exhibit10_7.htm


    
      
        
          

        
Exhibit 10.7

    

    
      


      


      


      


      


      


      


      


      


      


      


      Vail
Resorts, Inc.

      


      Management
Incentive Plan

      


      


      Executives

      Grade
32 & Above

      


      


      


      


      


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    Objective

    


    The
purpose of the Management Incentive Plan (the “Plan”) is to reinforce individual
employee behaviors that contribute to the mission, values, growth and
profitability of Vail Resorts, Inc. by:

    


    
      	
              ·  

            	
              Rewarding
      and recognizing goal-exceeding performance in one or more of the following
      areas:

            


    

    
      	
              -  

            	
              Resort
      (Mountain and Lodging Segments) EBITDA (All
  executives)

            


    

    
      	
              -  

            	
              Lodging
      EBITDA (Lodging executives)

            


    

    
      	
              -  

            	
              Real
      Estate Division Goal Attainment (All
executives)

            


    

    
      	
              -  

            	
              Individual
      employee performance, including adherence to the Company’s mission and
      values (All executives)

            


    

    


    Eligibility

    


    All
full-time employees of Vail Resorts, Inc. and any of its subsidiaries
(collectively, the “Company”) at grade levels 32 and above as identified in the
Company’s compensation grade structure are eligible to participate in the Plan
(excluding employees who participate in a department specific incentive
plan).

    


    For
employees who become or cease to be eligible (other than due to new hire or
separation from employment with the Company) or who move between eligibility
target levels under this Plan during a fiscal year, the amount of their award,
if any, will be prorated (by month) based on the length of time in each eligible
position for any change after the first fiscal quarter, which is not
prorated.  If an employee is promoted into a grade level 32 or above
during a fiscal year and becomes eligible to participate in this Plan, the
employee will be eligible to receive an award in that fiscal year, which award
may be prorated, (if the change is after the first fiscal quarter), under this
Plan or their previous bonus plan and level, at the sole discretion of the
Compensation Committee of the Board of Directors (the “Compensation
Committee”).

    


    New
Hires

    


    An
employee hired into a position eligible for this Plan will receive a prorated
incentive for the Plan Year based on the number of months worked from the
employee’s hire date rounded to the number of full months worked in the fiscal
year.  A full month will be counted if a new hire was hired on or
prior to the 16th of the
month.  Anyone hired after the end of the third quarter of the fiscal
year will not be eligible to receive an award in that fiscal year, except at the
sole discretion of the Compensation Committee.

    


    Bonuses
under the Plan do not accrue until the date Plan payments are
made.  To be eligible to receive a payment, a participant must be
employed by the Company on the date Plan payments are made.

    
Effective
Dates

    


    The Plan
is effective August 1, 2008, and will conclude on July 31, 2013.

    


    Funding

    


    For
Corporate executives, the Plan is 80% funded based on Resort EBITDA and 20%
funded based on the attainment of the VRDC Goals (defined below).

    


    For
Mountain executives, the Plan is 80% funded based on Resort EBITDA and 20%
funded based on the attainment of the VRDC Goals (defined below).

    


    For
Lodging executives, the Plan is 40% funded based on Resort EBITDA, 40% funded
based on Lodging EBITDA, and 20% funded based on the attainment of the VRDC
Goals (defined below).

    


    For VRDC
executives, the Plan is 25% funded based on Resort EBITDA and 75% funded based
on the attainment of one or more of the following VRDC performance goals:
attaining EBITDA targets for the Company’s real estate segment, achieving
pre-sales targets on real estate projects, receiving zoning approval on real
estate projects, meeting budgeted profitability on real estate targets, and
achieving sales targets in existing real estate projects (collectively, the
“VRDC Goals”).

    


    The
maximum amount that may be earned as an award under the Plan for any Plan year
by any one eligible employee shall be $4,000,000.  The schedule
attached hereto as Exhibit A is used to
determine the percent of the target bonus funded by Resort, Mountain and Lodging
EBITDA performance.  The schedule attached hereto as Exhibit B is used to
determine the percent of the target bonus funded by VRDC Goals. The Compensation
Committee will establish the Resort, Mountain and Lodging EBITDA performance
targets and corresponding funding levels and the VRDC Goals and may amend Exhibit A and Exhibit B by October
29 of each fiscal year and while the attainment of such goals is substantially
uncertain.

    


    Target
Percentages

    


    The
target bonuses as a percentage of base salary for executives in different
divisions of the Company for purposes of the Plan and at different grade levels
are set forth on Exhibit C attached
hereto.  The Compensation Committee may amend Exhibit C in its sole
discretion on a yearly basis by October 29 of each fiscal year and while the
attainment of Resort, Mountain and Lodging EBITDA performance targets and
corresponding funding levels and VRDC Goals is substantially
uncertain.

    


    Individual
Bonus Determinations

    


    Bonus
determinations for individual executives (other than the Chief Executive
Officer) are determined by adjusting the funded target bonus by the application
of negative discretion based on individual performance. 100% of the total bonus
for each executive (other than the Chief Executive Officer) will be determined
based upon individual performance based on the year-end performance matrix in
Exhibit D.  The Chief Executive Officer’s total bonus will be equal
to, and based solely on, the funded target bonus amount.

    


    Individual
Performance

    


    Individual
performance for all executives (other than the Chief Executive Officer) will be
determined through the applicable fiscal year performance review process, which
will be conducted by the Chief Executive Officer and reviewed by the
Compensation Committee.  The Compensation Committee will conduct the
individual performance review for the Chief Executive Officer.  Higher
performing executives will receive larger rewards for the individual portion of
the bonus than their lower performing peers based on the year-end performance
matrix in Exhibit D.

    


    Example:

    


    Grade 34
Mountain Executive earning $200,000 annually;

    Target
Bonus % = 50%

    


    Assume
Resort EBITDA at 100% of target and VRDC achieves their target
goals

    


    Resort
EBITDA Funding =         $200,000 x
50% x 80% = $80,000

    VRDC
Goals Funding
=              $200,000
x 50% x 20% = $20,000

    
                                                                   
Total Funding = $100,000

    

     

    
      	
               
      Payout:

            	
               

            


    

     

    
      	
              o  

            	
              100%
      based upon individual performance (“average”) =
  $100,000

            


    

    


    
      	
              o  

            	
              Total
      average individual bonus = $100,000

            


    

    
      	
              -  

            	
              Individual
      performance can range from $0 to “average” amount to 166% of the “average”
      amount ($0 to $166,000 for this example).  The highest
      performing executives could receive in excess of their target bonus
      (subject to overall funding limits of the Plan in any fiscal year),
      whereas the lowest performing executive could receive as little as $0 for
      their bonus.

            


    

    


    Plan
Payouts

    


    Individual
bonus determinations calculated in accordance with the terms of this Plan will
be paid in cash or pursuant to equity awards granted under the Company’s equity
compensation plan, or a combination thereof, at the discretion of the
Compensation Committee, minus applicable deductions and withholding as required
by law, between August 1 and October 15 following the previous fiscal year
end.

    


    Termination
of Employment

    


    As stated
above, employees whose employment ends prior to the payment date under the Plan
for any fiscal year will not be eligible, subject to the discretion of the
Compensation Committee.  However, if an otherwise eligible employee is
not employed as of the date of the payout under the Plan due to death,
short-term or long-term disability, such employee, if they would have otherwise
received a payout under the Plan but for their death or disability, shall be
entitled to receive a pro-rated (by month) payment for the portion of the fiscal
year the employee was actively employed.

    


    Leave
of Absence

    


    Individual
bonus determinations for employees who have a paid or unpaid leave of absence
(this does not include vacation) in excess of one month during the Plan year
will be pro-rated to reflect the time on leave.

    


    Plan
Administration, Modification and Discontinuance

    


    This Plan
is administered by the Compensation Committee. The Compensation Committee has
authority to interpret the Plan and to make, amend, or nullify any rules and
procedures deemed necessary for proper Plan administration, including, but not
limited to, performance targets, results and extraordinary
events.  The EBITDA performance targets and corresponding funding
levels shall be adjusted for acquisitions, divestitures, or board imposed
unbudgeted expenses in the discretion of the Compensation Committee. In
addition, any stock compensation expense or restructuring expense will be
excluded from the applicable EBITDA performance targets used to determine
funding/payout levels.

    


    Notwithstanding
the foregoing, no Plan payouts will be made until and unless the Compensation
Committee has certified that the performance goals and all other material terms
have been satisfied.  The Compensation Committee has the sole
discretion to modify the application of this Plan.

    


    Continued
Employment

    


    The Plan
is not intended to and shall not be deemed to confer on any employee a guarantee
of continued employment by the Company.