- Royal Caribbean said Wednesday that its CEO would forego his salary until September in the wake of the coronavirus.
- Other executives are taking a 25% pay cut as the pandemic brings the industry to its knees.
- Richard Fain, who has been the company’s CEO for decades, will likely still see hefty compensation in the form of stock options.
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Royal Caribbean’s CEO has volunteered to not take a salary through the end of September, the company said Wednesday, with three other executives taking a 25% pay cut as the coronavirus pandemic causes a major headache for the cruise industry.
Richard Fain, who has helmed the company since 1988, has a salary of $1.1 million, according to regulatory filings. However, his compensation also included a $3.5 million bonus and $5.8 million in non-cash pay. Coupled with his shares in the company, Fain took home almost $25 million in 2018.
The other executives seeing a 25% pay cut include CFO Jason Liberty, Michael Bayley, CEO of Royal Caribbean International, and Lisa Lutoff-Perlo, CEO of Celebrity Cruises.
“These reductions were made in light of the COVID-19 pandemic and the negative financial and operational impacts resulting therefrom,” Royal Caribbean said.
Wednesday’s announcement comes after Royal Caribbean, alongside many of its major competitors, was forced to cease all sailings for the time being.
“Cruise lines, as evidenced by the stocks, are in a world of hurt right now without a clear light at the end of the tunnel,” Patrick Scholes, a SunTrust Robinson Humphrey analyst, told Business Insider’s Meghan Morris in March.
Scholes said that with ships halted, the public companies could pay their financial obligations for the next six to nine months.
“Under normal circumstances, that’s not the end of the world; here the multitrillion question is when do ships start sailing again?” he said.
To make matters worse, it’s possible that cruise lines won’t see a single cent of the massive financial aid package passed by the US government in response to the pandemic, thanks to their so-called flags of convenience. Under that practice, many cruise lines register their ships in foreign countries to skirt US regulations, like labor laws.
“It would be very tough for politicians to defend the cruise industry getting a potential bailout when they don’t pay US corporate taxes,” Steve Wieczynski, an analyst at Stifel Financial, said in recent notes to clients.