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2019 Hospitality & Leisure Corporate Governance Snapshot

2019 Hospitality & Leisure Corporate Governance Snapshot

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

 

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

3% 74 years old

3% 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
60%
62%
57%
56%
Option grants
2%
1%
3%
4%
Cash fees
37%
32%
38%
38%
Other
2%
5%
2%
2%

*Numbers may not add to 100% due to rounding.

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

 

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

3% 74 years old

3% 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
60%
62%
57%
56%
Option grants
2%
1%
3%
4%
Cash fees
37%
32%
38%
38%
Other
2%
5%
2%
2%

*Numbers may not add to 100% due to rounding.