Will Chairman Richard Keith And CFO Philip Callaghan Remain With Ultimate Escapes?

By: Destination Club News
Date: September 9, 2010

Two of the leading executives at Ultimate Escapes, the world's second largest destination club with over 1,200 members, will soon have contracts expiring with the club, begging the question, will Chairman Richard Keith and Chief Financial Officer Philip Callaghan be part of the club moving forward?

Both Keith and Callaghan have one year agreements with the club concluding on October 29, 2010. Both are subject to an automatic renewal of an additional 12 months upon the expiration date, unless terminated by either party 90 days before the end of the current term. The two highly experienced executives account for a combined salary of $750,000 and are both eligible for a "performance-based bonus as additional cash compensation."

The 90 day window prior to the automatic renewal date has already passed, meaning that if the pair haven't already been notified of an upcoming termination, they will be entitled to a severance package of six months compensation and the prorated amount of bonuses earned during the current fiscal year if they are relieved.

While both have been integral components to the Ultimate Escapes' machine, the club has made reducing their operating expenses one of their pillars in recent weeks. The club closed their Colorado branch in a cost cutting measure that will save an estimated $3 million per year. "Given what the economy has done in the last year, Ultimate Escapes, like all companies, is looking at ways to be more efficient for less costs," said Keith himself in a voice mail message with The Coloradoan following the closure. Ultimate Escapes has also appointed Sheon Karol to serve as Chief Restructuring Officer where he will be responsible for optimizing cash flow from operations amongst other duties as Ultimate Escapes looks to reduce their costs.

The Keith and Callaghan question may be an intriguing one, but the club has more timely matters in front of them. Tomorrow is the forbearance termination date as outlined in Ultimate Escapes Form 8-K, the date that lender CapitalSource specified in their forbearance agreement with the club.

In all probability, more information about what CapitalSource, CEO and President Jim Tousignant, Karol, Keith, Callaghan, and others plan to do will emerge early next week. Many options are currently on the table for the destination club, including new debt or equity financing, the liquidation of club assets, and mergers or sale opportunities. As always, we will continue to monitor the situation and will report on our findings. In the interim, contact us at contribute@destinationclubnews.com if you would like to share your thoughts on any news within the destination club industry and check back frequently for more news on Ultimate Escapes and the other major players in the sector.