There is a degree of irrationality in CEO pay on many levels, including the companies' relative performance. The pay disclosures also expose the wide disparity in employee pay at Booking versus Airbnb.
Expedia Group in 2021 awarded vice chairman and CEO Peter Kern a $296 million compensation package, outpacing all his peers by an order of magnitude, and reportedly making him the third-highest compensated CEO in all of corporate America.
See the chart below outlining the 2021 compensation for the CEOs of Expedia Group, Booking Holdings, Tripadvisor, and Airbnb. The companies disclosed their executives’ compensation in May.
On paper, Kern’s bonanza makes Airbnb co-founder and CEO Brian Chesky’s 2020 package of $120 million seem like a relative paltry sum.
All of these comparisons are apples versus oranges. We’ll explain.
To put it all into perspective, on the surface Kern’s 2021 compensation package has a 2,897:1 ratio compared to the median pay for Expedia workers, which was $102,270.
Kern’s 2021 compensation package, though, actually covers three years plus a make-good for Covid-tinged 2020, while the median pay for Expedia employees was calculated for one year. (Chesky’s 2020 payload covered 10 years.)
“On February 25, 2021, Expedia Group entered into an Employment Agreement with Mr. Kern that has a term that expires on April 22, 2024 (the “Kern Employment Agreement”), after which Mr. Kern is expected to continue to serve as the Company’s Executive Vice Chairman at least through June 1, 2026,” Expedia Group stated in a financial filing.
The company said Kern isn’t expected to seek additional compensation during the term of his employment pact. Although the employment contract started in 2021, it included a base salary payment of $728,000 covering Kern’s first day as CEO on April 22, 2020 through the official start of the employment contract 10 months later.
So over a four-year span, Kern’s big payday would actually average a more modest — and still gargantuan — $74 million per year if the stock performs well. That’s way more than his peers at Booking Holdings, Tripadvisor and Airbnb.
Online Travel Agency CEO Pay 2021
|CEO||Company||Pay (All In)|
|Peter Kern||Expedia Group||$296 million|
|Glenn Fogel||Booking Holdings||$54 million|
|Steve Kaufer||Tripadvisor||$7.6 million|
Source: Financial filings
If Kern were to actually receive the $296 million over the four-year span, he’d be earning around $35,576 per hour based on a 40-hour work week.
That should give pause to Expedia Group board member Chelsea Clinton, who chaired the compensation committee in 2021. Chelsea Clinton, vice chair of the Clinton Foundation, campaigned for her mom and 2020 presidential candidate Hillary Clinton, who backed a nationwide $15 minimum wage.
Chelsea Clinton and the two other members of the Expedia board compensation committee drew a large number of withheld votes in their ultimately successful elections to the Expedia board this month. There haven’t been any public articulations of what prompted the withheld votes, which often indicate displeasure, Kern’s compensation package may have been a trigger.
But there are lots of caveats in Kern’s bundle beyond the fact that it is spread out over multiple years. The company said “he is not expected to receive additional equity compensation for the three-year term of his employment agreement.”
The vast majority of Kern’s package is in stock and option awards that would vest over several years, and the amounts are estimates that may not turn into reality based on the performance of Expedia’s stock.
Kern’s package was based in part on the performance of Expedia’s stock since he took over as CEO through the end of 2021. However, the stock, as has much of the market, has performed poorly in 2022.
Expedia Stock Performance April 22, 2020 through December 31, 2021
To come up with the $296 million package, Expedia stated that its compensation committee took into account Kern’s leadership during the pandemic, including his strategy to consolidate tech platforms, the cost cutting he did and financing deals he helped reach, and the stock price growth, which had been 194 percent through the end of 2021.
Booking Holdings CEO Glenn Fogel
Booking Holdings CEO Glenn Fogel’s 2021 compensation package was $54 million. The company said without prior-year adjustments, Fogel’s 2021 compensation was $29.9 million. But the company adjusted upward Fogel’s prior-year grants because his Performance Share Unit awards were two times the target in 2018, and one time the target for pre-pandemic 2019.
In addition to Fogel’s $54 million, Booking Holdings General Counsel Peter Millones’ compensation package in 2021 was $19.5 million, as was Chief Financial Officer David Goulden’s 2021 pay award of $19.5 million.
Although Millones and Goulden aren’t CEOs, their payola bonanzas were considerably larger than all of the top paid U.S. airline CEOs. Delta CEO Ed Bastian’s payday was $12.4 million, although the CARES Act limited airline CEO compensation in 2021.
Tripadvisor CEO Steve Kaufer
Outgoing Tripadvisor CEO Steve Kaufer’s 2021 pay package was $7.6 million.
“The Compensation Committees granted to Mr. Kaufer an equity award consisting of time-vested restricted stock units and time-vested non-qualified stock options with a grant date value equal to $5,800,000 in the aggregate based on the closing price of Tripadvisor’s common stock on Nasdaq on the grant date,” Tripadvisor stated. “The grant value was significantly smaller than prior long-term incentive award to Mr. Kaufer in recognition of his pending retirement some time in 2022.”
In 2018, Tripadvisor granted Kaufer a nearly $48 million compensation package.
Airbnb CEO Brian Chesky
Airbnb CEO Brian Chesky’s 2021 compensation award in 2021 was a mere $132,152, but that followed a $120 million 10-year award starting in 2020.
As such, Chesky’s 2021 nominal award was the only CEO payday among the bosses of Airbnb, Expedia Group, Booking Holdings, and Tripadvisor where Chesky earned less — when removing his 2020 award from consideration — than the median 2021 pay of Airbnb employees, which was $202,541. As shown in the following chart, the pay ratio between Chesky and Airbnb employees was 0.65: 1.
Online Travel Agency CEO Pay Ratio Versus Employee Pay
|CEO||Company||Staff Median||Ratio to CEO Pay|
|Peter Kern||Expedia Group||$102,270||2,897:1|
|Glenn Fogel||Booking Holdings||$58,005||931:1|
Although companies calculate the CEO pay ratio to employee pay somewhat differently, it is worth noting the vast disparity in employee pay among these competitors. In 2021, the median pay at Airbnb was $202,541 versus $58,005 at Booking Holdings. The majority of Booking’s employees are based in Europe.
As at Booking Holdings, several Airbnb executives were awarded large compensation packages in 2021: Airbnb awarded Chief Technology Officer Aristotle Balogh’s ($10.5 million), Global Head of Hosting Catherine Powell ($9.6 million), Chief Financial Officer Dave Stephenson ($9.5 million), and co-founder and Chief Strategy Officer Nate Blecharczyk ($7.61 million).
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Tags: airbnb, booking holdings, brian chesky, ceo pay, chelsea clinton, corporate governance, expedia, glenn fogel, labor, minimum wage, online travel newsletter, peter kern, steve kaufer, tripadvisor
Photo credit: Expedia Group CEO Peter Kern had the largest compensation award in 2021 among online travel CEOs, and it was reportedly the third highest among public company CEOs in the U.S.