Executive Salaries at Royal - readjusted?

[DirtyDawg]

What? No covid testing or masking thread to waste out time on this morning? 

 

[topnole]

19 hours ago, rudeney said:

I agree with @Tree_skier.  Another thing to consider is that 85% of Bayley's compensation is in "stock awards".  Some of that might be actual stock, or it might be options.  If it's options, then he has to spend money to buy the stock to see any gains in value.  If it's actual stock, then he would never be able to sell it and get that money back.  If he were to sell just 1% of stock he owns, it would tank the value because analysts would "assume" that something is wrong.   

He would not tank the stock.  Executives sell their stock all the time.   There are other things incorrect in your statement too.  

[topnole]

On 5/16/2020 at 1:39 PM, jalves said:

I would hope that the Board of Directors will adjust the salary and bonus provisions to include a measure of how they bring back the company from current conditions.  

Since Sox regulation, the compensation committee does this for the highest paid executives.  This must be “outsiders” on the committee.  These members represent the shareholders who by proxy set the compensation.  Executives don’t set their own compensation.  
 

Compensation is market driven.  Pay them well below average and see what you get.  I doubt shareholders want to do that.  But it is their choice either way.  

[DirtyDawg]

On 4/20/2022 at 4:38 AM, Biker19 said:

RCCL executives seem to be doing well for a company that hasn't made a profit in 2+ years.

 

Michael Bayley, president and CEO of Royal Caribbean International, was the highest compensated executive at Royal Caribbean Group in 2021.

His package was valued at $17.55m, higher than the $15.81m of Royal Caribbean Group Chairman/CEO Richard Fain.

$10m jump in Bayley's stock awards

Bayley's compensation — which totaled $7.43m in 2020 — was buoyed by a $10m increase in time- and performance-based stock awards, to $14.99m. His salary was $1m and he received a $1.4m bonus. 'Other compensation' was $132,217, including an auto lease, life insurance, a retirement plan and further perks.

 

 

Bloomberg recently produced information on a wide variety of company's CEO to median employee pay based on 2020 data. The average in the U.S. in 2020 was 144 - to 1.  Which means that the average CEO compensations in the U.S. was 144 times the compensation of that company's median worker compensation.

 

Walmart's ratio was 983:1, Coca-Cola Co., 1,621:1, and GameStop Corp., 1,137:1. You can look up Royal Caribbean's ratio if you like. But first, let's do an over/under. Do you think Royal's is over the average 144:1 or under the average of 144? I peaked so I can't participate. 

 

Here's the link. 

https://www.bloomberg.com/graphics/ceo-pay-ratio/

[rudeney]

4 hours ago, topnole said:

He would not tank the stock.  Executives sell their stock all the time.   There are other things incorrect in your statement too.  

 

 

Execs are issued restricted shares and there are rules around the sale.  The company can buy back shares, but it's unlikely they would be able to buy back, at market prices, all the stock issues to executives.  To sell shares on the open market, you have to jump through many hoops, and each and every time an execute or even former executive sells a lot of stock, the prices drop.  Depending on who it is, they can drop considerably.  Even when complying with SEC rules that are meant to prevent insider trading by execs, shareholders and markets are fickle.  I've been-there-done-that as the CIO of a small public company.  By the time I sold my restricted shares, they were at about 85% of the value I was awarded for them, and over 70% below the highest market value that I wanted to receive.  It was quite disappointing, and with the relatively small value of what I had, I can only imagine what it would be like for someone holding tens of millions of dollars in stock.  Oh, and some oy my stock was purchased with options.  On that, I did make a "profit" over the purchase price.  Of course I made money on all the sales, but only because the stock was awarded to me and I did not pay out of pocket for it.  

[topnole]

58 minutes ago, rudeney said:

 

 

Execs are issued restricted shares and there are rules around the sale.  The company can buy back shares, but it's unlikely they would be able to buy back, at market prices, all the stock issues to executives.  To sell shares on the open market, you have to jump through many hoops, and each and every time an execute or even former executive sells a lot of stock, the prices drop.  Depending on who it is, they can drop considerably.  Even when complying with SEC rules that are meant to prevent insider trading by execs, shareholders and markets are fickle.  I've been-there-done-that as the CIO of a small public company.  By the time I sold my restricted shares, they were at about 85% of the value I was awarded for them, and over 70% below the highest market value that I wanted to receive.  It was quite disappointing, and with the relatively small value of what I had, I can only imagine what it would be like for someone holding tens of millions of dollars in stock.  Oh, and some oy my stock was purchased with options.  On that, I did make a "profit" over the purchase price.  Of course I made money on all the sales, but only because the stock was awarded to me and I did not pay out of pocket for it.  

Maybe for small companies with no analyst coverage and minimal volume.   But to state each and every time?   We both know that isn’t true.  What if big positive news came out the day before the execution of the sale?  You think it would still drop?  No way you cashing out some compensation would negate that.   
 

Executives don’t hold stock forever.   The market knows this.  Filings are done in advance and the market absorbs the perceived reasons for selling.  If it is simply a normal series of selling it likely doesn’t make one bit of difference in the market price.  Context matters a great deal.  When billions are traded daily on a stock, a few million is a drop in the bucket.  For a company with little volume, any selling creates a downside pressure.  Not just executive selling.  Again, context matters here.  
 

Fain selling a couple million in stock is nothing for this company.  To suggest it would tank the stock is ridiculous.   

[rudeney]

OK, so maybe "tank" is not a good description, but my point is that while his compensation includes millions in stock awards, it is all on paper right now because it is very unlikely that he could actually cash out all of it and have that amount of money in his bank account.  Well, unless there was a buyout with a uniform purchase price for all shares.  

 

Another thing in play here is how the stock is awarded.  Executives rarely get issues regular stock.  It's almost always restricted shares and they also use options.  In my case, I have options that were awarded at 50% of market value on the day of the award.  I could exercise my option after a certain length of time and I would get unrestricted shares for it.  I was also awarded restricted shares that I could not sell for a given time.  The options were the best.  The restricted shares were not so good in terms of what I had to do to cash out. 

 

Don't get me wrong - I have no problem with executive compensation und fully understand why it is what it is!

[topnole]

7 minutes ago, rudeney said:

OK, so maybe "tank" is not a good description, but my point is that while his compensation includes millions in stock awards, it is all on paper right now because it is very unlikely that he could actually cash out all of it and have that amount of money in his bank account.  Well, unless there was a buyout with a uniform purchase price for all shares.  

 

Another thing in play here is how the stock is awarded.  Executives rarely get issues regular stock.  It's almost always restricted shares and they also use options.  In my case, I have options that were awarded at 50% of market value on the day of the award.  I could exercise my option after a certain length of time and I would get unrestricted shares for it.  I was also awarded restricted shares that I could not sell for a given time.  The options were the best.  The restricted shares were not so good in terms of what I had to do to cash out. 

 

Don't get me wrong - I have no problem with executive compensation und fully understand why it is what it is!

The devil is in the details on this Bloomberg link.  Not sure if they are using estimated stock compensation or is this that actual value from sales of stock.  Same with options.  These are almost always estimated in these types of reports.  If the stock tanks, options are worthless.  So I’m more than sure these numbers don’t equal the cash that went into any of these executives bank in the given year reported.  Lord knows many had options expire worthless when the market tanked in 2020.  Royal was at what, 20 a share?   Timing was bad for some of them, that is for sure.   
 

Meanwhile, they are necessarily including benefits or bonuses for the employees.  But they do include that for the executives.  These reports seemed designed to make it look as bad as possible.  
 

Stock and options align the incentives of the owners and managers.  That is why they are used.  When used it can make for some big paydays.  But that is the choice of the owners.  So who is anyone on here to judge.  When not used (which doesn’t happen for executives) the interests of management would not be aligned with shareholders causing all kinds of problems.  Stockholders gladly pay to have interests aligned as it benefits the firm in the long run.   Now everyone can quit complaining and direct their attention at college football coaches who make 10 million a year working for the state government.  😂

[rudeney]

1 hour ago, topnole said:

  Now everyone can quit complaining and direct their attention at college football coaches who make 10 million a year working for the state government.  😂

 

No kidding!  

[taglovestocruise]

On 4/20/2022 at 6:17 AM, rudeney said:

I agree with @Tree_skier.  Another thing to consider is that 85% of Bayley's compensation is in "stock awards".  Some of that might be actual stock, or it might be options.  If it's options, then he has to spend money to buy the stock to see any gains in value.  If it's actual stock, then he would never be able to sell it and get that money back.  If he were to sell just 1% of stock he owns, it would tank the value because analysts would "assume" that something is wrong.   

Elon Musk sold 16 billion in Tesla stock Nov - Dec 2021. During the 7 weeks he sold the stock Tesla stock went from $850 to over $1200. Tanked,, I don't think so.