COMPENSATION – Articles

The last eighteen months has been a reckoning for powerful men in the business world and gaming has been no exception. The #MeToo Movement struck down one of the most recognizable names in the gaming industry when Steve Wynn stepped down from the company he founded, Wynn Resorts. These issues have continued to shine a spotlight on CEO pay, severance and golden parachutes. Four other CEOs in gaming are out or on the way out soon. Caesars recently announced that Mark Fissora is stepping down at the end of the year. All that said, it was a very solid year for casinos stocks, with many of the bigger companies outperforming the small ones.

According to a 2017 report from the Economic Policy Institute on CEO pay, chief executives at the largest 350 public companies in the United States made US$15.6 million on average in 2016 — 271 times what the typical worker earns. In the hotel industry the average total compensation for a public CEO was US$5.7 million or about 100 times more than the typical worker. Should hotel CEOs be criticized or praised? We think it’s a combination of both, but you might be surprised who gets criticized and who gets praised.

If you have attended any hotel sector related conference this year, or kept up to date with industry press, you will have been unable to ignore the dialogue taking place around brands and the argument posited by some that we are reaching a point of brand oversaturation in the market. Are the lines of differentiation between brands, often within the same company, becoming blurrier; is the brand proposition to the consumer and to the hotel owner being diluted; is too much choice overwhelming? The big chains of course counter that they have to compete with the OTAs; their earnings are nowadays based on management fee growth rather than real estate appreciation; and the value of their loyalty programme drives the need to provide greater consumer choice. This scenario gives independent hotels an opportunity to be differentiators, to stand out from the crowd and to offer something more unique that captures the consumer not looking to follow the crowd. The reality nonetheless is that, commercially, independent properties are having to compete against an increasing number of 800lb gorillas who are getting bigger by the day.

Being a CEO in the restaurant industry is tough work; and short lived for many. Nearly 20% of the CEOs in our annual study of pay-for-performance resigned, retired or were pushed out. It would stand to reason that deficient performance would precipitate a CEO’s ouster, but was that really the case?

Besides technology, the gaming industry has one of the largest percentages of entrepreneurs running their respective companies. Larger than life personalities such as Steve Wynn and Sheldon Adelson actually cast a shadow well beyond gaming. But that is changing as entrepreneurs are slowly being replace by corporate execs such as Keith Smith at Boyd, Jim Murren at MGM, Tim Wilmott at Penn and Mark Frissora at Caesars. It is interesting to see how CEO compensation has changed as this process has unfolded. Generally speaking, the entrepreneurs took more of the compensation in equity, while corporate executive appear to have a more balance approach to their compensation mix. In the end, what matters most is whether a CEO earns his or her pay, not necessarily the size of the paycheck. In an effort to analyze executive pay in the gaming industry, AETHOS developed a proprietary pay-for-performance model that allows for the comparison of disparate data points to determine if a pay package was too large or small.

A recent compensation review of more than 250 Directors of Sales (DOS) from four- and five-star properties throughout the United States has resulted in AETHOS Consulting Group’s Director of Sales Compensation Study.

When we began our careers in the hotel business, it was widely thought that our industry paid executives rather poorly. Is that still true today? If CEO pay is any indication, it appears that stigma needs to change. In fact, based on our 20th review of hotel CEO pay, one could say that the industry is a vehicle for getting rich.

The General Manager (GM) is the undisputed business and cultural nucleus of the hotel ecosystem, and recent research indicates that such leadership roles require competencies – including emotional intelligence, adaptability and consultative decision-making - that can neither be relegated nor replaced by technology. As a result, the proverbial “war for talent” is more topical and critical than ever. To this end, let us explore pertinent data and trends for hotel owners and operators to make informed decisions when designing programs to attract and retain high-impact GMs.

David Mansbach, Managing Director at AETHOS Consulting Group and author of the study, reviewed 37 publicly-listed restaurant companies and, using the AETHOS Value Index (AVI), identified those CEOs who excelled at their job and increased value for shareholders but who were underpaid relative to their performance and peers. Also reviewing the Top10 of those CEOs who were overpaid, David Mansbach highlights the importance of greater accountability and transparency at board level when it comes to CEO compensation.

Using our proprietary pay-for-performance model, AETHOS has evaluated the performance of forty-six CEOs in the hospitality/travel/entertainment industries. The overarching goal? To determine whether a CEO is deserving of his or her pay relative to their peers.

Pay for top gaming industry chief executives is on the uptick, especially for companies concentrating on international opportunities

Every proxy season for the past 20 years I have evaluated the performance of CEOs in the hotel industry using a proprietary pay-for-performance model which looks at key financial metrics such as company size, stock appreciation, EBITDA growth, and total direct compensation within a defined peer group.

Many would argue that all CEOs are overpaid, but we disagree. Keith Kefgen reveals his findings in the latest edition of our annual review of US hotel company CEO compensation.

After a slower than expected recession recovery, the gaming industry is beginning to see signs of optimism, leading towards an economic rebound. The authors present their 2012 review of US gaming CEO compensation for Casino Journal

Based on our pay-for-performance model, Bill McCarten was underpaid by 120.9% in 2006. The model takes into consideration three primary criteria, EBITDA/FFO growth, market capitalization and stock appreciation and compares that to total compensation.

Based on our pay-for-performance model, Steve Bollenbach at Hilton Hotels Corporation was underpaid by 120% in 2005.

What are the factors that decide how much a General Manager should be paid? AETHOS looks at compensation trends in North America’s top 6 cities to answer this question.

You can’t read a business magazine or newspaper today without executive compensation being hotly debated.

Shareholders are demanding transparency and they are going to get it. With the right balance of metrics, managerial behavior can be directed in the appropriate way.

Chris Mumford directs this year’s crop of graduates in search of money towards sales and marketing jobs in the luxury hotel sector.

IRS statute (280G) was enacted to control excessive payment to executives in the event of a Change In Control.

We still deem equity pay to be an important part of compensation administration; we just think it is time to end the compensation free-for-all.

Did CEO pay follow the dramatic fall of the US economy in 2009? AETHOS Consulting Group presents this and other findings in our annual CEO survey of the US hotel industry.

CEO pay continues to be a highly scrutinized topic, especially in today's economic environment. We argue that when compensation programming is done correctly, a CEO's pay should be based on performance relative to his or her peers.

In the last year, numerous cases of backdating stock options have come to light. Apple has been the most high profile company to be embroiled in the scandal. Keith Kefgen looks at "What is backdating?"

Our annual study addresses trends in total compensation for two of the most senior positions at U.S. Gaming Companies.

AETHOS looks at the Say on Pay bill passed in the United States - a real reform or just good politics?

Bonuses way up, stock options way down in the 2007 Gaming Industry CEO Survey by AETHOS.

An answer to one of our most frequently asked questions, and a demystification of the construction of a working bonus program.

This review of US gaming company CEOs compares 2010 compensation in relation to stock performance, EBITDA growth and market capitalization over a three year period.

This year we analyzed CEO compensation for 53 public restaurant firms. Based on our pay-for-performance model, the top performer was Joel A. Schwartz of Benihana Inc.

The biennial study addresses trends in total compensation for two of the most senior positions in an organization in the US chain restaurant industry.

We named Jeffery H. Boyd President & Chief Executive Officer of priceline.com as the hotel industry’s top-performing chief executive officer of 2008 in our 16th Annual CEO Survey.

Even with fewer bonuses and stock options, the average CEO salary shot up 16.2 percent in 2003, thanks to a spike in casino business finds our annual US Gaming CEO performance study.

CEO compensation in the hotel industry continues to be an important issue in the midst of an economic downturn. Based on our pay-for-performance model, Jon E. Bortz of LaSalle Hotel Properties was underpaid by 111.9% or $2.1 million in 2007.