Carnival Corp. Goes Outside Industry for New CEO

Micky Arison will step down from his role as CEO of Carnival Corp. after 34 years, as the company splits the role of CEO and chairman. Arnold W. Donald, who has served on Carnival’s board for 12 years, will take over the CEO role. Arison will remain as board chair.

“I have been discussing this with the board for some time now and feel the timing is right to align our company with corporate governance best practices and turn over the reins after 34 years as CEO,” said Arison.  

The move comes after some have questioned Arison’s leadership following several safety incidents on Carnival vessels in 2013. It is also the latest in a series of high-profile moves – most notably the recent re-hiring of Bob Dickinson, former Carnival Cruise Lines president and CEO, as a consultant.

Pressures
Arison’s stepping down from the CEO role reflects the extent of the challenges faced by Carnival, one observer said.

“In the industry, there are more pressures than ever before, so he could have realized he needed some help to run the company day-to-day,” said Oivind Mathisen, editor and co-publisher of Cruise Industry News. “Their numbers are down, so maybe they need someone new to take the reins.”

About the new CEO
Except for his time on Carnival’s board, Donald is an industry outsider. He founded the company Merisant, which produces the Equal sweetener brand. He also has held several leadership roles at international agricultural conglomerate Monsanto over more than 20 years.

Donald said that as a board member he had come to know the company well. “I have a firsthand appreciation of what it has taken to develop this highly successful business, an understanding for the dynamics and challenges we face.”

Arison said of Donald that he “is an exceptional professional with extensive experience in organizational leadership who will bring a fresh perspective to the company. I have come to value and rely on his judgment and insight . . . and I am very confident in his ability to move the organization forward.”

Doesn’t build confidence
Carnival has gone outside the cruise industry for two high-level appointments this month. Last week it appointed Roger Frizell to the new post of  senior vice president of corporate communications. Most recently Frizzell served as chief communications officer for Pacific Gas & Electric in San Francisco.

Some observers were disheartened by Carnival’s decision to look outside the cruise industry for its new chief executive officer.

“At this stage of the game, it’s not a great confidence builder. I would rather Arison be in charge and strengthen the team around him,” said Mathisen.

Bringing in a CEO from outside the cruise industry shows a focus on financials, he said.  If that’s the case, it could further ostracize the agent community.

“Donald has no track record that I can look at,” said Gary Silverstein, owner of Mann Travels in Charlotte, N.C. “A travel background helps.”

Agents react
Travel agents said they see the CEO move as aimed at stockholders, with little regard for agents. They said they expected little impact on their sour relationship with the embattled cruise company.

“The thing about Micky is that he took over his father’s company, but has always been hands-on and has a great connection with the travel community,” said Cindy Clifford, co-owner of Gotta Go Cruises in Riverhead, N.Y. “But the average guy booking his Carnival cruise doesn’t care who the CEO is.”

Others said Carnival’s recent disregard for agents will taint Arison’s legacy as CEO.

“The line has done an awful job of working with agents,” said Silverstein. “There’s such animosity toward Carnival. It’s well-deserved, given its total effort to bypass us.”

The change in role for Arison doesn’t affect agents, said Jim Antista, owner of The Cruiseman in Springfield, Mo. Antista said he was more concerned about changes to Carnival Cruise Lines’ commission structure that went into effect this year.

Tough financial shape?
Mathisen of Cruise Industry News said Carnival may be in rougher financial shape than expected. He was especially concerned by the financial projections outlined in Carnival Corp.’s June earnings call.

“I’m surprised they expect it to take two or three years before the brand is back, in terms of earnings,” he said. “Over the same period, Costa is recovering more strongly and they had a loss of life of 32 people.”

Fresh perspective
At Carnival Cruise Lines, Lynn Torrent, executive vice president of sales and guest services, said she was thankful for Arison’s leadership. “From our perspective, as an organization, I think we continue to benefit from Mickey’s leadership, his knowledge.

“At the same time we look forward to working with Arnold [Donald]. He has a lot of experience, and fresh perspectives are always a good thing.”