HOTEL CEO Pay - The Hot Potato
HVS Executive Search names Jeffery H. Boyd President & Chief Executive Officer of priceline.com as the hotel industry’s top-performing chief executive officer of 2008 in its 16th Annual CEO Survey.
Just when you thought that nothing else could be written about CEO pay, the financial crisis brought it back to the forefront. Shareholders and legislators screamed about pay-for-performance like never before. Congress even passed a new bill that gives shareholders a right to vote on executive pay. Hotel CEOs have not been the poster child of excessive pay but there are plenty of reasons why they should examine our yearly analysis. We know that shareholders and media pundits will be reading it very carefully. In its 16th annual CEO survey HVS Executive Search included thirty companies, down one from last year. With private equity and hedge funds looking for bargains, we suspect that this trend will continue.
No Worries
In terms of a pure stock play, Priceline was the best investment nearly tripling in value over the survey period. Only four other companies had positive stock returns, Loews, Vail, Disney and DiamondRock. Jonathan Tisch of Loews and Bill McCarten of DiamondRock have been former winners of our top performing CEO survey. Bluegreen was still the worst investment over the survey period, as it was last year.
CEO | COMPANY |
Salary |
S-T Incentives |
Other Compensation |
L-T Incentives |
2008 Total Compensation |
HVS Value Index |
Iger, Robert, A | Walt Disney |
$2,000 |
$13,945 |
$930 |
$13,742 |
$30,617 |
109.6 |
Marriott, Jr., J. W. | Marriott Intl, Inc. |
$1,254 |
$905 |
$406 |
$7,425 |
$9,989 |
106.8 |
Arison, M. Micky | Carnival |
$880 |
$0 |
$517 |
$7,101 |
$8,498 |
104.6 |
Boyd, Jeffery | Priceline.com |
$550 |
$2,000 |
$13 |
$3,461 |
$6,024 |
184.6 |
Fain, Richard D. | Royal Caribbean |
$1,000 |
$1,441 |
$126 |
$3,215 |
$5,781 |
101.4 |
Frits van Paasschen | Starwood Hotels & Resorts |
$1,000 |
$1,365 |
$523 |
$2,835 |
$5,723 |
100.2 |
Tisch, Jonathan M.*** | Loews Hotels |
$975 |
$2,100 |
$1,738 |
$684 |
$5,497 |
105.4 |
Stephen P. Joyce | Choice Hotels International |
$983 |
$585 |
$1,655 |
$1,006 |
$4,229 |
101.0 |
Reed, Colin V. | Gaylord Entertainment |
$898 |
$400 |
$127 |
$2,487 |
$3,912 |
102.7 |
Wm. Britton Greene | St Joe Co |
$700 |
$490 |
$119 |
$2,482 |
$3,791 |
81.7 |
Katz, Robert, A | Vail Resorts, Inc. |
$835 |
$211 |
$15 |
$2,300 |
$3,362 |
122.6 |
Bortz, Jon E. | LaSalle Hotel Properties |
$567 |
$499 |
$575 |
$1,539 |
$3,179 |
98.5 |
Alter, Robert* | Sunstone Hotel Investors |
$356 |
$311 |
$51 |
$2,173 |
$2,891 |
93.5 |
Geller, Laurence | Strategic Hotels & Resorts |
$750 |
$0 |
$29 |
$2,073 |
$2,852 |
50.6 |
Cole, David C.* | Maui Land |
$550 |
$0 |
$540 |
$1,736 |
$2,826 |
35.2 |
Smith, Richard A. | Felcor Lodging Trust |
$600 |
$74 |
$36 |
$1,985 |
$2,695 |
27.6 |
Kleisner, Fred | Morgans Hotel Group |
$936 |
$0 |
$53 |
$1,346 |
$2,335 |
84.3 |
McCarten, William W.* | DiamondRock |
$564 |
$426 |
$32 |
$1,217 |
$2,238 |
123.4 |
W. Edward Walter | Host Hotels & Resorts |
$750 |
$468 |
$130 |
$335 |
$1,683 |
96.6 |
Bennett, Montgomery | Ashford Hospitality |
$700 |
$438 |
$0 |
$395 |
$1,533 |
159.6 |
Maloney, John M. | Bluegreen Corp |
$600 |
$0 |
$15 |
$825 |
$1,441 |
34.2 |
Shah, Jay | Hersha Hospitality |
$425 |
$411 |
$4 |
$532 |
$1,372 |
114.8 |
Hewitt, Thomas | Interstate Hotels & Resorts |
$500 |
$125 |
$40 |
$525 |
$1,190 |
74.1 |
Marcus, Stephen H. | Marcus |
$621 |
$262 |
$204 |
$0 |
$1,087 |
94.9 |
Emery, John* | Great Wolf Resorts |
$499 |
$0 |
$872 |
-$288 |
$1,083 |
154.2 |
Ratner, Charles A. | Forest City |
$500 |
$0 |
$75 |
$300 |
$875 |
84.7 |
Sonnabend, Stephanie & Peter | Sonesta International |
$706 |
$57 |
$82 |
$0 |
$846 |
141.3 |
Peter T. Cyrus** | Lodgian |
$658 |
$0 |
$1 |
$0 |
$658 |
56.1 |
Anupam Narayan | Red Lion Hotels |
$346 |
$0 |
$5 |
$243 |
$594 |
87.8 |
Schulte, Paul* | Supertel Hospitality |
$270 |
$0 |
$27 |
$0 |
$297 |
180.6 |
Note: The table has been organized by Total Compensation.
* No Longer CEO
**Interim CEO
*** Office of CEO Loews Corp.
Looking Over Their Shoulder
Base & Bonus Pay
Average bonuses were down 25% from a year ago, dropping from $1.2 million to $884,000. We are not surprised by the drop but we thought a larger drop would have occurred. We foresee an even steeper decline in bonus payouts for next year as operating metrics continue to deteriorate. Interestingly, the median bonus was approximately $287,000, half as much as last year's $570,000. The average was clearly affected by the top five bonus payouts. The largest bonus went to Iger at almost $13 million, while other million dollar bonuses went to Tisch, Boyd, van Paasschen and Richard Fain of Royal Caribbean. We also noted that one-third, or ten CEOs received no bonus at all.
The category of "Other Compensation" has usually not had much to speak about, but that is changing. The SEC wants more transparency regarding benefits, perks, and non-traditional sources of compensation. Tisch and Joyce received other compensation that totaled nearly $2 million. In Tisch's case he has duties that extend beyond Loews Hotels and Joyce, who relocated from Marriott to Choice leaving compensation on the table.
Long-Term Incentives
The richest CEOs are generally the same as last year's, with Arison's net worth at nearly $4.5 billion. The other billionaire is Marriott weighing in at $1.2 billion. Tisch, Ratner and Iger round out the list of the hospitality industry's richest CEOs.
One of the primary functions of our pay-for-performance model is to determine whether a CEO earned his or her pay. The HVS Value Index can help shareholders evaluate a CEO's performance as they vote on pay. An HVS Value Index of 100 means that a CEO got paid exactly what they deserved relative to their peers. We noted that the five most highly compensated CEOs, Iger, Marriott, Arison, Boyd and Fain all had HVS Indexes over 100, proving that they earned their pay. That clearly can't be said for everyone in the industry.
About HVS Executive Search
HVS Executive Search provides human capital advisory services to leaders in the hotel, restaurant, food service and gaming industries around the world. Its specialties include senior-level executive search, mid-management recruitment and performance improvement strategies. Coupled with a unique and proven psychometric approach, HVS Leadership Assessment™ is the only solution-driven HR assessment tool dedicated to streamlining and enhancing recruitment and training processes, specifically designed for the services industry. Industry benchmarked Compensation Studies leverage the HVS reach and global expertise to help businesses structure compensation in line with industry standards, allowing them to attract and retain talent through equitable compensation practices. For further information, please visit HVS.com/Services/ExecutiveSearch/