Harry Sommer
Norwegian Cruise Line HoldingsAbout Harry Sommer
Harry Sommer, 57, is President & Chief Executive Officer and a director of Norwegian Cruise Line Holdings Ltd. (NCLH) since July 1, 2023; he holds an MBA (Pace University), BBA (Baruch College) and is a CPA (inactive) . Under his leadership, NCLH reported 2024 Adjusted EBITDA of $2.534 billion and Net Income of $910.3 million, while the pay-versus-performance table shows the Company’s TSR value improving to 44.05 in 2024 from 34.31 in 2023 (value of a $100 investment metric) . His 2024 total reported compensation was $12.81 million, with “compensation actually paid” (SEC Item 402(v)) at $24.17 million, driven by equity performance and share price recovery .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Norwegian Cruise Line Holdings Ltd. | President & CEO | Jul 2023 – Present | Oversaw delivery of Norwegian Viva, Seven Seas Grandeur, Norwegian Aqua; advanced long-term fleet strategy . |
| NCLH | President & CEO – Elect | Apr 2023 – Jun 2023 | CEO transition planning . |
| Norwegian Cruise Line (brand) | President & CEO | Jan 2020 – Mar 2023 | Navigated global pause/restart; launched first-in-class Norwegian Prima with record bookings . |
| NCLH | President, International | Jan 2019 – Jan 2020 | Drove international expansion . |
| NCLH | EVP, International Business Development | May 2015 – Jan 2019 | Global commercial development . |
| NCLH | EVP & Chief Integration Officer | Feb 2015 – May 2015 | Integration leadership . |
| Prestige Cruises | SVP & Chief Marketing Officer | Oct 2013 – Feb 2015 | Brand/marketing leadership . |
| Prestige Cruises | SVP, Finance & CIO | Sep 2011 – Oct 2013 | Finance/technology leadership . |
| Prestige Cruises | SVP, Accounting/CAO/Controller | Aug 2009 – Aug 2011 | Corporate accounting leadership . |
| Luxury Cruise Center | Co‑founder & President | 2002 – 2008 | Built high-end travel agency . |
| Norwegian Cruise Line (brand) | VP, Relationship Marketing | 2000 – 2001 | CRM/loyalty marketing leadership . |
External Roles
- No current public company board roles disclosed beyond NCLH directorship; education noted above .
Fixed Compensation
| Year | Base salary ($) | Notes |
|---|---|---|
| 2022 | 900,000 | Pre‑CEO role period . |
| 2023 | 1,000,822 | Increased to $1.1m effective July 1, 2023 upon CEO promotion . |
| 2024 | 1,150,000 | Benchmark-driven increase . |
| 2025 (effective Jan 1) | 1,300,000 | Set by Compensation Committee for 2025 . |
Retention bonuses (one-time):
| Year | Retention bonus ($) | Footnote |
|---|---|---|
| 2023 | 1,000,000 | From March 2022 retention agreement . |
| 2024 | 1,000,000 | From March 2022 retention agreement . |
Other perquisites (2024): Monthly car allowance $2,500 (annualized $30,000 in “Automobile”), executive medical plan premiums $22,896; company‑paid security enhancements ($1,200), travel ($550), identity theft protection ($400) .
Performance Compensation
2024 Annual Cash Incentive – Metrics and Payout
| Metric | Weight | Target | Actual result | Payout contribution |
|---|---|---|---|---|
| Adjusted EBITDA | 80% | $2.200B | $2.534B (per plan definition) | 180% of target portion |
| Strategic Health & Safety | 10% | Clear all Passenger Ship Safety Certificate inspections & fleet USPH ≥92 | Achieved | 100% of target portion |
| Sustainability (shore power) | 10% | ≥59% of fleet with shore power by YE 2024 | Achieved (>59%) | 100% of target portion |
| Total payout | — | — | — | 200% of target |
Individual payout:
- Target annual incentive: $2,300,000 (200% of base salary) .
- Actual annual incentive paid: $4,600,000 (200% of target) .
2024 Long-Term Equity Incentive (granted Mar 1, 2024)
| Award type | Target value ($) | Units granted | Vesting | Performance conditions |
|---|---|---|---|---|
| RSUs | 3,000,000 | 155,520 | 1/3 on Mar 1, 2025, 2026, 2027 | Time‑based. |
| PSUs | 3,000,000 (target) | 155,520 target; 38,880–311,040 range | Through Dec 31, 2026 + service to Mar 1, 2027 | 50% average Adjusted EPS growth (’23–’26) and 50% Adjusted ROIC at 12/31/2026; 0–200% payout; pro‑rata between thresholds . |
Prior PSU result:
- March 1, 2022 PSU award certified at 200% (maintain fleet certificates; financing thresholds for Seven Seas Grandeur & Norwegian Aqua), also subject to time‑based vesting through Mar 1, 2025 .
2025 program alignment update:
- Short-term metrics include Adjusted EPS and GHG intensity reductions; long-term metrics include Adjusted ROIC, Net Leverage, and Adjusted Operational EBITDA Margin, aligning to 2026 “Charting the Course” targets per shareholder feedback .
Option policy:
- Company has not granted stock options since 2016; no repricing without shareholder approval .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 454,375 shares; “<1%” of 443,440,226 shares outstanding (as of Apr 2, 2025) . |
| Options exercisable (60 days) | 125,000 shares within 60 days of Apr 2, 2025 . |
| Unvested RSUs/PSUs outstanding | 939,301 units unvested at Dec 31, 2024 (aggregate) . |
| Shares vested in 2024 | 157,089 shares vested (value realized $3,030,247) . |
| CEO ownership guideline | 6× base salary; all NEOs except a 2023 hire exceed requirements; retain 50% net shares until compliant . |
| Hedging/pledging | Prohibited for senior officers and directors; no margin/pledge; short sales and derivatives prohibited . |
Director fees: As an employee, Mr. Sommer receives no additional director compensation .
Employment Terms
| Term | Key provisions |
|---|---|
| Agreement & term | CEO employment agreement dated Mar 15, 2023; effective Jul 1, 2023; initial term through Dec 31, 2025; auto‑renews annually unless 60‑day non‑renewal notice . |
| Base salary (minimum) | ≥$1,100,000, subject to annual review (increased to $1.15m for 2024, $1.30m for 2025) . |
| Target bonus | ≥175% of base salary per agreement; 2024 target set at 200% of base salary ($2.3m) . |
| Equity | Annual equity awards with at least 50% of grant date fair value performance‑based . |
| Benefits/perqs | Executive medical plan; $2,500/month car allowance; cruise benefits; security/identity protection as disclosed . |
| Non‑compete / non‑solicit | 2 years post‑termination (confidentiality survives) . |
| Clawback | NYSE‑compliant clawback adopted Oct 2023; mandatory on restatement; discretionary for misconduct . |
| Hedging/pledging | Prohibited (see above) . |
Severance and Change‑in‑Control (CIC) Economics
General structure:
- Without cause / good reason / company non‑renewal: cash equal to 2× base salary, paid over 12 months; pro‑rata annual incentive for year of termination; 18 months of medical/vision/dental continuation; for Mr. Sommer, accelerate time‑based equity not tied to performance and continue eligibility for performance‑based awards granted on/after Jul 1, 2023; double‑trigger CIC accelerates all equity; no excise tax gross‑ups (cut‑back if beneficial) .
Estimated values if the event occurred on Dec 31, 2024:
| Scenario (12/31/2024) | Severance payment ($) | Insurance continuation ($) | Equity acceleration ($) |
|---|---|---|---|
| Death or Disability | 4,600,000 (pro‑rata bonus) | — | 21,810,318 |
| Termination w/o cause or good reason | 6,900,000 | 83,191 | 16,997,315 |
| CIC termination (double‑trigger) | 6,900,000 | 83,191 | 24,168,215 |
| Retirement (if eligible) | 4,600,000 (pro‑rata bonus) | 83,191 | 14,112,982 |
Board Governance (Director Service)
| Item | Detail |
|---|---|
| Board role | Director since July 2023; up for Class III election in 2025 proxy . |
| Independence | Not independent due to employment; 7 of 8 directors independent . |
| Board leadership | Independent Chair (Stella David); CEO and Chair roles separated . |
| Committees | None for Mr. Sommer (employee director); committees chaired by independent directors . |
| Board/committee meetings (2024) | Board (4), Audit (4), Compensation (5), Nominating & Governance (4), TESS (4); all directors >75% attendance . |
| Executive sessions | Four independent-director executive sessions in 2024 . |
Director compensation: Employee directors receive no additional fees; non‑employee director retainers and RSUs disclosed separately in proxy .
Say‑on‑Pay & Shareholder Feedback
- 2024 Say‑on‑Pay approval: ~89.25% of votes cast, up significantly from 2022; company engaged holders representing ~20% of outstanding shares to refine metrics and alignment with 2026 “Charting the Course” targets .
- CEO pay ratio (2024): 550:1 (CEO $12,811,659 vs. median employee $23,312) .
Compensation Peer Group (for benchmarking)
- Alaska Air, Boyd Gaming, Caesars, Carnival, Hyatt, Host Hotels, JetBlue, Las Vegas Sands, Marriott Vacations, MGM Resorts, Park Hotels, Penn Entertainment, Royal Caribbean, Spirit Airlines, Travel + Leisure, Vail Resorts, Wynn Resorts, Yum! Brands (peer group maintained after 2024 review) .
Related Party Transactions and Policies
- Audit Committee reviews related party transactions; no written policy, but criteria disclosed .
- 2024–2025 related transactions disclosed include arrangements involving former CEO Frank J. Del Rio and former director Russell Galbut; none were identified as involving Mr. Sommer .
- Hedging/pledging prohibited for officers/directors .
Compensation Structure Analysis
- Shift toward performance: At least 50% of CEO annual equity awards are performance‑based by policy; 2024 PSUs tied to Adjusted EPS growth and Adjusted ROIC with three-year horizon; 2025 PSU metrics aligned to long-term targets (ROIC, Net Leverage, Operational EBITDA Margin) .
- Cash vs. equity mix: 2024 Total = $12.81m with $6.0m stock awards and $4.6m annual incentive; retention bonus $1.0m (final legacy payment) .
- Stringent features: Double‑trigger CIC; no excise tax gross‑ups; clawback policy; no option repricing; hedging/pledging bans; robust ownership guidelines (CEO 6× salary) .
- Potential concerns: Use of non‑GAAP measures for incentives (Adjusted metrics), high reported CEO pay ratio (550:1), equity plan overhang (shares available + proposed increase to 48,009,006 if approved) .
Performance & Track Record Highlights
- Delivered three newbuilds under CEO tenure (Norwegian Viva, Seven Seas Grandeur, Norwegian Aqua) and advanced long-term fleet expansion program; successful post‑pandemic restart when leading the Norwegian brand .
- Financial momentum reflected in 2024 Adjusted EBITDA reaching $2.534B and Net Income $910.3M, with improved TSR value year‑over‑year in the pay-versus-performance table .
Equity Vesting & Potential Selling Pressure
- 2024 vesting: 157,089 shares vested for Mr. Sommer; 2024 annual RSU grant vests in equal tranches in 2025–2027; 2024 PSU performance window runs through 2026 with service through 2027 .
- Policy mitigants: Hedging/pledging prohibitions, ownership requirements (6× salary) driving holding behavior .
Investment Implications
- Alignment: Structure emphasizes multi‑year performance (EPS growth, ROIC) with 2025 metrics tied to long-term targets; robust ownership and clawback frameworks reduce agency risk .
- Retention risk: Low near‑term due to substantial unvested equity (939,301 units at YE 2024), two‑year non‑compete/non‑solicit, and double‑trigger CIC protections—though CIC could result in material equity acceleration .
- Trading signals: Annual RSU tranche vesting (2025–2027) and any PSU certifications (2026/2027) may create periodic form‑driven supply, but hedging/pledging bans and ownership guidelines support alignment; watch for equity plan share increases/dilution and Say‑on‑Pay trends (improved to ~89% in 2024) .
Key numbers to monitor: CEO STI metrics and payout rigor (Adjusted EBITDA and safety/sustainability), PSU calibration versus 2026 targets (ROIC, Net Leverage, Operational EBITDA Margin), unvested equity trajectory, and equity plan usage/dilution **[1513761_0001104659-25-040634_tm252472-1_def14a.htm:45]** **[1513761_0001104659-25-040634_tm252472-1_def14a.htm:40]** **[1513761_0001104659-25-040634_tm252472-1_def14a.htm:65]** **[1513761_0001104659-25-040634_tm252472-1_def14a.htm:86]**.