Vail Resorts: Responding to Activist Pressure (A)

On January 27, 2025, the head of a relatively small hedge fund named Late Apex Partners sent a highly critical letter to the board of directors of Vail Resorts, the world’s largest ski resort operator. In his letter, and the 88-slide presentation that accompanied his letter, the activist investor criticized the firm’s strategy, leadership, and financial performance. In fact, he was calling for fundamental change: replacing the CEO, CFO, and board chair; changing the firm’s capital allocation strategy; and focusing more attention on customers and employees to fix the company’s damaged reputation. On the day the letter became public, Vail’s stock price jumped 6%, representing an increase in almost $350 million of market value. With the stock price down more than 50% in the past few years, Vail’s relatively new CEO (Kirsten Lynch) and the board chairman (Rob Katz, the former CEO), had to decide whether to respond to the letter and, if so, how. What made this decision difficult was that several relatively small and unknown activist investors had won important victories against large corporations in recent years. Examples of this kind of “David vs. Goliath” battle included BlueBell Capital successfully removing Danone’s CEO in March 2021 and Engine No. 1 winning three board seats at ExxonMobil in May 2021.