In bracing for the economic impact that will likely be a winter season encumbered by continued COVID-19 outbreaks, Aspen Skiing Co. has had to follow suit with much of the resort industry in cutting some employee benefits in order to manage expenses.
In an email sent to employees July 31, SkiCo CEO Mike Kaplan outlined three arenas in which salaried employees can expect changes to their compensation package: a suspension of 401(k) contributions, a one-week furlough and no budgeted bonuses.
It wasn’t an easy decision, Kaplan told the Aspen Daily News in an interview last week. But by every estimation, it was the most progressive one with the least immediate damage. And, as with so many things when navigating an unknown and ever-changing landscape amid a pandemic, nothing is permanent.
“All three of these things can still be earned and can hopefully be brought back. But [it’s] the responsible thing to do, given the uncertainty that we’re facing and the need to be proactive in addressing it,” Kaplan said.
By “earn,” he means revenue.
“If we exceed our targets, we’ll at the end of the year say, ‘You know what? We hit our targets, and the uncertainty was clarified — it wasn’t as we thought it might be,’” Kaplan said. “It gets complicated, but at the end of the year, we could say, ‘We can do a lump sum into your 401(k).’”
No longer matching 401(k) contributions is by far the largest financial hit to salaried employees, he acknowledged, especially given the importance of compound interest in long-term wealth accumulation.
“The 401(k) … is the biggest financial issue there,” Kaplan said. “But employees’ take-home pay won’t be affected by that decision. Obviously, their savings are — and it’s not something we want to do and maybe we can recoup that in the future — but this is a way we can meaningfully save some money without affecting people’s take-home pay.”
The other thinking, he noted, was that salaried employees are hopefully in a stronger financial position than seasonal, hourly staff, and so the harder management decisions related to expenses intentionally focused on the former because they were seen as more resilient to shorter-term changes. For instance, while salaried employees should not expect bonuses unless the aforementioned revenue targets are met, hourly and seasonal bonus and commission programs will continue to be funded.
“These are tough decisions, so we try to take as progressive approach as possible,” Kaplan said.
The unpaid week off is currently slated for the third week in October and is intended to mirror the company’s “spring break” program that’s existed the last two years, which similarly requires unpaid time off during the off-season.
“The differences this year are the program will apply only to salaried employees, and we are asking employees to take the week off without the benefit of using paid vacation or personal days,” the company-wide email explains. “We are informing you now of this program so you have time to plan and budget for this time off — scheduled for the week of October 19, 2020. As in the past, if this week will not work for your schedule, we will be reviewing alternative dates on a case-by-case basis.”
SkiCo is certainly not the first to announce such decisions. By late March, Vail Resorts CEO Rob Katz sent a letter outlining furloughs for most hourly employees and salary reductions. Additionally, shareholders — Vail Resorts is a publicly traded company — saw a suspension of dividend payments between July and October. The company also paused payments to Katz and the board of directors.
Kaplan emphasized the importance of unity and patience in surviving the uncertain.
“We’re all in this together,” he said. “I get it, but we’re all in a different situation right now, and we’ll get ours in — we as a community, when I say that. We all need to be patient and stay above the fray.”
Staff writer Erica Robbie contributed to this story.