Skift Take

Most CEOs at the largest hotel companies ended 2022 with less actual overall compensation than they might have. We know this fact thanks to a splendid new U.S. reporting requirement, which cast pay packages in a fresh light.

Rob Goldstein, CEO and chairman of Las Vegas Sands Corp., was last year’s best-compensated public hotel company CEO, collecting $40 million. The second-most was Patrick Pacious, president and CEO of Choice Hotels International, who earned $27 million in total compensation.

Yet the newsiest detail in hotel CEO pay was something else. Most major hotel company CEOs ended 2022 with less actual overall compensation than first awarded. A new regulatory measure this year made it easier to see the difference between what CEOs aimed for and what they actually got.

A new rule this year required U.S. companies to more clearly report the equity awards that account for pay packages for top executives. In the past, companies reported compensation as valued when awarded. This year, the U.S. Securities and Exchange Commission required companies to disclose a “compensation actually paid” measure — which provides a clearer picture of the paper gains and losses of top bosses for the three most recent years.

Hotel CEO pay packages begin with a salary and then add a buffet of incentives tied to meeting performance targets or the shifting value of company stock. An annual bonus, stock share awards, and other compensation help to boost the average pay of a top boss. Yet the variable compensation can be tricky to estimate because an executive may hold it indefinitely and the value will fluctuate.

Exhibit A: In 2022, Hilton CEO Chris Nassetta earned a base salary of $1.3 million. But he also had an opportunity to receive $23.5 million in compensation but only received $8.4 million. Hilton tied CEO pay to targets for financial performance. About half of the incentives were linked to an adjusted earnings target. Other targets included free cash flow, net room growth, and diversity equity and inclusion goals for staffing.

Hilton’s stock sagged 19% last year, which depressed the value of its equity awards. In comparison, the Baird/STR Hotel Stock Index, which tracks 20 large hotel companies and real estate investment trusts, was down 15% for the year.

Wyndham CEO Geoffrey Ballotti is another executive who saw less than “expected” remuneration. Under the old measure, Ballotti was notionally awarded $9.7 million in compensation last year. But under the new measure, he was effectively awarded only $1.6 million — primarily because of a change in the fair value of equity awards granted in prior years.

Another notable compensation package was for Thomas Reeg, CEO of Caesars, the casino and hotel operator. He was paid a base salary of $2 million last year. But variable compensation made up most of his remuneration. A 56% plunge in the company’s equity value last year impacted his compensation so much that his compensation was notionally a negative $15.7 million. That’s on paper, though. Awards still outstanding may revive in value later.

Pay Versus “Compensation Actually Paid”

RankCEOHotel Group2022 Pay (all in)Compensation Actually Paid
1Robert GoldsteinLas Vegas Sands Corp.$11,410,263$40,267,303
2Patrick PaciousChoice Hotels International$37,993,749$27,120,091
3Anthony CapuanoMarriott International$18,686,271$17,995,991
4Mark HoplamazianHyatt Hotels & Resorts$16,660,642 $16,629,914
5Christopher NassettaHilton Hotels & Resorts$23,532,938$8,350,685
6Craig BillingsWynn Resorts$12,229,087$6,644,349
7William HornbuckleMGM Resorts International$16,238,075$6,386,343
8Geoffrey BallottiWyndham Hotels & Resorts$9,732,789$1,614,733
9Thomas ReegCaesars Entertainment Group$31,349,920-$15,761,300

Source: Skift/public filings.

European Hotel CEOs Paid Less

Hotel companies based in Europe weren’t required to disclose compensation in the same method as the U.S. adopted.

This year, the CEOs of IHG and Accor received less compensation on average than their U.S.-based peers, following a multi-year trend.

Last year, IHG (InterContinental Hotels & Resorts Group) offered CEO Keith Barr potential remuneration of about $6.5 million (£5.25 million). Actual remuneration was about $5 million (£4.7 million) because IHG fell short of a couple of financial performance targets, such as barely passing the threshold for rooms opened via net new properties to the system.

Accor doesn’t rely on variable compensation as heavily as its U.S.-based peers. It also estimates equity awards with the value at the grant date, rather than the effectively paid compensation. With those caveats, CEO Sebastian Bazin received about $5.3 million (€4.9 million) in total compensation last year.

Highest-Paid Hotel CEOs

Including European CEOs and excluding casino operators produces the following, adjusted list of highest-paid hotel CEOs for 2022, led by Patrick Pacious of Choice Hotels International.

RankCEOHotel Group2022 Remuneration
1Patrick PaciousChoice Hotels International$27.1 million
2Anthony CapuanoMarriott International$17.9 million
3Mark HoplamazianHyatt Hotels & Resorts$16.6 million
4Christopher NassettaHilton Hotels & Resorts$8.35 million
5Sébastien BazinAccor$5.3 million*
6Keith BarrInterContinental Hotels Group (IHG)$5.1 million*
7Geoffrey BallottiWyndham Hotels & Resorts$1.6 million

Source: Skift/public filings. Figures for Accor and IHG reflect currency conversions and amounts that calculate equity values at the time of granting.

None of the cited figures are total cash transfers to the individuals last year. Instead, the numbers include variable awards whose value can only be estimated. European companies calculate awards slightly differently than U.S. ones. But the ranking order would almost certainly be the same under either method.

The median pay for CEOs at those seven hotel companies was $8.35 million. For context, the median pay package for all S&P 500 CEOs in 2022 was $14.5 million, according to the Wall Street Journal. While hotel companies saw fewer gains in total performance in 2022 than in the post-pandemic surge year of 2021, the hotel company compensation was broadly in line with performance for a sector that broadly did better in terms of actual performance than overall North American and European economies.

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Tags: ceo pay, ceos, compensation, future of lodging, labor, pay

Photo credit: Photo illustration of the Venetian, owned by Las Vegas Sands. Source: Skift.

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