Despite strong operating performance that resulted in increases in the company's total revenue, net income and earnings per share, no members of management, including Del Rio and the four other named officers, received a cash bonus due to aggressive performance targets, according to a proxy.
The decision not to pay bonuses represented a $4.5m loss of potential compensation for Del Rio and an approximately $3.8m combined loss of potential compensation for the other named officers when compared to amounts payable for maximum performance results.
Due to rigorous performance targets, Del Rio forfeited 22,500 restricted share units and 93,749 options to purchase ordinary shares from his 2015 equity award that were to be earned based on NCLH's 2016 financial performance.
Among other things, the proxy outlined the compensation committee's responses to investor feedback which included the view that the front-loaded equity awarded to Del Rio was too large. In light of his 2015 award, the committee determined not to award additional equity in 2016.
Also, Del Rio's base salary was reduced by $337,500, to $1.5m. His stock awards were valued at $625,000 and options at $537,000. $256,000 in other compensation included a car allowance and 'ceo benefits' of a $100,000 travel expense allowance, $12,000 personal allowance, $20,000 tax preparation service, $20,000 country club membership and $52,870 legal fee reimbursement.
The company's other named officers were evp and cfo Wendy Beck; Bob Binder, vice chairman, Oceania Cruises and Regent Seven Seas Cruises, and president and ceo, Oceania; Andy Stuart, president and ceo, Norwegian Cruise Line; and Robin Lindsay, evp vessel operations. (Named officers in 2015 had included Kevin Sheehan, who resigned as ceo in January that year, and Jason Montague, who was president and chief operating officer, Oceania and Regent, and currently is president and ceo, Regent.)
Binder's total 2016 compensation was worth $3.8m, up from more than $1.7m in 2015. His salary went to $575,000, down from $891,000, while stock awards were valued at nearly $2.6m and options at $649,000, compared to no awards or options the prior year. He also received $21,000 in other compensation.
The value of Stuart's total compensation went to $2.8m from $3.3m in 2015. His salary was $650,000, slightly up from $628,000. Stock awards were valued at nearly $1.5m, compared to no awards the prior year, while options were valued at $649,000, versus $2m in 2015. Other compensation was $46,000.
Lindsay, who became a named officer for the first time at NCLH, received total compensation valued at $2.5m, including a $650,000 salary and a $250,000 bonus for the successful delivery of Seven Seas Explorer. Stock awards were valued at $943,000 and options at $649,000. Other compensation was about $42,000.
Beck's compensation increased to nearly $2.3m from just over $2.1m. Her salary was $650,000, up from $625,000. Stock awards were valued at $943,000 and options at $649,000. Other compensation was nearly $41,000.
NCLH shareholders will consider executive compensation on a non-binding, advisory basis at their annual meeting, scheduled for May 25 in Miami.
Shareholders will also consider the reelection of David Abrams, John Chidsey and Russell Galbut as directors. Directors continuing in office whose terms expire in 2018 are Adam Aron, Stella David and chairman Walter Revell. Directors whose terms expire in 2019 include Del Rio, Steve Martinez and Chad Leat.
The proxy showed that various Apollo entities hold a collective 36.1m NCLH shares, or a 15.8% stake, while Genting Hong Kong has 25.4m shares, or 11.1%, T. Rowe Price 10.2%, Capital International Investors 5.7%, The Vanguard Group 5.3% and TPG Viking Funds 2.3%.
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