Board Meeting Minutes: July 14, 2007
Board of Trustees
Meeting
Minutes – Saturday,
July 14, 2007
Draft – Pending
Review
After due notice, a meeting of the Board of Trustees of the
Mad River Glen Cooperative was convened at 8:10 a.m. on Saturday, July 14th,
2007 on the third floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston, Vermont.
Trustees Jay Appleton, Paul Finnerty, Jed Kalkstein, Eric
Schoenholz (phone), Rick Moulton, Lars Bruns, Bill Reynolds, and Geordie Hall
were present. Steve Mackenzie was absent.
Also present was President Jamey Wimble. There were three shareholders in attendance including
Betsy Pratt and Bob Rodgers.
CALL TO ORDER:
Jay Appleton, chair, called the meeting to order at 8:10 a.m.
REVIEW OF MINUTES:
Regarding the draft June 2nd minutes, Bill Reynolds moved to
accept the minutes, Rick Moulton seconded. All trustees present approved the June 2nd
minutes as-is, without changes by a vote
of 8-0.
OPENING SHAREHOLDER COMMENTARY: None.
MANAGEMENT REPORT:
Jamey announced good news on the new “Triple Major” college
pass. MRG will team with Bolton Valley
and Jay Peak
to offer unlimited skiing at Jay, Bolton, and
MRG for $269, for full-time college students.
Eric Friedman had been working on this deal since January. This pass will entitle students to full
access to all three resorts with no blackouts. MRG will receive a portion of the revenue
from all Triple Major passes sold. When questioned about having to share our
Middlebury College nitch, Jamey explained that the revenue coming to MRG from
the sale of these joint passes would be reviewed next year to see if it indeed
provided a boost to the college segment over last season’s numbers.
Mountain crews have been focusing on lift maintenance this
month. Mowing is planned for
August. The mountain crew will be
involved in the Single work thereafter in September and October.
New maintenance – we need to replace a sewage line from near
patrol room to pumping station as a pipe has collapsed. Hartigan will be onsite to replace the pipe this
coming week or next at a cost of ~$3,000.
Share sales: We have
sold 124 shares YTD, with 0 in June and 4 (so far) in July. There have been two financial hardship cases that
have requested information on share redemption.
We are waiting to hear back from these shareholders if they desire to
redeem these shares.
SINGLE CHAIR PROJECT:
The work is on schedule according to CTEC. All rock anchors have been installed from the
top down to Tower 9. The Chute footings
are pinned/anchored right into rock. All
of this work is done by hand. The existing
footings will be broken up, scattered, hayed, and seeded. Towers are returning from Maine where they have been sandblasted and
painted. Jamey is very pleased with the
job they’re doing on the towers they really look great.
The total number of chairs on the line must be changed from
158 to 147 due to weight changes on the line.
The lift must maintain a proper bull wheel slippage ratio, and additional
work on the upper mountain counterweight is required for this as well as the
chair quantity change. This change is
required due to the ANSII code and is needed since the new chairs weigh ~50
pounds more than the original chairs. The
chairs are heavier due to changes in the gauge of steel and grip adaptation
requirements. This chair count change
will not result in any change to uphill capacity because the chairs will be
further apart which will allow the lift to run slightly faster, decreasing the
ride time slightly.
There are late penalties that are applied to CTEC if the
lift is not load tested in October and the punch list is not complete by
November. The lift should be ready to go
for Green and Gold weekend. Final
scheduled contract construction complete date is 10/15.
COOP FINANCIAL:
June was ~$10k under budget.
We’re currently in a slightly better cash position due to stronger share
sales than what was reported at the Annual Meeting We’ll need
to begin using the bank loan for the Single in approximately 3 weeks for CTEC
payments.
Geordie mentioned that a note will be included in the APR
mailing with a request/reminder to shareholders to please consider sending in payments
on their 2007 pledges as soon as possible as opposed to waiting until the end
of the year. Pledges received earlier in
the year will help reduce the interest expense the cooperative will incur as we
begin drawing against the line of credit needed to pay CTEC.
June financials were reviewed. Lars requested a follow-up on the Fayston tax
line item. Lars will re-examine and
discuss with Eric S. and Jamey.
SINGLE CHAIR CAMPAIGN:
Jamey reviewed the
financials year to date. The cooperative
currently has ~$612k cash from PTV & SMF foundations. Salvage monies account for $246k (from old chairs)
and raffle funds account for $31k.
Construction payments to CTEC are in progress with $588k paid to date. Campaign costs have run about $98k so far.
Geordie talked about significant planning that is underway
regarding Green and Gold and the Single Chair Campaign. We are planning on a full kick-start for the
campaign again this fall, timed with Green and Gold weekend. This will be focused on solicitations as only
~35% of shareholders have given to the Single so far. We are shooting for 100% participation. Geordie mentioned that they are planning for
a function for Green and Gold weekend to thank the tower donors and tower donor
solicitors. Replica plaques will be
given to these donors that weekend.
Chair donors will be able to ride their chairs from 9-10am on Green and
Gold Saturday. A draft all-donor plaque listing
will be made available to confirm/change donor names for corrections and
clarifications. The full and complete all-donor
plaque won’t be complete for another year or so. There are still 2 towers left, so sponsor
your tower now! We are also planning on another
campaign mailing in the fall, and may potentially combine this with the mountain’s
area guide mailing.
The board discussed the initial telemarketing campaign this
past spring. Many board members
volunteered and made suggestions regarding another round of calling. Another telemarketing campaign may be coming
around again this fall. Bill asked to
see if we can confirm/check the shareholder information for
correctness/completeness. Lars suggested
calling when the mountain is open. Jamey mentioned that the office staff tries to
keep the shareholder directory information up to date (including addresses and
phone numbers) and in synch as best they can.
Lars reported on the MRG booth at the Farmers market. Bill commented that new puppies work really well
to get people to the booth. Generally we
get from 20-40 conversations with people per Saturday. We really need more volunteers, especially
for August. Last weekend, shareholder Deb
Steines talked with someone from a ski lift preservation trust which may be
considering a donation.
Geordie announced that there will be a full solicitors
meeting on the Sunday of Green and Gold, weekend. This will be a short meeting from ~10:30am to
11am, with a free BBQ chicken ticket for each solicitor in attendance.
BYLAW DISCUSSION:
As a reminder, Jay noted that any Board action on bylaw
discussions require a shareholder notice.
The outcome of today’s discussions could result in a notice that the Board
would propose a bylaw change at the next Board meeting on Sept 8th.
Section 9.6 – Share Redemption: Regarding terminology, Jay reminded everyone
that the “Carrying value of a share” is
what the shareholder paid. The “net book
value per share” is the balance sheet book value of the coop divided by number
of shares outstanding. Section 9.6
specifies that the amount redeemed is the lesser of the two.
Geordie opened the discussion stating that he finds it hard
to understand why we can sell shares at $2000 and redeem them for less. For example, when the net book value per
share is less, if a person bought a share and then redeemed it a few months
later, the redemption value (according to the bylaws) would be at a price lower
than the shareholder purchase price. Geordie
supports suspending redemptions at this time…but is concerned about the message
and moral perspective in redeeming shares at a price lower than the purchase
price. Geordie stated he was concerned about the ethical perspective with
redemption as stated in the bylaws. Geordie
felt that the current bylaws do not represent the true spirit of Mad River
during shareholder redemption when the Coop’s book value per share is less than
a shareholders purchase price.
Geordie stated that he still feels that the bylaws should be
revised so that the redemption value is the carrying value, however understands
and will support the Board’s position not to make any changes to the bylaws. The board discussed the interpretation of
redemption language in the bylaws at length.
The other Board members in attendance felt that the
redemption value calculation of section 9.6 is in the best interests of the
Co-op in the long term because the business risk is allocated evenly across all
shareholders. Board members discussed redemption from a fairness perspective as
well and generally supported that all shareholders should be treated
equally. Section 9.6 means that if one
redeems during low revenue years, then one gets less back than during
profitable years, but one can not get back more than they paid. Other Board
members pointed out that if the Co-op did poorly for several years in a row,
then redeeming at the carrying vale (what you paid) could cause a “run on the
bank” when people try to get their money out before the Co-op runs out of
money. Paul Finnerty said that redeeming
at the carrying value only creates two classes of stockholders because if the
Co-op went bankrupt, then the shareholders at the end would get nothing
back. Therefore he suggested that redeeming
solely at the carrying value is probably illegal.
Shareholder Betsy Pratt mentioned that the Coop was created
for the advance sale. Her problem was
with the tough snow years and an energy crisis.
She discussed the importance of the advance sale w/ families and how
much the mountain needed the clubs and the families. Betsy mentioned that the purpose behind the
shares was to receive steady income. She
discussed redemption values and APRs.
Betsy felt that the APR is very important for the coop’s financial
health.
The Board decided to take no action, and redeem shares
according to section 9.6 as written. The
Board recognized that in the past it was
not made clear to shareholders how the bylaws define the redemption share
value. Although no action or motion was
made, it was suggested that there be better communication of the redemption
clause in the bylaws to current and future shareholders. Jamey mentioned that we have clarified our
shareholder prospectus question and answer document to better clarify the
bylaws. Eric Schoenholz took an action
item to work on talking points to share with board members. He will work Eric F. and Jamey so that
everyone can understand and communicate the bylaws consistently.
Section 2.1- Advance Purchase Requirement (APR): Jay discussed the existing bylaws section
2.1, specifically the clause of the APR annual amount “maximum commitment shall
be increased” yearly. The cooperative
has not changed the APR ($200) since inception in 1995.
Eric Schoenholz mentioned that this came up at a Finance
Committee meeting and that the Board may want to consider changing the words
“shall” to “may”. Eric Schoenholz moved
and Jed seconded to consider formal discussion and approval of a bylaw change
question for the 2008 ballot at the next Board meeting. Additional discussion of the motion continued
regarding the bylaw wording.
Rick commented that the Bylaws have stood the test of time
and that any changes should be considered with care.
Lars suggested that the words, "maximum annual
commitment", define a ceiling that the APR can be raised to. Therefore the "shall" refers to the
ceiling if the APR is increased. It does
not require annual increases. A lengthy
discussion ensued regarding CPI clause and APR increases being allowed to be
cumulative from (since) 1995 or only allowable going back one prior year. The Board decided to table Eric Schoenholz’s
motion, pending additional legal perspective regarding interpretation of bylaws
language in Section 2.1 regarding “maximum annual commitment”.
SHARE REDEMPTION SUSPENSION:
Eric Schoenholz discussed the recommendation from the
Finance Committee to continue the suspension of share redemptions due to the Co-op’s
need to use a line of credit to fund the completion of the Single Chair
project. Geordie motioned to accept the
Finance’s recommendation, Bill Reynolds seconded it. The boarded voted 8-0 in favor of accepting
the recommendation to continue suspending share redemptions at this time. This item will be revisited at the next Board
meeting on September 8th.
LONG
RANGE
CAPITAL PLANNING:
Eric Schoenholz described a Finance committee initiative
regarding long range financial scenario planning related to planned capital
expenditures. Eric Schoenholz and the
Finance Committee have requested Jamey to update the future facilities upkeep/maintenance
capital expenditure plan to understand the cooperative’s future spending needs
and potential impacts to cash flow. This
update will include priorities for the projects. Jamey is currently in the
process of updating the mountain’s capital planned spending requirements
through 2020. The Finance committee will
then work on scenario planning for these capital projects. Eric Schoenholz and a Finance Committee
sub-committee will look at these future spending plans and initiatives and
prepare this information for the strategic planning discussion scheduled for
the November Board meeting.
The Board discussed this initiative. Jamey’s updated plan will be reviewed and
discussed with the Facilities committee before the November Board meeting while
the Finance committee will work on cash flow scenarios.
COMMITTEE REPORTS:
There were no new items from Finance committee. The Executive committee discussed a hardship
request for share redemption. Although more
information was provided to the shareholder, a formal request for redemption
has not yet been received from the shareholder.
NEW BUSINESS:
Jamey mentioned that there may be a request coming re:
single Campaign where the Coop may be asked to indemnify a donation through
SMF. Jamey asked if the Board would
approve the Executive Committee making the final approval. Jed made a motion to empower the executive
committee to make the final call, Geordie seconded the motion. The board approved the motion by a vote of
8-0.
CLOSING SHAREHOLDER COMMENTS:
Shareholder Bill Heinzerling asked about the new/increased
cost of the Single due to change orders.
Jamey mentioned that to date, the
total change order costs are about $28,000.
The need to purchase a new cable for the line accounted for $18,000 of
that cost. CTEC picked up the remaining
$36,000 of the cost of the new cable. We
also expect a credit (not specified at this time) because of the decrease in
the number of chairs being provided.
NEXT MEETING:
Upon review of the calendar, it was determined that the next
meeting of the Board will be on Saturday, September 8th at 8am on
the third floor of the Basebox at Mad River Glen Ski Area (“MRG”) in Fayston,
Vermont.
ADJOURNMENT:
Jay made a motion to adjourn the meeting, seconded by Bill
Reynolds. The meeting was adjourned
after an 8-0 vote at 10:35am.
Respectfully submitted, Lars Bruns
A true record.
Attest:
_________________________________
Lars Bruns, Secretary
