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New NCLH CEO: $1.7 Million Salary, Potentially $48+ Million in Stock

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New NCLH CEO: $1.7 Million Salary, Potentially $48+ Million in Stock

Norwegian Cruise Line Holdings announced that it has entered into an employment agreement and restricted share unit award agreement with John W. Chidsey, its new president and CEO.

“His compensation structure is designed to immediately align his incentives with long-term shareholder value creation, with the majority of his long-term compensation delivered in performance-based equity,” the company said in a press release issued on Friday morning.

Under the employment agreement, Chidsey is entitled to an annual base salary of $1,715,000.

Beginning with the company’s 2027 fiscal year, he will participate in the annual bonus plan with a target annual bonus opportunity equal to 175% of his base salary.

For fiscal 2026, his annual bonus is fixed at $2.9 million, which is below his target annual bonus amount, with no opportunity to earn a higher payout regardless of performance results achieved.

The company said in an effort to encourage Chidsey to accept the job, he was granted a one-time target award of 2,139,892 restricted share units with an intended value of approximately $48 million.

The award was structured as a “front-loaded” grant covering four years of annual equity incentives and designed to provide him with a meaningful at-risk equity interest in the company that may be earned over the initial four-year term of his employment, the company said, in a press release.

When determining the value of Chidsey’s four-year “front-loaded” grant, the Compensation Committee reviewed annual equity grant benchmarks among the company’s peers to help establish a grant value intended to appropriately incentivize sustained shareholder value creation while maintaining a competitive compensation level, NCLH said in a press release.

Based on these considerations, the Compensation Committee determined that the annualized intended grant value of approximately $12 million was market-aligned and within the competitive range for similarly situated peers based on size and industry profile, appropriately encouraging Chidsey’s contributions over the next four-year period.

Consistent with the front-loaded structure, the Compensation Committee does not intend to grant Chidsey additional equity awards until 2030. Unlike other similarly situated executives, Chidsey’s employment agreement does not entitle him to participate in the company’s Amended and Restated 2013 Performance Incentive Plan or any successor equity incentive plan.

Additional information:

The approved award was delivered in a mix of a target number of 1,172,638 performance share units with an intended approximate grant date value of $28.8 million, which represent 60% of the total intended value of restricted share units and 967,254 restricted share units with an intended grant date value of $19.2 million, which represent 40% of the total intended value of restricted share units (the “RSUs”).

The RSUs will vest in four substantially equal annual installments on each of the first four annual anniversaries of March 1, 2026. The PSUs will be eligible to “cliff vest” at the end of a four-year performance period, but only if applicable absolute total shareholder return compounded annual growth rate (“TSR CAGR”) targets are achieved. If our TSR CAGR achieved for the performance period is: (i) less than 5%, none of the PSUs will vest, (ii) 5%, 50% of the target number of PSUs will vest, (iii) 10%, 100% of the target number of PSUs will vest, or (iv) 20% or more, 200% of the target number of PSUs will vest. For performance that falls between these milestones, the PSU vesting will be determined based on linear interpolation.

Chidsey must generally remain continuously employed through the date the performance targets are achieved in order to vest in any PSUs becoming earned based on performance, although the award agreement does provide for accelerated RSU and PSU vesting for certain qualifying terminations of his employment.

The company said the new employment agreement was approved by the Compensation Committee of the Board, in consultation with its independent compensation consultant, and is based on the same form of employment agreement that applies to other senior executive officers.

Royal Caribbean Reports 2025 Q1 Results

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Jewel of the Seas visiting the Historic port of Liverpool, photo credit Spacejunkie2 Flickr

Royal Caribbean Group today reported first quarter Earnings per Share (“EPS”) of $2.70 and Adjusted EPS of $2.71, according to a press release.

These results were better than the company’s guidance due to stronger-than-expected pricing on close-in demand and lower costs, mainly due to timing. The company is increasing its full year 2025 Adjusted EPS guidance to $14.55 to $15.55. The increase in earnings expectations is driven by the better-than-expected revenue performance in the first quarter and the benefit of currency exchange rates and lower fuel costs for the remainder of the year.

“Our strong first quarter results are a testament to the enduring appeal and attractive value proposition of our leading brands and the incredible vacations they deliver,” said Jason Liberty, president and CEO, Royal Caribbean Group. “As we navigate the complexities of the current macroeconomic landscape, we remain focused on what we can control — delivering the best vacation experiences, optimising revenue, and managing costs, while continuing to invest in our future and drive further differentiation. With our industry-leading brands, state-of-the-art ships, exclusive destinations, and a fortified balance sheet, we will continue dreaming and innovating to win a greater share of the growing $2 trillion global vacation market.”

First Quarter 2025:

  • Load factor in the first quarter was 109%.
  • Gross Margin Yields were up 13.9% as-reported. Net Yields were up 4.7% as-reported and 5.6% in Constant Currency.
  • Gross Cruise Costs per Available Passenger Cruise Days (“APCD”) decreased 1.1% as-reported. Net Cruise Costs (“NCC”), excluding Fuel, per APCD decreased 0.3% as-reported and increased 0.1% in Constant Currency.
  • Total revenues were $4.0 billion, Net Income was $0.7 billion or $2.70 per share, Adjusted Net Income was $0.7 billion or $2.71 per share, and Adjusted EBITDA was $1.4 billion.

Full Year 2025 Outlook:

  • Net Yields are expected to increase 2.5% to 4.5% as-reported (2.6% to 4.6% in Constant Currency).
  • NCC, excluding Fuel, per APCD are expected to be 0.1% to 1.1% as-reported and (0.1%) to 0.9% in Constant Currency.
  • Adjusted EPS is expected to grow approximately 28% year-over-year and be in the range of $14.55 to $15.55.

First Quarter 2025 Results

Net Income for the first quarter of 2025 was $0.7 billion or $2.70 per share, compared to Net Income of $0.4 billion or $1.35 per share for the same period in the prior year. Adjusted Net Income was $0.7 billion or $2.71 per share for the first quarter of 2025, compared to Adjusted Net Income of $0.5 billion or $1.77 per share for the same period in the prior year. The company also reported total revenues of $4.0 billion and Adjusted EBITDA of $1.4 billion.

Capacity for the first quarter was up 3% year over year, and the company delivered memorable vacations to 2.2 million guests, a 9% increase year over year. Gross Margin Yields increased 13.9% as-reported, and Net Yields increased 4.7% as-reported (5.6% in Constant Currency), when compared to the first quarter of 2024. Load factor for the quarter was 109%. Net Yield growth exceeded the company’s guidance mainly due to higher pricing across key products driven by strong close-in demand.

Gross Cruise Costs per APCD decreased 1.1%  as-reported, compared to the first quarter of 2024. NCC, excluding Fuel, per APCD decreased 0.3% as-reported (and increased 0.1% in Constant Currency), when compared to the first quarter of 2024.

Update on Bookings

During the first quarter, the company took record bookings during the WAVE season. Additionally, during April, the company’s bookings were greater than the same period last year, including continued strength in close-in bookings. Booked load factors remain in line with prior years and at higher rates. Guest spending onboard and pre-cruise purchases continue to exceed prior years, driven by greater participation at higher prices. To account for broader external factors, the company has expanded its guidance ranges in response to the complexity of the current macroeconomic landscape.

“Bookings for 2025 have remained on track, cancellation levels are normal, and we continue to see excellent close-in demand”, said Jason Liberty, president and CEO, Royal Caribbean Group. “This year continues our guest experience innovation with the debut of Star of the Seas, Celebrity Xcel, and the opening of Royal Beach Club Paradise Island by year-end – all of which continue to generate consumer excitement and strengthen our competitive moat.”

The cadence of yield growth throughout the year, as expected, is driven by the timing of new hardware entering service, with the arrival of Star of the Seas in late summer and the related ramp-up of load factors, as is typical for new ship launches.

Second Quarter 2025

Capacity in the quarter is expected to increase 6%, driven by lower dry dock days and a full year of Utopia of the Seas, compared to the second quarter 2024. Net Yields are expected to increase 4.4% to 4.9% as-reported and 4.3% to 4.8% in Constant Currency as compared to the same period in the prior year. The expected growth in yield is driven by healthy demand across all key products and onboard spend, both from new and like-for-like hardware.

NCC, excluding Fuel, per APCD, is expected to increase 4.1% to 4.6% as reported and 3.7% to 4.2% in Constant Currency compared to the same period in the prior year. Approximately 140 bps of cost growth is attributable to the timing shift from the first quarter.

Based on current fuel pricing, interest rates, currency exchange rates, and the factors detailed above, the company expects second quarter Adjusted EPS to be between $4.00 and $4.10.

Fuel Expense

Bunker pricing, net of hedging, for the first quarter was $655 per metric ton, and consumption was 423,000 metric tons.

The company does not forecast fuel prices, and its fuel cost calculations are based on current at-the-pump prices, net of hedging impacts. Based on current fuel prices, the company has included $286 million of fuel expense in its second quarter guidance at a forecasted consumption of 428,000 metric tons, which is 59% hedged via swaps. Forecasted consumption is 59%, 55%, 45%, and 15% hedged via swaps for 2025, 2026, 2027, and 2028, respectively. The annual average cost per metric ton of the hedge portfolio is approximately $487, $476, $393, and $426 for 2025, 2026, 2027, and 2028, respectively.

Royal Caribbean Increases Financial Guidance for 2024

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Independence and Symphony of the Seas in San Juan, Puerto Rico photo credit Spacejunkie2 Flickr

Royal Caribbean Group today provided an update on demand and updated its 2024 guidance.

The company said it continues to be very encouraged about the demand and pricing environment for 2024.

Since its most recent update on its Q4 2023 earnings call, the WAVE booking season has exceeded the company’s initial expectations, with the first five weeks of the year resulting in the best WAVE booking weeks in the company’s history.

“Bookings have been significantly higher than during the same period last year, with the back half of the year up by more than the front half. For 2024, all four quarters and all key products are booked ahead of the same time last year in both rate and volume. Consumer spending for onboard purchases continue to exceed prior years driven by greater participation at higher prices, indicating quality and healthy future demand,” the company said in a statement.

“Since our last earnings call, robust demand for our vacation experiences has significantly exceeded our initial expectations,” said Jason Liberty, president and CEO of Royal Caribbean. “As a result, we are increasing our 2024 guidance on stronger revenue outlook, and we expect to achieve all Trifecta goals in 2024. Trifecta marks an important milestone as we remain intensely focused on delivering a lifetime of vacations and priceless memories for our guests while delivering exceptional long-term shareholder value.”

As a result of the strong WAVE season, the company is increasing its 2024 Adjusted EPS guidance by $0.40 compared to its February guidance. For the full year, Adjusted EPS is now expected to be $9.90 to $10.10 driven by an increase in constant currency net yield growth of approximately 100 bps compared to the February guidance. Approximately $0.15 of the full year increase in adjusted EPS is driven by an improved revenue outlook for the first quarter of 2024. The company now expects to achieve all Trifecta goals in 2024.