Spencer Stuart is pleased to present this year’s Hospitality & Leisure Corporate Governance Snapshot, highlighting the latest data and trends in board composition, board practices and director compensation for 20 U.S. hospitality and leisure companies. In addition, we examine how hospitality companies compare to the broader S&P 500 index. Our analysis is based on the most recent proxy statements filed between October 23, 2017, and August 6, 2018, from the following companies:
- Bloomin’ Brands
- Booking Holdings
- Brinker International
- Carnival Corporation
- Darden Restaurants
- Dine Brands International
- Hilton Worldwide Holdings
- Host Hotels & Resorts
- Hyatt Hotels Corporation
- Marriott International
- McDonald’s Corporation
- MGM Resorts International
- Royal Caribbean Cruises
- Starbucks Corporation
- Vail Resorts
- Wyndham Destinations
- Yum! Brands
Director Recruiting and Board Composition
Hospitality and leisure company boards have 10.5 members on average, a slight increase from 10.2 in 2017. This is roughly the same as S&P 500 company boards, which have an average of 10.8 members. Independent directors represent 78% of all directors on hospitality and leisure company boards, compared with 85% of S&P 500 directors.
The average age of hospitality and leisure independent directors is 60.2, nearly three years younger than the S&P 500 average of 63. The youngest hospitality board has an average age of 46.8 (TripAdvisor) and the oldest has an average age of 66.1 (Wyndham Destinations).
The average tenure of hospitality company directors is 8.2 years, up from 7.3 in 2017. This is closely aligned with the S&P 500 average, 8.1 years. The longest average board tenure for hospitality companies is 13.6 years, while the shortest is 3.9.
The number of female hospitality board members continues to climb, with women representing 27% of all board members this year. One hospitality company board (TripAdvisor) has no female directors. This is a departure from the two previous years when every hospitality company in our index had at least one woman on their boards. Ninety percent of boards have two or more female directors, a slight increase from 85% last year. Ninety-nine percent of S&P 500 boards have at least one female director.
Representation of Women Directors on Hospitality Company Boards
New Director Backgrounds
More than half (54%) of new H&L company directors in the 2018 proxy year are women. This represents an increase from 2017, when 33% of new directors were women. By comparison, 40% of new S&P 500 directors in 2018 are women. New directors have a broad range of functional and industry backgrounds.
Functional and Industry Experience
Seventy-five percent of hospitality company boards have a separate board chair and CEO, up from 60% in 2017. By contrast, only 50% of S&P 500 boards have separated the board chair and CEO roles. None of the companies that report having an independent chair have a lead or presiding director. Sixty-five percent of all hospitality companies have a lead or presiding director, versus 80% of the S&P 500 (down from 84% last year). Among hospitality companies where the CEO is also the board chair, all have either a lead or presiding director.
Board Organization and Process
Annual Director Elections
Eighty-five percent (17) of hospitality company boards have annual director elections, and the remaining 15% (three) have three-year terms. By comparison, 92% of S&P 500 boards have one-year terms and 8% have three-year terms.
Hospitality company boards met an average of 6.3 times, down from 7.7 in 2017. In contrast, S&P 500 boards met
an average of 8.0 times. A growing proportion (60%) of hospitality company boards held five or fewer board meetings in 2018, compared with only 25% in 2017. The number of meetings held by hospitality company boards ranged from four to 16.
Board Meetings Breakdown
Sixty percent of hospitality company boards report having a mandatory retirement age in their proxies, a significant uptick from 45% in 2017. This percentage appears to be moving closer to S&P 500 boards, of which 71% disclose a mandatory retirement age. Mandatory retirement ages range from 72 to 76, with a median retirement age of 73.5.
Mandatory Retirement Breakdown
Total Director Compensation
The total average per-director compensation for hospitality company directors is $282,069, less than the 2017 average of $290,855, and lower than the S&P 500 average of $298,981. As in 2017, all hospitality companies reported compensation of at least $200,000, with average per director compensation ranging from $204,414 to $534,447.
Total Director Compensation Value Breakdown
In 2018, 62% of average director compensation is provided in the form of stock awards, a slight increase from 59% last year. When looking at individual companies, stock grants represent as much as 99% of director compensation and as little as 44%. While all hospitality companies provide board directors with stock grants, only one company provides stock options. Cash compensation represents 32% of director compensation on average, similar to 33% in 2017.
Director Compensation Breakdown