Introduction
Spencer Stuart is pleased to present the 2019 Hospitality & Leisure Corporate Governance Snapshot, highlighting the latest data and trends in board composition, board practices and director compensation for 31 U.S. hospitality and leisure companies.
In this report, we examine how hospitality companies compare to the broader S&P 500 index. We also, where appropriate, compare this year’s findings to a similar study we conducted in 2018. However, for the 2019 index, we used a larger group of companies (compared to last year’s 20) in order to offer a more representative industry sample, so year-over-year comparisons are directional only.
Our analysis is based on the most recent DEF14A proxy statements filed with the U.S. Securities and Exchange Commission between January 25, 2019, and October 29, 2019. Latest fiscal year revenue, where shown, was obtained from CapitalIQ. Total average compensation per non-employee director is based on non-employee director compensation tables included in each company’s proxy statement. The number includes all board and committee retainers and meeting fees, supplemental non-executive chairman and lead/presiding director fees, the value of equity compensation, and all other compensation paid in latest fiscal year.
- Bloomin’ Brands
- Booking Holdings
- Brinker International
- Carnival Corporation
- Cedar Fair, L.P.
- Chipotle Mexican Grill
- Darden Restaurants
- Dine Brands International
- Domino’s Pizza
- Dunkin’ Brands Group
- Expedia Group
- Hilton Worldwide Holdings
- Host Hotels & Resorts
- Hyatt Hotels Corporation
- Marriott International
- McDonald’s Corporation
|
- MGM Resorts International
- Norwegian Cruise Line Holdings
- Papa John’s International
- Park Hotels & Resorts
- Pebblebrook Hotel Trust
- Restaurant Brands International
- RLJ Lodging Trust
- Royal Caribbean Cruises Ltd.
- Six Flags
- Starbucks Corporation
- TripAdvisor
- Vail Resorts
- The Wendy’s Company
- Wyndham Destinations
- Yum! Brands
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Director Recruiting and Board Composition
Hospitality and leisure company boards have 9.9 members on average, a slight decrease from the 10.5 average associated with a smaller group of companies in 2018. This is roughly one fewer director per board than S&P 500 company boards, which have an average of 10.7 members. Independent directors represent 80% of all directors on hospitality and leisure company boards, compared with 85% of S&P 500 directors.
Independent director profiles
The average age of hospitality and leisure independent directors is 60.2, 2.5 years younger than the S&P 500 average of 62.7. The youngest average age of a hospitality board is 46.8 (TripAdvisor) and the oldest is 65.7 (Park Hotels & Resorts).
The average tenure of hospitality company directors is 7.3 years, lower than the S&P 500 average of eight years. The average board tenure for hospitality companies ranges from 2.1 years to 14.6 years.
Female directors
The number of women on hospitality boards continues to climb, with women representing 27.7% of all board members in 2019. One hospitality company board has no female directors. Ninety percent of boards have two or more female directors, the same level as last year. Every S&P 500 board today has at least one female director.
representation of women directors on hospitality company boards
3%
0 women
|
6%
1 women
|
39%
2 women
|
23%
3 women
|
29%
4 or more women
|
|
New independent director backgrounds
Twelve of the 25 new hospitality & leisure company directors (48%) in the 2019 proxy year are women. By comparison, 46% of new S&P 500 directors in 2019 are women. The data matches what we’ve seen in other industries, where competitive, regulatory and financial pressures are driving companies to increase their focus on diversity.
gender breakdown — new independent directors
|
Hospitality & leisure |
S&P 500 |
Total |
25
|
432
|
Women |
12 (48%)
|
198 (46%)
|
Men |
13 (52%)
|
234 (54%)
|
employment status
|
Employed |
Retired |
Women |
10
|
2
|
Men |
5
|
8
|
functional backgrounds
|
|
Chair / CEO / president / COO / vice chair |
9 (36%)
|
Finance management / CFO / treasurers |
4 (16%)
|
Investment management / investors |
4 (16%)
|
Division / subsidiary presidents / heads |
2 (8%)
|
EVPs / SVPs / functional unit heads |
2 (8%)
|
Accountants |
2 (8%)
|
Consultants |
2 (8%)
|
industry backgrounds
|
|
Consumer goods and services |
9 (36%)
|
Private equity / investment |
4 (16%)
|
Communications / media / publishing |
3 (12%)
|
Technology / telecommunications |
3 (12%)
|
Accounting |
2 (8%)
|
Consulting |
1 (4%)
|
Healthcare |
1 (4%)
|
Professional services |
1 (4%)
|
Transportation products & services |
1 (4%)
|
Board leadership
77%
of hospitality boards separate their board chair and CEO positions, compared to 53% of
S&P 500 boards
|
65%
of all hospitality companies have a lead or presiding director, versus 75% of the S&P 500
|
Seventy-seven percent (77%) of hospitality company boards have a separate board chair and CEO, compared to just 53% of S&P 500 boards. This gap may be a symptom of a rapidly changing industry landscape and desire for greater autonomy and separation of power between board and executive team. None of the hospitality and leisure 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 75% of the S&P 500. 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
25
companies have annual director elections
|
6
companies have three-year terms
|
Eighty-one percent (25) of hospitality company boards have annual director elections, and the remaining 19% (six) have three-year terms. By comparison, 90% of S&P 500 boards have one-year terms and 10% have three-year terms.
Board meetings
7
Average number of hospitality company board meetings, up from 6.3 in 2018
|
7.9
Average number of meetings for S&P 500 boards
|
Hospitality company boards met an average of seven times, up from 6.3 in 2018. In contrast, S&P 500 boards met an average of 7.9 times. Only 26% of hospitality company boards held five or fewer meetings in 2019, compared with 60% among the 20 companies we studied in 2018 — perhaps an indication of the rising disruption affecting companies in this industry. The number of meetings held by hospitality company boards ranged from four to 16.
board meetings breakdown
|
2019 |
2018 |
Average number of meetings |
7
|
6.3
|
5 or fewer meetings |
25.8%
|
60%
|
6 to 9 meetings |
58.1%
|
30%
|
10 or more meetings |
16.1%
|
10%
|
Mandatory retirement
Less than half (48%) of hospitality company boards report having a mandatory retirement age in their proxies, well below levels in the S&P 500, where 71% of boards disclose a mandatory retirement age. Mandatory retirement ages range from 72 to 76, with a median retirement age of 73.
mandatory retirement breakdown*
|
52%
None or not listed
23%
72 years old
13%
75 years old
7%
73 years old
2.53%
74 years old
2.53%
76 years old
|
Compensation
Total director compensation
The total average per-director compensation for hospitality company directors is $264,465, 13 percent less than the S&P 500 average of $304,856. The average per director compensation ranges from $152,335 to $542,760, with three companies reporting average compensation of less than $200,000.
total average per director compensation breakdown
|
2019 |
2018 |
Less than $200,000 |
10%
|
0%
|
$200,000 to $250,000 |
29%
|
35%
|
$250,001 to $300,000 |
32%
|
40%
|
$300,001 to $350,000 |
19%
|
10%
|
More than $350,000 |
10%
|
15%
|
In 2019, 60% of directors’ total compensation was provided in the form of stock awards. When looking at individual companies, stock grants represent as much as 100% of director compensation and as little as 0%. While all but one hospitality company provide board directors with stock grants, only two provide stock options. Cash compensation represents 37% of directors’ total compensation, up from 32% in 2018.
director compensation breakdown*
2019 Hospitality & leisure
2018 Hospitality & leisure
2019 S&P 500
2018 S&P 500
|
Stock awards |
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|
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Option grants |
|
|
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|
|
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Cash fees |
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Other |
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*Numbers may not add to 100% due to rounding.