ROYAL CARIBBEAN CRUISES LTD
For the period ended May 29, 2024. Filed Apr 17, 2024.
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May 29, 2024 · Filed Apr 17, 2024
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
| ☑ Filed by the Registrant | | | ☐ Filed by a party other than the Registrant |
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CHECK THE APPROPRIATE BOX:
| ☐ | Preliminary Proxy Statement |
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| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| ☑ | Definitive Proxy Statement |
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| ☐ | Definitive Additional Materials |
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| ☐ | Soliciting Material under §240.14a-12 |
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Royal Caribbean Cruises Ltd.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY):
| ☑ | No fee required |
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| ☐ | Fee paid previously with preliminary materials |
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| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
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Who We Are
We are one of the largest and most successful cruise companies in the world operating through our three global brands: Royal Caribbean International, Celebrity Cruises and Silversea Cruises, and also through our partner brands: TUI Cruises and Hapag-Lloyd Cruises, in which we own a 50% stake. Together, our brands represent a combined total of 65 ships in the cruise vacation industry with an aggregate capacity of approximately 157,575 berths as of December 31, 2023.
As used in this Proxy Statement, the terms “Royal Caribbean,” “Royal Caribbean Group,” the “Company,” “we,” “our” and “us” refer to Royal Caribbean Cruises Ltd. and our wholly owned global cruise brands. Our partner brands are unconsolidated investments and therefore our operating results and other disclosures herein do not include these brands.
Letter from the
Chief Executive Officer
| “2023 was an exceptional year, propelled by unmatched demand for our experiences. With our industry-leading global brands combined with the most innovative fleet and destinations, we remain intensely focused on delivering a lifetime of vacations and priceless memories for our guests while delivering exceptional long-term shareholder value.”Jason T. LibertyPresident and Chief Executive Officer | | |
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Dear fellow shareholders,
2023 was an exceptional year, fueled by unmatched demand for our brands. Our net income exceeded our January expectations by about $1 billion, resulting in a significant increase in adjusted earnings per share versus our January guidance. We continued our focus on reshaping the cost structure across the operating platform, leading to durable margin expansion, which is expected to continue to provide operating leverage as we grow the business. The robust performance in 2023 significantly accelerated our trajectory toward our Trifecta goals. We also continued to invest in the future while making significant progress in strengthening the balance sheet towards our target of investment grade metrics.
I am incredibly proud of everyone at Royal Caribbean Group for the work they do each day to execute on our mission and further strengthen the foundation for our future growth.
Our vision for a better tomorrow
Our sustainability ambitions help inform our strategic and financial decisions, ensuring that we always act responsibly while achieving our long-term profitability goals. We are making progress on our SEA the Future commitment to sustain the planet, energize communities, and accelerate innovation.
On this journey, we ended the year on track to achieve our carbon intensity reduction target. To make this possible, we continue to accelerate innovations, like the first methanol-capable tri-fuel engine that we expect to debut on Celebrity Xcel in 2025.
Every new ship represents an advancement in our energy transition efforts. The game-changing Icon of the Seas exceeds industry standards for energy efficiency by 24%. Icon and the recently launched Silver Nova also allow us to advance new technologies such as the innovative waste to energy systems on board.
By consistently using our latest ships to pilot new technologies we can validate the decisions we are making now to help position us to achieve our Destination Net Zero targets.
Our future
Looking to the rest of 2024 and beyond, we will remain focused on our strategic and operational journey – while never losing sight of our Trifecta goals. We’ll also be hard at work executing on our strategic pillars, which are deepening customer relationships, delivering the best hardware and destinations, and excelling in the core of our business. As we move forward, I want to also acknowledge our unwavering commitment to our people, guests, communities, travel partners and shareholders. Royal Caribbean Group wouldn’t be the company it is without the support of all our stakeholders around the world.
Our operating platform is bigger and stronger than ever. We believe we have the leading brands in each of their respective segments, the best people, and the most innovative fleet and robust destinations. With the ecosystem we’ve created throughout our portfolio, we remain intensely focused on transforming a vacation of a lifetime into a lifetime of vacations for our guests while delivering long-term value for our shareholders.
Sincerely,
Jason T. Liberty
President and Chief Executive Officer
| | | 2024 Proxy Statement | | | 1 |
2023 Performance Highlights
Key 2023 Successes
| Strong demand driving financial performance | | | | | 106% | | | $13.9B Total Revenues | | | 8 M | |
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| | 13.2% Gross Margin Yield Growth and 13.5% Net Yield Growth*, each as compared to 2019 | | | Return to historical load factors | | | $4.5B Adjusted EBITDA* | | | 8 million vacations delivered during 2023 at high guest satisfaction scores | ||
| Enhancing Platform for Long-Term Growth | | | | | | | | | ||||
| | Launched 3 new ships Strong pipeline capacity of 9 new ships to be delivered in 2024-2028 | | | Destinations visited Advanced critical port and destination efforts for a diversified port portfolio | | | Continued investments in private destinations and our digital infrastructure to enhance our guest experience and commercial capabilities | | | All three financial Trifecta metrics trending ahead of plan: Adjusted EBITDA per APCD, Adjusted EPS, and ROIC | ||
| Strong Liquidity and Improving Financial Performance | | | $3.1 B | | | | | | | |||
| | Year-end liquidity | | | Disciplined cost management and focus on profitability | | | Paid down approximately $4B of debt | | | Credit ratings upgrades by Moody’s & S&P | ||
| ESG is Core to our Business | | | | | | | | | ||||
| | Achieved 6.8% reduction in carbon intensity versus 2019, on our way to Destination Net Zero goals | | | Delivered Silver Nova, and Icon of the Seas our first ships powered by liquified natural gas (LNG); Successfully tested biofuel blends on three ships in Europe | | | Launched myCareer Journey, a career development initiative to help employees navigate career growth and mobility at the Company | | | Launched the first solid waste-to-energy system on a cruiseship onboard Silversea’s Silver Nova and Royal Caribbean International’s Icon of the Seas | ||
| * | See Annex A for reconciliation of non-GAAP and GAAP measures presented. |
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| 2 | | | 2024 Proxy Statement | | |
Proxy Summary
We look forward to welcoming you to our 2024 Annual Meeting of Shareholders. This important meeting provides the Board of Directors and management with an opportunity to receive collective feedback from you, our shareholders. We place significant value on your opinion, and we have strived to highlight in this summary key information for your consideration. We recommend, however, that you read the entire proxy statement carefully before voting.
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| PROPOSAL 1Election of Directors | | | The board recommends a vote “FOR” each nominee. | | |
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Director Nominees
| Name and Primary Occupation · · · Age · · · Director Since · · · Committee Membership | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| · AC · · · TCC · · · NGC · · · SESH | ||||||||||||||||||||
| | | John F. Brock INDEPENDENT Former Chairman & CEO, Coca-Cola European Partners | | | 75 | | | 2014 | | | | | • | | | • | | | ||
| | | Richard D. Fain Chairman, Former CEO Royal Caribbean Group | | | 76 | | | 1981 | | | | | | | | | ||||
| | | Stephen R. Howe, Jr. INDEPENDENT Former U.S. Chairman & Managing Partner, Ernst & Young | | | 62 | | | 2018 | | | • | | | | | • | | | ||
| | | William L. Kimsey LEAD INDEPENDENT DIRECTOR Former CEO, Ernst & Young Global | | | 81 | | | 2003 | | | • | | | | | • | | | ||
| | | Michael O. Leavitt INDEPENDENT Co-Chairman, Health Management Associates and Chairman, Leavitt Equity Partners | | | 73 | | | 2022 | | | | | | | | | • | |||
| | | Jason T. Liberty President and CEO, Royal Caribbean Group | | | 48 | | | 2021 | | | | | | | | | ||||
| | | Amy McPherson INDEPENDENT Former President & Managing Director, Europe, Marriott | | | 62 | | | 2020 | | | | | • | | | | | |||
| | | Maritza G. Montiel INDEPENDENT Former Deputy CEO & Vice Chairman, Deloitte | | | 72 | | | 2015 | | | • | | | • | | | | | ||
| | | Ann S. Moore INDEPENDENT Former Chairman & CEO, Time | | | 73 | | | 2012 | | | | | • | | | | | |||
| | | Eyal M. Ofer INDEPENDENT Chairman, Ofer Global and Zodiac Group | | | 73 | | | 1995 | | | | | | | • | | | • | ||
| | | Vagn O. Sørensen INDEPENDENT Former President & CEO, Austrian Airlines Group | | | 64 | | | 2011 | | | • | | | • | | | | | ||
| | | Donald Thompson INDEPENDENT Former President & CEO, McDonald’s | | | 61 | | | 2015 | | | | | • | | | | | • | ||
| | | Arne Alexander Wilhelmsen INDEPENDENT Chairman, AWILHELMSEN AS | | | 58 | | | 2003 | | | | | | | • | | | • | ||
| | | Rebecca Yeung INDEPENDENT Corporate Vice President at FedEx Corporation | | | 52 | | | 2023 | | | • | | | | | | | |||
| AC Audit Committee | | | SESH Safety, Environment, Sustainability and Health Committee | | | • Chair |
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| NGC Nominating and Corporate Governance Committee | | | TCC Talent and Compensation Committee | | | • Member |
| | | 2024 Proxy Statement | | | 3 |
Board Snapshot
Skills and Experience
| | | INDUSTRY | | | Experience in relevant industries such as hospitality, travel, and leisure results in a deep understanding of consumer expectations and business strategy | | | |
| | | MARITIME | | | Experience in the maritime industry provides an understanding of marine operations, including critical health, safety, and security aspects | | | |
| | | EXECUTIVE LEADERSHIP | | | Experience serving as public company CEO or other senior leadership role is valuable in understanding and managing a range of corporate governance, risk management, strategic planning, finance, operational and management and succession planning matters | | | |
| | | REGULATED BUSINESS | | | Familiarity with highly regulated industries can provide the Board with insight and understanding of effective strategies in managing the complex political and regulatory landscape in which we operate | | | |
| | | GOVERNMENT / PUBLIC POLICY | | | Helpful to oversee management’s interactions with governing authorities to support desired business objectives | | | |
| | | SUSTAINABILITY / ENVIRONMENTAL | | | Strengthens the Board’s oversight and assures that strategic business imperatives and long-term value creation are achieved within a sustainable, environmentally focused model | | | |
| | | FINANCE / ACCOUNTING | | | Valuable in contributing to and overseeing strong financial planning, reliable financial information, robust controls and financial reporting | | | |
| | | GLOBAL ENTERPRISE | | | Experience with a global enterprise or with international markets aids the Board in understanding diverse business environments, economic conditions, and cultures associated with our global workforce and activities | | | |
| | | TECHNOLOGY / INNOVATION / CYBERSECURITY | | | Helps management address innovation and competitiveness in the digital age and technology risks, including cybersecurity risks | | | |
| | | CONSUMER BUSINESS | | | Experience in a consumer-facing industry with an understanding of consumer expectations, experiential marketing, and loyalty programs is valuable as the Company seeks to provide all cruising guests with memorable vacation experiences and superior customer service | | | |
| | | RISK MANAGEMENT | | | Enables directors to effectively anticipate and oversee the most significant risks facing the Company | | |
| 4 | | | 2024 Proxy Statement | | |
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| PROPOSAL 2Advisory Vote to Approve the Compensation of Our Named Executive Officers | | | The board recommends a vote “FOR” this proposal. | | |
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We place significant focus on the design of our executive compensation programs as we believe their effectiveness is crucial to our success as a company. We assess our programs regularly and strive to continuously make improvements as well as incorporate shareholder feedback.
Executive Compensation Program
| Align the interests of our executives with the interests of our shareholders | | | Recruit, retain, and motivate an elite management team | | | Reward positive contributions to both short-and long-term corporate performance |
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| PRINCIPLES | | | IMPLEMENTATION |
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| Total direct compensation levels should be competitive to attract, motivate and retain the highest quality executives. | | | Our Talent and Compensation Committee seeks to establish target total direct compensation (salary, short-term incentive and long-term incentive) at appropriate levels relative to our Market Comparison Group, providing our executives the opportunity to be competitively rewarded for our financial and operational performance. Total direct compensation opportunity (i.e., maximum achievable compensation) should increase with position and responsibility. |
| Performance-based and “at-risk” incentive compensation should constitute a substantial portion of total compensation. | | | We seek to foster a pay-for-performance culture, with a significant portion of total direct compensation being performance-based and/or “at risk.” Executives with greater responsibilities and the ability to directly impact our strategic and operational goals and long-term results should bear a greater proportion of the risk if these goals and results are not achieved. Therefore, the more senior the executive, the greater the percentage of total compensation in the form of performance-based and/or “at risk” compensation. |
| Long-term incentive compensation should align executives’ interests with our shareholders’ interests to further the creation of long-term shareholder value. | | | We focus on ensuring that executive compensation includes a high portion of long-term performance-based equity compensation. Awards of equity-based compensation encourage executives to focus on our long-term growth and prospects and incentivize executives to manage our company from the perspective of owners with a meaningful stake and to encourage them to remain with us for long and productive careers. Our stock ownership guidelines further enhance the incentive to create long-term shareholder value. Equity-based compensation also subjects our executives to market risk, a risk also borne by our shareholders. |
| | | 2024 Proxy Statement | | | 5 |
We provide compensation to our executives consisting of three principal elements: base salary, performance-based annual incentive bonus and long-term equity awards. The objectives and key features of each pay element are described below.
| | | Pay Elements (rounded) | | | Objective | | | Key Features | ||||||||||
| | | CEO | | | Other NEOs | | ||||||||||||
| Fixed | | | Cash Compensation | | | Base Salary | | | | | | | • Provide a base level of income in line with expertise, experience, tenure, performance, potential and scope of responsibility | | | • Set annually based on market competitiveness and in-line with performance and contributions to the achievement of Company goals• Increases, when appropriate, are provided based on market movements, scope of responsibilities, and merit | ||
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| Variable | | | Performance-Based Annual Incentive | | | | | | | • To focus executives on annual financial and operational performance• To reward executives for performance relative to our short-term goals and initiatives | | | • Earned based on company-wide and/or brand-specific (based on area of responsibility) financial and operational objective metrics and individual performance against previously established strategic goals, including, but not limited to, Adjusted EPS (corporate), adjusted brand operating income, if applicable, and an ESG composite• For our President and CEO, payout is entirely based on corporate performance. • For other NEOs, 2/3rd is determined by corporate and, if applicable, brand performance, 1/3rd based on individual performance • Payouts range from 0% and 200% based on achievement of results during the year | |||||
| | Equity Compensation | | | Performance-Based Restricted Shares | | | | | | | • Structured to align with shareholder interests, reward the achievement of long-term goals and promote stability and corporate loyalty among the executives | | | • Earned only if specified financial performance measures are met• Measures three-year performance, with annual performance segments with a 25%, 25% and 50% weighting • Aligned with Trifecta program; PSU Awards granted in 2023 will be earned based on Adjusted EBITDA per APCD, Adjusted EPS, ROIC, and carbon intensity reduction• PSU Awards granted in 2023 for the period ending December 2025 can range from 0% to 200% of target, with opportunity to obtain up to an additional 100% of target for achievement of performance metrics at maximum levels in 2025 | ||||
| | Time-Based Restricted Stock Units | | | | | | | • Multi-year vesting requirements align our executives’ interests with our shareholders and incentivize retention of our executive talent | | | • Set annually based on market competitiveness and in-line with performance and contributions to the achievement of Company goals• Increases, when appropriate, are provided based on market movements, scope of responsibilities, and merit | |||||||
| 6 | | | 2024 Proxy Statement | | |
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| PROPOSAL 3Ratification of Principal Independent Registered Public Accounting Firm | | | The board recommends a vote “FOR” this proposal. | | |
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Aggregate fees for professional services rendered by PricewaterhouseCoopers LLP for the fiscal years ended December 31, 2023 and 2022 were:
| | | 2023 | | | 2022 | |
|---|---|---|---|---|---|---|
| Audit fees(1) | | | $4,352,366 | | | $5,090,316 |
| Audit-related fees(2) | | | $219,353 | | | $212,889 |
| Tax fees(3) | | | $13,132 | | | $12,488 |
| All other fees(4) | | | $3,825 | | | $10,000 |
| Total | | | $4,588,676 | | | $5,325,693 |
| (1) | The audit fees for the fiscal years ended December 31, 2023 and 2022 were for professional services rendered for the integrated audits of the Company’s consolidated financial statements and system of internal control over financial reporting, quarterly reviews, statutory audits required by foreign jurisdictions, consents, issuance of comfort letters, and review of documents filed with the SEC. |
| (2) | The audit-related fees for the fiscal years ended December 31, 2023 and 2022 were for the audits of the Company’s retirement savings plan and other attest services. |
| (3) | Tax fees for the fiscal years ended December 31, 2023 and 2022 were for services performed in connection with international tax compliance and transfer pricing. |
| (4) | All other fees for the fiscal years ended December 31, 2023 and 2022 were for subscription fees for accounting and auditing research software. |
| | | 2024 Proxy Statement | | | 7 |
Table of Contents
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