Board of Trustees Meeting Minutes September 11, 2004








MINUTES OF MEETING – Draft Pending Approval

September 11, 2004


After due notice, a meeting of the board of trustees of the Mad River Glen Cooperative was convened at 8:00 AM on September 11, 2004 on the 3 rd floor of the Basebox at Mad River Glen Ski Area in Fayston , Vermont .


Trustees Alan Moats (Board Chair), Jay Appleton, Paul Finnerty, Bill Reynolds, Mary Schramke, Leigh Michl, Rick Moulton, Deb Steines, and Jed Kalkstein were present. No trustees were absent. Also present was President Jamey Wimble, Eric Friedman, Sharon Crawford as well as several shareholders. Steve Kantor, new Co-op counsel, arrived partway through the meeting.



Board Chair Alan Moats called the meeting to order at 8:00 AM .



Upon motion duly made by Alan Moats and seconded by Paul Finnerty, it was unanimously


VOTED: To accept the minutes of the July 3, 2004 board of trustee meeting, with one typographical correction.



Several shareholders expressed concern and dismay regarding the elimination the discount price on the seasons pass purchases by a shareholder’s spouse as well as the increase in the seasons pass price. Comments related to the fact that the “second pass” discount had been a tradition, it was now more expensive to ski at Mad River , and it reduced the financial attractiveness of owning a share in the Co-op. Shareholders wondered what factors had been taken into consideration and whether there were alternatives, such as a $600 APR (versus the present $200 APR). Shawn Kalkstein noted that there were still numerous methods for affordable skiing at Mad River for shareholders who could not justify a season’s pass.


Mr. Moats commented that the Co-op is successful, but that the finances are very thin, especially in light of future capital requirements such as the Single Chair. Jamey deferred to his comments to Deb Steines, Vice Chair and a member of the Finance Committee. Ms. Steines commented that the Finance Committee had pressed management for several years to examine the possibility of eliminating the second pass discount. She also commented that a shareholder’s spouse was not, in fact a shareholder. Jay Appleton commented that, although the second pass discount was eliminated, the board had enacted a smaller pass price increase than recommended by management (and the Finance Committee) and that the board had also increased the discount available to shareholders in connection with the elimination of the second pass discount. It was widely noted by the board and Mr. Wimble that Mad River does not have the capacity to fight price wars since all of our income is made through skiing – other areas operate at a loss (particularly last year) and make it up in other revenue producing areas, such as real estate.


Leigh Michl commented that this had been only the second seasons pass price increase in the history of the Co-op and that being a shareholder is not a financial investment – the return on investment from owning a share is ensuring the preservation of the Mad River ski experience, not get discounts.


Shareholders expressed dismay about the Mad Card and Kids Under 12 Ski Free Program. Mr. Michl commented that the Mad Card/Kids Ski free is arguably 100% of Mad River ’s annual operating income (measured by direct financial contribution and not indirect spending, such as spending in the Basebox or increased future share sales by skiers introduced to the mountain through the program). For instance, children skiers enroll in seasonal programs ($500 per child) and ski school lessons. Mr. Wimble commented that the Mad Card is the most profitable lift ticket for the mountain – a $42 a day yield versus the $33 per day average price implied by the $99 Mad Card purchase price. He also noted that discounts to shareholders were over $42,000 per year, a major percentage of our annual income.


Messrs. Michl and Moats, commented that we have a unique business model – we can only make money on skiing. Mr. Michl commented that our costs are carefully managed, we are at skier capacity, and that leaves pricing as the only lever to achieve financial stability. The board evaluated second pass discounts versus even larger day price or pass price increases to achieve the financial targets required for sustainable operations.



Mr. Wimble presented a written report on developments during the prior month (copy attached). Mr. Appleton commended management on the Stark Mountain-financed effort to plant trees as a wind break in the flat area to the skier’s left of the main double. The employees at Mad River had expended a significant effort to get the trees in the ground. There were other questions related to the area’s preparedness for the coming ski season.




Mr. Wimble provided the board with income statements for the month of August (copy attached). In response to a question from Ms. Steines, Mr. Wimble indicated that higher 2003-2004 costs were related to insurance and the single breakdown. The Co-op’s cash is about $300K, including the single reserve. Mr. Wimble noted that the annual low point in cash during August and September, at which APR and pass sale revenues are realized and cash builds again.




Mr. Michl introduced the topic of whether the board should amend its present share redemption practice. Currently, the Co-op redeems shares at the earlier of (1) when 10 new shares are sold or (2) six months. Therefore, even though the Co-op sold 42 shares year to date, 34 shares had been redeemed – $59,500 was paid to redeeming shareholders to date in the 2004 Fiscal Year and $151,000 paid to date in the history of the Co-op (see attached). In light of difficult pricing decisions necessary to achieve financial stability, Mr. Michl indicated that this seemed like too great of a loss of cash for the Co-op.


Mr. Moats noted that there may have been implications that shares were redeemable. Ms. Steines noted that the long range plan specified the need for 20 share sales a year, net of redemptions, to be sustainable. However, only 8 net shares were sold this year.


Rick Moulton thought share redemptions could be stemmed by making it more attractive to own a share and be more aggressive in selling shares. Ms. Steines reiterated her belief that the benefit of owning a share is being able to ski Mad River , as was stressed in the Strategic Plan. Mr. Michl stressed the need to pay for the Single, an amount that was large and unknown. And until that financial requirement were known and/or paid for, he felt that the Co-op should slow the cash expended on share redemptions.


Mr. Michl proposed a motion (for future consideration) that, until the Single Chair renovation was deemed affordable by the Co-op, the share redemption practice would be the shorter of 10 new shares sold or six months, provided that the Co-op had a net 20 shares sold per year.


Rocky Bleier advocated additional borrowing to provide the Co-op with necessary cash so that shareholders could redeem when they desired. Mr. Moats noted that there was an obligation to shareholders to avoid the risk of debt. He also noted that these difficult questions would likely not result in an easy answer with a consensus, but a composite solution.


Mr. Michl noted that this issue could be resolved as part of an overall review of the financial model at the Strategic Planning update meeting to be held.




Mr. Wimble indicated that he was still waiting for some details and the final engineering report on the Single restoration option. Specifically, more engineering reviews needed to be done. In addition, non-destructive testing of the tower bases may take place in the fall. He indicated that the largest variable in the restoration option was the condition of the tower bases – which, if replacement where needed, could result in a $300K – $400K cost swing. He indicated that the engineering report is not available but that the engineer’s “marching orders” were to review restoration as a “50 year fix”, not a “10 year fix”. Mr. Wimble stated that the engineering review was being made with an eye toward the maintaining the present aesthetics supplemented with largely hidden, tramway code-oriented safety improvements.


Mr. Moats asked the Finance Committee to review the financial preparedness of the Co-op. Jed Kalkstein noted that should consider implementing a bond offering now. Mr. Michl noted that there was a cost and long lead time on bond issuances, but that it might make sense to wait on the offering until the exact cash requirement were known. Ms. Steines noted that the prior bond offering yielded much less than expectations ($120K versus $300K) and that only 22 shareholders had purchased bonds, of which the majority of money came from a handful of shareholders.


There was a general discussion of whether the restoration could be completed in phases. Mr. Wimble noted that the Single is a serious issue, but that it doesn’t require immediate renovations. He also noted that bank debt was available in the event of an emergency, based on his discussions with lenders. Other financial resources included share sales (which had been successful in the past during times of financial need) and the Stark Mountain Foundation.


In terms of the timeline, Mr. Wimble stated that it looked unlikely that he would be in a position to have a package available at Green and Gold during October 2004. A shareholder “straw poll” could be completed in November with results reviewed and discussed at the December Town Meeting. Rick Moulton favored a board recommendation as part of the straw poll – to which the board was in agreement. The question could be formalized on the April 2005 shareholder ballot.




The board decided to hold its annual review of the Strategic Plan at 8am on November 13, 2004 , with a board meeting to follow that same afternoon.




Mr. Moats stressed the need of the board to represent shareholders and ensure that communications opportunities are maximized. He noted that the board had established an email account for shareholders ( that would provide direct communication from shareholders to the board. There was also a question regarding the extent to which discussions of proprietary information (e.g., marketing plans) should be shared publicly and potentially made available to competitors/vendors. Some discussions are clearly private such as employee matters and ongoing negotiations. Another question was whether individual board members should be able to state their own opinions publicly.


Mr. Michl noted that there was unanimous agreement among the trustees that the board should have informed shareholders with a high sense of goodwill toward the Co-op. He noted that the questions were how to achieve that objective without chaos or hurting management’s ability to do its job. Messrs. Michl and Moulton noted that individual trustees were presently prohibited from speaking individually, without the approval of the board. Mr. Kalkstein noted that he ran for the board out of frustration, as a shareholder, over the inability to learn what was happening at the Co-op and being able to participate in decisions.


Mary Schramke felt that additional communication should be made with respect to how decisions were made, but that once decisions were made, it was important that trustees were supportive and not “agitating” to undermine decisions. Bill Reynolds noted that the opportunity for a trustee’s dissent existed and the time the appropriate time for debate is at board meetings.


Mr. Appleton noted that, in his experience in municipal government, policies regarding communication are strict and limited. He also felt that an objective of the board should be to seek shareholder participation in advance of decisions by the board.


There was a clarifying discussion of the board’s current policy regarding communications by trustees, particularly on the list serve. Mr. Michl stated that the current policy required a majority of the trustees or, in certain limited instances, a majority of the Executive Committed, prior to a trustee’s written communication. He also stated that the intent of the policy was to ensure that (1) inaccuracies were not created or perpetuated by trustees and (2) an individual trustee was not representing that they were speaking for the entire board. The policy was not to limit a trustee’s ability to communicate. The trustees sought clarification of this policy with respect to individual, “one-on-one” oral communications with shareholders. The consensus of the trustees was that those individual discussions with shareholders were productive but that care should be made to avoid unprofessional discussions or discussions intended on undermining actions of the board.


Mr. Moats asked whether the board should be more active in the list serve or whether it existed for intra-shareholder communications. In light of the fact that the list serve participation had grown to about 600 shareholders, the board felt that clarifications and statements to keep discussions on track would be helpful and that individual statements by trustees would be permissible within the policy of seeking advanced approval from the other trustees.


Mr. Wimble stated his opinion that there were already numerous methods and channels of communications to shareholders and that that abundance often created confusion. He also stated that he would provide the board with additional comments and questions from shareholders.


The board’s goal of getting more shareholder input ahead of decisions was not completed and was tabled to a future meeting.





20 th Hole – Mad River Corporation is requesting currently a $3.0 million for the land versus a $1.3 million fully exploited (developed) value and a $900K recent tax assessment. With parties so far apart, negotiations were not being pursued.


Executive Committee – The Executive Committee confirmed the recommendation of the Trustee/Management counsel search. Peter Monte, Jamey Wimble, Bill Reynolds, and Paul Finnerty participated in the search and recommended that the Executive Committee hire Steve Kantor as Co-op counsel.


There were no other committee reports.




Rocky Bleier noted that tremendous progress had been made with respect to openness and communications in the Co-op and by the board in particular, but that more should be done. Shawn Kalkstein stated his opinion that the Chair should speak on behalf of the board and the every effort should be made to proactively disseminate information and solicit feedback, rather than just react to the list serve.



There was no Executive Session and, there being no further business to come before the board, the meeting adjourned at 12:03 PM .


Respectfully submitted, Leigh Michl


A true record.



ATTEST: __________________________________________

Leigh Michl, Secretary

Mad River Glen

Management Report

Saturday September 11, 2004



  • The wet month of August has put the outside guy’s behind schedule but all schedule maintenance should be completed no problem.
  • 17 Balsam Furs were planted between towers 7 & 8 on lift 2 and 3 were planted in the base area for aesthetics.
  • We had a fair amount of lightning damage to lift 2 this summer. We have added lightning protection to the lift and made other modifications to the drive to protect it. Will add this to capital.
  • City Market News, a newsletter for the Hunger Mountain Coop will be doing a profile on us in an upcoming issue. We will continue to add more Coops to our off-site programs.



  • We will not add a new POS system. We are upgrading the existing one. This will cost around $6,000. Most all-Capital projects are complete and went well.



  • Neal Berwick has been hired as Administrator of communications and information. New title but this replaces Andrew Snows position. Neal comes to us from Middlebury College.
  • Steve Kantor, of Doremus & Kantor will be our new legal council. Steve is a Shareholder and the firm has a grate reputation.


Share Sales:  

  • Sold 4 shares in the month of August against a budget of 1. We have sold 42 shares YTD against a budget of 39. We have tendered 34 shares for a net of 8 share sold.



  • August came in on budget. Projected year-end numbers are + or – $175,000. We have $300,000 in the bank. $225,000 is single reserve. Another $75,000 will go to the reserve when September closes out. We will receive about $400,000 by mid October in pre-season sales. Auditors will be here starting September 29 th. I hope to have a draft of the 04 audit by the November meeting.

Financial Reports:

Year to Date

          Oct ’03 – Aug 04   Budget   $ Over Budget
  Ordinary Income/Expense          
        Basebox 359,794.52   310,900.00   48,894.52
        Day Tickets 908,518.08   935,488.00   -26,969.92
        Gear Page 1,095.00        
        Interest 6,335.81   7,300.00   -964.19
        Marketing 27,980.65   36,700.00   -8,719.35
        Other Income 51,550.90   2,900.00   48,650.90
        Rental Income 30,425.11   30,000.00   425.11
        Season Passes 520,365.30   531,027.27   -10,661.97
        Services Income 352,890.51   301,126.27   51,764.24
        362.1 · Special Events-Taxable 10% 3,981.65   3,600.00   381.65
      Total Income 2,262,937.53   2,159,041.54   103,895.99
      Cost of Goods Sold          
        Co-op Discount 37,428.69   35,600.00   1,828.69
        Employee Discount 1,909.75        
      Total COGS 39,338.44   35,600.00   3,738.44
    Gross Profit 2,223,599.09   2,123,441.54   100,157.55
        Basebox Expense 283,940.99   209,160.00   74,780.99
        Cooperative Expenses 22,715.74   43,115.00   -20,399.26
        Credit Card Service Charges 29,400.35   28,985.00   415.35
        Facilities Expense 562,463.72   566,223.00   -3,759.28
        Gear Page Expense 0.00        
        Insurance/Property Tax 321,507.99   299,730.77   21,777.22
        Marketing Expense 159,156.01   161,457.47   -2,301.46
        Office/Admin. Expense 222,857.03   223,800.01   -942.98
        Other Expense 63,853.52   41,291.92   22,561.60
        Payroll Tax Expenses 98,079.85   93,926.87   4,152.98
        Services Expense 234,322.12   177,616.00   56,706.12
        Share Marketing Expense 0.00        
        535 · Capital In Progress Burden 5.70        
        545 · Housing Expense 548.43   2,000.00   -1,451.57
        821 · Transportation 225.20        
        821.1 · Transportation Wage 180.00        
        850 · Short & Over 0.92        
      Total Expense 1,999,257.57   1,847,306.04   151,951.53
  Net Ordinary Income 224,341.52   276,135.50   -51,793.98
  Other Income/Expense          
    Other Expense          
      Depreciation 203,394.62        
      Amortization 9,150.13        
    Total Other Expense 212,544.75        
  Net Other Income -212,544.75   0.00   -212,544.75
Net Income   11,796.77   276,135.50   -264,338.73


          Aug 04   Budget   $ Over Budget
  Ordinary Income/Expense          
        Basebox 0.00   500.00   -500.00
        Day Tickets 0.00   0.00   0.00
        Interest 182.16   500.00   -317.84
        Marketing 0.00   0.00   0.00
        Other Income 25.00   0.00   25.00
        Rental Income 252.32   0.00   252.32
        Season Passes 0.00   0.00   0.00
        Services Income 2,866.00   2,000.00   866.00
        362.1 · Special Events-Taxable 10% 0.00   0.00   0.00
      Total Income 3,325.48   3,000.00   325.48
      Cost of Goods Sold          
        Co-op Discount 0.00   0.00   0.00
      Total COGS 0.00   0.00   0.00
    Gross Profit 3,325.48   3,000.00   325.48
        Basebox Expense 1,068.66   350.00   718.66
        Cooperative Expenses 1,073.60   2,190.00   -1,116.40
        Credit Card Service Charges 628.32   200.00   428.32
        Facilities Expense 29,119.34   37,622.00   -8,502.66
        Gear Page Expense 0.00        
        Insurance/Property Tax 27,858.94   26,319.64   1,539.30
        Marketing Expense 4,044.99   3,870.50   174.49
        Office/Admin. Expense 15,991.99   14,366.99   1,625.00
        Other Expense 399.05   114.72   284.33
        Payroll Tax Expenses 3,489.61   4,244.51   -754.90
        Services Expense 4,864.14   2,635.00   2,229.14
      Total Expense 88,538.64   91,913.36   -3,374.72
  Net Ordinary Income -85,213.16   -88,913.36   3,700.20
  Other Income/Expense          
    Other Expense          
      Depreciation 18,490.42        
      Amortization 831.83        
    Total Other Expense 19,322.25        
  Net Other Income -19,322.25   0.00   -19,322.25
Net Income   -104,535.41   -88,913.36   -15,622.05

Mad River Glen Coop

Opening and Closing Guidelines

Revised June 2004



Since the Coop purchased the ski area, there has been some confusion as to what are the decision making factors in deciding to open or close the mountain. The following are the guidelines that management will use to make these important decisions.

These guidelines will primarily apply to periods outside the normal operating season. (Dec 15 to the second weekend in April) The mountain will remain open inside this time frame as long as there is sufficient snow cover and the mountain is deemed safe to ski by mountain personnel.


This document is a guideline for management to use. Management needs flexibility to make sound business decisions when deemed necessary for the well being of the mountain.


Factors to Consider:


1. Skier Safety

Skier safety is not well defined; management and some skiers might have very different opinions as to what constitutes skier safety. Management considers the mountain safe for skiing when there is adequate snow cover to ski top to bottom without risking skier’s safety. Safety concerns include water bars and large stumps or rocks and that adequate turns can be made on a trail in order to maintain skier control. It is also important to remember that Vermont Tramway code requires that anytime a lift is operating there has to be enough staff to evacuate a lift in two hours if the lift becomes inoperable. Mountain transportation is a critical part of this.


2. The well being of the mountain terrain

The well being of the mountain relates to what damage the mountain may suffer from ski or equipment traffic on the terrain. Trail surfaces should be frozen so tracks do not tear up the ground. Snow depth has relevance in this category; 8” is significantly different then 3”.

Another aspect of the well being of terrain criteria is whether the trail system support multi-day skiing with the snow cover in place and forecasted weather. This relates to opening more than closing but is a criterion which has to be evaluated.


3. Season Pass Holders

An important criterion is the season pass holder who has paid in advance for a season of skiing. The mountain wishes to give pass holders the highest number of ski days for their loyalty and commitment. This is much easier to address in early season as there is pent-up demand. In the late season, the same level of demand may not exist and management will monitor pass holders’ usage of the ski area.


4. Financial

Financial is a straightforward criterion – Will enough revenue be generated to cover the cost of operations?


The cost to ski the main mountain per day is:

Wages $1,428

Fuel $300

Maintenance $260

Total $1,988


Number of tickets required to break-even @ $35.00 (Early & Late season rate) = 57


This does not account for any losses that may be being encored in the ancillary departments. The figure also does not account for variance in ticket yield, which would likely be less due to junior and senior tickets, half day tickets and other discounts.


5. Staffing

Staffing relates to the availability of staff and the ability to give staff proper notice so they can plan their work schedules not only at Mad River Glen but the jobs they are leaving or going too.


It should be remembered that in early season the mountain operations staff could be on split shift for snowmaking, meaning some of the staff might be working 12-hour night shifts, unavailable for lift duty.


Early and late season, all services would run with the exception of Ski School


How the Decision Will Be Made:

Management states that the factors of skier safety, well being of terrain and staffing be left to their judgment in accessing early season opening or late season closing with the following guidelines:

  • Top to bottom skiing required
  • Skiing has to be sustainable, lasting for a period of days
  • Groomers have to be able to travel the mountain safely and without damage to the terrain (This is a safety issue in that an accident or maintenance issue may require a groomer on the mountain.)
  • Financial, recognizing that a dollar for dollar return is unlikely, management will use a benchmark of 50% of the cost has to be covered, 28 paid day tickets. This partly judgmental in that the decision to open or stay open assumes a level of activity. If that activity does not materialize then management may reverse its decision.

If management believes skiing is sustainable, it will open the mountain anytime after Thanksgiving. It will keep the mountain open in the spring as long as there is demand to meet half the cost of operating.


Notification of Decision:

Being that the decision to open or close will be made almost on a moment’s notice, the following avenues will be used to notify skiers of the mountain’s opening and closing:Post to ski report, faxed and snow phone

  • Post to Website,
  • Post to list server, all lists
  • Posting at mountain at base of lifts and in Basebox, works well with closing
  • Press releases – faxed