UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549_______________________
SCHEDULE 14A INFORMATION
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ROYAL CARIBBEAN CRUISES LTD.
Royal Caribbean Cruises Ltd.
(Name of Registrant as Specified In Its Charter)
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Notice of 2022 Annual Meetingand Proxy Statement
Miami, Florida | June 2, 2022
Who We Are
We are one of the leadinglargest and most successful cruise companies in the world. We operateworld operating through our three global cruise brands: Royal Caribbean International, Celebrity Cruises and Silversea Cruises, (collectively,and also through our “Global Brands”). We also own a 50% joint venture interest in TUI Cruises GmbH that operates the German brandspartner brands: TUI Cruises and Hapag-Lloyd Cruises, (collectively, our “Partner Brands”).in which we own a 50% stake. Together, our Global Brands and our Partner Brands operatebrands represent a combined total of 6164 ships in the cruise vacation industry with an aggregate capacity of approximately 140,855150,005 berths as of December 31, 2021.2022.
Letter from the
Chief Executive Officer
“ Jason T. Liberty
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Dear Fellow Shareholders,fellow shareholders,
As I reflect on this past year, I am tremendously proudOn behalf of everything ourRoyal Caribbean Group’s nearly 100,000 employees and crew members, I want to express how pleased we are with the progress our company has made over the past year. While 2022 had its challenges, it was a transitional year full of many notable achievements, including returning our business to full operations and leadership teams have achieveddelivering memorable vacations to help6 million guests.
We finished the year on a high note, and we will continue to build on that momentum throughout 2023. The normalization of our operations provide the visibility needed for us return to service after 15 months of being shut down due to the COVID-19 pandemic. It was truly an amazing moment in June 2021 to welcome back our first guests in the U.S. and to resume deliveringannual guidance. Additionally, we have developed a strong foundation to achieve our goals on Trifecta, our purpose as an organization –three-year initiative designed to provide the best vacations in the world in a responsible way.
Our Leadership Transitions
In December, my colleague, mentor and friend, Richard Fain, announced he would step down from his role as Chief Executive Officer after 33 years. There is no doubt Richard’s legacy will live on for many years.drive record financial performance. I am incredibly humbledproud of everyone at Royal Caribbean Group for the work they do each day to execute on our mission and honoredfurther strengthen the foundation for our future growth.
Supporting our communities and people
Our environmental, social and governance (ESG) ambitions help inform our strategic and financial decisions on a daily basis, ensuring that we always act responsibly while achieving our long-term profitability goals. In the year ahead, we will:
Our future
Looking to the rest of 2023 and beyond, we will remain focused on our strategic and operational journey – while never losing sight of our Trifecta goals. We’ll also be hard at work executing on our strategic pillars, which are deepening customer relationships, delivering the best hardware and destinations, and excelling in the core of our business. As we move forward, I want to also acknowledge our unwavering commitment to our people, guests, communities, travel partners and shareholders. Royal Caribbean Group wouldn’t be the company it is without the support of all our stakeholders.
The future of our company is bright, and we are well-positioned to achieve both our near-term goals and succeed for the long-term. I have no doubt that this next President and Chief Executive Officerchapter of the Royal Caribbean Group and to partner with Richard in his role as Chairman of our Board of Directors. Additionally, we welcomed Naftali Holtz to the role of Chief Financial Officer. Naftali is a strong leader and has beenwill be a great partner in strengthening our financial condition as we continue our recovery efforts.
Our Commitment to ESG
In addition to a healthy return to sailing, we are steadfast in our commitment to environmental, social and governance (ESG) practices and the destinations we visit and the communities we serve. And as always, we continue to drive toward innovation, continuous improvement and doing the best we can for all of our stakeholders through a variety of efforts and initiatives. For example, last October, we announced our most exciting destination yet – Destination Net Zero – which outlined our aim to achieve net zero emissions by 2050. This ambitious strategy to cut emissions, protect our oceans and ensure the viability of our destinations builds upon our environmental journey that began 30 years ago with our Save the Waves campaign. We also continue to make progress in other areas of our ESG strategy, specifically in diversity, equity and inclusion and governance.
Our Future
As we continue to navigate the pandemic, we are focused on our full return to service, with our goal to have all of our ships back at sea as soon as possible. We and our award-winning brands, Celebrity Cruises, Royal Caribbean International, Silversea Cruises, TUI Cruises and Hapag-Lloyd Cruises remain committed to delivering the very best vacation experiences.
I believe the coming months and years will be transformational for our company,one, and I am excited about our future. I know expectations are high for our long-term growth and success, as they should be. We arelook forward to all committed to exceeding those expectations every day, and I thank you for your continued support and dedication to Royal Caribbean Group.we will accomplish in the year ahead, together.
Sincerely,
Jason T. Liberty
President and Chief Executive Officer
2023 Proxy – Letter from the Chief Executive Officer | 1 | ||
20212022 Performance Highlights
Navigating the Pandemic and Recovering from the Crisis – Key 20212022 Successes
Successful Return to Full Operations | 100% | 95% | +3.5% | 6 M | ||||
of fleet in operation since June 2022 | Significant ramp-up in load factors, from 57% in first quarter to 95% in the fourth quarter of 2022 | Strong demand for our vacation experiences; 3.5% increase in revenue per passenger cruise day versus 2019 | 6 million vacations delivered during 2022 at high guest satisfaction scores | |||||
Enhancing Platform for Long-Term Growth | ≈1,000 |
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Launched 3 new ships Strong pipeline capacity of 10 new ships to be delivered in 2023-2026 | Destinations visited Advanced critical port and destination efforts for a diversified port portfolio | Continued investments in private destinations and our digital infrastructure to enhance our guest experience and commercial capabilities | In November 2022, the Company introduced the Trifecta program, a new three-year initiative designed to drive superior performance | |||||
Strong Liquidity and Improving Financial Performance | > $2.9 B | |||||||
Year-end liquidity | Disciplined cost management and focus on profitability, abating inflationary cost increases of more than 25% since 2019 | Successfully refinanced $6.9 billion of debt to manage debt maturity profile | Generated approximately $500M of operating cash flow | |||||
ESG is Core to our Business | ||||||||
Opened the first net zero cruise terminal in Galveston, Texas | Launched a new environmental protection initiative – “Blue Green Promise” – aimed at supporting resilient and sustainable ocean communities | Set a short-term target for Destination Net Zero to reduce carbon intensity by double digits by 2025. | Introduced our “Propelled by People” campaign, a new platform to increase employee engagement. |
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We look forward to welcoming you to our 20222023 Annual Meeting of Shareholders. This important meeting provides the Board of Directors and management with an opportunity to receive collective feedback from you, our shareholders. We place significant value on your opinion, and we have strived to highlight in this summary key information for your consideration. We recommend, however, that you read the entire proxy statement carefully before voting.
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Director Nominees
Director | Committee Membership | |||||||
Name and Primary Occupation | Age | Since | AC | TCC | NGC | SESH | ||
John F. Brock IND Former Chairman & CEO, Coca-Cola European Partners | 73 | 2014 | ||||||
Richard D. Fain Chairman, Former CEO Royal Caribbean Group | 74 | 1981 | ||||||
Stephen R. Howe, Jr. IND Former U.S. Chairman & Managing Partner, Ernst & Young | 60 | 2018 | ||||||
William L. Kimsey LEAD DIRECTOR Former CEO, Ernst & Young Global | 79 | 2003 | ||||||
Michael O. Leavitt IND Co-Chairman, Health Management Associates and Chairman, Leavitt Equity Partners | 71 | 2022 | ||||||
Jason T. Liberty President and CEO, Royal Caribbean Group | 46 | 2022 | ||||||
Amy McPherson IND Former President & Managing Director, Europe, Marriott | 60 | 2020 | ||||||
Maritza G. Montiel IND Former Deputy CEO & Vice Chairman, Deloitte | 70 | 2015 | ||||||
Ann S. Moore IND Former Chairman & CEO, Time | 71 | 2012 | ||||||
Eyal M. Ofer IND Chairman, Ofer Global and Zodiac Group | 71 | 1995 | ||||||
William K. Reilly IND Founding Partner, Aqua International Partners | 82 | 1998 | ||||||
Vagn O. Sørensen IND Former President & CEO, Austrian Airlines Group | 62 | 2011 | ||||||
Donald Thompson IND Former President & CEO, McDonald’s | 59 | 2015 | ||||||
Arne Alexander Wilhelmsen IND Chairman, AWILHELMSEN AS | 56 | 2003 |
PROPOSAL 1 Election of Directors | The board recommends a vote “FOR” each nominee. | ||||
Director Nominees
Committee | ||||||||||
Name and Primary Occupation | Age | Director Since | AC | TCC | NGC | SESH | ||||
John F. Brock INDEPENDENT Former Chairman & CEO, Coca-Cola European Partners | 74 | 2014 | ||||||||
Richard D. Fain Chairman, Former CEO Royal Caribbean Group | 75 | 1981 | ||||||||
Stephen R. Howe, Jr. INDEPENDENT Former U.S. Chairman & Managing Partner, Ernst & Young | 61 | 2018 | ||||||||
William L. Kimsey LEAD DIRECTOR Former CEO, Ernst & Young Global | 80 | 2003 | ||||||||
Michael O. Leavitt INDEPENDENT Co-Chairman, Health Management Associates and Chairman, Leavitt Equity Partners | 72 | 2022 | ||||||||
Jason T. Liberty President and CEO, Royal Caribbean Group | 47 | 2021 | ||||||||
Amy McPherson INDEPENDENT Former President & Managing Director, Europe, Marriott | 61 | 2020 | ||||||||
Maritza G. Montiel INDEPENDENT Former Deputy CEO & Vice Chairman, Deloitte | 71 | 2015 | ||||||||
Ann S. Moore INDEPENDENT Former Chairman & CEO, Time | 72 | 2012 | ||||||||
Eyal M. Ofer INDEPENDENT Chairman, Ofer Global and Zodiac Group | 72 | 1995 | ||||||||
Vagn O. Sørensen INDEPENDENT Former President & CEO, Austrian Airlines Group | 63 | 2011 | ||||||||
Donald Thompson INDEPENDENT Former President & CEO, McDonald’s | 60 | 2015 | ||||||||
Arne Alexander Wilhelmsen INDEPENDENT Chairman, AWILHELMSEN AS | 57 | 2003 | ||||||||
Rebecca Yeung INDEPENDENT Corporate Vice President at FedEx Corporation | 51 | 2023 |
AC | Audit Committee | SESH | Safety, Environment, Sustainability and Health Committee | Chair | |||
NGC | Nominating and Corporate Governance Committee | TCC | Talent and Compensation Committee | ||||
Member |
2023 Proxy – Proxy Summary | 3 | ||
Proxy Summary
Board Snapshot
Skills and Experience
Diversity | Independence | Tenure | Age | |||
Skills and Experience | |||||
INDUSTRY | Experience in industries such as hospitality, travel, tourism and shipping results in a deep understanding of consumer expectations and business strategy | ||||
EXECUTIVE LEADERSHIP | Valuable in understanding and managing a range of corporate governance, risk management, strategic planning, finance, operational and management and succession planning matters | ||||
REGULATED BUSINESS | Familiarity with highly regulated industries can provide the Board with insight and understanding of effective strategies in managing the complex political and regulatory landscape in which we operate | ||||
GOVERNMENT / PUBLIC POLICY | Helpful to oversee management’s interactions with governing authorities while achieving desired business objectives | ||||
SUSTAINABILITY / ENVIRONMENTAL | Strengthens the Board’s oversight and assures that strategic business imperatives and long-term value creation are achieved within a sustainable, environmentally focused model | ||||
FINANCE / ACCOUNTING | Valuable in contributing to and overseeing strong financial planning, reliable financial information, robust controls and financial reporting | ||||
GLOBAL ENTERPRISE | Experience with a global enterprise or with international markets aids the Board in understanding diverse business environments, economic conditions, and cultures associated with our global workforce and activities | ||||
TECHNOLOGY / INNOVATION / CYBERSECURITY | Helps management address | ||||
CONSUMER BUSINESS | Valuable as the Company seeks to provide all cruising guests with memorable vacation experiences and superior customer service | ||||
RISK MANAGEMENT | Enables directors to effectively anticipate and oversee the most significant risks facing the Company |
4 | 2023 Proxy – Proxy Summary | ||
Proxy Summary
PROPOSAL 2
| The board recommends a vote “FOR” this proposal. | ||||
We place significant focus on the design of our executive compensation programs as we believe their effectiveness is crucial to our success as a company. We assess our programs regularly and strive to continuously make improvements as well as incorporate shareholder feedback.
Executive Compensation Program
Align the interests of our | Recruit, retain, and | Reward positive contributions |
PRINCIPLES |
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Total direct compensation |
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Performance-based and “at-risk” incentive compensation should constitute a substantial portion of total compensation. | We seek to foster a pay-for-performance culture, with a significant portion of total direct compensation being performance-based and/ or “at risk.” Executives with greater responsibilities and the ability to directly impact our strategic and operational goals and long-term results should bear a greater proportion of the risk if these goals and results are not achieved. Therefore, the more senior the executive, the greater the percentage of total compensation in the form of performance-based and/or “at risk” compensation. | |
Long-term incentive compensation should align executives’ interests with our shareholders’ interests to further the creation of long-term shareholder value. | We focus on ensuring that executive compensation includes a high proportion of long-term performance-based equity compensation. Awards of equity-based compensation encourage executives to focus on our long-term growth and prospects and incentivize executives to manage our company from the perspective of owners with a meaningful stake and to encourage them to remain with us for long and productive careers. Our stock ownership guidelines further enhance the incentive to create long-term shareholder value. Equity-based compensation also subjects our executives to market risk, a risk also borne by our shareholders. |
2023 Proxy – Proxy Summary | 5 | ||
Proxy Summary
Executive Compensation Program
Compensation Elements
We provide compensation to our executives consisting of three principal elements: base salary, performance-based annual incentive bonus and long-term equity awards. The objectives and key features of each pay element are described below.
Pay Elements | ||||||||||||
CEO | Other NEOs | Objective | Key Features | |||||||||
●Provide a base level of | ●Set annually based on market competitiveness and ● | |||||||||||
●To focus executives on annual financial and operational performance ●To reward executives for performance relative to our short-term goals and initiatives | ● ●Payouts range from 0% and 200% based on achievement of results during the year ●For our President and CEO, payout is entirely based on corporate performance. For other NEOs, one-third is determined based on individual performance and two-thirds is determined by corporate and, if applicable, brand performance | |||||||||||
●Structured to align with shareholder interests, reward the achievement of long-term goals and promote stability and corporate loyalty among the executives | ●Earned only if specified financial performance measures are met ●Typically, with a three-year performance measure ● ●PSU Awards granted in 2022 for the period ended December 2024 can range from 0% to 200% of target
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●Multi-year vesting requirements align our executives’ interests with our shareholders and incentivize retention of our executive talent | ● ●Increases, when appropriate, are provided based on market movements, scope of responsibilities, and merit. |
6 | 2023 Proxy – Proxy Summary | ||
Proxy Summary
PROPOSAL 3 | The board recommends a vote for the option of “ONE YEAR.” | ||||
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Applicable SEC rules require that, at least once every six years, shareholders be given the opportunity to vote on an advisory basis regarding the frequency (i.e., annually, every two years or every three years) of future shareholder advisory “say-on-pay” votes on the compensation of our named executive officers. Our shareholders voted on a similar proposal in 2017, with the majority voting to hold the say-on-pay vote annually. We continue to believe that say-on-pay votes should be conducted every year so that our shareholders may annually express their views on our executive compensation program.
PROPOSAL 4 Ratification of Principal Independent Registered Public Accounting Firm | The board recommends a vote “FOR”this proposal. | ||||
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Aggregate fees for professional services rendered by PricewaterhouseCoopers LLP for the fiscal years ended December 31, 2022 and 2021 and 2020 were:
2021 | 2020 | |||||||
Audit fees | $ | 4,967,736 | $ | 5,718,226 | ||||
Audit-related fees | $ | 193,375 | $ | 190,265 | ||||
Tax fees | $ | 10,902 | $ | 14,616 | ||||
All other fees | $ | 10,000 | $ | 10,000 | ||||
Total | $ | 5,182,013 | $ | 5,933,107 | ||||
2022 | 2021 | |||||
Audit fees(1) | $ | 5,090,316 | $ | 4,967,736 | ||
Audit-related fees(2) | $ | 212,889 | $ | 193,375 | ||
Tax fees(3) | $ | 12,488 | $ | 10,902 | ||
All other fees(4) | $ | 10,000 | $ | 10,000 | ||
Total | $ | 5,325,693 | $ | 5,182,013 |
(1) | The audit fees for the fiscal years ended December 31, 2022 and 2021 were for professional services rendered for the integrated audits of the Company’s consolidated financial statements and system of internal control over financial reporting, quarterly reviews, statutory audits required by foreign jurisdictions, consents, issuance of comfort letters, and review of documents filed with the SEC. | ||
| The audit-related fees for the fiscal years ended December 31, 2022 and 2021 were for the audits of |
| other attest services. |
(3) | Tax fees for the fiscal years ended December 31, 2022 and 2021 were for services performed in connection with international tax compliance, and transfer pricing. | ||
(4) | All other fees for the fiscal years ended December 31, 2022 and 2021 were for subscription fees for accounting and auditing research software. |
We are asking shareholders to approve an amendment and restatement of our 2008 Equity Incentive Plan to, among other things, increase the number of shares of common stock reserved for issuance thereunder by 9.5 million shares. This amendment and restatement of the 2008 Plan (the “Amended Plan”) was recommended by our Talent and Compensation Committee. If approved by our shareholders, the Amended Plan will become effective as of the date of the Annual Meeting.
2023 Proxy – Proxy Summary | 7 | ||
8 | 2023 Proxy – Table of Contents | ||
Notice of Annual Meeting
of Shareholders
DATE & TIME June 1, 2023 9:00 A.M., ET |
LOCATION
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RECORD DATE
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How to Vote |
BY INTERNET |
BY TELEPHONE |
BY MAIL
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Items of Business | ||||
1. | Election of 14 directors to the Board | |||
Recommendation: FOR | Page Reference: 10 | |||
2. | Say-on-pay: advisory vote to approve the compensation of our named executive officers | |||
Recommendation: FOR | Page Reference: | |||
3. | Advisory vote on frequency of shareholder vote on executive compensation | |||
Recommendation: ONE YEAR | Page Reference: 82 | |||
4. | Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for | |||
Recommendation: FOR | Page Reference: | |||
Shareholders also will transact such other business as may properly come before the Annual Meeting and any adjournment thereof.
We will furnish our proxy materials over the Internet as permitted by the rules of the U.S. Securities and Exchange Commission. As a result, we are sending a Notice of Internet Availability of Proxy Materials rather than a full paper set of the proxy materials, unless you previously requested to receive printed copies. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our proxy materials on the Internet, as well as instructions on how shareholders may obtain a paper copy of the proxy materials. This process will reduce the costs associated with printing and distributing our proxy materials.
Internet voting is available to make it easier for you to vote in advance of the Annual Meeting. The instructions on the Notice of Internet Availability of Proxy Materials or your proxy card describe how to use these convenient services.
All shareholders are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend, you are urged to vote as soon as possible by Internet or mail so that your shares may be voted in accordance with your wishes. Granting a proxy does not affect your right to revoke it later or to vote your shares in the event you attend the Annual Meeting.
R. Alexander Lake
Senior Vice President, Chief Legal Officer and Secretary
Royal Caribbean Cruises Ltd.
April 18, 2023
April 19, 2022
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE SHAREHOLDER MEETING TO BE HELD ON JUNE 2, 20221, 2023
On or about April 19, 2022,18, 2023, we mailed a Notice of Internet Availability of Proxy
Materials containing instructions on how to access our proxy statement and 2021 2022
annual report. These materials are available online at proxyvote.com.
2023 Proxy – Notice of Annual Meeting of Shareholders | 9 | ||
Corporate Governance and
Board Matters
Our Board currently has 14 members, each of whom is standing for re-election to hold office until the next Annual Meeting of Shareholders and until their successors are duly elected and qualified. Each candidate has consented to being named in this proxy statement and serving as a director, if elected. However, if any nominee is not able to serve, the Board can either nominate a different person or reduce the size of the Board. If the Board nominates another individual, the persons named as proxies may vote for that nominee.
The Board unanimously recommends that shareholders vote “ FOR” the election of each of the nominees for director named below. |
Our Board is made up of a diverse group of leaders with substantial experience in their respective fields. Our director nominees hold and have held senior positions as leaders of various large and complex businesses and organizations and in government, demonstrating their ability to develop and execute significant policy and operational objectives at the highest levels. Our nominees include current and former chief executive officers, chief financial officers, chief operating officers and other members of senior management of large, global businesses. Through these roles, our nominees have developed expertise in, among other things, core business strategy, operations, finance, human capital management and leadership development, compliance, controls and risk management, as well as the skills to respond to rapidly evolving business environments and to foster innovation and business transformation. Additionally, our nominees’ experience serving in government and on other boards brings valuable knowledge and expertise, including in the areas of public policy, governance, succession planning, financial reporting and regulatory compliance. Our Board believes that the combination of the various skills, qualifications and experiences of the director nominees contributes to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight and strategic guidance.
10 | 2023 Proxy – Corporate Governance and Board Matters | ||
Corporate Governance and Board Matters
We have included below detailed biographical information for each director nominee, including career highlights, other public directorships and select professional and community contributions, along with the top qualifications, experience, skills and expertise we believe each director brings to our Board. Our Board considered all of these attributes when deciding to nominate these individuals to the Board.
| | John F. Brock | |
| BACKGROUND: Mr. Brock retired as Chief Executive Officer of Coca Cola European Partners in December 2016, having served in that role since the formation of that company in May 2016. Prior to that, Mr. Brock served as Chairman and Chief Executive Officer of Coca Cola Enterprises Inc. since April 2008 and as Chief Executive Officer since April 2006. From February 2003 until December 2005, Mr. Brock was Chief Executive Officer of InBev, S.A., a global brewer, and from March 1999 until December 2002, he was Chief Operating Officer of Cadbury Schweppes plc, an international beverage and confectionery company. From April 2007 to December 2007, Mr. Brock served as a director of Dow Jones & Company, Inc., a publisher and provider of global business and financial news. From 2004 to 2006, he served as a director of the Campbell Soup Company, a global manufacturer and marketer of branded convenience food products. From 2003 to 2005, he served as a director of Interbrew / Inbrew, a beer brewing company. He also served as a director of Reed Elsevier, a publisher, from 1997 to 2003. Mr. Brock is a Trustee of the Georgia Tech Foundation, Director of Horizons Atlanta, a philanthropic organization that enhances education for underserved children, and a member of the Smithsonian National Board. Mr. Brock also is a member of the Advisory Board of BIP Capital, a venture capital firm. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 74 Director Since: Committees: Other Public Company Boards: | |||
2023 Proxy – Corporate Governance and Board Matters | 11 | ||
Corporate Governance and Board Matters
| | Richard D. Fain | |
| BACKGROUND: Mr. Fain has served as our Chief Executive Officer from 1988 through January 2022. He has been a director of the Company since 1981 and SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Chairman of the Board Age: 75 Director Since: Committees: Other Public Company Boards: | |||
| | Stephen R. Howe, Jr. | |
| BACKGROUND: Mr. Howe served as U.S. Chairman and Managing Partner and Americas Area Managing Partner of Ernst & Young (“EY”) and was a member of EY’s Global Executive Board from 2006 until his retirement in 2018. In these roles, Mr. Howe directed strategy and operations for EY’s businesses of over 75,000 people, delivering professional services across all industry sectors. While leading EY, Mr. Howe also gained extensive board governance and regulatory experience and was executive sponsor for the firm’s focus on diversity and inclusiveness. He was with EY for over 35 years. Mr. Howe is also a member of the Board of Trustees of Carnegie Hall, the Board of the Peterson Institute for International Economics and the Board of Trustees (Chairman) of the Liberty Science Center. Mr. Howe was previously a member of the boards of Colgate University, the Center for Audit Quality and the Financial Accounting Foundation. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 61 Director Since: Committees: Other Public Company Boards: | |||
12 | 2023 Proxy – Corporate Governance and Board Matters | ||
Corporate Governance and Board Matters
| | William L. Kimsey | |
| BACKGROUND: Mr. Kimsey was employed for 32 years through September 2002 with the independent public accounting firm Ernst & Young L.L.P. From 1998 through 2002, Mr. Kimsey served as the Chief Executive Officer of Ernst & Young Global and Global Executive Board member of Ernst & Young and from 1993 through 1998 as the Firm Deputy Chairman and Chief Operating Officer. From 2003 until 2018, Mr. Kimsey served on the board, the compensation committee, and the audit committee (serving as chair from 2011-2018) of Accenture Plc. From 2004 until 2008, he served on the board of NAVTEQ Corporation and was the chairman of its audit committee. From 2003 through 2014, Mr. Kimsey also served on the board and the audit committee of Western Digital Corporation. Mr. Kimsey is a certified public accountant and a member of the American Institute of Certified Public Accountants. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Lead Director Age: 80 Director Since: Committees: Other Public Company Boards: | |||
| | Michael O. Leavitt | |
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| BACKGROUND: Gov. Leavitt is the Co-Chairman of Health Management Associates, a health care consulting firm, and Chairman of Leavitt Equity Partners, a private equity fund. From 2009 to 2021, he served as the Chairman of Leavitt Partners, LLC, a health care consulting firm. He also previously served as the United States Secretary of Health and Human Services from 2005 to 2009, the Administrator of the Environmental Protection Agency from 2003 to 2009 and the Governor of the State of Utah from 1993 to 2003. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 72 Director Since: Committees: Other Public Company Boards: | |||
2023 Proxy – Corporate Governance and Board Matters | 13 | ||
Corporate Governance and Board Matters
| | Jason T. Liberty | |
| BACKGROUND: Mr. Liberty has served as President and Chief Executive Officer since January 2022. Mr. Liberty has held several roles since joining the Company in 2005, including most recently as Executive Vice President and Chief Financial Officer since 2017 and, prior to that, as Senior Vice President and Chief Financial Officer since 2013. Before his role as Chief Financial Officer, Mr. Liberty served as Senior Vice President, Strategy and Finance from 2012 through 2013; as Vice President of Corporate and Revenue Planning from 2010 through 2012; and as Vice President of Corporate and Strategic Planning from 2008 to 2010. Before joining Royal Caribbean Group, Mr. Liberty was a Senior Manager at the international public accounting firm of KPMG LLP. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 47 Director Since: Committees: Other Public Company Boards: | |||
| Amy McPherson
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| BACKGROUND: Ms. McPherson served in various positions at Marriott International, Inc. for over 30 years. Most recently, from 2009 through 2019, she served as President & Managing Director, Europe. Under her leadership, Marriott launched five new brands in Europe and completed the successful integration of Starwood Hotels in Europe. Since 2017, Ms. McPherson has served as a non-executive member of the board of directors of PVH Corporation and is a member of its Audit and Nominating & Governance Committees. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 61 Director Since: Committees: Other Public Company Boards: | |||
14 | 2023 Proxy – Corporate Governance and Board Matters | ||
Corporate Governance and Board Matters
| | Maritza G. Montiel | |
| BACKGROUND: Ms. Montiel served as Deputy Chief Executive Officer and Vice Chairman of Deloitte LLP from 2011 through her retirement in May 2014. Prior to these positions, she held numerous senior management roles at Deloitte, including Managing Partner (Leadership Development and Succession, Deloitte University) from 2009 to 2011, and Regional Managing Partner from 2001 to 2009. During Ms. Montiel’s tenure at Deloitte, she was the Advisory Partner for many public company registrants in The Board has concluded that Ms. Montiel’s simultaneous service on four public company audit committees would not impair her ability to serve on the Audit Committee. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 71 Director Since: Committees: Other Public Company Boards: | |||
| 15 | ||
Corporate Governance and Board Matters
Other Public Company Boards:
None
| Ann S. Moore | ||
| BACKGROUND: Ms. Moore served as SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Corporate Governance and Board Matters
Age: Director Since:
Other Public Company Boards:
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| Eyal M. Ofer | ||
| BACKGROUND: Mr. Ofer SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 72 Director Since: Committees: Other Public Company Boards: | |||
16 | 2023 Proxy – Corporate Governance and Board Matters | ||
Corporate Governance and Board Matters
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Corporate Governance and Board Matters
| Vagn O. Sørensen | ||
| BACKGROUND: Mr. Sørensen brings to the Board over 20 years of experience in the aviation industry, having served as the President and Chief Executive Officer of Austrian Airlines Group from 2001 through 2006. Prior to that, he served in a variety of roles with Scandinavian Airlines Systems, including as Executive Vice President and Deputy CEO. He currently serves as a board member and chairman for a number of corporations throughout Europe and Canada, including Air Canada, SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 63 Director Since: Committees: Other Public Company Boards: | |||
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Corporate Governance and Board Matters
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| BACKGROUND: Mr. Thompson currently serves as Chief Executive Officer of Cleveland Avenue, LLC, a food, beverage and technology investment company, which he founded in 2015. From 2012 to March 2015, Mr. Thompson served as President and Chief Executive Officer of McDonald’s Corporation. Previously, Mr. Thompson served as President and Chief Operating Officer of McDonald’s Corporation from 2010 to 2012 and President of McDonald’s USA from 2006 to 2010. Prior to joining McDonald’s, Mr. Thompson served six years as an Electrical Engineer for the Northrop Corporation, where he specialized in power supply design and manufacturing for high technology radar systems. Mr. Thompson served as director of McDonald’s Corporation from 2011 to March 2015, a director of Exelon Corporation from 2007 to 2013 and a director of Beyond Meat, Inc. from 2015 to May 2021. He also served as an Advisory Board member of DocuSign, Inc. from 2015 to SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 60 Director Since: Committees: Other Public Company Boards: | |||
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Corporate Governance and Board Matters
| | Arne Alexander Wilhelmsen | |
| BACKGROUND: Mr. Wilhelmsen is Chairman of the board of directors of AWILHELMSEN AS, the holding company for the AWILHELMSEN group of companies, after having served as the Chairman of the board of directors of AWILHELMSEN Management AS from 2008 through June 2013. He also founded, and has served since 2011 as Chairman of the Board of, AWECO AS, a family office with financial investments, significant philanthropy and social impact activities. Mr. Wilhelmsen was elected Chairman of the Board of AWILHELMSEN HOLDING AS in June 2016 and Aweco Cruise Holding AS in June 2017. He has held a variety of positions within the AWILHELMSEN group of companies since 1995. In addition, Mr. Wilhelmsen serves as Chairman of the board of his wholly-owned company, Pan Sirius AS. From 1996 through 1997, Mr. Wilhelmsen was engaged as a marketing analyst for the Company and from 2001 through 2009 served as a member of the board of directors of Royal Caribbean Cruise Line AS, a wholly-owned subsidiary of Royal Caribbean Cruises Ltd. that was responsible for sales and marketing activities in Europe. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE:
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Age: 57 Director Since: Committees: Other Public Company Boards: | |||
| Rebecca Yeung | |||
| BACKGROUND: Ms. Yeung serves as Corporate Vice President, Operations Science and Advanced Technology at FedEx Corporation, a global logistics company with a broad portfolio of transportation, e-commerce and business services. In her role, she is responsible for driving critical aspects of FedEx’s innovation and transformation strategy including scaling up robotics and automation technology, autonomous vehicles, decision science, and electromobility. Ms. Yeung joined FedEx in 1998 and has served in various marketing, innovation, and technology roles since then. Prior her current role, she was Vice President – Advanced Technology & Innovation at FedEx Corporation from 2015 to 2021. She has also previously served as a Board of Director for the Mid-South Food Bank between 2013 and 2022. SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE: | |||
Age: 51 Director Since: Committees: Other Public Company Boards: | ||||
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Corporate Governance and Board Matters
As illustrated by the director biographies above, our Board is made up of a diverse group of leaders with substantial experience in their respective fields. We believe that our directors should possess the highest personal and professional ethics, integrity and values, demonstrate the ability to act candidly, show a willingness and ability to evaluate, challenge and stimulate, have demonstrated leadership ability and a proven record of accomplishment as well as expertise in business, professional, academic, political or community affairs, and be committed to representing the long-term interests of the shareholders. Our Board believes that the combination of the various skills, qualifications and experiences of the director nominees contributes to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight and insightful strategic guidance.
Board Snapshot
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Corporate Governance and Board Matters
Skills and Experience
Our Board periodically reviews the appropriate skills and expertise required of the Board in order to successfully carry out its responsibilities both in the near term and into the future. This assessment includes issues of diversity (including diversity of race, gender and ethnicity), business experience and expertise – all in the context of an assessment of the perceived needs of the Board at that time and does not discriminate on the basis of ethnicity, sexual orientation, culture or nationality.
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Corporate Governance and Board Matters
Board Selection and Evaluation
Process for Identifying and Adding New Directors
We believe that our directors should possess the highest personal and professional ethics, integrity and values, demonstrate the ability to act candidly, show a willingness and ability to evaluate, challenge and stimulate, have demonstrated leadership ability and a proven record of accomplishment as well as expertise in business, professional, academic, political or community affairs, and be committed to representing the long-term interests of our shareholders.
1 | Assessment of Potential Candidates |
The Nominating and Corporate Governance Committee assesses potential candidates based on their history of achievement, the breadth of their business experiences, whether they bring specific skills or expertise in areas that the committee has identified as desired and whether they possess personal attributes and experiences that will contribute to the sound functioning of our Board. In addition, the Board self-evaluation process described below is an important determinant for Board refreshment.
2 | Use of a Third-Party Search Firm |
The Nominating and Corporate Governance Committee typically uses a professional search firm to help identify, evaluate and conduct due diligence on potential director candidates. Using a professional search firm supports the committee in conducting a broad search and looking at a diverse pool of potential candidates. In 2022, this third-party search firm identified and recommended Ms. Yeung for appointment to the Board.
The Nominating and Corporate Governance Committee also maintains an ongoing list of potential candidates and considers recommendations made by members of the Board. The Board of Directors met with Michael Leavitt as part of his role as Co-Chair of the Healthy Sail Panel. At a meeting of
3 | Shareholder Nominations |
In addition, the Nominating and Corporate Governance Committee considers all shareholder recommendations for director candidates and applies the members discussedsame standards in considering candidates submitted by shareholders as it does in evaluating all other candidates. Shareholders can recommend candidates by writing to the committee in care of the Company’s Corporate Secretary, whose contact information is on page 35.
Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedure described on page 91.
The Board recognizes the value of having someonediversity and endeavors to have a Board composed of individuals with varying backgrounds (including diversity of race, gender and ethnicity) and experience in health care management as well as environmental, socialbusiness and governancein other areas that may be relevant to the Company’s activities. Our Corporate Governance Principles provide that whenever the Board conducts a search for a new director, the Board will consider at least one woman and one underrepresented minority in the slate of potential candidates.
36%
5 out of 14 directors are gender/ethnically diverse
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Corporate Governance and Board Matters
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Director Onboarding
We maintain a comprehensive director onboarding program to familiarize all new directors with the Company’s business, including its plans, significant financial, accounting and risk management issues, policies and compliance processes, strategic priorities and members of senior management. While some in-person orientation activities were paused during the COVID-19 pandemic, our director onboarding program also has included site and ship tours. Each director’s onboarding is tailored to take into account the individual’s prior experience and background and to ensure the director becomes knowledgeable about the most important issues affecting the Company and its business.
Corporate Governance and Board Matters
Our Board Evaluation Process
The Nominating and Corporate Governance Committee has oversight responsibility for the annual Board and committee evaluation process and uses feedback from the evaluation to identify director nominees.
Review of the Process’ Format |
The Nominating and Corporate Governance Committee periodically reviews the format of the Board and committee evaluation process to ensure that actionable feedback is solicited on the performance of the Board and the committees.
Discussions with Directors Utilizing Questionnaire |
For the 2022 evaluation process, the Nominating and Corporate Governance Committee decided to have the Chair of the Nominating and Corporate Governance Committee hold one-on-one discussions with directors utilizing questionnaires. The questionnaires solicited commentary on various topics, including Board and committee composition and performance, meeting materials, access to management, among other matters. Directors were also invited to discuss the performance of other individual Directors.
Use of Results to Guide Board Enhancement |
The Chair of the Nominating and Corporate Governance Committee aggregated the feedback received from individual discussions with directors and presented the findings to the Chair of each Committee as it relates to their respective committee. The data identified any themes or issues that had emerged and included suggestions for areas of improvement. The Chair of the Nominating and Corporate Governance Committee also presented the aggregated feedback to the full Board. The Board used these results to review and assess the Board’s and each committee’s composition and required skill sets, responsibilities, structure, processes and effectiveness.
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Corporate Governance and Board Matters
Executive Succession Planning
Succession planning and execution is one of the Board’s most important responsibilities, and the success of the Company’s recent leadership transitions is a testament to the care and diligence that the Board has devoted to this key topic. For many years, the Board has focused attention on this area and has developed programs and procedures designed to address it. These plans became relevant and actionable when Richard Fain, the Company’s long-standing CEO, announced his intention to step down as CEO effective at the beginning of 2022. The resulting transition, which notably included Jason Liberty being promoted to CEO and Naftali Holtz being appointed as CFO, was carried out smoothly and orderly with the oversight of the Nominating and Corporate Governance Committee and the Talent and Compensation Committee.
The Board’s succession planning activities are strategic, long-term and supported by the Board’s committees and external consultants. As a result of the Board’s thoughtful approach to executive succession planning, the Board was well-positioned to effectuate the recent leadership transition in the midst of a challenging period in our industry and macroeconomic instability. The Board was intensively involved in evaluating each of these executives prior to their promotions and had opportunities to observe each executive through presentations to the Board as well as through significant informal contact.
Corporate Governance and Board Matters
Succession planning and talent development are important at all levels within the Company. In accordance with our Corporate Governance Principles, our Talent and Compensation Committee has primary responsibility for reviewing our talent development programs and initiatives for senior executives and for periodically reviewing our programs and practices for overseeing the continuity of capable management.
Evaluation of Potential Successors |
A key responsibility of the Talent and Compensation Committee is the identification and evaluation of potential successors for each business-critical position in the Company. This includes, our CEO, CFO, Brand Presidents and other positions that have been identified as integral to the delivery of our service. Regularly, the Talent and Compensation Committee, in consultation with the CEO and with the assistance of external consultants, as necessary, reviews the skills, experiences and attributes that the Committee believes are required and/or desirable for each position in light of the Company’s then current business strategy, prospects and challenges. For each candidate, the Committee evaluates strengths, contributions, candidate readiness, and areas for development.
Recommendations from the CEO |
The CEO makes available his recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
CEO Succession Planning |
In the event of a CEO transition, the Nominating and Corporate Governance Committee, in consultation with the CEO, provides oversight of the CEO transition process.
Ongoing Review by the Board |
The Board routinely engages with the Company’s leadership team on matters of talent and culture, including around the development of the Company’s talent pipeline and advancing diversity and inclusion efforts across the enterprise.
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Corporate Governance and Board Matters
Board Leadership Structure
The Board is responsible for broad corporate policy and overall performance of the Company through oversight of management and stewardship of the Company. Consequently, the Board believes that the independent directors should have a strong defined leadership roles. The current leadership structure of the Board consists of:
Name | Title | |
Richard Fain | ||
William Kimsey | Lead Director, | |
Vagn O. Sørensen | ||
Stephen R. Howe, Jr. | ||
Separation of ChairmanChair and CEO Position
The Board recognizes that the leadership structure and combination or separation of the CEO and ChairmanChair roles are driven by the needs of the Company. As a result, no static policy exists requiring the combination or separation of leadership roles. The Board regularly reviews Board leadership structure and in connection with Mr. Fain stepping down as our CEO and the appointment of Mr. Liberty as his successor, has concluded that separating the positions of ChairmanChair and CEO is appropriate at this point in time. While Mr. Fain stepped down as CEO effective January 3, 2022, we believe that the Board and the Company are best served by retaining on the Board his 30 years of experience leading our Company as ChairmanChair and CEO through challenging periods in our industry and macroeconomic instability.CEO. Consequently, the Board asked Mr. Fain to continue to serve as the ChairmanChair of our Board. We believe that we will benefit from the strong working relationships and professional trust that Mr. Fain and Mr. Liberty have developed with other members of the Board. Further, the Board believes that the significant leadership roles undertaken by Mr. Kimsey as well as the various independent directors who chair other committees of the Board strike an appropriate balance between effective Board leadership and independent oversight of management.
Lead Independent Director
Regardless of the specific board leadership structure, our Corporate Governance Principles provides for a strong defined leadership role for a lead independent director. Our current lead independent director is Mr. Kimsey who has served in that role since 2013. Mr. Kimsey has significant experience in corporate governance, senior management of a global business and public company board experience.
Corporate Governance and Board Matters
Under our Corporate Governance Principles, the independent directors annually elect an independent director to serve as Lead Independent Director. While the Board has currently separated the positions of Key Responsibilities ●ChairmanChair and CEO, the Board believes that a lead independent director continues to bring balance to our Board management.Calls meetings of the independent directors. ● Presides at all meetings of the Board at which the ChairmanChair is not present, including executive sessions of the independent directors.● Facilitates communication between the independent directors, our ChairmanChair and our CEO.● Provides independent Board leadership. ● ● Approves the agenda for all Board meetings and all Board materials.● Communicates with shareholders and other key constituents, as appropriate● Engages with our other independent directors to identify matters for discussion at executive sessions of independent directors and advises our ChairmanChair and our CEO of any decisions reached, and suggestions made at the executive sessions.
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IndependenceTable of Contents
Corporate Governance and Board Matters
Independence
Under our corporate governance principles, at least two thirds of our directors are required to be independent within the meaning of the NYSE standards of independence for directors. Our Corporate Governance Principles contain guidelines established by the Board to assist it in determining director independence in accordance with these NYSE standards. The Board believes that directors who do not meet the NYSE independence standards also make valuable contributions to the Board and to the Company by reason of their experience and wisdom, and the Board expects that some minority of its Board will not meet the NYSE independence standards.
To be considered independent under the NYSE independence standards, the Board must determine that a director does not have any direct or indirect material relationship with the Company or any of its subsidiaries. The Board has established guidelines to assist it in determining director independence in accordance with those standards, which are available on the corporate governance section on our website at www.rclinvestor.com.
Each director must regularly disclose to the Board whether his or her relationships satisfy these independence tests. Based on these disclosures and other information available to it, the Board has determined that all of the directors are independent with the exception of Mr. Fain and Mr. Liberty due to their past and current service as CEO, respectively.
Meetings
The Board held 135 meetings during 2021.2022. In 2021,2022, each of our directors attended at least 75% of an aggregate of all meetings of the Board and of any committees on which and he or she served during the period the director was on the Board or committee. Our independent directors regularly meet in executive session without management directors present. The Lead Director presides at such meetings.
We do not have a formal policy regarding Board member attendance at the annual shareholders meeting. Two of our Board members were in attendance at our 20212022 shareholders meeting in person.
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Corporate Governance and Board Matters
Board Committees
The Board has established four standing committees: the Audit Committee, the Nominating and Corporate Governance Committee, the Safety, Environment, Sustainability and Health Committee, and the Talent and Compensation Committee. Each of the standing committees is composed solely of independent directors. Each standing committee has adopted a written charter, meets periodically throughout the year, reports its actions and recommendations to the Board, receives reports from senior management, annually evaluates its performance and has the authority to retain outside advisors in its discretion. The primary responsibilities of each committee are summarized in the charts below and set forth in more detail in each committee’s written charter, which can be found in the corporate governance section on our website at www.rclinvestor.com.
In addition to these committees, the Board, from time to time, authorizes additional Board committees to assist the Board in executing its responsibilities. Notably, the Board established the ad hoc Strategic and Financial Health Committee that existed from August 2020 to December 2021 to assist in the oversight of management’s responsibility to improve the Company’s financial health, which was adversely impacted by the effect of the COVID-19 pandemic.
Audit Committee Members: William L. Kimsey Meetings Held 8 |
Independence and Financial Expertise: | ||
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Corporate Governance and Board Matters
Nominating Members: Stephen R. Howe, Jr. Meetings Held 4 |
Independence: | ||
Safety, Members:
Meetings Held 4 |
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Corporate Governance and Board Matters
Talent and Members: Vagn O. Sørensen Meetings Held 5 |
Independence: | ||
Board Risk Oversight
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Corporate Governance and Board Matters
Board Risk Oversight
Board Oversight | ||
The Board oversees the Company’s risk profile and management’s processes for assessing and managing risk, through both the whole Board and its committees. At least annually, the Board reviews strategic risks and opportunities facing the Company and its businesses. Other important categories of risk are assigned to designated Board committees that report back to the full Board. | ||
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Committees of the Board | ||
Committees of the Board consider and review with management at regularly scheduled committee meetings ongoing financial, strategic, operational, legal and compliance risks inherent in the business activities applicable to each committee’s area of responsibility. | ||
The committee chairs inform the Board of the outcome of these reviews through reports to the Board at the regularly scheduled Board meetings. | ||
Audit Committee ●Reviews the Company’s guidelines and policies with respect to risk assessment. ●Oversees management of risks relating to financial accounting and compliance matters, including risks associated with financial reporting, internal controls, the internal audit function, the Company’s cybersecurity plans, and the Ethics and Compliance Program. | ||
Nominating and Corporate Governance Committee | ||
Talent and Compensation Committee ●Oversees risks that are inherent in the design of the Company’s compensation plans, policies and practices | ||
Safety, Environment, Sustainability and Health Committee Charter ●Oversees risks related to the Company’s programs and policies in the areas of safety, environment, sustainability, and health | ||
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Management | ||
Management annually performs a Company-wide enterprise risk assessment under the supervision of the Audit & Advisory Services department. This assessment
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Management reviews and discusses the risk assessment report and updates thereto with the Audit Committee and the Board. | ||
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Corporate Governance and Board Matters
Oversight of COVID-19 Impact
Our Board and its committees have been actively overseeing the Company’s response to and risk management of the ongoing COVID-19 pandemic, including regular updates from and discussions with Company management. In mid-2020, in response to the unprecedented impact of COVID-19 on the cruise industry and our company, our Board established the ad hoc Strategic and Financial Health Committee to assist in the oversight of management’s responsibility to improve the Company’s financial health. During 2020 and 2021, the Committee met regularly to consider and discuss with management the key strategies, actions and metrics to improve the Company’s liquidity and credit worthiness, its financial performance (e.g. earnings and ROIC) and, its short-term and long-term financial health.
In addition, the Talent and Compensation Committee and the Board, as a whole, have actively monitored a broad range of matters during this crisis, including: protecting the health and safety of our employees; minimizing adverse financial impact on affected employees; evaluating the impact of the pandemic on strategy, operations, liquidity and financial matters; assessing the Company’s compensation programs; minimizing chain disruption; monitoring continued compliance with applicable laws; and supporting the communities in which we operate.
Cybersecurity Risk Oversight
Our Audit Committee and our Board oversee the Company’s management of cybersecurity risk. Cyberattacks have continued to intensify in their sophistication and ability to harness information both from the public domain and by means of data exfiltration across public and private institutions. In order to respond to the threat of security breaches and cyberattacks, we have developed a program, overseen by our Chief Information Officer and our Chief Information Security Officer, that is designed to protect and preserve the confidentiality, integrity and continued availability of all information owned by us or in our care. Using a risk-based prioritization approach, our management team focuses on securing our critical assets, updating our cybersecurity detection and prevention capabilities to the new threats, and maturing our compliance processes to protect our operations and our guests.data. We have taken the following foundational steps to address these risks:
Our Chief Information Officer and Chief Information Security Officer meet with the Audit Committee on a quarterly basis to review our cybersecurity programs and risks, and the ChairmanChair of the Audit Committee informs the Board of the outcome of these committee reviews through updates presented to the Board at the regularly scheduled Board meetings. The full Board also receives periodic briefings on cyber threats in order to enhance our directors’ literacy on cyber issues.
Corporate Governance and Board Matters
Executive Compensation Risk Oversight
We monitor the risks associated with our compensation programs and individual executive compensation decisions on an ongoing basis. Each year, management undertakes a review of our various compensation programs to assess the risks arising from our compensation policies and practices in accordance with a screening methodology approved by the Talent and Compensation Committee. In 20212022 management reviewed each plan and program for risk features and presented its findings to the Talent and Compensation Committee. The risk assessments included a review of the primary design features of our compensation plans, the process to determine compensation pools and awards for employees and an analysis of how those features could directly or indirectly encourage or mitigate risk-taking. As part of the risk assessments, it has been noted that the Company’s annual incentive plan allows for discretionary negative adjustments to the ultimate outcomes, which serves to mitigate risk-taking. Moreover, senior management is subject to share ownership and retention policies, and historically a large percentage of senior management compensation has been paid in the form of long-term equity awards. In addition, senior management compensation is paid over a multiple-year cycle, a compensation structure that is intended to align incentives with appropriate risk-taking. The Company’s general risk management controls also serve to preclude decision-makers from taking excessive risk to earn the incentives provided under our compensation plans. Based on this review, management and the Talent and Compensation Committee believe that the nature of our business, and the material risks we face, are such that the compensation plans, policies and programs we have put in place are not reasonably likely to give rise to risks that would have a material adverse effect on our business.
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Corporate Governance and Board Matters
Shareholder Engagement
WHY WE ENGAGE |
We maintain an ongoing, proactive outreach effort with our shareholders. Throughout the year, members of our investor relations team and members of senior management engage with shareholders in order to: ●Provide visibility and transparency into our business, our performance, and our corporate governance, ESG and compensation practices; ●Discuss with our shareholders the issues that are important to them and share our views; and ●Assess emerging issues that may affect our business, inform our decision-making, enhance our corporate disclosures, and help shape our future practices. |
SHAREHOLDER ENGAGEMENT PROCESS | |||
Spring | Summer | ||
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Engage with shareholders to gather feedback on compensation and governance practices ahead of the Annual Meeting of Shareholders. | Review results from the Annual Meeting of Shareholders and conduct targeted responsive engagements with shareholders who did not express support for management proposals. | |||||
Fall | Winter | |||||
Conduct comprehensive engagement with shareholders to discuss developments in the Company’s business and strategy, corporate governance matters, executive compensation design, and business priorities for the upcoming year. | Review shareholder feedback from Fall engagement and discuss with Board potential changes to executive compensation or governance practices in light of feedback received, as well as recommend enhancements to our public disclosures. |
| Who we engaged | ||
Who is involved in engagement ●Members of our Investor Relations team as well as our ●CEO; ●CFO; ●Chief ●Chief ESG ●Relevant subject matter experts from the management team participated in these meetings as appropriate. | Topics of engagement During our meetings with investors, we ●The recovery of our ●Our plans to ●Our executive compensation program.
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This engagement outreach was in addition to other meetings and discussions that management and investor relations team had throughout the year with shareholders through quarterly earnings calls, individual meetings, road shows, conferences and investor days.
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Corporate Governance and Board Matters
We are committed to maintaining strong governance policies and practices, some of which we highlight below:
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Corporate Governance and Board Matters
Certain Relationships and Related Person Transactions
Review and Approval Related Person Transactions
We have a written Related Person Transaction Policy that requires review of all relationships and transactions in which the Company is a participant and in which a “related person” (including any director, director nominee, executive officer or greater than 5% beneficial owner of the Company or any immediate family member of the foregoing) has a direct or indirect material interest. Under this policy, each director, director nominee and executive officer is required to promptly notify the Corporate Secretary of any such transaction. The Corporate Secretary then presents such transactions to the Audit Committee, which is responsible for reviewing and determining whether to approve or ratify the transactions. The following types of transactions are deemed not to create or involve a material interest on the part of the related person and do not require approval or ratification under the policy, unless the Audit Committee determines that the facts and circumstances of the transaction warrant its review:
In reviewing transactions submitted to them, the Audit Committee reviews and considers all relevant facts and circumstances to determine whether the transaction is in, or not inconsistent with, the best interests of the Company and its shareholders, including, without limitation:
If after the review described above, the Audit Committee determines not to approve or ratify the transaction, it will be cancelled or unwound as the Audit Committee considers appropriate and practicable.
Related Person TransactionTransactions
Barbara Muckermann, Chief Commercial OfficerThere were no related person transactions during 2022.
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Table of Silversea Cruises, is the spouse of Roberto Martinoli, PresidentContents
Corporate Governance and CEO of Silversea Cruises. In 2021, Ms. Muckermann earned in excess of $120,000. Ms. Muckermann’s compensation is commensurate with the compensation of her peers and is established in accordance with RCG’s compensation practices applicable to employees with equivalent qualifications, experience and responsibilities.Board Matters
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our executive officers and directors and persons who own more than 10% of our common stock to file reports of
Corporate Governance and Board Matters
ownership and changes in ownership with the SEC. Based on our review of such reports and written representations from our directors and officers, one transaction on June 1, 2022 was not timely reported on Form 4 on behalf of Roberto MartinoliR. Alexander Lake due to administrative error.
Corporate Governance Principles
We have adopted Corporate Governance Principles which, along with our Board committee charters, provide the framework for the governance of the Company. The Corporate Governance Principles address such matters as director qualifications, director independence, director compensation, Board committees and committee evaluations. Copies of these principles and our Board committee charters are posted in the corporate governance section on our website at www.rclinvestor.com.
Code of Ethics
The Board has adopted a Code of Business Conduct and Ethics that applies to all our employees, including our executive officers, and our directors. A copy of the Code of Business Conduct and Ethics is posted in the corporate governance section of our website at www.rclinvestor.com and is available in print, without charge, to shareholders upon written request to our Corporate Secretary at Royal Caribbean Cruises Ltd., 1050 Caribbean Way, Miami, Florida 33132. Any amendments to the code or any waivers from any provisions of the code granted to executive officers or directors that require disclosure under the applicable SEC or NYSE rules will be posted on our website at www.rclinvestor.com.
Trading in Company Securities
Our Securities Trading Policy prohibits hedging transactions in Company securities by officers, directors and employees. In addition, it prohibits officers and directors from holding Company Securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Additionally, we require officers and directors to pre-clear every transaction in Company securities for themselves, their immediate family members, and any family trust with the Corporate Secretary. This includes purchases, sales, gifts, contributions to a trust and any other transfers.
Compensation Committee Interlocks and Insider Participation
During 2021,2022, none of the members of the Talent and Compensation Committee (a) was an officer or employee of the Company or any of its subsidiaries, (b) was a former officer of the Company or any of its subsidiaries or (c) had any related party relationships requiring disclosure under Item 404 of SEC Regulation S K. During 2021,2022, no executive officer of the Company served as a member of the board of directors or on the compensation committee of any other company, one of whose executive officers or directors serve or served as a member of the Board or the Talent and Compensation Committee of the Company.
Contacting Members of the Board
The Board welcomes questions and comments. Interested parties who wish to communicate with non-management members of the Board can address their communications to the attention of our Corporate Secretary at our principal address at 1050 Caribbean Way, Miami, Florida 33132 or via email to corporatesecretary@rccl.com. The Corporate Secretary maintains a record of all such communications and promptly forwards to the Lead Director those communications that the Corporate Secretary believes require immediate attention. The Corporate Secretary periodically provides a summary of all such communications to the Lead Director and he, in turn, notifies the Board or the chairs of the relevant committees of the Board of those matters that he believes are appropriate for further action or discussion.
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Environmental, Social and Governance Overview
Board Oversight |
Our Board provides oversight and guidance on the Company’s performance and management of environmental, social and governance (“ESG”) issues, including climate change, environmental stewardship, supply chain risk management, human rights, diversity, equity and inclusion and ESG reporting.
Safety, Environment, Sustainability and Health Committee | |||||
Reviews and monitors overall strategies, policies and programs that impact the safety, environment, sustainability and health of our guests, crew, the communities where we operate and the ports where our ships call, as well as our overall development of strategies, policies, and practices in the areas of energy consumption, greenhouse gas, physical and transition risks related to climate change and other criteria, pollutant emissions, waste disposal and water use. | |||||
Talent and Compensation Committee | |||||
Oversees the Company’s human capital management strategies, including initiatives for talent diversity, equity and inclusion, talent management, pay equity, succession planning and corporate culture. | |||||
Audit Committee | |||||
Discusses with management any potential enterprise risks associated with ESG and the controls and procedures concerning the Company’s environmental, social and governance disclosures. | |||||
Nominating and Corporate Governance Committee | |||||
Oversees various aspects of corporate governance and reviews and makes recommendations to our Board concerning Board and committee structure and composition, consistent with the Board’s endeavor to be composed of individuals with varying skills and backgrounds (including diversity of race, gender and ethnicity) and experience in business and in other areas that may be relevant to the Company’s activities, including those related to ESG. |
36 | 2023 Proxy – Environmental, Social and Governance Overview | ||||
Environmental, Social and Governance Overview
ESG Principles |
ESG is at the core of our business and rests on five key principles:
Champion Communities and the Environment | |||||
We recognize our responsibility to the guests who travel with us, the people who work for us, the communities and destinations that we visit, and the oceans we traverse. | |||||
Environmental, Social and Governance Overview
Provide Unforgettable Cruise Experiences | |||||
We connect people to the wonders of the world and help them create unforgettable memories. | |||||
Foster Human Rights and be an Employer of Choice | |||||
We treat our guests, employees, crew, and suppliers with dignity and respect. We act ethically and with integrity so we all can thrive. | |||||
Advance Net Zero Innovation | |||||
We are committed to decarbonizing our operations through innovation, collaborative partnerships, and an accelerated transition to cleaner fuels, smarter technologies, and improved energy efficiencies. | |||||
Govern Responsibly | |||||
We believe that good governance and transparency are critical to ESG and help us align corporate decision-making to our ESG strategy and performance. We take an integrated approach to board oversight, risk management and stakeholder engagement and we embed appropriate policies and practices for ethics, compliance, and data security within our operations. |
2023 Proxy – Environmental, Social and Governance Overview | 37 | ||
Environmental, Social and Governance Overview
2022 Priorities |
Throughout 2022, Royal Caribbean’s efforts were concentrated on the critical ESG needs of, and issues for, the cruise industry:
Environmental Stewardship | |||||
Protecting the environment has been a longstanding core value for us. Thriving, healthy and sustainable oceans are inextricably tied to the health of our business that is why we set ambitious targets in a variety of facets of our business to improve our operations including waste and water management, emission reduction, and sustainable sourcing. | |||||
Environmental, Social and Governance Overview
Decarbonization of Operations | ||||||
We are committed to decarbonizing our operations through meaningful innovation, partnerships, and action. We have been monitoring and reducing emissions and tracking our energy consumption since 2010. In 2021, we announced our Destination Net Zero strategy which is focused on achieving net zero cruise ship by 2035 and net zero emissions by 2050. In 2022, we added to our strategy a near-term target to reduce our carbon intensity by double digits by 2025, aimed at continuing our advancement in decarbonizing our business. Both our near-term reduction target along with our Destination Net Zero | To help on our journey, we are forging strong partnerships with maritime experts, shipyards, and industry associations such as Maersk Mc-Kinney Moller Center for Zero Carbon Shipping. | |||||
A Healthy Return to Cruising | ||||||
We have long maintained some of the industry’s most rigorous and thoughtful health and safety protocols. Summer of |
38 | 2023 Proxy – Environmental, Social and Governance Overview | |||||
Environmental, Social and Governance Overview
Responsible Tourism |
At its core, tourism depends on the beauty of the environment. Ensuring the destinations we visit are vibrant and healthy far into the future is critical to the success of our business.
A Partnership for our Oceans | ||||||
In 2016, we joined forces with World Wildlife Fund to help ensure the long-term health of the oceans by setting, and achieving, ambitious sustainability targets to lessen the company’s environmental impact, raise awareness of ocean conservation for our guests and crew, and support ocean conservation projects around the world. We have supported WWF initiatives on wildlife trafficking, commitment to deliver on the promise of the Paris Agreement through the We Are Still In coalition and signed on to the Cascading Materials Vision for a more sustainable supply chain. | ||||||
Exploring the World Sustainably | ||||||
We deepened our commitment to responsible tourism in 2016, when we set a goal to offer our guests 1,000 destination tours certified by the Global Sustainable Tourism Council (GSTC) by 2020. By 2021, we had more than doubled our 2020 goal, with 2,000-plus GSTC-certified tours available to guests. GTSC-certified tour operators agree to protect the overall health of destinations, preserve local heritage, maximize social and economic benefits to the community, and reduce negative impacts to the environment from travel-related waste. In 2022, we continued to expand this commitment and have now set a goal to have 60% of all tours offered by RCG certified to the GSTC standard by 2025. For us, GSTC certification enables us to align our sustainability philosophy with the practices of our third-party tour operators. | ||||||
Sourcing Sustainably | ||||||
Environmental, Social and Governance Overview
Our supply chain, through a large and diverse network of suppliers, fuels everything we do. As a result, we collaborate with partners to support the sustainable sourcing movement and the improvement of animal welfare throughout the food supply. Most notably we are working with World Wildlife Fund to source Marine Stewardship Council (MSC) and Aquaculture Stewardship Council (ASC) seafood and supporting fishery improvement projects that boost the overall supply of responsibly produced seafood and ensure the livelihoods of artisanal fishers and their communities. Additionally, we worked with the U.S. Humane Society to set targets aimed at improving the treatment of farm animals raised for consumption in our supply chain. |
2023 Proxy – Environmental, Social and Governance Overview | 39 | ||
Environmental, Social and Governance Overview
Human Capital Management |
Great vacations begin with great employees. Each day, our employees from all around the world go above and beyond to deliver exceptional vacations to our guests. Our leadership team, with oversight from our Board of Directors, strives to maintain a work environment that reinforces collaboration, motivation and innovation, and believes that a strong employee-focused culture is essential to a good business.
Empowering Women in a Male-Dominated Industry | ||||||
The maritime world has always been male-driven – in fact, there was a time having a woman on board ranked at the top of a long list of sailors’ superstitions. That’s since changed. In 2015, Celebrity Cruises appointed Captain Kate McCue as the first American female captain, starting an intentional effort by the brand to attract more women to the industry and into leadership roles across our fleet. Now, our Celebrity Cruises brand is taking it further, with ambitions to raise the ratio of women to men on their ships’ bridges. | ||||||
Diversity, Equity, and Inclusion | ||||||
We have always promoted an inclusive workplace – both on land and at sea – where our employees can contribute fully and bring their diverse perspectives to the workplace. We have | ||||||
Environmental, Social and Governance Overview
Employee Engagement and Development | |||||
We measure employee engagement on a quarterly basis on land and monthly on our ships. Since the start of the pandemic, we’ve increased our listening through surveys and focus groups and dedicated ourselves to act on the feedback we receive. We’ve also increased our wellness programs and improved our employee assistance program. | |||||
During 2022, we worked on the development of our “Propelled by People” campaign, a new platform to share the voices and stories of our employees and crew members across the world and increase employee engagement. Our employee development programs are designed to grow and advance our leaders by developing premier learning, mentorship, coaching and planning programs. We are also focused on succession planning and increasing the readiness of internal talent to take on business-critical roles. Our Talent and Compensation Committee regularly reviews our succession planning process and pipeline talent. |
40 | 2023 Proxy – Environmental, Social and Governance Overview | ||
Environmental, Social and Governance Overview
ESG Reporting | |||||
We believe in transparency, accountability and continuous improvement. Our reporting reflects our belief that what gets measured gets better. This is why we have published a comprehensive sustainability report since 2008. To maximize the breadth and depth of our disclosures, we |
2023 Proxy – Environmental, Social and Governance Overview | 41 | ||
Proposal 2
Advisory Vote to Approve the | The board recommends a vote “FOR” this proposal. | ||||
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our shareholders have the opportunity to cast an advisory vote to approve the compensation of our NEOs.
As described in detail under the heading “Compensation Discussion and Analysis,” we adhere to a pay-for-performance philosophy and, to this end, our executive compensation programs are designed to align the interests of our executives with the interests of our shareholders, recruit, retain and motivate a talented and high-performing management team and reward our NEOs for their positive contributions to both short-term and long-term corporate performance. Shareholders are urged to read the Compensation Discussion and Analysis, which discusses in detail how our compensation policies and procedures implement our compensation philosophy.
2023 Proxy – | |||
Letter from the Talent and Compensation Committee
Dear Shareholders,
While 2021 was another incredibly challengingIt is incredible to consider that just over one year it marked our return to delivering the very best vacation experiences.
Beginning in the third quarter of 2021, RCG was able to commence broad-based operations following the complete lay up of its ships due to the COVID-19 pandemic. To weather the extreme and disproportionate impact of the pandemic on the cruise industry, RCG relied on its leadership team to develop and implement strategies that would position RCG to return to healthy sailing and profitability and drive its long-term financial value.
The year also represented one of significant leadership change. Richard Fain, the company’s CEO for 33 years, announced his decision to step down as CEO. Mr. Fain, a true industry leader, led the growth ofago, Royal Caribbean Group from five vesselswas in 1988the midst of managing Omicron, still in the process of returning ships to service, and sailing at load factors below 60%. Despite these challenges, we finished 2022 on a global company with over 60 ships, three unique brandshigh note as we returned our business to full operations, normalized occupancy levels, achieved positive operating cash flows, and an employee population of 85,000. The successful transitionalso achieved greater revenue per passenger cruise day as compared to 2019. We are proud of the CEO role to Jason Liberty representedefforts of our entire workforce for executing so well on our mission of delivering the culmination of many years of succession planning by Mr. Fainbest vacation experiences, responsibly, and building the Board and will ensure strong leadershipfoundation for RCG into theour future buildinggrowth.
2022 Compensation Program
As we reflect on the challenges and progress from recent years, we remain committed to maintaining strong foundation left by Mr. Fain.
Withexecutive pay and governance practices in which compensation is tied to performance. The Talent & Compensation Committee structured the events of 2021 in mind,2022 compensation program to ensure our decisionsNEOs were appropriately incentivized and rewarded for the year, as described in the Compensation Discussion and Analysis that follows, were focused on ensuring RCG’s financial strength, making prudent financial and operational decisions, returning to service safely and maintaining continuity of management, while staying true to our fundamental pay-for-performance compensation philosophy. In particular:their achievements:
● | For our President and CEO, we |
● | An ESG composite metric was added to both our 2022 Executive Bonus Plan and the metrics used for the PSUs granted in 2022 for the period ending December 2024. |
● | As described in detail in the Compensation Discussion and Analysis (CD&A) section that follows, we implemented a total of seven key performance indicators for our Executive Bonus Plan designed to incentivize our NEOs to 1) ensure RCG’s financial strength, 2) make prudent financial and operational decisions as the company resumed full operations, and 3) advance certain of our ESG goals related to reduction of fuel consumption, progress on initiatives related to diversity, equity and inclusion, and cybersecurity. These changes further enhance the rigor of the compensation structure and strengthen pay and performance alignment. |
● | PSU Awards granted in 2022 for the period ended December 2024 were granted with target performance levels that were challenging and aligned with Board-approved three-year return on invested capital (ROIC), adjusted earnings per share (EPS), leverage, as well as |
● | No discretionary adjustments were made to payouts for the |
By the end of 2021, RCG’s NEOs had successfully met these challenges. Specifically, they had:Shareholder Engagement
Based on these accomplishments, the NEOs achievedWe view engagement with our shareholders as a 117.4% payout on the established metrics. Nevertheless, we exercised negative discretion to reduce these payments to a 100% payout in light of
Executive compensation
the impact of the pandemic on RCG’s financial results. Further information on our approach to the 2021 short-term incentive compensation can be found on page 55.
Executive compensation
We are proud of the progress RCG has made during such a challenging year. As a Committee, we are committed to continued shareholder engagement.top priority. During the summer/fall 20212022 engagement season, RCG contacted its top 2050 shareholders, representing approximately 55%65% of its outstanding common stock and held meetings with 1015 of them, collectively holding 38.4%about 55% of itsour outstanding common stock (or 70%90% of the common stock held by the top 2025 investors). During these conversations and meetings, most shareholders understood the Talentrationale for the compensation-related actions taken during 2020 and Compensation Committee’s decision-making2021 in order to continue to reward, incentivize and retain our NEOs during such an unprecedented time. They also supported our plans to return to the use of discretion in these difficult times was discussed. We have taken into accountmore quantitative metrics for our incentive compensation program for 2022 as our operations stabilized, as well as the feedback receivedintroduction of ESG measures. As a result of this engagement, 79% of the votes cast at these meetings when making our executive compensation decisions in 2022.2022 Annual Meeting of Shareholders supported our say-on-pay proposal. We intend to continue to engage with our shareholders to ensure that our actions are in-line with, and responsive, to their expectations. We believe that the dedication of RCG to its guests and all of its employees has successfully positioned it to return to growth in a leadership position in 2022 and beyond.
Sincerely,
2023 Proxy – Executive Compensation | 43 | ||
We look forward to continuing to work with the full Board of Directors and executive team in overseeing and executing on our strategic priorities. We will continue to be responsive to our shareholders as we seek to maintain a highly performance-based executive compensation program that drives long-term value creation for our shareholders.
Sincerely,
Vagn O. Sørensen, Chair | John F. Brock | Amy C.McPherson | Ann S. Moore | Donald Thompson | ||||
44 | ||||||||
Compensation Discussion
and Analysis
Compensation Discussion and Analysis
RCG’s executive compensation program is designed to align executive compensation with the long-term interests of our shareholders. This Compensation Discussion and Analysis (“CD&A”)&A provides shareholders with information about our business, 20212022 performance, our disciplined approach to compensation and 20212022 compensation decisions for our 20212022 Named Executive Officers (“NEOs”) listed below.
As discussed earlier in this proxy statement, on November 6, 2021, Mr. Fain announced that he would be stepping down from his position as Chief Executive Officer effective January 3, 2022. In connection with this transition, the Board promoted Jason Liberty to serve as President and Chief Executive Officer, transitioning from his former position as EVP and Chief Financial Officer, and promoted Naftali Holtz, our former SVP of Finance, to the role of Chief Financial Officer. As these transitions were effective commencingMr. Fain did not receive any compensation in the 2022 fiscal year, they are not reflected in this CD&A.for his role as Chief Executive Officer.
RCG’s 20212022 Named Executive Officers
Richard Fain Chairman & | Jason Liberty President and Chief Executive Officer (“CEO”) and Former Chief Financial Officer |
| Michael Bayley President and | Lisa Lutoff-Perlo President and | Harri U. Executive Vice |
Table of Contents
2023 Proxy – Compensation Discussion and Analysis | |||
Executive SummaryCompensation Discussion and Analysis
RCG’s 2021RCG’S 2022 Performance
Navigating the Pandemic and Recovering from the Crisis – Key 20212022 Successes
Successful Return to Full Operations | 100% | 95% | +3.5% | 6 M | ||||
of fleet in operation since June 2022 | Significant ramp-up in load factors, from 57% in first quarter to 95% in the fourth quarter of 2022 | Strong demand for our vacation experiences; 3.5% increase in revenue per passenger cruise day versus 2019 | 6 million vacations delivered during 2022 at high guest satisfaction scores | |||||
Enhancing Platform for Long-Term Growth | ≈1,000 |
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Launched 3 new ships Strong pipeline capacity of 10 new ships to be delivered in 2023-2026 | Destinations visited Advanced critical port and destination efforts for a diversified port portfolio | Continued investments in private destinations and our digital infrastructure to enhance our guest experience and commercial capabilities | In November 2022, the Company introduced the Trifecta program, a new three-year initiative designed to drive superior performance | |||||
Strong Liquidity and Improving Financial Performance | > $2.9 B | |||||||
Year-end liquidity | Disciplined cost management and focus on profitability, abating inflationary cost increases of more than 25% since 2019 | Successfully refinanced $6.9 billion of debt to manage debt maturity profile | Generated approximately $500M of operating cash flow | |||||
ESG is Core to our Business | ||||||||
Opened the first net zero cruise terminal in Galveston, Texas | Launched a new environmental protection initiative – “Blue Green Promise” – aimed at supporting resilient and sustainable ocean communities | Set a short-term target for Destination Net Zero to reduce carbon intensity by double digits by 2025 | Introduced our “Propelled by People” campaign, a new platform to increase employee engagement |
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Executive SummaryCompensation Discussion and Analysis
2021 Compensation Overview
Aligned Strategy and Pay During the Challenges of 2021
At the beginning of 2021, our Talent and Compensation Committee, in coordination with our Strategic Health and Finance Committee, identified five specific and tangible goals to navigate our recovery. These financial and operational metrics were established as the performance metrics for our annual incentive plan. Specifically, the goals were:
At the end of the year, our Talent and Compensation Committee reviewed the company’s performance on each of these metrics and found that the management team’s performance against these metrics was positive.
Executive Summary
MaintainedMaintain Robust Corporate Governance Policies that AlignedAlign Executives’ Interests with Those of our Shareholders
Our Talent and Compensation Committee seeks to align our compensation practices with strong corporate governance practices. As reflected below, we believe that robust corporate governance practices are integrated into our 20212022 executive compensation program.
What We Do | |||
No extensive perquisites – All Other Compensation represented approximately 2% of CEO’s 2022 Total Compensation No acceleration of vesting of equity awards in connection with terminations, absent a change in control No pledging or hedging of shares No tax gross-ups on perquisites or change in control benefits No pension or supplemental retirement plan benefits Equity plan does not permit liberal share recycling No liberal change of control definition in equity plan or employment agreements | |||
Clawback policy that applies to cash and equity incentive compensation
Independent compensation consultants, report directly to Talent and Compensation Committee
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47 | |||
Executive SummaryCompensation Discussion and Analysis
Designed our Executive Compensation to Be Performance BasedPerformance-Based
Our commitment to performance-based compensation is illustrated by the following charts, which show the mix of each compensation component at target levels for our ChairmanPresident & CEO and for our other NEOs for 2021.
2022 (excluding Mr. Fain who served as NEO for only the first two calendar days of 2022).
Other Named Executives | |
89% Variable Compensation | 81% Variable Compensation |
Aligned Strategy and Pay
Our executive compensation program ties a significant portion of our NEOs’ compensation to the operational and financial performance of our company. 2022 was a transitional year for the Company which marked the return to full operations and more normalized occupancy levels. In anticipation of this, the Talent & Compensation Committee returned to using a quantitative performance-based approach for our Executive Bonus Plan, as described below. This quantitative approach aligns with our compensation philosophy and in large part with the structure of our pre-COVID-19 compensation program. This approach is also responsive to the feedback we received from our shareholders during 2022. As such, 100% of our CEO’s payout for the Executive Bonus Plan was based on company-wide performance and no longer includes individual performance. As it relates to the long-term performance-based equity awards, the PSU Awards granted in 2022 for the performance period ending December 31, 2024 were granted with target performance levels that were challenging and in-line with Board-approved three-year ROIC, Adjusted EPS and Leverage targets as well as ESG targets. We’ve also embedded ESG targets as part of both short-term and long-term incentive awards to drive continued improvement in areas such as alternative energy sourcing, employee engagement, cyber maturity ratings, and diversity, equity and inclusion initiatives, among others.
Engaged with Shareholders and Responded to their Comments
We have an active shareholder engagement program.It is our long-standing practice to actively engage with our shareholders throughout the year. We believe it is important to directly engage with our shareholders as a means of soliciting their views on matters such as corporate governance, executive compensation and environmental and social initiatives, among other important topics. We use this feedback to assist RCGmanagement and the Board with matters requiring a broader shareholder perspective. We also take into account the feedback our shareholders provide through the annual say-on-pay advisory votes on our executive compensation.
Historically, our shareholders have overwhelmingly supported our executive compensation program, which has received an average of 93%91% support from 2011 when we held our first say-on-pay vote through our 20202022 Annual Meeting of Shareholders. Last year, ISScertain large proxy advisory firms recommended a vote against our say-on-pay proposal, while Glass Lewis recommended a vote in favorproposal. In light of it. Considering these recommendations, prior to the 20212022 Annual Meeting of Shareholders, we engaged with shareholdersconducted a robust shareholder engagement process to further explain our executive compensation program, and our Talent and Compensation Committee’s decisions regarding our pay-for-performance philosophy and the rationale for certain compensation decisions made during 2020 short-term compensation, our anticipated use of discretion with respect to the 2019-2021 PSU Awards, our modificationand 2021 as a result of the 2020-2022 PSU Awardschallenges created by the pandemic and in connection with our special equity awards (all of which were disclosed in our 2021 Proxy Statement).planned leadership transition. During these conversations and meetings, most shareholders supported theseexpressed understanding of our rationale for the compensation-related actions taken during 2020 and understood the need2021 in order to continue to reward, incentivize and retain our NEOs during such an unprecedented time. They also supported our plans to return to the use of more quantitative metrics for our incentive compensation program for 2022 as our operations stabilized as well as the introduction of ESG measures. As a result of this engagement, and our communication of the reasons and need for the use of discretion, 78%79% of the votes cast at our 20212022 Annual Meeting of Shareholders supported our say-on-pay proposal.
After our 2021 Annual Meeting of Shareholders, we continued our conversations with shareholders and engaged in a targeted outreach effort focused on our executive compensation philosophy and decisions. As part of this effort, we contacted our top 20 shareholders, representing approximately 55% of our outstanding common stock and held meetings with 10 of them, collectively holding 38.4% of our outstanding common stock (or 70% of the common stock held by our top 20 investors). During these meetings, we continued to discuss our prior use of discretion with respect to the compensation decisions and actions taken during March 2021, our anticipated limited use of discretion for the 2019-2021 PSU Awards and our intent to return to the historical financial and operational metrics for measuring company-wide and brand performance commencing in 2022. The Talent and Compensation Committee have taken into account the feedback received at these meetings when making their executive compensation decisions.
2023 Proxy – | |||
Executive SummaryCompensation Discussion and Analysis
The table below describes the feedback we received during this engagementour recent engagements related to our executive compensation program and the revisions that our Talent and Compensation Committee implemented for 2022 in light of these discussions.
What We Heard | Actions Taken | |
Our shareholders generally viewed our management’s performance as |
| ●For 2022, the short-term incentive plan for the CEO ●The performance-based long-term incentive awards granted in 2022 for the performance period ending December 2024 are based on quantitative financial and operational metrics. |
●The performance-based long-term incentive awards granted in 2022 for the |
●PSUs granted in 2020 for the period ended December 2022 paid out at 35% of target, with no discretionary adjustments. | |
Our shareholders understood the competitive nature of our operational performance metrics but generally wanted more transparency with respect to the difficulty of our financial metrics. | ●This CD&A includes enhanced disclosure of the financial targets and performance levels of Adjusted EPS, which metric determines 60% of the payout under our | |
Our shareholders expressed support for adding ESG measures to our compensation program. | ●An ESG |
2023 Proxy – Compensation Discussion and Analysis | 49 | ||
Compensation Discussion and Analysis
Aligned our Compensation with Our ESG Commitments
Our commitment to meet the environmental, social and governance (ESG) challenges of our time is core to our business strategy. Continuous improvement is the persistent wave that drives our work, the ships we build, the infrastructure we develop in coastal communities, and the ESG targets we aim to achieve. As part of that commitment, commencing in 2022, we have embedded ESG metrics in the annual and long-term metrics upon which we evaluate our NEOs. With respect to our annual Executive Bonus Plan, ESG metrics will beare a component of our corporate and our brand operational performance metrics. With respect to our PSU program, 20% of the performance target will beis based on a composite of ESG metrics. These metrics will take into account performance with respect to our goals on alternative energy sourcing, employee engagement, living wagecyber maturity rating from the National Institute of Standards and payTechnology (NIST), and diversity, equity and other initiatives.
Table of Contentsinclusion initiatives, among others.
How We Make Compensation Decisions
How We Make Compensation Decisions
Our Compensation Philosophy and Principles
Our fundamental compensation philosophy remains unchanged: we adhere to a pay-for-performance philosophy. In line with this philosophy, we have designed our compensation programs to support three main goals:
Align the interests of our executives with the interests of our shareholders | Recruit, retain, and | Reward positive contributions |
PRINCIPLES | IMPLEMENTATION |
Total direct compensation levels should be sufficiently competitive to attract, motivate and retain the highest quality executives. | Our Talent and Compensation Committee seeks to establish target total direct compensation (salary, short-term incentive and long-term incentive) at appropriate levels relative to our Market Comparison Group, providing our executives the opportunity to be competitively rewarded for our financial and operational |
Performance-based and “at-risk” incentive compensation should constitute a substantial portion of total compensation. | We seek to foster a pay-for-performance culture, with a significant portion of total direct compensation being performance-based and/or “at risk.” Executives with greater responsibilities and the ability to directly impact our strategic and operational goals and long-term results should bear a greater proportion of the risk if these goals and results are not achieved. Therefore, the more senior the executive, the greater the percentage of total compensation in the form of performance-based and/or “at risk” compensation. |
Long-term incentive compensation should align executives’ interests with our shareholders’ interests to further the creation of long-term shareholder value. | We focus on ensuring that executive compensation includes a high proportion of long-term performance-based equity compensation. Awards of equity-based compensation encourage executives to focus on our long-term growth and prospects and incentivize executives to manage our company from the perspective of owners with a meaningful stake and to encourage them to remain with us for long and productive careers. Our stock ownership guidelines further enhance the incentive to create long-term shareholder value. Equity-based compensation also subjects our executives to market risk, a risk also borne by our shareholders. |
2023 Proxy – | |||
2021Compensation Discussion and Analysis
2022 Compensation Elements and 20212022 Decisions
2021 Compensation Elements and 2021 Decisions
We provide compensation to our executives consisting of three principal elements: base salary, performance-based annual incentive bonus and long-term equity awards. The objectives and key features of each pay element are described below.
Pay Elements | |||||||||||
CEO | Other NEOs | Objective | Key Features | ||||||||
●Provide a base level of income |
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●To focus executives on annual financial and operational performance ●To reward executives for performance relative to our short-term goals and initiatives | including, but not limited to, Adjusted EPS (corporate), adjusted brand operating income, if applicable, and an ESG composite | ||||||||||
●Structured to align with shareholder interests, reward the achievement of long-term goals and promote stability and corporate loyalty among the executives | an ESG composite | ||||||||||
●Multi-year vesting requirements align our executives’ interests with our shareholders and incentivize retention of our executive talent | ●Set annually based on market competitiveness and in-line with performance and contributions to the achievement of Company goals ●Increases, when appropriate, are provided based on market movements, scope of responsibilities, and merit. |
2023 Proxy – Compensation Discussion and Analysis | 51 | |||||||||
2021 Compensation ElementsDiscussion and 2021 DecisionsAnalysis
Why we pay base salaries. Base salaries comprise, on average, less than 20% of the target total direct compensation for our NEOs. During 2021,2022, base salary represented 8%11% of target total direct compensation for our CEO and an average of 17%19% for our other NEOs. However, base salaries are an important and customary element of pay for attracting and retaining executives. The Talent and Compensation Committee seeks to pay each NEO a level of base salary that competitively reflects their scope of responsibility.
The primary considerations used in setting base salary levels include each NEO’s:
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The Talent and Compensation Committee generally reviews salaries in the early part of each year and, if appropriate, adjusts them to reflect changes in the above considerations and to respond to market and competitive pressures.
Our 20212022 Base Salary Decisions. Decisions. The Talent and Compensation Committee approved base salary increases for 2022 for each of Mr. Liberty and Mr. Holtz to account for their increased roles and responsibilities following their respective promotions to Chief Executive Officer and Chief Financial Officer in early 2022. The Talent and Compensation Committee also considered compensation benchmarking provided by the Committee’s independent compensation consultant and adjusted the base salary for Mr. Liberty and Mr. Holtz to move them closer to the market median for their respective positions. The Talent and Compensation Committee approved modest base salary increases for the other NEOs in recognition of their strong leadership during the pandemic and the Company’s successful return to service. In February 2021, based onmaking this determination, the ongoing impactTalent and Compensation Committee also considered that none of the pandemic, including suspension of our cruising operations, there were no changes toNEOs received a base salaries.salary increase in 2021.
Base Salary | Base Salary | Percent Change | ||||||||||
Name | 2021 | 2021 | 2022 | |||||||||
Richard D. Fain | $ | 1,300,000 | ||||||||||
Jason T. Liberty | $ | 950,000 | $ | 950,000 | $ | 1,200,000 | 26.3% | |||||
Naftali Holtz(1) | $ | n/a | $ | 675,000 | n/a | |||||||
Michael W. Bayley | $ | 1,000,000 | $ | 1,000,000 | $ | 1,050,000 | 5.0% | |||||
Lisa Lutoff-Perlo | $ | 820,000 | $ | 820,000 | $ | 861,000 | 5.0% | |||||
Harri U. Kulovaara | $ | 810,000 | $ | 810,000 | $ | 850,500 | 5.0% |
(1) | Mr. Holtz was a NEO for the first time in fiscal 2022. |
Performance-Based Annual Incentive
Why we pay annual performance-based compensation. We believe that annual incentive programs focus executives on annual financial and operational performance enabling them to better manage the cyclical nature of our business and to reward executives for performance relative to our annual goals and initiatives. We pay our annual performance-based compensation pursuant to our Executive Short-Term Bonus Plan (the “Executive Bonus Plan”). The Executive Bonus Plan is designed to reward our executives for the achievement of RCG’s annual financial and/or strategic goals and to recognize individual contributions. For 2021,2022, the Executive Bonus Plan represented approximately 19%23% of our CEO’s target total direct compensation and an average of 22% of the other NEOs’ target total direct compensation.
How we measure annual performance. Prior to the pandemic, we measured annual performance-based on (1) company-wide and brand financial and operational results, depending on the NEO’s responsibility and (2) on individual performance against previously established strategic objectives. For 2019, company-wide and brand financial and operational key performance indicators (“KPIs”) represented 100% of the annual bonus opportunity for the CEO and 66.67% for each other NEO while individual performance strategic objectives represented the remaining 33.33% of the bonus opportunity for each other NEO. In 2020, given the complete uncertainty of the economic and operational environment attributable to the COVID-19 pandemic, the Talent and Compensation Committee set nine strategic areas of focus against which it would evaluate the company-wide annual performance for the CEO and each other NEO, representing 80% of the bonus opportunity for the CEO and 50% of the bonus opportunity for each other NEO. Individual performance represented the remaining 20% of the bonus opportunity for the CEO and 50% of the bonus opportunity for each other NEO.
2021 Compensation Elements and 2021 Decisions
In 2021, the Talent and Compensation Committee elected to return to more normalized annual performance KPIs, such that each NEO was evaluated on company-wide financial and operational performance as well as individual performance. Due to the continuing uncertainties that existed at the beginning of 2021 and the need for extraordinary cross-functional cooperation and support, the Talent and Compensation Committee believed that the financial and operational KPIs should be based on company-wide metrics for all NEOs, rather than a combination of company-wide and brand-wide metrics.
For 2021, the framework of the Executive Bonus Plan was as follows:
2021 Executive Bonus Plan Framework | ||||
Name | Company-Wide Performance | Individual Performance Against Strategic Objectives | ||
CEO | 80% | 20% | ||
Other NEOs | 66.67% | 33.33% |
How we determine annual target bonus. Each year, the Talent and Compensation Committee considers the responsibilities of each executive and the competitiveness of our target bonus opportunity compared to our Market Comparison Group. The Talent and Compensation Committee then sets the annual Executive Bonus Plan Targettarget for each NEO, as a percentage of base salary. Based onFor 2022, the market environment, thereTalent and Compensation Committee approved an increase to the Executive Bonus Plan target for Mr. Liberty and Mr. Holtz in connection with the Company’s leadership transition and their respective promotions. There were no changes to the bonus targetstarget percentages for 2021.the other NEOs.
Name | 2021 Bonus Target (% of base salary) | 2021 Target Payout | |||
Richard D. Fain | 225% | $ | 2,925,000 | ||
Jason T. Liberty | 145% | $ | 1,377,500 | ||
Michael W. Bayley | 140% | $ | 1,400,000 | ||
Lisa Lutoff-Perlo | 130% | $ | 1,066,000 | ||
Harri U. Kulovaara(1) | 100% | $ | 810,000 |
52 | 2023 Proxy – Compensation Discussion and Analysis | ||
Compensation Discussion and Analysis
Name | 2022 Bonus Target (% of base salary) | 2022 Target Amount | |||
Jason T. Liberty | 200% | $ | 2,400,000 | ||
Naftali Holtz | 100% | $ | 675,000 | ||
Michael W. Bayley | 140% | $ | 1,470,000 | ||
Lisa Lutoff-Perlo | 130% | $ | 1,119,300 | ||
Harri U. Kulovaara(1) | 100% | $ | 850,500 |
(1) | Based on his unique and focused responsibilities, in addition to his bonus target, Mr. Kulovaara’s employment agreement provides that he is entitled to a bonus of $150,000 for each ship delivered during a fiscal year. During fiscal year 2022, the Company took delivery of two new ships. |
2021 Company-Wide Metrics; Weighting and Performance
In establishing the 2021 Executive Bonus Plan company-wide metrics in early 2021,How we measure annual performance. For 2022, the Talent and Compensation Committee believed thatreverted to the mostpre-COVID framework of the Executive Bonus Plan, pursuant to which annual performance is based on: (1) company-wide performance as well as brand performance, depending on the NEO’s areas of responsibility and (2) for NEOs other than the CEO, individual performance against previously established strategic objectives. Company-wide and brand performance is measured 60% based on financial measures (Adjusted earnings (loss) per share for company-wide and adjusted brand-specific operating income for brand performance) and 40% based on a composite of financial, operational, and ESG-related key performance indicators (“KPIs”).
For 2022, the framework of the Executive Bonus Plan was as follows:
2022 Executive Bonus Plan Framework | ||||||||
Name | Company- Wide Performance | Brand Performance | Individual Performance Against Strategic Objectives | |||||
Jason T. Liberty | 100% | – | – | |||||
Naftali Holtz | 66.67% | – | 33.33 | % | ||||
Michael W. Bayley(1) | 33.34% | 33.33 | % | 33.33 | % | |||
Lisa Lutoff-Perlo(2) | 33.34% | 33.33 | % | 33.33 | % | |||
Harri Kulovaara | 66.67% | – | 33.33 | % |
(1) | Brand performance for Mr. Bayley was based on Royal Caribbean International |
(2) | Brand performance for Ms. Lutoff-Perlo was based on Celebrity Cruises |
2023 Proxy – Compensation Discussion and Analysis | 53 | ||
Compensation Discussion and Analysis
Metrics Comprising the Executive Bonus Plan
Company-Wide Performance | Brand Performance | Individual Performance | ||||
60% | 60% | 100% | ||||
40% | 40% | |||||
7%Liquidity 7%Adjusted Gross Margin 7%Net Promoter Score/ Guest Satisfaction 7%Safety and Security 6%Employee Engagement 6%ESG Composite Index | 7%Percentage Capacity in Operations 7%Adjusted Gross Margin 7%Net Promoter Score/ Guest Satisfaction 7%Safety and Security 6%Employee Engagement 6%ESG Composite Index |
Company-Wide Financial Metric. For 2022, the Talent and Compensation Committee approved using Adjusted EPS as an important financial metric for evaluating annual company-wide metrics would be thoseperformance, reflecting our renewed focus on delivering profitable growth as we resumed operations.
In accordance with the terms of the Executive Bonus Plan, the Talent and Compensation Committee adjusted this number for purposes of 2022 annual bonuses to account for fuel price and interest rate variances from the prices and rates used for the Company’s initial forecast when setting targets, net of hedging impacts. These adjustments avoid penalizing or benefiting our NEOs for significant fluctuations in fuel prices and interest rates that positioned RCGare outside of the initial forecasted range and over which they have no control. In addition, and consistent with the Talent and Compensation Committee’s discretion under the Executive Bonus Plan, the net financial results and interest expense related to begin cruising once permitted by the CDCopportunistic acquisition of the Silver Endeavour vessel were excluded from the Company’s financial results, as the targets for the Executive Bonus Plan were established prior to that acquisition. This adjustment increased Adjusted EPS.
The table below sets forth the targets and other governmental agencies. Consequently, the six equally-weighted, company-wide metrics establishedachieved performance results approved by the Talent and Compensation Committee for 2021this financial metric.
Payout | 2022 Approved Results | Payout % | ||||||||||||||||
Metric | Weighting | 0% | 90% | 100% | 110% | 150% | 200% | |||||||||||
Adjusted EPS ($ Million) | 60% | ($17.03) | ($8.79) | ($6.54) | ($4.29) | ($2.37) | $3.95 | ($6.82) | 98% |
2022 KPIs for Company and Brand Performance. In establishing the 2022 Executive Bonus Plan KPIs for both company-wide and brand performance, the Talent and Compensation Committee focused on selecting metrics that would best position the Company to safely and efficiently return to operations, while also incentivizing strong financial performance. Although 2022 represented a unique transitional year, the Talent and Compensation Committee supported the return to the historical practice of using solely quantitative financial and operational metrics as opposed to qualitative measures when measuring annual company-wide and brand performance. The table below sets forth each KPI, the weighing of each KPI and how they were as follows:measured. The target achievement levels for each KPI was set to require significantly challenging, but attainable, results.
2023 Proxy – Compensation Discussion and Analysis | |||
Compensation Discussion and Analysis
KPIs | Weight | How Evaluated | ||
Liquidity(1) | 7% | The amount of cash and cash equivalents, undrawn capacity under the Company’s credit facilities and available but undrawn loan commitments as of December 31, 2022, adjusted to exclude transaction costs related to proactive financing actions to address near-term debt maturities and the impact of fuel price increases. This metric was intended to reward NEOs for their cost-management initiatives and their success in | ||
Adjusted Gross Margin | 7% | Gross Margin, adjusted for payroll and related fuel, food other operating expenses, depreciation and amortization, and the net financial results and interest expense related to the opportunistic acquisition of the Silver Endeavour vessel. Gross Margin is calculated as total revenues less total cruise operating expenses and depreciation and amortization. | ||
Operational | ||||
Percentage Capacity in Operations(2) | 7% | Percentage of available passenger cruise days (“APCDs”) in operation during 2022. APCD is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and cabins not available for sale. | ||
Net Promoter Scores (NPS) / | 7% | Third party surveys / net promoter scores, measuring customer satisfaction with their most recent cruise, his or her intent to cruise again with us and | ||
Safety and | 7% | Composite score comprised of safety incident frequency and severity, audit and compliance scores, COVID protocols and other safety, security, environment and health measures, which we believe are key to our extremely high safety and security standards and our goal of being a good steward of the environmental resources we manage. | ||
Employee Engagement | 6% | Quarterly pulse surveys, conducted by outside firm, of shoreside and shipboard employees measuring both employee satisfaction and employee engagement, which is defined as the tendency of employees to exert discretionary effort for our benefit. | ||
ESG | ||||
ESG Composite Index | 6% | Composite of |
(1) | This measure was used for purposes of evaluating company-wide performance only. |
(2) | This measure was used for purposes of evaluating brand performance only. |
The Talent and Compensation Committee established a threshold performance levellevels for each metric and performance levels at which executives could earn from a threshold of 50% up to a maximum of 200%, along with performance measures identified at 90%, 100%, 110%, and 200%150%. Although historically the Executive Bonus Plan provided for performance levels that ranged from 0% to 300% for company-wide and brand-wide metrics and 0% to 200% for individual performance, due to the continued uncertainty arising from the impact of the pandemic, for 20212022 the Talent and Compensation Committee capped the maximum performance at 200% for both the company-wide and brand performance metrics and the individual performance metric. Achievement in between these performance levels would be calculated on a linear basis (except for the qualitative metric which was evaluated based on those distinct levels articulated above).basis.
55 | |||
2021 Compensation ElementsDiscussion and 2021 DecisionsAnalysis
Company-Wide Financial Metric – For 2021, the Talent and Compensation Committee determined that the most important financial metric was Liquidity Preservation - the amount of cash and cash equivalents and undrawn capacity under the Company’s credit facilities as of December 31, 2021, adjusted to exclude transaction costs from the early partial redemption of certain senior secured notes due 2025 and the impact of fuel price increases. The Talent and Compensation Committee believed that maintaining a strong balance sheet would allow RCG to weather the continued uncertainty facing RCG and the industry due to the pandemic. Furthermore, the Talent and Compensation Committee believed that by measuring Liquidity Preservation as of the fiscal year-end, the NEOs would be rewarded for their cost-management initiatives and debt and equity raising activities, while retaining flexibility to use each of these tools as the executives believed was most appropriate. The table below sets forth the targets and the performance achieved for this financial metric.
Payout | 2021 Results | Payout % | ||||||||||||||
Metric | Weighting | 0% | 90% | 100% | 110% | 200% | ||||||||||
Liquidity Preservation ($ Billion) | 16.67% | $1.8 | $2.6 | $3.6 | $4.6 | $5.4 | $3.625 | 100.2% |
Company-Wide Objective Operational Metrics – The Talent and Compensation Committee also set four objective operational company-wide metrics at the corporate level, rather than by brand, which it believed to be most reflective of the actions necessary to successfully return to operations. The table below sets forth each operational metric, the weighting of the metric, how the metric was measured and the percentage achieved. Targets for each of the other operational KPIs were set at levels that the Talent and Compensation Committee anticipated would be challenging but achievable. For example, our Ships in Service threshold was set at 21 ships while target was 40 ships, even though we had no ships operating revenue cruises on January 1, 2021, at the beginning of the performance period. Target performance levels for our Guest Satisfaction (or NPS) were set based on the all-time high levels achieved in 2019, even though no one knew at the time of setting the targets what type of restrictions and limitations would be placed on cruising guests and how this would affect their travel experience.
Objective Operational Metric | Weight | How Evaluated | Payout % | |||
Ships in Service | 16.67% | Number of our Global Brand Ships (RCI, Celebrity and Silversea) operating revenue cruises by December 31, 2021 | 92% | |||
Guest Satisfaction | 16.67% | Third party surveys / net promoter scores, measuring customer satisfaction with their most recent cruise, his or her intent to cruise again with us and his or her willingness to recommend that others cruise with us | 129.2% | |||
Employee Engagement | 16.67% | Quarterly pulse surveys, conducted by outside firm, of shoreside and shipboard employees measuring both employee satisfaction and employee engagement, which is defined as the tendency of employees to exert discretionary effort for our benefit | 100.9% | |||
Safety and Health | 16.67% | Composite score comprised of safety incident frequency and severity, audit and compliance scores, COVID protocols and other safety, security, environment and health measures, which we believe are key to our extremely high safety and security standards and our goal of being a good steward of the environmental resources we manage | 100.7% |
In evaluating the company-wide performance ofunder each of the operational metrics, the Talent and Compensation Committee notedabove KPIs, it is useful to highlight that:
● | Our |
● | Our |
● |
Our ESG composite index exceeded target, with an average payout across the three subcomponents of 133% of target. For this component, the Talent and Compensation |
2021 Compensation Elements and 2021 Decisions
Company-Wide Qualitative Metric – Our “Return to Service” metric was a reflection of multiple qualitative objectivesCommittee considered that the Talent and Compensation Committee reviewed with respect to the organization as a whole. The weighting for this metric was only 16.67%, and the Talent and Compensation Committee determined that this metric had been met at the 175% performance level. The material factors that the Talent and Compensation Committee cited in evaluating this metric are set forth below.
fuel consumption per berth. |
2021 Compensation Elements and 2021 Decisions
Individual Performance. The individual performance component of our Executive Bonus Plan awards is intended to reward managerial decision-making, behavioral interaction, and overall contribution. As discussed above, for our CEO, individual performance represented 20% of his bonus opportunity and for each of our other NEOs, individual performance represented 33.33% of the bonus opportunity for each of our NEOs except for Mr. Liberty, as his bonus was based 100% on corporate performance. None of the individual goals are material to understanding the Executive Bonus Program or how annual targets were determined for 2022. The Talent and Compensation Committee approves the final individual achievement and bonus payout for each of the other NEOs based on the CEO’s recommendation.
The Talent and Compensation Committee considered each NEOs achievement of his or her bonus opportunity.individual goals and overall contribution to our successful growth, how each one directed their area of responsibility to meet ongoing challenges of the pandemic during 2022, and the results of specific projects they were responsible for during the year. In evaluating the performance of each NEO during 2022, the Talent and Compensation Committee consideredhighlighted the following achievements for each NEO.2022, among others:
Returned our business to full operations and delivered vacation experiences to 6 million guests; | |||
Resumed quarterly guidance and launched Trifecta, a new three-year financial performance initiative designed to drive superior performance; | |||
● | Successfully raised over $9 billion of capital to refinance debt in a | ||
● | Delivered Wonder of the Seas and | ||
● | Launched Icon of | ||
● | |||
Achieved | |||
● | Implemented additional initiatives related to safety and | ||
● | |||
2021 Compensation Elements and 2021 Decisions
Advanced our Destination Net Zero “journey to carbon free” strategy. | |||
2022 |
2021 Compensation Elements and 2021 Decisions
2021 Executive Bonus Plan PaymentsPayouts
Based on the achievement levelsabove KPIs and financial performance results, the following table shows the 2022 Executive Bonus Plan payout as a percentage of target for each company-wide metric set forth above,award component and the actual total achievement for the company-wide metricspayout amount.
Payout % per Component | Total Payout % (rounded) | Target 2022 Payout | Actual Total 2022 Payout | |||||||||||||||
Name | Corporate | Brand | Individual | |||||||||||||||
Jason T. Liberty | 97.7 | % | N/A | N/A | 97.7 | % | $ | 2,400,000 | $ | 2,344,800 | ||||||||
Naftali Holtz | 97.7 | % | N/A | 120 | % | 105.1 | % | $ | 675,000 | $ | 709,645 | |||||||
Michael W. Bayley | 97.7 | % | 96.8 | % | 130 | % | 108.2 | % | $ | 1,470,000 | $ | 1,590,035 | ||||||
Lisa Lutoff-Perlo | 97.7 | % | 79.1 | % | 100 | % | 92.3 | % | $ | 1,119,300 | $ | 1,032,747 | ||||||
Harri U. Kulovaara | 97.7 | % | N/A | 105 | % | 100.1 | % | $ | 850,500 | $ | 851,632 |
In addition to his award under the Executive Bonus Plan, was 117%, but the Talent and Compensation Committee exercised negative discretion and reducedawarded Mr. Kulovaara a special performance bonus of $300,000 for the achievement on company-wide metrics to 100%. As discussed above, eachdelivery of two new ships in 2022: Wonder of the NEOs met theirSeas and Celebrity Beyond. This success also contributed to Mr. Kulovaara’s individual performance strategic objectives at 100%. Consequently, payments under the Executive Bonus Plan for 2021 were equal to 100%component performance.
56 | 2023 Proxy – Compensation Discussion and Analysis | ||
Compensation Discussion and Compensation Committee exercised negative discretion to reduce the aggregate amount from $450,000 to $300,000. The amounts paid are set forth below in our Summary Compensation Table.Analysis
Long-Term Equity Incentive Awards
Why we pay equity-based compensation. Our long-term incentive award program is the most significant element of our overall compensation program. During 2021,2022, annual long-term incentive awards represented 73%66% of our CEO’s target total direct compensation and an average of 60%58% of target total direct compensation for our other NEOs. The Talent and Compensation Committee’s philosophy is that a majority of an executive’s compensation should be based directly upon the value of long-term incentive compensation in the form of time-based restricted stock units and performanceperformance-based restricted stock units so as to align with shareholder interests, reward the achievement of long-term goals and promote stability and corporate loyalty among the executives. The Talent and Compensation Committee believes that providing executives with the opportunities to acquire significant stakes in our growth and prosperity (through grants of equity-based compensation), while maintaining other components of our compensation program at competitive levels, will incentivize and reward executives for sound business management, develop a high-performance team environment, foster the accomplishment of short-term and long-term strategic and operational objectives and compensate executives for improvement in shareholder value, all of which are essential to our ongoing success.
How equity-based compensation is determined. Annually, the Talent and Compensation Committee evaluates the appropriate form and mix of equity-based compensation that RCG will grant as part of its long-term incentive compensation and approves the dollar value of long-term equity awards that will be granted to each NEO. In the beginning of each year, the Talent and Compensation Committee determines the target equity award value (“LTI Value”) to be delivered to each NEO.
In the beginning of each year, the Talent and Compensation Committee determines the target equity award value (“LTI Value”) to be delivered to each NEO. In determining the appropriate long-term incentive award value, the Talent and Compensation Committee considers:
● | the compensation paid to comparable executives in the Market Comparison Group; |
● | |
a review of each of the elements of total direct compensation; and | |
● | |
the NEO’s contribution to the overall results of the Company. |
To strike an appropriate balance between performance and retention incentives, we use a combination of time-based restricted stock units/shares, which we refer to as Time-Based RSUs, and performance-based restricted stock units/shares, which we refer to as PSUs.
Time-Based Equity. To promote retention and align our executive’s interests with long-term stock appreciation, the Time-Based RSUs vest in equal annual installments over a four-year period commencing on the first anniversary date of the grant. As Time-Based RSUs are inherently tied to the performance of our common stock, we consider a vesting schedule based on continued service appropriate to incentivize retention and performance.
2021 Compensation Elements and 2021 Decisions
Performance-Based Equity. Each PSU is expressed as a target number of PSUs, with the actual number that cancould be earned for the grants made in 2022 ranging from 0% to 200% of the target based on our performance results with regards to the predetermined metric or metrics across the measurement period. Annually the Talent and Compensation Committee determines (1) the metrics that will be used for the PSUs, (2) the weighting of each metric and (3) a threshold, target and maximum performance level. Below the threshold level, all PSUs are forfeited. At the target level, 100% of the target number of PSUs are earned and at the maximum level, 200% of the target number of PSUs are earned. The threshold, target and maximum performance levels are set based on prior year performance and our long-term growth targets.
2023 Proxy – Compensation Discussion and Analysis | 57 | ||
2021Compensation Discussion and Analysis
2022 Equity Awards
For 2021,2022, the Talent and Compensation Committee approved an increase to the LTI Value for Mr. Liberty (from $3,500,000 to $7,000,000) and Mr. Holtz to reflect their new positions and expanded scope of responsibilities. All other NEOs maintained the same annual LTI Value for eachas 2021 as set forth below.
Name | 2021 LTI Value | 2022 LTI Value | ||||
Richard D. Fain | $ | 11,250,000 | ||||
Jason T. Liberty | $ | 3,500,000 | $ | 7,000,000 | ||
Naftali Holtz | $ | 1,400,000 | ||||
Michael W. Bayley | $ | 5,000,000 | $ | 5,000,000 | ||
Lisa Lutoff-Perlo | $ | 2,750,000 | $ | 2,750,000 | ||
Harri U. Kulovaara | $ | 1,500,000 | $ | 1,500,000 |
As discussed above, the Talent and Compensation Committee then allocated the total LTI Value between Time-Based RSUs and Performance-Based Awards.PSUs. For the 20212022 compensation program, consistent with prior years, we provided long-term incentive awards for all NEOs allocated as follows.set forth below. The Talent and Compensation Committee believes that the use of both Time-Based RSUs and PSUs is consistent with competitive market practice and that the allocation set forth below effectively and efficiently balances both performance and retention objectives.
For the 2021-2023 PSU Award,Awards granted in 2022 for the period ending December 2024, the Talent and Compensation Committee decided to (1) continue to use Adjusted EPS, ROIC, and ROICLeverage (Net Debt/Adjusted EBITDA) as the applicable performance metrics and (2) added a leverage ratio (Debt/EBITDA)add an ESG composite as a new performance metric to drive the achievement of ESG-related performance goals and further align executive compensation with stakeholder interests.
ROIC is a performance metric that measures how effective the Company is at generating a return for investors who have provided capital (i.e., lenders and shareholders). We define ROIC as “Adjusted Operating Income (Loss)” divided by “Invested Capital.” Adjusted Operating Income (Loss) represents operating income (loss) including income (loss) from equity investments and income taxes but excluding certain items that we believe adjusting for is meaningful when assessing our operating performance on a comparative basis, which for 2022 consisted of: impairment and credit losses, restructuring charges and other initiative expenses, and the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018. Invested Capital represents the most recent five-quarter average of total debt (i.e., current portion of long-term debt plus long-term debt) plus total shareholders’ equity.
58 | 2023 Proxy – Compensation Discussion and Analysis | ||
Compensation Discussion and Analysis
The inclusion of Leverage was intended to incentivize our NEOs to pay down crisis-debt in an effort to return to an investment grade credit profile. Leverage is defined as “Net Debt” divided by “Adjusted EBITDA”, whereby (1) Net Debt represents total debt (i.e., the current portion of long-term debt plus long-term debt) less cash and cash equivalents and (2) Adjusted EBITDA represents EBITDA excluding certain items that we believe adjusting for is meaningful when assessing our profitability, which for 2022 included other income (expense) in our consolidated statements of comprehensive loss, impairment and credit losses, and restructuring charges and other initiatives. EBITDA represents net income (loss) excluding (i) interest income; (ii) interest expense, net of interest capitalized; (iii) depreciation and amortization expenses; and (iv) income tax benefit or expense.
The ESG composite evaluates performance based on the Board’s belief that a primary focusfollowing equally-weighted quantitative measures: five specific energy efficiency goals for our vessels, employee engagement scores, and cybersecurity risk rating from NIST.
The threshold, target, and maximum levels for payouts of the NEOs should be returnPSUs granted in 2022 for the period ended December 2024 were set to an unlevered balance sheetalign with the Company’s long-term targets as soon as possible.established by the Board’s Strategic Financial Health Committee in 2021. The performance metrics werewill be weighted 40%30% for each of the Adjusted EPS metric, 40% for theand ROIC metricmetrics, and 20% for each of the leverage ratioLeverage metric and the ESG composite metric. Similar to prior years,The payout level for the percentage of equity awardedgrants made in the form of PSUs to2022 will be determined by our CEO was higher than that awarded to our other NEOs due to the Talent and Compensation Committee’s belief that the CEO’s compensation should be primarily performance based.
2021 Compensation Elements and 2021 Decisions
Payout under 2019 Performance-Based Equity Awards
In February 2022, the Talent and Compensation Committee determined the payout for the PSUs issued to the NEOs in early 2019. Consistent with the disclosure in last year’s proxy statement and as discussed with shareholders who understood and concurred with the intended use of discretion, the Talent and Compensation Committee exercised discretion in determining the payout for the performance-based equity awards (PSUs) subject to the 2019-2021 performance period. For the 2019-2021 performance period, the Talent and Compensation Committee had initially set two metrics tied to income - EPS and ROIC - to evaluate performance over the three-year period. The threshold and target performance levels had been set based on performance during 2018 and our long-term growth targets, with the threshold performance level being set at 20% above the 2018 actual EPS and target performance level at 32% above the 2018 actual EPS. However, because the pandemic forced us to shut down our operations and prevented us from generating earnings, the Talent and Compensation Committee believed it was appropriate to apply discretion in the evaluation of the 2019-2021 PSU2025.
Payout under 2020 Performance-Based Equity Awards and referred to two objective sets of criteria in determining the appropriate level of discretion to apply:
Based on these factors, and in-line with our equity plan documents, the Talent and Compensation Committee took into consideration the achievement of results prior to the COVID-19 pandemic and the shareholder value maintained since the pandemic to exclude the impact of fiscal year 2020 and 2021 on the attainment of the financial metrics during the performance period and utilized discretion in its determination to payout the PSUs at 90% of the original targeted number of shares.
2021 Compensation Elements and 2021 Decisions
Adjustment of Financial Metrics for the 2020-2022 PSU Awards
Our PSUs for the 2020-2022 performance period were setgranted in February 2020 for the period ended December 2022 were set before the eventual impact of the COVID-19 pandemic on our business was understood. Consistent with prior years, the Talent and Compensation Committee had adopted Adjusted EPS and ROIC as the two financial metrics, with the threshold, target and maximum performance levels being set based on the budgeted long-term growth targets and the 2022 Adjusted EPS and 2022 ROIC targets adopted by the Board. As disclosed in last year’s proxy statement and discussed with shareholders who understood and concurred with the need to modify long-term targets set prior to the pandemic, in March 2021, the Talent and Compensation Committee modified the PSUs granted in March 2021 modified our 2020-2022 PSU AwardsFebruary 2020 for the period ending December 2022 to align with the revised targets for 2022 Adjusted EPS and 2022 ROIC established by the Board’s Strategic Financial Health Committee and added a leverage ratio (Debt/Leverage metric (Net Debt/Adjusted EBITDA) to reflect the continued focus on returning to an unleveraged balance sheet.. The new performance metrics arewere weighted 40% based on our Adjusted EPS performance, 40% based on our ROIC performance and 20% based on our Leverage ratio performance.
The revised threshold, target and maximum performance levels were set at levels considered to be challenging and materially above the prior year’s2020 actual results. These decisions reflectThe targets for Adjusted EPS, ROIC and Leverage metrics were set at $0.20, 3.60%, and 10.80, respectively. In determining the level of performance achieved for each of the three metrics, the Talent and Compensation Committee accounted for variances in fuel prices, interest rates, and foreign exchange rates from the Company’s forecast when setting targets, net of hedging impacts. These adjustments avoid penalizing or benefiting our NEOs for significant fluctuations in fuel prices, foreign exchange rates, and interest rates that are outside of the initial forecasted range and over which they have no control. In addition, for purposes of calculating Adjusted EBITDA for the Leverage metric, the Talent and Compensation Committee excluded equity investment income from our joint ventures that are not consolidated in our financial statements.
2023 Proxy – Compensation Discussion and Analysis | 59 | ||
Compensation Discussion and Analysis
In February 2023, the Talent and Compensation Committee determined the payout for the PSUs issued to the NEOs in 2020 for the performance period ended December 2022. Due to the extended negative impact of the COVID-19 pandemic on our organization throughout this period, the resulting amounts approved by the Talent and Compensation Committee for Adjusted EPS, ROIC, and Leverage came in below targets at ($5.52), -1.1%, and 20.66, respectively. The table below sets forth the final payout amounts for each NEO. Given the Committee’s commitment to pay-for-performance, based on achievementthe Committee did not exercise discretion to adjust the final payout amounts for any of long-term financial metrics.the NEOs.
Name | Target Shares | Final Payout % | Shares Earned | |||
Richard D. Fain(1) | 76,562 | 35% | 26,797 | |||
Jason T. Liberty | 19,055 | 35% | 6,669 | |||
Naftali Holtz | 3,376 | 35% | 1,182 | |||
Michael W. Bayley | 27,222 | 35% | 9,528 | |||
Lisa Lutoff-Perlo | 14,972 | 35% | 5,240 | |||
Harri U. Kulovaara | 8,167 | 35% | 2,858 |
(1) | Although Mr. Fain did not serve as an NEO after January 3, 2022, the performance shares issued to him in 2020 continued to vest. Refer to the section on “Vesting into Retirement Policy” on page 64. |
Payout under 2021 Special Equity Awards
The
As described in last year’s proxy statement, the Talent and Compensation Committee successfully implemented a retention program in connection with our CEO transitionstransition in 2022 by granting special equity awards in March 2021 to three NEOs – Messrs. Liberty and Bayley and Ms. Lutoff-Perlo – each of whom it believed were critically important to retain in order to ensure a smooth leadership transition and drive continued enterprise growth. Each of these NEOs has significant tenure with the Company – Mr. Liberty has served since 2008 in a variety of positions of increasing responsibility, Mr. Bayley has been with RCG for 40 years and served as President and CEO of two of RCG’s global cruises brands for a total of 9 years and Ms. Lutoff-Perlo has been with RCG for 35 years and served as the President and CEO of one of RCG’s global cruise brands for 7 years. In addition, they each brought unique knowledge and experience to their positions and to RCG as a whole and, in light of these contributions, the Talent and Compensation Committee considered the potential challenges the Company would encounter if any of themThe awards were to leave RCG prior to, or during the transition following, the selection of the new CEO, as well as the additional time and resources that would be required to fill their key leadership roles. This was especially important as our key executives were in high demand across similar leisure industries that had returned to normal service much more quickly and therefore were not similarly impacted by the pandemic.
Based on these considerations, the Talent and Compensation Committee approved special equity awards to each of Mr. Liberty, Mr. Bayley and Ms. Lutoff-Perlo equal to two times each executive’s normal annual equity award.
The Talent and Compensation Committee structured these awards with the goal of (i) reinforcing our continued emphasis on the return to normal financial health and (ii) ensuring that these NEO’s continued focus was on returning to service as quickly as practicable. Therefore, each of these awards was (i) 50% in the form of Time-Based RSUs and (ii) 50% in the form of PSUs. The Time-Based RSUs vest 50% on the second anniversary of the grant date and the 50% on the third anniversary of the grant date. The PSUs are earned (1) 50% on a two-year performance period, January 1, 2021 through December 31, 2022 (“First Tranche”) and (2) 50% on a three-year performance period from January 1, 2021 through December 31, 2023.2023 (“Second Tranche”). The financial metrics upon which the PSUPSUs can be earned are Adjusted EPS, ROIC and leverage ratio (Debt/Leverage (Net Debt/Adjusted EBITDA), the same as those utilized for the 2021-2023 PSU Awards.Awards granted in 2021 for the period ending December 2023. The target performance level was set by the Talent and Compensation Committee in-line with the operating plan adopted by the Strategic Financial Health Committee, while the threshold was set slightly below the budget and the maximum was set at a level that was deemed to be significantly challenging. As the purpose of these awards were continued active engagement of our NEOs, these special equity awards
2021 Compensation Elements and 2021 Decisions
were not subject to the “Vesting Into Retirement Policy” described on page 6864 and are subject to forfeiture if any of the NEOs leftleave the Company prior to the respective vesting dates.
Consistent with the payout percentage for the PSUs granted in 2020 for the performance period ended December 2022, the First Tranche of the PSU component of the special equity awards vested at 35% of target. The table below sets forth the final payout for the First Tranche. The Talent and Compensation Committee did not exercise discretion to adjust the final payout results noted below.
Name | Target Shares for First Tranche | Final Payout % | Shares Earned | |||
Jason T. Liberty | 20,630 | 35% | 7,220 | |||
Michael Bayley | 29,471 | 35% | 10,315 | |||
Lisa Lutoff-Perlo | 16,209 | 35% | 5,673 |
60 | 2023 Proxy – Compensation Discussion and Analysis | ||
Compensation Discussion and Analysis
Other Elements of Compensation
In an effort to offer our employees a competitive remuneration package, we provide them with certain retirement, medical and welfare benefits, including a qualified non-contributory profit-sharing retirement plan. The NEOs are eligible to participate and/or receive such benefits on a basis commensurate with that of other employees.
Since January 1, 2009, as a result of Section 457A of the U.S. Internal Revenue Code, in lieu of contributions to the Royal Caribbean Cruises Ltd. Supplemental Executive Retirement Plan (the “SERP”), each NEO receives, on an annual basis, a lump-sum cash payment of the benefits that would have been accrued under the SERP for services in a given year but for a change in tax laws. Amounts earned in 20212022 in lieu of the SERP benefit are disclosed in the Summary Compensation Table — All Other Compensation column, as further detailed in the “2021“2022 All Other Compensation Table.”
We also offer the NEOs certain perquisites which include: Company paid automobile leases, annual executive physicals, and life insurance coverage equal to five times their annual base salary. In addition, our executives who have been on international assignments are also eligible to receive tax equalization and preparation assistance. NEOs also receive free and discounted Company cruises, and, annual executive physicals. In addition, from time to time, family members may accompany our NEOs on business travel, either on chartered aircraft or on cruises, all of which is provided at little or no incremental cost to the Company. Our executives who have been on international assignments are also eligible to receive tax equalization and preparation assistance. Our NEOs also receive life insurance coverage equal to five times their annual base salary.cost.
2023 Proxy – | |||
Compensation PoliciesDiscussion and ProceduresAnalysis
Compensation Policies and Procedures
Roles and Responsibilities
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CEO |
| Compensation Consultant |
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● | our compensation plan risk; | |
● | current trends in executive and director compensation design; and | |
● | the overall levels of compensation and types and blend of various compensation elements. |
In May 2022, the Talent and Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”), as its new independent compensation consultant. Meridian’s work during the second half of 2022 consisted of review of our stock ownership guidelines, peer group composition, compensation benchmarking of senior executive pay structure, and review of Board compensation trends in anticipation of the Committee’s decisions on compensation program design in 2023.
Each of Willis Towers Watson and Meridian had direct access to the Talent and Compensation Committee’s members and advised them regarding matters for whichduring the Talent and Compensation Committee is responsible.period of their respective engagements in 2022. Within this framework, Willis Towers Watsoneach was instructed to work collaboratively with management, including our CEO and our Chief Human Resources Officer to gain an understanding of our business and compensation programs to help Willis Towers Watson advise the Talent and Compensation Committee.programs. In addition, during 2021 Willis Towers Watsoneach consultant regularly conferred with our senior management and human resources department to collect, analyze and present data requested by the Talent and Compensation Committee.
2023 Proxy – Compensation | |||
Compensation PoliciesDiscussion and ProceduresAnalysis
Market Comparison Group
Our Market Comparison Group is the foundation of our annual compensation review — which begins in September and runs through February — and is used to help guide the Talent and Compensation Committee’s decisions regarding competitive pay levels and design architecture.
How We Choose Our Market Comparison Group
Although we strive for consistency, theThe list of companies that comprise our Market Comparison Group arewas developed by Willis Towers Watson, our independent compensation consultant for 2021 and the first half of 2022. Although we strive for consistency, the list is reviewed and approved annually by the Talent and Compensation Committee using the following criteria:
● | Availability of public information— company is publicly-traded and compensation data is available in public filings |
● | Relevant industry group— company included |
● | Equivalent revenue— company is within approximately 0.5 to 2 times our revenue |
● | Similar business strategy— company falls under hospitality, hotels and motels, leisure time, leisure products or resort industry categories |
● | Global Footprint— company has significant operations outside of the United States |
● | Historical precedent— company included in the prior year’s Market Comparison Group |
Based on considerations of the factors above, Willis Towers Watson did not recommend, and the Talent and Compensation Committee did not make, any changes to the Market Comparison Group from 2021. The below Market Comparison Group which was approved by our Talent and Compensation Committee in September 2020, was used to inform 20212022 compensation decisions.
Booking Holdings Inc. | Hilton Worldwide Holdings, Inc. | Norwegian Cruise Line | |||
Caesars Entertainment Corp. | Las Vegas Sands Corp. | Holdings Ltd. | |||
Carnival Corp. | Live Nation Entertainment, Inc. | Starbucks Corp. | |||
Darden Restaurants, Inc. | Marriott International Inc. | Wyndham Worldwide Corp. | |||
eBay Inc. | McDonald’s Corporation | Wynn Resort Ltd. | |||
Expedia Inc. | MGM Resorts International | Yum Brands |
For awards of PSUs, RCG has adopted a “clawback” policy applicable to the award recipients, including the NEOs. If, for the two year period following the end of the three-year performance period of each award, RCG is required to restate its financial results for the award performance period in a manner that would have adversely affected the number of PSUs subject to the award, the Talent and Compensation Committee may (regardless of any fault on the part of the participant) adjustrequire the number of PSUs subjectaward recipient to forfeit and/or repay an amount equal to the award to reflectdifference between the numberamount actually awarded based on the erroneous financial data and the amount of PSUscompensation that wouldshould have been payableawarded to the recipient under the restatedaccounting restatement or the adjusted financial statements, as determined by the Talent and Compensation Committee. For example, for the grants made in February 2021,2022, the compensation recoupment period would extend to December 31, 2025.2026.
Timing of Equity Awards:Awards: The Talent and Compensation Committee generally grants annual equity awards to NEOs and other members of management at the first regularly scheduled Talent and Compensation Committee meeting of the calendar year, usually held in February. Equity awards may be granted outside of the annual grant cycle in connection with events such as hiring, promotion or extraordinary performance or as part of a special retention effort.
2023 Proxy – Compensation | |||
Compensation PoliciesDiscussion and ProceduresAnalysis
Vesting Into Retirement Policy: Starting with grants made in 2014, certainCertain of our executives may be eligible for accelerated or continued vesting of applicable long-term equity awards under our “Vesting Into Retirement” policy. In recognition that different motivations and considerations prevail for officers approaching retirement, awards granted to senior executives who are at least 62 years of age and who have been employed by RCG for at least 15 years are generally not subject to forfeiture upon termination of employment after the later of the first anniversary of the grant date and the first anniversary of the date that the officer meets both the age and service criteria. In order to maintain an alignment of interest with our shareholders, these awards continue to be subject to restrictions on transfer that will lift over a four-year period for the RSUs and over a three-year period for PSUs (mirroring the typical vesting schedule for these awards).
We recognize the importance of aligning our management’s interests with those of our shareholders. As a result, the Board, at the recommendation of the Talent and Compensation Committee, has established stock ownership guidelines for all of our officers. Under these guidelines, the NEOs are expected to accumulate over a designated period, Company stock having a fair market value equal to the multiples of their base salaries as shown in the table below.
Name | Stock Ownership Amount (base salary multiple) | |
Chief Executive Officer | ||
All Other NEOs |
Stock owned outright, unvested time-based restricted stock, and the earned portion of performance-based stock awards count towards the stock ownership amount. Officers are required to retain 50% of the net after-tax shares received under any equity awards until they meet the applicable ownership amount. Once an officer’s target stock ownership is achieved, or upon expiration of the applicable accumulation period, an officer will be permitted to sell Company stock only to the extent that, immediately following such sale, the officer continues to meet the applicable ownership amount. Each NEO is currently satisfiesin compliance with the stock ownership guidelines.
Prohibition of Pledging/Hedging
We have a policy that prohibits the members of our Board and our officers and employees from engaging in pledging and hedging transactions with respect to our securities, including through the use of instruments such as prepaid variable forwards, equity swaps, collars and exchange funds, and from short selling our securities.
2023 Proxy – Compensation | |||
Report of the Talent and
Compensation Committee
Report of the Talent and Compensation Committee
The Talent and Compensation Committee has reviewed and discussed with management the Compensation Discussion & Analysis and, based on such review and discussion, has recommended to the Board that the Compensation Discussion & Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for 2021.2022.
THE TALENT AND COMPENSATION COMMITTEE
Vagn O. Sørensen, Chairman
Chair
John F. Brock
Ann S. Moore
Amy McPherson
Donald Thompson
2023 Proxy – Report of the Talent and Compensation Committee | |||
Executive Compensation Tables
Summary Compensation Table
The following table presents certain summary information for the fiscal years ended December 31, 2019, 2020, 2021 and 20212022 concerning compensation earned for services rendered in all capacities by our CEO, our CFO and our other three most highly compensated executive officers during the fiscal year ended December 31, 2021.2022. We refer to these officers collectively as our named executive officers or NEOs.
Name and Principal Position | Year | Salary | Stock Awards(1)(2) | Non-Equity Incentive Plan Compensation(3) | Declined Non-Equity Incentive Plan Compensation | Change in Pension Value and NQDC Earnings(4) | All Other Compensation(5) | Total | |||||||||||||||
Richard D. Fain Chairman & Chief Executive Officer | 2021 | $ | 1,300,000 | $ | 11,250,070 | $ | 2,925,000 | $ | 156,971 | $ | 179,986 | $ | 15,812,027 | ||||||||||
2020 | $ | 645,000 | $ | 11,171,146 | $ | 3,042,000 | ($3,042,000) | $ | 154,879 | $ | 112,478 | $ | 12,083,503 | ||||||||||
2019 | $ | 1,276,923 | $ | 8,699,024 | $ | 4,006,080 | $ | 189,347 | $ | 187,545 | $ | 14,358,919 | |||||||||||
Jason T. Liberty EVP, Chief Financial Officer | 2021 | $ | 950,000 | $ | 10,500,003 | $ | 1,377,500 | $ | 88,519 | $ | 118,660 | $ | 13,034,682 | ||||||||||
2020 | $ | 818,798 | $ | 3,228,563 | $ | 1,411,938 | $ | 89,503 | $ | 100,429 | $ | 5,649,231 | |||||||||||
2019 | $ | 866,346 | $ | 2,621,510 | $ | 1,731,002 | $ | 91,472 | $ | 113,674 | $ | 5,424,004 | |||||||||||
Michael W. Bayley President and CEO, RCI | 2021 | $ | 1,000,000 | $ | 14,999,980 | $ | 1,400,000 | $ | 18,969 | $ | 132,217 | $ | 17,551,166 | ||||||||||
2020 | $ | 866,346 | $ | 4,943,887 | $ | 1,435,000 | $ | 74,355 | $ | 116,244 | $ | 7,435,832 | |||||||||||
2019 | $ | 941,923 | $ | 4,061,696 | $ | 1,803,361 | $ | 110,190 | $ | 140,711 | $ | 7,057,881 | |||||||||||
Lisa Lutoff-Perlo President and CEO, Celebrity Cruises | 2021 | $ | 820,000 | $ | 8,250,057 | $ | 1,066,000 | $ | 130,258 | $ | 151,810 | $ | 10,418,125 | ||||||||||
2020 | $ | 710,558 | $ | 2,719,084 | $ | 1,092,650 | $ | 130,177 | $ | 96,854 | $ | 4,749,323 | |||||||||||
2019 | $ | 770,769 | $ | 2,278,490 | $ | 1,098,258 | $ | 140,211 | $ | 142,114 | $ | 4,429,482 | |||||||||||
Harri U. Kulovaara EVP, Maritime | 2021 | $ | 810,000 | $ | 1,499,964 | $ | 1,110,000 | $ | 83,691 | $ | 109,980 | $ | 3,613,635 | ||||||||||
2020 | $ | 803,846 | $ | 1,483,167 | $ | 830,250 | $ | 81,764 | $ | 107,746 | $ | 3,606,773 | |||||||||||
2019 | $ | 761,923 | $ | 1,139,243 | $ | 870,446 | $ | 98,382 | $ | 102,335 | $ | 3,422,329 |
Name and Principal Position | Year | Salary / Fees | Stock Awards(1)(2) | Non-Equity Incentive Plan Compensation(3) | Declined Non-Equity Incentive Plan Compensation | Change in Pension Value and NQDC Earnings(4) | All Other Compensation(5) | Total | ||||||||||||||
Richard D. Fain(6) Chairman & Former Chief Executive Officer | 2022 | $ | 100,000 | $ | 200,006 | — | — | — | $ | 300,006 | ||||||||||||
2021 | $ | 1,300,000 | $ | 11,250,070 | $ | 2,925,000 | $ | 156,971 | $ | 179,986 | $ | 15,812,027 | ||||||||||
2020 | $ | 645,000 | $ | 11,171,146 | $ | 3,042,000 | ($3,042,000) | $ | 154,879 | $ | 112,478 | $ | 12,083,504 | |||||||||
Jason T. Liberty President & Chief Executive Officer and Former Chief Financial Officer | 2022 | $ | 1,200,000 | $ | 7,000,056 | $ | 2,344,800 | $ | — | $ | 219,402 | $ | 10,764,258 | |||||||||
2021 | $ | 950,000 | $ | 10,500,003 | $ | 1,377,500 | $ | 88,519 | $ | 118,660 | $ | 13,034,682 | ||||||||||
2020 | $ | 818,798 | $ | 3,228,563 | $ | 1,411,938 | $ | 89,503 | $ | 100,429 | $ | 5,649,231 | ||||||||||
Naftali Holtz (7) Chief Financial Officer | 2022 | $ | 675,000 | $ | 1,400,011 | $ | 709,645 | $ | — | $ | 33,396 | $ | 2,818,052 | |||||||||
Michael W. Bayley President and CEO, RCI | 2022 | $ | 1,046,849 | $ | 5,000,029 | $ | 1,590,035 | $ | — | $ | 128,847 | $ | 7,765,760 | |||||||||
2021 | $ | 1,000,000 | $ | 14,999,980 | $ | 1,400,000 | $ | 18,969 | $ | 132,217 | $ | 17,551,166 | ||||||||||
2020 | $ | 866,346 | $ | 4,943,887 | $ | 1,435,000 | $ | 74,355 | $ | 116,244 | $ | 7,435,832 | ||||||||||
Lisa Lutoff-Perlo President and CEO, Celebrity Cruises | 2022 | $ | 858,416 | $ | 2,749,988 | $ | 1,032,747 | $ | — | $ | 115,514 | $ | 4,756,665 | |||||||||
2021 | $ | 820,000 | $ | 8,250,057 | $ | 1,066,000 | $ | 130,258 | $ | 151,810 | $ | 10,418,125 | ||||||||||
2020 | $ | 710,558 | $ | 2,719,084 | $ | 1,092,650 | $ | 130,177 | $ | 96,854 | $ | 4,749,323 | ||||||||||
Harri U. Kulovaara EVP, Maritime | 2022 | $ | 847,948 | $ | 1,500,001 | $ | 1,151,632 | $ | — | $ | 115,759 | $ | 3,615,340 | |||||||||
2021 | $ | 810,000 | $ | 1,499,964 | $ | 1,110,000 | $ | 83,691 | $ | 109,980 | $ | 3,613,635 | ||||||||||
2020 | $ | 803,846 | $ | 1,483,167 | $ | 1,130,250 | $ | 81,764 | $ | 107,746 | $ | 3,606,773 |
(1) | The amounts in this column |
(2) | |
(3) | Represents amounts earned pursuant to the annual Executive Bonus Plan. We make payments under our annual Executive Bonus Plan in the first quarter following the fiscal year in which they were earned. In addition to the amounts earned under the Executive Bonus Plan, Mr. Kulovaara is entitled to receive a bonus of $150,000 per ship delivered during the year. During |
2023 Proxy – Executive Compensation Tables | |||
Executive Compensation Tables
(4) | Each of the NEOs, except for Mr. Fain, participated in the Royal Caribbean Cruises Ltd. Retirement Savings Plan as of December 31, |
(5) | Please see the |
(6) | Mr. Fain stepped down from his position as Chief Executive Officer, effective January 3, 2022. Although he did not receive any cash or equity compensation in 2022 for this role as Chief Executive Officer, he received compensation for services he provided during 2022 as our Chairman of the Board of Directors. The Salary/Fees and Stock Awards columns in the “Summary Compensation” table notes compensation received by Mr. Fain for his role as Chairman. As required by Regulation S-K, Item 402(c), these amounts are also reported separately in the “Director Compensation for 2022” table below. |
(7) | Mr. Holtz is an NEO for the first time in fiscal 2022. |
20212022 All Other Compensation
Perquisites | Benefits | |||||||||||||||||||||||
Name | Auto Lease(1) | Other Perquisites(2) | Life Insurance Policies | Company Contributions to Qualified Deferred Compensation Plans(3) | Benefit Payouts(4) | Total | ||||||||||||||||||
Richard D. Fain | $ | 11,436 | $ | 0 | $ | 38,550 | $ | 29,000 | $ | 101,000 | $ | 179,986 | ||||||||||||
Jason T. Liberty | $ | 18,216 | $ | 2,809 | $ | 2,636 | $ | 29,000 | $ | 66,000 | $ | 118,660 | ||||||||||||
Michael W. Bayley | $ | 14,400 | $ | 9,065 | $ | 8,752 | $ | 29,000 | $ | 71,000 | $ | 132,217 | ||||||||||||
Lisa Lutoff-Perlo | $ | 18,670 | $ | 43,275 | $ | 7,865 | $ | 29,000 | $ | 53,000 | $ | 151,810 | ||||||||||||
Harri U. Kulovaara | $ | 14,400 | $ | 0 | $ | 14,580 | $ | 29,000 | $ | 52,000 | $ | 109,980 |
Perquisites | Benefits | ||||||||||||||||
Name | Auto Lease(1) | Other Perquisites | Life Insurance Policies | Company Contributions to Qualified Deferred Compensation Plans(3) | Benefit Payouts(4) | Total | |||||||||||
Jason T. Liberty | $ | 19,800 | $ | 77,108(2) | $ | 2,975 | $ | 30,500 | $ | 89,019 | $ | 219,402 | |||||
Naftali Holtz | $ | 12,814 | $ | — | $ | 395 | $ | 9,150 | $ | 11,037 | $ | 33,396 | |||||
Michael W. Bayley | $ | 14,400 | $ | — | $ | 9,831 | $ | 30,500 | $ | 74,115 | $ | 128,847 | |||||
Lisa Lutoff-Perlo | $ | 20,750 | $ | — | $ | 8,979 | $ | 30,500 | $ | 55,285 | $ | 115,514 | |||||
Harri U. Kulovaara | $ | 14,400 | $ | — | $ | 16,621 | $ | 30,500 | $ | 54,238 | $ | 115,759 |
(1) | These amounts include payments or allowance for auto lease, maintenance and repairs, registration and insurance. |
(2) | |
(3) | Represents Company contributions to the Royal Caribbean Cruises Ltd. Retirement Savings Plan. |
(4) |
2023 Proxy – Executive Compensation Tables | |||
Executive Compensation Tables
Grants of Plan Based Awards in 20212022
The following table provides information about cash (non-equity) and equity incentive compensation awarded to our NEOs in 2021,2022, including (1) the range of possible cash payouts under our annual Executive Bonus Plan; (2) the grant date of equity awards; (3) the number of time-based and performance-based restricted stock units granted; and (4) the grant date fair value of the time-based and performance-based equity grants calculated in accordance with FASB ASC Topic 718. The time-based and performance-based equity awards were granted under RCG’s 2008 Performance and Equity Incentive Plan, which is discussed in greater detail in this proxy statement under the caption “Compensation Discussion and Analysis.” As noted above, Mr. Fain stepped down from service as Chief Executive Officer on January 3, 2022 and did not receive any cash or equity incentive compensation during 2022 (other than for his service as Chairman of our Board of Directors in accordance with our director compensation program).
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Grant Date | Type of Award | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: Number of Shares of Stocks or Units | Grant Date Fair Value of Stock Awards ($)(4) | ||||||||||||||||||
Name | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||
Richard D. Fain | 0 | $ | 2,925,000 | $ | 5,850,000 | ||||||||||||||||||
3/24/21 | PSA(5) | 0 | 99,464 | 198,928 | $ | 8,437,521 | |||||||||||||||||
3/24/21 | RSU(6) | 33,155 | $ | 2,812,539 | |||||||||||||||||||
Jason T. Liberty | 0 | $ | 1,377,500 | $ | 2,755,000 | ||||||||||||||||||
3/24/21 | PSU(5) | 0 | 24,755 | 49,510 | $ | 2,099,967 | |||||||||||||||||
3/24/21 | RSU(6) | 16,504 | $ | 1.400,034 | |||||||||||||||||||
3/24/21 | PSU(7) | 0 | 41,259 | 82,518 | $ | 3,500,001 | |||||||||||||||||
3/24/21 | RSU(8) | 41,259 | $ | 3,500,001 | |||||||||||||||||||
Michael W. Bayley | 0 | $ | 1,400,000 | $ | 2,800,000 | ||||||||||||||||||
3/24/21 | PSA(5) | 0 | 35,365 | 70,730 | $ | 3,000,013 | |||||||||||||||||
3/24/21 | RSU(6) | 23,577 | $ | 2,000,037 | |||||||||||||||||||
3/24/21 | PSU(7) | 0 | 58,941 | 117,882 | $ | 4,999,965 | |||||||||||||||||
3/24/21 | RSU(8) | 58,941 | $ | 4,999,965 | |||||||||||||||||||
Lisa Lutoff-Perlo | 0 | $ | 1,066,000 | $ | 2,132,000 | ||||||||||||||||||
3/24/21 | PSA(5) | 0 | 19,451 | 38,902 | $ | 1,650,028 | |||||||||||||||||
3/24/21 | RSU(6) | 12,967 | $ | 1,099,991 | |||||||||||||||||||
3/24/21 | PSU(7) | 0 | 32,418 | 64,836 | $ | 2,750,019 | |||||||||||||||||
3/24/21 | RSU(8) | 32,418 | $ | 2,750,019 | |||||||||||||||||||
Harri U. Kulovaara | 0 | $ | 810,000 | $ | 1,620,000 | ||||||||||||||||||
$ | 150,000 | (2) | |||||||||||||||||||||
3/24/21 | PSA(5) | 0 | 10,609 | 21,218 | $ | 899,962 | |||||||||||||||||
3/24/21 | RSU(6) | 7,073 | $ | 600,003 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Grant Date | Type of Award | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: Number of Shares of Stocks or Units | Grant Date Fair Value of Stock Awards ($)(4) | |||||||||||||||||||
Name | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||
Jason T. Liberty | 0 | $ | 2,400,000 | $ | 4,800,000 | |||||||||||||||||||
2/7/22 | PSU(5) | 0 | 52,632 | 105,264 | $ | 4,200,034 | ||||||||||||||||||
2/7/22 | RSU(6) | 35,088 | $ | 2,800,022 | ||||||||||||||||||||
Naftali Holtz | 0 | $ | 675,000 | $ | 1,350,000 | |||||||||||||||||||
2/7/22 | PSU(5) | 0 | 10,526 | 21,052 | $ | 839,975 | ||||||||||||||||||
2/7/22 | RSU(6) | 7,018 | $ | 560,036 | ||||||||||||||||||||
Michael W. Bayley | 0 | $ | 1,470,000 | $ | 2,940,000 | |||||||||||||||||||
2/7/22 | PSA(5) | 0 | 37,594 | 75,188 | $ | 3,000,001 | ||||||||||||||||||
2/7/22 | RSU(6) | 25,063 | $ | 2,000,027 | ||||||||||||||||||||
Lisa Lutoff- Perlo | 0 | $ | 1,119,300 | $ | 2,238,600 | |||||||||||||||||||
2/7/22 | PSA(5) | 0 | 20,677 | 41,354 | $ | 1,650,025 | ||||||||||||||||||
2/7/22 | RSU(6) | 13,784 | $ | 1,099,963 | ||||||||||||||||||||
Harri U. Kulovaara | 0 | $ | 850,500 | $ | 1,701,000 | |||||||||||||||||||
$ | 300,000 | (2) | ||||||||||||||||||||||
2/7/22 | PSA(5) | 0 | 11,278 | 22,556 | $ | 899,984 | ||||||||||||||||||
2/7/22 | RSU(6) | 7,519 | $ | 600,016 |
(1) | These values represent the threshold, target and maximum payouts under the Executive Bonus Plan. As discussed above, payouts under our Executive Bonus Plan range from 0% to 200% based on the company-wide and, if applicable, brand-specific performance level achieved and, except in the case of Mr. Liberty, the individual performance level achieved. For |
(2) | In addition to the amounts that may be earned pursuant to the Executive Bonus Plan, Mr. Kulovaara is eligible to receive an incentive payment equal to $150,000 for each ship delivered during the year. There were two scheduled ship deliveries for 2022. |
(3) | These values represent the threshold, target and maximum number of shares that may be earned pursuant to the performance-based award for the relevant performance period. As discussed above, payout on the performance-based awards range from 0% to 200% based on the company-wide performance level achieved. For the annual performance-based awards |
(4) | With respect to time-based RSUs, the grant date fair value is calculated in accordance with FASB ASC Topic 718. With respect to the performance-based share awards, pursuant to the applicable FASB ASC Topic 718 rules, the “grant date” for accounting purposes will not be determined until the performance period has been completed because of the Talent and Compensation |
Executive Compensation Tables
Committee’s ability to make adjustments to the payout levels. Consequently, the amount reported in this column represents the fair value of the award at the service inception date (i.e., the date the Talent and Compensation Committee authorized the award) based upon the then probable outcome of the performance conditions (i.e. target). | |
(5) | Represents annual performance-based awards granted on |
(6) | Represents the annual time-based RSUs granted on |
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Executive Compensation Tables
Employment Agreements
We have employment agreements with each of our NEOs. These agreements are intended to enhance the retention and motivation of these key employees and include provisions protecting the Company such as non-competition and non-solicitation clauses. The material terms of the employment agreements are summarized below and apply uniformly to all of our NEOs, except thatas otherwise noted below. Ms. Lutoff-Perlo’s agreement is with Celebrity Cruises Inc.
Pursuant to each employment agreement, each NEO is entitled to receive an annual base salary, which may be increased, but not decreased, at any time during the term at our sole discretion. Each NEO is also eligible to participate in and receive awards, in our discretion, pursuant to any cash incentive compensation programs and any equity or long-term incentive plans on terms available to similarly situated executives of the Company.
Each NEO’s employment can be terminated by us or by them at any time. IfFor NEOs other than Mr. Holtz, if we terminate a NEO’stheir employment without “cause” or if thesuch NEO resigns for “good reason” (as both terms are defined in the applicable employment agreement), he or she is entitled to (i) two times his or her then current base salary payable over the two year period following termination, and (ii) two times his or her “target” bonus under the annual Executive Bonus Plan for the year in which the termination of employment occurs, generally payable in accordance with our normal bonus payment practices, (iii)practices. With regard to Mr. Holtz, he is entitled to a payment equal to his current base salary payable over the one year period following termination. In addition, all NEOs are entitled to continued payment of health and medical benefits for a period of two years (one year for Mr. Holtz) commencing on the date of termination, or until such time that he or she commences employment with a new employer, whichever occurs first, and (iv) payment of reasonable professional search fees relating to outplacement. At our sole discretion, each NEO is also eligible to receive a one-time lump sum termination bonus to be paid two years after the date of termination in an amount not to exceed 50% of his or her base salary as of the date of termination. All of these payments are conditioned on the NEO executing a general release of claims for the benefit of the Company.
IfFor NEOs other than Mr. Holtz, if the NEO’s employment is terminated as a result of the NEO’s death or disability, the NEO, or his or her legal representative, is entitled to, within 60 days of the NEO’s death or disability (i) payment in a lump sum of compensation equal to two times his or her base salary in effect at the time of termination of employment, (ii) payment of the “target” bonus he or she would have been entitled to receive in each year during the two year period commencing on the date of termination under the annual Executive Bonus Plan and (iii) any death or disability benefit, as applicable, provided in accordance with the terms of the Company’s employee benefit plans then in effect. For Mr. Holtz, he or his legal representative will be entitled to receive payment of compensation equal to his base salary in effect at the time of termination, payment of accrued benefits, and any benefits provided in accordance with applicable plans then in effect.
If the NEO’s employment is terminated for cause, we have no obligation to provide severance payments, except for certain amounts that were earned and unpaid as of the date of termination or as required by law.
Any outstanding equity grants held by the NEO at the time of termination will be treated in the manner provided for in each equity grant. Please see further information regarding treatment of equity grants under the heading “Payment Upon Termination of Employment.”
Each NEO has agreed not to compete with the Company or its affiliates during the term of employment and for two yearsa fixed period of time following termination of employment and to refrain from (i) employing the Company’s or its affiliates’ employees during this period or (ii) soliciting employees, consultants, lenders, suppliers or customers from discontinuing, modifying or reducing the extent of their relationship with the Company during such period. During the term of the agreements and subsequent thereto, the NEOs have agreed not to disclose or use any confidential information. The non-compete period extends two years following termination of employment for each NEO other than Mr. Holtz, and one year following termination of employment for Mr. Holtz.
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Executive Compensation Tables
Outstanding Equity Awards at 20212022 Fiscal Year End
The following table provides information concerning unvested restricted stock units and performance share awards for each NEO outstanding as of the end of the fiscal year ended December 31, 2021.2022. Each restricted stock unit grantaward is shown separately for each NEO.
Stock Awards | Equity Incentive Plan Awards | |||||||||||
Name | Equity Award Grant Date | # of Shares or Units of Stock That Have Not Vested (#) | Market value of Shares or Units of Stock That Have Not Vested ($)(1) | # of Unearned Shares/Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares/Units or Other Rights that Have Not Vested ($)(1) | |||||||
Richard D. Fain | 2/13/2019 | 111,154 | (4) | 8,547,743 | ||||||||
2/20/2020 | 153,124 | (5) | 11,775,236 | |||||||||
3/24/2021 | 198,928 | (6) | 15,297,563 | |||||||||
3/24/2021 | 33,155 | (2) | 2,549,620 | |||||||||
33,155 | 2,549,620 | 463,206 | 35,620,542 | |||||||||
Jason T. Liberty | 2/13/2019 | 28,456 | (4) | 2,188,266 | ||||||||
2/20/2020 | 38,110 | (5) | 2,930,659 | |||||||||
3/24/2021 | 49,510 | (6) | 3,807,319 | |||||||||
3/24/2021 | 82,518 | (7) | 6,345,634 | |||||||||
9/27/2017 | 10,253 | (2) | 788,456 | |||||||||
2/13/2018 | 1,744 | (2) | 134,114 | |||||||||
2/13/2019 | 4,742 | (2) | 364,660 | |||||||||
2/20/2020 | 9,528 | (2) | 732,703 | |||||||||
3/24/2021 | 16,504 | (2) | 1,269,158 | |||||||||
3/24/2021 | 41,259 | (3) | 3,172,817 | |||||||||
84,030 | 6,461,907 | 198,594 | 15,271,879 | |||||||||
Michael W. Bayley | 2/13/2019 | 41,666 | (4) | 3,204,115 | ||||||||
2/20/2020 | 54,444 | (5) | 4,186,744 | |||||||||
3/24/2021 | 70,730 | (6) | 5,439,137 | |||||||||
3/24/2021 | 117,882 | (7) | 9,065,126 | |||||||||
9/27/2017 | 10,253 | (2) | 788,456 | |||||||||
3/24/2021 | 23,577 | (2) | 1,813,071 | |||||||||
3/24/2021 | 58,941 | (3) | 4,532,563 | |||||||||
92,771 | (2) | 7,134,090 | 284,722 | 21,895,122 | ||||||||
Lisa Lutoff-Perlo | 2/13/2019 | 23,374 | (4) | 1,797,461 | ||||||||
2/20/2020 | 29,944 | (5) | 2,302,694 | |||||||||
3/24/2021 | 38,902 | (6) | 2,991,564 | |||||||||
3/24/2021 | 64,836 | (7) | 4,985,888 | |||||||||
9/27/2017 | 6,835 | (2) | 525,612 | |||||||||
3/24/2021 | 12,967 | (2) | 997,162 | |||||||||
3/24/2021 | 32,418 | (3) | 2,492,944 | |||||||||
52,220 | (2) | 4,015,718 | 157,056 | 12,077,606 | ||||||||
Harri U. Kulovaara | 2/13/2019 | 11,686 | (4) | 898,653 | ||||||||
2/20/2020 | 16,334 | (5) | 1,256,085 | |||||||||
3/24/2021 | 21,218 | (6) | 1,631,664 | |||||||||
9/27/2017 | 3,417 | (2) | 262,767 | |||||||||
9/5/2018 | 5,381 | (2) | 413,799 | |||||||||
3/24/2021 | 7,073 | (2) | 543,914 | |||||||||
15,871 | (2) | 1,220,480 | 49,238 | 3,786,402 | ||||||||
Stock Awards | ||||||||||||
Equity Incentive Plan Awards | ||||||||||||
Name | Equity Award Grant Date | # of Shares or Units of Stock That Have Not Vested (#) | Market value of Shares or Units of Stock That Have Not Vested ($)(1) | # of Unearned Shares/Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares/Units or Other Rights that Have Not Vested ($)(1) | |||||||
Richard D. Fain | 2/20/2020 | 153,124 | (4) | 7,568,919 | ||||||||
3/24/2021 | 198,928 | (5) | 9,833,011 | |||||||||
352,052 | 17,401,930 | |||||||||||
Jason T. Liberty | 2/20/2020 | 38,110 | (4) | 1,883,777 | ||||||||
3/24/2021 | 49,510 | (5) | 2,447,279 | |||||||||
3/24/2021 | 82,518 | (6) | 4,078,865 | |||||||||
2/7/2022 | 105,264 | (7) | 5,203,200 | |||||||||
2/13/2019 | 2,371 | (2) | 117,199 | |||||||||
2/20/2020 | 6,352 | (2) | 313,979 | |||||||||
3/24/2021 | 12,378 | (2) | 611,845 | |||||||||
3/24/2021 | 41,259 | (3) | 2,039,432 | |||||||||
2/07/2022 | 35,088 | (2) | 1,734,400 | |||||||||
97,448 | 4,816,855 | 275,402 | 13,613,121 | |||||||||
Naftali Holtz | 2/20/2020 | 6,752 | (4) | 333,751 | ||||||||
3/24/2021 | 9,194 | (5) | 454,459 | |||||||||
2/7/2022 | 21,052 | (7) | 1,040,600 | |||||||||
2/20/2020 | 1,124 | (2) | 55,559 | |||||||||
3/24/2021 | 2,298 | (2) | 113,590 | |||||||||
2/7/2022 | 7,018 | (2) | 346,900 | |||||||||
10,440 | 516,049 | 36,998 | 1,828,811 | |||||||||
Michael W. Bayley | 2/20/2020 | 54,444 | (4) | 2,691,167 | ||||||||
3/24/2021 | 70,730 | (5) | 3,496,184 | |||||||||
3/24/2021 | 117,882 | (6) | 5,826,907 | |||||||||
2/7/2022 | 75,188 | (7) | 3,716,543 | |||||||||
3/24/2021 | 58,941 | (3) | 2,913,454 | |||||||||
2/7/2022 | 25,063 | (2) | 1,238,864 | |||||||||
84,004 | 4,152,318 | 318,244 | 15,730,801 | |||||||||
Lisa Lutoff-Perlo | 2/20/2020 | 29,944 | (4) | 1,480,132 | ||||||||
3/24/2021 | 38,902 | (5) | 1,922,926 | |||||||||
3/24/2021 | 64,836 | (6) | 3,204,843 | |||||||||
2/7/2022 | 41,354 | (7) | 2,044,128 | |||||||||
3/24/2021 | 32,418 | (3) | 1,602,422 | |||||||||
2/7/2022 | 13,784 | (2) | 681,343 | |||||||||
46,202 | 2,283,765 | 175,036 | 8,652,029 |
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Executive Compensation Tables
Stock Awards | Equity Incentive Plan Awards | |||||||||||
Name | Equity Award Grant Date | # of Shares or Units of Stock That Have Not Vested (#) | Market value of Shares or Units of Stock That Have Not Vested ($)(1) | # of Unearned Shares/Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares/ Units or Other Rights that Have Not Vested ($)(1) | |||||||
Harri U. Kulovaara | 2/20/2020 | 16,334 | (4) | 807,390 | ||||||||
3/24/2021 | 21,218 | (5) | 1,048,806 | |||||||||
2/7/2022 | 22,556 | (7) | 1,114,943 | |||||||||
9/5/2018 | 3,311 | (2) | 163,663 | |||||||||
2/7/2022 | 7,519 | (2) | 371,664 | |||||||||
10,830 | 535,327 | 60,108 | 2,971,138 |
(1) | Calculated based on the closing stock price of |
(2) | Outstanding time-based RSUs vest in accordance with the following schedule: remaining time-based |
(3) | Represents the time-based RSUs granted as part of the Special Equity Awards which will vest 50% on the second anniversary of the grant date and 50% on the third anniversary of the grant date. |
(4) | |
Represents the annual 2020-2022 PSU Awards for the three-year period ending December 31, 2022 that | |
(5) | |
Represents the annual 2021-2023 PSU Awards for the three-year period ending December 31, 2023 that, to the extent earned, will vest on the date in 2024 that the Talent and Compensation Committee sets the actual payout level for purposes of such grant. Reflects the maximum number of PSUs/PSAs that may be earned. | |
(6) | |
Represents the PSUs granted as part of the Special Equity Awards, which will be earned based on RCG’s performance – 50% based on the two-year period ending December 31, 2022 and 50% based on the three-year period ending on December 31, 2023. The PSUs will vest on the dates in 2023 and 2024, respectively, that the Talent and Compensation Committee sets the actual payout level for purposes of such grant. Reflects the maximum number of PSUs that may be earned. These awards are not subject to the “Vesting into Retirement” policy. | |
(7) | Represents the annual 2022-2024 PSU Awards for the three-year period ending December 31, 2024 that, to the extent earned, will vest on the date in 2025 that the Talent and Compensation Committee sets the actual payout level for purposes of such grant. Reflects the maximum number of PSUs/PSAs that may be earned. |
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Option Exercises and Stock Vested in 20212022
The following table provides information for the NEOs on stock option exercises and the time-based RSUs and performance-based awards that vested during 2021,2022, including the number of shares acquired upon exercise or vesting and the value realized, before payment of any applicable withholding tax and broker commissions.
Option Awards | Stock Awards(3) | Option Awards | Stock Awards(1) | ||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting(4) | Value Realized on Vesting(5) | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting(2) | Value Realized on Vesting(3) | |||||||||||||||||
Richard D. Fain | 37,513 | (2) | 1,065,369 | (2) | 70,306 | $ | 5,792,684 | — | — | 83,175 | $ | 6,511,127 | |||||||||||||
Jason T. Liberty | — | — | 26,063 | $ | 2,149,665 | — | — | 34,476 | $ | 2,433,429 | |||||||||||||||
Naftali Holtz | — | — | 12,472 | $ | 746,458 | ||||||||||||||||||||
Michael W. Bayley | — | — | 58,291 | (6) | $ | 4,649,736 | — | — | 52,580 | $ | 3,762,126 | ||||||||||||||
Lisa Lutoff-Perlo | — | — | 22,628 | $ | 1,889,699 | — | — | 30,321 | $ | 2,140,930 | |||||||||||||||
Harri U. Kulovaara | — | — | 13,761 | $ | 1,141,015 | — | — | 17,819 | $ | 1,200,837 |
(1) | |
These columns reflect RSUs, PSUs, and PSAs previously awarded to the named executive officers that vested during | |
(2) | |
Of these amounts, shares were withheld by us to cover tax withholding obligations as follows: Mr. Fain | |
(3) | |
Calculated based on the average of the high and low sales price of the Company’s common stock on the applicable vesting dates. | |
2023 Proxy – Executive Compensation Tables | |||
Executive Compensation Tables
Payments Upon Termination of Employment
The following table represents payments and benefits to which the NEOs would be entitled upon termination of their employment in accordance with their employment agreements and our equity plans and agreements. Termination of employment is assumed to occur, for purposes of this table, on December 31, 2021. The table does not include amounts a NEO would be entitled to receive without regard to the circumstances of termination, such as vested equity awards or accrued retirement benefits (if retirement eligible) and deferred compensation. Please see the “Outstanding Equity Awards at 2021 Fiscal Year-End” table for more information. In most cases, entitlements2022. Entitlements upon termination of employment are governed by the NEOs’ employment agreements with the Company, which are described under the heading “Employment Agreements.” In addition, the treatment of outstanding equity awards, which are unvested as of the time of termination, are treated in accordance with the agreement and plan applicable to the particular award, as described below. We do not provide any cash payments in the event of a change of control absent an employment termination nor do we increase the amount of cash severance that would be due to a NEO in the event of his or her termination of employment in connection with a change of control.
Termination Type | ||||||||||||||
Name | Benefit | Death or Disability | Termination w/o Cause or for Good Reason | “Change of Control Termination” | ||||||||||
Richard D. Fain | Severance Payment | $ | 2,600,000 | $ | 2,600,000 | $ | 2,600,000 | |||||||
Settlement of Outstanding Annual Bonus Award | $ | 5,850,000 | $ | 5,850,000 | $ | 5,850,000 | ||||||||
Settlement of Outstanding Equity Awards(1) | $ | 20,359,890 | — | $ | 20,359,890 | |||||||||
Medical and Dental Benefits Continuation | — | $ | 19,191 | $ | 19,191 | |||||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | |||||||||
Total | $ | 28,809,890 | $ | 8,494,191 | $ | 28,854,081 | ||||||||
Jason T. Liberty | Severance Payment | $ | 1,900,000 | $ | 1,900,000 | $ | 1,900,000 | |||||||
Settlement of Outstanding Annual Bonus Award | $ | 2,755,000 | $ | 2,755,000 | $ | 2,755,000 | ||||||||
Settlement of Outstanding Equity Awards(1) | $ | 14,097,846 | — | $ | 14,097,846 | |||||||||
Medical and Dental Benefits Continuation | — | $ | 27,308 | $ | 27,308 | |||||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | |||||||||
Total | $ | 18,752,846 | $ | 4,707,308 | $ | 18,805,154 | ||||||||
Michael W. Bayley | Severance Payment | $ | 2,000,000 | $ | 2,000,000 | $ | 2,000,000 | |||||||
Settlement of Outstanding Annual Bonus Award | $ | 2,800,000 | $ | 2,800,000 | $ | 2,800,000 | ||||||||
Settlement of Outstanding Equity Awards(1) | $ | 18,081,651 | — | $ | 18,081,651 | |||||||||
Medical and Dental Benefits Continuation | — | $ | 16,943 | $ | 16,943 | |||||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | |||||||||
Total | $ | 22,881,651 | $ | 4,841,943 | $ | 22,923,594 | ||||||||
Lisa Lutoff-Perlo | Severance Payment | $ | 1,640,000 | $ | 1,640,000 | $ | 1,640,000 | |||||||
Settlement of Outstanding Annual Bonus Award | $ | 2,132,000 | $ | 2,132,000 | $ | 2,132,000 | ||||||||
Settlement of Outstanding Equity Awards(1) | $ | 10,054,521 | — | $ | 10,054,521 | |||||||||
Medical and Dental Benefits Continuation | — | $ | 19,539 | $ | 19,539 | |||||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | |||||||||
Total | $ | 13,826,521 | $ | 3,816,539 | $ | 13,871,060 | ||||||||
Harri U. Kulovaara | Severance Payment | $ | 1,620,000 | $ | 1,620,000 | $ | 1,620,000 | |||||||
Settlement of Outstanding Annual Bonus Award | $ | 1,620,000 | $ | 1,620,000 | $ | 1,620,000 | ||||||||
Settlement of Outstanding Equity Awards(1) | $ | 3,113,681 | — | $ | 3,113,681 | |||||||||
Medical and Dental Benefits Continuation | — | $ | 19,191 | $ | 19,191 | |||||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | |||||||||
Total | $ | 6,353,681 | $ | 3,284,191 | $ | 6,397,872 | ||||||||
The table does not include amounts a NEO would be entitled to receive without regard to the circumstances of termination, such as accrued vested equity awards or accrued retirement benefits (if retirement eligible) and deferred compensation. Please see the “Outstanding Equity Awards at 2022 Fiscal Year-End” table for more information.
Termination Type | |||||||||||
Name(1) | Benefit | Death or Disability | Termination w/o Cause or for Good Reason | “Change of Control Termination” | |||||||
Jason T. Liberty | Severance Payment | $ | 2,400,000 | $ | 2,400,000 | $ | 2,400,000 | ||||
Settlement of Outstanding Annual Bonus Award | $ | 4,800,000 | $ | 4,800,000 | $ | 4,800,000 | |||||
Settlement of Outstanding Equity Awards(2) | $ | 11,623,415 | — | $ | 11,623,415 | ||||||
Medical and Dental Benefits Continuation | — | $ | 27,174 | $ | 27,174 | ||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | ||||||
Total | $ | 18,823,415 | $ | 7,252,174 | $ | 18,875,589 | |||||
Naftali Holtz | Severance Payment | $ | — | $ | 675,000 | $ | 675,000 | ||||
Settlement of Outstanding Annual Bonus Award | $ | — | $ | — | $ | — | |||||
Settlement of Outstanding Equity Awards(2) | $ | 1,430,455 | — | $ | 1,430,455 | ||||||
Medical and Dental Benefits Continuation | — | $ | 13,587 | $ | 13,587 | ||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | ||||||
Total | $ | 1,430,455 | $ | 713,587 | $ | 2,144,042 | |||||
Michael W. Bayley | Severance Payment | $ | 2,100,000 | $ | 2,100,000 | $ | 2,100,000 | ||||
Settlement of Outstanding Annual Bonus Award | $ | 2,940,000 | $ | 2,940,000 | $ | 2,940,000 | |||||
Settlement of Outstanding Equity Awards(2) | $ | 12,017,718 | — | $ | 12,017,718 | ||||||
Medical and Dental Benefits Continuation | — | $ | 16,810 | $ | 16,810 | ||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | ||||||
Total | $ | 17,057,718 | $ | 5,081,810 | $ | 17,099,528 | |||||
Lisa Lutoff-Perlo | Severance Payment | $ | 1,722,000 | $ | 1,722,000 | $ | 1,722,000 | ||||
Settlement of Outstanding Annual Bonus Award | $ | 2,238,600 | $ | 2,238,600 | $ | 2,238,600 | |||||
Settlement of Outstanding Equity Awards(2) | $ | 6,609,780 | — | $ | 6,609,780 | ||||||
Medical and Dental Benefits Continuation | — | $ | 19,461 | $ | 19,461 | ||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | ||||||
Total | $ | 10,570,380 | $ | 4,005,061 | $ | 10,614,840 | |||||
Harri U. Kulovaara | Severance Payment | $ | 1,701,000 | $ | 1,701,000 | $ | 1,701,000 | ||||
Settlement of Outstanding Annual Bonus Award | $ | 1,701,000 | $ | 1,701,000 | $ | 1,701,000 | |||||
Settlement of Outstanding Equity Awards(2) | $ | 2,020,896 | — | $ | 2,020,896 | ||||||
Medical and Dental Benefits Continuation | — | $ | 19,191 | $ | 19,191 | ||||||
Outplacement Services | — | $ | 25,000 | $ | 25,000 | ||||||
Total | $ | 5,422,896 | $ | 3,446,191 | $ | 5,467,087 |
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Executive Compensation Tables
The cost of Settlement of Outstanding Equity Awards, reflects the following based on the terms of the Plan and the relevant awards agreements: |
● | ||
upon a termination due to death or disability, (i) all unvested time-based RSUs will immediately vest and (ii) all unearned performance-based awards will be earned at target and, to the extent not yet vested, immediately vest; and | ||
● | ||
upon a termination of the executive’s employment by the Company without “cause” or by the executive for “good reason” within 12 months following a “change of control”, (i) all unvested time-based RSUs will immediately vest and (ii) all unearned performance-based awards will be earned based upon the Talent and Compensation Committee’s then best estimate of the shares that have been earned will be awardable at the end of the performance period, and, to the extent not yet vested, immediately vest. (For purposes of the table above, we assumed that the Company would meet target for each of the performance-based awards.) |
Compensation Risk
In order to assess the risk inherent in the design of our compensation plans, policies and programs, management regularly undertakes a comprehensive inventory of all plans and programs. In accordance with screening methodology approved by the Talent and Compensation Committee, in late 2021,2022, management reviewed each plan and program for risk features and presented its findings to the Talent and Compensation Committee. Based on this review, management and the Talent and Compensation Committee believe that the nature of our business, and the material risks we face, are such that the compensation plans, policies and programs we have put in place are not reasonably likely to give rise to risks that would have a material adverse effect on our business. We believe our compensation programs and decisions include qualitative factors which restrain the influence that an overly formulaic approach may have on excessive risk taking by management.
2023 Proxy – Executive Compensation Tables | |||
CEO Pay Ratio
In August 2015, pursuant to a mandate of the Dodd Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the Principal Executive Officer (“PEO”). The Company’s PEO is our former CEO, Richard Fain. The Company is presenting the required disclosure as follows:
We had approximately 85,00084,059 active employees as of December 31, 2021. The2022. This amount excludes shipboard employees who were not assigned to any sailing during the year and thus did not receive any compensation.
We calculated median employee’sgross wages for our employee population and identified our median employee. We did not annualize the pay for our employees when identifying our median. We determined that this person was a crew member whose total compensation for 2021,2022, calculated consistent with Item 402(c) of Regulation S-K, was $14,706.$15,264. This figure includes gratuities directly billed to our guests but excludes any cash gratuities paid directly to the employee by guests. It also excludes room and board, which is provided to our crew members without charge. Based upon this methodology and the CEO’s total compensation, as set forth in the Summary Compensation Table, we estimate the ratio of our CEO’s pay to the median employee’s pay is 1,075705 to 1.
75 | |||
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and the Company’s financial performance.
Tabular Disclosure of Compensation Actually Paid versus Performance
The following table discloses information on “compensation actually paid” (CAP) to our principal executive officer (PEO) and (on average) to our other NEOs (non-PEO NEOs) during the specified years alongside total shareholder return (TSR) and net income metrics, as well as a Company-selected measure of Adjusted EPS. The Company selected this measure as the most important in linking compensation actually paid to our NEOs for 2022 to Company performance, as Adjusted EPS was the predominant metric used in evaluating company-wide performance under our Executive Bonus Plan (60%) and comprised 30% of target long-term incentive awards granted to our NEOs in 2022 for the performance period ending December 2025, as described in more detail in the “Compensation Discussion and Analysis” beginning on page 45.
Year | SCT Total for Former PEO(1) | Compensation Actually Paid to Former PEO(3) | SCT Total Compensation for PEO(2) | Compensation Actually Paid to Mr. Liberty(3) | Average SCT Total Compensation for Other NEOs(4) | Average Compensation Actually Paid to Other NEOs(3) | Company TSR(5) | Dow Jones U.S. Travel & Leisure Index(5) | Net Income ($M)(6) | Adjusted EPS(7) | ||||||||||||||||||||
2022 | $ | 300,006 | ($4,371,814 | ) | $ | 10,764,258 | $ | 3,846,340 | $ | 4,738,954 | $ | 1,390,884 | $ | $ | ($2,156 | ) | ) | |||||||||||||
2021 | $ | 15,812,027 | $15,310,661 | — | — | $ | 11,154,402 | $ | 10,506,637 | $ | $ | ($5,261 | ) | ) | ||||||||||||||||
2020 | $ | 12,083,504 | ($462,571 | ) | — | — | $ | 5,360,290 | $ | 498,183 | $ | $ | ($5,798 | ) | ) |
(1) | Reflects the total compensation for our former PEO, Mr. Richard Fain, who served as PEO until January 3, 2022, and is therefore included in this table as an additional PEO in accordance with SEC rules. Amounts shown are calculated in the Summary Compensation Table (SCT) for each of the years shown (and for Mr. Fain, solely reflect compensation for his service as our Chairman of the Board of Directors, since he received no additional compensation for his service as PEO in 2022.) |
(2) | Reflects total compensation of our current CEO, Mr. Jason Liberty, as calculated in the Summary Compensation Table (SCT). |
(3) | The dollar amounts shown in these columns reflect “compensation actually paid” to the NEOs calculated in accordance with SEC rules. As required, the dollar amounts include (among other items) unpaid amounts of equity compensation that may be realizable in future periods, and as such, the dollar amounts shown do not fully represent the actual final amount of compensation earned or actually paid to either individual during the applicable years. The adjustments made to each officer’s total compensation for each year to determine CAP are shown in the tables below. For Mr. Liberty, information is only included with respect to 2022, the first year in which he served as CEO. |
76 | 2023 Proxy – Pay Versus Performance | ||
Pay Versus Performance
2022 | 2021 | 2020 | |||||||||||||||||||
Richard D. Fain | Jason T. Liberty | Other NEOs | Richard D. Fain | Other NEOs | Richard D. Fain | Other NEOs | |||||||||||||||
Total Reported in 2022 Summary Compensation Table (SCT) | $ | 300,006 | $ | 10,764,258 | $ | 4,738,954 | $ | 15,812,027 | $ | 11,154,402 | $ | 12,083,504 | $ | 5,360,290 | |||||||
Deduct Change in Pension Value and NQDC Earnings Reported in SCT | — | — | — | $ | (156,971) | $ | (80,359) | $ | (154,879) | $ | (93,950) | ||||||||||
Add Service Cost and Prior Service Cost | — | — | — | — | — | — | — | ||||||||||||||
Deduct Value of Stock Awards Reported in SCT | $ | (200,006) | $ | (7,000,056) | $ | (2,662,507) | $ | (11,250,070) | $ | (8,812,501) | $ | (11,171,146) | $ | (3,093,676) | |||||||
Add Year-End Fair Value of Awards Granted in Fiscal Year that are Outstanding and Unvested | — | $ | 4,336,000 | $ | 1,649,220 | $ | 10,198,401 | $ | 7,988,699 | $ | 7,624,579 | $ | 2,160,278 | ||||||||
Add Change in Fair Value of Prior Year Awards that are Outstanding and Unvested | $ | (4,835,434) | $ | (4,049,875) | (2,150,970) | $ | 292,027 | $ | 96,223 | $ | (5,771,819) | $ | (2,576,592) | ||||||||
Add Fair Value of Awards Granted in Fiscal Year that Vested in the Same Fiscal Year | $ | 111,514 | — | — | — | — | — | — | |||||||||||||
Add Change in Fair Value of Prior Year Awards that Vested in Year | $ | 252,107 | $ | (203,987) | $ | (183,813) | $ | 415,247 | $ | 160,173 | $ | (3,072,810) | $ | (1,258,168) | |||||||
Deduct Prior Year Fair Value of Prior Year Awards that Failed to Vest this Year | — | — | — | — | — | — | — | ||||||||||||||
Total Adjustments | $ | (4,671,820) | $ | (6,917,918) | $ | (3,348,070) | $ | (501,366) | $ | (647,765) | $ | (12,546,075) | $ | (4,862,107) | |||||||
Compensation Actually Paid for Fiscal Year | $ | (4,371,814) | $ | 3,846,340 | 1,390,884 | 15,310,661 | $ | 10,506,637 | $ | (462,571) | $ | 498,183 |
(4) | Reflects the average total compensation of our non-PEO NEOs, as calculated in the SCT for each of the years shown. Our non- PEO NEOs included in the table above are the following individuals: for 2022: Naftali Holtz, Michael Bayley, Lisa Lutoff-Perlo, and Harri U. Kulovaara; for 2021: Jason Liberty, Michael W. Bayley, Lisa Lutoff-Perlo and Harri U. Kulovaara; and for 2020: Jason Liberty, Michael W. Bayley, Lisa Lutoff-Perlo and Harri U. Kulovaara. |
(5) | Pursuant to SEC rules, the TSR figures assume an initial investment of $100 on December 31, 2019. As permitted by SEC rules, the peer group referenced for purpose of the TSR comparison is the group of companies included in the Dow Jones U.S. Travel and Leisure Index, which is the industry peer group used for purposes of Item 201(e) of Regulation S-K. The separate peer group used by the Talent and Compensation Committee for purposes of determining compensation paid to our executive officers is described on page 63. |
(6) | Reflects after-tax net income (loss) attributable to shareholders prepared in accordance with GAAP for each of the years shown. |
(7) | Adjusted Earnings (Loss) per Share is a non-GAAP financial measure that represents net income (loss) excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis. For the 2022 periods presented, these items included (i) gain or loss on the extinguishment of debt; (ii) the amortization of non-cash debt discount on our convertible notes; (iii) the estimated cash refunds expected to be paid to Pullmantur guests as part of the Pullmantur S.A. reorganization in 2020; (iv) impairment and credit losses; (v) equity investment asset impairments; (vi) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vii) restructuring charges and other initiative expenses; (viii) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018; (ix) the net gain recognized in 2021 in relation to the sale of the Azamara brand; (x) the net loss recognized in the fourth quarter of 2021 related to the elimination of the three-month reporting lag for Silversea Cruises; and (xi) the estimated amounts that may be payable in relation to the ongoing Havana Docks litigation. In addition, for purposes of determining payouts in 2022 under the Executive Bonus Plan and performance-based awards, the Talent and Compensation Committee also accounted for variances in fuel prices, interest rates, and foreign exchange rates from the Company’s forecast when setting targets, net of hedging impacts. Refer to “Compensation Discussion and Analysis,” beginning on page 45. |
2023 Proxy – Pay Versus Performance | 77 | ||
Pay Versus Performance
Tabular Disclosure of Most Important Measures Linking Compensation Actually Paid During 2022 to Company Performance
As required, we disclose below the most important measures (unranked) used by the Company to link compensation actually paid to our NEOs for 2022 to Company performance. For further information regarding these performance metrics and their function in our executive compensation program, please see “Compensation Discussion and Analysis” beginning on page 45.
ROIC |
Leverage |
Liquidity |
Adjusted Gross Margin |
ESG Composite Index |
Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures
The below graphical illustrations demonstrate the relationship between compensation actually paid to the NEOs over the last three fiscal years as compared to TSR, Net Income, and Adjusted EPS over the last three fiscal years. Generally, compensation actually paid (for both the PEO(s) and NEOs) since fiscal 2020 has increased or decreased as each of TSR, Net Income, and Adjusted EPS has increased or decreased, respectively. However, the compensation in fiscal 2021 for the PEOs does not align with that trend as Mr. Liberty, Mr. Bayley, and Ms. Lutoff-Perlo received special retention equity grants as described of page 60 of the “Compensation Discussion and Analysis.” In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions (shown graphically) of the relationships between information presented in the Pay versus Performance table.
PEO & Average NEO CAP vs Net Income,
Fiscal 2020 - 2022
78 | 2023 Proxy – Pay Versus Performance | ||
Pay Versus Performance
PEO & Average NEO CAP vs Adjusted EPS,
Fiscal 2020 - 2022
2023 Proxy – Pay Versus Performance | 79 | ||
Director Compensation for 20212022
Director Compensation for 2021
We pay annual cash retainers of $100,000 to our directors for their service on the Board. We also pay annual cash retainers for chairing and service on various Board committees. The amount of these retainers in 20212022 for a full year of service was as follows:
Committee Role | Audit Committee | Talent & Compensation Committee | Nominating & Corporate Governance Committee | Safety, Environment, Sustainability & Health Committee | Audit Committee | Talent & Compensation Committee | Nominating & Corporate Governance Committee | Safety, Environment, Sustainability & Health Committee | ||||||||||||||||
Chairman | $ | 35,000 | $ | 25,500 | $ | 20,000 | $ | 20,000 | $35,000 | $25,000 | $20,000 | $20,000 | ||||||||||||
Member | $ | 20,000 | $ | 12,000 | $ | 10,000 | $ | 10,000 | $20,000 | $12,000 | $10,000 | $10,000 |
Directors do not earn fees for each meeting attended; however, they are reimbursed for their travel expenses and, occasionally, for those of an accompanying guest. In addition, our Lead Director received a further annual cash retainer of $75,000 for 2021.2022. Directors who are also Company employees do not receive any compensation for their services as directors.
In February 2021,2022, each non-employee director received restricted stock units with a fair market value of $200,029$200,006 as of the grant date. These restricted stock units vested in full immediately upon grant and settled one year following the date of grant. Our stock ownership guidelines require directors to accumulate ownership of at least $300,000 of our common stock (which is 3three times their annual cash retainer for Board service), including the value of restricted stock and restricted stock units, within three years of becoming a director. If the value of their stock holdings falls below this amount, directors cannot sell shares of our common stock until the value once again exceeds the required amount. In addition, non- employeenon-employee directors may not be granted awards with a dollar value, in excess of $500,000 in any onewhich together with cash compensation paid to such director for such calendar year.year, would exceed $750,000.
In order to increase their knowledge and understanding of our business, we encourage our non-employee Board members and their families to experience our cruises. As a result, we have adopted a Non-Management Director Cruise Policy. Under this policy, with certain limited exceptions, a Board member is entitled to up to two complimentary staterooms on two cruises per year for the Board member and any immediate family accompanying the Board member on the cruise. Additional guests traveling with a Board member will receive a 15% discount off the lowest available fare for up to five staterooms. These benefits are provided at little or no incremental cost to the Company. The CEO may grant exceptions to this policy at his discretion but did not do so in 2021.2022.
80 | 2023 Proxy – Director Compensation for 2022 | ||
Director Compensation for 2022
The table below summarizes the compensation of each person serving as a non-employee director in 2021.2022. Mr. Richard Fain was an NEO for 2022 as he served as our Chief Executive Officer until January 3, 2022. He did not receive compensation in 2022 for his role as Chief Executive Officer but received compensation for his service as Chairman of the Board of Directors, as set forth below and in the “Summary Compensation Table.”
Name | Fees Earned or Paid in Cash | Stock Awards(1),(2) | All Other Compensation(3) | Total | Fees Earned or Paid in Cash | Stock Awards(1)(2) | All Other Compensation | Total | |||||||||||
John F. Brock | $122,000 | $200,029 | — | $322,029 | $ | 122,000 | $ | 200,006 | — | $ | 322,006 | ||||||||
Richard D. Fain | $ | 100,000 | $ | 200,006 | — | $ | 300,006 | ||||||||||||
Stephen R. Howe, Jr. | $140,000 | $200,029 | — | $340,029 | $ | 140,000 | $ | 200,006 | — | $ | 340,006 | ||||||||
William L. Kimsey | $220,000 | $200,029 | — | $420,029 | $ | 220,000 | $ | 200,006 | — | $ | 420,006 | ||||||||
Michael O. Leavitt(3) | $ | 97,471 | $ | 200,006 | — | $ | 297,477 | ||||||||||||
Amy McPherson | $110,233 | $200,029 | $17,996 | $328,258 | $ | 112,000 | $ | 200,006 | — | $ | 312,006 | ||||||||
Maritza G. Montiel | $120,000 | $200,029 | $320,029 | $ | 120,000 | $ | 200,006 | — | $ | 320,006 | |||||||||
Ann S. Moore | $112,000 | $200,029 | — | $312,029 | $ | 112,000 | $ | 200,006 | — | $ | 312,006 | ||||||||
Eyal M. Ofer | $120,000 | $200,029 | — | $320,029 | $ | 120,000 | $ | 200,006 | — | $ | 320,006 | ||||||||
William K. Reilly | $120,000 | $200,029 | $48,446 | $368,475 | |||||||||||||||
William K. Reilly(4) | $ | 120,000 | $ | 200,006 | — | $ | 320,006 | ||||||||||||
Vagn O. Sørensen | $145,500 | $200,029 | — | $345,529 | $ | 145,000 | $ | 200,006 | — | $ | 345,006 | ||||||||
Donald Thompson | $122,000 | $200,029 | — | $322,029 | $ | 122,000 | $ | 200,006 | — | $ | 322,006 | ||||||||
Arne Alexander Wilhelmsen | $120,000 | $200,029 | — | $320,029 | $ | 120,000 | $ | 200,006 | — | $ | 320,006 |
(1) | The column titled “Stock Awards” reports the fair value of restricted stock unit awards at their grant date in |
(2) | As of December 31, |
(3) | Mr. Leavitt was appointed to the Board of Directors on February 10, 2022 and received a prorated cash retainer. |
Mr. Reilly retired from the Board of Directors, effective January 26, 2023. |
2023 Proxy – Director Compensation for | 81 | ||
Audit Committee MattersProposal 3
PROPOSAL 3 | The board recommends a vote for the option of “ONE YEAR.” | ||||
Applicable SEC rules require that, at least once every six years, shareholders be given the opportunity to vote on an advisory basis regarding the frequency (i.e., annually, every two years or every three years) of future shareholder advisory “say-on-pay” votes on the compensation of our named executive officers.
Our shareholders voted on a similar proposal in 2011 and 2017. In 2011, the majority of our shareholders voted to hold the say-on-pay vote once every three years. Notwithstanding this, the Talent and Compensation Committee adopted an annual vote as it believed such practice was in accord with best market practices and, more importantly, allowed shareholders to provide valuable input on our compensation philosophy, policies and practices. In 2017, the majority of shareholders voted in favor of holding such a vote annually.
We continue to believe that say-on-pay votes should be conducted every year so that our shareholders may annually express their views on our executive compensation program.
As an advisory vote, this proposal is not binding on the Company, our Board, or the Talent and Compensation Committee. However, the Talent and Compensation Committee and the Board value the opinions expressed by shareholders in their votes on this proposal and will consider the outcome of the vote when making future decisions regarding the frequency of conducting a say-on-pay vote.
Shareholders may cast their advisory vote to conduct advisory votes on executive compensation every “One Year,” “Two Years,” or “Three Years,” or may “Abstain.”
Board Recommendation
The Board unanimously recommends that shareholders vote for the option of “ONE YEAR” as the frequency of future advisory votes on executive compensation. |
82 | 2023 Proxy – Proposal 3 | ||
Proposal 4
PROPOSAL 4 Ratification of Principal Independent Registered Public Accounting Firm | The board recommends a vote “FOR” this proposal. | ||||
The Audit Committee has appointed PricewaterhouseCoopers LLP as our principal independent auditor for the fiscal year ending December 31, 2022.2023. PricewaterhouseCoopers LLP has served in this capacity since at least 1989. A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting to respond to questions from the shareholders and to make a statement if the representative desires to do so.
Although ratification by the shareholders of the appointment of our principal independent auditor is not required, the Board is submitting the selection of PricewaterhouseCoopers LLP for ratification because the Board values the views of our shareholders on the selection and believes doing so is consistent with good corporate governance. If the shareholders do not approve this proposal, the Audit Committee will re-evaluate its selection, taking into consideration the shareholder vote. However, the Audit Committee is solely responsible for selecting and terminating our independent registered public accounting firm and may do so at any time at its discretion.
The Board unanimously recommends a vote “ FOR” ratification of the selection of PricewaterhouseCoopers LLP as our principal independent auditor for the |
2023 Proxy – Proposal 4 | 83 | ||
Audit Fees
Audit Fees
Aggregate fees for professional services rendered by PricewaterhouseCoopers LLP for the fiscal years ended December 31, 2022, and 2021 and 2020 were:
2021 | 2020 | 2022 | 2021 | ||||||||||
Audit fees(1) | $ | 4,967,736 | $ | 5,718,226 | $ | 5,090,316 | $ | 4,967,736 | |||||
Audit-related fees(2) | $ | 193,375 | $ | 190,265 | $ | 212,889 | $ | 193,375 | |||||
Tax fees(3) | $ | 10,902 | $ | 14,616 | $ | 12,488 | $ | 10,902 | |||||
All other fees(4) | $ | 10,000 | $ | 10,000 | $ | 10,000 | $ | 10,000 | |||||
Total | $ | 5,182,013 | $ | 5,933,107 | $ | 5,325,693 | $ | 5,182,013 |
(1) | The audit fees for the fiscal years ended December 31, |
(2) | The audit-related fees for the fiscal years ended December 31, |
(3) | Tax fees for the fiscal years ended December 31, |
(4) | All other fees for the fiscal years ended December 31, |
Audit Committee Matters
Pursuant to the terms of its charter, the Audit Committee approves all audit and audit related engagement fees and terms and all non-audit engagements with the principal independent auditor. The ChairmanChair of the Audit Committee also has the authority to approve any non-audit engagements with the independent registered public accounting firm but must report any such approvals to the Audit Committee at its next meeting. Our Audit Committee was not called upon in the fiscal year ended December 31, 2021,2022, to approve, after the fact, any non-audit, review or attest services pursuant to the pre-approval waiver provisions of the auditor independence rules of the SEC and the Audit Committee charter.
The Audit Committee has considered and determined that the services provided by PricewaterhouseCoopers LLP are compatible with maintaining PricewaterhouseCoopers LLP’s independence.
2023 Proxy – Audit | |||
The Audit Committee is composed of four non-management directors, each of whom meets the independence and financial literacy requirements of the New York Stock Exchange and SEC rules. In addition, all four members qualify as “audit committee financial experts” as defined by the SEC.
The Audit Committee operates under a written charter adopted by the Board of Directors, which may be accessed on our website at www.rclinvestor.com. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis. In accordance with the charter, the Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the quality and integrity of the Company’s financial statements; the qualifications, independence and performance of the Company’s principal independent auditor; the performance of the Company’s internal audit function; and the Company’s compliance with legal and regulatory requirements in connection with the foregoing.
It is the responsibility of the Company’s management to prepare the Company’s financial statements and to develop and maintain adequate systems of internal control over financial reporting. The internal auditor’s responsibility is to review and, when appropriate, audit the internal control over financial reporting. The Company’s principal independent auditor has the responsibility to express an opinion on the financial statements and internal control over financial reporting based on an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”).
As part of its oversight of the Company’s financial statements, the Audit Committee reviews and discusses with both management and the Company’s principal independent auditor all annual and quarterly financial statements prior to their issuance. During 2021,2022, management advised the Audit Committee that each set of financial statements reviewed had been prepared in accordance with generally accepted accounting principles, and management reviewed significant accounting and disclosure issues with the Audit Committee. These reviews included discussion with the principal independent auditor of matters required to be discussed by the applicable requirements of the PCAOB and the SEC, including the quality of the Company’s accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Audit Committee also discussed with the principal independent auditor matters relating to its independence, including the written disclosures and letter from the principal independent auditor to the Audit Committee required by applicable PCAOB requirements regarding the independent accountants’ communications with the Audit Committee concerning independence. The Audit Committee has also considered whether the provision of non-audit services is compatible with maintaining the independence of the principal independent auditor.
The Audit Committee also has reviewed and discussed with management, the internal auditor and the principal independent auditor the Company’s internal controls report and the auditor’s attestation of the report.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, for filing with the SEC.
THE AUDIT COMMITTEE
William L. Kimsey, Chairman
Chair
Stephen R. Howe, Jr.
Maritza G. Montiel
Vagn O. Sørensen
85 | |||
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The Board believes that equity-based incentive compensation is essential to attracting, motivating and retaining employees, consultants and directors, and aligning their interests with those of our shareholders. We currently maintain the 2008 Equity Incentive Plan, as amended and restated (the “2008 Plan”), which is our only active equity award plan other than our employee stock purchase plan. The 2008 Plan was originally adopted by our Board of Directors on March 7, 2008 and approved by our shareholders on May 13, 2008. The 2008 Plan was subsequently amended and restated as of May 20, 2016 to, among other things, extend the term for an additional 10 years through May 19, 2026.
We are asking shareholders to approve another amendment and restatement of the 2008 Plan to, among other things, extend the term for an additional 10 years through April 11, 2032 and increase the number of shares of common stock reserved for issuance thereunder by 9.5 million shares. This amendment and restatement of the 2008 Plan (the “Amended Plan”) was recommended by our Talent and Compensation Committee and approved by our Board of Directors in March 2022. If approved by our shareholders, the Amended Plan will become effective as of the date of the Annual Meeting.
In addition to extending the term for an additional 10 years through April 11, 2032 and increasing the number of shares of common stock reserved for issuance, in the Amended Plan, we are making certain other changes which the Talent and Compensation Committee and the Board of Directors believe are consistent with good corporate governance and with our equity compensation practices. These changes include:
As of March 31, 2022, a total of 2,514,786 shares of the Company’s common stock were subject to outstanding awards granted under the 2008 Plan, and an additional 583,570 shares were available for new award grants under the 2008 Plan. The Amended Plan will increase by 9.5 million the number of shares authorized for issuance bringing the total available for issuance up to 10,083,570.
If the requisite shareholder approval is not obtained, the Amended Plan will not take effect but the Company may continue to grant awards under the 2008 Plan in accordance with the current terms and conditions of the 2008 Plan.
We believe that equity incentives are critical to our success. Shareholder approval of the Amended Plan will allow us to continue to provide such incentives in a way that benefits both our service providers and our shareholders.
Approval of Amended and Restated 2008 Equity Incentive Plan
Significant Historical Award Information
The following table provides information regarding the grant of equity awards under the 2008 Plan over the past three completed fiscal years:
Key Equity Metrics
2019 | 2020 | 2021 | ||||
Equity burn rate(1) | 0.3% | 0.4% | 0.3% | |||
Dilution(2) | 2.4% | 2.0% | 1.4% | |||
Overhang(3) | 0.8% | 0.9% | 0.9% |
Overview
The Amended Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, stock awards and stock unit awards to employees, non-employee directors and consultants of the Company and certain of its affiliates.
The Amended Plan aims to reflect certain “best practices” that are consistent with the interests of our shareholders and with our corporate governance policies. Accordingly, the Amended Plan reflects the following practices:
Approval of Amended and Restated 2008 Equity Incentive Plan
The following is a summary of the principal features of the Amended Plan. This summary does not purport to be a complete description of all of the provisions of the Amended Plan. It is qualified in its entirety by reference to the full text of the Amended Plan, a copy of which is attached to this Proxy Statement as Annex A.
Summary of the Amended Plan
The Amended Plan is administered by the Talent and Compensation Committee. The Talent and Compensation Committee has, among other powers, the power to establish rules and regulations for administering the Amended Plan and to perform other acts relating to the Amended Plan. Decisions of the Talent and Compensation Committee are final and conclusive on all parties. The Board may appoint another committee to perform the functions of the Talent and Compensation Committee under the Amended Plan.
The Talent and Compensation Committee has the discretion to grant to eligible participants one or more equity-based awards, including options, stock appreciation rights, stock awards (including time-based and/or performance-based restricted stock) and stock units (including time-based and/or performance based restricted stock units), or any combination thereof. The Talent and Compensation Committee has the discretion to determine the number or amount of any award to be awarded to any participant subject to the following limitations:
If a dividend, recapitalization, stock split, or other similar corporate event or transaction (more fully described in Section 7 of the Amended Plan) affects the shares in such a way that an adjustment is appropriate to prevent dilution or enlargement of the benefits, or potential benefits, intended to be made available under the Amended Plan, the Talent and Compensation Committee shall, in such manner as it may deem equitable and appropriate, adjust: (i) the number of shares (or other securities) which may be made the subject of awards, (ii) the number of shares subject to outstanding awards, (iii) the exercise price with respect to any award, and (iv) any other provision determined by the Talent and Compensation Committee to be necessary for an equitable adjustment. The Talent and Compensation Committee may not take any other action to directly or indirectly reduce, or have the effect of reducing, the total exercise price of any option as established at the time of grant.
Awards may provide that upon their exercise the holder will receive cash, stock, other securities or other awards or any combination thereof, as the Talent and Compensation Committee determines. Any shares of stock deliverable under the Amended Plan may consist in whole or in part of authorized and unissued shares or treasury shares acquired by the Company.
The grant of any award shall count, equal in number to the shares represented by such award, towards the maximum number of shares that may be issued under the Amended Plan. To the extent that an
Approval of Amended and Restated 2008 Equity Incentive Plan
award is forfeited or otherwise does not result in the delivery of shares by the Company, such shares shall be deemed to have not been delivered and shall be restored to the share maximum.
Notwithstanding the foregoing, the following shares shall not become available for grant under the Amended Plan: (i) shares subject to an option that are used to satisfy the exercise price of an option, (ii) shares surrendered or withheld to cover taxes due upon the vesting of an award, (iii) shares subject to a stock appreciation right that are not issued or delivered as a result of the net, stock settlement of a stock appreciation right, or (iv) shares repurchased on the open market with the proceeds of the exercise price of an option.
Except in the case of substitute awards, the exercise price under any stock option and the grant price of any stock appreciation right will not be less than 100% of the fair market value of the stock or other security on the date of the grant of the option, right or award. The Talent and Compensation Committee will determine the times at which options and other purchase rights may be exercised and the methods by which and the forms in which payment of the purchase price may be made. Under the Amended Plan, determinations of the fair market value of shares of the Company’s common stock will be based on the closing sales price on the date in question and determinations of fair market value with respect to other property will be made in accordance with methods or procedures established by the Talent and Compensation Committee.
No awards may be granted under the Amended Plan after the tenth anniversary of the approval of the Amended Plan by our Board of Directors.
Awards
Options. An option is a right to purchase from the Company a stated number of shares at an exercise price and for a period of time established by the Talent and Compensation Committee. The duration of options granted under the Amended Plan will be established by the Talent and Compensation Committee but may not exceed ten years. The Talent and Compensation Committee may impose a vesting schedule on options, and will determine the acceptable form(s) in which the exercise price may be paid.
Options granted under the Amended Plan may be “incentive stock options” (“ISOs”), which afford certain favorable tax treatment for the holder, or “nonqualified stock options” (“NQSOs”). See “Tax Matters” below. Under the Amended Plan, we are restricted from granting “reload” options.
Stock Appreciation Rights. A stock appreciation right (“SAR”) is the right to receive an amount equal to the excess of the fair market value of the shares underlying the SAR over the base price of the SAR. The settlement amount of SARs may be paid in cash or shares. The Talent and Compensation Committee determines the terms of each SAR at the time of the grant. Any SAR may not have a base price less than the fair market value of the stock on the date the SAR is granted and cannot have a term of longer than ten years.
Stock Awards and Stock Units. The Talent and Compensation Committee may issue stock awards in the form of “bonus stock” (i.e. shares not subject to any restrictions or limitations) or in the form of “restricted stock”. In addition, the Talent and Compensation Committee may issue stock unit awards which are awards payable in cash or stock at a future date and represented by a bookkeeping credit. Stock unit awards may also be in the form of units not subject to any restrictions or limitations or in the form of “restricted stock units”.
In the case of both restricted stock and restricted stock units, the award is subject to restrictions on transferability and such other restrictions, if any, as the Talent and Compensation Committee may impose at the date of grant. The restrictions may lapse separately or in combination, at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction of pre-established performance goals, and in such installments, or otherwise, as the Talent
Approval of Amended and Restated 2008 Equity Incentive Plan
and Compensation Committee may determine. Except to the extent provided in the applicable award agreement, a participant granted restricted stock will have all of the rights of a shareholder, including, without limitation, the right to vote and the right to accrue dividends equal to the dividends paid on shares of common stock. If provided in the applicable award agreement, a holder of restricted stock units may be entitled to dividend equivalents with respect to such restricted stock units, which shall accrue and only be paid to the extent the award becomes vested.
Transferability
The Amended Plan provides that, except as described in the following sentence, no options or SARs granted under the Amended Plan may be transferred or otherwise encumbered by the individual to whom it is granted, other than by will, court order or by designation of a beneficiary and that, during the individual’s lifetime, each award will be exercisable only by the individual or by the individual’s guardian or legal representative. The Talent and Compensation Committee may permit options or SARs to be transferred to an option holder’s or SAR holder’s family members or a trust for the benefit of family members, or to certain controlled corporations. Shares represented by restricted stock awards may not be sold, assigned, transferred, pledged or otherwise encumbered, except as permitted by the Talent and Compensation Committee, during the applicable vesting period.
Minimum Vesting Periods
Except with respect to five percent (5%) of the maximum number of shares that may be issued under the Amended Plan, each award shall vest on the basis of the participant’s continued performance of services or the attainment of performance goals. No award which vests on the basis of the participant’s continued performance of services shall vest earlier than one year following the date of grant of such award, and no award which vests on the basis of attainment of performance goals shall provide for a performance period of less than one year; provided, however, that such limitations shall not preclude the acceleration of vesting of such award upon the death or disability of the participant, or in connection with a change in control.
Change in Control
In the event of a “Change in Control”:
The terms “Cause” and “Change in Control” are defined in the Amended Plan.
Eligibility and Participation
Any employee of the Company or its affiliates, including any executive officer, and any consultant or director of the Company or its affiliates, will be eligible to receive awards under the Amended Plan. Additionally, any holder of an outstanding equity-based award issued by a company acquired by the
Approval of Amended and Restated 2008 Equity Incentive Plan
Company may be granted a substitute award under the Amended Plan. The Company and its affiliates had approximately 88,000 employees, 6,000 consultants and 13 directors as of March 31, 2022 that would be eligible to receive awards under the Amended Plan.
Recoupment
The Talent and Compensation Committee shall have full authority to implement any policies and procedures necessary to comply with Section 10D of the Exchange Act and any rules promulgated thereunder. Without limiting the foregoing, each agreement evidencing awards with performance conditions made to employees who are at the senior vice president level or more senior shall include a provision which requires, at a minimum, that in the event that:
the Talent and Compensation Committee may require the award holder to forfeit and/or repay an amount equal to the difference between the amount actually awarded pursuant to such agreement based on the erroneous financial data and the amount of compensation that should have been awarded to the award holder pursuant to such agreement under the accounting restatement or the adjusted financial statements, as applicable, as determined by the Talent and Compensation Committee in its sole discretion taking into account those factors the Talent and Compensation Committee determines necessary or appropriate.
Amendment and Termination
The Talent and Compensation Committee may at any time terminate, suspend or discontinue the Amended Plan. The Talent and Compensation Committee may amend the Amended Plan at any time, provided that no amendment may be made without the approval of the Company’s shareholders (a) to the extent that such approval is required by applicable law or by the listing standards of any applicable exchange(s) on or after the adoption of the Amended Plan, (b) to the extent that such amendment would materially increase the number of securities which may be issued under the Amended Plan, (c) to the extent that such amendment would materially modify the requirements for participation in the Amended Plan, (d) to the extent that such amendment would accelerate the vesting of any restricted stock or restricted stock units under the Amended Plan except as otherwise provided therein or (e) to the extent that such amendment would permit or would result in the purchase of any or all outstanding Options with an Exercise Price greater than fair market value.
Approval of Amended and Restated 2008 Equity Incentive Plan
Grants and Awards as of December 31, 2021
As of December 31, 2021, the following awards are outstanding under the 2008 Plan for each of the named executive officers below, all current executive officers as a group, all non-employee directors as a group, and all other employees, respectively:
New Plan Benefits
Any awards under the Amended Plan will be at the discretion of the Talent and Compensation Committee or its delegate. Therefore, it is not possible at present to determine the amount or form of any award that will be available for grant to any individual during the term of the Amended Plan.
As of March 31, 2022, the closing price on the New York Stock Exchange of the Company’s common stock was $83.78 per share.
Tax Matters
The following discussion is a brief summary of the principal United States Federal income tax consequences under current Federal income tax laws relating to awards under the Amended Plan. This summary is not intended to be exhaustive and, among other things, does not describe state, local or foreign income and other tax consequences.
Nonqualified Stock Options. An optionee will not recognize any taxable income upon the grant of an NQSO and the Company will not be entitled to a tax deduction with respect to the grant of an NQSO. Upon exercise of an NQSO, the excess of the fair market value of the underlying shares of common stock on the exercise date over the option exercise price will be taxable as compensation income to the optionee and will be subject to applicable withholding taxes. The Company will generally be entitled to a tax deduction at such time in the amount of such compensation income. The optionee’s tax basis for the shares received pursuant to the exercise of an NQSO will equal the sum of the compensation income recognized and the exercise price.
In the event of a sale of shares received upon the exercise of an NQSO, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss and will be long-term capital gain or loss if the holding period for such shares is more than one year.
Incentive Stock Options. An optionee will not recognize any taxable income at the time of grant or timely exercise of an ISO and the Company will not be entitled to a tax deduction with respect to such grant or exercise. Exercise of an ISO may, however, give rise to taxable compensation income subject to applicable withholding taxes, and a tax deduction to the Company, if the ISO is not exercised on a timely basis (generally, while the optionee is employed by the Company or within 90 days after termination of employment) or if the optionee subsequently engages in a “disqualifying disposition”,
Approval of Amended and Restated 2008 Equity Incentive Plan
as described below. Also, the excess of the fair market value of the underlying shares on the date of exercise over the exercise price will be an item of income for purposes of the optionee’s alternative minimum tax in the year of exercise.
A sale or exchange by an optionee of shares acquired upon the exercise of an ISO more than one year after the transfer of the shares to such optionee and more than two years after the date of grant of the ISO will result in any difference between the net sale proceeds and the exercise price being treated as long-term capital gain (or loss) to the optionee. If such sale or exchange takes place within two years after the date of grant of the ISO or within one year from the date of transfer of the ISO shares to the optionee, such sale or exchange will generally constitute a “disqualifying disposition” of such shares that will have the following results: any excess of (i) the lesser of (a) the fair market value of the shares at the time of exercise of the ISO and (b) the amount realized on such disqualifying disposition of the shares over (ii) the option exercise price of such shares, will be ordinary income to the optionee, subject to applicable withholding taxes, and the Company will be entitled to a tax deduction in the amount of such income. Any further gain or loss after the date of exercise generally will qualify as capital gain or loss and will not result in any deduction by the Company.
Stock Appreciation Rights. Generally, the recipient of a standalone SAR will not recognize taxable income at the time the standalone SAR is granted. The amount of cash, or the value of stock received upon exercise of the SAR will be taxed as ordinary income to the employee at the time it is received. In general, there will be no federal income tax deduction allowed to the Company upon the grant or termination of SARs. However, upon the exercise of a SAR, the Company will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the exercise.
Stock and Restricted Stock. A grantee will not recognize any income upon the receipt of restricted stock unless the holder elects under Section 83(b) of the Internal Revenue Code, within thirty days of such receipt, to recognize ordinary income in an amount equal to the fair market value of the restricted stock at the time of receipt, less any amount paid for the shares. If the election is made, the holder generally will not be allowed a deduction for amounts subsequently required to be returned to the Company. If the election is not made, the holder will generally recognize ordinary income, on the date that the stock is no longer subject to vesting restrictions, in an amount equal to the fair market value of such shares on such date, less any amount paid for the shares. With respect to a stock award that is not subject to vesting restrictions, the holder will generally recognize ordinary income on the grant date in an amount equal to the fair market value of such shares on the grant date, less any amount paid for the shares. At the time the holder recognizes ordinary income, the Company generally will be entitled to a deduction in the same amount.
Generally, upon a sale or other disposition of stock or restricted stock with respect to which the holder has recognized ordinary income (i.e., a Section 83(b) election was previously made or the vesting restrictions were previously removed), the holder will recognize capital gain or loss in an amount equal to the difference between the amount realized on such sale or other disposition and the holder’s basis in such shares. Such gain or loss will be long-term capital gain or loss if the holding period for such shares is more than one year.
Restricted Stock Units. The grant of an award of restricted stock units, including units with performance conditions, will not result in income for the grantee or in a tax deduction for the Company. Upon the settlement of such an award, the grantee will recognize ordinary income equal to the aggregate value of the payment received, and the Company generally will be entitled to a tax deduction in the same amount.
Certain Other Tax Issues. In addition to the matters described above, (i) any entitlement to a tax deduction on the part of the Company is subject to applicable federal tax rules (including, without limitation, Section 162(m) of the Internal Revenue Code regarding the $1,000,000 limitation on deductible compensation), (ii) the exercise of an incentive stock option may have implications in
Approval of Amended and Restated 2008 Equity Incentive Plan
the computation of alternative minimum taxable income, (iii) certain awards under the Amended Plan may be subject to the requirements of Section 457A of the Internal Revenue Code (regarding certain nonqualified deferred compensation), and (iv) if the exercisability or vesting of any award is accelerated because of a change in control, such award (or a portion thereof), either alone or together with certain other payments, may constitute parachute payments under Section 280G of the Internal Revenue Code, which excess amounts may be subject to excise taxes. Officers and directors of the Company subject to Section 16(b) of the Exchange Act may be subject to special tax rules regarding the income tax consequences concerning their awards. The Amended Plan is not subject to any of the requirements of the Employee Retirement Income Security Act of 1974, as amended. The Amended Plan is not, nor is it intended to be, qualified under Section 401(a) of the Internal Revenue Code.
Registration with the SEC
We intend to file with the U.S. Securities and Exchange Commission a registration statement on Form S-8 covering the additional shares that would be reserved for issuance under the Amended Plan.
Summary
We believe strongly that the approval of the Amended Plan is important to our continued success. Equity-based compensation such as the awards that would be granted under the Amended Plan are essential to attracting, motivating and retaining high performing individuals.
Board Recommendation
Security Ownership of Certain
Beneficial Owners and Management
This table sets forth information as of March 31, 20222023 about persons we know to beneficially own(1) own(1) more than five percent of our common stock.
Name of Beneficial Owner | Shares of Common Stock (#) | Percentage of Ownership(2) | |||
Capital International Investors | 30,538,307 | (3) | 11.9% | ||
Capital Research Global Investors | 27,990,406 | (4) | 11.0% | ||
The Vanguard Group | 23,947,488 | (5) | 9.4% | ||
AWILHELMSEN AS | 21,064,632 | (6) | 8.2% | ||
BlackRock, Inc. | 14,299,319 | (7) | 5.6% |
(1) | A person is deemed to be the beneficial owner of securities to which such person has the right to acquire within 60 days from March 31, |
(2) | Applicable percentage ownership is rounded and based on |
(3) | Represents shares beneficially owned by Capital International Investors, 333 South Hope Street, 55th Floor, Los Angeles, California 90071. Of the total shares owned, the nature of beneficial ownership is as follows: sole voting power over |
(4) | Represents shares beneficially owned by Capital Research Global Investors, 333 South Hope Street, 55th Floor, Los Angeles, California 90071. Of the total shares owned, the nature of beneficial ownership is as follows: sole voting power over |
(5) | Represents shares beneficially owned by The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355. Of the total shares owned, the nature of beneficial ownership is as follows: shared voting power over 306,374 shares; sole dispositive power over 23,046,666 shares; and shared dispositive power over 900,822 shares. The foregoing information is based solely on Amendment 8 to Schedule 13G/A filed by The Vanguard Group with the SEC on February 9, 2023. |
(6) | AWILHELMSEN AS is a Norwegian corporation, the indirect beneficial owners of which are members of the Wilhelmsen family of Norway. The shares reported in the table include 5,035,259 shares owned by AWECO Invest AS, an affiliate of AWILHELMSEN AS. AWILHELMSEN AS has the power to vote and dispose of the shares owned by AWECO Invest AS pursuant to an agreement between AWILHELMSEN AS and AWECO Invest AS. The address of AWILHELMSEN AS is Beddingen 8, Aker Brygge, Vika N 0118 Oslo, Norway. The foregoing information is based on |
(7) | Represents shares beneficially owned by BlackRock, Inc., 55 East 52nd Street, New York, NY 10055. Of the total shares owned, the nature of beneficial ownership is as follows: sole voting power over |
2023 Proxy – Security Ownership of Certain Beneficial Owners and Management | |||
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Directors and Executive Officers
This table sets forth information as of March 31, 20222023 about the number of shares of common stock beneficially owned(1) owned(1) by (i) our directors; (ii) the named executive officers listed in the “Compensation Discussion and Analysis” below; and (iii) our directors and executive officers as a group.
The number of shares beneficially owned by each named person or entity is determined under rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose.
No shares of common stock held by our directors or named executive officers have been pledged.
Name of Beneficial Owner | Shares of Common Stock (#) | Percentage of Ownership(2) | Shares of Common Stock (#) | Percentage of Ownership(2) | |||||||
Michael W. Bayley | 22,994 | * | 75,804 | * | |||||||
John F. Brock | 19,020 | (3) | * | ||||||||
John F. Brock | 21,276 | * | |||||||||
Richard D. Fain | 801,329 | (4) | * | 652,619 | (3) | * | |||||
Naftali Holtz | 15,968 | * | |||||||||
Stephen R. Howe, Jr. | 6,117 | * | 8,373 | * | |||||||
William L. Kimsey | 25,076 | * | 27,332 | * | |||||||
Harri U. Kulovaara | 34,247 | * | 46,615 | * | |||||||
Michael O. Leavitt | 0 | * | 2,256 | * | |||||||
Jason T. Liberty | 23,557 | * | 63,566 | * | |||||||
Lisa Lutoff-Perlo | 17,179 | * | 47,950 | * | |||||||
Amy McPherson | 2,392 | * | 4,648 | * | |||||||
Maritza G. Montiel | 7,654 | * | 9.910 | * | |||||||
Ann S. Moore | 20,823 | * | 23,079 | * | |||||||
Eyal M. Ofer | 34,745 | (5) | * | 37,001 | * | ||||||
William K. Reilly | 21,425 | * | |||||||||
Vagn O. Sørensen | 27,542 | * | 26,583 | * | |||||||
Donald Thompson | 31,381 | * | 33,637 | * | |||||||
Arne Alexander Wilhelmsen | 22,499,407 | (6) | 8.8 | % | 21,081,397 | (4) | 8.2% | ||||
All directors and executive officers as a group (22 persons) | 23,658,551 | 9.28 | % | ||||||||
Rebecca Yeung | — | * | |||||||||
All directors and executive officers as a group (19 persons) | 22,138,772 | 8.7% |
* | Denotes beneficial ownership of less than 1% of the outstanding shares of common stock |
(1) | A person is deemed to be the beneficial owner of securities to which such person has the right to acquire within 60 days from March 31, |
(2) | Applicable percentage ownership is based on |
(3) | Includes |
Includes | |
2023 Proxy – Security Ownership of Certain Beneficial Owners and Management | |||
Equity Compensation Plan Information
Equity Compensation Plan Information
Equity Compensation Plan Information
The following table summarizes our equity plan information as of December 31, 2021.2022.
Plan Category | Column A: Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) | Column A: Number of Securities to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) | ||||||||
Equity compensation plans approved by security holders | 1,461,030(1) | — | 2,699,005(2) | 1,536,353 | (1) | — | 11,241,118 | (2) | ||||||
Equity compensation plans not approved by security holders | — | — | — | — | — | — | ||||||||
Total | 1,461,030 | — | 2,699,005 | 1,536,353 | — | 11,241,118 | ||||||||
Includes unvested or unsettled restricted stock units and unvested performance share units under our 2008 Equity Incentive Plan. | |
Includes |
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Availability of Proxy Materials
Under the rules adopted by the SEC, we are furnishing proxy materials to our shareholders primarily over the Internet. We believe that this process expedites shareholders’ receipt of these materials, lowers the costs of our Annual Meeting and helps to conserve natural resources. On or about April 19, 2022,18, 2023, we mailed to each of our shareholders (other than those who previously requested electronic or paper delivery) a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review the proxy materials, including this proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2021,2022, on the Internet and how to access a proxy card to vote on the Internet. The Notice of Internet Availability of Proxy Materials also contains instructions on how to receive a paper copy of the proxy materials. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials unless you request one. If you received paper copies of our proxy materials, you may also view these materials at www.proxyvote.com.
Who May Vote
Each share of our common stock outstanding as of the close of business on April 7, 20226, 2023 (the “Record Date”) is entitled to one vote at the Annual Meeting. At the close of business on the Record Date, 255,060,065255,731,909 shares of our common stock were outstanding and entitled to vote. You may vote all of the shares owned by you as of the close of business on the Record Date. These shares include shares that are (1) held of record directly in your name (in which case, you are a “Record Holder” with respect to such shares) and (2) held for you as the beneficial owner through a broker, bank or other nominee (in which case, you are a “Beneficial Holder” with respect to such shares). There are some distinctions between being a Record Holder and a Beneficial Holder as described herein.
Shares heldHeld of recordRecord
If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the Record Holder with respect to those shares, and the proxy materials were sent directly to you by Royal Caribbean. As the Record Holder, you have the right to grant your voting proxy directly to us or to vote in person at the Annual Meeting. If you requested to receive printed proxy materials, we have enclosed or sent a proxy card for you to use. You may also vote on the Internet as described in the Notice of Internet Availability of Proxy Materials and below under the heading “How to Vote.”
Shares owned beneficiallyOwned Beneficially
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the Beneficial Holder of shares held in street name, and the proxy materials were forwarded to you by your broker or other nominee who is considered, with respect to those shares, the shareholder of record. As the Beneficial Holder, you have the right to direct your broker or other nominee on how to vote the shares in your account, and you are also invited to attend the Annual Meeting.
Requirements to Attend the Annual Meeting
You are invited to attend the Annual Meeting if you are a Record Holder or Beneficial Holder as of the Record Date. If you are a Record Holder, you must bring proof of identification, such as a valid driver’s license, for admission to the Annual Meeting. If you are a Beneficial Holder, you will need to provide proof of ownership by bringing either your proxy card provided to you by your broker or a copy of your brokerage statement showing your share ownership as of the Record Date.
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General Information
In the interests of mitigating risks related to the ongoing COVID-19 pandemic and to prioritize the well-being of all attendees, including our employees, shareholders and other stakeholders, the following will be implemented at the Annual Meeting:
Attendees will be required to comply with any additional federal, state and/or local government guidance in force on the day of the Annual Meeting. You should not attend the Annual Meeting if you are suffering from any COVID-19 symptoms or you have come into close contact with someone who has tested positive for COVID-19 within the 14 days preceding the date of the Annual Meeting. You may be asked to complete a Health Declaration Form upon arrival.
How to Vote
Voting in Person
Shares held in your name as the Record Holder may be voted in person at the Annual Meeting. Shares for which you are the Beneficial Holder may be voted in person at the Annual Meeting only if you obtain a legal proxy from the broker or other nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you also vote by proxy in advance of the meeting so that your vote will be counted if you later decide not to attend the meeting.
Voting Without Attending the Annual Meeting
Regardless of how you hold your shares, you may vote your shares without attending the Annual Meeting. You may vote by granting a proxy or, for shares held as a Beneficial Holder, by submitting voting instructions to your broker or other nominee. You may also vote using the Internet or by mail as outlined in the Notice of Internet Availability of Proxy Materials or on your proxy card. Please see the Notice of Internet Availability of Proxy Materials, your proxy card or the information your bank, broker or other holder of record provided to you for more information on these options. Votes cast by Internet have the same effect as votes cast by submitting a written proxy card.
How Proxies Work
All properly executed proxies will be voted in accordance with the instructions contained thereon and, if no choice is specified, the proxies will be voted:
1. | FOR the election of the fourteen nominees for director named below (Proposal No. 1); |
2. | |
FOR the approval of the compensation of our named executive officers (Proposal No. 2); | |
3. | FOR the option of “ONE YEAR” as the frequency of future advisory votes on executive compensation (Proposal No. 3); and |
FOR the ratification of the selection of PricewaterhouseCoopers LLP (Proposal No. | |
Under New York Stock Exchange (“NYSE”) rules, if you are a Beneficial Holder and do not provide specific voting instructions in a timely fashion to your broker or other nominee that holds your shares, such broker or nominee will not be authorized to vote your shares on any matters other than Proposal No. 34 regarding the ratification of the auditors. Therefore, failure to provide your broker or other nominee with specific voting instructions in a timely fashion will result in “broker non-votes” with respect to Proposals No. 1, 2, and 4.
General Information
Matters to be Presented
We are not aware of any matters to be presented for a vote at the Annual Meeting other than those described in this proxy statement. If any matters not described in this proxy statement are properly presented at the meeting, the proxies will use their own judgment to determine how to vote your shares. If the meeting is postponed or adjourned, the proxies will vote your shares on the new meeting date in accordance with your previous instructions unless you have revoked your proxy.
Votes Necessary to Approve Proposals
We will hold the Annual Meeting if we have a quorum, which requires the presence, in person or represented by proxy, of holders of a majority of the outstanding shares of common stock as of the Record Date. If you vote via the Internet or sign and return your proxy card, your shares will be counted to determine whether we have a quorum, even if you abstain or fail to vote on any of the proposals listed on the proxy card. If the persons present or represented by proxy at the Annual Meeting constitute the holders of less than a majority of the outstanding shares of common stock as of the Record Date, we will not have a quorum and the Annual Meeting may be adjourned to a subsequent date for the purpose of obtaining a quorum.
The affirmative vote of a majority of the votes cast is required to approve each proposal.
Although abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present, they will not have any effect on the outcome of any proposal.
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General Information
Prior to the Annual Meeting, we will select one or more inspectors of election for the meeting. Such inspectors shall determine the number of shares of common stock represented at the Annual Meeting, the existence of a quorum and the validity and effect of proxies. They shall also receive, count and tabulate ballots and votes and determine the results thereof.
Revoking a Proxy
Any proxy may be revoked by a shareholder at any time prior to the final vote at the Annual Meeting by voting again on a later date via the Internet (only your latest Internet proxy submitted prior to the Annual Meeting will be counted), by signing and submitting a later dated proxy or by attending the Annual Meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering to our Corporate Secretary at 1050 Caribbean Way, Miami, Florida 33132 a written notice of revocation prior to the Annual Meeting.
Proposals of Shareholders for Next Year
Proposals of shareholders intended to be considered for inclusion in our proxy statement for our 20232024 Annual Meeting of Shareholders must be received by our Corporate Secretary no later than December 20, 20222023 at our executive offices: 1050 Caribbean Way, Miami, Florida 33132. Such proposals will need to comply with SEC regulations regarding the inclusion of shareholder proposals in company sponsored proxy statements. Any proposals for consideration at our next annual meeting of shareholders, but not included in our proxy statement, must be received by the Corporate Secretary of the Company no later than February 2, 2023.2024 in accordance with our Bylaws.
In addition, in order for shareholders to give timely notice of nominations for directors for inclusion on a universal proxy card in connection with the 2024 Annual Meeting, notice must be submitted by the same deadline as disclosed above under the advance notice provisions of our Bylaws and must include the information in the notice required by our Bylaws and by Rule 14a-19(b)(2) and Rule 14a-19(b)(3) under the Exchange Act.
Solicitation of Proxies
This proxy statement is furnished in connection with the solicitation of proxies by the Company on behalf of the Board. We will pay the cost of this proxy solicitation. In addition to soliciting proxies by mail, we expect that a number of our employees will solicit shareholders for the same type of proxy, personally and by telephone or other electronic means. None of these employees will receive any additional or special
General Information
compensation for assisting us in soliciting proxies. Okapi Partners has been retained to assist in soliciting proxies at a fee of approximately $14,500,$15,500, plus distribution costs and other expenses. We will, on request, reimburse banks, brokerage firms and other nominees for their expenses in sending proxy materials to their customers who are beneficial owners of our common stock and obtaining their voting instructions.
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General Information
Notice Regarding Delivery of Security Holder Documents
Under the SEC rules, delivery of one proxy statement and annual report to two or more investors sharing the same mailing address is permitted, under certain conditions. This procedure, called “householding,” applies to you if all of the following criteria are met:
(1) You have the same address as other security holders registered on our books;
(2) You have the same last name as the other security holders; and
(3) Your address is a residential address or post office box.
If you meet these criteria, you are eligible for householding and the following terms apply. If you are not eligible, please disregard this notice.
For Registered Shareholders
Only one proxy statement and annual report will be delivered to the shared mailing address. You will, however, still receive separate mailings of important and personal information, as well as a separate proxy card.
What do I need to do to receive just one set of annual disclosure materials?
You do not have to do anything. Unless Broadridge is notified otherwise within 60 days of the mailing of this notice, your consent is implied and only one set of materials will be sent to your household. This consent is considered perpetual, which means you will continue to receive a single proxy statement/ annual report in the future unless you notify us otherwise.
What if I want to receive multiple sets of materials?
If you would like to receive multiple sets of materials, call or write Broadridge at 800-542-1061 or 51 Mercedes Way, Edgewood, NY 11717. A separate set of materials will be sent to you promptly.
What if I consent to have one set of materials mailed now, but change my mind later?
Call or write Broadridge to turn off the householding instructions for yourself. You will then be sent a separate proxy statement and annual report within 30 days of receipt of your instruction.
The reason I receive multiple sets of materials is that some of the stock belongs to my children. What happens when they move out and no longer live in my household?
When there is an address change for one of the members of the household, materials will be sent directly to the shareholder at his or her new address.
Annual Report on Form 10-K
We will provide without charge to each person solicited by this proxy statement, upon the written request of such person, a copy of our annual report on Form 10-K, as filed with the SEC, for our most recent fiscal year. Such written requests should be directed to investor relations, Royal Caribbean Cruises Ltd., 1050 Caribbean Way, Miami, Florida 33132.
2023 Proxy – General Information | |||
RoyalMiami, Florida
royalcaribbeangroup.com
1050 Caribbean Cruises Ltd.Way
Miami, FL 33132
2008 Equity Incentive Plan
Amended and Restated as of [ ], 2022
Amended and Restated 2008 Equity Incentive Plan
Section 1. Purpose and Effectiveness
Section 2. Definitions and Rules of Construction
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Section 3. Eligibility and Participation
Section 4. Stock Subject to Plan
Amended and Restated 2008 Equity Incentive Plan
Section 5. Forms and Terms of Awards under the Plan
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Section 6. Exercises of Stock Options
Amended and Restated 2008 Equity Incentive Plan
Section 7. Events Affecting Plan Reserve or Plan Awards
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Section 9. Government Regulations and Registration of Shares
Section 10. Miscellaneous Provisions
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Amended and Restated 2008 Equity Incentive Plan
Section 11. Term; Amendment and Termination; Stockholder Approval of this Plan
Miami, Floridaroyalcaribbean.com1050 Caribbean WayMiami, FL 33132
ROYAL CARIBBEAN CRUISES LTD.
1050 CARIBBEAN WAY
MIAMI, FL 33132-2096
ATTN: INVESTOR RELATIONS
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Vote 24 Hours a Day, 7 Days a Week by Internet, Telephone or Mail.
VOTE BY INTERNET - www.proxyvote.comor scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
V11780-P90832 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY |
ROYAL CARIBBEAN CRUISES LTD. | ||||||
The Board of Directors recommends you vote FORthe election of all the listed nominees, | ||||||
1. | Election of Directors | For | Against | Abstain | ||
1a. | John F. Brock | ☐ | ☐ | ☐ | ||
1b. | Richard D. Fain | ☐ | ☐ | ☐ | ||
1c. | Stephen R. Howe, Jr. | ☐ | ☐ | ☐ | ||
1d. | William L. Kimsey | ☐ | ☐ | ☐ | ||
1e. | Michael O. Leavitt | ☐ | ☐ | ☐ | ||
1f. | Jason T. Liberty | ☐ | ☐ | ☐ | ||
1g. | Amy McPherson | ☐ | ☐ | ☐ | ||
1h. | Maritza G. Montiel | ☐ | ☐ | ☐ | ||
1i. | Ann S. Moore | ☐ | ☐ | ☐ | ||
1j. | Eyal M. Ofer | ☐ | ☐ | ☐ | ||
1k. | Vagn O. Sørensen | ☐ | ☐ | ☐ | ||
1l. | Donald Thompson | ☐ | ☐ | ☐ |
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For | Against | Abstain | |||||
1m. | Arne Alexander Wilhelmsen | ☐ | ☐ | ☐ | |||
1n. | Rebecca Yeung | ☐ | ☐ | ☐ | |||
2. | Advisory approval of the Company's compensation of its named executive officers. | ☐ | ☐ | ☐ | |||
1 Year | 2 Years | 3 Years | Abstain | ||||
3. | Advisory vote on the frequency of shareholder vote on executive compensation. | ☐ | ☐ | ☐ | ☐ | ||
For | Against | Abstain | |||||
4. | Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for | ☐ | ☐ | ☐ | |||
NOTE: THE SHARES COVERED BY A PROPERLY EXECUTED PROXY WILL BE VOTED AS SPECIFIED THEREIN. IF NO SPECIFIC DIRECTIONS ARE MADE, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF ALL LISTED NOMINEES, |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] | Date |
Signature (Joint Owners) | Date |
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The Notice of Annual Meeting and Proxy Statement and Annual Report are available at www.proxyvote.com.
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V11781-P90832 |
ROYAL CARIBBEAN CRUISES LTD.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 2, 20221, 2023
The undersigned hereby appoints Jason T. Liberty and Naftali Holtz, and each of them, as the undersigned's attorneys and agents to vote as Proxy for the undersigned, as herein stated, at the Annual Meeting of Shareholders of Royal Caribbean Cruises Ltd. to be held at the JW Marriott Marquis Miami, 255 Biscayne Boulevard Way, Miami, Florida 33131 on Thursday, June 2, 20221, 2023 at 9:00 A.M., Eastern Time, and at any adjournment or postponement thereof, according to the number of votes the undersigned would be entitled to vote if personally present, on the Proposals set forth on the reverse side and in accordance with their discretion on any other matters that may properly come before the meeting or any adjournments or postponements thereof. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated April 19, 202218, 2023 and Annual Report for 2021.2022.
Continued and to be signed on reverse side