Carnival Corporation

Meeting date: April 11

The compensation package for Carnival President and CEO Arnold W. Donald increased last year from $9,881,820 to $13,046,075. A significant portion of that increase is in the salary, which increased by 50%.

In the proxy statement the company refers to Donald’s prior salary of $1 million as a “relatively low base salary.” This is not accurate. The prior salary of $1 million is quite close to the median salary of S&P 500 companies. CEOs that could rightfully be considered to have relatively low base salaries in the S&P 500 include Alaska Air with $487,600; Southwest Airlines with $675,000, or Under Armor at $26,000.

Of course “relatively low” depends entirely upon comparator groups. The selection of peer companies has long been understood as a way to drive up compensation. Carnival lists one airline as a peer (American Airline, where the CEO takes a $0 salary), but indeed lists many companies with high salaries.  

Base salary influences every other component of pay – bonus, pension, and so on -- and because it is easily compared it drives up pay at other companies. It may be that Donald, who has not received a salary increase in some years, is due for an incremental increases, but an increase of $500,000 is too much.

In guidelines As You Sow has prepared we recommend “Vote against any compensation package if salary has increased by over $100,000 over the past three years, or by more than 10%.”