The 2007 Hotel Industry CEO Survey
Based on our pay-for-performance model, Bill McCarten was underpaid by 120.9% in 2006. The model takes into consideration three primary criteria, EBITDA/FFO growth, market capitalization and stock appreciation and compares that to total compensation.
It amazes me how much can change in a year. Although CEO pay is still a hot topic, the new trend this year is private equity. With the pressures and cost of being publicly traded, many companies are opting to go private. Large companies such as Harrah’s Entertainment and REITs such as Highland Hospitality see the advantage of operating in a private environment. This trend will no doubt continue until capital becomes more expensive and exit strategies need to be executed. Only thirty-seven companies are profiled in our survey this year, down from fifty-two, five years ago. The group that remained was an interesting mix of large-cap companies and micro-caps.
Another significant change this year was the new proxy reporting requirements. The SEC changed the way and type of compensation that must be disclosed in proxy statements. It was abundantly clear that a great deal of CEO pay was not being reported in the old format. What a surprise. Our winner of the top performing CEO in 2006 was also a new player, William McCarten of DiamondRock, who took the company public in 2004.
Top performers
Top Appreciators
Top Salaries and Bonuses
Bonus compensation for hotel CEOs also increased in 2006, with the average bonus totaling $1.1 million. It is the first time since we have been conducting the survey that that the average bonus exceeded $1 million. We again believe the rise is due to the great performance of industry sector. Furthermore, we believe shareholders will continue to demand performance-based compensation packages. Disney’s CEO once again topped our bonus list, with Robert Iger, instead of Michael Eisner, having the largest cash bonus at nearly $15,000,000. Iger’s bonus compensation was nearly five times larger than the second highest bonus, which at $3,000,000 went to Royal Caribbean CEO Richard Fain. Other top bonuses in the $2,000,000 range belonged to Mickey Arison, Stephen Bollenbach, and Steven Heyer.
Top Stock Incentives
Richest CEOs
CEO compensation is now one of the most scrutinized issues in corporate America. Shareholders are increasing fighting to limit multi-million dollar awards for CEOs that do not perform. The lodging industry however, performed extremely well in 2006 and many CEOs got their just rewards. It is the underachievers who should be worried, because boards and shareholders have CEOs on a short leash. Look at the case of Steven Heyer of Starwood who was let go with no severance pay because of a possible transgression.
CLICK HERE TO VIEW THE 2007 HOTEL INDUSTRY CEO SURVEY
HVS International is a hospitality services firm providing industry skill and knowledge worldwide. The organization and its specialists possess a wide range of expertise and offer market feasibility studies, valuations, strategic analyses, development planning, and litigation support. Additionally, HVS International supplies unique knowledge in the areas of executive search, investment banking, environmental sustainability, timeshare consulting, food and beverage operations, interior design, gaming, technology strategies, organizational assessments, operational management, strategy development, convention facilities consulting, marketing communications, property tax appeals and investment consulting. Since 1980, HVS International has provided hospitality services to more than 10,000 hotels throughout the world. Principals and associates of the firm have authored textbooks and thousands of articles regarding all aspects of the hospitality industry. Click here for more...