- After around eight years in the position
- Accolades, praise and thanks for Del Rio
- Harry Sommer taking over
- Del Rio spoke at length and said 143 words
(exechange) — Miami, Florida, March 20, 2023 — Frank Del Rio, chief executive of Norwegian Cruise, leaves his position. As announced by Norwegian Cruise Line Holdings Ltd. in a news release and in a regulatory filing published on Monday, March 20, 2023, Frank J. Del Rio leaves his post as chief executive officer at the cruise company which operates the Norwegian Cruise Line (“NCL”), Oceania Cruises and Regent Seven Seas Cruises brands, after around eight years in the role, effective June 30, 2023.
The average tenure of CEOs who announced their departure over the past 12 months was 8.1 years. This is according to data collected by CEO-exit research firm exechange.
exechange tracks CEO departures at the 3,000 largest publicly traded companies in the U.S., examines the reasons CEOs leave and determines the Push‑out Score™, a measure of pressure on departing chief executives on a scale of 0 to 10.
Frank Del Rio’s duties as CEO will be taken over by Harry J. Sommer, currently President and Chief Executive Officer of NCL.
Frank Del Rio’s planned departure from the CEO post is explained as follows. Norwegian Cruise stated: “Del Rio’s well-deserved retirement is the culmination of a remarkable career spanning three decades in the cruise industry. Del Rio has led the Company since 2015 and prior to that led Prestige Cruise International, Inc., or its predecessor, which operated Oceania Cruises and Regent Seven Seas Cruises, from 2002 until its acquisition by Norwegian.”
The top three reasons cited in corporate announcements for CEO departures over the past 12 months are performance issues (27.5% of cases), implementation of a planned succession (16.9%) and the statement that the time was right for a change (9.7%), according to exechange data. Other motives given for leadership changes included the outgoing CEO’s wish to pursue other opportunities (5.3% of cases), personal reasons (3.8%) and conduct issues (2.2%). Rather rarely stated reasons are health problems (1.6% of cases), disagreement (1.3%), death (1.3%), the desire for more time with family (0.9%) and career change (0.9%). Sometimes, more than one reason was given. In 28.8% of cases, no reason was given.
Precise information regarding Frank Del Rio’s future plans was not immediately available.
Norwegian Cruise said: “Frank J. Del Rio has decided to retire and step down from his position as the Company’s President and Chief Executive Officer, and from its Board of Directors, effective June 30, 2023.”
Generally, retirements are seen as formally voluntary departures. Still, CEOs may also be pressured to accelerate their retirement plans. In fact, 35% of the time “retire” was used in CEO departure announcements over the past 12 months, the departing chief executives received Push-out Scores above the critical threshold of 5, indicating elevated pressure.
Share price decline since March 2018
The announcement follows a decline in Norwegian Cruise Line Holdings Ltd.’s share price of 78% since March 2018.
In the position of CEO since 2015
Frank Del Rio became CEO of the Company in 2015.
Del Rio will serve in a consultant capacity as a Senior Advisor to the Board through 2025.
Del Rio has served as an executive in the cruise industry for 29 years and has been responsible for navigating the Company through the impacts of the pandemic and for the successful integration of the Company and Prestige.
His bio reads as follows:
- President and Chief Executive Officer, NCLH: January 2015 – Present
- Founder, Oceania Cruises and Chief Executive Officer, Prestige (or its predecessor): October 2002 – September 2016
- Co-Chief Executive Officer, Executive Vice President and Chief Financial Officer, Renaissance Cruises: 1993 – April 2001
- B.S. in Accounting, University of Florida.
143 words by Frank Del Rio
In the news release announcing his departure as CEO of Norwegian Cruise Line Holdings Ltd., Frank Del Rio received accolades, praise and thanks.
In announcing the leadership change, Frank Del Rio spoke at length and said 143 words.
“Now is the right time to pass the baton to Harry”
Frank Del Rio stated: “Leading Norwegian Cruise Line Holdings has been one of the most rewarding experiences of my professional career. My heartfelt gratitude goes out to our 39,000 team members around the globe whose innovation, tenacity and collaboration have strengthened this Company and built the industry’s most passionate and loyal base of cruisers. With the Company solidly positioned for 2023 and beyond, I am confident that now is the right time to pass the baton to Harry. Having worked closely with Harry for decades, I know firsthand that his talent and skills are ideally suited to take this Company into its next era. I look forward to continuing to work closely with Harry, the Board and our management team during the coming months to ensure a seamless transition and I am delighted to continue to serve as a Senior Advisor to the Board after the transition.”
Over the past 12 months, 25% of all outgoing CEOs remained silent in the departure announcement, according to data compiled by exechange. Departing CEOs who did make a statement said an average of 110 words. The longest statement was 510 words. The shortest statement was 23 words. Leadership transitions in which departing CEOs provide conspicuously short, excessively long or no explanations for their move are statistically associated with elevated pressure and show an increased incidence of Push-out Scores above the critical threshold of 5.
38% of CEOs are forced out or fired
When CEO departures are announced, exechange determines the Push-out Score on a scale of 0 to 10 to assess how likely it is that the chief executive was pushed out or felt pressure to leave the position, with 0 being most likely a voluntary move and 10 being most likely a forced exit. Anything over a 5 indicates that there are valid reasons to believe an executive may have been pushed out.
Of the 320 CEO departures in the Russell 3000 Index evaluated over the past 12 months (March 20, 2022, to March 19, 2023), the average Push-out Score was 6, according to exechange data. References to conduct issues, disagreements and irregularities lead to the highest Push-out Scores. When performance issues, time with family or pursuit of other opportunities were cited as departure reasons, the average Push-out Scores were also significantly elevated.
Around 38% of the CEO departure events from the past 12 months received Push-out Scores of 8 or higher.
In other words, in the past 12 months, three in eight departing CEOs were forced out or fired.
Push-out Score for Frank Del Rio’s move determined
The Push-out Score regarding Frank Del Rio’s move is explained point by point in the exechange report.
exechange reached out to Norwegian Cruise and offered the company the opportunity to comment on the score.
Read the full story in the exechange report 13.2023 ($).