The Securities and Exchange Exchange Commission reported this past week that the president & CEO of Norwegian Cruise Line Holdings Ltd ("NCLH"), Frank Del Rio, bought 83,498 shares of NCLH at an average price of $35.94 a share. (Photo below, right, during interview on CNBC).
The transaction took place on on August 31, 2016. The total cost of cruise stock purchased was $3 million.
The price of the stock decreased to $35.61 by the end of the week. It is at a 52 week low.
It was widely reported earlier last month that NCL had slashed its earnings forecast for this year and announced that it would miss its profit target for next year, because of "continued weak demand" for European travel, Brexit’s impact on the pound, and some U.S. consumers reconsidering Mediterranean cruises following ISIS-inspired violence worldwide.
Analysts say that its been a "choppy year" for the cruise industry in general, and for shares of Norwegian Cruise Line in particular. NCLH stock reportedly "retreated to levels last seen in mid-2014." Frank Del Rio’s $3 million cruise stock purchase, according to Wolfe Research analyst Jared Shojaian, is "the largest open market purchase by a cruise-line executive in history."
Bloomberg says that Del Rio is attempting to demonstrate confidence in NCL to "sail through choppy waters."
It is a move similar to Royal Caribbean’s Chairman Richard Fain who bought 29,190 shares of RCL stock, in a series of trades for an average of $68.5161 per share, worth nearly $2,000,000. Cruise executive Fain made the transaction shortly after his cruise line’s stock price dropped substantially following the release of Royal Caribbean’s second quarter earnings. But in Fain’s case, unlike Del Rio’s, the cruise stock quickly bounced back over 6.5 %, earning the cruise executive a one-day profit of around $140,000.
Del Rio certainly has boatloads of money to buy stock. In 2015, he received almost $32,000,000 in total executive compensation.
The SEC states that he directly and indirectly holds 919,173 worth of his cruise line stock. The SEC forms reveal he owns 451,171 shares directly. He indirectly owns 27,875 shares through a family trust and the SEC forms state that he indirectly holds 304,373 and 135,754 shares through investment limited liability corporations. The total shares are worth over $34,000,000 at the current depressed stock prices. The Norwegian Cruise Line stock price hit a high last year of $64.27 a share which, at that price, would be worth a total of nearly $60,000,000 to Del Rio.
It’s no wonder that cruise passengers freak out when NCL nickel and dimes them with room service charges, increased gratuties and high-end restaurant cover charges.
Yes, cruise executives pocket an obscene anount of money. It’s funny money, I say, at a time when crew members are working harder and longer than ever before for less and have no job security.
Interested in "fat cat" cruise executives? Read Andy Stuart – No Wonder He’s Smiling (NCL), Micky Arison Sells $433,700,000 Worth of Carnival Stock (CCL), and Cruise Executive Richard Fain Hits the Jackpot Again (RCL).
Photo Credit: CNBC
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