Australia Markets closed

Is Royal Caribbean Cruises Ltd. (NYSE:RCL) Overpaying Its CEO?

Simply Wall St

Richard Fain became the CEO of Royal Caribbean Cruises Ltd. (NYSE:RCL) in 1988. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Royal Caribbean Cruises

How Does Richard Fain's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Royal Caribbean Cruises Ltd. has a market cap of US$28b, and reported total annual CEO compensation of US$12m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Richard Fain receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at Royal Caribbean Cruises has changed over time.

NYSE:RCL CEO Compensation, January 9th 2020

Is Royal Caribbean Cruises Ltd. Growing?

Over the last three years Royal Caribbean Cruises Ltd. has grown its earnings per share (EPS) by an average of 15% per year (using a line of best fit). It achieved revenue growth of 17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Royal Caribbean Cruises Ltd. Been A Good Investment?

I think that the total shareholder return of 63%, over three years, would leave most Royal Caribbean Cruises Ltd. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Richard Fain is paid around the same as most CEOs of large companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Whatever your view on compensation, you might want to check if insiders are buying or selling Royal Caribbean Cruises shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.