Monthly Meeting of the Prairie Meadows Board of Directors December 16, :00 p.m.

Transcription

1 Monthly Meeting of the Prairie Meadows Board of Directors December 16, :00 p.m. The Monthly Meeting of the Prairie Meadows Board of Directors was called to order by Mr. Myers in the James Rasmussen Board Room at Prairie Meadows in Altoona, Iowa at 3:00 p.m. Introduce New Board Member: Kurt Rasmussen At-Large. Mr. Myers introduced Mr. Rasmussen, noting his family has been closely associated with Prairie Meadows for many years, he is a tremendous business person, and he has great business experience and common sense. Mr. Rasmussen thanked Mr. Myers for his kind words. Welcome Returning Board Members: Mr. Myers welcomed returning members: E. J. Giovannetti, Taxpayers Association; Martha Willits, Polk County; Paul Rogness, At-Large. Welcome New Director of Marketing. Mr. Palmer introduced Brad Rhines as the new Marketing Director he s been in orientation and today is his first day in the office. Mr. Rhines believes this will be a great transition he s been in Biloxi, Mississippi for the last ten years and this is his first official day at Prairie Meadows; he s worked in casinos for over 15 years with the Golden Nugget companies in Atlantic City, Las Vegas, Laughlin, Biloxi, Tunica, and he s now at Prairie Meadows; Prairie Meadows has a great team and there are great opportunities here; he s looking forward to steering to great waters. Roll Call. Mark Cooper Diana Ewing E. J. Giovannetti Linda Grandquist Mark Hedberg - absent Michael Knapp Bob Myers Jack Peters Also in attendance were: Gary Palmer, President/CEO Ann Atkin, Vice President/COO Brian Wessels, Vice President/CFO Kurt Rasmussen Paul Rogness Karen Novak Swalwell - absent Lisa Moody-Tunks arrived during Financials Martha Willits Gene Meyer Michael Helak Tom Flynn, Legal Counsel Nancy Winget, Its Recording Secretary Members of the Press, Public, and Staff Approval of the Minutes. A motion was made by Mr. Cooper to approve the Minutes of the monthly meeting of the Prairie Meadows Board of Directors held on November 18, 2015, as written. The motion was seconded by Mr. Knapp and passed on a Voice Vote. YMCA. Jim Cownie said he s honored to be in the James Rasmussen Board Room; Prairie Meadows has done a lot of good over the years and he believes it is the best way for the gaming 1

2 market to operate; Vern Delpesce is here to answer questions. Mr. Cownie said the Y is part of a three way transition with Bill Knapp, Polk County, and Wellmark the J. C. Penney building became the Polk County Annex, the Convention Complex became the new Y, and the old Y will be on the tax rolls for a housing project; the transition of the first two went perfectly, but the Y stumbled; the philanthropy part of the Y went well and includes Prairie Meadows commitment; the Y expected to get some credits, along with State and EB5 funding to add to the $12.5 million it became a complicated process and the team was reluctant to give a progress report before any progress happened and he apologized for the oversight; there are over 300 contributors. The next step is Plan B with the preliminaries subject to several qualifications: new philanthropy for $2 million, Vision Iowa for $700,000-$1 million, Des Moines for $500,000, Polk County for $500,000; if the first four happen and the balance sheet is ok, the team plans to recapitalize the Y debt of $4-$5 million and then ask the five major contributors of $1 million and the 18, six figure contributors if there s any interest in making an additional commitment for a sixth year; he believes this will happen if the six things are accomplished and $9 million is raised; there are great people working on this; Mr. Knapp is traveling and was unable to be here he is the leader of getting $9 million in commitments for the $12.5 million project. Mr. Delpesce, on behalf of the Y, is humbled by the commitment of people like Mr. Cownie and Mr. Knapp; the $6 million tax credits were elusive the team tried hard with no success; now, the team is moving on to the next phase and will get it done. Mr. Myers noted that the Board s concern was the way it found out about the issues and about the time our third payment was coming due; the Board voted to suspend the third payment pending an explanation. Mr. Myers asked the timeline before financing is in place and Mr. Cownie said three months the wheels are in motion, the team has a six part plan and the balance sheet; it will happen people are generous and we live in a great community. Ms. Willits said the issue was that we were not getting answers thanked Mr. Cownie and Mr. Delpesce for coming today; she believes in what Mr. Cownie believes; thank you for the update. Mr. Meyer also believes in Mr. Cownie and asked when the pool would open and Mr. Delpesce said ten months the contractors are ready when we are. Mr. Rasmussen asked about the contracts and Mr. Delpesce said they were done in pieces and some of the bids need to be redone the team has been talking to the contractors all along. Mr. Helak noted the gap is $9 million is that all for the pool or the pool and other things and Mr. Delpesce said it s for the construction of the pool. Mr. Cownie said the team looked at downsizing the Olympic sized pool, but that didn t make sense as there are 1,500 seats; Mr. Delpesce said the economic impact of an Olympic pools will be significant to Des Moines; Ms. Grandquist noted that the pool was represented to the Prairie Meadows Boar as an Olympic sized pool, and thanked Mr. Cownie and Mr. Delpesce for coming today. Ms. Willits said Des Moines has a large downtown workforce and they want, expect, and will use the Y and the pool. Mr. Knapp said people really enjoy the facility and asked for an update on membership and Mr. Delpesce said the old Y had 4,000 members and the new Y, since January, has 8,300 members he s anticipating 15,000 members after the pool is built and the Y matures. Mr. Myers said the Board suspended the third payment what does Mr. Cownie and Mr. Delpesce want the Board to do? Mr. Cownie requested the Board unsuspend the payment and 2

3 discuss an additional pledge. Mr. Knapp noted efforts are being made to help support the Y and get the project done, he suggests the Board lift the suspension and discuss an additional contribution. Mr. Flynn said this is not an agenda item and suggested this be an Action Item at the January meeting. Mr. Myers said there are two separate things release the suspension and continue payments and additional funding. Mr. Flynn said the Board approved suspending the payment and could vote to reinstate the payment, but the second request is a separate item. Mr. Knapp mved to vote to lift the suspension and the motion was seconded by Ms. Moody-Tunks. Mr. Myers reminded the Board that Mr. Hedberg gave him authorization to vote for him. The motion passed on a Roll Call Vote ( 12 yes, 0 no, 1 member absent). Mr. Giovannetti asked if it would be appropriate to ask for updates and Mr. Myers said yes, updates can be done through e- mail or in person. Public Comment. None Financials. Mr. Wessels reviewed the November 2015 YTD financials: Net Revenue above plan 3.3%; Total Expenses below plan 3.0%; and Net Income before Community Betterment above plan 46.9%; when we were working on the 2015 budget, there were two uncertainties the exit closure and the opening of Jefferson; the IRGC studies projected Jefferson would cause an impact on Prairie Meadows between $6-$15 million and we used the mid-point of $11 million the impact hasn t been as significant as we expected. Licensee Comparisons Property Net Win 2014 vs Slot Hold YTD PMRC -0.9% 7.97% Council Bluffs Market -2.1% n/a (Horseshoe, Harrah s and Ameristar) Horseshoe/Harrah s n/a 10.74% / 10.43% Ameristar n/a 9.61% Lakeside n/a 9.64% State as a whole +2.6% n/a State as a whole removing Sioux City +0.3% n/a and Jefferson Jefferson n/a 8.09% Hotel information has not been published yet. Performance Goals November 2015 Year-to-Date Exceeds/Below Plan Casino Revenue +1.4% Total Revenue +2.2% Net Revenue +3.3% Operating Expenses +4.6% 3

4 Mr. Knapp asked Prairie Meadows hold target and Mr. Wessels said around 8% - it fluctuates. Mr. Meyer asked the number of months until we see the impact of Jefferson and Mr. Wessels said after we have one year of statistics. Mr. Knapp asked if it is a rolling twelve months and Mr. Wessels said yes, and he s starting to use the last twelve months in his presentation. Lobbyist Report. Mr. Myers reported that Mr. Skinner called yesterday and said he had nothing to report and asked to be excused his request was granted. Action Item Election of the Executive Committee (Chair, Vice Chair, Secretary) and one other member. As Past Chair, Jack Peters automatically remains a member of the Executive Committee. Mr. Myers said the Board will vote for a Chair, Vice Chair, Secretary, and an open seat; he s received recommendations from several Board members; if there is more than one nomination for a position, Mr. Flynn and Ms. Winget will count and record the ballots; the Past Chair is the fifth member of the committee and that position is not up for a vote. Chair. Ms. Grandquist moved to elect Mr. Myers as Chair, the motion was seconded by Mr. Rasmussen, there were no other nominations, and the motion passed on a Voice Vote. Vice Chair. Ms. Willits moved to elect Ms. Grandquist as Vice Chair, the motion was seconded by Mr. Giovannetti, there were no other nominations, and the motion passed on a Voice Vote. Secretary. Mr. Peters moved to elect Mr. Knapp as Secretary, the motion was seconded by Ms. Grandquist, there were no other nominations, and the motion passed on a Voice Vote. Open Seat. Mr. Knapp moved to elect Mr. Hedberg as the other member, the motion was seconded by Ms. Grandquist, there were no other nominations, and the motion passed on a Voice Vote. Past Chair. Mr. Myers said Mr. Peters fills the fifth position as the Past Chair on the Executive Committee. Action Item End-of-the-Year 401k Distribution of 2.5% for Bargaining and Non-Bargaining Employees. Mr. Wessels said we ve done this every year under the Union contracts, those employees get an additional distribution of 2.5% and we re asking that the non-bargaining employees also get 2.5%; the cost is approximately $500,000 and is in the budget; this will go into the employee s account in March Mr. Cooper moved the 2.5% for the non-bargaining employees, the motion was seconded by Mr. Giovannetti, and passed unanimously on a Voice Vote. Action Item End-of-the-Year 401k Discretionary Distribution of 1.5% for Bargaining and Non- Bargaining Employees. Mr. Wessels said we re asking that all employees who participate in the program receive an additional 1.5%; it s approximately $600,000 and is in the budget; this will go into the employee s account in March Mr. Cooper moved the 1.5% for all employees, the motion was seconded by Mr. Rogness, and passed unanimously on a Voice Vote. 4

5 Three Officers Compensation is the compensation in compliance with IRS 4958 for 2016 external report to determine fair and reasonable salaries. Mr. Wessels said the study is updated and reviewed in detail every year by the Finance and Executive Committees - it s an IRS requirement to review the Officers compensation to determine if it is fair and reasonable; Deloitte did the report in 2012 and staff has updated it every year since then; public information is used from non-profits, casinos, and casinos and gaming sector and is weighted one-third, onethird, and one-third; the report shows our Officers are in the 50 th percentile of the companies evaluated; we re asking the Board to accept the study. Mr. Helak said the study was vetted thoroughly by the Finance Committee; it s an 18 page document Deloitte prepared with benchmarks; this is good corporate governance and is an IRS mandate; a formalized study will be done in 2016 by an outside company; public information was used. Mr. Myers asked if the IRS Auditors reviewed the study and Mr. Wessels said yes, and there were no questions or concerns. Mr. Knapp said this is IRS requirement and we are required to determine that compensation is fair, reasonable, and defendable; we developed the process it is a multi-step process; he s proud of the way we do the study as we re highly scrutinized; this is a good system to rationalize compensation and fits within the IRS guidelines. Mr. Helak said the IRS is not telling us what to pay, but wants a methodology on how it s benchmarked with other officers with similar duties and tasks; the study has been updated with sources; we ll do a formalized study in Mr. Wessels said Deloitte was hired to determine the methodology and Prairie Meadows staff uses the same companies that Deloitte used. Mr. Knapp noted the Board gets questions and this is a critical area; we are being diligent; it s good to have this information. Mr. Helak said the philosophy on base compensation is different; he agrees with Mr. Knapp that this is a thorough process and there are details to support any questions. Mr. Myers said the 18 page document contains public information, but not in the format we have the Board is welcome to review the document on a one-on-one basis. There were no questions or objections to the fairness and reasonableness of the Officers compensation. Action Item Bonus Resolution. Mr. Wessels said this is just a housekeeping formality to be able to take a deduction on the 2015 income tax return; the Resolution states up to $2,050,000; we follow the plan the Board approved early in 2015; we ll wait until the audit is finalized to determine the actual amount; the bonus will be paid out by mid-february. Mr. Knapp moved to approved the Bonus Resolution, the motion was seconded by Mr. Rasmussen, and passed unanimously on a Voice Vote. President s Report. Mr. Palmer reported: Several Board members need to be relicensed by February 29, 2016 and the information is in the Board packet. Prairie Meadows and Polk County will distribute funds to the Polk County schools on January 26, 2016 at The Meadows, refreshments at 4:30 p.m. and the program begins at 5:30 p.m. Mr. Peters said funding goes to every school in Polk County, the average is $4 per student, it s a tremendous program and is funded by Prairie Meadows. Mr. Palmer noted we have an amazing community and there s always a solution to a problem. 5

6 The Board Holiday Dinner is this evening in the Café, cocktails at 5:00 p.m. and dinner at 6:00 p.m. Christmas Eve - Brunch $11.95 and Buffet $ Christmas Day Buffet $ New Year s Eve - Brunch $11.95 and Buffet $ Committee Reports Finance. Mr. Helak said the committee met on Monday and thoroughly vetted the financials revenue is up from plan and that s a good thing, the impact of Jefferson was projected to be in the 6% range according to the IRGC studies and the impact is in the 1-1.5% range; the committee also reviewed the Action Items on the Board Agenda and the Officers Compensation study. Facilities. Mr. Knapp said AJ s bar is done and he s heard great comments about it; Ms. Grandquist said it s fabulous and beautiful; Mr. Palmer said AJ s dining area will be remodeled starting the first of the year it will be done in sections and the goal is to be completely done by January 31, Mr. Knapp said a RFQ was done for the Track Level remodeling project and Weitz was awarded the contract. Audit. Ms. Willits said the committee did not meet. Human Resources. Mr. Myers said the committee did not meet. Grants. Mr. Peters said the committee did not meet. Executive. Mr. Myers said the committee met prior to this meeting; Ms. Ewing was the guest; the committee covered the topics on the Board Agenda. Other Business. Mr. Meyer attended the Iowa Business Hall of Fame event at Prairie Meadows a few weeks ago the food was great and he s heard great comments about the event kudos to Mr. Willey and staff. Mr. Helak and Mr. Myers echoed the comments. Closed Session Evaluate Gary Palmer s Job Performance and Employment Contract, Iowa Code 21.5(1)i. Mr. Myers said the Board will go into a Closed Session to evaluate Mr. Palmer s job performance and Employment Contract under Iowa Code 21.5(1)i. Mr. Cooper moved to go into a Closed Session at 3:55 p.m., the motion was seconded by Mr. Knapp, and passed on a Voice Vote. Open Session. Ms. Grandquist moved to go back into an Open Session at 4:23 p.m., the motion was seconded by Ms. Willits and passed on a Voice Vote. Mr. Myers said there are two items the Board will vote on: 1. A one year extension of Mr. Palmer s Employment Agreement. Mr. Giovannetti moved to approve a one year extension, the motion was seconded by Mr. Cooper and passed unanimously on a Voice Vote. 2. Amend the Employment Agreement, at the end of Mr. Palmer s employment, from a two year pay-out to a five year pay-out, paid out in equal monthly payments. Mr. Giovannetti moved to approve a five year pay-out; Ms. Willits would like to modify the motion to allow Mr. Palmer to be paid out over five years unless, at his option, he requests a faster pay-out. 6

7 The amended motion was seconded by Mr. Rasmussen and passed unanimously on a Voice Vote. Adjournment. Mr. Cooper moved to adjourn the meeting, the motion was seconded by Ms. Grandquist, and passed unanimously on a Voice Vote. There being no further business, the meeting adjourned at 4:30 p.m. Respectfully submitted, R. Michael Knapp, Its Secretary 7