Frank Del Rio, president and CEO of Norwegian Cruise Line Holdings, received compensation in the staggering amount of $36,400,000 in 2020, consisting primarily of nearly $18,000,000 in stock awards, according to a recent Security and Exchange Commission (SEC) filing. The news was initially reported by the cruise trade publication Cruise Industry News.
CEO Del Rio is by far the highest paid cruise executive in the world. In the last three years alone, Del Rio took home over $76,000,000 in income. Including his 2015 income of $31,900,000, he collected over $108,000,000 for four years, including $22,590,000 in 2018, $17,808,000 in 2019,and $36,400,000 in 2020. He collected $2,900,000 in 2016 and $10,490,000 in 2017.
Last year, Del Rio was the highest paid CEO of all businesses in Florida, cruise lines or otherwise, when he collected a whopping $22,590,000.
In 2018, Del Rio’s compensation of $22,590,000 was over one thousand times more than the median wages of a NCL crew member who earned an annual income of a little less than $17,000 according to information submitted to the SEC by NCL. A NCL median employee was defined in SEC filings as a “full-time employee located on one of the NCL ships with an annual total compensation of $16,925 for 2019.” This resulted in a compensation ratio between CEO Del Rio and a median crew members of “1,052 to 1” for 2018, according to the SEC filing.
Considering that the average crew members in 2020 probably collected only around $4,000 until the Centers for Disease Control and Prevention issued its first no-sail order in March, CEO Del Rio’s $36,400,000 results in a compensation ratio with a median crew members of well over 9,000 to 1.
In 2020, Del Rio collected a total of around $24,374,000 in stock awards (over $17,952,000) incentive payments ($3,600,000) and bonuses ($2,824,495) as part of his overall compensation, despite NCL’s disastrous financial performance due to the COVID-19 pandemic. He also collected “other compensation” of $10,476,999 bringing his total income to of $36,400.000.
Last year, NCL suffered a net loss of $4,000,000,000 (billion) compared to net income in 2019 of $930,200,000. As of December 31, 2020, NCL had total debt of $11,800,000,000 (billion) and cash of only $3,300,000,000. NCL is facing a cash burn rate of $190,000,000 a month, excluding non-recurring debt modification costs.
Although NCL and most other cruise lines talk about “pent-up demand” for cruising, NCL announced that its booking for the second half of this year were below historical levels.
NCL’s excessive executive salary occurred while there are thousands of unemployed crew members and shoreside employees due to the pandemic. NCL stopped paying its crew members early last year and eventually repatriated them to their home countries. NCL touted in a press release last month that its “actions to enhance liquidity” (by raising money via stock sales, taking on credit, amending credit agreements, deferring new-build payments, and reducing or deferring payment of marketing and other expenses) included extending “salary reductions and furloughs for certain shoreside team members.” One wonders whether any of the NCL office workers and sales representatives have any idea that their CEO collected record breaking income for 2020 while their meager salaries were reduced or they were fired?
The irony of Del Rio receiving his monstrous income is that NCL almost single handedly cemented the reputation of the cruise industry being non-compliant with the CDC’s cruise-related COVID protocols. NCL and Del Rio in particular demonstrated a combative and defiant attitude toward the CDC:
- Last March, the Miami New Times nd the Washington Post published articles revealing that NCL publicly down played the pandemic and pressured its sales team to misrepresent the reality of COVID-19. Read Leaked Emails: Norwegian Pressures Sales Team to Mislead Potential Customers About Coronavirus by Miami New Times March 11, 2020.
- Last April, ex-president Trump named Del Rio to his “Great American Economic Revival” Industry Group. Del Rio admired the ex-president who advocated fewer regulations and pro-business tax cuts. Del Rio was one of several cruise executives who refused to publicly acknowledge or support the CDC’s extension of the “no-sail” order to July 24, 2021. Like the other CEO’s, he publicly disputed the CDC’s conclusion that “cruise ship travel markedly increases the risk and impact of the COVID19 disease outbreak in the United States.”
- In May, NCL permitted its crew members to crowd together without masks during several parties on the Norwegian Escape (above left) and Norwegian Epic (below left) at the port of Miami. In an article titled “Ridiculously Overcrowded” Norwegian Escape Sails to Miami, we noted that after NCL assembled employees from several different NCL ships aboard the Norwegian Escape which sailed to Miami, the cruise line scheduled a series of parties on the pool decks of several of its ships. It made no effort to enforce social distancing or the wearing of masks. Hundreds of NCL crew members openly mingled and crowded around bars on the pool deck of the NCL ship without masks. (We also posted a video of a crowded pool party in our article Norwegian Epic – the Latest NCL Cruise Ship to Ignore the CDC’s Social Distancing Rule). NCL also ignored the DCD’s instructions that crew members should not be forced to live together in solo internal cabins on the NCL ships. This was reckless and a clear violation of the CDC’s guidelines.
- Del Rio claimed, even before his hired experts prepared a single protocol designed to reduce the spread of the virus, that a cruise ship can be “safer than anywhere else in the world.
- In May, CEO Del Rio characterized the CDC as an “obstacle” to cruising. He claimed that as soon as governments lift travel bans and open up ports, “the consumer will be there.” Del Rio argued that government authorities have to “immediately stop” travel restrictions which are allegedly causing “great harm” on a “permanent basis to economies.” He said that “reality is now setting in” and “the general strokes painted by authority have to stop.” Del Rio stated that “people are rushing to bars and restaurants as they reopen, they want to get back to their normal lives, and cruising is a part of their normal lives.” Del Rio seems to believe that disregarding the CDC’s guidelines for social distancing and the wearing of masks is a good thing rather than a major problem that needs to be discouraged.
- In July, when NCL announced its preliminary COVID-19 protocols which NCL called its “Peace of Mind Safe Sail” measures, there was no mention of the wearing of face protection recommended by the CDC.
- Later in July, Del Rio said “one of the hallmarks of the cruise industry is that we always sail with full ships. It’s one of the basic tenets of our business model,” cruise executive Del Rio told the Financial Times. Lower capacities “would be a severe blow” to financial performance, he added. The CDC previously concluded that reducing the occupancy of ships was one of the integral first steps toward combating the spread of COVID-19. But fewer passengers means fewer cruises fares sold. And most significantly, reduced occupancy means reduced onboard revenue from alcohol sales, casinos, gift shops, specialty restaurants and shore excursions.
When the CDC extended the July 24, 2020 no-sail order, it “slammed” the cruise industry for spreading COVID-19 in a “scathing” order, according to the New York Times. The CDC cited many of NCL’s failures as justification for extending the order.
The New York Times published an article two weeks ago titled Anguish, Determination, Hope: Travel Workers Despair a Lost Year. The first profile in the New York Times article focused on a wine steward previously employed by NCL who worked for nearly 10 years to support his wife and four children. He writes “this is the first time I have not received any money for nearly one year. It is very, very challenging . . . now we cannot even afford our electricity bills and we are drowning in debt.”
Two weeks ago, we wrote about the CEO of Carnival Corporation, Arnold Donald, who took a well publicized but modest pay cut. However, his stock award of over $12,228,000 increased his income last year from around $10,080,000 in 2019 to over $13,080,000. CEO Donald also oversaw substantial layoffs and reduction of salaries throughout the Carnival cruise brands.
In the final analysis, Mr. Donald, like Mr. Del Rio and perhaps all cruise executives, profited substantially last year while their companies’ employees and crew members continue to suffer greatly while facing an uncertain future.
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Photo credits: Frank Del Rio – CNBC Jim Cramer’s MAD Money May 7, 2020; – Frank Del Rio – Opening Bell, January 11, 2018 from CNBC.