Norwegian Cruise Line Holding

Meeting: May 20

Norwegian Cruise Line Holding President and CEO Frank Del Rio had  total reported compensation of $36,381,255 in 2020, more than twice his compensation in 2019. In a year where the cruise industry was severely impacted – Norwegian itself posting a $4 billion loss and 80% decrease in revenue – Del Rio’s pay spike has drawn media attention. It was one of a few companies featured in a Wall Street Journal article, “CEO Pay Surged in a Year of Upheaval and Leadership Challenges: The executives’ compensation for 2020 is on track for a record even as shareholders voice displeasure with some pay packages”

While more than $10 million of Del Rio’s pay came from “the cash payment owed to our President and Chief Executive Officer under his previous employment agreement” that was amended in 2017, his additional $8.8 million of inducement bonuses and restricted stock awards were was discretionary. Furthermore, every other NEO was given a “retention” bonus and additional stock awards. These “pay to stay” bonuses more than covered the 20% reduction in base salary that executives took in 2020. In fact, the total reported compensation of every company executive increased by at least 40% since 2019.

A company spokeswoman defended the company’s pay decisions, as reported in the Wall Street Journal:

‘“We believe these changes were in the best interests of the company and secured Mr. Del Rio’s continued invaluable expertise,” the spokesman said. “Our management team took quick, decisive action to reduce costs, conserve cash, raise capital” and is executing a plan to relaunch its ships.’

Norwegian’s retention efforts apparently did not apply to its frontline employees – 20% of whom joined the more than 100,000 shoreline workers who found themselves out of work last year. Even the company employees who remained still took a 20% salary cut and moved to four-day workweeks. These furloughs may provide an explanation for the company’s median employee compensation increasing from $16,925 for 2019 to $30,635 for 2020. The number of low paid employees working on ships has declined. Nevertheless, the CEO-to-median employee pay ratio still increased to 1,188:1 in 2020.