The Corporate Rundown: Marriott International Inc.

The hospitality industry, just like any other industry is experiencing the changing economic environment. To remain afloat, sound management practices are necessary. Management of resources, more so the human aspect is key in this pursuit. Marriott is one company that has been accompanied by many assortments that come with being in power. This paper is an examination of the top most decision making organ in Marriot. 

Headed by a fourteen team board, Marriott International Inc. (Marriott), has a team that reflects the needs of the company in its quest to become the number one hospitality company in the world (Marriott Inc. , 2016). The board of Marriott is chaired by Mr. J.W Marriott Jr. who has served in the company as its CEO since 1972. This means that he has a wealth of knowledge on the operations of the company, finances and its points of strength. According to Duchin & Dittmar (2016), a manager’s professional experience is considered an asset in the making of financial decisions something that has been demonstrated Mr. Marriott. His company also holds 24% of the company’s stake something that would make him more indebted to the company on a personal level. The board also enjoys the input of the likes of Debra L. Lee who is brings with her the experience from entertainment industry where she is the CEO of a BET Networks. Finance, corporate governance, capital advisory is a requirement that is handled by Mary K. Bush who has held several presidential appointments. Academically, the board enjoys the input of Ms. Susan Schwab who is a professor in University of Maryland. In a nutshell, the board offers the company a desirable cocktail of professionals that includes seasoned professions from the fields of entertainment, finance, academics, hospitality, and food processing which is just right. 

The company has well thought out and formulated committees where the members’ experiences are a reflection of the needs of such committees. For instance, Bruce W. Duncan who is the President, Chief Executive Officer and Director First Industrial Realty Trust Inc. and a Member of the Finance Committee is experienced in the field of finance since he has held various posts in the corporate world responsible for making financial decisions. Frederick A. Henderson, who is simultaneously the Chairman and Chief Executive Officer of SunCoke Energy, Inc acts as the Chair of the Audit Committee. His experience in several banks gives him the right to chair such a committee. Eric Hippeau, a member of the Compensation Policy Committee has wide and deep experience in the world of venture capital, CEO of a marketing company for 5 years and currently a partner in a venture capital firm. The aforementioned people and the others were not randomly chosen as reflected in the proxy statement. The committees are highly professional and from their profiles, are appropriately staff. 

The CEO of the company, Mr. Arne M. Sorenson has been with the company since 1996 and has rose through the ranks to become the CEO. He has diverse experience in the hospitality industry and this was proved right when he delivered a turnover of more than $14 billion in 2015. Mr. is the has diverse experience in the accounting profession having served as the U.S. Hospitality practice leader in Deloitte & Touche LLP among other duties in the company, this makes him the most suitable candidate for the position of Controller and Chief Accounting Officer. Starting in 1995, Mr. Anthony G. Capuano who is currently the Executive Vice President and
Global Chief Development Officer joined Marriott and has been on a constant rise to his current position. When he joined Marriott in 2007, Mr. Bancroft S. Gordon has fought his way up to become the Vice President, Assistant General Counsel and Corporate Secretary having started as the Vice President, Senior Counsel and Corporate Secretary. Ms. Stephanie C. Linnartz, the current Global Chief Commercial Officer joined Marriott in 1997 and has served in various capacities in the company. She can be said to be wealthy in knowledge of the company and other corporate responsibilities that accompany her current title. Taking the mentioned individuals as representatives of the level managers, it can be said that Marriott rewards experience and hard work and that is why the company has such a big number of managers staying till now since the late 1990s. 

Marriott remunerates its executives rather handsomely. According to Forbes (2016), the company CEO, Mr. Arne M. Sorenson, is the eleventh most paid CEO in the hotel and hospitality industry in the U.S. He talks an average of close to $10 million in a year in 2015. 

Source (Salary.com, 2016)

From the chart above, we can see that the CEO earned the highest salary as compared to other executives. From the proxy statement, it is mentioned that the company follows a specific line of thought when determining its executives pay. For instance, in the 2015 salary review, the company ensured that the Mr. Messrs, Grissen and Berquist each got a 3% increase in their base salaries which was standard in the market. To ensure optimum performance, the company set targets which is achieved would stimulate the payment of the annual incentives. The targets were achieved and the same led to salary increases. The targets were based on room growth, satisfaction of clients on the maximum level, engagement with associates, and individual objectives. The compensation committee believed that the company should tie company’s performance to executive pay and from the chart below, the same has been happening especially with the CEO who should set the pace. 

                                                              Source Marriott Int Inc. ,(2016)

I find the compensation scheme for the executives in the company more reasonable for the following reasons. First, the systems ensures that the pay is highly correlated to performance, second, the compensation is schemed to maximize shareholder value and third, it is a motivational plan that is geared towards meeting short run and long run objectives. Lastly, the plan is structured in a way that is attracts talent from both internal and external environments.  

Transactions with related parties exist in the company and have been declared in the financial report of 2015 (p 82). The transactions are reasonable since the company was able to make substantial revenues from such transactions as well as recover expenses on some of operations relating to the transactions. To be specific, the transactions generated $13 million in 2015, a jump from $ 11 in 2013.

Marriot International Inc. is a hospitality based company that is managed within the confines of good corporate governance. The company has a highly qualified board that meets the academic, professional experience and right combination of skill and will. Using the same, pool of experts, the company has been able to deliver to it shareholders by meeting targets. The company has high ethical standards that ensure that points raising conflict of interest are declared and necessary action taken. The company can only achieve upward mobility. 

References

Dittmar, A., & Duchin, R. (2016). Looking in the Rearview Mirror: The Effect of Managers’ Professional Experience on Corporate Financial Policy. Review of Financial Studies, 29(3), 565-602.

Forbes . (2016). CEO Compensation. Retrieved from Forbes Website: http://www.forbes.com/lists/2012/12/ceo-compensation-12_Arne-N-Sorenson_FHUX.html

Marriott Inc. . (2016). Marriot International Inc . Retrieved from Marriot International Inc Website: http://www.marriott.com

Marriott Int Inc. . (2016). EXECUTIVE AND DIRECTOR COMPENSATION. Retrieved from Marriott Int Inc. website: http://files.shareholder.com/downloads/MAR/0x0x153731/46BE3F10-3BB0-4CF6-AF7D-5ABBAEF0D3B4/EXECUTIVE_COMPENSATION.pdfSalary.com. (2016). MARRIOTT INTL INC. Retrieved from salary.com: http://www1.salary.com/MARRIOTT-INTL-INC-Executive-Salaries.html