SEC Filings

DEF 14A
CARNIVAL CORP filed this Form DEF 14A on 03/07/2019
Entire Document
 
DEF 14A
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant    ☒

Filed by a Party other than the Registrant    ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

CARNIVAL CORPORATION

CARNIVAL plc

 

(Name of Registrants as Specified in Its Charter)

 

  

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

1)

Title of each class of securities to which transaction applies:

 

 

 

2)

Aggregate number of securities to which transaction applies:

 

 

 

3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

4)

Proposed maximum aggregate value of transaction:

 

 

 

5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

1)

Amount previously paid:

 

 

 

2)

Form, Schedule or Registration Statement No.:

 

 

 

3)

Filing Party:

 

 

 

4)

Date Filed:

 

 


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LOGO

NOTICE OF 2019 ANNUAL MEETINGS

OF SHAREHOLDERS AND

PROXY STATEMENT

Tuesday, April 16, 2019

at 9:30 a.m., local time

Mandarin Oriental Hotel – Ballroom Entrance

66 Knightsbridge

London SW1X 7LA

United Kingdom

 

 

LOGO    LOGO    LOGO    LOGO

 

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TABLE OF CONTENTS

 

LETTER TO SHAREHOLDERS FROM THE CHAIRMAN

     1  

VOTING INFORMATION

     2  

NOTICE OF 2019 ANNUAL MEETING OF CARNIVAL CORPORATION SHAREHOLDERS

     3  

NOTICE OF 2019 ANNUAL GENERAL MEETING OF CARNIVAL PLC SHAREHOLDERS

     6  

PROXY STATEMENT

     12  

GOVERNANCE

     13  

PROPOSALS 1-12 Election or Re-Election of Directors

     13  

Board and Committee Governance

     22  

Director Compensation

     28  

Related Person Transactions

     30  

SHARE OWNERSHIP

     32  

Share Ownership of Certain Beneficial Owners and Management

     32  

Section 16(a) Beneficial Ownership Reporting Compliance

     35  

COMPENSATION

     36  

PROPOSAL 13 Advisory (Non-Binding) Vote to Approve Executive Compensation

     36  

PROPOSAL 14 Approval of Carnival plc Directors’ Remuneration Report

     37  

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report – Part I

     37  

Report of the Compensation Committees

     55  

Compensation Committee Interlocks and Insider Participation

     55  

Compensation Tables

     56  

Potential Payments on Termination or Change of Control

     63  

CEO Pay Ratio

     67  

AUDIT MATTERS

     69  

Report of the Audit Committees

     69  

Independent Registered Public Accounting Firm

     70  

PROPOSALS 15  & 16 Re-Appointment and Remuneration of Independent Auditors of Carnival plc and Ratification of Independent Registered Public Accounting Firm of Carnival Corporation

     71  

OTHER PROPOSALS

     72  

PROPOSAL 17 Receipt of Accounts and Reports of Carnival plc

     72  

PROPOSALS 18 &19 Approval of the Grant of Authority to Allot New Carnival plc Shares and the Disapplication of Pre-Emption Rights Applicable to the Allotment of New Carnival plc Shares

     72  

PROPOSAL 20 General Authority to Buy Back Carnival plc Ordinary Shares

     74  

QUESTIONS AND ANSWERS

     76  

Questions Applicable to All Shareholders

     76  

Questions Specific to Shareholders of Carnival Corporation

     81  

Questions Specific to Shareholders of Carnival plc

     84  

ANNEX A Carnival plc Directors’ Report

     A-1  

ANNEX B Carnival plc Directors’ Remuneration Report – Part II

     B-1  

ANNEX C Carnival plc Corporate Governance Report

     C-1  

 

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LOGO

 

 

LETTER TO SHAREHOLDERS FROM THE CHAIRMAN

 

Dear Fellow Shareholders:

You are cordially invited to attend our joint Annual Meetings of Shareholders at Mandarin Oriental Hotel – Ballroom Entrance, 66 Knightsbridge, London SW1X 7LA, United Kingdom on Tuesday, April 16, 2019. The meetings will commence at 9:30 a.m., and although there are technically two separate meetings (the Carnival plc meeting will begin first), shareholders of Carnival Corporation may attend the Carnival plc meeting and vice-versa. We plan to continue to rotate the location of the Annual Meetings between the United Kingdom and the United States each year in order to accommodate shareholders on both sides of the Atlantic.

We are also pleased to offer an audio replay of the business portion of the Annual Meetings, which will be available shortly after the meetings at www.carnivalcorp.com or www.carnivalplc.com.

Details regarding the matters to be voted on are contained in the attached Notices of Annual Meetings of Shareholders and Proxy Statement. Because of the dual listed company arrangement, all voting will take place on a poll (or ballot).

Your vote is important. We encourage you to vote as soon as possible to ensure your vote is recorded promptly, even if you plan to attend the Annual Meetings.

The Boards of Directors recommend that you vote in favor of Proposals 1 through 20 and consider their approval to be in the best interests of Carnival Corporation and Carnival plc and their shareholders.

Thank you for your ongoing interest in, and continued support of, Carnival Corporation & plc.

 

March 7, 2019      

 

Sincerely,

   

 

 

LOGO

    Micky Arison
    Chairman of the Boards of Directors

 

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VOTING INFORMATION

 

Your vote is important. We encourage you to vote as soon as possible, even if you plan to attend the Annual Meetings.

Who is Eligible to Vote?

 

 

Carnival Corporation Shareholders

 

  

 

Carnival plc Shareholders

 

 

You are eligible to vote if you were a shareholder
as of the close of business (EDT) on
February 19, 2019.

 

  

 

You are eligible to vote if you are a shareholder
as of 6:30 p.m. (BST) on April 12, 2019.

 

How to Vote?

To make sure your vote is counted, please cast your vote as soon as possible by one of the following methods:

 

 

    Carnival Corporation Shareholders*

 

  

 

    Carnival plc Shareholders

 

 

    •

  

 

Using the Internet at

www.proxyvote.com

 

  

 

 

  

 

Using the Internet at

www.sharevote.co.uk

 

    •

  

 

Calling toll-free

1-800-690-6903

 

  

 

  

 

Using CREST electronic proxy appointment service (if you hold your shares through CREST)

 

 

    •

 

  

 

Mailing your signed form

 

  

 

 

  

 

Mailing your signed proxy form

 

 

*

If you are a record holder or your bank or broker utilizes Broadridge. Otherwise, your bank or broker will provide you with instructions on how to vote.

All eligible shareholders may vote in person at the 2019 Annual Meetings of Shareholders. Please refer to details about how to vote in person in the “Question and Answers” section.

 

Important Note: If you plan to attend the 2019 Annual Meetings of Shareholders please see the Notice of Meetings for important details on admission requirements.

Directions

For directions to the 2019 Annual Meetings of Shareholders, you may contact Investor Relations at Carnival Corporation & plc, 3655 N.W. 87th Avenue, Miami, Florida 33178-2428 or via email at ir@carnival.com.

Enroll for Electronic Delivery

We encourage shareholders to sign up to receive future proxy materials electronically. If you have not already enrolled, please consider doing so as it is simple, saves time and money, and is environmentally friendly.

 

 

Carnival Corporation Shareholders

 

  

 

Carnival plc Shareholders

 

 

www.investordelivery.com

 

  

 

www.shareview.co.uk

 

 

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LOGO

Carnival Place

3655 N.W. 87th Avenue

Miami, Florida 33178-2428

United States of America

 

 

NOTICE OF 2019 ANNUAL MEETING OF CARNIVAL

CORPORATION SHAREHOLDERS

 

 

When   Where

Tuesday, April 16, 2019

9:30 a.m., local time

 

Mandarin Oriental Hotel – Ballroom Entrance

66 Knightsbridge

London SW1X 7LA

United Kingdom

We are pleased to invite you to join our Board of Directors, senior leadership and other associates at Carnival Corporation’s 2019 Annual Meeting of Shareholders.

Items of Business

 

1.

To re-elect Micky Arison as a Director of Carnival Corporation and as a Director of Carnival plc.

 

2.

To re-elect Sir Jonathon Band as a Director of Carnival Corporation and as a Director of Carnival plc.

 

3.

To re-elect Jason Glen Cahilly as a Director of Carnival Corporation and as a Director of Carnival plc.

 

4.

To re-elect Helen Deeble as a Director of Carnival Corporation and as a Director of Carnival plc.

 

5.

To re-elect Arnold W. Donald as a Director of Carnival Corporation and as a Director of Carnival plc.

 

6.

To re-elect Richard J. Glasier as a Director of Carnival Corporation and as a Director of Carnival plc.

 

7.

To re-elect Debra Kelly-Ennis as a Director of Carnival Corporation and as a Director of Carnival plc.

 

8.

To elect Katie Lahey as a Director of Carnival Corporation and as a Director of Carnival plc.

 

9.

To re-elect Sir John Parker as a Director of Carnival Corporation and as a Director of Carnival plc.

 

10.

To re-elect Stuart Subotnick as a Director of Carnival Corporation and as a Director of Carnival plc.

 

11.

To re-elect Laura Weil as a Director of Carnival Corporation and as a Director of Carnival plc.

 

12.

To re-elect Randall J. Weisenburger as a Director of Carnival Corporation and as a Director of Carnival plc.

 

13.

To hold a (non-binding) advisory vote to approve executive compensation (in accordance with legal requirements applicable to U.S. companies).

 

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14.

To approve the Carnival plc Directors’ Remuneration Report (in accordance with legal requirements applicable to UK companies).

 

15.

To re-appoint the UK firm of PricewaterhouseCoopers LLP as independent auditors of Carnival plc and to ratify the selection of the U.S. firm of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Carnival Corporation.

 

16.

To authorize the Audit Committee of Carnival plc to determine the remuneration of the independent auditors of Carnival plc (in accordance with legal requirements applicable to UK companies).

 

17.

To receive the UK accounts and reports of the Directors and auditors of Carnival plc for the year ended November 30, 2018 (in accordance with legal requirements applicable to UK companies).

 

18.

To approve the giving of authority for the allotment of new shares by Carnival plc (in accordance with customary practice for UK companies).

 

19.

To approve the disapplication of pre-emption rights in relation to the allotment of new shares by Carnival plc (in accordance with customary practice for UK companies).

 

20.

To approve a general authority for Carnival plc to buy back Carnival plc ordinary shares in the open market (in accordance with legal requirements applicable to UK companies desiring to implement share buy back programs).

 

21.

To transact such other business as may properly come before the meeting.

Record Date

The Board of Directors set February 19, 2019 as the record date for the Carnival Corporation Annual Meeting of Shareholders. This means that our shareholders as of the close of business on that date are entitled to receive this notice of the meeting and vote their shares.

How to Vote

Your vote is important. Please review the proxy materials for the 2019 Annual Meeting of Carnival Corporation Shareholders and follow the instructions.

Audio Replay of the Annual Meetings

If you are unable to attend the Annual Meetings in person, you can listen to an audio replay of the business portion of the Annual Meetings by visiting the Financial Information tab of the “Investor Relations” section of our website at www.carnivalcorp.com or www.carnivalplc.com shortly after the meetings. Then, click on Webcasts/Presentations and follow the instructions provided.

 

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Meeting Admission Requirements

Attendance at the Annual Meeting is limited to shareholders and their duly appointed proxies or corporate representatives. Each attendee will be asked to present valid government-issued picture identification, such as a driver’s license or passport. Shareholders holding shares in brokerage accounts (“under a street name”) will need to bring a copy of a brokerage statement reflecting share ownership as of the record date (February 19, 2019). Due to security measures, all bags will be subject to search, and all persons who attend the meeting will be subject to a metal detector and/or a hand wand search. We will be unable to admit anyone who does not comply with these security procedures.

On behalf of the Board of Directors

 

 

LOGO

ARNALDO PEREZ

General Counsel & Secretary

Carnival Corporation is continuing to take advantage of U.S. Securities and Exchange Commission (“SEC”) rules that allow it to deliver proxy materials over the Internet. Under these rules, Carnival Corporation is sending its shareholders a one-page notice regarding the Internet availability of proxy materials instead of a full set of proxy materials, unless they previously requested to receive printed copies. If you receive this one-page notice, you will not receive printed copies of the proxy materials unless you specifically request them. Instead, this notice tells you how to access and review on the Internet all of the important information contained in the proxy materials. This notice also tells you how to submit your proxy card on the Internet and how to request to receive a printed copy of the proxy materials. All Carnival Corporation shareholders are urged to follow the instructions in the notice and submit their votes using one of the voting methods described in the proxy materials. If you receive a printed copy of the proxy materials, the accompanying envelope for return of the proxy card requires no postage. Any shareholder attending the Annual Meetings in London may personally vote on all matters that are considered, in which event any previously submitted proxy will be revoked.

 

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THIS NOTICE OF ANNUAL GENERAL MEETING IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT AS TO ANY ASPECT OF THE PROPOSALS REFERRED TO IN THIS DOCUMENT OR AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD IMMEDIATELY CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER INDEPENDENT FINANCIAL ADVISOR AUTHORIZED UNDER THE UK FINANCIAL SERVICES AND MARKETS ACT 2000.

IF YOU HAVE SOLD OR OTHERWISE TRANSFERRED ALL YOUR SHARES IN CARNIVAL PLC, PLEASE SEND THIS DOCUMENT AND THE ACCOMPANYING DOCUMENTS TO THE PURCHASER OR TRANSFEREE OR TO THE STOCKBROKER, BANK OR OTHER AGENT THROUGH WHOM THE SALE OR TRANSFER WAS EFFECTED FOR TRANSMISSION TO THE PURCHASER OR TRANSFEREE.

 

LOGO

(incorporated and registered in England and Wales under number 4039524)

Carnival House

100 Harbour Parade

Southampton SO15 1ST

United Kingdom

 

 

NOTICE OF 2019 ANNUAL GENERAL MEETING OF

CARNIVAL PLC SHAREHOLDERS

 

NOTICE IS HEREBY GIVEN that an ANNUAL GENERAL MEETING of Carnival plc will be held at Mandarin Oriental Hotel – Ballroom Entrance, 66 Knightsbridge, London SW1X 7LA, United Kingdom on Tuesday, April 16, 2019 at 9:30 a.m. (BST), for the purpose of considering and, if thought fit, passing the resolutions described below:

 

 

Proposals 1 through 18 will be proposed as ordinary resolutions. For ordinary resolutions, the required majority is more than 50% of the combined votes cast at this meeting and Carnival Corporation’s Annual Meeting.

 

 

Proposals 19 and 20 will be proposed as special resolutions. For special resolutions, the required majority is not less than 75% of the combined votes cast at this meeting and Carnival Corporation’s Annual Meeting.

Election or Re-election of 12 Directors named in this Proxy Statement

 

1.

To re-elect Micky Arison as a Director of Carnival Corporation and as a Director of Carnival plc.

 

2.

To re-elect Sir Jonathon Band as a Director of Carnival Corporation and as a Director of Carnival plc.

 

3.

To re-elect Jason Glen Cahilly as a Director of Carnival Corporation and as a Director of Carnival plc.

 

4.

To re-elect Helen Deeble as a Director of Carnival Corporation and as a Director of Carnival plc.

 

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5.

To re-elect Arnold W. Donald as a Director of Carnival Corporation and as a Director of Carnival plc.

 

6.

To re-elect Richard J. Glasier as a Director of Carnival Corporation and as a Director of Carnival plc.

 

7.

To re-elect Debra Kelly-Ennis as a Director of Carnival Corporation and as a Director of Carnival plc.

 

8.

To elect Katie Lahey as a Director of Carnival Corporation and as a Director of Carnival plc.

 

9.

To re-elect Sir John Parker as a Director of Carnival Corporation and as a Director of Carnival plc.

 

10.

To re-elect Stuart Subotnick as a Director of Carnival Corporation and as a Director of Carnival plc.

 

11.

To re-elect Laura Weil as a Director of Carnival Corporation and as a Director of Carnival plc.

 

12.

To re-elect Randall J. Weisenburger as a Director of Carnival Corporation and as a Director of Carnival plc.

Executive Compensation

 

13.

To hold a (non-binding) advisory vote to approve executive compensation (in accordance with legal requirements applicable to U.S. companies).

Directors’ Remuneration Report

 

14.

To approve the Carnival plc Directors’ Remuneration Report as set out in the annual report for the year ended November 30, 2018.

Re-appointment and remuneration of Carnival plc auditors and ratification of Carnival Corporation auditors

 

15.

To re-appoint the UK firm of PricewaterhouseCoopers LLP as independent auditors of Carnival plc and to ratify the selection of the U.S. firm of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Carnival Corporation.

 

16.

To authorize the Audit Committee of the Board of Directors of Carnival plc to determine the remuneration of the independent auditors of Carnival plc.

Accounts and Reports

 

17.

To receive the UK accounts and the reports of the Directors and auditors of Carnival plc for the year ended November 30, 2018.

Allotment of shares

 

18.

THAT the Directors of Carnival plc be and they are hereby authorized to allot shares in Carnival plc and to grant rights to subscribe for or convert any security into shares in Carnival plc:

 

  (a)

up to a nominal amount of $106,171,191 (such amount to be reduced by the nominal amount allotted or granted under paragraph (b) below in excess of such sum); and

 

  (b)

up to a nominal amount of $212,342,382 (such amount to be reduced by any allotments or grants made under paragraph (a) above) in connection with an offer by way of a rights issue:

 

   

to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

   

to holders of other equity securities as required by the rights of those securities or as the Directors of Carnival plc otherwise consider necessary,

and so that the Directors of Carnival plc may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the

 

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laws of, any territory or any other matter, such authorities to apply until the end of next year’s Carnival plc Annual General Meeting (or, if earlier, until the close of business on July 15, 2020) but, in each case, during this period Carnival plc may make offers and enter into agreements which would, or might, require shares to be allotted or rights to subscribe for or convert securities into shares to be granted after the authority ends and the Directors of Carnival plc may allot shares or grant rights to subscribe for or convert securities into shares under any such offer or agreement as if the authority had not ended.

Disapplication of pre-emption rights

 

19.

THAT, subject to Proposal 18 passing, the Directors of Carnival plc be given power to allot equity securities (as defined in the UK Companies Act 2006 (the “Companies Act”)) for cash under the authority given by that resolution and/or to sell ordinary shares held by Carnival plc as treasury shares for cash as if Section 561 of the Companies Act did not apply to any such allotment or sale, such power to be limited:

 

  (a)

to the allotment of equity securities and sale of treasury shares for cash in connection with an offer of, or invitation to apply for, equity securities (but in the case of the authority granted under paragraph (b) of Proposal 18, by way of a rights issue only):

 

   

to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and

   

to holders of other equity securities, as required by the rights of those securities, or as the Directors of Carnival plc otherwise consider necessary,

and so that the Directors of Carnival plc may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter; and

 

  (b)

in the case of the authority granted under paragraph (a) of Proposal 18 and/or in the case of any sale of treasury shares for cash, to the allotment (otherwise than under paragraph (a) above) of equity securities or sale of treasury shares up to a nominal amount of $15,925,678,

such power to apply until the end of next year’s Annual General Meeting (or, if earlier, until the close of business on July 15, 2020) but, in each case, during this period Carnival plc may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the power ends and the Directors of Carnival plc may allot equity securities (and sell treasury shares) under any such offer or agreement as if the power had not ended.

General authority to buy back Carnival plc ordinary shares

 

20.

THAT Carnival plc be and is generally and unconditionally authorized to make market purchases (within the meaning of Section 693(4) of the Companies Act) of ordinary shares of $1.66 each in the capital of Carnival plc subject to the following conditions:

 

  (a)

the maximum number of ordinary shares authorized to be acquired is 19,187,564;

 

  (b)

the minimum price (exclusive of expenses) which may be paid for an ordinary share is $1.66;

 

  (c)

the maximum price which may be paid for an ordinary share is an amount (exclusive of expenses) equal to the higher of:

 

   

105% of the average middle market quotation for an ordinary share, as derived from the London Stock Exchange Daily Official List, for the five business days immediately preceding the day on which such ordinary share is contracted to be purchased; and

 

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the higher of the last independent trade and the highest current independent bid for an ordinary share on the trading service venue where the purchase is carried out; and

 

  (d)

unless previously revoked or renewed, this authority shall expire on the earlier of:

 

   

the conclusion of the Annual General Meeting of Carnival plc to be held in 2020; and

   

18 months from the date of this resolution (except in relation to the purchase of ordinary shares, the contract of which was entered into before the expiry of such authority).

 

By Order of the Board

 

LOGO

Arnaldo Perez

Company Secretary

January 28, 2019

 

Registered Office:

 

Carnival House

100 Harbour Parade

Southampton SO15 1ST

United Kingdom

Voting Arrangements for Carnival plc Shareholders

Carnival plc shareholders can vote in either of three ways:

 

 

by attending the Annual General Meeting and voting in person or, in the case of corporate shareholders, by corporate representatives;

 

 

by appointing a proxy to attend and vote on their behalf, using the proxy form enclosed with this Notice of Annual General Meeting; or

 

 

by voting electronically as described below.

Voting in person

If you come to the Annual General Meeting, please bring the attendance card (attached to the enclosed proxy form) with you. This will mean you can register more quickly.

In order to attend and vote at the Annual General Meeting, a corporate shareholder may appoint one or more individuals to act as its representative. The appointment must comply with the requirements of Section 323 of the Companies Act. Each representative should bring evidence of their appointment, including any authority under which it is signed, to the meeting. If you are a corporation and are considering appointing a corporate representative to represent you and vote your shareholding in Carnival plc at the Annual General Meeting, you are strongly encouraged to pre-register your corporate representative to make registration on the day of the meeting more efficient. In order to pre-register, please email your Letter of Representation to Carnival plc’s registrars, Equiniti Limited, at proxyvotes@equiniti.com.

Voting by proxy

A shareholder entitled to attend and vote at the meeting is entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote in his or her stead. A proxy need not be a shareholder of Carnival plc. A shareholder may appoint more than one proxy provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. To appoint more than one proxy, please follow the notes contained in the proxy form. A person who is nominated to enjoy information rights in accordance with Section 146 of the Companies Act, but who is not a shareholder, is not entitled to appoint a proxy.

 

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If you are a person nominated to enjoy information rights in accordance with Section 146 of the Companies Act you may have a right under an agreement between you and the member by whom you were nominated to be appointed, or to have someone else appointed, as a proxy for the meeting. If you have no such right, or you have such a right but do not wish to exercise it, you may have a right under such an agreement to give instructions to the member as to the exercise of voting rights.

To be effective, a duly completed proxy form and the authority (if any) under which it is signed, or a notarially certified copy of such authority, must be deposited (whether delivered personally or by post) at the offices of Carnival plc’s registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing BN99 6DA, United Kingdom as soon as possible and in any event no later than 9:30 a.m. (BST) on April 12, 2019. Alternatively, a proxy vote may be submitted via the Internet in accordance with the instructions set out on the proxy form.

In the case of joint registered holders, the signature of one holder on a proxy card will be accepted and the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the order in which names stand on the register of shareholders of Carnival plc in respect of the relevant joint holding.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear’s specifications and must contain the information required for such instructions, as described in the CREST Manual, which can be viewed at www.euroclear.com. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA19) by the latest time(s) for receipt of proxy appointments specified in the Notice of Annual General Meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

Carnival plc may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

Voting electronically

Shareholders are entitled to vote online at www.sharevote.co.uk. Shareholders voting electronically should vote as soon as possible, and in any event no later than 9:30 a.m. (BST) on April 12, 2019.

Shareholders who are entitled to vote

Carnival plc, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those shareholders registered in the register of members of Carnival plc at 6:30 p.m. (BST) on

 

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April 12, 2019 shall be entitled to attend or vote at the meeting in respect of the number of shares registered in their name at that time. Changes to the entries on the register of members after 6:30 p.m. (BST) on April 12, 2019 shall be disregarded in determining the rights of any person to attend or vote at the meeting.

Any shareholder attending the meeting has the right to ask questions. Carnival plc must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if:

 

 

to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information;

 

the answer has already been given on a website in the form of an answer to a question; or

 

it is undesirable in the interests of Carnival plc or the good order of the meeting that the question be answered.

Documents available for inspection

Copies of all service agreements (including letters of appointment) between each Director and Carnival plc will be available for inspection during normal business hours on any weekday (public holidays excluded) at the registered office of Carnival plc from the date of this notice until and including the date of the meeting and at the place of the meeting for at least 15 minutes prior to and during the meeting.

*    *    *

There are 20 Proposals that require shareholder approval at the Annual General Meeting this year. The Directors unanimously recommend that you vote in favor of Proposals 1 through 20 (inclusive). The Directors encourage you to submit your vote using one of the voting methods described herein. Submitting your voting instructions by any of these methods will not affect your right to attend the meeting in person should you so choose.

Website materials

This Proxy Statement and other information required by Section 311A of the Companies Act have been posted on our website at www.carnivalcorp.com and www.carnivalplc.com.

Under Section 527 of the Companies Act, shareholders meeting the threshold requirements set out in that section have the right to require Carnival plc to publish on a website a statement setting out any matter relating to:

 

 

the audit of Carnival plc’s accounts (including the auditor’s report and the conduct of the audit) that are to be laid before the Annual General Meeting; or

 

any circumstance connected with an auditor of Carnival plc ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with Section 437 of the Companies Act.

Carnival plc may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act. Where Carnival plc is required to place a statement on a website under Section 527 of the Companies Act, it must forward the statement to Carnival plc’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that Carnival plc has been required under Section 527 of the Companies Act to publish on a website.

 

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PROXY STATEMENT

 

The Board of Directors of each of Carnival Corporation and Carnival plc (together, “Carnival Corporation & plc,” “we,” “our” or “us”) is providing these proxy materials to you in connection with our joint Annual Meetings of Shareholders on Tuesday, April 16, 2019. The Annual Meetings will be held at Mandarin Oriental Hotel – Ballroom Entrance, 66 Knightsbridge, London SW1X 7LA, United Kingdom. The meetings will commence at 9:30 a.m., local time, and although technically two separate meetings (the Carnival plc meeting will begin first), shareholders of Carnival Corporation may attend the Carnival plc meeting and vice-versa.

We are furnishing the proxy materials to shareholders on or about March 7, 2019.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR

THE SHAREHOLDER MEETINGS TO BE HELD ON APRIL 16, 2019

The Notice of Annual Meetings, Proxy Statement and the Annual Report are available at www.carnivalcorp.com and www.carnivalplc.com.

 

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GOVERNANCE

 

We are committed to governance policies and practices so that shareholder and other stakeholder interests are represented in a thoughtful and independent manner. Sound principles of corporate governance are critical to obtaining and retaining the trust of investors. They are also vital in securing respect from other key stakeholders and interested parties, including our workforce, guests and suppliers, the communities in which we conduct business, government officials and the public-at-large.

Carnival Corporation and Carnival plc operate under a dual listed company structure with primary stock listings in the United States (“U.S.”) and the United Kingdom (“UK”). Accordingly, we have implemented a single corporate governance framework consistent, to the extent possible, with the governance practices and requirements of both countries. While there are customs or practices that differ between the two countries, we believe our corporate governance framework effectively addresses the corporate governance requirements of both the U.S. and the UK.

Our corporate governance principles are set forth in our Corporate Governance Guidelines and the charters of our Board Committees. The actions described in these documents, which the Boards have reviewed and approved, implement applicable requirements, including the New York Stock Exchange listing requirements and, to the extent practicable, the UK Corporate Governance Code published by the UK Financial Reporting Council in April 2016 (the “UK Corporate Governance Code”), as well our own vision of good governance.

We will continue to monitor governance developments in the U.S. and the UK to ensure a vigorous and effective corporate governance framework of the highest international standards.

A new corporate governance code was published by the UK Financial Reporting Council in July 2018 (the “New UK Corporate Governance Code”). The New UK Corporate Governance Code only applies to financial years beginning on or after January 1, 2019. This means that the new requirements will apply to Carnival Corporation & plc for its fiscal year beginning December 1, 2019. We will continue to implement the systems and procedures that will need to be in place to ensure our compliance, to the extent practicable, with these requirements.

Our Corporate Governance Guidelines, copies of the charters of our Board Committees and our organizational documents are available under the “Governance” section of our website at www.carnivalcorp.com and www.carnivalplc.com.

PROPOSALS 1-12

ELECTION OR RE-ELECTION OF DIRECTORS

 

The Boards are elected by the shareholders to exercise business judgment to act in what they reasonably believe to be in the best interests of Carnival Corporation & plc and its shareholders. The Boards select and oversee the members of senior management, who are charged by the Boards with conducting the business of the company.

Nominations of Directors

Carnival Corporation and Carnival plc are two separate legal entities and, therefore, each has a separate Board of Directors, each of which in turn has its own Nominating & Governance Committee. As the dual listed company (“DLC”) arrangement requires that there be identical Boards of Directors, the Nominating & Governance Committees make one set of determinations in relation to both companies.

 

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GOVERNANCE

Election or Re-Election of Directors

 

The Nominating & Governance Committees actively seek individuals qualified to become Board members and recommend to the Boards the nominees to stand for election as Directors at the Annual Meetings of Shareholders or, if applicable, at a Special Meeting of Shareholders.

When evaluating prospective candidates for Director, regardless of the source of the nomination, the Nominating & Governance Committees will consider, in accordance with their charters, such factors as they deem appropriate, including, but not limited to:

 

 

the candidate’s judgment;

 

the candidate’s skill;

 

diversity considerations;

 

the candidate’s experience with businesses and other organizations of comparable size;

 

the interplay of the candidate’s experience with the experience of other members of the Boards; and

 

the extent to which the candidate would be a desirable addition to the Boards and any Committees of the Boards.

Our Corporate Governance Guidelines dictate that diversity should be considered by the Nominating & Governance Committees in the director identification and nomination process. This means that the Nominating & Governance Committees seek nominees who bring a variety of business backgrounds, experiences and perspectives to the Boards. The Boards believe that the backgrounds and qualifications of the Directors, considered as a group, should provide a broad diversity of experience, professions, skills, geographic representations, knowledge and abilities that will allow the Boards to fulfill their responsibilities and the Nominating & Governance Committees assess the effectiveness of this approach as part of the annual evaluations of our Boards of Directors.

As of the date of this Proxy Statement, 33% of the members of the Boards are women (being four of 12 members).

The Nominating & Governance Committees will also use their best efforts to see that the composition of the Boards adheres to the independence requirements applicable to companies listed for trading on the New York Stock Exchange and the London Stock Exchange. The Nominating & Governance Committees and the Boards utilize the same criteria for evaluating candidates regardless of the source of the referral. Other than the foregoing, there are no stated minimum criteria for Director nominees.

The Nominating & Governance Committees identify nominees by first evaluating the current members of the Boards willing to continue in service. As part of director succession planning, current members of the Boards with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Boards with that of obtaining a new perspective. If any member of the Boards does not wish to continue in service or if the Nominating & Governance Committees or the Boards decide not to re-nominate a member for re-election, the Nominating & Governance Committees identify the desired skills and experience of a new nominee in light of the criteria above. Current members of the Nominating & Governance Committees and the Boards are polled for suggestions as to individuals meeting the criteria of the Nominating & Governance Committees. The Nominating & Governance Committees may consider candidates proposed by management, but are not required to do so. The Nominating & Governance Committees may engage a third party search firm to identify and attract potential nominees. In the case of Katie Lahey, several board members who interacted with her while she served as Executive Chair of Carnival Australia identified her as a potential board member.

 

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GOVERNANCE

Election or Re-Election of Directors

 

2019 Nominees for Election or Re-Election to the Boards

The DLC arrangement requires the Boards of Carnival Corporation and Carnival plc to be identical. Shareholders are required to approve the election or re-election of Directors to each Board. There are 12 nominees for election or re-election to each Board of Directors. Each nominee currently serves as a Director of both companies. All nominees for Director are to be elected or re-elected to serve until the next Annual Meeting and until their successors are elected.

All of the nominees have indicated that they will be willing and able to serve as directors.

With respect to each Board nominee set forth below, the information presented includes such person’s age, the year in which such person first became a Director, any other position held with Carnival Corporation and Carnival plc, such person’s principal occupations during at least the past five years, any directorships held by such nominee in public or certain other companies over the past five years and the nominee’s qualifications, including particular areas of expertise, to serve as a Director.

The Nominating & Governance Committees conducted performance evaluations on the members of our Boards of Directors serving during fiscal 2018 and reported the results to the Boards. The Boards determined that each nominee was an effective and committed member of the Boards and the Board Committees on which each serves. In addition, in 2016, the Nominating & Governance Committees engaged a third-party governance expert to perform an assessment of the effectiveness of the Boards. The third-party governance expert interviewed each Director and members of senior management who interact substantially with the Boards, reviewed the results of the assessment with the Senior Independent Director, and then organized and summarized the assessment for discussion with the full Boards.

Accordingly, the Boards of Directors unanimously recommend a vote FOR the election or re-election of each of the following Director nominees:

 

 

Micky Arison

 

 

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Carnival Corporation

Director since 1987

 

Carnival plc Director

since 2003

 

Age: 69

  

Mr. Arison has been Chairman of the Board of Directors of Carnival Corporation since 1990. He has been Chairman of the Board of Directors of Carnival plc since 2003. He was Chief Executive Officer of Carnival Corporation (formerly known as Carnival Cruise Lines) from 1979 to 2013 and was Chief Executive Officer of Carnival plc from 2003 to 2013.

 

Board Committees: Executive (Chair)

 

Other Public Company Boards: None

 

Qualifications:

Mr. Arison’s qualifications to serve on the Boards include his decades of leadership experience with Carnival Corporation & plc, as well as in-depth knowledge of our business, our history and the cruise industry, all gained through more than 45 years of service with our companies.

 

 

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GOVERNANCE

Election or Re-Election of Directors

 

 

 

Sir Jonathon Band

 

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Carnival Corporation

Director since 2010

 

Carnival plc Director

since 2010

 

Age: 69

  

Sir Jonathon served in the British Navy from 1967 until his retirement in 2009, having served as First Sea Lord and Chief of Naval Staff, the most senior officer position in the British Navy, until 2009. He was a Director of Lockheed Martin UK Limited from 2010 to 2015.

 

Board Committees: Health, Environmental, Safety & Security (“HESS”) (Chair) and Nominating & Governance

 

Other Public Company Boards: None

 

Qualifications:

Sir Jonathon’s qualifications to serve on the Boards include his extensive experience in maritime and security matters gained through his 42 years of service with the British Navy. He also brings an international perspective of company and industry matters.

 

 

 

Jason Glen Cahilly

 

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Carnival Corporation

Director since 2017

 

Carnival plc Director

since 2017

 

Age: 48

  

Mr. Cahilly is the Founder and Chief Executive Officer of Dragon Group LLC, a private investment firm, which concurrently provides business management consulting and advisory services. Mr. Cahilly previously served as Chief Strategic and Financial Officer of the National Basketball Association, a North American professional basketball league, from 2013 to 2017, as well as a Director of the Board of NBA China. Prior to that, Mr. Cahilly spent 12 years at Goldman Sachs & Co., where he served as a partner and the global co-head of media and telecommunications.

 

Board Committees: Audit

 

Other Public Company Boards: None

 

Qualifications:

Mr. Cahilly’s qualifications to serve on the Boards include his more than 20 years’ experience in the global media, entertainment, sports, technology, leisure, communications and finance sectors in a variety of senior leadership roles.

 

 

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GOVERNANCE

Election or Re-Election of Directors

 

 

 

Helen Deeble

 

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Carnival Corporation

Director since 2016

 

Carnival plc Director

since 2016

 

Age: 57

  

Ms. Deeble was the Chief Executive Officer of P&O Ferries Division Holdings Ltd., a pan-European shipping and logistics business, from 2006 until 2017. She is also a Non-Executive Director of the Port of London Authority and a member the Supervisory Board of the UK Chamber of Shipping.

 

Board Committees: HESS

 

Other Public Company Boards: None

 

Qualifications:

Ms. Deeble’s qualifications to serve on the Boards include her more than 30 years’ experience in retail, transport, logistics and leisure sectors in finance and general management roles, including significant maritime operational and commercial experience gained through her service as a chief executive officer of a passenger shipping organization. She is also a UK Chartered Accountant.

 

 

 

Arnold W. Donald

 

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Carnival Corporation

Director since 2001

 

Carnival plc Director

since 2003

 

Age: 64

  

Mr. Donald has been President and Chief Executive Officer of Carnival Corporation & plc since 2013. He was President and Chief Executive Officer of The Executive Leadership Council, a professional network of African-American executives of major U.S. companies, from 2010 to 2012. He previously served as President and Chief Executive Officer of the Juvenile Diabetes Research Foundation International from 2006 to 2008. From 2000 to 2005, Mr. Donald was the Chairman of the Board of Merisant Company, a manufacturer and marketer of tabletop sweetener products, including the Equal® and Canderel® brands. From 2000 to 2003, he was also the Chief Executive Officer of Merisant Company. From 1998 to 2000, he was Senior Vice-President of Monsanto Company, a company which develops agricultural products and consumer goods, and President of its nutrition and consumer sector. Prior to that he was President of Monsanto Company’s agricultural sector. He previously served as a Director of Oil-Dri Corporation of America from 1997 to 2013 and The Laclede Group, Inc. from 2003 to 2014.

 

Board Committees: Executive

 

Other Public Company Boards: Bank of America Corporation (since 2013); and Crown Holdings, Inc. (since 1999)

 

Qualifications:

Mr. Donald’s qualifications to serve on the Boards include his broad leadership and other executive skills gained through his prior executive leadership experience with a Fortune-100 science-based research and development, manufacturing and marketing company, a privately held company with global operations, and as head of a large international research-based not-for-profit corporation. He also has broad experience in corporate governance, having served as a Director, past and present, of a number of other publicly-traded companies.

 

 

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GOVERNANCE

Election or Re-Election of Directors

 

 

 

Richard J. Glasier

 

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Carnival Corporation

Director since 2004

 

Carnival plc Director

since 2004

 

Age: 73

  

Mr. Glasier was President of Argosy Gaming Company, an owner and operator of casinos, from 2002 to 2005, and its Chief Executive Officer from 2003 until 2005. From 1995 to 2002, Mr. Glasier was Executive Vice President and Chief Financial Officer of Royal Caribbean Cruises Ltd., a global cruise company.

 

Board Committees: Audit (Chair), Compensation and Nominating & Governance

 

Other Public Company Boards: None

 

Qualifications:

Mr. Glasier’s qualifications to serve on the Boards include significant cruise industry experience as a senior financial officer of a major cruise line, as well as his managerial and corporate governance expertise acquired as the Chief Executive Officer of a New York Stock Exchange-listed operator of hotels and casinos, and as well as many years of public company board experience.

 

 

 

Debra Kelly-Ennis

 

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Carnival Corporation

Director since 2012

 

Carnival plc Director

since 2012

 

Age: 62

  

Ms. Kelly-Ennis was President and Chief Executive Officer of Diageo Canada, Inc., a subsidiary of Diageo plc, a global spirits, wine and beer company, from 2008 to 2012. From 2005 to 2008, she was Chief Marketing Officer for Diageo North America Inc., another subsidiary of Diageo plc. Ms. Kelly-Ennis has also held marketing, sales and general management positions with leading companies such as RJR/Nabisco, Inc., The Coca-Cola Company, General Motors Corporation and Grand Metropolitan PLC. She has been honored as one of the Top 100 Most Powerful Women in Canada in 2012, 2011, 2010 and 2009 and was named Leading Chief Executive Officer in 2010 by the Toronto Human Resources Professional Association. She served as a Director of Hertz Global Holdings, Inc. from 2013 to 2015 and Pulte Group, Inc. from 1997 to 2016.

 

Board Committees: HESS

 

Other Public Company Boards: Altria Group, Inc. (since 2013); and TFI International Inc. (since 2017)

 

Qualifications:

Ms. Kelly-Ennis’s qualifications to serve on the Boards include her extensive marketing and general managerial experience gained through 30 years of working with consumer brand corporations, as well as many years of public company board experience.

 

 

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GOVERNANCE

Election or Re-Election of Directors

 

 

Katie Lahey

 

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Carnival Corporation

Director since

January 2019

 

Carnival plc Director

since January 2019

 

Age: 68

  

Ms. Lahey has been the Chair of Korn Ferry Australasia, a leadership and talent firm, since February 1, 2019, having served as its Executive Chair since 2011. She has been a Non-Executive Director of The Star Entertainment Group Limited, which owns and operates integrated resort destinations in Australia, since 2012, and was Chair of the Tourism and Transport Forum Australia, a tourism and transportation industry group, from 2015 until November 2018. She was the Executive Chair of Carnival Australia, a division of Carnival plc, from 2006 to 2013. In 2013, she was named a Member of the Order of Australia for her significant services to business and commerce and the arts and in 2003 she was awarded a Centenary Medal for contributions to Australian society in the area of business leadership.

 

Board Committees: Audit

 

Other Public Company Boards: The Star Entertainment Group Limited (since 2012)

 

Qualifications:

Ms. Lahey’s qualifications to serve on the Boards include her more than 30 years’ experience in the tourism, talent sourcing, cultural transformation, governmental, retail and the arts sectors in a variety of leadership roles, including within the cruise industry.

 

 

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GOVERNANCE

Election or Re-Election of Directors

 

 

 

Sir John Parker

 

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Carnival Corporation

Director since 2003

 

Carnival plc Director

since 2000

 

Age: 76

  

Sir John has been Non-Executive Chairman of Pennon Group plc, an environmental utility infrastructure company, since 2015, and Non-Executive Chairman of Laing O’Rourke, a multinational construction company, since 2017. He was the Lead Non-Executive Director for the UK Government Cabinet Office from 2017 to 2018, a Non-Executive Director of Airbus Group NV, an aeronautics, space and related services company, from 2007 to April 2018, Non-Executive Chairman of Anglo American plc, a multinational mining company, from 2009 until 2017, a Non-Executive Director of DP World Limited, a global supply chain and container handling company, from 2006 to 2015, Non-Executive Chairman of Mondi plc from 2007 to 2009, Non-Executive Chairman of National Grid plc from 2002 to 2012, Senior Non-Executive Director of the Court of the Bank of England from 2004 to 2009, and a Non-Executive Director of GKN plc from 1993 to 2002, Brambles Industries plc from 2001 to 2003 and BG Group plc from 1997 to 2000. He was Chairman and Chief Executive Officer of Babcock International Group plc from 1994 to 2000, RMC Group plc from 2002 to 2005 and P&O Group plc from 2000 to 2003, a President of the Royal Institution of Naval Architects from 1996 to 1999, a member of the Prime Minister’s Business Council for Britain and Chancellor of the University of Southampton from 2006 to 2011. He was President of the Royal Academy of Engineering from 2011 until 2014. Sir John has been a member of the General Committee of Lloyds Register of Shipping since 1983 and was Chairman of its Technical Committee from 1993 until 2002.

 

Board Committees: HESS and Nominating & Governance

 

Other Public Company Boards: Pennon Group plc (since 2015)

 

Qualifications:

Sir John’s qualifications to serve on the Boards include his extensive international background and wealth of corporate experience. His past and present service as a Non-Executive Director of a number of listed UK companies provides the Boards with invaluable knowledge and insight with respect to UK corporate governance policies and practices. In addition, Sir John, as a qualified naval architect and former head of a major shipbuilding company, is very experienced in the design, construction and operation of ships.

 

 

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GOVERNANCE

Election or Re-Election of Directors

 

 

 

Stuart Subotnick

 

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Carnival Corporation

Director since 1987

 

Carnival plc Director

since 2003

 

Age: 77

  

Mr. Subotnick has been President and Chief Executive Officer of Metromedia Company, a privately held diversified Delaware general partnership, since 2010, having previously served as its General Partner and Executive Vice President since 1986. He previously served as a Director of AboveNet, Inc. from 1997 to 2012.

 

Board Committees: Audit, Executive and Nominating & Governance (Chair)

 

Other Public Company Boards: None

 

Qualifications:

Mr. Subotnick’s qualifications to serve on the Boards include his significant experience in financing, investing and general business matters, as well as his past Board experience with us, which are important to the Boards when reviewing our investor relations, assessing potential financings and strategies, and otherwise evaluating our business decisions.

 

 

 

Laura Weil

 

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Carnival Corporation

Director since 2007

 

Carnival plc Director

since 2007

 

Age: 62

  

Ms. Weil is the Founder and has been the Managing Partner of Village Lane Advisory LLC, which specializes in providing executive and strategic consulting services to retailers as well as private equity firms, since 2015. She was the Executive Vice President and Chief Operating Officer of New York & Company, Inc., a women’s apparel and accessories retailer, from 2012 to 2014. Ms. Weil was the Chief Executive Officer of Ashley Stewart LLC, a privately held retailer, from 2010 to 2011. Ashley Stewart emerged from the 2010 restructuring and Chapter 11 proceedings of Urban Brands, Inc., a privately held apparel retailer, where Ms. Weil served as the Chief Executive Officer from 2009 to 2010. Ms. Weil was the Chief Operating Officer and Senior Executive Vice President of AnnTaylor Stores Corporation, a women’s apparel company, from 2005 to 2006. From 1995 to 2005, she was the Chief Financial Officer and Executive Vice President of American Eagle Outfitters, Inc., a global apparel retailer.

 

Board Committees: Audit and Compensation

 

Other Public Company Boards: Christopher & Banks Corporation (since 2016)

 

Qualifications:

Ms. Weil’s qualifications to serve on the Boards include her extensive financial, strategic information technology and operating skills developed over many years as an investment banker and senior financial operating executive. Ms. Weil also brings significant experience in global e-commerce and consumer strategies from her leadership experience with multi-billion dollar New York Stock Exchange-listed retailers.

 

 

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GOVERNANCE

Board and Committee Governance

 

 

 

Randall J. Weisenburger

 

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Carnival Corporation

Director since 2009

 

Carnival plc Director

since 2009

 

Age: 60

  

Mr. Weisenburger has been the Managing Member of Mile 26 Capital LLC, a private investment firm, since 2014. He was the Executive Vice President and Chief Financial Officer of Omnicom Group Inc., a Fortune-250 global advertising, marketing and corporate communications company, from 1998 to 2014.

 

Board Committees: Audit, Compensation (Chair) and Nominating & Governance

 

Other Public Company Boards: Valero Energy Corporation (since 2011)

 

Qualifications:

Mr. Weisenburger’s qualifications to serve on the Boards include his broad leadership and operational skills gained as a senior executive of a large multi-national corporation and his extensive financial and accounting skills acquired as an investment banker and senior financial operating executive.

 

BOARD AND COMMITTEE GOVERNANCE

 

Board Meetings

During the year ended November 30, 2018, the Board of Directors of each of Carnival Corporation and Carnival plc held a total of six meetings. Each Carnival Corporation Director and each Carnival plc Director attended either telephonically or in person at least 75% of all Carnival Corporation & plc Board of Directors and applicable Board Committee meetings held during the period that he or she served in fiscal 2018.

All Board members are expected to attend our Annual Meetings of Shareholders. At the 2018 Annual Meetings, all 11 incumbent Board members of each company were in attendance, except for Sir John Parker who missed due to illness.

Board Leadership Structure

Our Boards of Directors are led by our executive Chair, Mr. Arison. The Chief Executive Officer position is currently separate from the Chair. The Boards maintain the flexibility to determine whether the roles of Chair and Chief Executive Officer should be combined or separated, based on what it believes is in the best interests of Carnival Corporation & plc at a given point in time. We believe that the separation of the Chair and Chief Executive Officer positions is appropriate corporate governance for us at this time, and that having Mr. Arison as our executive Chair enables Carnival Corporation & plc and the Boards to continue to benefit from Mr. Arison’s skills and expertise, including his extensive knowledge of our business.

Our Non-Executive Directors, all of whom are independent, meet privately in executive session at least quarterly. The Presiding Director leads those meetings and also acts as the Senior Independent Director under the UK Corporate Governance Code. In addition, the Presiding Director serves as the principal liaison to the Non-Executive Directors, reviews and approves meeting agendas for the Boards and reviews meeting schedules. Our Non-Executive Directors, acting in executive session, elected Mr. Weisenburger in July 2017 as the Presiding Director and Senior Independent Director.

 

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GOVERNANCE

Board and Committee Governance

 

The structure of our Boards facilitates the continued strong communication and coordination between management and the Boards and enables the Boards to fulfill their risk oversight responsibilities, as further described below.

Board Committees

The Boards delegate various responsibilities and authority to different Board Committees. The Board Committees regularly report on their activities and actions to the full Boards. The Board of Directors of each of Carnival Corporation and Carnival plc has established standing Committees, which are each comprised of the same Directors for each company, as follows:

 

 

Audit;

 

Compensation;

 

Executive;

 

HESS; and

 

Nominating & Governance.

Each Board Committee periodically reviews its charter in light of new developments in applicable regulations and may make additional recommendations to the Boards to reflect evolving best practices. Each Board Committee can engage outside experts, advisors and counsel to assist the Committee in its work.

The current Board Committee members are as follows:

 

  Name

 

Board Committees

 

 

    Audit    

 

 

Compensation

 

 

Executive

 

 

    HESS    

 

 

  Nominating &  

Governance

 

 

  Micky Arison

 

 

 

 

 

  Chair

 

 

 

 

 

 

  Sir Jonathon Band

 

 

 

 

 

 

 

  Chair

 

  X

 

 

  Jason Glen Cahilly

 

  X

 

 

 

 

 

 

 

 

 

 

  Helen Deeble

 

 

 

 

 

 

 

  X

 

 

 

 

  Arnold W. Donald

 

 

 

 

 

  X

 

 

 

 

 

 

  Richard J. Glasier

 

  Chair

 

  X

 

 

 

 

 

  X

 

 

  Debra Kelly-Ennis

 

 

 

 

 

 

 

  X

 

 

 

 

  Katie Lahey

 

  X

 

 

 

 

 

 

 

 

 

 

  Sir John Parker

 

 

 

 

 

 

 

  X

 

  X

 

 

  Stuart Subotnick

 

  X

 

 

 

  X

 

 

 

  Chair

 

 

  Laura Weil

 

  X

 

  X

 

 

 

 

 

 

 

 

  Randall J. Weisenburger

 

  X

 

  Chair

 

 

 

 

 

  X

 

 

  Number of Board Committee meetings in fiscal 2018

 

  10

 

  4

 

  0

 

  4

 

  4

 

Audit Committees. The Audit Committees assist the Boards in their general oversight of our financial reporting, internal controls and audit functions, and are responsible for the appointment, retention, compensation, and oversight of the work of our independent auditors and our independent registered public accounting firm. The Board of Directors of Carnival Corporation has determined that each member of the Audit Committees is both “independent” and an “audit committee financial expert,” as defined by SEC rules. In addition, the Board of Directors of Carnival plc has determined that each member of the Audit Committees has “recent and relevant financial experience” for the purposes of the UK Corporate Governance Code. The Boards determined that each member of the Audit Committees has sufficient knowledge in reading and understanding the company’s financial statements to serve on the Audit Committees. The responsibilities and activities of the Audit Committees are described in detail in “Report of the Audit Committees” and the Audit Committees’ charter.

 

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Board and Committee Governance

 

Compensation Committees. The Compensation Committees have authority for reviewing and determining salaries, performance-based incentives, and other matters related to the compensation of our executive officers, and administering our stock incentive plans, including reviewing and granting equity-based grants to our executive officers and other employees. The Compensation Committees also review and determine various other compensation policies and matters, including making recommendations to the Boards with respect to the compensation of the Non-Executive (non-employee) Directors, incentive compensation and equity-based plans generally, and administering the employee stock purchase plans. For more information on the responsibilities and activities of the Compensation Committees, including the Committees’ processes for determining executive compensation, see “Compensation Discussion and Analysis” and “Executive Compensation” sections and the Compensation Committees’ charter.

Executive Committees. The Executive Committees may exercise the authority of the full Boards between meetings of the Boards, except to the extent that the Boards have delegated authority to another Committee or to other persons, and except as limited by applicable law.

HESS Committees. The HESS Committees review and recommend policies relative to the protection of the environment and the health, safety and security of employees, contractors, guests and the public. The HESS Committees also supervise and monitor health, environmental, safety, security and sustainability policies and programs and review with management significant risks or exposures and actions required to minimize such risks. For more information on the responsibilities and activities of the HESS Committees, see the HESS Committees’ charter.

Nominating & Governance Committees. The Nominating & Governance Committees review and report to the Boards on a periodic basis with regard to matters of corporate governance, including succession planning. The Nominating & Governance Committees also review and assess the effectiveness of our Corporate Governance Guidelines, make recommendations to the Boards regarding proposed revisions to these guidelines, and make recommendations to the Boards regarding the size and composition of the Boards and their Committees. For more information on the responsibilities and activities of the Nominating & Governance Committees, see “Nominations of Directors” and “Procedures Regarding Director Candidates Recommended by Shareholders” sections and the Nominating & Governance Committees’ charter. Additional information with respect to Carnival plc’s corporate governance practices during fiscal 2018 is included in the Carnival plc Corporate Governance Report attached as Annex C to this Proxy Statement.

Board and Committee Independence

Under New York Stock Exchange standards of independence for directors, the Board must determine that a Director does not have any material relationship with Carnival Corporation & plc or its subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with Carnival Corporation & plc) and meet certain bright-line tests. The Boards of Directors have determined that each of Sir Jonathon Band, Jason Glen Cahilly, Helen Deeble, Richard J. Glasier, Debra Kelly-Ennis, Katie Lahey, Sir John Parker, Stuart Subotnick, Laura Weil and Randall J. Weisenburger is an “independent director” in accordance with the New York Stock Exchange standards of independence for directors and that all members of the Audit Committees and Compensation Committees meet the heightened independence criteria applicable to Directors serving on those Committees under SEC rules and New York Stock Exchange listing standards. Accordingly, a majority of the Directors of each company, all of our Non-Executive Directors and all of the members of the Audit Committees, Compensation Committees, HESS Committees and Nominating & Governance Committees of each company are independent (as defined by the New York Stock Exchange listing standards, SEC rules and the UK Corporate Governance Code).

 

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Board and Committee Governance

 

Risk Oversight

Our Boards use their Committees to assist in their risk oversight function as follows:

 

 

Our Audit Committees are responsible for oversight of our financial, operational and non-HESS controls and compliance activities, including those related to information technology operations, cybersecurity and privacy. In connection with its risk oversight role, the Audit Committees regularly meet privately with representatives from Carnival Corporation’s independent registered public accounting firm, the Carnival plc independent auditor, the Chief Audit Officer and the General Counsel.

 

Our Compensation Committees are responsible for oversight of risk associated with our executive compensation structure, policies and programs.

 

Our HESS Committees are responsible for oversight of risk associated with the health, environment, safety and security of employees, contractors, guests and the public.

 

Our Nominating & Governance Committees are responsible for oversight of risk associated with Board processes and corporate governance, including succession planning.

Each Committee Chair presents on its area of risk oversight to the full Boards for review.

Discussions between management and the Boards regarding the Carnival Corporation & plc strategic plan, consolidated business results, capital structure, and other business-related activities include a discussion of the risks associated with the particular item under consideration.

The Boards believe that the structure and assigned responsibilities provides the appropriate focus, oversight and communication of principal risks faced by our companies.

Compensation Risk Assessment

Carnival Corporation & plc’s management, in conjunction with the Compensation Committees’ independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), conducted a thorough review of our compensation programs, including those programs in which our Named Executive Officers participate, to determine if aspects of those programs contribute to excessive risk-taking. Based on the findings from this review and the annual reassessment, the Compensation Committees continue to believe that our compensation policies and practices do not encourage excessive risk-taking and are not reasonably likely to have a material adverse effect on Carnival Corporation & plc.

To reach this conclusion, key elements of our compensation programs were assessed to determine if they exhibited excessive risk. These elements included pay mix (cash vs. equity) and pay structure (short vs. long-term focus), performance metrics, performance goals and ranges, the degree of leverage, incentive maximums, payment timing, incentive adjustments, use of discretion and stock ownership requirements. Our assessment reinforced the Compensation Committees’ belief that our compensation programs are not contributing to excessive risk-taking, but instead contain many features and elements that help to mitigate risk. For example:

 

 

Pay Structure. Our compensation programs emphasize both short and long-term performance through our annual bonus program (delivered in cash) and through the delivery of long-term incentives (equity) in a balanced approach (approximately 46% through base salary and bonus and 54% in long-term equity grants). The mix of our pay program is intended to motivate management to consider the impact of decisions on shareholders in the short, intermediate and long-term.

 

Incentive Limits. Our annual bonus plans do not allow for unlimited payouts. Bonuses cannot exceed 200% of target levels. The performance-based share grants made in fiscal 2018 limit the

 

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Board and Committee Governance

 

 

payouts to 200% (in the case of PBS and MTE grants as described below) or 600% (in the case of SEA grants as described below) of target.

 

Performance-Based Share Grants. To strengthen the relationship between pay and performance, all of our equity grants to senior executives for fiscal 2018 service have been in the form of performance-based share grants.

 

Performance Measurement. For corporate officers, the performance measurement used when determining their annual bonus is based on the performance of Carnival Corporation & plc. For officers of our operating units, the performance measurements used when determining their bonus is based 50% on the performance of their operating unit, with the remaining balance being based on the performance of Carnival Corporation & plc to enable a continued focus on the overall success of Carnival Corporation & plc.

 

Stock Ownership Policy. All senior executives who are designated as reporting officers under Section 16 of the Exchange Act, including our Named Executive Officers, are subject to a stock ownership policy which specifies target ownership levels of Carnival Corporation and Carnival plc shares in terms of the value of the equity holdings as a multiple of each officer’s base salary.

 

Clawback Policy. The Carnival Corporation 2011 Stock Plan (which was approved by shareholders in 2011), the Carnival plc 2014 Employee Share Plan (which was approved by shareholders in 2014) and the incentive plan used to determine annual bonuses contain clawback provisions, which authorize us to recover incentive-based compensation granted under those plans in the event Carnival Corporation & plc is required to restate their financial statements due to fraud or misconduct.

Corporate Governance Guidelines

Our Corporate Governance Guidelines address various governance issues and principles, including Director qualifications and responsibilities, access to management personnel, Director compensation, Director orientation and continuing education and annual performance evaluations of the Boards, their Committees and individual Directors. Our Corporate Governance Guidelines are posted on our website at www.carnivalcorp.com and www.carnivalplc.com.

Chief Executive Officer Succession Planning

Our Boards believe that planning for the succession of our Chief Executive Officer is an important function. Our multi-brand structure enhances our succession planning process. At the corporate level, a highly-skilled management team oversees a collection of cruise brands. At both the corporate and brand levels, we continually strive to foster the professional development of senior management. As a result, Carnival Corporation & plc has developed a very experienced and strong group of leaders, with their performance subject to ongoing monitoring and evaluation, as potential successors to all of our senior executive positions, including our Chief Executive Officer.

The Boards and the Nominating & Governance Committees are responsible for succession planning, including emergency succession planning. The independent Non-Executive Directors meet with the Chairman and the Chief Executive Officer (both together and individually) at least quarterly to plan for the succession of the Chief Executive Officer, including plans in the event of an emergency. During those sessions, each of the Chairman and the Chief Executive Officer discusses his recommendations of potential successors, along with an evaluation and review of any development plans for such individuals. As provided in our Corporate Governance Guidelines, the Nominating & Governance Committees will, when appropriate, make recommendations to the Boards with respect to potential successors to the Chief Executive Officer. All members of the Boards will work with the Nominating & Governance Committees to see that qualified candidates are available and that development plans are

 

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being utilized to strengthen the skills and qualifications of the candidates. When assessing the qualifications of potential successors to the Chief Executive Officer, the Boards and the Nominating & Governance Committees will take into account our business strategy as well as any other criteria they believe are relevant.

Procedures Regarding Director Candidates Recommended by Shareholders

The Nominating & Governance Committees will also consider shareholder recommendations of qualified Director nominees when such recommendations are submitted in accordance with the procedures below. In order to recommend a candidate for consideration by the Nominating & Governance Committees for election at the 2019 Annual Meetings, a shareholder must provide the same information as is required for shareholders to submit Director nominations under the advance notice provision set forth in Carnival Corporation’s By-laws. Specifically, any such recommendation must include, in addition to any other informational requirements specifically set forth in Carnival Corporation’s and Carnival plc’s governing documents:

 

 

the name and address of the candidate;

 

a brief biographical description, including his or her occupation and service on Boards of Directors of any public company or registered investment company for at least the last five years;

 

a statement of the particular experience, qualifications, attributes or skills of the candidate, taking into account the qualification requirements set forth above; and

 

the candidate’s signed consent to serve as a Director if elected and to be named in the Proxy Statement.

Once we receive the recommendation, we may deliver to the candidate a questionnaire that requests additional information about the candidate’s independence, qualifications and other matters that would assist the Nominating & Governance Committees in evaluating the candidate, as well as certain information that must be disclosed about the candidate in our Proxy Statement or other regulatory filings, if nominated. Candidates must complete and return the questionnaire within the time frame provided to be considered for nomination by the Nominating & Governance Committees at the Annual Meetings. For our 2020 Annual Meetings of Shareholders, the Nominating & Governance Committees will consider recommendations received by our Secretary at our headquarters no later than November 8, 2019.

Communications between Shareholders or Interested Parties and the Boards

Shareholders or interested parties who wish to communicate with the Boards, the Presiding Director, the Non-Executive Directors as a group or any individual Director should address their communications to the attention of the Secretary of Carnival Corporation and Carnival plc at 3655 N.W. 87th Avenue, Miami, Florida 33178 U.S.A. The Secretary will maintain a log of all such communications, promptly forward to the Presiding Director those which the Secretary believes require immediate attention, and also periodically provide the Presiding Director with a summary of all such communications and any responsive actions taken. The Presiding Director will notify the Boards or the Chairs of the relevant Board Committees as to those matters that he believes are appropriate for further action or discussion.

Code of Business Conduct and Ethics

Carnival Corporation and Carnival plc’s Code of Business Conduct and Ethics applies to all employees and members of the Boards of Carnival Corporation and Carnival plc and provides guiding principles on areas such as identifying and resolving conflicts of interest. Our Code of Business Conduct and Ethics is posted on our website at www.carnivalcorp.com and www.carnivalplc.com.

 

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GOVERNANCE

Director Compensation

 

DIRECTOR COMPENSATION

 

During fiscal 2018, our Non-Executive Directors were entitled to receive an annual retainer of $110,000 per year, equity compensation, as further described below, and reimbursement for travel, meals and accommodation expenses attendant to their Board membership. We do not provide retirement benefits or other benefits to our Non-Executive Directors. We reimburse Directors for travel expenses incurred for spouses or partners when we request that they attend a special event. Any amount reimbursed for spousal or partner travel is reported below in the “Director Compensation for Fiscal 2018” table. For fiscal 2018, the Presiding Director received an additional retainer of $25,000 per annum. In addition, Non-Executive Directors receive additional compensation for serving as Chair of a Board Committee. Board members who are employed by us do not receive additional compensation for their services as a member of the Boards of Directors.

During fiscal 2018, the retainers for the Chair of Board Committees were as follows:

 

  Board Committee   

Chair

    Retainer    

 

 

  Audit Committees

 

    

 

$30,000

 

 

 

 

  Compensation Committees

 

    

 

$30,000

 

 

 

 

  Executive Committees

 

    

 

 

 

 

 

  HESS Committees

 

    

 

$30,000

 

 

 

 

  Nominating & Governance Committees

 

    

 

$15,000

 

 

 

The Boards of Directors are committed to attracting and retaining a highly diverse, experienced and capable group of Non-Executive Directors. To that end, the Compensation Committees annually review Non-Executive Director pay levels and compensation practices of certain other publicly-listed companies with the assistance of their consultant to ensure our compensation program is competitive.

Non-Executive Directors receive payment of their earned retainer in quarterly installments. Annual retainers are pro-rated so that adjustments can be made during the year. Unearned portions of cash retainers are forfeited upon termination of service.

Non-Executive Directors receive annual restricted share grants under the Carnival Corporation 2011 Stock Plan. In April 2018, the Non-Executive Directors received grants with a dollar value equal to approximately $175,000. As a result, a grant of 2,749 Carnival Corporation restricted shares was made to each Non-Executive Director elected or re-elected on April 11, 2018 based on the closing price of a share on that date of $63.64.

Grants under the Carnival Corporation 2011 Stock Plan are released from restriction on the third anniversary of the grant date (and are not forfeitable provided the Director has served at least a full year). Grants of restricted shares have the same rights with respect to dividends and other distributions as all other outstanding shares of Carnival Corporation common stock. Generally, Non-Executive Directors will receive their annual grants initially upon their election to the Boards and subsequently at the time of their annual re-election to the Boards.

 

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Director Compensation

 

Director Compensation for Fiscal 2018

The following table details the total compensation earned by our Directors in fiscal 2018, other than Mr. Donald who is a Named Executive Officer. Mr. Donald’s compensation is reflected in the “Summary Compensation Table,” which follows the “Compensation Discussion and Analysis” section. Board members who are employed by us do not receive additional compensation for their services as a member of the Boards of Directors.

 

  Name   

Fees Earned or

Paid in Cash(1)

($)

    

Stock

Awards(2)(3)

($)

    

All Other

Compensation(4)

($)

    

  Total  

($)

 

 

  Micky Arison(5)

 

    

 

1,000,000

 

 

 

    

 

 

 

 

    

 

100,943

 

 

 

    

 

1,100,943  

 

 

 

 

  Sir Jonathon Band

 

    

 

140,000

 

(6)  

 

 
    

 

174,946

 

 

 

    

 

5,310

 

 

 

    

 

320,256  

 

 

 

 

  Jason Glen Cahilly

 

    

 

110,000

 

 

 

    

 

174,946

 

 

 

    

 

6,024

 

 

 

    

 

290,970  

 

 

 

 

  Helen Deeble

 

    

 

110,000

 

 

 

    

 

174,946

 

 

    

 

3,832

 

 

 

    

 

288,788  

 

 

 

 

  Richard J. Glasier

 

    

 

140,000

 

 

 

    

 

174,946

 

 

 

    

 

8,232

 

 

 

    

 

323,178  

 

 

 

 

  Debra Kelly-Ennis

 

    

 

110,000

 

 

 

    

 

174,946

 

 

 

    

 

8,732

 

 

 

    

 

293,678  

 

 

 

 

  Katie Lahey(7)

 

    

 

 

 

 

    

 

 

 

 

    

 

 

 

 

    

 

—  

 

 

 

 

  Sir John Parker

 

    

 

110,000

 

 

 

    

 

174,946

 

 

 

    

 

5,445

 

 

 

    

 

290,391  

 

 

 

 

  Stuart Subotnick

 

    

 

125,000

 

 

 

    

 

174,946

 

 

 

    

 

3,520

 

 

 

    

 

303,466  

 

 

 

 

  Laura Weil

 

    

 

110,000

 

 

 

    

 

174,946

 

 

 

    

 

 

 

 

    

 

284,946  

 

 

 

 

  Randall J. Weisenburger

 

    

 

165,000

 

 

 

    

 

174,946

 

 

 

    

 

 

 

 

    

 

339,946  

 

 

 

 

(1)

Refer to the table above describing the Chair of the Board Committees.

(2)

No stock option grants were made in fiscal 2018. Represents the grant date fair value, assuming no risk of forfeiture of the grants of Carnival Corporation restricted shares made in fiscal 2018, calculated in accordance with Accounting Standards Codification Topic 718, “Stock Compensation” (“ASC 718”). In April 2018, each of the Non-Executive Directors received a grant of 2,749 restricted shares based on the closing price of a share on April 11, 2018, the day they were elected or re-elected, of $63.64. The restricted shares granted in 2018 vest on the third anniversary of the grant date. The restricted shares granted to Non- Executive Directors also vest in full upon the death or disability of the Director, and continue to vest in accordance with the original vesting schedule and are not forfeited if a Director ceases to be a Director for any other reason after having served as a Director for at least one year. All of the Directors who received grants served for all of fiscal 2018.

(3)

None of the directors holds stock options. The aggregate number of Carnival Corporation and Carnival plc restricted shares outstanding at November 30, 2018 are as follows:

 

  Name   

  Unvested Restricted  

Shares

  Micky Arison

       0

  Sir Jonathon Band

       8,560

  Jason Glen Cahilly

       2,749

  Helen Deeble

       5,458

  Richard J. Glasier

       8,560

  Debra Kelly-Ennis

       8,560

  Katie Lahey

       N/A

  Sir John Parker

       8,560

  Stuart Subotnick

       8,560

  Laura Weil

       8,560

  Randall J. Weisenburger

       8,560

 

(4)

Benefits provided to Mr. Arison include private medical health insurance costs ($57,937), driver and security ($21,024), automobile lease ($12,314),and the following other benefits: accidental death or dismemberment insurance premiums, disability insurance premiums, life insurance premiums and automobile repairs and expenses($9,668). For the Non-Executive Directors, benefits represent reimbursement of expenses associated with spousal or partner travel and tax gross-ups for the spousal or partner travel.

(5)

Represents compensation for Mr. Arison’s service as Executive Chairman.

(6)

Exclusive of value-added tax.

(7)

Ms. Lahey was appointed to the Boards in January 2019 and thus did not receive any compensation during fiscal 2018.

 

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Related Person Transactions

 

The following policies also apply to our Non-Executive Directors:

 

 

Stock Ownership Policy. The stock ownership policy for Non-Executive Directors provides that all Non-Executive Directors are required to own shares (inclusive of unvested restricted shares, restricted stock units (“RSUs”) and shares in a trust beneficially owned by the Director) of either Carnival Corporation common stock or Carnival plc ordinary shares with a value equal to a multiple of the cash retainer. During fiscal 2018, the Board increased the target ownership level from four times the cash retainer to five times the cash retainer. New Directors must achieve this requirement no later than five years from the date of their initial election to the Boards by the shareholders. Other than Ms. Deeble and Mr. Cahilly who were initially elected at the 2017 and 2018 Annual Meetings, respectively, and Ms. Lahey, who was appointed to the Boards in January 2019 and is proposed for election at the 2019 Annual Meetings, each of the Non-Executive Directors elected has achieved this Board-mandated requirement.

 

Product Familiarization. All Non-Executive Directors are encouraged to take a cruise(s) for up to a total of 14 days per year for product familiarization and pay a fare of $35 per person per day for such cruises (or $50 per day in the case of Seabourn), plus taxes, fees and port expenses. All other charges associated with the cruise (e.g., air, ground transfers, gratuities, tours and fuel supplements, if any) are the responsibility of the Non-Executive Director.

Carnival plc

Additional information with respect to Carnival plc’s compensation and reimbursement practices during fiscal 2018 for Non-Executive Directors is included in Part II of the Carnival plc Directors’ Remuneration Report, which is attached as Annex B to this Proxy Statement.

RELATED PERSON TRANSACTIONS

 

Review and Approval of Transactions with Related Persons

Consistent with our written policies and procedures, it is our practice to review all relationships and transactions in which Carnival Corporation or Carnival plc is a participant and in which our Directors, nominees and executive officers and their immediate family members and any five percent beneficial holders have an interest in order to determine whether such related persons have a direct or indirect material interest. Our Legal and Global Accounting and Reporting Services Departments are primarily responsible for the development and implementation of processes and controls to obtain information from the Directors, nominees and executive officers with respect to related person transactions and for then determining, based on the facts and circumstances, whether a related person has a direct or indirect material interest in the transaction. As required under SEC rules, transactions exceeding $120,000 in which Carnival Corporation & plc was or is to be a participant and a related person had or will have a direct or indirect material interest are disclosed in this Proxy Statement.

In addition, in accordance with our Schedule of Matters Reserved to the Boards and their Committees for their Decision, the Boards review and approve or ratify any related person transaction involving:

 

 

a Director, regardless of the amount; and

 

a Non-Director executive officer with an aggregate value in excess of $50,000.

In the course of their review and approval or ratification of a related person transaction, the Boards may consider factors as follows:

 

 

the nature of the related person’s interest in the transaction;

 

the material terms of the transaction, including, without limitation, the amount and type of transaction;

 

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Related Person Transactions

 

 

the importance of the transaction to the related person;

 

the importance of the transaction to Carnival Corporation & plc;

 

whether the transaction would impair the judgment of a Director or executive officer to act in our best interest; and

 

any other matters the Boards deem appropriate.

Any member of the Boards who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting approval or ratification of the transaction, provided, however, that such Director may be counted in determining the presence of a quorum at a meeting of the Board that considers the transaction.

Transactions with Related Persons

Transactions with Micky Arison. Micky Arison, our Chairman, is also the Chairman, President and the indirect sole shareholder of FBA II, Inc., the general partner of Miami Heat Limited Partnership (“MHLP”), the owner of the Miami Heat, a professional basketball team. He is also the indirect shareholder of Basketball Properties, Inc., the general partner of Basketball Properties, Ltd. (“BPL”), which is the manager and operator of the American Airlines Arena. Pursuant to a five-year advertising and promotion agreement between Carnival Cruise Line, MHLP and BPL, Carnival Cruise Line paid $538,000 during fiscal 2018. Carnival Cruise Line also paid $110,000 during fiscal 2018 for in-game promotions to publicize Carnival Cruise Line during Miami Heat games.

In August 2015, Carnival Corporation entered into the following agreements:

 

 

a nonexclusive Aircraft Lease Agreement with an owner trustee under a trust agreement with AD Astra I, LLC (the “Lease Agreement”); and

 

a Services Agreement with AFO, LLC (the “Services Agreement” and together with the Services Agreement, the “Aircraft Agreements”).

Both AD Astra I, LLC and AFO, LLC are companies directly or indirectly controlled by a trust of which Mr. Arison is a beneficiary.

Under the terms of the Lease Agreement, Carnival Corporation leases an aircraft beneficially owned by AD Astra I, LLC for additional flight capacity from time-to-time in exchange for an hourly rent of $4,500 plus applicable taxes, which is based on market charter rates for similar aircraft as adjusted for costs of operations borne by Carnival Corporation (i.e., fuel, crew costs and line maintenance during its operation of the aircraft) and hourly service plan expenses.

Under the terms of the Service Agreement, Carnival Corporation provides aircraft management services to AFO, LLC with respect to the aircraft, including overseeing its operation, maintenance, and staffing, and is paid an annual fee of $216,000 (which is based on market rates for similar arrangements) (the “Service Fee”). In addition, Carnival Corporation will be reimbursed for operating, maintenance and personnel costs and related third party costs incurred in connection with the services (“Service Costs”). The terms of the Aircraft Agreements are one year and renew automatically for one-year periods, unless terminated sooner by either party upon 30 days’ written notice.

During fiscal 2018, Carnival Corporation paid AD Astra I, LLC $789,000 under the Lease Agreement, and AFO, LLC paid Carnival Corporation $216,000 for the Service Fee and reimbursed Carnival Corporation $1,733,000 for the Service Costs.

The Boards have reviewed and approved or ratified these transactions.

 

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SHARE OWNERSHIP

 

SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Directors and Executive Officers

Set forth below is information concerning the share ownership as of January 17, 2019 of:

 

 

each of our Directors;

 

each individual named in the “Summary Compensation Table” which appears elsewhere in this Proxy Statement; and

 

all Directors and executive officers as a group.

The number of shares beneficially owned by each entity, person, Director or executive officer is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and also any shares that the individual would have the right to acquire as of March 17, 2019 (being 60 days after January 17, 2019) through the vesting of RSUs.

 

  Name and Address of

  Beneficial Owners or

  Identity of Group(1)

 

 

Amount and Nature of

Beneficial Ownership of

Carnival Corporation

Common Stock*

 

 

Percentage of

Carnival

Corporation

Common Stock

 

 

Amount and

Nature of

Beneficial

Ownership of

Carnival plc

Ordinary

Shares

 

 

Percentage of

Carnival plc

Ordinary

Shares

 

 

 Percentage of 

Combined

Voting

Power**

 

 

Micky Arison

 

     

 

126,136,034

 

(2)(3)

 

 
     

 

23.9%

 

 

 

     

 

0

 

 

     

 

 

 

     

 

18.2%

 

 

 

 

Sir Jonathon Band

 

     

 

20,152

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

David Bernstein

 

     

 

36,557

 

(4)

 

 
     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Jason Glen Cahilly

 

     

 

2,749

 

 

     

 

 

 

     

 

0

 

 

     

 

 

 

     

 

 

 

 

Helen Deeble

 

     

 

5,458

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Arnold W. Donald

 

     

 

498,274

 

(4)(5)

 

 
     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Richard J. Glasier

 

     

 

23,124

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Stein Kruse

 

     

 

61,238

 

(4)

 

 
     

 

***

 

 

     

 

4,240

 

 

     

 

***

 

 

 

     

 

***

 

 

 

Debra Kelly-Ennis

 

     

 

24,845

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Katie Lahey

 

     

 

0

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Sir John Parker

 

     

 

26,104

 

 

     

 

***

 

 

     

 

10,004

 

(6)

 

 
     

 

***

 

 

 

     

 

***

 

 

 

Arnaldo Perez

 

     

 

33,909

 

(4)(7)

 

 
     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Stuart Subotnick

 

     

 

46,806

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Michael Thamm

 

     

 

0

 

 

     

 

 

 

     

 

50,914

 

(4)

 

 
     

 

***

 

 

     

 

***

 

 

 

Laura Weil

 

     

 

44,358

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

Randall J. Weisenburger

 

     

 

99,000

 

 

     

 

***

 

 

     

 

0

 

 

     

 

 

 

     

 

***

 

 

 

All Directors and executive officers as a group

   (17 persons)

 

     

 

127,058,608

 

 

     

 

24.1%

 

 

 

     

 

65,158

 

 

     

 

***

 

 

     

 

18.4%

 

 

 

*

As part of the establishment of the DLC arrangement, Carnival plc issued a special voting share to Carnival Corporation, which transferred such share to the trustee of the P&O Princess Special Voting Trust (the “Trust”), a trust established under the laws of the Cayman Islands. Trust shares of beneficial interest in the Trust were transferred to Carnival Corporation. The trust shares represent a beneficial interest in the Carnival plc special voting share. Immediately following the transfer, Carnival Corporation distributed such trust shares by way of a dividend to holders of shares of Carnival Corporation common stock. Under a pairing agreement, the trust shares of beneficial interest in the Trust are paired with, and evidenced by, certificates representing shares of Carnival Corporation common stock on a one-for-one basis. In addition, under the pairing agreement, when a share of Carnival Corporation common stock is issued to a person after the implementation of the DLC

 

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SHARE OWNERSHIP

Share Ownership of Certain Beneficial Owners and Management

 

 

arrangement, a paired trust share will be issued at the same time to such person. Each share of Carnival Corporation common stock and the paired trust share may not be transferred separately. The Carnival Corporation common stock and the trust shares (including the beneficial interest in the Carnival plc special voting share) Are listed and trade together on the New York Stock Exchange under the ticker symbol “CCL.” Accordingly, each holder of Carnival Corporation common stock is also deemed to be the beneficial owner of an equivalent number of trust shares.

**

As a result of the DLC arrangement, on most matters that affect all of the shareholders of Carnival Corporation and Carnival plc, the shareholders of both companies effectively vote together as a single decision-making body. Combined voting is accomplished through the special voting shares that have been issued by each company.

***

Less than one percent.

(1)

The address of each individual is 3655 N.W. 87 Avenue, Miami, Florida 33178.

(2)

Mr. Arison is a member of the Arison Group (defined below), which has filed a joint statement on Schedule 13D with respect to the shares of Carnival Corporation common stock held by such persons. Each member of the Arison Group may be deemed to own the shares of common stock held by all other members of the Arison Group. For information on the share ownership of other members of the Arison Group, see “Principal Shareholders” table below.

(3)

Includes (i) 4,934,166 shares of common stock held by the various Arison family trusts, (ii) 85,736,445 shares of common stock held by MA 1994 B Shares, L.P. and (iii) 35,465,423 shares of common stock held by the Artsfare 2005 Trust No. 2 by virtue of the authority granted to Mr. Arison under the last will of Ted Arison. Mr. Arison does not have an economic interest in the shares of common stock held by Artsfare 2005 Trust No. 2.

(4)

Includes PBS grants scheduled to be released February 15, 2019. The executive officer will also receive additional shares at the time of vesting to take into account dividend reinvestment during the period.

(5)

Includes 363,675 shares held by The Arnold W. Donald Revocable Trust UAD 5/26/98.

(6)

Includes 7,000 shares held by Barclays Wealth on behalf of Barnett Waddingham Trustees Ltd., the trustee for Sir John Parker’s Fixed Unapproved Restricted Retirement Scheme.

(7)

Includes 11,306 shares held by The Arnaldo Perez Trust U/A/D 3/18/2014.

Principal Owners

Set forth below is information concerning the share ownership of as of January 17, 2019:

 

 

all persons known by us to be the beneficial owners of more than 5% of the 526,719,965 shares of Carnival Corporation common stock and trust shares of beneficial interest in the P&O Princess Special Voting Trust outstanding; and

 

all persons known by us to be the beneficial owners of more than 5% of the 191,875,647 ordinary shares of Carnival plc outstanding, 25,666,636 of which are directly or indirectly owned by Carnival Corporation and have no voting rights.

 

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SHARE OWNERSHIP

Share Ownership of Certain Beneficial Owners and Management

 

Micky Arison, Chairman of the Board of each of Carnival Corporation and Carnival plc, certain other members of the Arison family and trusts for their benefit (collectively, the “Arison Group”), beneficially own shares representing approximately 24.6% of the voting power of Carnival Corporation and approximately 18.7% of the combined voting power of Carnival Corporation & plc and have informed us that they intend to cause all such shares to be voted in favor of Proposals 1 through 20. The table below begins with the ownership of the Arison Group.

 

   Name and Address of Beneficial

   Owners or Identity of Group(1)

 

Amount and Nature of

Beneficial Ownership of

Carnival Corporation

Common Stock*

 

Percentage of

Carnival

Corporation

Common Stock

 

Amount and

Nature of

Beneficial

Ownership of

Carnival plc

Ordinary

Shares

 

Percentage of

Carnival plc

Ordinary

Shares

 

 Percentage of 

Combined

Voting

Power**

MA 1994 B Shares, L.P.

      85,736,445 (2)(3)        16.3 %       0             12.4 %

MA 1994 B Shares, Inc.

      85,736,445 (2)(3)        16.3 %       0             12.4 %

Artsfare 2005 Trust No. 2
c/o SunTrust Delaware Trust Company
1011 Centre Road,
Suite 108
Wilmington, DE 19805

      35,465,423 (2)(5)        6.7 %       0             5.1 %

Verus Protector, LLC
Two Alhambra Plaza, Suite 1040
Coral Gables, FL 33134

      35,465,423 (2)(4)        6.7 %       0             5.1 %

Richard L. Kohan
Two Alhambra Plaza, Suite 1040
Coral Gables, FL 33134

      126,138,034 (2)(5)(11)        23.9 %       0             18.2 %

MBA I, L.P.
SunTrust Delaware Trust Company
1011 Centre Road, Suite 108
Wilmington, DE 19805

      900,000 (2)(6)        * **       0             * **

Artsfare 2003 Trust
SunTrust Delaware Trust Company
1011 Centre Road, Suite 108
Wilmington, DE 19805

      2,147,946 (2)(6)(11)        * **       0             * **

James M. Dubin
Madison Place Partners, LLC
One Madison Place
Harrison, NY 10528

      90,671,611 (2)(7)(9)        17.2 %       0             13.1 %

JMD Delaware, LLC

      87,419,457 (2)(7)(9)        16.6 %       0             12.6 %

Nickel 2015-94 B Trust
1313 North Market Street
Suite 5300
Wilmington, DE 19801

      85,736,445 (2)(3)        16.3 %       0             12.4 %

SunTrust Delaware Trust Company
1011 Centre Road, Suite 108
Wilmington, DE 19805

      36,015,423 (2)(8)        6.8 %       0             5.2 %

KLR, LLC
Two Alhambra Plaza, Suite 1040
Coral Gables, FL 33134

      87,419,457 (2)(10)        16.6 %       0             12.6 %

BlackRock, Inc.
55 East 52nd Street
New York, NY 10022

      29,824,886 (12)        5.7 %       15,323,044 (13)        9.2 %       6.5 %

Causeway Capital Management LLC
11111 Santa Monica Boulevard
Los Angeles, CA 90025

      0             10,047,568 (14)        6.1 %       1.5 %

*, ** and *** have the same meanings as indicated in the table above.

 

(1)

The address unless otherwise noted is 1201 North Market Street, Wilmington, DE 19899.

(2)

The Arison Group has filed a joint statement on Schedule 13D with respect to the shares of Carnival Corporation common stock held by such persons. Each member of the Arison Group may be deemed to own the shares of common stock held by all other members of the Arison Group.

(3)

MA 1994 B Shares, L.P. (“MA 1994, L.P.”) owns 85,736,445 shares of common stock. The general partner of MA 1994, L.P. is MA 1994 B Shares, Inc. (“MA 1994, Inc.”), which is wholly-owned by the Nickel 2015-94 B Trust, a trust established for the benefit of Mr. Arison and members of his family (the “B Trust”). The sole limited partner of MA 1994, L.P. is the B Trust. Under the terms of the instrument governing the B Trust, Mr. Arison has the sole right to vote and direct the sale of the common stock indirectly held by the B Trust. By virtue of the limited partnership agreement of MA 1994, L.P., MA 1994,

 

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SHARE OWNERSHIP

Section 16(a) Beneficial Ownership Reporting Compliance

 

 

Inc. may be deemed to beneficially own all such 85,736,445 shares of common stock. By virtue of the B Trust being the sole stockholder of MA 1994, Inc., the B Trust may be deemed to beneficially own all such 85,736,445 shares of common stock. By virtue of Mr. Arison’s interest in the B Trust and the B Trust’s interest in MA 1994, L.P., Mr. Arison may be deemed to beneficially own all such 85,736,445 shares of common stock. The administrative trustee of the B Trust is the Northern Trust Company of Delaware.

(4)

Verus Protector, LLC is the protector of Artsfare 2005 Trust No. 2. Verus Protector, LLC has shared voting and dispositive power with respect to the shares of common stock held by Artsfare 2005 Trust No. 2.

(5)

By virtue of being the sole member of Verus Protector, LLC, the sole member of KLR, LLC and a trustee of various Arison family trusts, Mr. Kohan may be deemed to own the aggregate of 126,136,034 shares of common stock beneficially owned by such entities, as to which he disclaims beneficial ownership. Mr. Kohan owns 1,000 shares of common stock directly and owns 1,000 shares of common stock indirectly by virtue of such shares owned by Mr. Kohan’s wife.

(6)

MBA I, L.P. (“MBA I”) owns 900,000 shares of common stock. The Artsfare 2003 Trust owns a controlling interest in MBA I; therefore, the Artsfare 2003 Trust is deemed to beneficially own all such 900,000 shares of common stock.

(7)

By virtue of being the sole member of JMD Delaware, LLC and trustee of various Arison family trusts, Mr. Dubin may be deemed to own the aggregate of 90,670,611 shares of common stock beneficially owned by such entities, as to which he disclaims beneficial ownership. Mr. Dubin owns 1,000 shares of common stock directly.

(8)

SunTrust Delaware Trust Company acts as trustee for the Artsfare 2005 Trust No. 2 and the Dozer Trust.

(9)

JMD Delaware, LLC is a Delaware limited liability company wholly owned by Mr. Dubin. JMD Delaware, LLC acts as an investment and distribution advisor of various Arison family trusts and has shared dispositive power over the shares of common stock held by certain of such trusts.

(10)

KLR, LLC is a Delaware limited liability company wholly owned by Mr. Kohan. KLR, LLC acts as an investment and distribution advisor for various Arison family trusts and has shared dispositive power over the shares of common stock held by certain of such trusts.

(11)

The Artsfare 2003 Trust owns a controlling interest in MBA 1 (see Note 6). By virtue of its controlling interest in MBA I, the Artsfare 2003 Trust is deemed to beneficially own 900,000 shares of common stock held directly by MBA I.

(12)

As reflected in Schedule 13G/A, filed on January 30, 2018 with the SEC. Blackrock, Inc. reported sole voting power over 25,154,278 shares of common stock and sole dispositive power over 29,824,887 shares of common stock.

(13)

As reflected in Schedule 13G/A, filed on January 30, 2018 with the SEC. Blackrock, Inc. reported sole voting power over 13,343,286 ordinary shares and sole dispositive power over 15,323,044 ordinary shares and shared voting.

(14)

As reflected in a separate Schedule 13G/A filed on February 14, 2018, with the SEC, Causeway Capital Management LLC reported sole voting power over 8,259,656 ordinary shares and sole dispositive power over 10,047,568 ordinary shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Based upon a review of Forms 3, 4 and 5 and amendments thereto furnished to Carnival Corporation and Carnival plc during and with respect to their most recent fiscal year and upon written representations from persons known to us to be subject to Section 16 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “reporting person”), all reporting persons filed on a timely basis reports required by Section 16(a) of the Exchange Act during and with respect to the year ended November 30, 2018.

 

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COMPENSATION

 

PROPOSAL 13

ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION

 

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and pursuant to Section 14A of the Exchange Act, our shareholders are being provided with the opportunity to cast an advisory (non-binding) vote to approve our executive compensation. We refer to this vote as the “say-on-pay” vote. Although this vote is advisory and is not binding on the Boards, the Compensation Committees will take into account the outcome of the vote when considering future executive compensation decisions.

The “say-on-pay” vote is required to be offered to our shareholders at least once every three years. In 2017, our Boards recommended that we provide shareholders with the opportunity to cast their “say-on-pay” vote each year and our shareholders agreed. As a result, the next “say-on-pay” vote is expected to occur at the 2020 Annual Meetings.

The Boards are committed to corporate governance best practices and recognize the significant interest of shareholders in executive compensation matters. The Compensation Committees seek to balance short-term and long-term compensation opportunities to enable Carnival Corporation and Carnival plc to meet short-term objectives while continuing to produce value for their shareholders over the long-term. They also promote a compensation program designed to attract, motivate and retain key executives. As discussed in the Compensation Discussion and Analysis, the Compensation Committees believe that our current executive compensation program directly links executive compensation to our performance and aligns the interests of our Named Executive Officers with those of our shareholders. For example:

 

 

Our compensation philosophy places more emphasis on variable elements of compensation (such as annual bonuses and equity-based compensation) than fixed remuneration.

 

In accordance with the Compensation Committees’ focus on long-term shareholder return, they approved performance-based share grants for our Named Executive Officers which vest based upon the extent to which certain pre-grant or post-grant performance criterion are attained. These grants also have maximum payout limitations. Performance criterion may include annual operating income, return on invested capital (“ROIC”), absolute total shareholder return (“TSR”) and/or TSR rank relative to the Peer Group (defined below).

 

To further promote long-term shareholder alignment, we require our Named Executive Officers to meet and maintain stock ownership requirements.

 

The Compensation Committees review the position of each element of total direct compensation relative to the competitive market, and use the range of total direct compensation levels in the competitive market to assess the extent to which the compensation provided to our Named Executive Officers is generally consistent with that offered by the competitive market to their named executive officers.

 

Carnival Corporation & plc does not offer U.S. executives excise tax gross-up protections.

We encourage you to read our Compensation Discussion and Analysis contained within this Proxy Statement for a more detailed discussion of our compensation policies and procedures.

Our shareholders have the opportunity to vote for or against, or to abstain from voting on, the following resolution:

“Resolved, that the shareholders approve the compensation of our Named Executive Officers as disclosed pursuant to the compensation disclosure rules of the SEC (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and any related material disclosed in this Proxy Statement).”

 

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COMPENSATION

Approval of Carnival plc Directors’ Remuneration Report

 

The Boards of Directors unanimously recommend a vote FOR approval of the compensation of our Named Executive Officers as disclosed pursuant to the compensation disclosure rules of the SEC (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and any related material disclosed in this Proxy Statement).

PROPOSAL 14

APPROVAL OF CARNIVAL PLC DIRECTORS’ REMUNERATION REPORT

 

In accordance with Section 439 of the Companies Act and Schedule 8 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulations 2008 (the “LMCG Regulations”), shareholders are voting to approve adoption of the Carnival plc Directors’ Remuneration Report. The Carnival plc Directors’ Remuneration Report is in two parts. Part I also constitutes the Compensation Discussion and Analysis as required by regulations promulgated by the SEC, and includes information that Carnival plc is required to disclose in accordance with the LMCG Regulations. Part II of the Carnival plc Directors’ Remuneration Report is set forth as Annex B to this Proxy Statement and includes the additional information that Carnival plc is required to disclose in accordance with the LMCG Regulations, including certain information which has been audited for the purposes of the Carnival plc Annual Report.

UK law only requires an advisory vote on the substance and content of the Carnival plc Directors’ Remuneration Report. Accordingly, disapproval of this Proposal 14 will not require us to amend the report or require any Director to repay any amount. However, the Boards and Compensation Committees are expected to take into account both the voting result and the views of our shareholders in their application, development and implementation of remuneration policies and plans.

The Boards of Directors unanimously recommend a vote FOR the approval of the Carnival plc Directors’ Remuneration Report.

COMPENSATION DISCUSSION AND ANALYSIS

and

CARNIVAL PLC DIRECTORS’ REMUNERATION REPORT – PART I

 

Introduction

Carnival Corporation and Carnival plc are separate legal entities (together referred to in this Report as “Carnival Corporation & plc”) and each company has its own Board of Directors and Compensation Committee. However, as is required by the agreements governing the DLC arrangement, the Boards of Directors and members of the Committees of the Boards, including the Compensation Committees, are identical and there is a single senior management team.

Carnival Corporation and Carnival plc are subject to disclosure regimes in the U.S. and UK. While some of the disclosure requirements are the same or similar, some are very different. As a result, the Carnival plc Directors’ Remuneration Report is in two parts. The information contained in this Part I constitutes the Compensation Discussion and Analysis as required by regulations promulgated by the SEC, and includes information that Carnival plc is required to disclose in accordance with Section 439 of the Companies Act and Schedule 8 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended (the “LMCG Regulations”). Part II of the Carnival plc Directors’ Remuneration Report is set forth as Annex B to this Proxy Statement and includes the additional information that Carnival plc is required to disclose in accordance with the LMCG Regulations, including certain information that has been audited for the purposes of the Carnival plc Annual Report.

 

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COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

Parts I and II of the Carnival plc Directors’ Remuneration Report are in compliance with the LMCG Regulations, the UK Corporate Governance Code published in April 2016 by the UK Financial Reporting Council (the “UK Corporate Governance Code”), the Companies Act and the Listing Rules of the UK Listing Authority. Both Parts I and II form part of the Carnival plc Annual Report for the year ended November 30, 2018.

Pursuant to rules promulgated by the SEC and the LMCG Regulations, this Compensation Discussion and Analysis reviews the compensation of the following Named Executive Officers of Carnival Corporation & plc:

 

 

 

  Named Executive Officers

 

 

 Arnold W. Donald

 

  

President and Chief Executive Officer

 

 

 David Bernstein

 

  

Chief Financial Officer and Chief Accounting Officer

 

 

 Stein Kruse

 

  

Group Chief Executive Officer of Holland America Group and Carnival UK

 

 

 Arnaldo Perez

 

  

General Counsel and Secretary

 

 

 Michael Thamm

 

  

Chief Executive Officer of Costa Group and Carnival Asia

 

Executive Summary

Our executive compensation program is designed to reward financial results and effective strategic leadership through use of both short-term rewards and long-term incentives and to promote alignment of the financial interests of our executive officers with our shareholders. We seek to provide total direct compensation (salary, bonus and equity grants) that allows us to be competitive in the labor markets where we compete for executive talent, adjusted as necessary to take into consideration factors including the senior executive’s performance, experience and responsibilities. We believe our compensation program’s performance measures align the interests of our shareholders and senior executives by linking actual pay to operating performance and shareholder outcomes.

Our compensation philosophy has historically been to emphasize at risk incentive pay in order to drive a pay-for-performance culture. In furtherance of this philosophy, all direct compensation for our Named Executive Officers, other than base salary, is 100% at risk and performance-based.

Most of our executive officers are located in the U.S., with others based in Europe. As a global entity, it is challenging to establish consistent compensation practices across geographic and operating company units that satisfy the particular requirements of all jurisdictions and local market demands. Since the largest presence of executive officers is in the U.S., our compensation policies primarily reflect U.S. market practices. However, the Compensation Committees seek to incorporate UK compensation principles, including those contained in the UK Corporate Governance Code, to the degree practicable.

 

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COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

 

 

  2018 Compensation Practices and Policies

 

 

  What we do

  

 

  

 

All compensation is performance-based and not guaranteed, other than base salary

 

  

  

Use multiple performance metrics to align pay with performance

 

  

  

Put caps on incentive compensation

 

  

  

Provide appropriate balance between short-term and long-term compensation to discourage short-term risk taking at the expense of long-term results

 

  

  

Set rigorous stock ownership requirements for Named Executive Officers based on a target multiple of base salary

 

  

  

Include clawback provisions in our incentive programs

 

  

  

Provide for only double-trigger change-in-control provisions

 

  

  

Prohibit short sales, short-term hedging and margin accounts of Carnival Corporation and Carnival plc shares

 

  

  

Engage an independent compensation consultant to review and advise on executive compensation

 

    

  

Regularly review the charter of the Compensation Committees to ensure best practices and priorities

 

 

  What we don’t do  

  

 

×

  

 

Provide guaranteed minimum bonuses

 

  

×

  

Reload, reprice or back-date stock options

 

  

×

  

Provide tax gross-ups on compensation or benefits, other than for spousal travel

 

  

×

  

Pay dividends on unvested or unearned performance-based share grants

 

    

×

  

Provide for automatic single-trigger vesting acceleration in connection with a change-in-control

 

Shareholder Engagement

Carnival Corporation & plc has a long-standing shareholder outreach program and routinely interacts with shareholders on a number of matters, including executive compensation. The Compensation Committees consider all feedback received about executive compensation.

In April 2018, shareholders approved our “say-on-pay” proposal with 92.4% of the votes cast in favor of the compensation paid to our Named Executive Officers. During the past year, we have continued to engage with shareholders and seek feedback on our compensation program and incorporate the results of that feedback in our compensation decisions. As a result, the Compensation Committees did not make any changes to the executive compensation program specifically as a result of the 2018 “say-on-pay” vote.

The Compensation Committees have and will continue to consider results from the annual shareholder advisory votes, including the next vote in April 2019, as well as other shareholder input, when reviewing executive compensation programs and policies.

 

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COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

Process for Making Compensation Determinations

The Compensation Committees determine the compensation policy and the compensation payable to all of our executive officers. The Compensation Committees interact with the management of Carnival Corporation & plc on compensation issues primarily through communications, meetings and discussions with the Chief Executive Officer, the Chairman of the Boards of Directors and the Chief Human Resources Officer, who also attend meetings of the Compensation Committees as requested by the Compensation Committees. As part of the fiscal 2018 annual compensation determination process, the Chief Executive Officer and the Chairman of the Boards of Directors recommended to the Compensation Committees key initiatives and goals for Carnival Corporation & plc at the beginning of the fiscal year. After the fiscal year was completed, the Chief Executive Officer and the Chairman of the Boards of Directors reviewed with the Compensation Committees the results of those initiatives, progress towards goals and other material items relating to overall Carnival Corporation & plc performance. The Chief Executive Officer reviewed the annual competitive market analysis provided by the independent consultant, as well as individual performance of each Named Executive Officer and the results of the group of brands or company-wide results, as appropriate, and provided the Compensation Committees with recommended total target compensation levels for each Named Executive Officer, except for his own. The compensation for our Named Executive Officers’ was then determined by the Compensation Committees using their discretion to evaluate the individual performance of our Named Executive Officers and the overall performance of Carnival Corporation & plc.

The Compensation Committees believe that the incentive structure for senior management does not raise environmental, social or governance risks by inadvertently motivating irresponsible behavior, and that risks arising from Carnival Corporation & plc’s compensation policies and practices for their workforce are not reasonably likely to have a material adverse effect on Carnival Corporation & plc. Please refer to the “Compensation Risk Assessment” section for additional information.

Independent Compensation Consultants. The Compensation Committees have engaged Frederic W. Cook & Co., Inc. (“FW Cook”) (together with its UK affiliated firm, FIT Remuneration Consultants LLP (“FIT”)) to assist in their annual review of our executive and Director compensation programs. The Compensation Committees believe that FW Cook and FIT provided objective advice to the Compensation Committees. FW Cook and FIT provide no other services to Carnival Corporation & plc.

During fiscal 2018, a consultant from FW Cook attended meetings of the Compensation Committees and provided FW Cook’s views on proposed actions by the Compensation Committees.

During fiscal 2018, the Compensation Committees also engaged Willis Towers Watson (“WTW”) to assist the Compensation Committees with the CEO Pay Ratio calculation and disclosure.

In accordance with the New York Stock Exchange rules relating to compensation consultant independence, the Compensation Committees have determined that FW Cook, FIT and WTW and their consultants are independent after taking into consideration the factors set forth in the New York Stock Exchange rules. Pursuant to the foregoing factors, the Compensation Committees have determined that FW Cook’s, FIT’s and WTW’s work raised no conflicts of interest.

Peer Group Characteristics. The Compensation Committees perform an annual review of the compensation practices of certain other publicly-listed companies with the assistance of their consultant. This annual market assessment consists of an analysis of executive pay at a group of publicly-listed peer companies.

The peer group listed below (the “Peer Group”) was used when assessing the fiscal 2018 compensation for our Named Executive Officers, which was unchanged from the peer group developed

 

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in October 2016 (except for the removal of Starwood Hotels and Resorts Worldwide, Inc. as a result of its acquisition by Marriott International, Inc.). The Peer Group consists of 19 publicly-listed companies from diverse industries that exhibit similar size and business characteristics with Carnival Corporation & plc and reflect the market in which we may compete for business, investor capital and/or executive talent. The Peer Group reflects a balanced group of companies in the consumer discretionary sector, including media, retailing, services and transportation companies.

 

 

Peer Group Companies

 

  

American Airlines Group Inc.

 

  

Marriott International, Inc.

 

  

Darden Restaurants, Inc.

 

  

McDonald’s Corporation

 

  

Delta Air Lines, Inc.

 

  

MGM Resorts International

 

  

easyJet plc

 

  

Norwegian Cruise Line Holdings Ltd.

 

  

FedEx Corporation

 

  

Royal Caribbean Cruises Ltd.

 

  

Hilton Worldwide Holdings Inc.

 

  

Starbucks Corporation

 

  

Hyatt Hotels Corporation

 

  

United Continental Holdings, Inc.

 

  

International Consolidated Airlines Group, S.A.

 

  

United Parcel Service, Inc.

 

  

Las Vegas Sands Corp.

 

  

Wyndham Worldwide Corporation

 

  

Live Nation Entertainment, Inc.

 

        

Competitive Market (Peer Group) Comparison. Annually, the Compensation Committees’ independent consultant, FW Cook, conducts a competitive market review to assist the Compensation Committees in their assessment of our Named Executive Officers’ competitive positioning of total compensation relative to the markets in which Carnival Corporation & plc competes for executive talent. FW Cook conducted a competitive market assessment on behalf of the Compensation Committees for fiscal 2018. The Compensation Committees reviewed our aggregate Named Executive Officer total compensation in comparison to the competitive market, which consists of the Peer Group as well as third-party surveys that reflect a broad database of hundreds of companies. The Compensation Committees were not provided with the identities of the companies in the surveys generally (or of the subsets of companies which had data for relevant comparable positions). As applicable, any utilized survey data was combined with the data for the Peer Group to produce a consolidated aggregated competitive market range for total direct compensation.

These analyses suggest that, in the aggregate, total direct compensation levels for our Named Executive Officers are competitively positioned. The Compensation Committees, as advised by FW Cook, consider total direct compensation to be generally competitive when within a range of 15% above or below the market median. Actual pay positioning can vary based on factors including job responsibilities, experience, impact of role and individual performance.

Consistent with the approach that the Compensation Committees take in reviewing each element of total direct compensation, the Compensation Committees utilize these analyses to assess the extent to which the compensation provided to our Named Executive Officers is generally consistent with that offered by companies with whom Carnival Corporation & plc competes for executive level talent. The Compensation Committees do not use these analyses to peg any particular element of compensation (or total compensation) to any specific targeted Peer Group level.

Named Executive Officer Compensation Design, Elements and Pay Mix

The compensation elements for our Named Executive Officers consist of base salary, an annual bonus, equity-based compensation, retirement benefits and perquisites.

The compensation practices for each of our Named Executive Officers vary in order to reflect the organizational structure of Carnival Corporation & plc. Three of our Named Executive Officers (Messrs.

 

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Donald, Bernstein and Perez) had company-wide roles during fiscal 2018 and two of our Named Executive Officers (Messrs. Kruse and Thamm) were Chief Executive Officers of groups operating two or more brands during fiscal 2018. As a result, the compensation practices for these two types of roles are different.

 

Named Executive
Officer
  Type of Role    Base Salary    Annual Bonus  

Equity-Based

Compensation

 

Retirement
Benefits

and Perquisites

 

Arnold W. Donald

 

  Company-wide role    Based on level of
responsibility and
increases based
on performance  or
other market
factors
   Based 100% on
company-wide
operating income
  MTE, PBS and SEA
grants to align
with
shareholder
outcomes
  Reflect country
practices where
a Named
Executive
Officer is employed

 

David Bernstein

 

 

Arnaldo Perez

 

 

Stein Kruse

 

  CEO of a group of brands   

 

Based 50% on
company-wide
operating income
and 50% on a group
of brands’  operating
income

 

 

Michael Thamm

 

In determining the amount of any particular compensation element, the Compensation Committees consider the impact of such an element on total compensation (and thus, each element affects the amount paid in respect of other elements of compensation). For example, the Compensation Committees consider the amount of the base salary and annual bonus that may be earned by a Named Executive Officer when making an equity grant. However, the annual bonus and equity-based compensation grants are set independently on the basis of dollar values (and are not set or determined as a fixed percentage of base salary).

As reflected in our target pay mix below, all direct compensation of our Named Executive Officers, other than base salary, is 100% at risk and performance-based in line with our philosophy to place greater emphasis on performance-based pay elements.

 

LOGO

 

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Fiscal 2018 Company Performance

We achieved double-digit ROIC and the highest full year earnings in our company’s history in 2018 reflecting our senior leadership’s focus on executing our business strategies effectively to achieve our goals.

 

 

  Fiscal 2018 Financial Results and Achievements

 

 

 

  •

  

 

Fiscal 2018 net income increased to $3.2 billion or $4.44 diluted earnings per share compared to $2.6 billion or $3.59 in fiscal 2017. Adjusted net income increased to $3.0 billion or $4.26 adjusted diluted earnings per share in fiscal 2018 compared to $2.8 billion or $3.82 in fiscal 2017(1)

 

 

  •

  

 

Increased revenues by $1.4 billion to achieve record revenues of $18.9 billion

 

 

  •

  

 

Generated cash from operations of $5.5 billion in fiscal 2018 compared to $5.3 billion in fiscal 2017

 

 

  •

  

 

Returned $2.8 billion to shareholders through the combination of dividends and share repurchases

 

 

  •

  

 

Increased the quarterly dividend to $0.50 per share from $0.40 per share in 2017

 

 

  •

  

 

Achieved our objective of double-digit ROIC in 2018, while maintaining a strong balance sheet and strong investment grade credit ratings

 

 

  •

  

 

Leveraged our scale to reduce costs, achieving cumulative savings of over $350 million in just five years

 

 

  •

  

 

Recognized globally for our innovation efforts, including being recognized by Fast Company as one of the “Top 10 Most Innovative Companies” in both the design and travel categories for our Ocean MedallionTM experience, which we debuted on Caribbean Princess

 

 

  •

  

 

Deployed our state-of-the-art revenue management system across nearly half of the company to facilitate further yield growth

 

 

  •

  

 

Continued to execute on our strategy to grow demand in excess of measured capacity growth by increasing consumer awareness and consideration of our cruise brands and the global cruise industry through ongoing public relations efforts and advertising, with our brands consistently capturing over 75 percent of all positive media in our industry and the absolute number of positive mentions being five times what they were just five years ago

 

 

  •

  

 

Exceeded our target unit fuel consumption reduction of 25 percent, three years ahead of schedule

 

 

  •

  

 

Opened the third of three state-of-the-art Fleet Operations Centers with advanced ship to shore communication technology

 

 

  •

  

 

Signed a historic joint venture agreement with CSSC, China State Shipbuilding Corporation, forming a local cruise operating company and forging a significant long-term relationship to help build the cruise industry in China

 

 

  •

  

 

Introduced three new ships during fiscal 2018: Carnival Horizon, Seabourn Ovation, and Nieuw Statendam and entered into agreements to sell six ships

 

(1)

Reconciliation to the corresponding $3.2 billion net income and $4.44 GAAP diluted earnings per share can be found on page F-43 of the Carnival Corporation & plc joint Annual Report on Form 10-K filed with the SEC on January 28, 2019.

2018 Compensation Recommendations and Rationale

As previously disclosed, the Compensation Committees undertook a fundamental restructuring of the compensation program for the Named Executive Officers in 2017. The restructured program, which strengthened the performance-based focus of compensation to our Named Executive Officers and enhanced the alignment between executive rewards and long-term gains for Carnival Corporation & plc and its shareholders, was continued for fiscal 2018. This compensation structure consists of base

 

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salary, performance-based annual bonus and three performance-based equity components tied to achievement of business objectives and total shareholder return. Therefore, every component of the compensation program, with the exception of base salary, is performance-based and at risk. This compensation philosophy continues to extend beyond our Named Executive Officers to include other key executives, reflecting the Compensation Committees’ commitment to aligning compensation with the success of Carnival Corporation & plc.

Comparison of Fiscal 2018 and Fiscal 2017 Total Direct Compensation

Mr. Donald – CEO

 

 

LOGO

Other Named Executive Officers

 

 

LOGO

 

(1)

Mr. Thamm’s compensation has been converted into dollars from euro and sterling as described below.

 

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Please refer to the following discussion and the “Compensation Tables” section for additional information on total direct compensation.

Base Salaries

Base salaries are intended to provide a level of fixed compensation that is reflective of each Named Executive Officer’s level of responsibility. Base salaries of our Named Executive Officers for fiscal 2018 are reported in the “Summary Compensation Table.” The Compensation Committees annually review each Named Executive Officer’s performance and may increase the base salary of a Named Executive Officer at their discretion if merited by performance or other market factors necessary to attract and retain our executives.

Salaries for fiscal 2018 were established for our Named Executive Officers in January 2018 after performance results for the prior fiscal year were available. There was no increase in the base salaries of our Named Executive Officers for fiscal 2018.

Annual Bonuses

In fiscal 2018, each Named Executive Officer’s target bonus comprised a significant portion of their respective total cash compensation opportunity, supporting Carnival Corporation & plc’s objective to emphasize pay for performance. Annual bonus payments are intended to reward short-term individual, corporate, and a group of brands’ performance results and achievements. The emphasis on the annual bonus as compared to base salary allows Carnival Corporation & plc to more closely link financial results to individual and overall company performance. Fiscal 2018 bonuses for our Named Executive Officers are reported in the “Summary Compensation Table” under the column labeled “Non-Equity Incentive Plan Compensation.”

For fiscal 2018, the annual bonuses for our Named Executive Officers were determined in accordance with the Carnival Corporation & plc Management Incentive Plan (the “Management Incentive Plan”) described below.

The Management Incentive Plan is designed to focus the attention of our executives, including our Named Executive Officers, on achieving outstanding performance results as reflected by income from the operations of Carnival Corporation & plc as well as other relevant measures. For the Named Executive Officers who are Chief Executive Officers of a group of brands, the Management Incentive Plan is designed to also focus their attention on achieving outstanding performance results as reflected in the operating income of the group of brands they oversee.

Under the Management Incentive Plan, the Corporation Operating Income Target, Brand Operating Income Target and target bonus for each executive are established by the Compensation Committees for each plan year. The respective operating income targets are the adjusted U.S. Generally Accepted Accounting Principles net income of Carnival Corporation & plc, or the respective brand (or group of brands), excluding interest income and expense, other nonoperating income and expense, and income taxes, as reported by Carnival Corporation & plc, or the respective brand (or group of brands), as applicable, for the plan year.

The “Corporation Operating Income Target” and “Brand Operating Income Target” for each year is established by the Compensation Committees taking into account historical performance, company/industry growth, Carnival Corporation & plc’s annual plan, consultation with management, investor guidance (as to the Corporation Operating Income Target), the brand’s annual plan (as to the Brand Operating Income Target) and such other factors as the Compensation Committees deem appropriate. In order to measure management’s controllable operating contribution to the company, the Corporation and Brand Operating Income Targets and the actual Corporation and Brand Operating Income

 

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achieved for fiscal 2018 were measured using a constant fuel price per ton and constant currency exchange rates.

In January 2018, the Compensation Committees set the Corporation Operating Income Target for fiscal 2018 at $3.335 billion, which was 7.2% more than the actual Corporation Operating Income achieved in fiscal 2017 when normalized for fuel price and currency exchange rate impact, consistent with historical methodology. The Compensation Committees believed that this target represented a challenging performance goal.

Under the Management Incentive Plan, the preliminary bonus amounts payable were dependent upon the amount of Corporation Operating Income achieved as compared to the Corporation Operating Income Target as follows:

 

Plan Provisions

Corporation Operating

Income (in billions)

  

Performance Level

(% of Target Achievement)

  

Payout

    Percentage(1)    

<$3.070

   Below Threshold (<92.1%)           0%

  $3.070

   Threshold (92.1%)      50.0%

  $3.301

   At 99.0%      90.0%

  $3.335

   Target (100.0%)    100.0%

  $3.565

   Maximum (106.9%)    200.0%
(1)

The payout curve includes four linear slopes. Payouts between these points are calculated using interpolation.

Bonus funding under the Management Incentive Plan for the Named Executive Officers who are Chief Executive Officers of a group of brands was calculated by reference to a bonus schedule that calibrates the respective weighted Brand Operating Income Target of 50% (proportionally weighted by the size of each brand, when more than one brand is under the scope of the Named Executive Officer) and Corporation Operating Income Target of 50% for the fiscal 2018 plan year with the target bonus.

The Compensation Committees considered the attainment of each brand’s Brand Operating Income Target for fiscal 2018 to be achievable but challenging given each brand’s fiscal 2017 performance.

The fiscal 2018 Brand Operating Income Target for the Holland America Group and Carnival UK (both applicable to Mr. Kruse) were 9.8% and 11.3%, respectively, and the Costa Group (applicable to Mr. Thamm) was 11.1% more than the actual Brand Operating Income achieved in fiscal 2017 when normalized for fuel price and currency exchange rate impact. The Compensation Committees believed that these targets represented challenging performance goals and were both higher than the normalized actual results for fiscal 2017.

In January 2018, Mr. Donald provided the Compensation Committees with his recommendations regarding the fiscal 2018 target bonus amounts under the Management Incentive Plan for our Named Executive Officers (other than himself), in which there was no increase from their fiscal 2017 target bonuses. The Compensation Committees accepted Mr. Donald’s recommendations. The fiscal 2018 target bonuses were, as follows:

 

Named Executive Officer

 

  

Fiscal 2018

    Target Bonus    

 

Arnold W. Donald

       $3,000,000

David Bernstein

       $1,000,000

Stein Kruse

       $1,200,000

Arnaldo Perez

       $   450,000

Michael Thamm

       1,116,000

These amounts were established by the Compensation Committees after taking into consideration the competitive market analysis (described above), historical bonus payout levels, the challenging

 

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Corporation Operating Income Target established by the Compensation Committees for fiscal 2018 and the Compensation Committees’ continued philosophy to place emphasis on performance-based pay elements.

Following the end of fiscal 2018, the Compensation Committees reviewed actual Corporation Operating Income and Brand Operating Income results achieved during fiscal 2018, inclusive of adjustments deemed relevant to the performance of Carnival Corporation & plc and the individual brands, under the terms of the Management Incentive Plan.

After taking these adjustments into consideration, the Compensation Committees certified an adjusted Corporation Operating Income amount for fiscal 2018 that was 103.8% of the fiscal 2018 Corporation Operating Income Target and resulted in a preliminary bonus funding.

One factor further modifying the bonus funding percentage was our HESS performance, as determined by the HESS Committees. To make this annual determination, the HESS Committees met regularly with members of the Carnival Corporation & plc Maritime Policy & Analysis Department and senior management to review an extensive analysis of each brand’s and Carnival Corporation & plc’s enterprise-wide performance in HESS-related areas tracked throughout the course of the fiscal year. When applied, the result was a preliminary funding Based on the Corporation’s 2018 results and the HESS modifier recommended by the HESS Committees, the Compensation Committees approved to the bonus funding equal to equal to 156.3% of Messrs. Donald, Bernstein and Perez’s target bonus.

The adjusted Corporation Operating Income, performance levels and resulting actual performance level payouts for fiscal 2018 as approved by the Compensation Committees were as follows:

 

Actual Results and Payout

Adjusted

Fiscal 2018

Corporation

Operating Income

(in billions)

  

Actual

Percent of

Target Achieved

  

Actual

Fiscal 2018

Payout Percentage

$3.463

   103.8%    156.3%

The Compensation Committees also certified an adjusted Brand Operating Income amount for the Holland America Group, Carnival UK and Costa Group for fiscal 2018 that were 103.5%, 108.3% and 100.5% of their respective 2018 Brand Operating Income Targets. Based on these 2018 brand results, their respective HESS modifiers recommended by the HESS Committees, and the adjusted Corporate Operating Income results described above, the result was bonus funding for Messrs. Kruse and Thamm, equal to 150.7% and 132.6% of their respective target bonuses.

Mr. Donald made recommendations to the Compensation Committees for all Named Executive Officer annual bonuses except for his own. The recommendations included a subjective review of the applicable fiscal year overall performance of each Named Executive Officer. Mr. Donald also submitted his self-assessments to the Compensation Committees summarizing his own activities and results as compared to his goals, as well as Carnival Corporation & plc’s overall performance.

Final bonus amounts were then determined by the Compensation Committees, taking into account Mr. Donald’s recommendations and input from FW Cook. In making their determinations, including whether to vary bonuses from the amount determined under the bonus schedule included in the Management Incentive Plan, the Compensation Committees considered the factors summarized in the “Executive Summary” section above, in addition to the competitive market compensation for each Named Executive Officer and their subjective overall assessment of individual performance in fiscal 2018. After taking into account the factors referred to above, together with an assessment of the individual performance of each of the Named Executive Officers, the Compensation Committees determined not to vary the final bonus amounts determined by the bonus schedule in the Management

 

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Incentive Plan. As a result, the bonuses for fiscal 2018 were more than actual bonus amounts for fiscal 2017, except for the bonus for Mr. Kruse.

Equity-Based Compensation

A.    General

The Compensation Committees grant equity-based compensation to our Named Executive Officers to provide long-term incentives and align management and shareholder interests. The Compensation Committees believe that a substantial portion of compensation should be equity-based. The equity-based compensation program is designed to recognize scope of responsibilities, reward demonstrated performance and leadership, motivate future superior performance and align the interests of the executive with our shareholders. To further augment these views the equity program for fiscal 2018 was 100% performance-based for our Named Executive Officers and other key executives within Carnival Corporation & plc. For fiscal 2018, this includes three different types of performance-based equity grants:

 

 

Management Incentive Plan-Tied Equity (“MTE”) grants;

 

Performance-Based Share (“PBS”) grants; and

 

Shareholder Equity Alignment (“SEA”) grants.

These equity grants provide for performance-based vesting or granting criteria and align our senior management team’s long-term compensation opportunities with Carnival Corporation & plc’s long-term performance. In addition, the value of these equity grants serve to link pay and performance in two ways: they have pre- or post-grant performance criteria to determine the number of shares earned and the value of the shares earned appreciate or depreciate based on the trading price of our shares.

Our equity-based compensation grants are made pursuant to the Carnival Corporation 2011 Stock Plan or the Carnival plc 2014 Employee Share Plan, which have been approved by Carnival Corporation & plc’s shareholders. Messrs. Donald, Bernstein, Kruse and Perez received equity grants under the Carnival Corporation 2011 Stock Plan. Mr. Thamm received equity grants under the Carnival Corporation 2011 Stock Plan and the Carnival plc 2014 Employee Share Plan.

The specific equity grants made to our Named Executive Officers reflect the desire of the Compensation Committees to link this compensation to performance. The number and form of equity grants made annually to our Named Executive Officers are determined both in the discretion of the Compensation Committees and pursuant to certain agreements with certain Named Executive Officers. Existing ownership levels are not a factor in grant determinations, as the Compensation Committees do not want to discourage executives from holding significant amounts of Carnival Corporation and Carnival plc shares.

The value of equity grants made to our Named Executive Officers other than Mr. Donald was determined by the Compensation Committees after reviewing the recommendation of Mr. Donald and the Chairman of the Boards of Directors and the other elements of the Named Executive Officer’s current year compensation, taking into account the position and role of the Named Executive Officer, the individual performance in the preceding fiscal year and historically, and the perceived future value to Carnival Corporation & plc. When reviewing the competitive market assessment provided by FW Cook for total direct compensation, the Compensation Committees also evaluated the long-term and short-term incentive compensation components to confirm that the value of a Named Executive Officer’s aggregate equity-based compensation and total direct compensation remains generally competitive. Similar to the approach taken for the other Named Executive Officers, the value of equity grants made to Mr. Donald was determined by the Compensation Committees after consultation with FW Cook, taking into account his position and role, his individual performance, perceived future value and competitive market position.

 

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B.    Disclosure and the Timing of Equity-Based Compensation

The Compensation Committees met in January 2018 to determine the target values of the MTE grants, in February 2018 to determine the PBS grants and in April 2018 to determine the SEA grants, all of which are part of the equity-based compensation for key executives in fiscal 2018.

The fiscal 2018 MTE grant was made in January 2019 once the Management Incentive Plan performance result was assessed and verified. Because the MTE grants are based on 2018 performance, the Compensation Committees believe that the discussion of these equity-based grants made after fiscal year end is important to understanding the overall Named Executive Officer compensation for the preceding year.

Accordingly, we describe below the MTE grants made in early 2019 and the MTE grants made in early 2018 (which were discussed previously in last year’s Proxy Statement but first appear in the “Summary Compensation Table” and “Grants of Plan-Based Awards in Fiscal 2018” table in this year’s Proxy Statement).

C.    Fiscal 2018 Annual Grants

2018 MTE Grants. In January 2018, the Compensation Committees approved an MTE target grant value for each of our Named Executive Officers and certain other executives. Each target grant value was determined after consideration of recommendations received from Mr. Donald and the Chairman of the Boards of Directors, as well as reviewing the scope of the Named Executive Officer’s responsibilities, performance and long-term retention considerations. There was no increase in the MTE target for the Named Executive Officers for fiscal 2018.

Following the end of fiscal 2018, the actual 2018 Management Incentive Plan payout percentage is applied to the MTE target grant value to determine the actual MTE grant values, which may be from zero to 200% of target. In January 2019, the actual MTE grant value earned was converted into a number of RSUs that cliff vest two years from the date of grant. The MTE grants do not receive dividends or have voting rights. Each MTE RSU is credited with dividend equivalents equal to the value of cash and stock dividends paid on Carnival Corporation common stock or Carnival plc ordinary shares. The dividend equivalents will be distributed upon the settlement of the MTE RSUs only upon vesting. Please see the “Equity Grants Made During Fiscal 2019 as Compensation for Fiscal 2018” table for additional MTE grant details.

The MTE grants made to our Named Executive Officers in January 2019 were as follows:

 

  Named Executive Officer   

MTE Target

Value(1)

 

           

 

2018

Payout

Percentage

 

          

MTE

Grant

Value

 

           

Closing Price

On

Grant Date(1)

 

           

RSUs

 Received(2) 

(#)

 

 

 

  Arnold W. Donald

 

    

 

$1,500,000

 

 

 

    

 

x

 

 

 

    

 

156.3

 

 

   

 

=

 

 

 

   $

 

2,344,500

 

 

 

    

 

÷

 

 

 

    

 

$52.20

 

 

 

    

 

=

 

 

 

    

 

44,913

 

 

 

 

  David Bernstein

 

    

 

$   400,000

 

 

 

    

 

x

 

 

 

    

 

156.3

 

 

   

 

=

 

 

 

   $

 

625,200

 

 

 

    

 

÷

 

 

 

    

 

$52.20

 

 

 

    

 

=

 

 

 

    

 

11,977

 

 

 

 

  Stein Kruse

 

    

 

$   500,000

 

 

 

    

 

x

 

 

 

    

 

150.7

 

 

   

 

=

 

 

 

   $

 

753,500

 

 

 

    

 

÷

 

 

 

    

 

$52.20

 

 

 

    

 

=

 

 

 

    

 

14,434

 

 

 

 

  Arnaldo Perez

 

    

 

$   250,000

 

 

 

    

 

x

 

 

 

    

 

156.3

 

 

   

 

=

 

 

 

   $

 

390,750

 

 

 

    

 

÷

 

 

 

    

 

$52.20

 

 

 

    

 

=

 

 

 

    

 

7,845

 

 

 

 

  Michael Thamm

 

    

 

   465,000

 

 

 

    

 

x

 

 

 

    

 

132.6

 

 

   

 

=

 

 

 

  

 

616,509

 

 

 

    

 

÷

 

 

 

    

 

45.34

 

 

 

    

 

=

 

 

 

    

 

13,600

 

 

 

(1)

The closing price on the grant date is calculated by reference to the price of Carnival Corporation common stock or Carnival plc ordinary shares on the New York Stock Exchange or London Stock Exchange, respectively, on the date of grant. The MTE grant made to Mr. Thamm is based on Carnival plc ordinary shares denominated in sterling. Because Mr. Thamm is compensated in euros, the Carnival plc ordinary share closing price on the grant date of £40.35 has been converted into euros based on an exchange rate of 1.12:£1.

(2)

RSUs received have been rounded down to the nearest whole share.

 

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Table of Contents

COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

Although considered to be compensation for performance in fiscal 2018, the MTE grants were made in early fiscal 2019 and, in accordance with SEC disclosure rules, are not shown in the “Grants of Plan-Based Awards in Fiscal 2018” table or included in the “Outstanding Equity Awards at 2018 Fiscal Year-End” table, and the grant date fair value of those shares are not reflected in the “Summary Compensation Table.” These grants will be reflected in the executive compensation tables in next year’s Proxy Statement. The MTE grants made during January 2018 were previously discussed in detail in our 2018 Proxy Statement. However, as discussed above, due to SEC disclosure rules, the grant date fair value of these grants are included in this Proxy Statement’s “Summary Compensation Table” and “Grants of Plan-Based Awards in Fiscal 2018” table.

2018 PBS Grants. The PBS grants made to our Named Executive Officers and other key executives in February 2018 vest zero to 200% of target based upon the extent to which Corporation Operating Income, as adjusted for certain fuel price change and currency exchange rate impacts, for each of the three fiscal years in the 2018-2020 performance cycle and the average of each annual ROIC result for the three-year performance cycle exceeds the specified performance goals. Under the terms of the grant, the Corporation Operating Income result is weighted 60% and ROIC result is weighted 40%. The maximum payout is 200% of target. The Corporation Operating Income target and ROIC target will be disclosed at the end of the performance period (as these targets are deemed strategic and commercially sensitive).

The Compensation Committees believe that growth in the Corporation Operating Income is a critical measure of Carnival Corporation & plc’s ability to maintain and grow earnings over time. The grants further align an increasing proportion of the total compensation of key members of our management team (116 senior managers worldwide, including our Named Executive Officers) with the long-term growth of Carnival Corporation & plc.

The Compensation Committees approved the PBS grants to our Named Executive Officers after an evaluation of current market practice, the aggregate market positioning of total direct compensation, and the Compensation Committees’ focus on the alignment between our Named Executive Officer’s pay outcomes and Carnival Corporation & plc’s long-term performance.

2018 SEA Grants. In April 2018, the Compensation Committees made SEA grants to the Named Executive Officers and certain other key executives. All Named Executive Officers received SEA grants in the form of RSUs of Carnival Corporation common stock.

The SEA grant is based upon Carnival Corporation’s absolute TSR performance as modified by our TSR rank relative to the Peer Group over the period of December 1, 2017 through November 30, 2020. The maximum possible payout is six times the target number of SEA RSUs, subject to a value cap of seven times the grant date value. While dividends are taken into account in assessing the TSR calculations, these RSUs do not accrue any dividends over the performance period. Absolute TSR growth is calculated using the 90-day average stock price as of December 1, 2017 of $66.04. The earned shares will vest after the Compensation Committees certify the results and are contingent upon continued employment.

 

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COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

The SEA grant requires an absolute TSR condition that is linked to Carnival Corporation’s share price growth as follows:

 

Goal Levels

Absolute TSR

Compound Annual

Growth per Year

(%)

Vesting

Payout

(%)

 

Below Threshold

 

 

 

Less than 7

 

 

0.0%

 

 

0

 

 

Threshold

 

 

7

 

 

At 7%, each 0.3% increase in the compound annual growth rate increases the absolute TSR vesting by 5.6% of the initial number of SEA restricted stock units granted until the maximum growth is reached

 

 

50

 

 

Target

 

 

9.7

 

 

100

Maximum

20.4

 

At maximum, three times the initial number of SEA restricted stock units granted is earned subject to a cap that the number of shares be reduced to such shares as have a value equal to seven times the grant date value if, at the end of the performance period, they would then be worth more than seven times the grant date value

 

300

The absolute TSR payout percentage is then multiplied by a modifier tied to Carnival Corporation’s TSR ranking relative to the 2018 Peer Group which may increase or decrease the absolute TSR result, as follows:

 

 

  Quintile

 

    

 

First

 

    

 

Second

 

    

 

Third

 

    

 

Fourth

 

    

 

Fifth

 

 

  Relative TSR Ranking (%)

 

    

 

0-14

 

    

 

15-29

 

    

 

30-69

 

    

 

70-84

 

    

 

85-100

 

 

  Relative TSR Modification (%)

 

 

    

 

33

 

 

    

 

75

 

 

    

 

100

 

 

    

 

125

 

 

    

 

200

 

 

The Compensation Committees believe that these SEA grants provide the Name Executive Officers with meaningful upside tied explicitly to shareholder outcomes and create alignment among the Named Executive Officers and senior management team.

The SEA grants made to our Named Executive Officers in April 2018 are included in the “Grants of Plan-Based Awards in Fiscal 2018” table.

D.    Disclosure of Prior Years’ Equity Grant Results

2016 PBS Grants. The 2016 PBS grants made to the Named Executive Officers in April 2016 reached the end of the performance period at the end of fiscal 2018 and vested on February 15, 2019. Under the terms of the 2016 PBS grant, shares vested based upon the extent to which Corporation Operating Income (70% weighting), as adjusted for 100% of year-over-year fuel price changes and currency exchange rate impact for each of fiscal 2016, 2017 and 2018 and ROIC growth (30% weighting) over the three-year performance period reached or exceeded the following:

 

  Goal Level  

Annual

Corporation

Operating Income

Growth Goal

(%)

 

 

2016

Corporation

Operating Income

Goals

($ in billions)

 

 

2017

Corporation

Operating Income

Goals

($ in billions)

 

 

2018

Corporation

Operating Income

Goals

($ in billions)

 

 

2018

ROIC Growth

Goal

(%)

 

 

Payout for

Operating

 Income & ROIC 

Goals

(%)

 

 

  Threshold

 

     

 

4

 

 

     

 

2.980

 

 

     

 

3.237

 

 

     

 

3.328

 

 

     

 

30

 

 

     

 

50

 

 

 

  Target

 

   

 

 

 

 

8

 

 

 

   

 

 

 

 

3.134

 

 

 

   

 

 

 

 

3.361

 

 

 

   

 

 

 

 

3.456

 

 

 

   

 

 

 

 

35

 

 

 

   

 

 

 

 

100

 

 

 

 

  Maximum

 

 

   

 

 

 

 

 

16

 

 

 

 

 

   

 

 

 

 

 

3.447

 

 

 

 

 

   

 

 

 

 

 

3.610

 

 

 

 

 

   

 

 

 

 

 

3.712

 

 

 

 

 

   

 

 

 

 

 

50

 

 

 

 

 

   

 

 

 

 

 

200

 

 

 

 

 

 

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COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

The Corporation Operating Income and ROIC results for the 2016 PBS grant were as follows:

 

  Operating Income and ROIC Results  

 

2016

Corporation

Operating Income

($ in billions)

 

 

 

2017

Corporation

Operating Income

($ in billions)

 

 

 

2018

Corporation

Operating Income

($ in billions)

 

 

2018

ROIC

 

 

2018

    ROIC Growth    

 

 

  Annual Adjusted Operating Income

 

     

 

$3.304

 

 

     

 

$3.526

 

 

     

 

$3.613

 

 

       

 

  Annual Adjusted Operating Income Growth

 

     

 

105.44

 

%

 

     

 

113.28

 

%

 

     

 

112.91

 

%

 

       

 

  Annual Operating Income Growth Payout

 

     

 

154.40

 

%

 

     

 

166.00

 

 

     

 

161.38

 

%

 

       

 

  ROIC Growth

 

                 

 

 

10.1

 

 

%

 

 

     

 

 

35.4

 

 

%

 

 

The fiscal 2016, 2017 and 2018 annual adjusted Corporation Operating Income growth payout percentages were averaged, and the growth of fiscal 2018 ROIC over fiscal 2015 ROIC was calculated to determine the respective payout percentages that were then weighted. The weighted payout percentage was then subject to modification for relative TSR (+10% if in the first quartile against the 2016 peer group, 0% if in the second or third quartile, and -10% if in the fourth quartile) to obtain a final payout percentages, as follows:

 

  Payout % and TSR Modifier   

Unweighted

Payout

(%)

 

  

Weighting

(%)

 

  

  Weighted  

Payout

(%)

 

 

  Average Annual Adjusted Operating Income Payout

 

      

 

160.59

 

 

      

 

70

 

 

      

 

112.41

 

 

 

  ROIC Payout

 

      

 

102.67

 

 

      

 

30

 

 

      

 

30.80

 

 

 

  Weighted Operating Income and ROIC Payout

 

                

 

143.21

 

 

 

  TSR Modifier (second quartile)

 

                

 

100.00

 

 

 

  Final Payout after TSR Modifier

 

                

 

143.21

 

 

Based on these performance measures, the Named Executive Officers received the following:

 

  Named Executive Officer   

2016 PBS

Earned Shares(1)

(#)

 

 

 

  Arnold W. Donald

 

    

 

67,891

 

 

 

 

  David Bernstein

 

    

 

22,860

 

 

 

 

  Stein Kruse

 

    

 

29,789

 

 

 

 

  Arnaldo Perez

 

    

 

13,299

 

 

 

 

  Michael Thamm

 

    

 

20,368

 

 

 

 

(1)

Additional shares will be provided to take into account dividend reinvestment during the period.

Perquisites and Other Compensation

Our Named Executive Officers are provided various perquisites believed by the Compensation Committees to be representative of common practices for executives in their respective countries. Some of Messrs. Donald’s and Thamm’s perquisites and other benefits are provided pursuant to terms of their employment agreements. The Compensation Committees, with the assistance of FW Cook, review perquisites provided to our Named Executive Officers on a periodic basis and take into account each Named Executive Officer’s particular circumstances and overall level of compensation, and believe that perquisites provided by Carnival Corporation & plc continue to be an appropriate element of the overall compensation package used to attract and retain such officers.

 

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COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

The Compensation Committees have approved a policy to establish procedures and controls as to the authorized use of aircraft owned or chartered by Carnival Corporation & plc (the “Aircraft”). According to the policy, the Aircraft can only be used for business purposes. Guests may accompany these executives when traveling. The Compensation Committees have also agreed to allow Mr. Donald to use the Aircraft for personal use so long as the incremental cost to Carnival Corporation & plc does not exceed $200,000 per year. Once that threshold is reached, Mr. Donald will reimburse us for those costs. The Compensation Committees determined that the Aircraft usage policy and levels of usage and costs were consistent with those offered by large multinational companies like Carnival Corporation & plc.

The perquisites received by each Named Executive Officer in fiscal 2018, as well as their incremental cost to Carnival Corporation & plc, are reported in the “Summary Compensation Table” and its accompanying footnotes.

Post-Employment Compensation Obligations

Carnival Corporation & plc does not have any change of control agreements that provide cash severance to our Named Executive Officers upon a change of control of Carnival Corporation & plc, with the exception of the employment agreement with Mr. Donald. Carnival Corporation & plc does not have employment agreements with any of our Named Executive Officers that provide cash severance benefits in connection with the termination of the executive’s employment, with the exception of employment agreements with Messrs. Donald and Thamm.

Mr. Donald’s employment agreement is subject to renewal annually on October 14th of each year. If Mr. Donald wishes to leave prior to the end of the current term, he would generally need to provide at least 60 days’ written notice. The payments to Mr. Donald in the event of termination are set forth in the “Post-Employment Cash Compensation Obligations to Mr. Donald” section.

Mr. Thamm’s employment agreement provides that he is generally entitled to an amount equal to 50% of his total remuneration most recently received by him as compensation for his agreement not to engage in competition with us. The Compensation Committees believe that the severance benefits provided to Mr. Thamm under his employment agreement are reasonable and in accordance with market practice in European Union.

Upon termination of employment for certain circumstances or upon a change of control, our Named Executive Officers may be entitled to retain or receive accelerated vesting of equity grants. Under the terms of the Carnival Corporation 2011 Stock Plan and the Carnival plc 2014 Employee Share Plan, however, the default provision upon a change in control would provide only for a “double trigger” acceleration of equity grants (such that no acceleration would occur unless the participant’s employment were subsequently terminated by Carnival Corporation & plc (or its successor) without cause). These benefits are provided under the terms of the plans pursuant to which the equity grants were made, the grant agreement and under individual agreements with certain Named Executive Officers. However, none of our Named Executive Officers are entitled to receive any tax gross-up payments in respect of their severance benefits or accelerated equity grants. The benefits that our Named Executive Officers may be eligible to receive in connection with the termination of their employment or upon a change of control are described in detail in the “Potential Payments Upon Termination or Change of Control” section.

The Compensation Committees believe that these arrangements are reasonable and encourage an executive to comply with post-termination non-compete and other restrictive covenants and to cooperate with us both before and after their employment is terminated.

 

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COMPENSATION

Compensation Discussion and Analysis and Carnival plc Directors’ Remuneration Report—Part I

 

Pensions and Deferred Compensation Plans

As part of the overall compensation program, Carnival Corporation & plc operates various group pension programs for certain of their executives. Under the Carnival Corporation pension programs, base salaries and annual bonuses were used to determine pension benefits.

Until December 31, 1997, Mr. Perez participated in the Carnival Corporation Nonqualified Retirement Plan for Highly Compensated Employees (the “Retirement Plan”), which is a nonqualified defined benefit plan. His benefit accruals under the Retirement Plan then ceased and he began earning benefits under the Carnival Corporation Fun Ship Nonqualified Savings Plan (the “Savings Plan”), which is a nonqualified defined contribution plan whereby certain executives were able to defer salary and/or bonus amounts into the Savings Plan. Until January 1, 2009, Messrs. Bernstein and Perez participated in the Savings Plan.

Additional information regarding the Retirement Plan is included in the “Pension Benefits” table and the narrative which follows. Additional information regarding the Savings Plan is in the “Nonqualified Deferred Compensation in Fiscal 2018” table and the narrative which follows.

In accordance with Section 457A of the U.S. Internal Revenue Code, Carnival Corporation paid out all benefits accrued under the Retirement Plan and the Savings Plan in December 2017.

In lieu of participation in the Savings Plan, the Compensation Committees approved payment of an additional annual bonus directly to these employees in an amount equal to what would have been deposited on behalf of those employees into those plans, less, as described below, any amount Carnival Corporation contributes to the Carnival Corporation Fun Ship Savings Plan, a 401(k) plan (the “401(k) Plan”). These payments are taxable as ordinary income.

Beginning with the 2010 calendar year, the 401(k) Plan was amended and currently allows Messrs. Donald, Bernstein and Perez (as well as all other highly compensated employees) to defer a limited amount of compensation into the 401(k) Plan subject to nondiscrimination testing. Similarly, Carnival Corporation shall make a matching contribution to the 401(k) Plan under the plan’s formula, subject to nondiscrimination testing.

Stock Ownership Requirements

Our Boards of Directors and Compensation Committees believe it is important for executive officers and Directors to build and maintain a long-term ownership position in Carnival Corporation or Carnival plc shares in order to align their financial interests with those of our shareholders and to encourage the creation of long-term value. Our compensation structure provides for a significant percentage of compensation to be equity-based, which places a substantial portion of compensation at risk over a long-term period. Accordingly, our Section 16 Officers, including our Named Executive Officers, are subject to a stock ownership policy. The policy specifies target ownership levels of Carnival Corporation or Carnival plc shares for each executive expressed in terms of the value of the equity holdings (excluding PBS and SEA grants which have not vested) as a multiple of each Section 16 Officer’s base salary. The target ownership levels are as follows:

 

  Officers   

  Ownership Target  

  Multiple of Base Salary  

 

  Chair and/or Chief Executive Officer

     6X salary  

  Vice Chair and/or Chief Operating Officer

     4X salary  

  Other Section 16 Officers

     3X salary  

 

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COMPENSATION

Report of the Compensation Committees

 

Individuals who are newly designated as Section 16 Officers are expected to be in compliance with the stock ownership policy within five years of the date of becoming a Section 16 Officer. All of our Named Executive Officers are in compliance with the stock ownership policy. Our Section 16 Officers are restricted from trading call and put options and entering into any hedging transactions with respect to our shares. Carnival Corporation & plc does not make any commitment to any persons covered by the stock ownership policy that they will receive any particular level of equity-based grants.

The stock ownership policy provides that Section 16 Officers be required to retain at least 50% of the shares received upon release after deducting withholding taxes, until their target ownership is achieved.

Impact of Regulatory Requirements on Compensation

In making determinations regarding executive compensation, the Compensation Committees consider relevant issues relating to accounting treatment, tax treatment (both company and individual) and regulatory requirements. The global nature of Carnival Corporation & plc’s operations necessarily means that monitoring these technical issues and considering their potential impact on the appropriate design and operation of executive remuneration programs is an increasingly complex exercise. Technical issues are evaluated in light of Carnival Corporation & plc’s philosophy and objectives for executive compensation and their corporate governance principles, as described earlier in this Compensation Discussion and Analysis.

REPORT OF THE COMPENSATION COMMITTEES

 

The Compensation Committees have reviewed the Compensation Discussion and Analysis and discussed it with the management of Carnival Corporation & plc. Based on their review and discussions with management, the Compensation Committees recommended to our Boards of Directors that the Compensation Discussion and Analysis be incorporated by reference into the Carnival Corporation & plc 2018 joint Annual Report on Form 10-K and included in the Carnival Corporation & plc 2019 Proxy Statement. This Report is provided by the following independent Directors, who comprise the Compensation Committees:

 

    The Compensation Committee

    of Carnival Corporation

 

The Compensation Committee

of Carnival plc

    Randall J. Weisenburger, Chair

 

Randall J. Weisenburger, Chair

    Richard J. Glasier

 

Richard J. Glasier

    Laura Weil

 

 

 

 

Laura Weil

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

 

The Compensation Committees are comprised entirely of three independent Directors listed above. No member of the Compensation Committees is a current, or during fiscal 2018 was a former, officer or employee of Carnival Corporation, Carnival plc or any of their subsidiaries. During fiscal 2018, no member of the Compensation Committees had a relationship that must be described under the SEC rules relating to disclosure of related person transactions. In fiscal 2018, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more of its executive officers serving on the Board or the Compensation Committee of Carnival Corporation or Carnival plc.

 

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COMPENSATION

Compensation Tables

 

COMPENSATION TABLES

 

 

Although Carnival Corporation and Carnival plc are two separate entities, our business is run by a single senior management team. The following tables, narrative and footnotes discuss the compensation of our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers for the year ended November 30, 2018, who are referred to as the Named Executive Officers. Mr. Thamm’s cash compensation was payable in euro. These euro amounts have been converted into U.S. dollars at the average U.S. dollar to euro exchange rate for fiscal 2018 of $1.19:1.

Summary Compensation Table

 

Name and

Principal Position

 

Fiscal

Year

 

Salary

($)

 

Stock

Awards(1)

($)

 

Non-Equity

Incentive Plan

Compensation

($)

 

All Other

Compensation(2)

($)

 

Total

($)

Arnold W. Donald

      2018       1,500,000       7,028,094       4,689,000       289,790       13,505,884   

    President & CEO

      2017       1,500,000       6,821,713       4,377,000       347,362       13,046,075   
      2016       1,000,000       4,598,986       4,041,250       241,584       9,881,820   

David Bernstein

      2018       750,000       1,959,205       1,563,000       283,589       4,555,794   

    CFO & CAO

      2017       750,000       2,094,331       1,459,000       221,746       4,525,077   
      2016       700,000       1,641,451       1,448,750       256,949       4,047,150   

Stein Kruse

      2018       925,000       2,704,688       1,808,400       78,305       5,516,393   

    Group CEO of Holland

      2017       925,000       2,713,268       2,097,600       95,117       5,830,985   

    America Group & Carnival UK

      2016       825,000       2,096,489       1,654,400       83,270       4,659,159   

Arnaldo Perez

      2018       450,000       996,096       703,350       256,462       2,405,908   

    General Counsel & Secretary

      2017       450,000       1,024,532       656,550       238,623       2,369,705   

Michael Thamm

      2018       1,023,698       2,415,232       1,760,981 (3)        83,666       5,283,577   

    CEO of Costa

      2017       963,480       2,306,767       912,442       117,534       4,300,223   

    Group & Carnival Asia

      2016       777,000       1,479,178       1,053,945       214,217       3,524,340   
(1)

No stock option grants were made in fiscal 2016 through 2018. The amounts included in the “Summary Compensation Table” reflect the grant date fair value, assuming no risk of forfeiture of the grants of Carnival Corporation restricted shares and Carnival plc RSUs made to our Named Executive Officers in fiscal 2018, calculated in accordance with ASC 718. The valuation of share-based grants is discussed in Notes 2 and 12 to the financial statements in the Carnival Corporation & plc joint Annual Report on Form 10-K for the year ended November 30, 2018. The amounts reflect the grant date fair value (100% of target) of the annual SEA grants made in January 2018 and PBS grants made in April 2018, calculated in accordance with ASC 718. The grant date fair value of the annual SEA grants and PBS grants assuming combined maximum performance (being 600% and 200% of target, respectively) is $17,037,990 for Mr. Donald, $4,853,732 for Mr. Bernstein, $6,184,421 for Mr. Kruse, $1,788,350 for Mr. Perez and $6,525,700 for Mr. Thamm. For the proceeds actually received by the Named Executive Officers upon the vesting of restricted shares or RSUs, see the “Stock Vested for Fiscal 2018” table. For the grant date fair value of equity grants made to our Named Executive Officers as compensation for fiscal 2018, which grants were made in January 2019, see the “Equity Grants Made During Fiscal 2019 as Compensation for Fiscal 2018” table.

(2)

See the “All Other Compensation” table for additional information.

(3)

A portion of Mr. Thamm’s non-equity incentive compensation was paid in Carnival plc shares.

 

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COMPENSATION

Compensation Tables

 

The amounts set forth in the column entitled Stock Awards in the “Summary Compensation Table” do not represent the equity-based compensation granted as compensation for fiscal 2018. As required by SEC rules and as described in Note 1 to the “Summary Compensation Table,” the amounts reported in this column only reflect the PBS, SEA and MTE grants made during fiscal 2018. The amounts reported in this column do not include value associated with MTE grants made in January 2019 that are described in the Compensation Discussion and Analysis. The MTE grants made to our Named Executive Officers in January 2019 as compensation for fiscal 2018 are as follows:

Equity Grants Made During Fiscal 2019 as Compensation for Fiscal 2018

 

Name

  

Grant Date Fair Value     

of Stock Awards(1)     

($)     

Arnold W. Donald

       2,344,459

David Bernstein

       625,199

Stein Kruse

       753,455

Arnaldo Perez

       390,717

Michael Thamm

       707,900
(1)

The amounts are the full value of the MTE grants on January 14, 2019, the date the grants were made effective. The value for Carnival plc ordinary shares has been converted from sterling into U.S. dollars based on the January 14, 2019 exchange rate of $1.29:£1. The full grant date fair value for a grant is the amount that Carnival Corporation & plc will expense in their financial statements over the grant’s vesting period or until the retirement eligibility date, if such date is earlier than the vesting date, when vesting is not contingent upon any future performance. The full grant date fair value may not correspond to the actual value that will be realized.

All Other Compensation

Each component of the All Other Compensation column in the “Summary Compensation Table” for fiscal 2018 is as follows:

 

Item

 

  

Arnold W.

Donald

($)

 

  

David

Bernstein

($)

 

  

Stein

Kruse

($)

 

  

Arnaldo

Perez

($)

 

  

  Michael 

Thamm

($)

 

Compensation in lieu of Savings Plan profit sharing contribution

       59,058        199,070               166,242       

Employer contributions to defined contribution plan

       8,250        8,250        21,240        8,250       

Private medical/health insurance costs and premiums(1)

       50,197        46,757        23,682        59,842        11,855

Accidental death and dismemberment insurance premiums

       104        104             104        17,372

Automobile lease or allowance

       24,000        11,400        13,000        11,400        18,857

Personal use of Aircrafts(2)

       126,929                            

Other personal air travel

              6,028        12,815        1,677       

Tax planning and return preparation fees

       18,002        6,500               5,195       

Living accommodations and maintenance

                                

Driver and security

                                   31,199

Other(3)

       3,250        5,480        7,568        3,752        4,383
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

TOTAL

       289,790        283,589        78,305        256,462        83,666
(1)

Certain of our Named Executive Officers are eligible to participate in an executive health insurance program, which includes a fully insured plan and a secondary insured plan. Amounts reported represent the cost of the premiums paid on a Named Executive Officer’s behalf under these plans plus the additional costs of medical services rendered during the fiscal year. Named Executive Officers participating in this plan generally have until March 31, 2019 to submit their 2018 claims for reimbursement, and as a result, these amounts may increase. The maximum amount that may be reimbursed in any year under the secondary plan is $20,000.

 

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Compensation Tables

 

(2)

Represents the aggregate incremental cost to Carnival Corporation & plc for travel on the Aircraft not related to company business. The aggregate incremental cost for the use of the Aircraft for personal travel is calculated by multiplying the hourly variable cost rate for the Aircraft used by the hours used. The hourly variable cost rate primarily includes fuel, airport handling and other fees, Aircraft repairs and maintenance, crew expenses and catering. The hourly variable cost rate is recomputed annually to reflect changes in costs. Fixed costs which do not change based on usage, such as pilots’ salaries, Aircraft depreciation and overhead costs, are excluded.

(3)

Includes the total amount of other benefits provided, none of which individually exceeded $10,000 for the designated Named Executive Officer. These other benefits include: automobile repair and expenses, life insurance premiums and gross-ups for a portion of income taxes for spousal travel.

Additional information with respect to Carnival plc’s compensation and reimbursement practices during fiscal 2018 for Non-Executive Directors is included in Part II of the Carnival plc Directors’ Remuneration Report, which is attached as Annex B to this Proxy Statement.

Grants of Plan-Based Awards in Fiscal 2018

Equity grants and non-equity awards made to the Named Executive Officers during fiscal 2018 are as follows:

 

    Grant           Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
($)
    Estimated Possible Payouts
Under Equity Incentive Plan
Awards(2)
(#)
   

All Other

Stock

Awards:

Number of

Shares of

Stock or

Units(3)

   

Grant Date

Fair Value

of Stock

Awards(4)

 

Name

  Type     Grant Date     Threshold     Target     Maximum     Threshold     Target     Maximum     (#)     ($)  

Arnold W. Donald

        1,500,000       3,000,000       6,000,000            
    MTE       1/16/2018                   31,939       2,188,460  
    PBS       2/12/2018             21,812       43,623       87,246         2,999,954  
    SEA       4/10/2018             17,500       35,000       210,000         1,839,681  

David Bernstein

        500,000       1,000,000       2,000,000            
    MTE       1/16/2018                   8,517       583,585  
    PBS       2/12/2018             6,180       12,360       24,720         849,997  
    SEA       4/10/2018             5,000     10,000       60,000         525,623  

Stein Kruse

        600,000       1,200,000       2,400,000            
    MTE       1/16/2018                   12,755       873,973  
    PBS       2/12/2018             8,725       17,449       34,898         1,199,968  
    SEA       4/10/2018             6,000     12,000     72,000         630,748  

Arnaldo Perez

        225,000       450,000       900,000            
    MTE       1/16/2018                   5,323       364,732  
    PBS       2/12/2018             3,635       7,270       14,540         499,958  
    SEA       4/10/2018             1,250       2,500       15,000         131,406  

Michael Thamm

        664,020       1,328,040       2,656,080            
    MTE       1/16/2018                   6,042       413,877 (5)  
    PBS       2/12/2018             10,237       20,474       40,948         1,370,607 (6)  
    SEA       4/10/2018             6,000       12,000       72,000         630,748 (7)  
(1)

Represents the potential value of the payout of the annual bonuses under the Management Incentive Plan for fiscal 2018 performance. The Non-Equity Incentive Plan awards were made under the Management Incentive Plan. The actual amount of a Named Executive Officer’s annual bonus paid in fiscal 2019 for fiscal 2018 performance is shown in the “Summary Compensation Table” in the “Non-Equity Incentive Plan Compensation” column. For a more detailed description of the potential payout under each plan, see the description in the “2018 Annual Bonuses” section of the Compensation Discussion and Analysis.

(2)

Represents the potential number of shares under the annual PBS and SEA grants. For a more detailed description of the potential payout under annual PBS and SEA grants, see the description in the “Fiscal 2018 Annual Grants” section of the Compensation Discussion and Analysis.

(3)

Represents the number of shares under the annual MTE grants made in fiscal 2018 under the Carnival Corporation 2011 Stock Plan, with the exception of Mr. Thamm. Mr. Thamm received an MTE grant under the Carnival plc 2014 Employee Share Plan.

 

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(4)

Represents the full grant date fair values of the equity grants made in fiscal 2018, which were determined based on the assumptions set forth in Notes 2 and 12 to the financial statements in the Carnival Corporation & plc joint Annual Report on Form 10-K for the year ended November 30, 2018 (disregarding estimated forfeitures). The full grant date fair value for a grant is the amount that Carnival Corporation & plc will expense in their financial statements over the grant’s vesting schedule or until the retirement eligibility date, if such date is earlier than the vesting date, when vesting is not contingent upon future performance. The full grant date fair value may not correspond to the actual value that will be realized.

(5)

The value for Carnival plc ordinary shares has been converted from sterling into U.S. dollars based on the January 16, 2018 exchange rate of $1.37:£1.

(6)

The value for Carnival plc ordinary shares has been converted from sterling into U.S. dollars based on the February 12, 2018 exchange rate of $1.38:£1.

(7)

The SEA grant was made in the form of Carnival Corporation RSUs for all Named Executive Officers, including Mr. Thamm. The SEA grant is denominated in U.S. dollars.

Narrative Disclosure to the “Summary Compensation Table” and the “Grants of Plan-Based Awards in Fiscal 2018” Table

Employment Agreements

Two of our Named Executive Officers have employment agreements as follows:

 

 

Mr. Donald entered into an employment agreement in October 2013, which was amended in October 2016, setting forth the contractual and economic terms of his post as the President and Chief Executive Officer of Carnival Corporation & plc. The employment agreement is subject to automatic renewal annually. Mr. Donald’s compensation is determined at the discretion of the Boards of Directors.

 

Mr. Thamm entered into a new agreement in April 2017 setting forth the contractual and economic terms of his post as the Chief Executive Officer of Costa Group and Carnival Asia. Mr. Thamm’s compensation is determined at the discretion of the Compensation Committees.

For more detailed information regarding the employment agreements, please refer to the Compensation Discussion and Analysis and the exhibit index to the Carnival Corporation & plc 2018 joint Annual Report on Form 10-K.

Annual Bonus Plans

Annual bonuses for our Named Executive Officers are determined based on the Management Incentive Plan. For more detailed information regarding this plan, please refer to the Compensation Discussion and Analysis and the exhibit index to the Carnival Corporation & plc 2018 joint Annual Report on Form 10-K.

Equity-Based Compensation

The Compensation Committees made MTE, PBS and SEA grants in January, February and April 2018, respectively, all in the form of RSUs to our Named Executive Officers.

The MTE. PBS and SEA grants do not receive dividends or have voting rights. Each MTE and PBS grant is made in the form of RSUs and is credited with dividend equivalents equal to the value of cash and stock dividends paid on Carnival Corporation common stock or Carnival plc ordinary shares. The dividend equivalents are settled only when these RSUs are released from restriction. The SEA grants do not accrue any dividends over the performance period.

Please refer to the Compensation Discussion and Analysis for additional detail on these grants. For further information regarding forfeiture and treatment upon termination or change of control, refer to the “Potential Payments Upon Termination or Change of Control” section.

 

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COMPENSATION

Compensation Tables

 

Outstanding Equity Awards at Fiscal 2018 Year-End

Our Named Executive Officers do not hold options for either Carnival Corporation or Carnival plc shares. Information with respect to outstanding Carnival Corporation restricted shares and RSUs granted by Carnival Corporation & plc to and held by our Named Executive Officers as of November 30, 2018, except for Mr. Thamm whose RSUs are related to Carnival plc ordinary shares, is as follows:

 

     Stock Awards
  Name    No. of
Shares or
Units of Stock
That Have Not
Vested
(#)
  

Market Value

of Shares or

Units of Stock

That Have

Not Vested(1)

($)

  

Equity Incentive

Plan Awards:

No. of Unearned

Shares, Units or

Other Rights

That Have

Not Vested

(#)

 

 

Equity Incentive

Plan Awards:

Market or

Payout Value

of Unearned

      Shares, Units or      

Other Rights

That Have

Not Vested

($)

 

  Arnold W. Donald

       38,932 (2)         2,347,210        47,407       4,093,182 (3) 
       30,161 (4)         1,818,407        51,020       3,075,996 (5) 
       31,939 (6)         1,925,602        35,000       2,110,150 (7) 
                 43,623       2,630,031 (8) 
                 35,000       2,110,150 (9) 
    

 

 

           

 

 

     

 

  TOTAL

    

 

 

 

101,032

 

         

 

 

 

212,050

 

   

 

  David Bernstein

       7,416 (2)         447,111        15,963       1,378,266 (3) 
       5,745 (4)         346,366        14,455       871,492 (5) 
       4,259 (6)         256,775        10,000       602,900 (7) 
                 12,360       745,184 (8) 
                 10,000       602,900 (9) 
    

 

 

           

 

 

     

 

  TOTAL

    

 

 

 

17,420

 

         

 

 

 

62,778

 

   

 

  Stein Kruse

       18,539 (2)         1,117,716        20,801       1,795,986 (3) 
       7,082 (4)         426,974        20,408       1,230,398 (5) 
       6,378 (6)         384,530        12,000       723,480 (7) 
                 17,449       1,052,000 (8) 
                 12,000       723,480 (9) 
    

 

 

           

 

 

     

 

  TOTAL

    

 

 

 

31,999

 

         

 

 

 

82,658

 

   

 

  Arnaldo Perez

       8,898 (2)         536,460        9,287       801,852 (3) 
       6,893 (4)         415,579        8,503       512,646 (5) 
       5,323 (6)         320,924        2,500       150,725 (7) 
                 7,270       438,308 (8) 
                 2,500       150,725 (9) 
    

 

 

           

 

 

     

 

  TOTAL

    

 

 

 

21,114

 

         

 

 

 

30,060

 

   

 

  Michael Thamm

       12,705 (2)         740,447        14,223       1,519,477 (3) 
       7,169 (4)         417,809        20,734       1,208,378 (5) 
       6,042 (6)         352,128        12,000       723,480 (7) 
                 20,474       1,193,225 (8) 
                 12,000       723,480 (9) 
    

 

 

           

 

 

     

 

  TOTAL

    

 

 

 

25,916

 

         

 

 

 

79,431

 

   
(1)

Market value of the stock awards is based on the closing price of Carnival Corporation common stock on November 30, 2018 of $60.29, except for the Carnival plc RSUs granted to Mr. Thamm under the Carnival plc 2014 Employee Share Plan, which are based on closing price of Carnival plc ordinary shares on November 30, 2018 of £45.53, which has been converted into $58.28 based on the November 30, 2018 exchange rate of $1.28:£1.

(2)

Restrictions lapsed on January 11, 2019.

(3)

Market value reflects the final performance payout of 143.21% of target on the April 2016 PBS grant for which the performance period ended on November 30, 2018. These grants vested based upon the extent to which annual Operating Income, as adjusted for fuel price changes and currency exchange rate impacts for each of the three fiscal years in the 2016-2018 performance cycle and ROIC for the three-year performance cycle. The TSR modifier had no impact. Additional shares were provided to take into account dividend reinvestment during the performance period.

(4)

Restrictions lapse on January 17, 2020.

(5)

Market value is based on target performance assuming 100% payout on the April 2017 PBS grant as at November 30, 2018. These grants vest zero to 200% of target based upon the extent to which annual Operating Income, as adjusted for fuel

 

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Compensation Tables

 

 

price changes and currency exchange rate impacts, for each of the three fiscal years in the 2017-2019 performance cycle and the average of ROIC results for the three-year performance cycle, exceeds specified performance goals.

(6)

Restrictions lapse on January 16, 2020.

(7)

Market value is based on target performance assuming 100% payout on the January 2017 SEA grant as at November 30, 2018. These grants vest zero to 300% of target based on attaining certain absolute TSR growth goals and may be modified by TSR rank relative to our 2017 Peer Group at the end of a three-year performance period. The maximum relative TSR modification is 200% of the absolute TRS performance for a combined maximum payout of six times target. The 2017 SEA grant is also subject to a value cap of seven times the grant date value.

(8)

Market value is based on target performance assuming 100% payout on the April 2018 PBS grant as at November 30, 2018. These grants vest zero to 200% of target based upon the extent to which annual Operating Income, as adjusted for fuel price changes and currency exchange rate impacts, for each of the three fiscal years in the 2018-2020 performance cycle and the average of ROIC results for the three-year performance cycle, exceeds specified performance goals.

(9)

Market value is based on target performance assuming 100% payout on the January 2018 SEA grant as at November 30, 2018. These grants vest zero to 300% of target based on attaining certain absolute TSR growth goals and may be modified by TSR rank relative to our 2018 Peer Group at the end of a three-year performance period. The maximum relative TSR modification is 200% of the absolute TSR performance for a combined maximum payout of six times target. The 2018 SEA grant is also subject to a value cap of seven times the grant date value.

Stock Vested for Fiscal 2018

None of our Named Executive Officers held options during fiscal 2018. The following table provides information for our Named Executive Officers on the number of shares acquired upon the vesting of restricted shares and RSUs and the value realized, each before the payment of any applicable withholding tax and broker commissions.

 

     Stock Awards    

Name

  

Number of Shares

Acquired on Vesting

(#)

  

Value Realized

on Vesting(1)

($)

   

Arnold W. Donald

       95,351        6,573,746  

David Bernstein

       110,675 (2)         7,439,386 (2)   

Stein Kruse

       116,899 (2)         7,764,793 (2)   

Arnaldo Perez

       34,102        2,313,280  

Michael Thamm

       89,319        5,899,855  
(1)

The fair market value of Carnival Corporation common stock realized on vesting has been determined using the average of the highest and lowest sale prices reported as having occurred on the New York Stock Exchange on the date of vesting. The fair market value of Carnival plc ordinary shares realized on vesting has been determined using the average of the highest and lowest sale prices reported as having occurred on the London Stock Exchange on the date of vesting. The value for Carnival plc ordinary shares has been converted from sterling into U.S. dollars based on the exchange rate on the date of exercise or vesting.

(2)

Includes portions of the 2016 restricted stock and 2017 MTE grants released to Mr. Bernstein in December 2017 and the 2017 MTE grants and 2018 MTE grants released to Mr. Kruse in November 2017 due to Messrs. Bernstein and Kruse reaching retirement age pursuant to the terms of the associated share grant agreements.

Pension Benefit in Fiscal 2018

Messrs. Donald, Bernstein, Kruse and Thamm do not participate in any defined benefit pension plans sponsored by Carnival Corporation or Carnival plc. Mr. Perez participated in the Retirement Plan.

The Retirement Plan was unfunded and was not qualified for U.S. tax purposes. Mr. Perez’s benefit accruals in the Retirement Plan both for credited service and compensation were both frozen as of December 31, 1997. Mr. Perez’s benefits under the Retirement Plan were calculated based on age, length of service with Carnival Corporation and the average of his five highest consecutive years of compensation out of the last 10 years of service up to December 31, 1997. The benefit formula provides an annual benefit accrual equal to 1% of his earnings for the year up to “covered

 

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Compensation Tables

 

compensation” plus 1.6% of earnings for the year in excess of covered compensation then multiplied by his years of service up to a maximum of 30 years of credited service, up to December 31, 1997. The elements of compensation to determine his benefits were his base salary and annual bonus. Mr. Perez was vested in his respective benefit in accordance with the terms of the Retirement Plan. As a result of the adoption of Section 457A, benefits under the Retirement Plan were $122,440, which was paid as a lump sum in December 2017.

 

Name

  Plan Name  

Number of Years

Credited Service(1)

(#)

 

Present Value of

Accumulated Benefit

($)

 

Payments During Last

Fiscal Year(2)

($)

Arnold W. Donald

  None                  

David Bernstein

  None                  

Stein Kruse

  None                  

Arnaldo Perez

  Retirement Plan       5       0       122,440

Michael Thamm

  None                  
(1)

Credited service reflects service up to the freeze date of December 31, 1997. Mr. Perez’s actual years of service is 27.

(2)

Due to taxation issues created by the adoption of Section 457A, benefits accrued as of December 31, 2008 under the Retirement Plan were paid a lump sum in December 2017.

Nonqualified Deferred Compensation in Fiscal 2018

 

Name

 

Executive

Contributions

in Last FY

($)

 

Registrant

Contributions in Last

FY

($)

 

Aggregate

Earnings in Last

FY

($)

 

Aggregate

Withdrawals/

Distributions

($)

 

Aggregate Balance

at Last

FYE

($)

Arnold W. Donald

                             

David Bernstein

                  (184 )       231,469       0

Stein Kruse

                             

Arnaldo Perez

                  (267 )       470,749       0

Michael Thamm

                             

Until December 31, 2008, Messrs. Bernstein and Perez could defer salary and/or bonus amounts into the Savings Plan, which is a nonqualified defined contribution plan for U.S. tax purposes. As described in the “Pensions and Deferred Compensation Plans” section of the Compensation Discussion and Analysis, effective January 1, 2009, they could no longer defer any salary or bonus amounts into the Savings Plan. Although the Savings Plan is unfunded, Carnival Corporation had established a “rabbi trust” that held any executive deferrals and company contributions to the Savings Plan.

Benefits were paid based on the participant’s form and timing elections made in accordance with applicable Section 409A Treasury Regulations. Benefits were based on the participant’s deferrals of cash compensation and associated earnings and losses based on the investment allocation selected by the participant. The investment options available to participants in the Savings Plan were identical to those available to participants in the 401(k) Plan, except for the Standard & Poor’s index fund and money market investment options. A participant could have changed his or her investment allocation at any time.

For every dollar Messrs. Bernstein and Perez deferred into the Savings Plan prior to January 1, 2009, Carnival Corporation matched 50% up to the lower of:

 

 

50% of the U.S. Internal Revenue Service qualified plan limitation; or

 

6% of his eligible pay.

 

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Potential Payments Upon Termination or Change of Control

 

“Eligible pay” includes regular pay (before any pre-tax contributions from his pay and taxes) and bonus. Carnival Corporation also made profit sharing contributions into the Savings Plan based upon their eligible pay and years of service according to the following schedule:

 

Years of Service   

Award

(% of Eligible Pay)

Less than 2    0%
2-5    1%
6-9    2%
10-13    3%
14-16    5%
17-19    7%
20-22    9%
23-25    12%
26 and over    15%

Following the promulgation of Section 457A, salary and bonus deferrals into the Savings Plan are no longer permitted. As a result, Messrs. Donald, Bernstein and Perez and all other Savings Plan participants and those who are deemed highly compensated employees under IRS regulations are paid the equivalent of their annual matching award (less any amount actually contributed by Carnival Corporation to the 401(k) Plan on their behalf as a matching contribution) and profit sharing contribution as additional cash compensation. The effect of this provision will result in no additional benefit for Messrs. Donald, Bernstein and Perez and will not result in a material incremental cost to Carnival Corporation. As of November 30, 2018, Messrs. Donald, Bernstein and Perez had 6, 21 and 27 years of service, respectively.

In accordance with Section 457A of the U.S. Internal Revenue Code, Carnival Corporation paid out all benefits accrued under the Retirement Plan and the Savings Plan in December 2017.

Additional information with respect to pension plan arrangements for Carnival plc for the year ended November 30, 2018 is included in Part I of the Carnival plc Directors’ Remuneration Report included in this Proxy Statement as the Compensation Discussion and Analysis and Part II of the Carnival plc Directors’ Remuneration Report, which is attached as Annex B to this Proxy Statement.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

 

Each of our Named Executive Officers may be eligible to receive certain payments and benefits in connection with termination of employment under various circumstances. The potential benefits payable to our Named Executive Officers in the event of termination of employment under various scenarios on November 30, 2018 are described below.

In addition to benefits described below, our Named Executive Officers will be eligible to receive any benefits accrued under Carnival Corporation & plc broad-based benefit plans, such as distributions under life insurance and disability benefits and accrued vacation pay, in accordance with those plans and policies. These benefits are generally available to all employees.

Cash Severance Benefits

It is the policy of the Compensation Committees for executive officers to have notice periods of not more than 12 months in duration. The Compensation Committees may make an exception to this

 

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Potential Payments Upon Termination or Change of Control

 

practice where they believe doing so would be in the best interests of Carnival Corporation and Carnival plc and their shareholders. The Compensation Committees will continue to consider the individual circumstances of each case taking account of best practice in the UK and the U.S. and the expected cost to Carnival Corporation & plc of any termination of an executive’s employment arrangements.

Accordingly, Messrs. Bernstein, Kruse and Perez have no employment agreements and no entitlement to severance except for possible retention of unvested restricted share grants depending on the circumstances of their separation of employment discussed below.

Messrs. Donald and Thamm are our only Named Executive Officers with employment agreements providing cash severance and other benefits. The table below details the various payments associated with certain termination events. Payment outcomes associated with the treatment of equity is detailed in the “Potential Value of Equity Grants upon Termination of Employment or Change of Control” section.

Post-Employment Cash Compensation Obligations to Mr. Donald. Upon termination of Mr. Donald’s employment, he will be entitled to certain payments as follows:

 

 

 Reason for Termination

 

  

 

Payment Type

 

 

By the company for cause

 

  

 

All amounts earned or accrued through the termination date

 

 

By Mr. Donald, other than for good reason

 

  

 

All amounts earned or accrued through the termination date

 

 

Because of death or disability

 

  

 

Benefits or payments under any applicable disability or life insurance benefit plans

 

 

By Mr. Donald for good reason

 

  

 

•  Severance pay equal to one times his base salary and target bonus for the year of termination

•  Continued medical, dental, group life, accidental death or dismemberment, and disability insurance premiums for up to 18 months (“Post-Employment Benefits”)

 

 

By the company other than for cause, death or disability

 

  

 

•  Severance pay equal to one times his base salary and target bonus for the year of termination

•  Post-Employment Benefits

 

 

Following a change in control event

 

  

 

•  Severance pay equal to two times the sum of his base salary and target bonus for the year of termination

•  Post-Employment Benefits

 

Post-Employment Compensation Obligations to Mr. Thamm. Mr. Thamm is eligible to receive 12 months of base salary plus his target bonus if his employment is terminated, as compensation for his non-competition and non-solicitation obligations.

 

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Potential Payments Upon Termination or Change of Control

 

Estimated Cash and Benefit Payments Upon Termination of Employment

The following table quantifies the cash compensation or value of benefits that Messrs. Donald and Thamm would receive upon termination of employment. The amounts shown assume the event that triggered the treatment occurred on November 30, 2018. The table does not include amounts they would be entitled to without regard to the circumstances of termination, such as earned or accrued compensation.

 

Name

  Benefit  

Termination

without Cause

($)

   

Voluntary

Termination

(without

Good

Reason)

($)

   

Voluntary

Termination

(with Good

Reason)

($)

   

Death or

Disability

($)

   

Change

of

Control

($)

 

Arnold W. Donald  

  Separation Payment     4,500,000       0       4,500,000       0       9,000,000  
 

Post-Employment Benefits

    81,855       0       81,855       0       81,855  
   

 

 

     

 

 

     

 

 

 
 

 

TOTAL

 

 

 

 

4,581,855

 

 

   

 

 

 

4,581,855

 

 

   

 

 

 

9,081,855

 

 

Michael Thamm

  Non-Competition Compensation(1)     2,351,738       1,190,482       1,190,482       1,190,482       1,190,482  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
 

 

TOTAL

 

 

 

 

2,351,738

 

 

 

 

 

 

1,190,482

 

 

 

 

 

 

1,190,482

 

 

 

 

 

 

1,190,482

 

 

 

 

 

 

1,190,482

 

 

(1)

These amounts would be payable in euro. Mr. Thamm’s potential non-competition compensation has been converted into U.S. dollars using the average U.S. dollar to euro exchange rate for fiscal 2018 of $1.19:1.

Equity-Based Compensation

Vesting of restricted shares and RSUs upon termination of a Named Executive Officer’s employment is dependent upon the reasons his employment is terminated, the terms of the respective equity plan and the associated equity grant agreement. Equity grants made to our Named Executive Officers are subject to the same terms as all other participants generally, except as described below.

Carnival Corporation 2011 Stock Plan. All our Named Executive Officers received SEA grants under the Carnival Corporation 2011 Stock Plan, In addition, all our Named Executive Officers except Mr. Thamm received MTE and PBS grants under the Carnival Corporation 2011 Stock Plan. The terms of the Carnival Corporation 2011 Stock Plan and the equity grant agreements applicable to participants generally provide that upon termination for death or disability, all unvested equity grants will immediately vest. The terms of the equity grants to Named Executive Officers provide that if their employment is terminated without cause or they voluntarily terminate due to a diagnosis of a terminal medical condition, the restricted share and MTE grants will continue to vest according to their original vesting schedule and remain subject to confidentiality and non-competition provisions. The SEA grants will also be retained if employment is terminated without cause. For the purposes of the agreement, “cause” is defined as any action or inaction which constitutes fraud, embezzlement, misappropriation, dishonesty, breach of trust, a felony or moral turpitude, as determined by the Boards of Directors.

Upon retirement, restricted share and MTE grants continue to vest according to their terms as though employment had not ended; provided, however, that as each participant reaches retirement age, 50% of the grant will immediately vest, if such participant becomes subject to tax withholding at that time. Retirement is defined as voluntary termination of an employee being at least 60 years of age with 15 years of service or at least 65 years of age with five years of service. Upon involuntary termination within 12 months after a change of control, the restricted period on all restricted shares and RSUs immediately expires.

Change of control means the occurrence of any of the following:

 

 

the acquisition by any individual, entity or group of beneficial ownership of 50% or more of either (A) the then outstanding shares of common stock of Carnival Corporation or (B) the combined

 

LOGO Carnival Corporation & plc 2019 Proxy Statement  

 

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Table of Contents

COMPENSATION

Potential Payments Upon Termination or Change of Control

 

 

voting power of the then outstanding voting securities of Carnival Corporation and Carnival plc entitled to vote generally in the election of Directors, except that this provision does not apply to affiliated companies or the Arison family,

 

the incumbent Directors cease to constitute at least a majority of the Boards of Directors;

 

the dissolution or liquidation of Carnival Corporation;