Carnival Stockholders Take Note

[CruisinTexans]

Two month ago Carnival Corporation announced the suspension of its first quarter dividend in 2009 in order to save the company $1.3 billion dollars. It sounded prudent to me at the time, but after reading the following in

Seatrade Insider News, I feel cheated:

 

Carnival granted restricted (can't be sold until 12/11/11) stock awards to these executives:

Mickey Arison 149,524 CCL shares valued at $3,501,104.00

Howard Frank COO-124,603 CCL shares valued at $2,917,579.00

Foschi (Costa CEO) 44,880 Carnival plc shares valued at £656,594

Dingle (Carnival UK CEO) 124,603 Carnival plc shares valued at £210,994

 

That's almost 450,000 new shares to dilute my non-dividend paying shares.

[MadManOfBethesda]

That's almost 450,000 new shares to dilute my non-dividend paying shares.

 

450,000 sharers represents less than 1/10 of 1% of the outstanding shares of the company.

 

Even so, if you believe that issuing restricted shares to corporate executives is inappropriate, you are always frree to liquidate your position. But then again, you might have some difficulty finding another public company that doesn't compensate their executives in the same manner.

[m steve]

they can get great results in the first quarter and reinstate the dividend. With the millions of share Arison owns he's losing about a half million $ a quarter not getting the dividend either.

[CruisinTexans]

Madman, I don't think issuing shares of restricted stock to execs is wrong. I just resent the fact that they suspended the dividend to save money and then rewarded the execs with almost $9 mil in stock.

[noblepa]

Two month ago Carnival Corporation announced the suspension of its first quarter dividend in 2009 in order to save the company $1.3 billion dollars. It sounded prudent to me at the time, but after reading the following in

Seatrade Insider News, I feel cheated:

 

Carnival granted restricted (can't be sold until 12/11/11) stock awards to these executives:

Mickey Arison 149,524 CCL shares valued at $3,501,104.00

Howard Frank COO-124,603 CCL shares valued at $2,917,579.00

Foschi (Costa CEO) 44,880 Carnival plc shares valued at £656,594

Dingle (Carnival UK CEO) 124,603 Carnival plc shares valued at £210,994

 

That's almost 450,000 new shares to dilute my non-dividend paying shares.

 

Whether or not these awards dilute your shares' value depends on where CCL got the shares. Corporations can't just create new shares out of whole cloth without SEC approval. Usually stockholder approval is required, because such an issue will, indeed, dilute the value of outstanding shares. Current owners are often given right of first refusal on the new shares.

 

The shares could have been treasury shares, which were issued, sold and repurchased by the corporation. Companies purchase their own shares all the time. Stock options to executives is one of the reasons they do this. Such shares do not dilute your shares. They are counted as outstanding shares.

 

Then there are shares that have been approved by the SEC but never issued. This, also, is common business practive. If I remember correctly from my undergraduate business classes, these shares are NOT counted as outstanding shares. Such shares would dilute the value of outstanding shares. This is one of the things that anyone attempting a hostile tackover would want to know: how many approved but unissued shares are there? The directors can sell such shares, which either forces the attacker to pay more than they planned, or it puts enough shares in friendly hands, that they can ward off the attack, or negotiate a higher price.

 

I suspect that the shares were treasury shares. They would not dilute the monetary value of your shares. They would, however, dilute the voting strength of your shares, as treasury shares are not allowed to vote. Once the shares are in private hands, such as Mickey Arison's, they can be voted.

 

But then, I'm not a corporate (or any other kind) lawyer.

 

Paul Noble

[BigGreenFan]

Whether or not these awards dilute your shares' value depends on where CCL got the shares. Corporations can't just create new shares out of whole cloth without SEC approval. Usually stockholder approval is required, because such an issue will, indeed, dilute the value of outstanding shares. Current owners are often given right of first refusal on the new shares.

 

The shares could have been treasury shares, which were issued, sold and repurchased by the corporation. Companies purchase their own shares all the time. Stock options to executives is one of the reasons they do this. Such shares do not dilute your shares. They are counted as outstanding shares.

 

Then there are shares that have been approved by the SEC but never issued. This, also, is common business practive. If I remember correctly from my undergraduate business classes, these shares are NOT counted as outstanding shares. Such shares would dilute the value of outstanding shares. This is one of the things that anyone attempting a hostile tackover would want to know: how many approved but unissued shares are there? The directors can sell such shares, which either forces the attacker to pay more than they planned, or it puts enough shares in friendly hands, that they can ward off the attack, or negotiate a higher price.

 

I suspect that the shares were treasury shares. They would not dilute the monetary value of your shares. They would, however, dilute the voting strength of your shares, as treasury shares are not allowed to vote. Once the shares are in private hands, such as Mickey Arison's, they can be voted.

 

But then, I'm not a corporate (or any other kind) lawyer.

 

Paul Noble

 

The issuance of treasury shares is, indeed, dilutive. When shares are purchased into the treasury, they reduce the share count outstanding. When shares are issued, they increase the share count and are dilutive.

 

Not to say that compensating executives with restricted shares is bad. Doesn't that tend to align management interests more closely with those of shareholders?

[m steve]

on the open market last year. They paid around $35-45 a share and used them for the bonus to directors at the price when they received them which was around $20. Maybe that's why they had to stop the dividends.

[lardor]

Two month ago Carnival Corporation announced the suspension of its first quarter dividend in 2009 in order to save the company $1.3 billion dollars. It sounded prudent to me at the time, but after reading the following in

Seatrade Insider News, I feel cheated:

 

Carnival granted restricted (can't be sold until 12/11/11) stock awards to these executives:

Mickey Arison 149,524 CCL shares valued at $3,501,104.00

Howard Frank COO-124,603 CCL shares valued at $2,917,579.00

Foschi (Costa CEO) 44,880 Carnival plc shares valued at £656,594

Dingle (Carnival UK CEO) 124,603 Carnival plc shares valued at £210,994

 

That's almost 450,000 new shares to dilute my non-dividend paying shares.

 

And besides dropping the dividend, I wonder if they will cancel the shareholder's OBC that is now in effect only on sailings made before 7/31/2009...or will they continue with it ?