In a shakeup at Miami-based Norwegian Cruise Line Holdings, president and CEO Kevin Sheehan has abruptly resigned.
The board of directors of the world’s third largest cruise ship company said Friday that they had appointed cruise industry veteran Frank Del Rio — CEO of Prestige Cruises International, which Norwegian recently acquired — to replace Sheehan.
An announcement from the company gave no reason for Sheehan’s departure and he could not be reached Friday. In a regulatory filing dated Friday, Norwegian said Sheehan resigned on Thursday, effective immediately. He is entitled to compensation including a separation payment of $3.25 million, his 2014 incentive bonus of $1.6 million and all accrued and unpaid base salary and vacation time.
“It has been a privilege to lead Norwegian over the last seven years,” Sheehan, 61, said in a statement. “I am proud of what we have accomplished, and take comfort in the knowledge that I am leaving the company much healthier and stronger than when I joined. With the company set for success, I hand the baton off to Frank, a proven leader in the cruise industry.”
In an interview, Del Rio said he is not aware of Sheehan’s future plans. He would not discuss what might have prompted the departure.
“It’s a matter of policy we don’t comment on personnel matters,” Del Rio said. “We’re extremely thankful for Kevin’s services and his contributions. And we wish him well.”
The news shocked industry insiders and observers who had expected Sheehan to remain in his job for a few more years.
In an emailed note to investors — subject line “What Is Going On With Norwegian?” — Wells Fargo analyst Timothy Conder wrote that a conversation with management Friday led him to believe that “Sheehan had something from a personal perspective that had changed in the last three months leading to his decision to leave the company.”
Shares of Norwegian, which has a market capitalization of almost $9.2 billion, closed at $45.15 Friday, down more than 3 percent. The company acquired Prestige, which includes the luxury Regent Seven Seas Cruises and upscale Oceania Cruises, for more than $3 billion in a transaction that closed in November.
At the time the acquisition was announced, Del Rio said he had committed to overseeing Oceania and Regent through the end of 2015. Friday, he referred to his new role as graduating “to even the bigger leagues after running Oceania and Regent for all these years.”
Now 60, Del Rio has been CEO of Prestige since April 2007. He founded Oceania in 2003 with a partner after being fired as co-chief executive of the now-defunct Renaissance Cruises. His tenure in the industry stretches back more than 20 years.
“Opportunities come and go all the time, and this was one that I simply couldn’t pass up,” said Del Rio, who has lived in Miami since 1970. “It will be the crowning jewel in a very long career for me. And I just can’t think of a better way to continue and extend my career.”
Mike Driscoll, editor of the trade publication Cruise Week, described the industry reaction to the change as “stunned,” but said the feedback he’s gotten has been positive about Del Rio taking the job.
“He understands the business like few others,” Driscoll said in an email.
Steve Martinez, a member of the company’s board of directors, praised both new and former CEOs in a statement, crediting Sheehan with building “Norwegian into the highly successful company it is today.”
A native New Yorker, Sheehan came to the cruise industry as a newcomer who joked that his “longest cruise was on the Staten Island Ferry.” He had worked in leadership at Telemundo, oversaw Avis and Budget for Cendant Corp.’s Vehicle Services Division and spent a couple of years as a professor at Adelphi University.
He joined Norwegian as chief financial officer in 2007, becoming CEO in late 2008. He is credited with steering the company to a financial turnaround, posting a profit in 2009 for the first time in four years. In 2011, he courted publicity by putting on a disguise to appear on the CBS reality show Undercover Boss.
Sheehan took the company public in a successful offering in 2013, and oversaw the launch of a new class of ships.
He last renewed his contract with Norwegian in June of 2013, extending his tenure to 2016 with automatic renewals that would keep him at the helm until 2018 unless he or the company objected.
Del Rio said fans of the company’s cruise lines should not expect any negative changes due to the change in leadership.
“I come from the upscale brand, so if anything we’re going to be looking to always improve upon all our products and perhaps Norwegian will benefit most from a new perspective in how to deliver an upscale product to its consumers,” he said. “It’s all good for Oceania and Regent customers who can be confident that the product that they have learned to love over the years will stay intact. And on the Norwegian side, there’s the promise and prospect that that product will improve tremendously to new levels.”