News: Cedar Fair brass gets more gold

I echo the sentiments that Dick, Jack and the others deserve their salaries and bonuses....but I believe it should trickle down more than it does. The middle managers (some of whom Jeff believes might be less than stellar) are GROSSLY underpaid considering what they do and the time spent doing it.

But, you have to look at it from a macro level. That is the industry norm. I don't know any amusement park company that pays their middle management well. Part of that is due to the fact that so many people covet a Cedar Point (or Disney, etc) job. How hard do you think it is for Cedar Point to fill a management job in ride ops, or merchandise, etc? It isn't.

I think I made $22,500 for a starting salary at Cedar Point and that wasn't all that long ago. I didn't even get the particular job I would have preferred but I was just thrilled to get a full time job in the industry. (That happens A LOT at Disney.) For every Bob Wozniak there are probably dozens (if not more) of folks who would love his position and the salary may not be all that important.

I'll say this. When I was at Cedar Point if Dick had said to me, "you have two choices...I could raise your salary or pay more to your seasonals" I might have actually said pay the seasonals more. Why? Because it might have made my hiring, recruiting, and retention significantly easier each year which may have overcome my lower salary.

I don't see any changes in the forseeable future. Until the recruiting/staffing shortfalls impact the bottom line there isn't a real problem, and how do you quantify that?

But, back to the original point. I don't think Mr. Kinzel is overpaid. I do think he gets too much credit for the success of the company from time to time but I think his salary is fair considering the growth and success of Cedar Fair. But, it would be easier to swallow if I didn't know many of the other people who are overworked and underpaid.

MrScott said:
Nothing. It's the amount of the reward that is disturbing. (And not just at CF!)

What's disturbing about it? Isn't that the American way? God, if you could pick out any one person in the entire country living the American dream the "old fashioned" way by working their way up in a company, something that's probably impossible today, I'd pick Dick Kinzel. You get there by working your ass off, not throwing a pissy fit because you do a seasonal job that requires no skill you can't teach in a few days and only get paid $7 an hour for it. You want more? Pay your dues, do the work, and earn it!

And Wahoo brings up an even more critical point... This is not about some kind of vague morality for the little guy. The company continues to grow and its finances are solid. The distribution just went up again too. So which part of that is bad and indicates the execs don't deserve what they're paid?

Even more to the point is that there are people who would kill to have some of these low-paying jobs. We all make choices in life, and if we don't like what we're doing, we do something else. Been down that road as well. Some days I'd probably take some mediocre middle-management job at CP for $30k a year in exchange for doing something I can really get into. Making six figures for some company or product you don't believe in isn't worth it.

What's disturbing about it? The MILLIONS these guys are getting paid to tell the ones below them that they have to cut costs. Again, I'm not just talking about Cedar Fair.

Whatever. It just doesn't seem right.

I wonder how much of my season pass price ends up in the upper management's pocket? (That question is CP related)

MrScott

I don't think that the top brass are necessarily overpaid when you look at how much they do for the company, but when you look at how much they are getting paid compared to what it takes to live a comfortable and expensive lifestyle I start seeing that all of that money isn't necessary to have. Here is where I start generalizing about all of Corporate America: No one needs a 20 room house (well if you're Amish maybe ;) ), 3 or 4 expensive cars just for one or two people, 2 or more vacation homes almost the size of their regular house, a private jet or two, and all the Gucci suits you can think of. That is a really ridiculous way to live if you ask me. I can understand a nice, spacious 10-12 room house and 2 really nice cars, and maybe a private jet depending on the need that the job has for one (ever heard of first class on AA, BA, Virgin?).

Now getting back to the business side...take that excess cash that puts above what you need to live a very comfortable and expensive life and invest it in your employees where it will most likely show an even bigger return in the long run. Thinking beyond the here and now can be beneficial.

So like I said at the beginning of my post, consdiering the work they do for the company and the status that that kind of job has I don't think they are overpaid per se, I just believe that a chunk of the money that goes towards bonuses and raises in already very large salaries should be redirected. I mean, what bigger way to set CF apart from the rest of Corporate America than the top brass putting what would be part of their raises and bonuses back into the company to better the company instead of using it to make an already comfortable lifestyle more comfortable than anyone could really want. That would not only show that the top brass care more about the company than themselves and their lifestyles, but would also be attractive to possible employees. I know I would rather work for a company where the top brass look to care more about the middle and lower employees than their own lifestyles.

What's the old saying? "You get what you pay for".

You hear these issues with declining employee quality and then look at the wages they make compared to comperable positions. If I were in college it would be move valuable to me to take a non-paying internship then sweat it out in the trenches at 6.25.

And then you have the seasonal management. I think one of the most important chains in the link. What quality could you get and retain with competitive wages. With higher rates the company can hold the feet to the fire and know that there are people out there willing to take the position.

I've become a firm believer in the model that Costco follows. After all how much money does one need? If there is still money left over invest it in things that you want and may need to but get passed over because it isn't visable enough (like seasonal housing).

Not that i'm a huge fan of comparing these times to those of the fifties, however in this case i feel it is an interesting comparison. The difference between the top and the rest was considerably lessened during the time after the second world war. By now things are starting to look like they did during the early part of the 20th century. The value that believes that people need to get as much as possible because its their right is one that is a major issue with our society today.

Just think how much less expensive things would be for the GP if the big guys in this country were not making millions a year. Getting into an amusment park might cost you half of what it costs today.

Flame away.

MrScott

Oh, get a freakin' grip. A million dollars isn't even on the radar of being important. It's not even a lot of money. I'll be worth that much when I retire. So you pay Kinzel 250,000 and spread out the rest to the rest of the employees. Thousands of them. They each get a couple of extra bucks. That makes sense.

You'd have a different perspective if you had the career of any of these guys. They're getting what they're entitled to. Furthermore, it IS their job to control costs because that's what's good for the value of the company. You want some of that wealth? Buy units and thank Dick for keeping that distribution on the up and up.

While I suppose it's entirely possible for all of these multimillionaires in the world to keep every penny to themselves in some self-absorbed selfish manner, many do give back to society in ways most of us can't even hope to match -- through investment in other businesses, and donations to charity (gasp! it's true! some of them do have a generous side!).

Take a look at CF's latest annual report. There's $428 MILLION invested in the company. Who do you think contributes to that total? Joe Schmo? Maybe a little, but it's safe to say that the major stockholders are businessmen who have big bucks to begin with, and can afford to put their dollars into the companies they foresee as being successful. Without them, I'd wager that it would cost even more to visit a park than it does today, simply because parks wouldn't be able to stay afloat otherwise. Or there's the other possibility: no new capital expenditures, even more cost cutting... the list goes on.

As for charitable donations, regardless of whether it's part of their moral code or it simply just makes them look better, in the end, many of those who have money give back. (And for those who don't understand why the massively rich don't throw away their excess billions to cure cancer tomorrow, realize that money you save generates interest, and as the wealthy get richer from that, they can actually contribute more each year. Bill Gates gets it!)

I agree with some, there's a lot of upper management in Corporate America who have no business being there. I also agree that minimum wages need to go up across the board in this country, and those who do well in the lower ranks should be compensated appropriately. However, becoming a multimillionaire shouldn't be impossible for anyone. Come up with a brilliant idea, work hard at everything you do, and 3) profit!

Don't know about you, but I'd like to someday.

-Skydiving Jeff

Jeff, I have a grip

Guys and Gals in positions like these make too much money(IMO) (and it would better for the company that they work for if they made less)

Anyone making that kind of money anywhere is just not worth the cost. My God! Muti Millions made by muliple people? No wonder the park faces declining attendance.

Is that more clear?

MrScott

Without the salary, there is no reason to do the job. There is no accountability. I don't know what kind of fantasy utopia you live in, but that's just the way it is.

You're making a ridiculous connection between declining attendance and executive salary. There is no connection.

Jeff does make a good point about paying the exec's less and that equaling only a few more dollars for the minimum workers. Dick does a great job. There are probably hundreds of people who could replace him, but would they keep the company in the good shape that it's in? I say reward him for his good work.

Think about it this way as well. Think of all the money coming in, from all of the amusement and water parks that CF owns. 1 or 2 million dollars isn't a whole lot when you think of the daily/monthly/annual revenue.

It's thinking like Jeffs is why consumers will be paying over three dollars a gallon for gas this summer,and oil company CEOs will be raking in thirty and forty million a year,and all the time laughing at the consumer.

Please.. Give me a break.

That is just the typical response of the average American in terms of gasoline prices.

After all, it's certianly can't be their fault for creating an inflexible dependance on gasoline. Americans certainly avoid inefficient modes of transportation such as oversized SubUrban Vehicles (SUV) or pickup trucks. They also perform basic maintenance such as checking tire pressure and air filters. Instead of driving relatively short distances, they walk or ride a bike.

Americans caused the gasoline prices to be as they are. There simply is not a shortage of crude oil but the refineries are limited. Building and operating these plants is a very expensive problem. It's worse than nuclear power plants were. Refineries aren't even profitable. No one wants to pay for them but they are a necessary evil to get derivative products.

All the prices are doing is following the laws of supply and demand. There is no price fixing or inflation as reported by many 3rd party and governmental studies. It is just a special case since the demand is inflexible and the supply has serious limiting factors.

So, how will gas prices drop? The demand needs to drop, simple as that. The trouble is that it won't at least soon. The demand continues to increase and the prices are simply following suit.

Onto the topic of executive pay:

Pay is one of the most powerful incentives availible. Executive positions have pay that is completely governed by their performance. If they make the company boom, then they are compensated well for such actions. If a terrible job is done, then they will receive less pay and might be voted out. Ben & Jerrys had pseudo-contest that was called "who wants to be a CEO." I guess some buisinesses will do anything for someone exceptional to lead their way. It's only good for buisness.

The communists didn't have such incentive so why should they even try hard? As it turns out they didn't and eventually fell apart.

A couple quick points regarding the oil industry...

While I agree that we, as consumers, have been irresponsible with our reliance and use of fossil fuels, that in no way justifies the price gouging of the oil companies. Here's some quick facts:

• Quarterly Net Income - Exxon saw a 75% increase in 4th-quarter net income from 2004, from $5.68 billion to around $10 billion dollars. Shell saw a 67% increase from $5.37 billion to $9 billion. That's pretty good, especially considering all of the "shortages" and "problems" they've faced...
• Record Income - Exxon and Shell are the first US companies ever to post quarterly sales of $100 billion. Also of note is that Exxon's 2005 annual net income was $36.13 billion, meaning almost 30% of this annual income was garnered during the time that was supposed to have been so heavily affected by the hurricane.
• Notable Quote from Shell's CFO - We are capturing the benefits of high oil and gas prices and refining margins.
• Average Sale Prices - Exxon's crude oil & natural gas prices were $52.23/barrel & $11.34/1000cuft in 2005, compared to $38.85/barrel & $6.61/1000cuft in 2004. Hmmm... 34% & 72% price increases, and a 75% net income increase?
• In Perspective - Exxon's 2005 revenue surpassed that of Saudia Arabia's 2005 GDP.

So, explain to me how these companies are justified in doing this? I hear people defend this all the time, telling me "oh, its much more complicated than that", or "that's just capitalism", and what-not. I say that is the biggest load of crap I've ever heard. It is that simple. Companies have a responsibility to contribute to society, not just their own coffers.

Sources

1. ABC News
2. MSNBC

Exactly DJ. These oil companies are simply greedy and are capitalizing on the current world view that we are running out of oil. Back during the hikes because of Katrina Venezuelan president/dictator agreed to have Citgo lower its prices in order to help us out a bit. I know in my area Citgo was 10-15 cents cheaper per gallon than everywhere else, and they did not suffer any negative effects. But this is about amusement park execs...

While the CF execs may be getting less than average in comparisons with others in similar positions, is it really such a big deal? I mean they are already millionares or close to being one. Especially at a time when operations seem to be in such a fast and uncontrollable spiral at your flagship park and budgets are being cut left and right while these big execs are getting large raises and bonuses.

I'm not arguing for paying the execs less...I'm arguing for paying middle management and the seasonals more.

I DO believe that if the base rate employee wage was raised a couple of bucks an hour then recruiting GOOD quality employees would be easier. I DO believe if Cedar Point upgraded it's housing options (tear down Gold and Cedars for starts) the Point would be a more desirable place to spend a summer. I DO believe that while the season got longer and longer and the off season got shorter and shorter, middle managment's salary was not adjusted as it should have been.

All of the above, if implemented, would lead to a better living and working environment, which leads to a better quality staff with higher morale, which leads to a better experience for the guest, which leads to a better bottom line.

All of that could, in fact, be done. What it takes is vision and planning. Back in the early 90's we identified the troubles brewing with the seasonal workforce. We were charged with looking at a short term and long term plan to improve and the long term plan never materialized. Why? Because the leadership isn't interested. If Mr. Kinzel and the Board had half the vision with "PEOPLE" as they do with "THINGS" then this company would be the preeminent amusement park company. As it is, they are pretty good. But, they could be better.

The general consensus here seems to be that if CP were able to recruit & retain a better work force, it would solve a lot of staffing-related problems, which seem to be where the company's biggest problems lie. It also seems apparent that these problems have been brewing for over 10 years.

So... seeing as how CP has had some serious problems that have yet to be solved, Cedar Fair seems to have been a serious boon for the brass.

I'm just waiting for someone from Europe to offer the much needed reality check we need on gas prices. dj: It is the American way. If you don't like gas prices, ride a bike, take public transportation, send a message. No country in the world is more inefficient at getting people around with single-car drivers filling the roads, and now, like everyone else, we're paying for it. If you want to talk about simplicity, talk about supply and demand.

cpdad said:
It's thinking like Jeffs is why consumers will be paying over three dollars a gallon for gas this summer,and oil company CEOs will be raking in thirty and forty million a year,and all the time laughing at the consumer.

That's just silly. If you paid an exec $1 instead for a company that has billions in income a year, it won't change the price of the product. Get some perspective.

So did anyone read the annual report? Cedar Fair is, in fact, a business. It exists to be profitable. It's the job of executives to make that happen, and it's exactly what they're doing. Furthermore, the market will bare what they're charging to a certain degree, because the company keeps making more money. They do see a trend they don't like, the slide in attendance in certain markets, and they've adjusted by lowering ticket prices. With regards to financial health, these guys are making mostly right decisions. Being accountable to thousands of individual investors, and dozens of huge institutional investors, they're entitled to be paid what they're getting.

Now, getting to the point that Wahoo made, there is obviously a lot of concern about the quality of middle management, and I'm on board with that entirely. There's also concern about the quality of seasonal workers. I'll agree with previous comments that the park needs to consider upgrading dorms and such, because it could attract a better pool of workers, or at least retain those that are on the fence.

But the problem with those issues is that, so far, they haven't materially affected the bottom line. Right now it's a little harder to see the ROI in spending money in those areas. The only thing I can criticize there is that is a short-sighted view, but if operational deficiencies are even a little obvious, I'm sure the execs see it, and will take some kind of action.

Having recently returned from France, I completely understand the gas situation there. The automotive industry is starkly different than here, with small, efficient cars everywhere, and public transportation as prominant in small towns as it is in NYC. That does not excuse big oil companies in their actions, though. They have constantly lobbied against economic improvements in the automotive industry, and the government (especially since 2000) has been all to happy to aid them in that. The administration turns a blind eye to gouging, simply because they profit more from doing so than not. The oil industry pressures our government into straying away from the obvious need to decrease our reliance on oil. Instead, they feed us lines like "reduce our reliance on foreign oil", or "we need to improve cleaner energy" and so on. Its fruitless rhetoric that is fed to the public to "assure" them that they are indeed concerned when, in fact, they are not.

As for CF's bottom line, I'm concerned with their apparent lack of concern over the long-term effects of their lackluster workforce. They are paid to see the less obvious trends in their company, and failing to do so is job failure. I'm not crying that the sky is falling, but it seems they need to seriously re-evaluate the last 20 years in terms of staffing and customer service.

Of course, for all we know, they could be fully aware of this, and already implementing appropriate corrective action(s). I certainly hope that is the case, but it doesn't appear so, since these problems can hardly be characterized as new.