SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
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VAIL RESORTS, INC.
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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[LETTERHEAD OF VAIL RESORTS APPEARS HERE]
November 10, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Vail Resorts, Inc., which will be held at 10:00 a.m., Eastern Standard Time,
on Tuesday, December 14, 1999 at the W New York Hotel, 541 Lexington Avenue,
New York, New York 10022.
The enclosed Notice and Proxy Statement contain complete information about
matters to be considered at the Annual Meeting, at which the business and
operations of our Company will also be reviewed. If you plan to attend, please
check the box provided on the proxy card.
Whether or not you plan to attend, we urge you to complete, sign and return
the enclosed proxy card, so that your shares will be represented and voted at
the Annual Meeting.
Sincerely,
/s/ Adam M. Aron
Adam M. Aron
Chairman and Chief Executive Officer
VAIL RESORTS, INC.
137 Benchmark Road P.O. Box 7
Avon, Colorado 81620 Vail, Colorado 81658
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NOTICE OF THE 1999 ANNUAL MEETING OF SHAREHOLDERS
----------------
November 10, 1999
To our Shareholders:
The Annual Meeting of Shareholders of Vail Resorts, Inc., a Delaware
corporation, will be held on Tuesday, December 14, 1999 at 10:00 a.m., Eastern
Standard Time, at the W New York Hotel, 541 Lexington Avenue, New York, New
York 10022, to:
(1) Elect nine Class 1 Directors and eight Class 2 Directors;
(2) Approve the Vail Resorts, Inc. 1999 Long Term Incentive and Share
Award Plan;
(3) Ratify the appointment of Arthur Andersen LLP as independent
public accountants; and
(4) Transact such other business as may properly come before the
meeting.
The record date for the determination of the shareholders entitled to notice
of and to vote at the meeting or at any adjournment thereof is the close of
business on November 1, 1999.
A copy of the Company's Annual Report to shareholders for the fiscal year
ended July 31, 1999 is enclosed.
A list of shareholders entitled to vote at the Annual Meeting will be open
to the examination of any shareholder, for any purpose germane to the meeting,
at the offices of the Company's Transfer Agent and Registrar, Norwest Bank
Minnesota, N.A., 161 North Concord Exchange, St. Paul, Minnesota 55075-0738,
during ordinary business hours for ten days prior to the Annual Meeting.
By Order of the Board of Directors
/s/ Martha D. Rehm
Martha D. Rehm
Senior Vice President,
General Counsel and Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED REPLY ENVELOPE. THIS WILL NOT LIMIT
YOUR RIGHT TO ATTEND OR VOTE AT THE MEETING.
VAIL RESORTS, INC.
137 Benchmark Road P.O. Box 7
Avon, Colorado 81620 Vail, Colorado 81658
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PROXY STATEMENT FOR THE 1999
ANNUAL MEETING OF SHAREHOLDERS
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SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy, being mailed to shareholders on or about November
10, 1999, is solicited by the Board of Directors of Vail Resorts, Inc. (the
"Company") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held on Tuesday, December 14, 1999. In case the Meeting is adjourned, the
proxy will be used at any adjournments thereof. If a proxy is received before
the Meeting, the shares represented by it will be voted unless the proxy is
revoked by written notice to the Secretary of the Company prior to the Meeting
or by voting in person by ballot at the Meeting. If matters other than those
specifically set forth in the accompanying Notice of Annual Meeting are
presented at the Meeting for action, which is not currently anticipated, the
proxy holders will vote the proxies in accordance with their best judgment.
Holders of record of Common Stock and Class A Common Stock of the Company as
of the close of business on November 1, 1999 will be entitled to vote at the
Meeting. On such date there were outstanding and entitled to vote
27,137,285 shares of Common Stock of the Company and 7,439,834 shares of Class
A Common Stock of the Company, each of which is entitled to one vote with
respect to each matter to be voted on at the Meeting. Pursuant to the
Company's Restated Certificate of Incorporation (the "Charter"), Class 1
directors of the Company are elected by a majority vote of the holders of
Class A Common Stock and Class 2 directors are elected by a majority vote of
the holders of the Common Stock. All other items to be voted on at the Meeting
require the affirmative vote of the holders of a majority of the shares of
Common Stock and Class A Common Stock taken together represented in person or
by proxy and entitled to vote on the item for approval. The presence at the
Meeting in person or by proxy of the holders of a majority of the outstanding
shares of Common Stock and Class A Common Stock entitled to vote shall
constitute a quorum for the transaction of business. Abstentions (including
proxies containing broker non-votes) on any matter to be acted upon by
shareholders will be treated as present at the meeting for purposes of
determining a quorum but will not be counted as votes cast on such matters and
will have the effect of a negative vote.
The cost of soliciting proxies in the form enclosed will be borne by the
Company. In addition to the solicitation by mail, proxies may be solicited
personally, or by telephone, by employees of the Company. The Company may
reimburse brokers holding Common Stock or Class A Common Stock in their names
or in the names of their nominees for their expenses in sending proxy material
to the beneficial owners of such Common Stock.
PROPOSAL 1. ELECTION OF DIRECTORS
The Charter and the bylaws of the Company provide that two-thirds of the
Board of Directors of the Company shall be comprised of Class 1 directors and
one-third shall be comprised of Class 2 directors, with each director serving
a one-year term. Pursuant to the Company's Charter, Class 1 directors will be
elected by the affirmative vote of a majority of the shares of Class A Common
Stock and Class 2 directors will be elected by the affirmative vote of a
majority of the shares of Common Stock. Currently, the Board of Directors is
comprised of seventeen members, nine of which are Class 1 directors and eight
of which are Class 2 directors. At the Meeting, nine Class 1 directors will be
elected by the Class A Common Stock holders and eight Class 2 directors will
be elected by the Common Stock holders. Pursuant to the Company's Charter and
bylaws, the holders of Class A Common Stock have the ability in the future to
increase the number of Class 1 directors or to decrease the number of Class 2
directors so that the respective two-thirds and one-third representation on
the Board of Directors is preserved.
Apollo Ski Partners, L.P. ("Apollo Ski Partners") owns substantially all of
the Class A Common Stock of the Company and, consequently, Apollo Ski Partners
has the ability to elect all of the Class 1 directors.
The persons named as proxies in the accompanying proxy, who have been
designated by the Board of Directors, intend to vote, unless otherwise
instructed in such proxy, FOR the election of Messrs. Black, Cogut, Daly,
Katz, Mack, Ressler, Rowan, Ryan and Spector as Class 1 directors and FOR the
election of Messrs. Aron, Biondi, Hilbert, Lee, Micheletto, Sorte, Stiritz and
Tisch as Class 2 directors.
INFORMATION WITH RESPECT TO NOMINEES
The following sets forth the name and age of each nominee, each of whom is
currently a member of the Board of Directors; all other positions and offices,
if any, now held by him with the Company and his principal occupation during
the last five years.
Nominees for Class 1 Directors
Leon D. Black, 48, was appointed a director of the Company in October 1992.
Mr. Black is one of the founding principals of Apollo Advisors, L.P. ("Apollo
Advisors"), which was established in August 1990, and which, together with its
affiliates, acts as managing general partner of Apollo Investment Fund, L.P.
("Apollo Fund"), AIF II, L.P., Apollo Investment Fund III, L.P. and Apollo
Investment Fund IV, L.P., private securities investment funds, of Apollo Real
Estate Advisors, L.P. ("AREA") which, together with an affiliate, acts as
managing general partner of the Apollo real estate investment funds and of
Lion Advisors, L.P. ("Lion Advisors"), which acts as financial advisor to and
representative for certain institutional investors with respect to securities
investments. Mr. Black is also a director of Converse, Inc., Samsonite
Corporation, Telemundo Group, Inc., United Rentals, Inc. and Sequa
Corporation. Mr. Black is Mr. Ressler's brother-in-law.
Craig M. Cogut, 46, was appointed a director of the Company in October 1992.
Mr. Cogut is currently a senior principal of Pegasus Investors, L.P., which
acts as a managing general partner of private securities investment funds.
Prior thereto he was one of the founding principals of Apollo Advisors and of
Lion Advisors.
Andrew P. Daly, 53, was appointed a director of the Company in June 1996.
Mr. Daly became President of Vail Associates, Inc. ("Vail Associates") in 1992
and President of the Company in 1996. He joined Vail Associates in 1989 as
Executive Vice President and President of Beaver Creek Resort Company. Prior
to joining Vail Associates, Mr. Daly owned and was President of Lake Eldora
Ski Corporation, which operated the Eldora Mountain Resort ski area. From 1982
to 1987, Mr. Daly was Chief Executive Officer of Copper Mountain Resort, where
he held several positions from 1972 to 1982.
Robert A. Katz, 32, was appointed a director of the Company in June 1996.
Mr. Katz is a principal of Apollo Advisors and Lion Advisors, with which he
has been associated since 1990. Mr. Katz is also a director of Aris
Industries, Inc., Clark Retail Group, Inc. and Quality Distribution, Inc.
2
William L. Mack, 59, was appointed a director of the Company in January
1993. Since 1963, Mr. Mack has been the President and Senior Managing Partner
of The Mack Organization, an owner and developer of and investor in office and
industrial buildings and other commercial properties principally in the New
York/New Jersey metropolitan area as well as throughout the United States. Mr.
Mack is Founder and Managing Partner of The Apollo Real Estate Investment
Funds. Mr. Mack is Chairman of the Board of Metropolis Realty Trust, Inc. and
also serves as a director of the Bear Stearns Companies, Inc., Koger Equity,
Inc. and the Mack-Cali Realty Corp.
Antony P. Ressler, 39, was appointed a director of the Company in October
1992. Mr. Ressler is one of the founding principals of Apollo Advisors, Lion
Advisors and Aris Management. Mr. Ressler is also a director of Allied Waste
Industries, Inc., Berlitz International, Inc. and Prandium, Inc. He is also a
member of the Executive Committee of the Board of Directors of LEARN, the
largest public school reform movement in the U.S., and of the Jonsson
Comprehensive Cancer Center at the UCLA Medical Center. Mr. Ressler is Mr.
Black's brother-in-law.
Marc J. Rowan, 37, was appointed a director of the Company in October 1992.
Mr. Rowan is one of the founding principals of Apollo Advisors and of Lion
Advisors. Mr. Rowan is also a director of NRT, Incorporated, Quality
Distribution, Inc., Samsonite Corporation and Wyndham International, Inc.
John J. Ryan III, 72, was appointed a director of the Company in January
1995. Mr. Ryan has been a financial advisor based in Geneva, Switzerland since
1972. Mr. Ryan is a director of Artemis S.A. and Financiere Pinault S.A.,
private holding companies in Paris, France. He is a director of Evergreen
Resources Inc., a publicly held oil and gas exploration company. Mr. Ryan is
President of J.J. Ryan & Sons, a closely held textile trading corporation in
Greenville, South Carolina.
Bruce H. Spector, 57, was appointed a director of the Company in January
1995. Mr. Spector has been a consultant to Apollo Advisors since 1992 and
since 1995 has been a principal in Apollo Advisors. Prior to October 1992, Mr.
Spector, a reorganization attorney, was a member of the Los Angeles law firm
of Stutman Triester and Glatt. Mr. Spector is also a director of Telemundo
Group, Inc. and Metropolis Realty Trust, Inc.
Nominees for Class 2 Directors
Adam M. Aron, 45, was appointed the Chairman of the Board and Chief
Executive Officer of the Company in July 1996. Prior to joining the Company,
Mr. Aron served as President and Chief Executive Officer of Norwegian Cruise
Line Ltd. from July 1993 until July 1996. From November 1990 until July 1993,
Mr. Aron served as Senior Vice President of Marketing for United Airlines.
From 1987 to 1990, Mr. Aron served as Senior Vice President of Marketing for
the Hyatt Hotels Corporation. Mr. Aron is also a director of Signature
Resorts, Inc., Crestline Capital Corporation and Florsheim Group, Inc.
Frank J. Biondi, 54, was appointed a director of the Company in July 1996.
Mr. Biondi currently is Chairman and Chief Executive Officer of Biondi Reiss
Capital Management and previously served as Chairman and Chief Executive
Officer of Universal Studios Inc. from April 1996 through November 1998. Mr.
Biondi served as President and Chief Executive Officer of Viacom, Inc., from
July 1987 to January 1996. He has also held executive positions with The
CocaCola Company, Home Box Office Inc, and Time Inc. Mr. Biondi currently is a
director of Leake and Watts Services, The Museum of Television and Radio, The
Bank of New York and About.com.
Stephen C. Hilbert, 53, was appointed a director of the Company in December
1995. Mr. Hilbert founded Conseco, Inc. in 1979 and serves as its Chairman,
President and Chief Executive Officer. Conseco, Inc. is a financial services
holding company based in Carmel, Indiana which owns and operates life
insurance companies and provides investment management, administrative and
other fee-based services. Mr. Hilbert serves as a director of the Indiana
State University Foundation and the Indianapolis Convention and Visitor's
Association.
3
He also serves on the Board of Trustees of both the Indianapolis Parks
Foundation and the U.S. Ski Team Foundation, as a Trustee of the Central
Indiana Council on Aging Foundation, and as a director of both the
Indianapolis Zoo and the St. Vincent Hospital Foundation.
Thomas H. Lee, 55, was appointed a director of the Company in January 1993.
Mr. Lee founded Thomas H. Lee Company in 1974 and since that time has served
as its President. The Thomas H. Lee Company and the funds which it advises
invest in friendly leveraged acquisitions and recapitalizations. From 1966
through 1974, Mr. Lee was with First National Bank of Boston where he directed
the bank's high technology lending group from 1968 to 1974 and became a Vice
President in 1973. Prior to 1966, Mr. Lee was a Securities Analyst in the
institutional research department of L.F. Rothschild in New York. Mr. Lee
serves as a director of Finlay Enterprises, Inc., First Security Services
Corporation, Livent, Inc., Metris Companies, Inc., Miller Import Corporation,
Safelite Glass Corporation and Wyndham International, Inc.
Joe R. Micheletto, 63, was appointed a director of the Company in February
1997. Mr. Micheletto has been Chief Executive Officer and President of Ralcorp
Holdings, Inc. ("Ralcorp") since September 1996 and was Co-Chief Executive
Officer and Chief Financial Officer of Ralcorp from January 1994 to September
1996. From 1985 to 1994, he served as Vice President and Controller of Ralston
Purina Company. From 1991 to 1997, Mr. Micheletto served as Chief Executive
Officer of Ralston Resorts, Inc. Mr. Micheletto also serves as a director of
Agribrands International, Inc. and Ralcorp.
John F. Sorte, 52, was appointed a director of the Company in January 1993.
Mr. Sorte has been President of New Street Advisors L.P., a merchant bank, and
of New Street Investments L.P., its broker-dealer affiliate, since he co-
founded both companies in March 1994. From 1992 to March 1994, Mr. Sorte was
President and Chief Executive Officer of New Street Capital Corporation, a
merchant banking firm. Mr. Sorte is also a director of WestPoint Stevens, Inc.
and serves as Chairman of the Board of Directors of The New York Media Group,
Inc.
William P. Stiritz, 65, was appointed a director of the Company in February
1997. Mr. Stiritz became Chairman, CEO and President of Agribrands
International, Inc. in April 1998. He also serves as Chairman of Ralston
Purina Company and, separately, as Chairman of Ralcorp. Mr. Stiritz also is a
director of the following companies: Agribrands International, Inc., American
Freightways, Angelica Corporation, Ball Corporation, May Department Stores
Company, Ralcorp, Ralston Purina Company and Reinsurance Group of America,
Incorporated.
James S. Tisch, 46, was appointed a director of the Company in January 1995.
Mr. Tisch is President and Chief Executive Officer of Loews Corporation
("Loews"). From October 1994 to December 1998 he served as President and Chief
Operating Officer of Loews and, since October 1994, he has served on the
Management Committee of Loews. Mr. Tisch has been with Loews since 1977. Mr.
Tisch has served as Chief Executive Officer of Diamond Offshore Drilling, Inc.
since March 1998 and, from June 1986 to October 1994, he served as Executive
Vice President of that company. Mr. Tisch is a member of the Board of
Directors of CNA Financial Corporation. He is also Chairman of the Federation
Employment and Guidance Service, a member of the Board of Directors of UJA-
Federation of New York, and a Trustee of The Mount Sinai Medical Center.
Vote Required for Approval
The affirmative vote of the holders of a majority of the outstanding shares
of Class A Common Stock is required to elect the Class 1 Directors. The
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock is required to elect the Class 2 Directors. Apollo Ski Partners
owns substantially all of the Class A Common Stock and, consequently, Apollo
Ski Partners has the ability to elect all of the Class 1 directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF MESSRS.
BLACK, COGUT, DALY, KATZ, MACK, RESSLER, ROWAN, RYAN AND SPECTOR AS CLASS 1
DIRECTORS AND "FOR" THE ELECTION OF MESSRS. ARON, BIONDI, HILBERT, LEE
MICHELETTO, SORTE, STIRITZ AND TISCH AS CLASS 2 DIRECTORS.
4
Executive Officers
The following table sets forth the executive officers of the Company and its
primary subsidiaries as of the date hereof:
Name Position
---- --------
Adam M. Aron............ Chairman of the Board of Directors and Chief Executive Officer
Roger T. Beck........... Senior Vice President, Vail Resorts Development Company
Andrew P. Daly.......... President and Director
James P. Donohue........ Senior Vice President and Chief Financial Officer
John McD. Garnsey....... Senior Vice President and Chief Operating Officer for Beaver Creek
William A. Jensen....... Senior Vice President and Chief Operating Officer for Vail
Bruce W. Mainzer........ Senior Vice President of Marketing and Sales
James S. Mandel......... Senior Vice President, Vail Resorts Development Company
Martha D. Rehm.......... Senior Vice President, General Counsel and Secretary
John W. Rutter.......... Senior Vice President and Chief Operating Officer for Keystone
Paul A. Testwuide....... Senior Vice President of Resort Projects for Vail
James P. Thompson....... President, Vail Resorts Development Company
Porter Wharton III...... Senior Vice President of Public Affairs
For biographical information about Messrs. Aron and Daly see "Information
With Respect to Nominees."
Roger T. Beck, 49, became Senior Vice President of Vail Resorts Development
Company in April 1999. Prior to accepting this position, he served as Vice
President and General Manager of Summit County for Vail Resorts Development
Company from June 1997 to April 1999. Mr. Beck served as President of the
Semiahmoo Company from 1989 to 1997, and he served as Vice President of
Marketing and Operations of that company from 1984 to 1989. In addition, Mr.
Beck has held various positions in the resort industry since he began his
career over 25 years ago.
James P. Donohue, 59, became Senior Vice President and Chief Financial
Officer of the Company in October 1996. From 1991 to October 1996, Mr. Donohue
served as Senior Vice President and Chief Financial Officer of Fibreboard
Corporation, a manufacturer and distributor of building products, which also
owned and operated three ski resorts located in California. Prior to 1991, Mr.
Donohue was an Executive Vice President of Continental Illinois Bank, N.A.
John McD. Garnsey, 49, joined the Company in May 1999 as Senior Vice
President and Chief Operating Officer for Beaver Creek. Mr. Garnsey served as
President of the Vail Valley Foundation from 1991 through April 1999 and as
Vice President from 1983 to 1991. Mr. Garnsey is also a director of the Vail
Valley Foundation, Bravo!Colorado, the Vilar Center for the Performing Arts at
Beaver Creek, Vail Valley Tourism and Convention Bureau and Ski Club Vail. In
addition, Mr. Garnsey was President of the Organizing Committee for the 1999
World Alpine Ski Championships.
William A. Jensen, 47, joined Breckenridge as Senior Vice President and
Chief Operating Officer in May 1997 and was appointed Chief Operating Officer
for Vail in May 1999. Mr. Jensen was President of the Fibreboard Resort Group
from 1991 to 1996. He was Vice President of Sunday River Ski Resort from 1989
to 1991 and, from 1983 to 1989, Mr. Jensen was Vice President of Kassbohrer of
North America, a grooming vehicle manufacturer.
Bruce W Mainzer, 47, joined the Company in June 1997 as Senior Vice
President of Marketing and was named Senior Vice President of Marketing and
Sales in August 1998. From 1996 to 1997, Mr. Mainzer was the Executive Vice
President of Marketing and Planning at Carnival Airlines in Miami. From 1994
to 1996, Mr. Mainzer was Vice President of Marketing for Norwegian Cruise Line
Ltd. From 1985 to 1994, Mr. Mainzer served in a variety of key marketing
positions at United Airlines including heading the departments of yield
management, market research and brand marketing.
5
James S. Mandel, 49, has served as Senior Vice President of Commercial
Development for Vail Resorts Development Company since April 1999. From 1994
to December 1998, Mr. Mandel was the Senior Vice President and General Counsel
of the Company, and served as Secretary of the Company from 1995 to 1998. From
January 1999 through March 1999, Mr. Mandel practiced law and was an advisor
to and part-time employee of the Company. From 1978 until joining the Company,
Mr. Mandel was a partner with Brownstein Hyatt Farber and Strickland, P.C., a
Denver law firm, and specialized in real estate development and corporate
finance.
Martha D. Rehm, 48, became Senior Vice President, General Counsel and
Secretary in May 1999. Prior to joining the Company, Ms. Rehm served since mid
1998 as Vice President and General Counsel of Corporate Express, Inc., a
supplier of office products and computer supplies to corporations. Prior to
1998, she was a partner for many years with Holme Roberts & Owen, LLP, a
Denver-based law firm, where her practice included general corporate law
emphasizing corporate finance and securities transactions.
John W. Rutter, 48, became Senior Vice President and Chief Operating Officer
of Keystone Resort in May 1997. From 1991 to 1997, he was Executive Vice
President of Ski Operations for Ralston Resorts, Inc. From 1980 to 1991, he
was Vice President of Ski Operations for Keystone Resort and Arapahoe Basin.
Mr. Rutter also serves on the Management Committee of Keystone/Intrawest LLC.
Mr. Rutter is Chairman of the Board of Directors of the National Ski Areas
Association and serves on its Public Lands Committee.
Paul A. Testwuide, 59, became Senior Vice President of Resort Projects for
Vail in May 1999. Prior to accepting this position, Mr. Testwuide was Senior
Vice President and Chief Operating Officer for Vail and Beaver Creek in 1998
and, from 1992 to 1998, he was Vice President of Mountain Operations for Vail
Associates. Mr. Testwuide was Managing Director of Vail Mountain Operations
from 1989 to 1992, Director of Mountain Operations from 1976 to 1989 and
served as the Director of Ski Patrol from 1971 to 1976. Mr. Testwuide has held
various management positions in mountain operations since joining Vail
Associates in 1963.
James P. Thompson, 55, joined Vail Resorts Development Company as its
President in 1993 in connection with Vail Associates' acquisition of the
Arrowhead at Vail development. He joined Arrowhead at Vail in 1989, and served
as its President. Prior to joining Arrowhead at Vail, Mr. Thompson served as
Vice President of Moore and Company in Denver for 14 years leading their land
acquisitions, syndications and development activities.
Porter Wharton III, 49, joined the Company in January 1999 as Senior Vice
President of Public Affairs. From 1985 to January 1999, Mr. Wharton was
Chairman and Chief Executive Officer of The Wharton Group, a Denver-based
national government relations and issues management consulting firm. He also
has served as a consultant to the Company since 1995.
6
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth in the following table is the beneficial ownership of Common Stock
as of November 1, 1999 for all directors and the five executive officers
listed on the Summary Compensation Table, and, as a group, such persons and
all other current executive officers. No director or executive officer of the
Company owns any Class A Common Stock of the Company.
Number of Shares
of Common Stock Percent
Name Beneficially Owned of Class
- ---- ------------------ --------
Adam M. Aron...................................... 192,275(1) *
Frank Biondi...................................... 32,300 *
Leon D. Black..................................... 0(2) *
Craig M. Cogut.................................... 9,720 *
Andrew P. Daly.................................... 257,071(1) *
Stephen C. Hilbert................................ 0 *
Robert A. Katz.................................... 0(2) *
Thomas H. Lee..................................... 0(3) *
William L. Mack................................... 0(2) *
Joe R. Micheletto................................. 1,000(4) *
Antony P. Ressler................................. 26,000(2) *
Marc J. Rowan..................................... 0(2) *
John J. Ryan III.................................. 0 *
John F. Sorte..................................... 10,000 *
Bruce H. Spector.................................. 0(2) *
William P. Stiritz................................ 0(4) *
James S. Tisch.................................... 0 *
James P. Donohue.................................. 74,080(1) *
James S. Mandel................................... 143,634(1)(5) *
James P. Thompson................................. 176,504(1) *
Directors and Executive Officers as a Group
(28 Persons)..................................... 1,113,971(1) 4.1%
- --------
* As of November 1, 1999, no director or executive officer owned more than
one percent of the Common Stock outstanding (including exercisable
options).
(1) Includes shares that may be acquired within 60 days of November 1, 1999
through the exercise of employee stock options as follows: 176,000,
248,154, 67,000, 143,634, 175,294 and 1,010,665 shares of Common Stock
subject to options granted to Messrs. Aron, Daly, Donohue, Mandel,
Thompson and the directors and executive officers as a group,
respectively.
(2) This individual is associated with Apollo Advisors, the managing general
partner of Apollo Fund, the general partner of Apollo Ski Partners. This
individual disclaims beneficial ownership of all shares of Common Stock
and Class A Common Stock of the Company held by Apollo Ski Partners.
(3) Excludes 19,440 shares of Common Stock owned by Mr. Lee's two children
(each owning 9,720 shares) to which Mr. Lee disclaims beneficial
ownership.
(4) Messrs. Micheletto and Stiritz disclaim beneficial ownership of all shares
of Common Stock of the Company held by Ralcorp.
(5) Excludes 1,000 shares of Common Stock owned by Mr. Mandel's wife's
individual retirement account as to which Mr. Mandel disclaims beneficial
ownership.
7
INFORMATION AS TO CERTAIN SHAREHOLDERS
Set forth below is certain information with respect to the only persons
known to the Company to be the beneficial owners of more than five percent of
the Company's voting securities as of November 1, 1999.
Common Stock Class A Common Percent of
Beneficially Owned Stock Beneficially Owned Class A Common
------------------- ---------------------------- Stock and
Name of Percent Percent Common Stock
Beneficially Owned Shares of Class Shares of Class Beneficially Owned
- ------------------ ---------- -------- -------------- -------------------------------
Apollo Ski Partners,
L.P. (1)(2)............ -- -- 7,439,542 99.9% 21.5%
Capital Research and
Management
Company (3)............ 1,519,600 5.6% -- -- 4.4%
Ralcorp Holdings, Inc.
(4).................... 7,554,406 27.8% -- -- 21.8%
Ronald Baron (5)........ 11,906,200 43.9% -- -- 34.4%
- --------
(1) Apollo Ski Partners was organized principally for the purpose of holding
Common Stock and Class A Common Stock of the Company. The general partner
of Apollo Ski Partners is Apollo Fund, a Delaware limited partnership and
a private securities investment fund. The managing general partner of
Apollo Fund is Apollo Advisors, a Delaware limited partnership, the
general partner of which is Apollo Capital Management, Inc. ("Apollo
Capital"), a Delaware corporation. Mr. Black, a director of the Company,
is a director of Apollo Capital. All officers, directors and shareholders
of Apollo Capital, including Messrs. Black, Katz, Mack, Ressler, Rowan and
Spector (directors of the Company), disclaim any beneficial ownership of
the Common Stock and Class A Common Stock of the Company owned by Apollo
Ski Partners. The address for Apollo Ski Partners is 2 Manhattanville
Road, Purchase, NY 10577.
(2) The Class A Common Stock is convertible into Common Stock (i) at the
option of the holder, (ii) automatically, upon transfer to a non-affiliate
of such holder and (iii) automatically, if less than 5,000,000 shares (as
such number shall be adjusted by reason of any stock split,
reclassification or other similar transaction) of Class A Common Stock are
outstanding.
(3) As reported by Capital Research and Management Company on Schedule 13G
filed with the Securities and Exchange Commission on February 11, 1999.
The address for Capital Research and Management Company is 333 South Hope
Street, Los Angeles, CA 90071.
(4) As reported by Ralcorp on Schedule 13D filed with the Securities and
Exchange Commission on February 13, 1997. The address for Ralcorp is 800
Market Street, Suite 1600, St. Louis, MO 63101.
(5) As reported by Ronald Baron and related entities on Schedule 13D filed
with the Securities and Exchange Commission on May 21, 1999. The address
for Ronald Baron is 767 Fifth Avenue, 24th Floor, New York, NY 10153.
8
BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES
The Board of Directors of the Company held a total of six meetings during
the fiscal year ended July 31, 1999 ("Fiscal 1999"). The Board of Directors
has an Executive Committee, an Audit Committee and a Compensation Committee.
The Board of Directors does not have a nominating committee.
The Executive Committee has all powers and rights necessary to exercise the
full authority of the Board of Directors in the management of the business and
affairs of the Company. The members of the Executive Committee for Fiscal 1999
were Messrs. Aron, Daly, Katz and Rowan. The Executive Committee had two
meetings during Fiscal 1999.
The Audit Committee is primarily concerned with the effectiveness of the
Company's accounting policies and practices, financial reporting and internal
controls. The Audit Committee is authorized to (i) make recommendations to the
Board of Directors regarding the engagement of the Company's independent
accountants, (ii) review the plan, scope and results of the annual audit, the
independent accountants' letter of comments and management's response thereto,
and the scope of any non-audit services which may be performed by the
independent accountants, (iii) manage the Company's policies and procedures
with respect to internal accounting and financial controls, and (iv) review
any changes in accounting policy. The members of the Audit Committee for
Fiscal 1999 were Messrs. Hilbert, Sorte and Tisch. The Audit Committee held
one meeting during Fiscal 1999.
The Compensation Committee is authorized and directed to (i) review and
approve the compensation and benefits of the executive officers, (ii) review
and advise management regarding the benefits, including bonuses, and other
terms and conditions of employment of other employees, (iii) review and
approve the Company's annual compensation plans, (iv) review management
organization and development as it relates to compensation, and (v) administer
any stock option plans which may be adopted and the granting of options under
such plans. The members of the Compensation Committee for Fiscal 1999 were
Messrs. Black, Lee and Rowan. The Compensation Committee had six meetings in
Fiscal 1999.
During Fiscal 1999 all of the directors of the Company attended 75% or more
of the meetings of the Board of Directors and of committees of the Board of
Directors on which they served either in person or telephonically, except for
Messrs. Cogut, Lee, Stiritz and Tisch.
The Company paid no fees to its directors in Fiscal 1999 and the Company
currently does not intend to pay directors' fees, however, the Company does
provide its directors with certain ski related privileges. The Company pays a
management fee of $500,000 per year to Apollo Advisors. Messrs. Black, Katz,
Mack, Ressler, Rowan and Spector are associated with Apollo Advisors and are
directors of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities to file initial reports of ownership and changes in ownership with
the Securities and Exchange Commission ("SEC") and the New York Stock
Exchange. Such officers, directors and shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that (A) all persons subject to the reporting
requirements of Section 16(a) filed the required reports on a timely basis for
Fiscal 1999 except Messrs. Beck, Garnsey and Mandel each failed to make one
required Form 3 filing on a timely basis and Messrs. Aron, Daly, Donohue,
Jensen, Mainzer, Rutter, Testwuide and Thompson each failed to make one timely
Form 4 filing to reflect one option grant made to each of them under a company
wide program of option grants made in November 1998, all of which filings
subsequently have been made for Fiscal 1999 for each person; and (B) for the
previous fiscal year ended July 31, 1998, Eric Resnick, who formerly served as
Treasurer of the Company and is currently the Vice President of Strategic
Planning and Investor Relations, failed to make one required Form 5 filing on
a timely basis.
9
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
During the fiscal year ended September 30, 1991, the Company loaned Mr. Daly
$300,000, $150,000 of which bears interest at a rate of nine percent per annum
and the remainder of which is non-interest bearing. The principal sum plus
accrued interest is due no later than one year following the termination, for
any reason, of Mr. Daly's employment with the Company. The proceeds of the
loan were used to finance the purchase and improvement of real property and
the loan is secured by a deed of trust on such property.
The Company pays a fee of $500,000 per year to Apollo Advisors for
management services and expenses related thereto. This fee has been incurred
each year since 1993 and is paid partly in cash and partly in services
rendered by the Company to Apollo Advisors and its affiliates. This
arrangement was approved by the Board of Directors of the Company in March
1993.
In 1995, Mr. Daly's spouse and Mr. Thompson and his spouse received
financial terms more favorable than those available to the general public in
connection with their purchase of homesites at Bachelor Gulch Village. Rather
than payment of an earnest money deposit with the entire balance due in cash
at closing, these contracts provide for no earnest money deposit with the
entire purchase price (which was below fair market value) to be paid under
promissory notes of $438,750 and $350,000 for Mr. Daly's spouse and Mr. and
Mrs. Thompson, respectively. Mr. Daly's note is secured by a first deed of
trust and amortized over 25 years at a rate of eight percent per annum
interest, with a balloon payment due on the earlier of five years from the
date of closing or one year from the date employment with the Company is
terminated. In 1999, the agreement with respect to Mr. Thompson's note was
amended to provide that the note, which continues to accrue at a rate of eight
percent per annum, will be payable in full in the form of one lump sum
payment. The lump sum payment is due on the earlier of (i) the date the
property is sold, (ii) two years from the date Mr. Thompson's employment with
the Company is terminated for any reason, or (iii) September 1, 2009. The
amended agreement between the Company and Mr. Thompson also contemplates that
the Company's loan will be subordinated to an anticipated construction loan
and, ultimately, permanent financing on the home, on terms and conditions
reasonably acceptable to the Company.
In order to facilitate the Company's requirement that Mr. Jensen reside in
the Town of Vail in connection with his appointment as the Chief Operating
Officer of Vail Mountain, the Company entered into an agreement with Mr.
Jensen in 1999 whereby the Company invested in the purchase of a primary
residence for Mr. and Mrs. Jensen in Vail, Colorado. The Company contributed
$1,000,000 toward the purchase price of the residence and thereby obtained an
approximate 49% undivided ownership interest in such residence. The Company is
entitled to receive its proportionate share of the resale price of the
residence, less certain deductions, upon the resale of the residence or within
approximately eighteen (18) months after Mr. Jensen's termination of
employment from the Company, whichever occurs first.
In September 1999, Mr. Rowan and Michael Gross (who is also one of the
founding principals of Apollo Advisors) each contracted to purchase a cluster
homesite at Bachelor Gulch Village for a price of $378,000, which the Company
believes to be the approximate fair market value for each site, less a credit
for certain infrastructure costs necessary for development of each homesite.
Pursuant to the terms of the contracts, the closing on such homesites will
occur on or before January 15, 2001.
Ralcorp, Apollo Ski Partners, and the Company are parties to a Shareholder
Agreement, dated January 3, 1997 and amended as of November 1, 1999 (the
"Shareholder Agreement"), pursuant to which they have agreed to cause the
Board of Directors of the Company to consist of no more than twenty directors,
with Ralcorp having the ability to nominate two directors for so long as it
owns at least ten percent of the Company's outstanding voting securities.
Messrs. Micheletto and Stiritz presently are Ralcorp's two nominees for
directors. Pursuant to the Shareholder Agreement, Apollo Ski Partners has
agreed to vote in favor of the election of the two directors nominated by
Ralcorp.
The Shareholder Agreement subjects Ralcorp to a voting agreement with
respect to actions taken by the Company's Board of Directors. Among other
things, Ralcorp agrees to vote (i) "for" all the nominees
10
recommended by the Board of Directors, (ii) with the Board of Directors on all
shareholder proposals and (iii) in the same proportion as all other
shareholders (i.e., "for," "against" and "abstain") on all other matters,
except that Ralcorp (a) has retained the right to vote all of its shares in
favor of the approval of the Vail Resorts, Inc. 1999 Long Term Incentive and
Share Award Plan, which is to be voted on by all shareholders at this year's
Annual Meeting and (b) has full discretion on extraordinary events such as
mergers or consolidations, sales of assets, creation of new stock with voting
rights and changes in the Company's Charter or bylaws. Apollo Ski Partners and
Ralcorp have informed the Company that they intend to vote all of their shares
in favor of the approval of the Vail Resorts, Inc. 1999 Long Term Incentive
and Share Award Plan.
Under the terms of the Shareholder Agreement, Ralcorp has agreed to certain
restrictions on the resale of its Common Stock. Ralcorp has agreed not to
transfer or sell its shares of Common Stock without the prior approval of a
majority of the Board of Directors, other than (i) to affiliates or Ralcorp
stockholders, (ii) pursuant to a demand or piggyback registration as allowed
under the Shareholder Agreement, or (iii) a transfer eighteen months after
February 7, 1997, provided the transferee will not own more than ten percent
of the outstanding voting securities of the Company and agrees to be bound by
the Shareholder Agreement. In addition, if Ralcorp transfers its shares under
(iii) above, it has agreed to provide the Company with a right of first
refusal, affording the Company the right to purchase such shares under the
same terms and conditions, and to provide Apollo Ski Partners a right of
second refusal if the Company elects not to purchase such shares.
The Shareholder Agreement will terminate (i) upon agreement of each of
Apollo Ski Partners and Ralcorp; (ii) upon the dissolution of the Company or a
sale of substantially all of its assets; or (iii) when either Apollo Ski
Partners or Ralcorp owns less than ten percent of the Company's outstanding
voting securities. Pursuant to the Shareholder Agreement, the Company has
granted to each of Apollo Ski Partners and Ralcorp certain demand and
piggyback registration rights with respect to the Common Stock owned by them.
The Company and BAMCO, Inc. ("BAMCO"), an affiliate of Ronald Baron, the
Company's largest shareholder, have entered into a Standstill and Registration
Rights Agreement. Pursuant to such agreement, the Company has granted BAMCO
certain registration rights in connection with unregistered shares of the
Company held by BAMCO and BAMCO has agreed not to acquire additional shares of
Common Stock of the Company other than as a result of (i) a stock split, stock
dividend or similar recapitalization or (ii) the purchase of an additional
445,350 shares of Common Stock provided that the aggregate number of shares of
Common Stock of the Company beneficially owned by BAMCO and its affiliates
does not exceed 12,034,200 shares (as adjusted for any stock split, stock
divided or recapitalization) at any time.
11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE (a)
The following table provides information concerning compensation paid by the
Company to the Chief Executive Officer and the other four highest paid
executive officers of the Company whose compensation was at least $100,000 for
Fiscal 1999 (collectively, the "Named Executive Officers").
Annual Compensation Long-Term Compensation
---------------------------- ----------------------------------
Awards Payouts
--------------------- ------------
Other Restricted Securities Deferred
Annual Stock Underlying Compensation All Other
Name, Principal Position, Salary Bonus Compensation Awards(s) Options Payments Compensation
and Period $ ($) ($)(b) ($) (#) ($)(c) ($)
- ------------------------- ------- ------- ------------ ---------- ---------- ------------ ------------
Adam M. Aron, Chairman
and Chief Executive
Officer of the Company
1999.................... 634,618 -- -- -- 60,000 -- 51,714(d)(e)
1998.................... 529,181 120,000 -- -- -- -- 122,610(d)(e)
1997.................... 560,000 250,000 -- -- 200,000 -- 51,812(d)(e)
Andrew P. Daly,
President and Director
of the Company
1999.................... 406,542 -- -- -- 27,000 -- 17,730(e)(f)
1998.................... 339,231 77,000 -- -- -- -- 307,762(e)(f)(g)
1997.................... 350,000 -- -- -- -- 28,471 5,774(e)
James P. Donohue, Senior
Vice President and
Chief Financial Officer
1999.................... 333,242 -- -- -- 21,000 -- 4,017(e)
1998.................... 282,308 50,000 -- -- -- -- 98,185(e)(h)
1997.................... 265,385 -- -- 240,000 60,000 -- 375(e)
James S. Mandel, Senior
Vice President, Vail
Resorts Development
Company (i)
1999.................... 343,872 51,250 -- -- 21,000 -- 32,098(e)(g)
1998.................... 282,308 50,000 -- -- -- -- 152,467(e)(g)
1997.................... 300,000 -- -- -- 20,000 -- 140,282(e)(g)
James P. Thompson,
President of Vail
Resorts Development
Company
1999.................... 293,132 118,000 -- -- 21,000 -- 3,787(e)
1998.................... 247,308 112,000 -- -- -- -- 197,169(e)(g)
1997.................... 268,654 108,000 -- -- 20,000 -- 1,095(e)
- --------
(a) Compensation figures for fiscal 1997 are for the twelve-month period ended
September 30, 1997. Compensation figures for fiscal 1998 are for the ten-
months ended July 31, 1998, as the Company changed its fiscal year during
that period, resulting in a shortened ten-month transition year.
Compensation figures for fiscal 1999 are for the twelve-month period ended
July 31, 1999.
(b) "Other Annual Compensation" includes perquisites and personal benefits,
where such perquisites and personal benefits exceed the lesser of $50,000
or 10% of the Named Executive Officer's annual salary and bonus for the
year, as well as certain other items of compensation. For 1999, none of
the Named Executive Officers received perquisites and/or personal benefits
in excess of the applicable threshold.
(c) Prior to October 8, 1992, the Company and certain of its subsidiaries
offered deferred compensation plans to certain key management employees in
lieu of any type of pension plans, stock options or other retirement
12
plans. As of October 8, 1992, following payments made on or around October
8, 1992, the outstanding deferred compensation balance for Mr. Daly was
$455,532. Mr. Daly's outstanding deferred compensation balance after
October 8, 1992 was paid to him over a four-year period, with the final
payment on October 1, 1996.
(d) Includes $45,455, $109,066 and $27,940 in relocation compensation received
in 1997, 1998 and 1999, respectively. Mr. Aron lives in a house provided
for the convenience of the Company as described in the section entitled
"Employment Agreements."
(e) Includes excess life insurance premiums paid in 1997, 1998 and 1999,
respectively, for each of the Named Executive Officers as follows: Mr.
Aron--$6,357, $13,544 and $23,774; Mr. Daly--$5,774, $6,797 and $14,340;
Mr. Donohue--$375, $2,396 and $4,017; Mr. Mandel--$992, $1,942 and $2,150;
and Mr. Thompson--$1,095, $2,166 and $3,787.
(f) Includes $4,050 and $3,390 of interest income for 1998 and 1999,
respectively, in connection with Mr. Daly's loan as described in the
section entitled "Certain Relationships and Other Transactions."
(g) On September 25, 1996, the Company declared a right to receive up to $2.44
per share of Common Stock to all shareholders of record on October 11,
1996. At that time, the Company amended agreements with certain option
holders such that those option holders were entitled to receive $2.44 per
share, per option as of September 25, 1996 if certain conditions were met.
Such payments include $296,915 to Mr. Daly in 1998, $139,290, $150,525 and
$29,948 to Mr. Mandel in 1997, 1998 and 1999, respectively, and $195,003
to Mr. Thompson in 1998.
(h) Includes $95,789 in relocation compensation received in 1998.
(i) Represents compensation earned as Senior Vice President, General Counsel
and Secretary, through December 1998, as an advisor and part-time employee
of the Company, from January 1999 to March 1999, and as Senior Vice
President, Vail Resorts Development Company, from April 1999 to July 31,
1999.
The following table sets forth information concerning individual grants of
stock options made under the 1993 and 1996 stock option plans in Fiscal 1999
to each of the Named Executive Officers.
Option Grants in Fiscal 1999
Individual Grants
------------------------------------------------------------
Potential
Realizable Value
at Assumed
Number of Annual Rates of
Securities % of Total Stock Price
Underlying Options Exercise Appreciation for
Options Granted to or Option Term(1)
Granted Employees Base Price Expiration ----------------
Name (#) in 1999 ($/Sh) Date 5% 10%
---- ---------- ---------- ---------- ---------- ------- --------
Adam M. Aron...... 60,000 9.3% 25.00 11/17/08 $75,000 $150,000
Andrew P. Daly.... 27,000 4.2% 25.00 11/17/08 33,750 67,500
James P. Donohue.. 21,000 3.3% 25.00 11/17/08 26,250 52,500
James P. Thompson. 21,000 3.3% 25.00 11/17/08 26,250 52,500
James S. Mandel... 21,000 3.3% 25.00 11/17/08 26,250 52,500
- --------
(1) The potential realizable value uses the hypothetical rates specified by
the Securities and Exchange Commission and is not intended to forecast
future appreciation, if any, of the Company's Common Stock price.
13
The following table sets forth information concerning each exercise of stock
options during Fiscal 1999 by each of the Named Executive Officers and the
value of unexercised options at July 31, 1999.
Aggregated Option Exercises During Fiscal 1999
and Option Values as of July 31, 1999
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options(1) Options(2)
Acquired Value -------------------- -------------
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- ----------- -------- -------------------- -------------
Adam M. Aron............ -- -- 156,000/364,000 $ 0/0
Andrew P. Daly.......... -- -- 212,487/80,333 1,900,712/0
James P. Donohue........ -- -- 40,000/41,000 0/0
James P. Thompson....... -- -- 168,293/27,667 1,288,105/0
James S. Mandel......... 29,660 477,724 136,633/27,667 1,024,931/0
- --------
(1) Options have a ten-year term and vest in one-year increments ranging from
three to five years commencing on the first anniversary of the date of
grant, except that, in certain cases, options granted to Mr. Aron can vest
up to ten years from the date of grant. Vesting will, in certain cases, be
accelerated upon the occurrence of a "change in control." See "Employment
Agreements."
(2) The "Value of Unexercised In-the-Money Options at July 31, 1999" was
calculated by determining the difference between the closing price on the
New York Stock Exchange of the underlying Common Stock at July 31, 1999 of
$18.3125 and the exercise price of the option. An option is "In-the-Money"
when the fair market value of the underlying Common Stock exceeds the
exercise price of the option.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Adam M. Aron (the
"Employment Agreement"). Pursuant to the Employment Agreement, Mr. Aron serves
as Chief Executive Officer of the Company. The initial term of his employment
was for the period from July 29, 1996 through September 30, 1999, with
automatic renewals thereafter such that the term of the Employment Agreement
will always be two years, subject to notice of termination by either Mr. Aron
or the Company. Mr. Aron's initial base salary was $560,000 per year, subject
to annual increases, as determined by the Compensation Committee of the Board
of Directors, and a bonus was guaranteed at an annualized rate of $250,000
through the fiscal year ended 1997, which bonus became payable on October 1,
1997. On October 1, 1997, Mr. Aron became eligible to participate in the
Company's bonus plan.
Pursuant to the Employment Agreement, Mr. Aron was granted 37,500 restricted
shares of Common Stock and options to purchase 260,000 shares of Common Stock,
with both restricted shares and options vesting over five years. The Company
provides Mr. Aron a life insurance policy of $5 million and $500,000 of annual
disability income protection. Pursuant to the Employment Agreement, the
Company purchased a home for Mr. Aron in the Vail Valley, with a purchase
price of approximately $1.5 million, for his use while employed by the
Company. Mr. Aron is subject to a 12-month non-compete clause upon
termination. In the event of a change of control of the Company, all of Mr.
Aron's rights with respect to the options and the restricted shares of Common
Stock will vest immediately if (1) he remains employed with the Company for at
least six months after the change of control occurs, or (2) following the
change of control, his employment is terminated as a result of death or
disability, or is terminated without cause. In addition, in the event of a
change of control, Mr. Aron is entitled to receive certain benefits if the
Company terminates his employment without cause or if Mr. Aron terminates his
employment agreement for good reason. Such benefits include payment of Mr.
Aron's then current base salary through the date his employment ends and for a
twenty-four month period thereafter and a prorated bonus (assuming performance
targets are met) for the portion of the year in which the termination occurs.
A "change in control" of the Company occurs when a person other than Apollo
Ski Partners or its affiliates owns a majority of the Company's outstanding
common stock or a majority of the combined voting power of all outstanding
voting securities.
14
Pursuant to an employment agreement with Andrew P. Daly, Mr. Daly serves as
President of the Company. The initial term of his employment was for the
period from October 1, 1996 through October 1, 1999, with a one-year automatic
renewal thereafter, subject to notice of non-renewal by either Mr. Daly or the
Company. Mr. Daly's initial base salary was $350,000 per year, subject to
annual increases, as determined by the Compensation Committee of the Board of
Directors and the Chief Executive Officer of the Company and Mr. Daly
participates in the Company's bonus plan. The Company provides Mr. Daly a life
insurance policy of $3 million and $262,500 of annual disability income
protection. In addition, pursuant to his employment agreement, Mr. Daly was
granted 12,500 restricted shares of Common Stock and options to purchase
100,000 shares of Common Stock. Such restricted stock and options originally
vested over five years; however, after the first year, the vesting schedule
was changed such that the then unvested restricted shares and options would
vest over the following three-year period. Mr. Daly is subject to a 12-month
non-compete clause upon termination. In the event of a change of control of
the Company, all of Mr. Daly's rights with respect to his options and
restricted shares of Common Stock will vest immediately if (1) he remains
employed with the Company for at least six months after the change of control
occurs, or (2) following the change of control, his employment is terminated
as a result of death or disability, or is terminated without cause. In
addition, in the event of a change of control, Mr. Daly is entitled to receive
certain benefits if the Company terminates his employment without cause, Mr.
Daly terminates his employment for good reason, or the Company gives notice of
non-renewal of his employment agreement. Such benefits include payment of Mr.
Daly's then current base salary through the date his employment ends and for
an eighteen month period thereafter and a prorated bonus (assuming performance
targets are met) for the portion of the year in which the termination occurs.
A "change in control" of the Company occurs when a person other than Apollo
Ski Partners or its affiliates owns a majority of the Company's outstanding
common stock or a majority of the combined voting power of all outstanding
voting securities.
Pursuant to an employment agreement with James P. Donohue, Mr. Donohue
serves as Senior Vice President and Chief Financial Officer of the Company.
The initial term of his employment was for the period from October 1, 1996
through September 30, 1999, with automatic renewals for successive one year
periods thereafter, subject to notice of termination by either Mr. Donohue or
the Company. Mr. Donohue's initial base salary was $300,000 per year, subject
to annual increases, as determined by the Compensation Committee of the Board
of Directors and the Chief Executive Officer, and Mr. Donohue participates in
the Company's bonus plan. In addition, pursuant to such agreement, Mr. Donohue
was granted 12,000 restricted shares of Common Stock and options to purchase
60,000 shares of Common Stock, which restricted stock and options vest over
three years. Mr. Donohue is subject to a 12 month non-compete clause upon
termination. In the event of a change of control of the Company, all of Mr.
Donohue's rights with respect to his options and restricted shares of Common
Stock will vest immediately if (1) he remains employed with the Company for at
least six months after the change of control occurs, or (2) following the
change of control, his employment is terminated as a result of death or
disability, or is terminated without cause. In addition, in the event of a
change of control, Mr. Donohue is entitled to receive certain benefits if the
Company terminates his employment without cause, Mr. Donohue terminates his
employment for good reason, or the Company gives notice of non-renewal of his
employment agreement. Such benefits include payment of Mr. Donohue's then
current base salary through the date his employment ends and for an eighteen
month period thereafter and a prorated bonus (assuming performance targets are
met) for the portion of the year in which the termination occurs. A "change in
control" of the Company occurs when a person other than Apollo Ski Partners or
its affiliates owns a majority of the Company's outstanding common stock or a
majority of the combined voting power of all outstanding voting securities.
15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General
The Compensation Committee of the Board of Directors (the "Committee") for
the fiscal year ended July 31, 1999 was comprised entirely of non-employee
directors, Messrs. Black, Lee and Rowan. The Committee is responsible for
establishing and administering the Company's executive compensation programs.
Compensation Philosophy
The Committee's compensation philosophy is designed to support the Company's
primary objective of creating value for shareholders. The Committee believes
that the following compensation strategies for the Company's executive
officers, including the Chief Executive Officer (the "CEO"), achieve this
objective:
. Attract and retain talented executives--The Company provides core
compensation in the form of base salary and benefit programs that are
comparable to those of similarly sized companies in the
resort/leisure/hospitality industry. The base salary target is
generally based on industry survey results. For higher levels of
responsibility, the base salary component is intended to be a
diminishing portion of the executive's potential total compensation.
. Emphasize pay for performance--The Company's 1996 Long-Term Incentive
and Share Award Plan ("LTIP") establishes a significant relationship
between current Company performance and incentive compensation, on a
sliding scale basis, with substantial rewards possible for
exceptional results and no reward for poor results.
. Encourage management stock ownership--The Committee firmly believes
that long-term shareholder value will be significantly enhanced by
management stock ownership. As a result, the Company's stock option
program strongly encourages stock ownership by executive officers.
The Internal Revenue Code imposes a limitation on the deduction for certain
executive officers' compensation unless certain requirements are met. The
Company and the Committee have carefully considered the impact of these tax
laws and have taken certain actions intended to preserve the Company's tax
deduction with respect to any affected compensation. The following are
descriptions of the Company compensation programs for executive officers,
including the CEO.
Base Salary
The Company generally establishes base salary ranges by considering
compensation levels in similarly sized companies in the
resort/leisure/hospitality industry. The base salary targets are generally
established based upon industry survey results in light of the Company's
strategic goals compared to other publicly owned, growth-oriented companies.
The Company's current philosophy is to pay base salaries sufficient to attract
and retain executives with a broad, proven track record of performance.
The base salary and performance of each executive officer is reviewed
periodically (at least annually) by his or her immediate supervisor (or the
Committee, in the case of the CEO) resulting in salary actions as appropriate.
An executive officer's level of responsibility is the primary factor used in
determining base salary. Individual performance and industry information are
also considered in determining any salary adjustment. The Committee reviews
and approves all executive officer salary adjustments as recommended by the
CEO. The Committee reviews the performance of the CEO and establishes his base
salary.
Bonus Plan
In 1999, all Named Executive Officers were eligible for an annual bonus
under the Vail Resorts, Inc. annual cash bonus plan approved by the Board. For
1999, the performance measure selected by the Committee for cash bonuses was
the meeting of certain cash flow targets. In the event the Company's cash flow
for 1999, as
16
determined on both an aggregate and a divisional basis, met or exceeded
certain predetermined target levels, the appropriate divisional executive
participating in the plan could receive an incentive award for 1999. Such
awards are based upon salary level, the Committee's determination of the
individual's position and level of responsibility and the Committee's
assessment of the individual's impact upon the Company's financial success.
The Committee has absolute discretion in reducing or eliminating the amount of
an award for any individual included in the plan. No bonus compensation was
received by the executive officers in 1999, except cash bonuses were received
in 1999 by certain executive officers of Vail Resorts Development Company, the
Company's real estate subsidiary, which met its divisional targets. All
bonuses received by the Named Executive Officers are reflected in the Summary
Compensation Table.
Stock Option and Share Award Program
The Company's existing 1993 stock option plan and 1996 long-term incentive
and share award plan are designed to align management interests with those of
shareholders. In furtherance of this objective, the level of stock option
grants and restricted share awards for executive officers is determined by the
Committee each year, typically in consultation with the CEO except with
respect to the CEO himself. Awards for all employees (including all executive
officers) are determined by giving equal consideration to base salary, level
of responsibility and industry long-term compensation information. In order to
encourage increased Company performance in the future, the Company's stock
options vest in one-year increments over periods ranging from three to five
years, except that options granted to Mr. Aron can vest up to ten years from
the date of grant and are subject to certain vesting acceleration conditions.
CEO Compensation
Mr. Aron's compensation for 1999 consisted of base salary in addition to
participation in the Company benefit program. Mr. Aron's base salary for 1999
was paid in accordance with his employment agreement. At the time the Company
entered into Mr. Aron's agreement, the Committee gave consideration to chief
executive officer compensation in other publicly owned, growth-oriented and
similarly sized companies in comparable industries. Mr. Aron was granted
60,000 stock options in fiscal 1999 in recognition of his performance as Chief
Executive Officer and to provide incentive throughout the term of the option
to strive to operate the Company in a manner that directly affects both the
short term and long term interests of the stockholders. Mr. Aron currently has
645,000 stock options of which 156,000 were fully vested as of July 31, 1999
and the remaining 489,000 vest up to ten years from the date of grant, subject
to acceleration. All compensation received by Mr. Aron in 1999 is reflected in
the Summary Compensation Table.
Compensation Committee
Leon D. Black
Thomas H. Lee
Marc J. Rowan
17
Performance Graph
The following graph compares the performance of the Company's Common Stock to
The Russell 2000 Stock Index, The S&P 500 Stock Index and the Company's Peer
Group Index*.
[LINE GRAPH]
Measurement Period Russell S&P
(Fiscal Year Covered) MTN 2000 500 INDEX PEER GROUP*
- --------------------- ---------- ---------- --------- ----------
2/3/97 $100.00 $100.00 $100.00 $100.00
7/31/97 $109.94 $112.94 $121.10 $79.53
1/30/98 $119.89 $117.19 $124.40 $93.44
7/31/98 $121.88 $114.37 $142.22 $81.36
1/30/99 $96.59 $115.61 $162.65 $75.12
7/31/99 $83.24 $120.36 $168.89 $87.62
- --------
* The Company's Peer Group Index performance is weighted according to market
capitalization.
The total return graph is presented for the period since the Company's
initial public offering through the end of the Company's 1999 fiscal year. The
total stockholder return assumes that $100 is invested at the beginning of the
period in the Common Stock of the Company, The Russell 2000, The S&P 500 Stock
Index and the Company's Peer Group. The Company's Peer Group is comprised of
Circus Circus Enterprises, Inc., MGM Grand, Inc., Cedar Fair, L.P., Intrawest
Corp., Premier Parks, Inc. and American Skiing Company. The Company has
selected this Peer Group because these companies operate in the
Resort/Leisure/Hospitality sector and have market capitalizations in the $500
million to $1.6 billion range. The Company included the Russell 2000 in the
graph because the Company is included in such index and because there is no
established industry index for the Company's business. Total shareholder return
is weighted according to market capitalization so that companies with a larger
market capitalization have a greater impact on the Peer Group index results.
Historical stock performance during this period may not be indicative of future
stock performance.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the above Compensation Committee Report on Executive
Compensation and Performance Graph shall not be incorporated by reference into
any such filings.
18
PROPOSAL 2. APPROVAL OF THE ADOPTION OF THE VAIL RESORTS, INC. 1999 LONG
TERM INCENTIVE AND SHARE AWARD PLAN
On September 14, 1999, the Board of Directors of the Company adopted the
Vail Resorts, Inc. 1999 Long Term Incentive and Share Award Plan (the "Plan"),
effective that date. The primary purpose of the Plan is to make available
additional shares of Common Stock for awards under the Plan to attract and
retain well-qualified individuals to serve in key positions with the Company
and its subsidiaries by providing them with performance related incentives.
The authorized number of shares under the existing plans under which stock-
based awards have been made to employees and directors of the Company, the
1993 Stock Option Plan and the Vail Resorts, Inc. 1996 Long Term Incentive and
Share Award Plan (together the "Prior Plans") is limited to 3,545,510 shares
in the aggregate (2,045,510 under the 1993 plan and 1,500,000 under the 1996
plan). Currently, all or substantially all of the authorized shares under the
Prior Plans have been issued or are subject to outstanding options or
restricted stock awards. The Board of Directors believes that the continued
availability and use of performance-based incentives and stock-based awards as
an element of key employee compensation represents an important aspect in
promoting the future growth and profitability of the Company and its
subsidiaries. Consequently, in order to allow for additional awards to qualify
as performance-based compensation under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), the Board adopted the Plan.
The stockholders are now requested to approve the adoption of the Plan. The
following summary of the Plan is qualified in its entirety by express
reference to the Plan, which is attached as Appendix A to this Proxy
Statement.
General
The Plan is intended to provide incentives to attract, retain and motivate
employees, consultants and directors in order to achieve the Company's long-
term growth and profitability objectives. The Plan will provide for the grant
to eligible employees and directors of stock options, share appreciation
rights ("SARs"), restricted shares, restricted share units, performance
shares, performance units, dividend equivalents and other share-based awards
(the "Awards"). An aggregate of 2,500,000 shares of Common Stock has been
reserved for issuance under the Plan (of which during a calendar year: (i) the
maximum number of shares with respect to which options and SARs may be granted
to an eligible participant under the Plan will be 1,000,000 shares, and (ii)
the performance shares, performance units, restricted shares and restricted
units intended to qualify as performance-based compensation shall be not more
than the equivalent of 200,000 shares), subject to anti-dilution adjustments
in the event of certain changes in the Company's capital structure, as
described below. Shares issued pursuant to the Plan will be either authorized
but unissued shares or treasury shares.
Eligibility and Administration
Officers and other employees and consultants of the Company and its
subsidiaries and affiliates and directors of the Company will be eligible to
be granted Awards under the Plan. The Plan will be administered by the
Compensation Committee (or sub-committee thereof) or such other Board
committee (or the entire Board) as may be designated by the Board (the
"Committee"). The Committee will determine which eligible employees,
consultants and directors receive Awards, the types of Awards to be received
and the terms and conditions thereof. The Committee will have authority to
waive conditions relating to an Award or accelerate vesting of Awards. All of
our employees are currently eligible to participate in the Plan. The actual
number of employees who will receive awards under the Plan cannot be
determined because selection for participation in the Plan is in the sole
discretion of the Committee.
The Committee will be permitted to delegate to officers or other directors
of the Company the authority to perform administrative functions for the Plan
and, with respect to Awards granted to persons not subject to Section 16 of
the Exchange Act, to perform such other functions as the Committee may
determine to the extent permitted under Rule 16b-3 of the Exchange Act and
applicable law. If an Award is intended to be qualified as performance-based
compensation under Section 162(m) of the Code, the Committee may not increase
the amount of compensation payable if it would disqualify the Award under
Section 162(m) of the Code.
19
Awards
Incentive stock options ("ISOs") intended to qualify for special tax
treatment in accordance with the Code and nonqualified stock options not
intended to qualify for special tax treatment under the Code may be granted
for such number of shares of Common Stock as the Committee determines. The
Committee will be authorized to set the terms relating to an option, including
exercise price and the time and method of exercise. The terms of ISOs will
comply with the provisions of Section 422 of the Code. ISOs may only be
granted to employees. Awards may be granted alone, in tandem with or in
exchange for any other Award.
A SAR will entitle the holder thereof to receive with respect to each share
subject thereto, an amount equal to the excess of the fair market value of one
share of Common Stock on the date of exercise (or, if the Committee so
determines, at any time during a specified period before or after the date of
exercise) over the exercise price of the SAR set by the Committee as of the
date of grant. Payment with respect to SARs may be made in cash or shares of
Common Stock as determined by the Committee.
Awards of restricted shares will be subject to such restrictions on
transferability and other restrictions, if any, as the Committee may impose.
Such restrictions will lapse under circumstances as the Committee may
determine, including upon the achievement of performance criteria referred to
below. Except as otherwise determined by the Committee, eligible individuals
granted restricted shares will have all of the rights of a stockholder,
including the right to vote restricted shares and receive dividends thereon,
and unvested restricted shares will be forfeited upon termination of service
during the applicable restriction period.
A restricted share unit will entitle the holder thereof to receive shares of
Common Stock or cash at the end of a specified deferral period. Restricted
share units will also be subject to such restrictions as the Committee may
impose. Such restrictions will lapse under circumstances as the Committee may
determine, including upon the achievement of performance criteria referred to
below. Except as otherwise determined by the Committee, restricted share units
subject to deferral or restriction will be forfeited upon termination of
service during any applicable deferral or restriction period.
Performance shares and performance units will provide for future issuance of
shares or payment of cash, respectively, to the recipient upon the attainment
of corporate performance goals established by the Committee over specified
performance periods. Except as otherwise determined by the Committee,
performance shares and performance units will be forfeited upon termination of
service during any applicable performance period. Prior to payment of
performance shares or performance units, the Committee will certify that the
performance objectives were satisfied. Performance objectives may vary from
individual to individual and will be based upon such one or more performance
criteria as the Committee may deem appropriate, including: appreciation in
value of the Common Stock; total stockholder return; earnings per share;
operating income; net income; pro forma net income; return on equity; return
on designated assets; return on capital; economic value added; earnings;
revenues; expenses; operating profit margin; operating cash flow; and net
profit margin. The Committee may revise performance objectives if significant
events occur during the performance period which the Committee expects to have
a substantial effect on such objectives.
Dividend equivalents granted under the Plan will entitle the holder thereof
to receive cash, shares of Common Stock or other property equal in value to
dividends paid with respect to a specified number of shares of Common Stock.
Dividend equivalents may be awarded on a free-standing basis or in connection
with another Award, and may be paid currently or on a deferred basis. The
Committee is also authorized, subject to limitations under applicable law, to
grant such other Awards that may be denominated in, valued in, or otherwise
based on, shares of Common Stock, as deemed by the Committee to be consistent
with the purposes of the Plan.
Nontransferability
Unless otherwise set forth by the Committee in an award agreement, Awards
(except for vested shares) will generally not be transferable by the
participant other than by will or the laws of descent and distribution and
will
20
be exercisable during the lifetime of the participant only by such participant
or his or her guardian or legal representative.
Capital Structure Changes
If the Committee determines that any dividend, recapitalization, share
split, reorganization, merger, consolidation, spin-off, repurchase, or other
similar corporate transaction or event affects the Common Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of eligible participants under the Plan, then the Committee is
authorized to make such equitable changes or adjustments as it deems
appropriate, including adjustments to (i) the number and kind of shares which
may thereafter be issued under the Plan, (ii) the number and kind of shares,
other securities or other consideration issued or issuable in respect of
outstanding Awards and (iii) the exercise price, grant price or purchase price
relating to any Award.
Amendment and Termination
The Plan may be amended, suspended or terminated by the Board of Directors
at any time, in whole or in part. However, any amendment for which stockholder
approval is required by Section 422 of the Code will not be effective until
such approval has been attained. In addition, no amendment, suspension, or
termination of the Plan may materially and adversely affect the rights of a
participant under any Award theretofore granted to him or her without the
consent of the affected participant. The Committee may waive any conditions or
rights, amend any terms, or amend, suspend or terminate, any Award granted,
provided that, without participant consent, such amendment, suspension or
termination may not materially and adversely affect the rights of such
participant under any Award previously granted to him or her.
Effective Date and Term
The Plan will become effective as of September 14, 1999. Unless earlier
terminated, the Plan will expire on September 14, 2009, and no further awards
may be granted thereunder after such date.
Market Value
The per share closing price of the Common Stock on November 1, 1999 was
$22.00.
Federal Income Tax Consequences
The following is a summary of the federal income tax consequences of the
Plan, based upon current provisions of the Code, the Treasury regulations
promulgated thereunder and administrative and judicial interpretation thereof,
and does not address the consequences under any state, local or foreign tax
laws.
Stock Options
In general, the grant of an option will not be a taxable event to the
recipient and it will not result in a deduction to the Company. The tax
consequences associated with the exercise of an option and the subsequent
disposition of shares of Common Stock acquired on the exercise of such option
depend on whether the option is a nonqualified stock option or an ISO.
Upon the exercise of a nonqualified stock option, the participant will
recognize ordinary taxable income equal to the excess of the fair market value
of the shares of Common Stock received upon exercise over the exercise price.
The Company will generally be able to claim a deduction in an equivalent
amount. Any gain or loss upon a subsequent sale or exchange of the shares of
Common Stock will be capital gain or loss, long-term or short-term, depending
on the holding period for the shares of Common Stock.
Generally, a participant will not recognize ordinary taxable income at the
time of exercise of an ISO and no deduction will be available to the Company,
provided the option is exercised while the participant is an employee
21
or within three months following termination of employment (longer, in the
case of disability or death). If an ISO granted under the Plan is exercised
after these periods, the exercise will be treated for federal income tax
purposes as the exercise of a nonqualified stock option. Also, an ISO granted
under the Plan will be treated as a nonqualified stock option to the extent it
(together with other ISOs granted to the participant by the Company) first
becomes exercisable in any calendar year for shares of Common Stock having a
fair market value, determined as of the date of grant, in excess of $100,000.
If shares of Common Stock acquired upon exercise of an ISO are sold or
exchanged more than one year after the date of exercise and more than two
years after the date of grant of the option, any gain or loss will be long-
term capital gain or loss. If shares of Common Stock acquired upon exercise of
an ISO are disposed of prior to the expiration of these one-year or two-year
holding periods (a "Disqualifying Disposition"), the participant will
recognize ordinary income at the time of disposition, and the Company will
generally be entitled to a deduction, in an amount equal to the excess of the
fair market value of the shares of Common Stock at the date of exercise over
the exercise price. Any additional gain will be treated as capital gain, long-
term or short-term, depending on how long the shares of Common Stock have been
held. Where shares of Common Stock are sold or exchanged in a Disqualifying
Disposition (other than certain related party transactions) for an amount less
than their fair market value at the date of exercise, any ordinary income
recognized in connection with the Disqualifying Disposition will be limited to
the amount of gain, if any, recognized in the sale or exchange, and any loss
will be a long-term or short-term capital loss, depending on how long the
shares of Common Stock have been held.
If an option is exercised through the use of shares of Common Stock
previously owned by the participant, such exercise generally will not be
considered a taxable disposition of the previously owned shares and, thus, no
gain or loss will be recognized with respect to such previously owned shares
upon such exercise. The amount of any built-in gain on the previously owned
shares generally will not be recognized until the new shares acquired on the
option exercise are disposed of in a sale or other taxable transaction.
Although the exercise of an ISO as described above would not produce
ordinary taxable income to the participant, it would result in an increase in
the participant's alternative minimum taxable income and may result in an
alternative minimum tax liability.
Restricted Stock
A participant who receives shares of restricted stock will generally
recognize ordinary income at the time that they "vest", i.e., either when they
are not subject to a substantial risk of forfeiture or when they are freely
transferable. The amount of ordinary income so recognized will be the fair
market value of the Common Stock at the time the income is recognized
(determined without regard to any restrictions other than restrictions which
by their terms will never lapse), less the amount, if any, paid, for the
stock. This amount is generally deductible for federal income tax purposes by
the Company. Dividends paid with respect to Common Stock that is
nontransferable will be ordinary compensation income to the participant (and
generally deductible by the Company). Any gain or loss upon a subsequent sale
or exchange of the shares of Common Stock, measured by the difference between
the sale price and the fair market value on the date restrictions lapse, will
be capital gain or loss, long-term or short-term, depending on the holding
period for the shares of Common Stock. The holding period for this purpose
will begin on the date following the date restrictions lapse.
In lieu of the treatment described above, a participant may elect immediate
recognition of income under Section 83(b) of the Code. In such event, the
participant will recognize as income the fair market value of the restricted
stock at the time of grant (determined without regard to any restrictions
other than restrictions which by their terms will never lapse), and the
Company will generally be entitled to a corresponding deduction. Dividends
paid with respect to shares as to which a proper Section 83(b) election has
been made will not be deductible to the Company. If a Section 83(b) election
is made and the restricted stock is subsequently forfeited, the participant
will not be entitled to any offsetting tax deduction.
22
SARs and Other Awards
With respect to SARs, restricted share units, performance shares,
performance units dividend equivalents and other Awards under the Plan not
described above, generally, when a participant receives payment with respect
to any such Award granted to him or her under the Plan, the amount of cash and
the fair market value of any other property received will be ordinary income
to such participant and will be allowed as a deduction for federal income tax
purposes to the Company.
Payment of Withholding Taxes
The Company may withhold, or require a participant to remit to the Company,
an amount sufficient to satisfy any federal, state or local withholding tax
requirements associated with Awards under the Plan.
Deductibility Limit on Compensation in Excess of $1 Million
Section 162(m) of the Code generally limits the deductible amount of annual
compensation paid (including, unless an exception applies, compensation
otherwise deductible in connection with Awards granted under the Plan) by a
public company to a "covered employee" (i.e., the chief executive officer and
four other most highly compensated executive officers of the Company) to no
more than $1 million. The Company currently intends to structure stock options
granted and other Awards made under the Plan to comply with an exception to
nondeductibility under Section 162(m) of the Code.
New Plan Benefits
Following adoption of the Plan by the Board of Directors, the Board of
Directors approved grants of stock options under the Plan to the Named
Executive Officers as follows:
Number of Exercise Price Number of Exercise Price
Name Options Per Share Options Per Share
- ---- --------- -------------- --------- --------------
Adam M. Aron................. 60,000 $19.0625 65,000 $21.1250
Andrew P. Daly............... 27,000 19.0625 23,000 21.1250
James P. Donohue............. 21,000 19.0625 4,000 21.1250
James S. Mandel.............. 12,000 19.0625 -- --
James P. Thompson............ 21,000 19.0625 -- --
Executive Officers as a group
(13 persons, including those
named above)................ 214,500 19.0625 128,000 21.1250
Options to purchase 71,500 shares, described in the foregoing table, at an
exercise price of $19.0625 will become exercisable in September 2000, with
options to purchase an additional 71,500 shares becoming exercisable in each
of 2001 and 2002. Options to purchase 42,668 shares, described in the
foregoing table, at an exercise price of $21.1250 will become exercisable in
September 2000, with options to purchase an additional 42,666 shares becoming
exercisable in each of 2001 and 2002.
In addition to the stock options granted to the executive officers, as set
forth above, the Board of Directors has granted options to purchase an
aggregate of 397,500 shares of Common Stock to approximately 350 management
employees under the Plan. Except as set forth above, no other awards have been
granted under the Plan. The grants of all of the existing awards to the
executive officers are subject to shareholder approval of the Plan. Benefits
accruing pursuant to the above awards are not presently determinable.
23
Vote Required for Approval
The affirmative vote of the holders of a majority of the shares represented
in person or by proxy and entitled to vote on this matter is required for this
proposal to be adopted. Apollo Ski Partners and Ralcorp, two of the Company's
largest shareholders, owning over 43% of the shares entitled to vote in the
aggregate, have informed the Company that they intend to vote all of their
shares in favor of the approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
PLAN.
PROPOSAL 3. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, based on the recommendation of the Audit Committee,
voted to retain Arthur Andersen LLP to serve as independent public accountants
for the fiscal year ended July 31, 2000. Arthur Andersen expects to have a
representative at the 1999 Annual Meeting of Shareholders who will have the
opportunity to make a statement and who will be available to answer
appropriate questions.
It is understood that even if the appointment is ratified, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board of Directors believes
that such a change would be in the best interests of the Company and its
shareholders.
Vote Required For Approval
The affirmative vote of the holders of a majority of the shares represented
in person or by proxy and entitled to vote on this matter is required for this
proposal to be adopted.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
INDEPENDENT PUBLIC ACCOUNTANTS.
FUTURE SHAREHOLDER PROPOSALS
FOR 2000 ANNUAL MEETING
The deadline for shareholders to submit proposals pursuant to Rule 14a-8 of
the Exchange Act for inclusion in the Company's proxy statement and proxy for
the 2000 Annual Meeting of Shareholders is July 16, 2000. The date after which
notice of a shareholder proposal submitted outside of the processes of Rule
14a-8 of the Exchange Act will be considered untimely is September 29, 2000.
If notice of a shareholder proposal submitted outside of the processes of Rule
14a-8 of the Exchange Act is received by the Company after September 29, 2000,
then the Company's proxy for the 2000 Annual Meeting may confer discretionary
authority to vote on such matter without any discussion of such matter in the
proxy statement for the 2000 Annual Meeting.
24
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors has no knowledge
of any business other than that described herein which will be presented for
consideration at the meeting. In the event any other business is presented at
the meeting, the persons named in the enclosed proxy will vote such proxy
thereon in accordance with their judgment in the best interests of the
Company.
By Order of the Board of Directors
/s/ Martha D. Rehm
Martha D. Rehm
Senior Vice President, General Counsel
and Secretary
November 10, 1999
25
APPENDIX A
VAIL RESORTS, INC.
1999 LONG TERM INCENTIVE AND SHARE AWARD PLAN
1. Purposes.
The purposes of the 1999 Long Term Incentive and Share Award Plan are to
advance the interests of Vail Resorts, Inc. and its shareholders by providing
a means to attract, retain, and motivate employees, consultants and directors
of the Company upon whose judgment, initiative and efforts the continued
success, growth and development of the Company is dependent.
2. Definitions.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board or the Committee as a
participating employer under the Plan, provided that the Company directly
or indirectly owns at least 20% of the combined voting power of all classes
of stock of such entity or at least 20% of the ownership interests in such
entity.
(b) "Award" means any Option, SAR, Restricted Share Unit, Performance
Share, Performance Unit, Dividend Equivalent, or Other Share-Based Award
granted to an Eligible Person under the Plan.
(c) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts which have
been designated by such Eligible Person in his or her most recent written
beneficiary designation filed with the Company to receive the benefits
specified under this Plan upon the death of the Eligible Person, or, if
there is no designated Beneficiary or surviving designated Beneficiary,
then the person, persons, trust or trusts entitled by will or the laws of
descent and distribution to receive such benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Code"means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
(g) "Committee" means the Compensation Committee of the Board or a
subcommittee thereof, or such other Board committee (which may include the
entire Board) as may be designated by the Board to administer the Plan, or
if the Board so designates, the entire Board.
(h) "Company" means Vail Resorts, Inc., a corporation organized under the
laws of Delaware, or any successor corporation.
(i) "Director" means a member of the Board who is not an employee of the
Company, a Subsidiary or an Affiliate.
(j) "Dividend Equivalent" means a right, granted under Section 5(g), to
receive cash, Shares, or other property equal in value to dividends paid
with respect to a specified number of Shares. Dividend Equivalents may be
awarded on a free-standing basis or in connection with another Award, and
may be paid currently or on a deferred basis.
(k) "Eligible Person" means (i) an employee or consultant of the Company,
a Subsidiary or an Affiliate, including any director who is an employee, or
(ii) a Director.
A-1
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and regulations thereunder.
(m) "Fair Market Value" means, with respect to Shares or other property,
the fair market value of such Shares or other property determined by such
methods or procedures as shall be established from time to time by the
Committee. If the Shares are listed on any established stock exchange or a
national market system, unless otherwise determined by the Committee in
good faith, the Fair Market Value of Shares shall mean the mean between the
high and low selling prices per Share on the immediately preceding date
(or, if the Shares were not traded on that day, the next preceding day that
the Shares were traded) on the principal exchange on which the Shares are
traded, as such prices are officially quoted on such exchange.
(n) "ISO" means any option intended to be and designated as an incentive
stock option within the meaning of Section 422 of the Code.
(o) "NQSO" means any Option that is not an ISO.
(p) "Option" means a right granted under Section 5(b), to purchase
Shares.
(q) "Other Share-Based Award" means a right, granted under Section 5(h),
that relates to or is valued by reference to Shares.
(r) "Participant" means an Eligible Person who has been granted an Award
under the Plan.
(s) "Performance Share" means a performance share granted under Section
5(f).
(t) "Performance Unit" means a performance unit granted under Section
5(f).
(u) "Plan" means this 1999 Long Term Incentive and Share Award Plan.
(v) "Restricted Shares" means an Award of Shares under Section 5(d) that
may be subject to certain restrictions and to a risk of forfeiture.
(w) "Restricted Share Unit" means a right, granted under Section 5(e), to
receive Shares or cash at the end of a specified deferral period.
(x) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(y) "SAR" or "Share Appreciation Right" means the right, granted under
Section 5(c), to be paid an amount measured by the difference between the
exercise price of the right and the Fair Market Value of Shares on the date
of exercise of the right, with payment to be made in cash, Shares, or
property as specified in the Award or determined by the Committee.
(z) "Shares" means common stock, $.01 par value per share, of the
Company.
(aa) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns
shares possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee, and the Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions
of the Plan:
(i) to select Eligible Persons to whom Awards may be granted;
(ii) to designate Affiliates;
A-2
(iii) to determine the type or types of Awards to be granted to each
Eligible Person;
(iv) to determine the type and number of Awards to be granted, the number
of Shares to which an Award may relate, the terms and conditions of any
Award granted under the Plan (including, but not limited to, any exercise
price, grant price, or purchase price, and any bases for adjusting such
exercise, grant or purchase price, any restriction or condition, any
schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability, or settlement of an Award,
and waiver or accelerations thereof, and waivers of performance conditions
relating to an Award, based in each case on such considerations as the
Committee shall determine), and all other matters to be determined in
connection with an Award;
(v) to determine whether, to what extent, and under what circumstances an
Award may be settled, or the exercise price of an Award may be paid, in
cash, Shares, other Awards, or other property, or an Award may be canceled,
forfeited, exchanged, or surrendered;
(vi) to determine whether, to what extent, and under what circumstances
cash, Shares, other Awards, or other property payable with respect to an
Award will be deferred either automatically, at the election of the
Committee, or at the election of the Eligible Person;
(vii) to prescribe the form of each Award Agreement, which need not be
identical for each Eligible Person;
(viii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any
Award, rules and regulations, Award Agreement, or other instrument
hereunder;
(x) to accelerate the exercisability or vesting of all or any portion of
any Award or to extend the period during which an Award is exercisable; and
(xi) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or
advisable for the administration of the Plan.
(b) Manner of Exercise of Committee Authority. The Committee shall have sole
discretion in exercising its authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, Subsidiaries, Affiliates, Eligible
Persons, any person claiming any rights under the Plan from or through any
Eligible Person, and shareholders. The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee
may delegate to other members of the Board or officers or managers of the
Company or any Subsidiary or Affiliate the authority, subject to such terms as
the Committee shall determine, to perform administrative functions and, with
respect to Awards granted to persons not subject to Section 16 of the Exchange
Act, to perform such other functions as the Committee may determine, to the
extent permitted under Rule 16b-3 (if applicable) and applicable law.
(c) Limitation of Liability. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished
to him or her by any officer or other employee of the Company or any
Subsidiary or Affiliate, the Company's independent certified public
accountants, or other professional retained by the Company to assist in the
administration of the Plan. No member of the Committee, nor any officer or
employee of the Company acting on behalf of the Committee, shall be personally
liable for any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Committee and any
officer or employee of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company with
respect to any such action, determination, or interpretation.
A-3
(d) Limitation on Committee's Discretion. Anything in this Plan to the
contrary notwithstanding, in the case of any Award which is intended to
qualify as "performance-based compensation" within the meaning of Section
162(m)(4)(C) of the Code, if the Award Agreement so provides, the Committee
shall have no discretion to increase the amount of compensation payable under
the Award to the extent such an increase would cause the Award to lose its
qualification as such performance-based compensation.
4. Shares Subject to the Plan.
(a) Subject to adjustment as provided in Section 4(c) hereof, the total
number of Shares reserved for issuance in connection with Awards under the
Plan shall be 2,500,000. No Award may be granted if the number of Shares to
which such Award relates, when added to the number of Shares previously issued
under the Plan, exceeds the number of Shares reserved under the preceding
sentence. If any Awards are forfeited, canceled, terminated, exchanged or
surrendered or such Award is settled in cash or otherwise terminates without a
distribution of Shares to the Participant, any Shares counted against the
number of Shares reserved and available under the Plan with respect to such
Award shall, to the extent of any such forfeiture, settlement, termination,
cancellation, exchange or surrender, again be available for Awards under the
Plan. Upon the exercise of any Award granted in tandem with any other Awards,
such related Awards shall be canceled to the extent of the number of Shares as
to which the Award is exercised.
(b) Subject to adjustment as provided in Section 4(c) hereof, the maximum
number of Shares (i) with respect to which Options or SARs may be granted
during a calendar year to any Eligible Person under this Plan shall be
1,000,000 Shares, and (ii) with respect to Performance Shares, Performance
Units, Restricted Shares or Restricted Share Units intended to qualify as
performance-based compensation within the meaning of Section 162(m)(4)(C) of
the Code shall be the equivalent of 200,000 Shares during a calendar year to
any Eligible Person under this Plan.
(c) In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Eligible Persons under the Plan, then the Committee shall make such
equitable changes or adjustments as it deems appropriate and, in such manner
as it may deem equitable, adjust any or all of (i) the number and kind of
shares which may thereafter be issued under the Plan, (ii) the number and kind
of shares, other securities or other consideration issued or issuable in
respect of outstanding Awards, and (iii) the exercise price, grant price, or
purchase price relating to any Award; provided, however, in each case that,
with respect to ISOs, such adjustment shall be made in accordance with
Section 424(a) of the Code, unless the Committee determines otherwise. In
addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria and performance objectives included in, Awards
in recognition of unusual or non-recurring events (including, without
limitation, events described in the preceding sentence) affecting the Company
or any Subsidiary or Affiliate or the financial statements of the Company or
any Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles; provided, however, that, if an Award
Agreement specifically so provides, the Committee shall not have discretion to
increase the amount of compensation payable under the Award to the extent such
an increase would cause the Award to lose its qualification as performance-
based compensation for purposes of Section 162(m)(4)(C) of the Code and the
regulations thereunder.
(d) Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares including Shares
acquired by purchase in the open market or in private transactions.
5. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in
this Section 5. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to
A-4
Section 7(d)), such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
regarding forfeiture of Awards or continued exercisability of Awards in the
event of termination of service by the Eligible Person.
(b) Options. The Committee is authorized to grant Options, which may be
NQSOs or ISOs, to Eligible Persons on the following terms and conditions:
(i) Exercise Price. The exercise price per Share purchasable under an
Option shall be determined by the Committee, and the Committee may, without
limitation, set an exercise price that is based upon achievement of
performance criteria if deemed appropriate by the Committee.
(ii) Option Term. The term of each Option shall be determined by the
Committee.
(iii) Time and Method of Exercise. The Committee shall determine at the
date of grant or thereafter the time or times at which an Option may be
exercised in whole or in part (including, without limitation, upon
achievement of performance criteria if deemed appropriate by the
Committee), the methods by which such exercise price may be paid or deemed
to be paid (including, without limitation, broker-assisted exercise
arrangements), the form of such payment (including, without limitation,
cash, Shares, notes or other property), and the methods by which Shares
will be delivered or deemed to be delivered to Eligible Persons.
(iv) ISOs. The terms of any ISO granted under the Plan shall comply in
all respects with the provisions of Section 422 of the Code, including but
not limited to the requirement that the ISO shall be granted within ten
years from the earlier of the date of adoption or shareholder approval of
the Plan. ISOs may only be granted to employees of the Company or a
Subsidiary.
(c) SARs. The Committee is authorized to grant SARs (Share Appreciation
Rights) to Eligible Persons on the following terms and conditions:
(i) Right to Payment. An SAR shall confer on the Eligible Person to whom
it is granted a right to receive with respect to each Share subject
thereto, upon exercise thereof, the excess of (1) the Fair Market Value of
one Share on the date of exercise (or, if the Committee shall so determine
in the case of any such right, the Fair Market Value of one Share at any
time during a specified period before or after the date of exercise) over
(2) the exercise price of the SAR as determined by the Committee as of the
date of grant of the SAR (which, in the case of an SAR granted in tandem
with an Option, shall be equal to the exercise price of the underlying
Option).
(ii) Other Terms. The Committee shall determine, at the time of grant or
thereafter, the time or times at which an SAR may be exercised in whole or
in part, the method of exercise, method of settlement, form of
consideration payable in settlement, method by which Shares will be
delivered or deemed to be delivered to Eligible Persons, whether or not an
SAR shall be in tandem with any other Award, and any other terms and
conditions of any SAR. Unless the Committee determines otherwise, an SAR
(1) granted in tandem with an NQSO may be granted at the time of grant of
the related NQSO or at any time thereafter and (2) granted in tandem with
an ISO may only be granted at the time of grant of the related ISO.
(d) Restricted Shares. The Committee is authorized to grant Restricted
Shares to Eligible Persons on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Shares shall be subject to such
restrictions on transferability and other restrictions, if any, as the
Committee may impose at the date of grant or thereafter, which restrictions
may lapse separately or in combination at such times, under such
circumstances (including, without limitation, upon achievement of
performance criteria if deemed appropriate by the Committee), in such
installments, or otherwise, as the Committee may determine. Except to the
extent restricted under the Award Agreement relating to the Restricted
Shares, an Eligible Person granted Restricted Shares shall have all of the
rights of a shareholder including, without limitation, the right to vote
Restricted Shares and the right to receive dividends thereon. If the lapse
of restrictions is conditioned on the
A-5
achievement of performance criteria, the Committee shall select the
criterion or criteria from the list of criteria set forth in Section
5(f)(i). The Committee must certify in writing prior to the lapse of
restrictions conditioned on achievement of performance criteria that such
performance criteria were in fact satisfied.
(ii) Forfeiture. Except as otherwise determined by the Committee, at the
date of grant or thereafter, upon termination of service during the
applicable restriction period, Restricted Shares and any accrued but unpaid
dividends or Dividend Equivalents that are at that time subject to
restrictions shall be forfeited; provided, however, that the Committee may
provide, by rule or regulation or in any Award Agreement, or may determine
in any individual case, that restrictions or forfeiture conditions relating
to Restricted Shares will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of Restricted Shares.
(iii) Certificates for Shares. Restricted Shares granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Shares are registered in the name of
the Eligible Person, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Shares, and the Company shall retain physical possession of the
certificate.
(iv) Dividends. Dividends paid on Restricted Shares shall be either paid
at the dividend payment date, or deferred for payment to such date as
determined by the Committee, in cash or in unrestricted Shares having a
Fair Market Value equal to the amount of such dividends. Shares distributed
in connection with a Share split or dividend in Shares, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Shares with respect to
which such Shares or other property has been distributed.
(e) Restricted Share Units. The Committee is authorized to grant Restricted
Share Units to Eligible Persons, subject to the following terms and
conditions:
(i) Award and Restrictions. Delivery of Shares or cash, as the case may
be, will occur upon expiration of the deferral period specified for
Restricted Share Units by the Committee (or, if permitted by the Committee,
as elected by the Eligible Person). In addition, Restricted Share Units
shall be subject to such restrictions as the Committee may impose, if any
(including, without limitation, the achievement of performance criteria if
deemed appropriate by the Committee), at the date of grant or thereafter,
which restrictions may lapse at the expiration of the deferral period or at
earlier or later specified times, separately or in combination, in
installments or otherwise, as the Committee may determine. If the lapse of
restrictions is conditioned on the achievement of performance criteria, the
Committee shall select the criterion or criteria from the list of criteria
set forth in Section 5(f)(i). The Committee must certify in writing prior
to the lapse of restrictions conditioned on the achievement of performance
criteria that such performance criteria were in fact satisfied.
(ii) Forfeiture. Except as otherwise determined by the Committee at date
of grant or thereafter, upon termination of service (as determined under
criteria established by the Committee) during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as provided
in the Award Agreement evidencing the Restricted Share Units), or upon
failure to satisfy any other conditions precedent to the delivery of Shares
or cash to which such Restricted Share Units relate, all Restricted Share
Units that are at that time subject to deferral or restriction shall be
forfeited; provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual
case, that restrictions or forfeiture conditions relating to Restricted
Share Units will be waived in whole or in part in the event of termination
resulting from specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Restricted Share Units.
A-6
(f) Performance Shares and Performance Units. The Committee is authorized to
grant Performance Shares or Performance Units or both to Eligible Persons on
the following terms and conditions:
(i) Performance Period. The Committee shall determine a performance
period (the "Performance Period") of one or more years and shall determine
the performance objectives for grants of Performance Shares and Performance
Units. Performance objectives may vary from Eligible Person to Eligible
Person and shall be based upon one or more of the following performance
criteria as the Committee may deem appropriate: appreciation in value of
the Shares, total shareholder return, earnings per share, operating income,
net income, pro forma net income, return on equity, return on designated
assets, return on capital, economic value added, earnings, revenues,
expenses, operating profit margin, operating cash flow, net profit margin.
The performance objectives may be determined by reference to the
performance of the Company, or of a Subsidiary or Affiliate, or of a
division or unit of any of the foregoing. Performance Periods may overlap
and Eligible Persons may participate simultaneously with respect to
Performance Shares and Performance Units for which different Performance
Periods are prescribed.
(ii) Award Value. At the beginning of a Performance Period, the Committee
shall determine for each Eligible Person or group of Eligible Persons with
respect to that Performance Period the range of number of Shares, if any,
in the case of Performance Shares, and the range of dollar values, if any,
in the case of Performance Units, which may be fixed or may vary in
accordance with such performance or other criteria specified by the
Committee, which shall be paid to an Eligible Person as an Award if the
relevant measure of Company performance for the Performance Period is met.
The Committee must certify in writing that the applicable performance
criteria were satisfied prior to payment under any Performance Shares or
Performance Units.
(iii) Significant Events. If during the course of a Performance Period
there shall occur significant events as determined by the Committee which
the Committee expects to have a substantial effect on a performance
objective during such period, the Committee may revise such objective;
provided, however, that, if an Award Agreement so provides, the Committee
shall not have any discretion to increase the amount of compensation
payable under the Award to the extent such an increase would cause the
Award to lose its qualification as performance-based compensation for
purposes of Section 162(m)(4)(C) of the Code and the regulations
thereunder.
(iv) Forfeiture. Except as otherwise determined by the Committee, at the
date of grant or thereafter, upon termination of service during the
applicable Performance Period, Performance Shares and Performance Units for
which the Performance Period was prescribed shall be forfeited; provided,
however, that the Committee may provide, by rule or regulation or in any
Award Agreement, or may determine in an individual case, that restrictions
or forfeiture conditions relating to Performance Shares and Performance
Units will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Performance Shares and Performance
Units.
(v) Payment. Each Performance Share or Performance Unit may be paid in
whole Shares, or cash, or a combination of Shares and cash either as a lump
sum payment or in installments, all as the Committee shall determine, at
the time of grant of the Performance Share or Performance Unit or
otherwise, commencing as soon as practicable after the end of the relevant
Performance Period. The Committee must certify in writing prior to the
payment of any Performance Share or Performance Unit that the performance
objectives and any other material terms were in fact satisfied.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Eligible Persons. The Committee may provide, at the date of
grant or thereafter, that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional Shares,
or other investment vehicles as the Committee may specify, provided that
Dividend Equivalents (other than freestanding Dividend Equivalents) shall be
subject to all conditions and restrictions of the underlying Awards to which
they relate.
A-7
(h) Other Share-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Persons such other
Awards that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Shares, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, unrestricted shares awarded purely as a "bonus" and not subject to
any restrictions or conditions, other rights convertible or exchangeable into
Shares, purchase rights for Shares, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the
Committee, and Awards valued by reference to the performance of specified
Subsidiaries or Affiliates. The Committee shall determine the terms and
conditions of such Awards at date of grant or thereafter. Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 5(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation,
cash, Shares, notes or other property, as the Committee shall determine. Cash
awards, as an element of or supplement to any other Award under the Plan,
shall also be authorized pursuant to this Section 5(h).
6. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible
Persons either alone or in addition to, in tandem with, or in exchange or
substitution for, any other Award granted under the Plan or any award granted
under any other plan or agreement of the Company, any Subsidiary or Affiliate,
or any business entity to be acquired by the Company or a Subsidiary or
Affiliate, or any other right of an Eligible Person to receive payment from
the Company or any Subsidiary or Affiliate. Awards may be granted in addition
to or in tandem with such other Awards or awards, and may be granted either as
of the same time as or a different time from the grant of such other Awards or
awards. The per Share exercise price of any Option, grant price of any SAR, or
purchase price of any other Award conferring a right to purchase Shares which
is granted, in connection with the substitution of awards granted under any
other plan or agreement of the Company or any Subsidiary or Affiliate or any
business entity to be acquired by the Company or any Subsidiary or Affiliate,
shall be determined by the Committee, in its discretion.
(b) Terms of Awards. The term of each Award granted to an Eligible Person
shall be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any ISO or an SAR granted in
tandem therewith exceed a period of ten years from the date of its grant (or
such shorter period as may be applicable under Section 422 of the Code).
(c) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made
in such forms as the Committee shall determine at the date of grant or
thereafter, including, without limitation, cash, Shares, or other property,
and may be made in a single payment or transfer, in installments, or on a
deferred basis. The Committee may make rules relating to installment or
deferred payments with respect to Awards, including the rate of interest to be
credited with respect to such payments.
(d) Nontransferability. Unless otherwise set forth by the Committee in an
Award Agreement, Awards (except for vested shares) shall not be transferable
by an Eligible Person except by will or the laws of descent and distribution
(except pursuant to a Beneficiary designation) and shall be exercisable during
the lifetime of an Eligible Person only by such Eligible Person or his
guardian or legal representative. An Eligible Person's rights under the Plan
may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and
shall not be subject to claims of the Eligible Person's creditors.
7. General Provisions.
(a) Compliance with Legal and Trading Requirements. The Plan, the granting
and exercising of Awards thereunder, and the other obligations of the Company
under the Plan and any Award Agreement, shall be subject
A-8
to all applicable federal and state laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may be required. The
Company, in its discretion, may postpone the issuance or delivery of Shares
under any Award until completion of such stock exchange or market system
listing or registration or qualification of such Shares or other required
action under any state or federal law, rule or regulation as the Company may
consider appropriate, and may require any Participant to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Shares in compliance with
applicable laws, rules and regulations. No provisions of the Plan shall be
interpreted or construed to obligate the Company to register any Shares under
federal or state law.
(b) No Right to Continued Employment or Service. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee, consultant
or director the right to be retained in the employ or service of the Company
or any of its Subsidiaries or Affiliates, nor shall it interfere in any way
with the right of the Company or any of its Subsidiaries or Affiliates to
terminate any employee's, consultant's or director's employment or service at
any time.
(c) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Person, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Eligible
Persons to satisfy obligations for the payment of withholding taxes and other
tax obligations relating to any Award. This authority shall include authority
to withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Person's tax obligations.
(d) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant
Awards under the Plan without the consent of shareholders of the Company or
Participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall be subject to the approval of the
Company's shareholders to the extent such shareholder approval is required
under Section 422 of the Code; provided, however, that, without the consent of
an affected Participant, no amendment, alteration, suspension,
discontinuation, or termination of the Plan may materially and adversely
affect the rights of such Participant under any Award theretofore granted to
him or her. The Committee may waive any conditions or rights under, amend any
terms of, or amend, alter, suspend, discontinue or terminate, any Award
theretofore granted, prospectively or retrospectively; provided, however,
that, without the consent of a Participant, no amendment, alteration,
suspension, discontinuation or termination of any Award may materially and,
adversely affect the rights of such Participant under any Award theretofore
granted to him or her.
(e) No Rights to Awards; No Shareholder Rights. No Eligible Person or
employee shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Eligible Persons and
employees. No Award shall confer on any Eligible Person any of the rights of a
shareholder of the Company unless and until Shares are duly issued or
transferred to the Eligible Person in accordance with the terms of the Award.
(f) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided, however, that the
Committee may authorize the creation of trusts or make other arrangements to
meet the Company's obligations under the Plan to deliver cash, Shares, other
Awards, or other property pursuant to any Award, which trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan unless
the Committee otherwise determines with the consent of each affected
Participant.
(g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt
such other incentive arrangements as it may deem desirable, including, without
limitation, the granting of options and other awards otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
A-9
(h) Not Compensation for Benefit Plans. No Award payable under this Plan
shall be deemed salary or compensation for the purpose of computing benefits
under any benefit plan or other arrangement of the Company for the benefit of
its employees, consultants or directors unless the Company shall determine
otherwise.
(i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of Colorado without giving effect to
principles of conflict of laws.
(k) Effective Date; Plan Termination. The Plan shall become effective as of
September 14, 1999 (the "Effective Date"). The Plan shall terminate as to
future awards on the date which is ten (10) years after the Effective Date.
(l) Titles and Headings. The titles and headings of the sections in the Plan
are for convenience of reference only. In the event of any conflict, the text
of the Plan, rather than such titles or headings, shall control.
A-10
P
R
O
X
Y
VAIL RESORTS, INC.
137 Benchmark Road, Avon, Colorado 81620
Proxy Solicited on Behalf of the Board of Directors of the Company
for the Annual Meeting of Shareholders--December 14, 1999
The undersigned holder of CLASS A COMMON STOCK hereby constitutes and appoints
Andrew P. Daly, James P. Donohue and Martha D. Rehm, and each of them, the
undersigned's true and lawful agents and proxies with full power of substitution
in each, to represent the undersigned at the Annual Meeting of Shareholders of
VAIL RESORTS, INC. to be held at the W New York Hotel, 541 Lexington Avenue, New
York, New York 10022, on Tuesday, December 14, 1999 at 10:00 A.M. Eastern
Standard Time and at any adjournments thereof, in all matters coming before said
meeting.
(Change of Address/Comments)
Election of Class 1 Directors, Nominees:
Leon D. Black, Craig M. Cogut, Andrew P. Daly,
------------------------
Robert A. Katz, William L. Mack, Antony P. Ressler,
------------------------
Marc J. Rowan, John J. Ryan III, Bruce H. Spector
------------------------
You are encouraged to specify your choices by marking in the appropriate boxes
but you need not mark any boxes if you wish to vote in accordance with the Board
of Directors' recommendations. Please complete, sign and return this proxy card
promptly. [SEE REVERSE SIDE]
[I plan to attend the meeting.]
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, this proxy will be
voted FOR Proposals 1, 2, 3 and 4.
1. Election of Class 1 Directors
FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY [ ]
(except as marked to to vote for all
the contrary below) nominees listed
(To withhold vote for any individual nominee write that name below.)
- -------------------------------------------------------------------
2. Approval of the Vail Resorts, Inc. 1999
Long Term Incentive and Share Award Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of appointment of Arthur Andersen LLP as independent public
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, upon other matters as they properly come before the
meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please mark, sign and return promptly
using the enclosed envelope. Executors,
administrators, trustees, etc. should
give full title as such. If the signer
is a corporation, please sign full
corporate name by duly authorized
officer.
---------------------------------------
, 1999
---------------------------------
SIGNATURE(S) DATED
P
R
O
X
Y
VAIL RESORTS, INC.
137 Benchmark Road, Avon, Colorado 81620
Proxy Solicited on Behalf of the Board of Directors of the Company
for the Annual Meeting of Shareholders--December 14, 1999
The undersigned holder of COMMON STOCK hereby constitutes and appoints Andrew P.
Daly, James P. Donohue and Martha D. Rehm, and each of them, the undersigned's
true and lawful agents and proxies with full power of substitution in each, to
represent the undersigned at the Annual Meeting of Shareholders of VAIL RESORTS,
INC. to be held at the W New York Hotel, 541 Lexington Avenue, New York, New
York 10022, on Tuesday, December 14, 1999 at 10:00 A.M. Eastern Standard Time
and at any adjournments thereof, in all matters coming before said meeting.
(Change of Address/Comments)
Election of Class 2 Directors, Nominees:
Adam M. Aron, Frank J. Biondi, Stephen C. Hilbert,
----------------------
Thomas H. Lee, Joe R. Micheletto, John F. Sorte,
----------------------
William P. Stiritz, James S. Tisch
----------------------
You are encouraged to specify your choices by marking in the appropriate boxes
but you need not mark any boxes if you wish to vote in accordance with the Board
of Directors' recommendations. Please complete, sign and return this proxy card
promptly. [SEE REVERSE SIDE]
[I plan to attend the meeting].
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, this proxy will be
voted FOR Proposals 1, 2, 3 and 4.
1. Election of Class 2 Directors
FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY [ ]
(except as marked to to vote for all
the contrary below) nominees listed
(To withhold vote for any individual nominee write that name below.)
- -------------------------------------------------------------------
2. Approval of the Vail Resorts, Inc. 1999
Long Term Incentive and Share Award Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of appointment of Arthur Andersen LLP as independent public
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, upon other matters as they properly come before the
meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please mark, sign and return promptly
using the enclosed envelope.
Executors, administrators, trustees,
etc. should give full title as such.
If the signer is a corporation,
please sign full corporate name by
duly authorized officer.
-------------------------------------
------------------------------ , 1999
SIGNATURE(S) DATED
