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General Meeting of Royal Caribbean Cruises

At the General Meeting of Royal Caribbean Cruises Folketrygdfondet voted against the following proposals:

  • Proposal 1: Elect Richard Fain as a director to the Board of Directors
  • Proposal 2: To approve the compensation of named executive officers
  • Proposal 3: To approve the delisting of the Company's common stock from the Oslo Stock Exchange

The reasons why we voted against the three proposals are explained below: 

Proposal 1:  Elect Richard Fain as a director to the Board of Directors
Richard D. Fain is the CEO of Royal Caribbean Cruises Ltd. One of the main responsibilities of the Board of Directors is to oversee and supervise the management of the company, including appointing and dismissing CEOs. To fulfill these responsibilities in a satisfactory manner, Folketrygdfondet believes it is a prerequisite that the Board of Directors is not recruited from the Management of the Company.  Therefore, Folketrygdfondet voted against the proposal to elect Richard Fain as a director to the Board of Directors.

Proposal 2:  To approve the compensation of named executive officers
In general, Folketrygdfondet believes that executive remuneration should be based on long term performance targets, including incentive schemes linked to various performance metrics. However, the total remuneration should not be at an excessive level.  Based on the company's disclosure, the total remuneration to the management, and in particular the share option program, is in our opinion unreasonable particularly taking into consideration the Company's return on capital over time.  On this basis, Folketrygdfondet voted against the proposal to approve the compensation of named executive officers.

Proposal 3:  To approve the delisting of the Company's common stock from the Oslo Stock Exchange
We are convinced that the advantages and the value of the listing on the OSE significantly outweigh the costs and disadvantages listed by the Company in its proxy statement.  Therefore, we voted against the Delisting Proposal

Our points of view and arguments are further elaborated upon below.

  1. I Delisting from the OSE may have adverse effect on the market price of the Company’s common stock

Royal Caribbean Cruises Ltd is one of the top ten largest companies listed on the OSE, and as such attracts significant attention from Norwegian investors and financial analysts as well as other European investors.Major institutional investors in Norway currently own shares of the Company’s common stock listed on the OSE.The Company’s Investor Relations section of its website admits that "Oslo Bors was selected as the listing exchange due to the Company’s historic links to Norway and the particular focus on Norwegian investors on the shipping/cruise industry. Over the years, the Company has benefited from this listing as it has allowed the Company to increase its visibility with Norwegian institutional investors."

However, many Norwegian and European fund managers are restricted in their mandates only to hold shares of companies that are listed in Norway or in other European countries.  If the delisting proposal is approved at the annual meeting and the Company delists its shares from the OSE,  fund managers will be forced to sell shares of the Company’s common stock, and the Company will lose the benefits of its connections to the Norwegian institutional investors.

Moreover, if European investors sell substantial amounts of the Company’s shares of common stock due to delisting, or if the market perceives that these sales would occur, the market price of the Company’s shares of common stock could decline significantly.  Accordingly, the delisting from the OSE and the potential drop in the value of the Company’s common stock would adversely affect not only Norwegian institutional investors, but would negatively affect all shareholders of the Company.  Such action is in our opinion inconsistent with the best interests of the Company’s shareholders.

  1. II Delisting from the OSE may have adverse impact on the Company’s brand awareness and results of operations in Europe

Europe and Norway in particular have played an important role in developing the cruise and shipping industry.  We believe that the cluster of Norwegian competence and professionalism surrounding the Company’s cruise lines represents significant value for the Company and its shareholders.  The Company’s Norwegian history and culture have played a vital role in the Company’s ability to attract European passengers, employees, suppliers and other stakeholders and the Company’s sound long-term relations with European regulatory and administrative authorities. 

If the Delisting Proposal is approved at the Annual Meeting and the Company’s common stock is delisted from the OSE, the Company may lose its natural link to Norwegian and European brand awareness, which may have an adverse impact on the Company’s results of operations in Europe, which could negatively affect all shareholders of the Company.

  1. III The Company’s reasons for delisting from the OSE are not convincing

The Company is asking its shareholders to approve the Delisting Proposal due to:

  • the complexity of complying with two regulatory regimes (the NYSE and OSE) with conflicting and often inconsistent requirements;
  • the Company’s low trading volume on the OSE relative to the NYSE and lack of need to access the capital markets through the OSE; and
  • the costs and administrative burden associated with maintaining and complying with the secondary listing venue.

We believe that these arguments do not warrant the delisting from the OSE.

Firstly, we believe that the listing requirements of the OSE have neither significantly changed nor become more stringent over the last years.In fact, the most recent changes to the OSE requirements related to listed companies were adopted in 2007 when the Directive on Markets in Financial Instruments was implemented (regulation which is similar to the European Union’s regulation). The Company should have disclosed in its proxy statement related to the Annual Meeting the OSE listing requirements that it finds particularly onerous to comply with in order to give shareholders an opportunity to evaluate the complexity of maintaining the dual listing.As far as we know, other companies listed both in the United States and Oslo do not find the different requirements an obstacle for dual listing.

Secondly, and with respect to the low liquidity of the Company’s shares of common stock on the OSE, it is inevitable that the liquidity is much higher at the NYSE because more shareholders are trading on the NYSE than on the OSE and is not indicative of whether the Company’s common stock should be delisted from the OSE given the impact of such delisting on the Company’s shareholders, as discussed above.

Finally, the Company states in its proxy statement related to the Annual Meeting that its annual costs and administrative burden associated with maintaining and complying with the secondary listing on the OSE is approximately US $500,000.Form 10-K reports that the Company’s total revenues for the fiscal year ended December 31, 2014 were US $8.1 billion, and we believe that the US $500,000 cost associated with the OSE listing is not a significant cost compared to the benefits derived from such listing, as discussed above.

As a result of the above, it is our opinion that the Company has not provided adequate disclosure of the material aspects of the Delisting Proposal, such that shareholders cannot make an informed voting decision. 

For the reasons set forth above, we are convinced that the advantages and the value of the listing on the OSE significantly outweigh the costs and disadvantages listed by the Company in its proxy statement.  Therefore, we voted against the Delisting Proposal.