Campbell’s compensation included about $6.4 million in stock and option awards and a base salary of more than $592,000, according to Hilton’s annual proxy statement. In 2019, her total compensation was about $3.6 million, including $2 million in stock and option awards.
Hilton, a hotel franchisor and manager based in McLean, Va., which owns hotel brands such as DoubleTree and Embassy Suits, hired Campbell as its top lawyer in 2011. The company reported a net loss of $720 million last year as Covid-19 stunted travel across the globe.
Despite base salary reductions and layoffs across the industry due to the pandemic’s negative effects on the hospitality industry, Campbell’s compensation package was among some of the largest awarded to legal chiefs last year. Her large equity awards were granted according to performance-based goals met in 2018 and 2019, and unrelated to the pandemic, according to the company.
“People stopped traveling, so the industry laid off a huge, very, very substantial number of its employees,” said David Sherwyn, a professor at Cornell University’s School of Hotel Administration. “Obviously, property level people were the first to go—you don’t have every housekeeper come in when you’re at 10% occupancy. But within weeks of that mid-March day, corporate was getting cut too.”
Companies like Hilton and rival hotel chain Marriott International, Inc., generally don’t own any hotels and instead operate and brand them, according to Sherwyn. As a result, Hilton was partially shielded from the most immediate impacts of the pandemic, such as layoffs and furloughs of building staff like room cleaners.
“$1 of franchise money is better than $1 of managed money. When you’re a franchisor, you don’t run the business, and you don’t have liability,” Sherwyn said. “When you’re an operator, whether it’s a slip and fall, or a sexual harassment claim, or a wage claim, the owner is going to have to pay for that. If you’re Hilton or Marriott or whoever is managing the owner, all you do is be like, ‘Hey, look, you’re violating our franchise agreement, and if you don’t cure these defects, we’re going to take the flag away.”
Hilton’s President and CEO Christopher Nassetta voluntarily gave up his salary beginning in April 2020, according to the proxy. The company’s other executives, including Campbell, each took a 50% salary reduction for four months.
Hilton’s executives were not the only ones in the hospitality and leisure industries to reduce their base salaries in response to the pandemic.
Penn National Gaming’s executives, including its former general counsel Carl Sottosanti, agreed to base salary reductions ranging from $130,000 to $350,000 from April to October of 2020. The executives of Wynn Resorts and MGM Resorts International opted to forgo portions of their base salaries in exchange for stock awards, according to proxy statements from each company.
There are some signs of recovery. Overall hotel capacity had reached 52% as of March, and Hilton reported that 97% of its system-wide rooms were open as of April 28, according to the company’s first quarter earnings report.
‘Interesting Freak of Time’
While Campbell took a base salary cut that amounted to about $100,000, her total compensation package was boosted by her equity awards. That can be a common occurrence in executive pay packages, according to Todd Sirras, managing director at executive compensation consultancy Semler Brossy. But those awards often don’t make it to an executive officer’s bank account until they vest years after the initial grant date.
Campbell’s large equity grants were unrelated to the pandemic, according to Hilton’s senior director of corporate affairs Meg Ryan.
“The increase in stock awards in the 2020 proxy reflect performance awards from 2018 and 2019 which vest over a three year period,” Ryan said in an email to Bloomberg Law. “The stock grants reflect an accounting adjustment to ensure recognition of prior years’ performance, and appropriately value 2020 performance based on the impact of the pandemic.”
“Most companies make their compensation decisions and equity awards in February of the prior year, so what you’re looking at in this year’s proxy is the equity that was awarded in February 2020,” Sirras said. “Even in companies where bonuses were down to zero and salaries were cut for a little bit, we’ve been telling our clients that pay is going to look like it was up because many companies made awards before the pandemic, which is just an interesting freak of time.”