hospitality & leisure corporate governance snapshot

Transcription

1 hospitality & leisure corporate governance snapshot Spencer Stuart is pleased to present the first Hospitality & Leisure Corporate Governance Snapshot, highlighting the latest data and trends in board composition, board practices and director compensation for 18 U.S. hospitality and leisure companies. In addition, we examine how hospitality companies compare to the broader index. Our analysis is based on the most recent proxy statements filed between May 15, 2013 and May 19, 2014, from the following companies: Caesars Entertainment Corporation Carnival Corporation Chipotle Mexican Grill Darden Restaurants Expedia Hilton Worldwide Host Hotels & Resorts Hyatt Hotels Corporation Marriott International McDonald s Corporation Royal Caribbean Cruises Starbucks Corporation Starwood Hotels & Resorts Worldwide The Priceline Group TripAdvisor Wyndham Worldwide Corporation Wynn Resorts Limited Yum! Brands

2 Director recruiting and board composition Hospitality and leisure company boards have 10.4 members on average, roughly the same size as company boards, which average of 10.8 members, but fewer independent directors. On four hospitality company boards, independent directors represent 55% or less of all directors, and one company has two independent directors out of 10. Independent directors 73% Hospitality vs 84% 94% of hospitality & leisure boards have at least one female director three 55% two 28% one woman 6% no Hospitality company boards have 17 minority directors and four international directors. Average board age and younger 72% 44% 45% and older Hospitality Independent directors on hospitality company boards are younger on average than their S&P 500 counterparts, 61 versus The youngest hospitality board has an average age of 45 (TripAdvisor) and the oldest has an average age of 67 (Wynn Resorts). Forty-five percent of boards have an average age of 64 or older, compared with just 17 percent of hospitality company boards. The average tenure of hospitality company boards is 8.4 years, the same as the. The longest average tenure is 13 years (McDonald s) and the shortest is two years (TripAdvisor). Three of the four companies with the shortest board tenure went public since 2012 and the fourth went public in % New directors 6 active CEO/chairs 2 active executives 1 retired other executive 1 retired CEO/chair functional backgrounds Board leadership 10 new independent directors Seven hospitality company boards added a total of 10 new independent directors in the 2014 proxy year. industry backgrounds 4 consumer 2 high tech/digital 2 travel/hospitality 1 finance 1 academic Fifty-six percent of hospitality company boards have a separate chairman and CEO, compared with 47% of boards. Sixty-one percent have a lead or presiding director, versus 90% of the. Lead directors are more prevalent than presiding directors: eight hospitality company boards have lead directors and three have presiding directors.

3 Board organization and processes Board Annual director elections Hospitality companies 83% companies 93% 56% 39% Eighty-three precent of hospitality company boards have annual director elections, and the remaining 17% have three-year terms. The average term length is 1.3 years. 5% Board, committee and director evaluations 63% 31% Full board and committees Full board, committees and directors 5 or less Hospitality company boards met an average of 6.5 times, almost two fewer times than the average. Only 39% of hospitality company boards report having a mandatory retirement age compared with 73% of companies. 43% 72 years old 14% 73 years old 6% Full board only 43% 75 and older Sixteen (89%) hospitality company boards report that they conduct some form of annual board evaluation, compared with 98% of boards. Just under one-third include the full board, committees and individual directors in the assessment. 39% report having a mandatory retirement age Among those that do, three (43%) set their retirement age at 75 and another three set it at 72. One company has a mandatory retirement age of 73.

4 Compensation Total director compensation more than 350, , , , ,000 56% 200, ,000 less than 200,000 The total average per-director compensation for hospitality company directors is 257,785, just 2% less than the average. Fifty-six percent of companies pay directors between 200,000 and 250,000. Nearly 60% of director compensation comes in the form of stock awards or option grants. When looking at individual companies, stock grants represent as much as 77% of director compensation to as little as 29%. Only three companies provide stock options. Cash compensation among individual companies represents as much as 57% and as little as 6% of total compensation for directors. Breakdown of director compensation* 59% Stock awards 53% 3% Option grants 5% Cash fees 34% 40% All other compenstion 2% 4% Hospitality & Leisure * Includes all board and committee retainers and meeting fees, non-executive chairman and lead/presiding director supplemental fees when applicable, the value of equity compensation and all other compensation paid to non-employee directors in ** Includes, for example, insurance premiums, charitable award programs and incremental cost to company of products provided.

5 About Spencer Stuart Spencer Stuart is one of the world s leading executive search consulting firms. Privately held since 1956, Spencer Stuart applies its extensive knowledge of industries, functions and talent to advise select clients ranging from major multinationals to emerging companies to nonprofit organizations and address their leadership requirements. Through 55 offices in 30 countries and a broad range of practice groups, Spencer Stuart consultants focus on seniorlevel executive search, board director appointments, succession planning and in-depth senior executive management assessments. For more information on Spencer Stuart, please visit Social Spencer Stuart Stay up to date on the trends and topics that are relevant to your business and career Spencer Stuart. All rights reserved. For information about copying, distributing and displaying this work, contact permissions@spencerstuart.com. Amsterdam Atlanta Bangalore Barcelona Beijing Bogota Boston Brussels Buenos Aires Calgary Chicago Copenhagen Dallas Dubai Frankfurt Geneva Hong Kong Houston Istanbul Johannesburg London Los Angeles Madrid Melbourne Mexico City Miami Milan Minneapolis/St. Paul Montreal Moscow Mumbai Munich New Delhi New York Orange County Paris Philadelphia Prague Rome San Francisco Santiago Sao Paulo Seattle Shanghai Silicon Valley Singapore Stamford Stockholm Sydney Tokyo Toronto Vienna Warsaw Washington, D.C. Zurich