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MAD RIVER GLEN COOPERATIVE

BOARD OF TRUSTEES

MINUTES OF MEETING – Draft Pending Final Approval (2)
February 5, 2005

 

Attachments

  1. Management Report
  2. Financial Report (Requires MS Excel)
  3. Forms of Proposed Single Rebuild Ballot Question
  4. Presentation on Financing the Single Rebuild (Requires MS Power Point)
  5. Share Redemption Policy

After due notice, a meeting of the board of trustees of the Mad River Glen Cooperative was convened at 5:00 PM on February 5, 2005 on the 3 rd floor of the Basebox at Mad River Glen Ski Area in Fayston , Vermont .

Trustees Alan Moats, Rick Moulton, Mary Schramke, Jay Appleton, Paul Finnerty, Leigh Michl, Bill Reynolds, and Jed Kalkstein were present. Deb Steines was absent. Also present was President Jamey Wimble and several shareholders.

 

CALL TO ORDER:

Chair Alan Moats called the meeting to order at 5:02 PM .

 

APPROVAL OF JANUARY MINUTES

Upon motion duly made by Leigh Michl and seconded by Rick Moulton, it was unanimously

VOTED: To accept the minutes of the January 8, 2005 board of trustees meeting.

 

SHAREHOLDER COMMENTS

Irma Heeter presented an idea for financing the renovation of the Single Chair. She showed a sample 10 th Anniversary Mug that could be sold, with proceeds used to finance the Single.

 

MANAGEMENT REPORT

The Management Report is attached for reference. In response to a question from Jay Appleton, Mr. Wimble stated that the “Freeze Your Butt Off” promotion was successful.

 

FINANCIAL REPORT

The Financial Report is attached for reference. Mr. Moats stated that, because of the snow conditions, the numbers were discouraging but not devastating. Mr. Appleton asked about ticket sales on Sunday, January 30 th. He stated that ticket sales seemed low compared to the crowd in the parking lot. Sharon Crawford mentioned that the junior race held that day may have accounted for this phenomenon.

 

SINGLE RESTORATION UPDATE

Mr. Moats stated that the meeting would include a presentation of initial thoughts related to the financing of the Single restoration and that the board would approve the wording of the ballot question that would be sent to shareholders for the Annual Meeting vote. Mr. Moats distributed a draft of two forms of the proposed ballot question (copy attached). Mr. Moats stated that there was overwhelming support for the renovation of the Single. He further stated that shareholders who initially favored a double chair typically changed their minds when they learned that the Single renovation would essentially provide a completely new, highly reliable lift that would be aesthetically similar to the current Single.

The board discussed ideas for educating shareholders on the nature of the actual vote as well as whether to include a “white paper” explaining the board’s decision to consider and present only one option to shareholders. There were no trustees present that supported other options or desired to write a “con” statement against the renovation. In response to a question from Mr. Reynolds, Mr. Wimble indicated that the proposed rebuild did not contemplate a change to the top return station. He stated that rebuilding the lift to include an unloading ramp (similar to the Double) would require raising the height of the top three towers. Mr. Wimble recommended not altering the lift’s profile because it does not have any problems currently and it would increase the lift’s exposure to wind.

Ms. Schramke asked a question about the extent to which management would have latitude to make changes to the lift during the renovation process. Mr. Wimble indicated that there should be leeway for minor changes, but that he would bring major aesthetic or financial changes back to the board.

 

Mr. Wimble presented several slides on how to finance the Single renovation (copy attached). There was a discussion of the availability of bank debt and the pros and cons of using bank debt. Mr. Wimble stated that the preference was for “friendly debt” in the form of shareholder bonds, and that any shortfall in the proceeds from shareholder debt could be made up with bank debt. In response to a shareholder question, Mr. Moulton stated the reasons he felt that utilizing new chairs was preferable to continuing to use the current chairs. There was also a discussion of grants. No grant resources had yet been identified but, if available, may flow through the Stark Mountain Foundation. Mr. Appleton observed that there may be non-federal grants available without intrusive or restrictive “strings attached.”

 

Mr. Kalkstein stated that the Finance Committee had not considered corporate or individual sponsorship of chairs or lift towers. Geordie Hall asked how shareholder financing ideas could be presented for consideration. Mr. Kalkstein indicated that suggestions should come to the Chair of the Finance Committee. He also indicated that there would be a subcommittee of the Finance Committee that would deal specifically with the question of financing the Single.

 

Upon motion duly made by Leigh Michl and seconded by Jay Appleton, it was unanimously

VOTED: To approve the Draft Single Rebuild Ballot Question, to be accompanied by a “white paper” explaining the issue, as follows:

“Shall the Board of Trustees be authorized to make a capital expenditure exceeding $300,000 for the purpose of rebuilding the Single Chair to meet all regulatory codes, facilitate maintenance, ensure reliability, and preserve the look and capacity of the current lift, at a cost not to exceed $1.4 million?”

 

SHARE REDEMPTION POLICY

The proposed revised share redemption policy drafted previously by Leigh Michl was distributed (copy attached). Mr. Moats summarized the key points of the proposal. In response to a question from Mr. Kalkstein, Mr. Michl stated that the overall financial condition of the Co-op was not included as a factor to be considered prior to making a redemption because that notion was not included in the ByLaws. However, Mr. Michl pointed out that the financial condition of the Co-op would be improved by the proposed policy because cash outflows would be more predictable and there was no chance of negative net cash outflows relating to redemptions.

 

Upon motion duly made by Alan Moats and seconded by Mary Schramke, it was unanimously

VOTED: To approve the revised Share Redemption Policy dated February 4, 2005 .

 

EMPLOYEES AS TRUSTEES

Mr. Moats pointed out that the issue of whether to amend the ByLaws to limit or exclude employees from serving on the Co-op board had not been formally resolved. He mentioned that the April 2004 “straw poll” of shareholders did not provided a clear mandate that the board could use to propose a formal ballot question to amend the ByLaws. Comments were made by Messrs. Moulton, Kalkstein, Michl, and Appleton against a ballot question limiting or restricting employees from serving on the board.

 

Mr. Moulton felt that including this issue on the ballot at this time would cloud the more important Single ballot question. Mr. Kalkstein indicated that limiting employees on the board would exclude qualified candidates. He further indicated that it was unlikely that there would ever be enough employees on the board (who would be forced to recuse themselves on certain votes) to preclude a quorum. Lastly, Mr. Kalkstein commented that an explicit policy outlining appropriate roles and how to manage inherent conflicts of interest for employees on the Board was in order before seeking outright limitations. Mr. Michl commented that, despite his prior support for limiting or excluding employees from serving on the board, he was no longer in favor of the idea. He advocated more clear and direct board policies that would (1) explicitly identify potential conflicts related to employee trustees and (2) explain expected employee trustee conduct. He further stated his belief that pushing issues that did not have a clear mandate could dissipate shareholder goodwill towards the Co-op. Mr. Moats stated that employees should not be punished (by excluding qualified employee candidates from the board) because of the past misconduct of prior employee trustees.

 

There were several comments that related to the proper definition of an employee. Geordie Hall stated that he had served concurrently as an employee and a president of the corresponding board of trustees of a non-profit organization and that he was familiar with the difference between management issues and policy issues. He asked that the board defer the issue of drafting strengthened employee/trustee policies. If elected, he would be in a position to help the board with new policies on this issue.

Mr. Appleton recommended that the Board Development Committee be tasked with drafting new policies related to the employee trustee issue.

 

Upon motion duly made by Alan Moats and seconded by Bill Reynolds, it was unanimously

VOTED: The board of trustees of the Co-op would not propose an amendment to the ByLaws that would limit or exclude Co-op employees from serving on the board of trustees.

 

COMMITTEE REPORTS

Election Committee – Mr. Finnerty, Chairman of the Election Committee, presented a slate of candidates deemed by that committee to be qualified as follows:

Candidates for Out-of-State Trustee:

Geordie Hall
Mark Lamont

Candidates for In-state Trustee:

Rick Moulton
Colin Rehkugler
Ron Shems
Steve McKenzie
Rocky Bleier

 

Mr. Finnerty made a motion that the board approve the slate presented. Mr. Michl offered an amendment to the motion. He made a motion that the candidates be approved person by person, rather than as an entire slate. Mr. Moats asked whether there were guidelines related to the definition of a “qualified” candidate. Mr. Finnerty stated that the definition of “qualified” was up to the board to determine, however, residency and status as a shareholder could be argued to be the only requirements for qualification. In that regard, Mr. Finnerty stated that the Bylaws, Section 4.2 read, “ To be qualified as a trustee, a person shall be an owner and shall not have an overriding conflict of interest. The Board shall determine whether such qualifications are met.”

 

On the issue of whether to approve a particular candidate that he did not believe was fit to serve on the board, Mr. Moats stated that he was torn between his fiduciary responsibility to the Co-op and the requirement to have open elections – thereby relying on informed shareholders to make the proper decision.

 

Mr. Michl stated that he did not believe Rocky Bleier was qualified to serve as a trustee. He stated that, based his four years on the board with Mr. Bleier, he believed that Mr. Bleier was not able to follow through and fulfill the tasks that were required of him as a trustee, that he was unable to subordinate his personal agenda to the agenda agreed to by the Board and to the best interests of the Co-op, and that he refused to recognize and recuse himself from conflicts of interest. Peter Monte, former Co-op counsel, stated that the board’s vote to approve a slate of candidate represents an endorsement that each of the candidates is qualified. He felt that Rocky Bleier was not qualified, based on his experience in working with him. He further reminded the board that a vote to exclude Mr. Bleier from the slate did not mean he could not run for election as he could easily become a candidate through the petition process. Mr. Kalkstein said that the Board’s vote on the slate was simply an acknowledgement of qualification not an endorsement, the latter of which Mr. Kalkstein said he could certainly not provide for several of the candidates whom he did not even know. Geordie Hall stated that a vote against a particular person’s candidacy could be perceived as improper self perpetuation by the trustees.

 

Mr. Michl stated that the ByLaws required him to vote for a slate of qualified candidates and that he would be abandoning his duties by deeming Mr. Bleier to be qualified. Deri Meier stated that he did not see the self perpetuation issue because the slate would still include a number of viable candidates, even if Mr. Bleier were not included. He also stated that many shareholders believed that the board’s vote to approve a slate of candidates represented tacit approval of the candidate. Therefore, the board had a responsibility to withhold approval for a candidate that they did not believe was qualified.

 

Rocky Bleier stated he had served on the board for 8 years, had never missed a meeting, and his record as recorded in the minutes speaks for itself.

 

Shawn Kalkstein stated that he felt Mr. Bleier was an excellent trustee because he spoke tirelessly for shareholders and worked hard as a trustee. He stated that Mr. Michl’s comments regarding Mr. Bleier represented his personal opinion and may be personal in nature. Mr. Monte further stated that the issue, while inherently personal, was based on the actual history of Mr. Bleier’s conduct as a trustee.

 

Mr. Michl’s amendment did not receive a second.

 

An out-of-state shareholder requested that the board present a list of qualified candidates only, since shareholders who were unable to come to the mountain frequently were often not in a position to know each candidate.

 

Upon motion duly made by Paul Finnerty and seconded by Bill Reynolds, it was

VOTED: That the individuals listed above would be placed on the ballot for the election of trustees.


For: Alan Moats, Jed Kalkstein, Bill Reynolds, Jay Appleton, Paul Finnerty
Against: Leigh Michl, Mary Schramke
Abstain: Rick Moulton 

Facilities Committee – No report.
20 th Committee – No report
Executive Committee – The Executive Committee did not meet and there were no Executive Committee actions since the prior trustee meeting.
Shareholder Relations – Mr. Moulton stated that the SRC had met and that minutes were available.

There were no other committee reports.

 

SHAREHOLDER COMMENTS

There were no further shareholder comments.

 

EXECUTIVE SESSION

The board met in Executive Session to discuss personnel matters at 7:06 PM .

 

ADJOURNMENT

Following the Executive Session, there being no further business to come before the board, the meeting adjourned at 8:25 PM .

 

Respectfully submitted, Leigh Michl

A true record.

 

ATTEST: __________________________________________

Leigh Michl, Secretary


Management Report

Mad River Glen

2-5-05

 

Operations:

The single has been shut down three times in the month of January for maintenance issues. The first one was an alignment issue. Same problem we have seen in the past. As the ground freezes and thaws it moves the towers. Second we had a faulty sheave rubber that failed during operation. The third was a safety system failure. Multiple things went wrong with the system and made it very difficult to trace down. We brought in one of the guys that designed the system to help trouble shoot it. This is a home-made system that was designed to keep the Single up with current code requirements thus making it hard to work on.

 

Skier visits are down nearly 40% due to light snowfall and cold temperatures.

 

I will be meeting with Doppelmayr/CTEC this month to start working out technical material on the Single rebuild.

 

The snow cover is very thin and without snow we will not be able to do much cosmetic work on the mountain.

 

A child fell from the chair on lift four. The child is doing fine and was back at the mountain skiing this past weekend.

 

We have tried to be creative in some Gorilla Marketing to get people on the mountain. We did a “Freeze Your Buns Off” weekend in sub zero temperatures and had a positive response. Attracted Inn guest from Killington and Stowe areas.

 

If the lean snowfall continues we will make cut backs after February holiday. We are controlling cost and lightning up already but they would be more significant in March if this pattern continues.

 

Capital projects for summer 2005 will be reviewed at the March meeting.

 

Share Sales:

3 shares were sold for the month against a budget of 4. YTD we have sold 23 shares against a budget of 16. We have tendered 3 shares this YTD. We have had very good luck saving shares by changing them to preservation certificates.

 

Financials:

January was a dismal month (see attached financials). We are 0ver $300,000 behind budget in revenue YTD

Total cash is $727,000. $300,000 is the Single Reserve. Still nearly $300,000 on the balance sheet in Mad Cards.

 

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