Norwegian Cruise Line investors vote against CEO’s $36.4 million pandemic payout
Norwegian Cruise Line Holdings shareholders gave a big thumbs down to the company’s plan to pay its CEO $36.4 million for 2020, double what he made the year before the COVID-19 pandemic shut down the cruise industry.
In a rare rebuke, 83% of shareholders did not approve the company’s executive compensation in a non-binding vote Thursday known as say-on-pay. As part of his $36.4 million payout, the company’s board awarded CEO Frank Del Rio a $2.8 million bonus despite the company’s record $4 billion loss for the year.
A spokesperson for Norwegian Cruise Line Holdings did not respond to a request for comment about the decision.
Norwegian Cruise Line Holdings is the third largest cruise company in the world valued at $11.6 billion, with a total of 28 ships operating under the brands Norwegian Cruise Line, Regent Seven Seas and Oceania Cruises. It employs 34,000.
Depending on how the company’s board members react to the vote, they could risk being voted off by shareholders, said Luis Navas, founder and senior partner of Global Governance Advisors, which advises companies on executive pay.
“This is a strong, strong message — stronger than what you’d normally see,” he said. “The worst thing they can do is not react at all.”
Norwegian’s competitors Carnival Corporation and Royal Caribbean Group took a different approach to executive compensation in the worst year for the cruise industry. Neither company awarded bonuses to its top executives. Carnival’s Arnold Donald made $13.3 million and Royal Caribbean’s Richard Fain made $12 million.
All three companies stopped paying thousands of their crew members while they were stuck on their ships waiting to be sent home. Some workers remained stuck and unpaid for several months.
Last month a spokesperson for Norwegian Cruise Line Holdings said Del Rio’s pay reflected business effects of the COVID-19 pandemic, the U.S. government’s decision to ban cruises to Cuba and an employment agreement extension.
Investors have voted against executive compensation at a record number of companies this year, according to Reuters. In the past, negative say-on-pay votes have pressured company boards and executives to renegotiate pay deals.
Navas, the executive compensation adviser, called the vote “incredibly embarrassing” and said the shareholders’ thinking is easy to understand.
“You had a global pandemic. You had an industry that is still shut down, losing billions of dollars. You had thousands of thousands of jobs lost, and yet one of the highest pay packages in America,” he said. “You have to remember that 99.99% of Americans don’t ever make this kind of money in their lifetimes. You’ve got to be sensitive to that.”
This story was originally published May 26, 2021 at 3:49 PM.
