Carnival Corporation (NYSE:CCL)
April 11, 2012 10:00 am ET
Micky M. Arison - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Carnival Plc. and Chief Executive Officer of Carnival Plc.
Arnaldo Perez - Senior Vice President of legal, General Counsel and Secretary
Howard S. Frank - Vice Chairman, Chief Operating Officer and Member of Executive Committee
Micky M. Arison
Good morning, everybody. I'd like to welcome all of you and thank you for joining us today. Before calling the meeting to order, I'd like to say a few words about the tragic accident involving Costa Concordia. As you can imagine, these past 3 months have been the most difficult and challenging in the history of our company. We're all deeply saddened. Our thoughts and prayers are with the passengers and crew members who were lost, their families and with all those who were impacted by the accident. We are grateful to the Italian authorities and rescue workers who acted heroically following the accident. I'd like to express our deepest appreciation to the local population of the island of Giglio and thank them for their generosity to those in need. And to the Costa Concordia crew, I want to thank and recognize them for their tireless efforts to evacuate more than 4,000 passengers and crew from the ship that night. Not enough can be said about the hard work the crew did to help our guests in that most challenging of conditions.
The cruise industry remains incredibly safe and maintains one of the best safety records of any form of recreational travel in the world. The safety and security of our guests and crew is job #1, and we will learn everything we can from this accident and apply all lessons learned. At this time, to honor those who were lost in the Costa Concordia, I ask you to join me in a moment of silence. Thank you.
I'd also like to thank Pier Foschi and the management team for the amazing efforts that they've had to undertake these past few months. Pier, thank you.
I now declare the annual general meeting of Carnival plc open. And on behalf of the Board of Directors of both Carnival Corporation and plc, I am pleased to welcome you to the W Hotel for the annual meeting of shareholders. Since we have shareholders from both the United States and United Kingdom, we plan to continue to rotate the location of the annual meeting between the United States and the United Kingdom each year in order to accommodate our shareholders on both sides of the Atlantic.
I'd like to introduce the company's Secretary, Arnie Perez, to proceed with the meeting. Arnie?
Thank you, Mr. Chairman. Because under our DLC structure, both Carnival plc and Carnival Corporation are separate legal entities, they must both hold separate shareholder meetings to consider the same matters. However, the DLC structure will, through the use of special voting shares issued by both companies, enable the shareholders of both Carnival Corporation and Carnival plc to vote on these matters as a joint voting electorate. This meeting will immediately be followed by the Carnival Corporation annual meeting, and the shareholders of Carnival Corporation have been invited to attend this meeting and will be able to ask any questions during this Carnival plc meeting. Likewise, Carnival plc shareholders may attend the Carnival Corporation meeting, which follows this meeting. Both meetings are being broadcast live via webcast for the benefit of our overseas shareholders who are unable to attend in person. To avoid interruptions, we ask that you please ensure that your mobile phones are all switched off. As there's a quorum present, we can start the annual general meeting of Carnival plc.
Before moving to the formal business of the meeting, I would like to introduce your Vice Chairman and Chief Operating Officer, Howard Frank.
Howard S. Frank
Thank you, Arnie, and good morning, everyone. Before I go through and update you on our business situation, I do want to introduce our board and some of the key executives from Carnival that are with us this morning. On my far left is Sir Jonathan Band. Jonathan, if you just wave your hand, so they know -- okay. We're in alphabetical order, so it should be relatively easy to follow. It makes it easy for me to follow anyway. Robert Dickinson; Arnold Donald. Arnold is also the Chair of our Compensation Committee of the board. Pier Luigi Foschi, Chairman, CEO of Costa; Richard Glasier. Richard is the Chair of our Audit Committee; Debra Kelly-Ennis, our -- Debra is to be voted on to come on to our board with this meeting, so we asked Debra to be with us on the dais this morning. Debra, welcome to the meeting. Sir John Parker, the Chair of our HESS Committee, which is our Health, Environment, Safety & Security Committee of the board; Laura Weil, Laura; Peter Radcliffe; Stuart Subotnick; Randy Weisenburger; and Uzi Zucker. Uzi is the Chair of our Nominating & Governance Committee. With this meeting, Uzi will wrap up 25 years on the board of Carnival and will retire at the conclusion of this meeting. So Uzi, thank you for everything you've done for Carnival, for your sage advice over the years. And we will all miss you, but I suspect we will also be seeing you, so -- which is great.
A number of our -- and if I miss some executives, I apologize for that. But a number of our key executives are in the audience. As I introduce you, just stand up and turn around and acknowledge our audience, that would be great. David Bernstein, Senior VP of Finance and our Chief Financial Officer, David; Arnie Perez, you already met -- you've already seen Arnie; Jim Hunn, Jim, Senior Vice President of Maritime Policy & Compliance, is with us this morning; Gerry Cahill, President, CEO of Carnival Cruise Lines; Stein Kruse, CEO of Holland America Lines; Alan Buckelew, CEO of Princess Cruise Lines; Rick Meadows, Chief Executive, CEO of Seabourn Cruise Lines; David Dingle, he's got a lot of titles, but I guess we'll call him CEO of Carnival U.K., which includes P&O Cruises and Cunard; Michael Thamm. Michael is the President of AIDA Cruises; Gianni Onorato, the President of Costa Cruises; and Katie Lahey and Ann Sherry are here. And Katie is the Chairman of P&O Australia. And Ann is the President, Chief Executive of P&O Australia; and Alfred Serrano -- Alfredo Serrano, who is President of Ibero Cruises in Spain.
And with those brief introductions, let me turn to my presentation this morning. So this has been a year of solid growth for us in many ways. We've added significant capacity to the fleets. It's been a challenging year, 2011, from the standpoint of many of these exogenous events that affected our business. And if you recall, it was the Arab awakening in the Middle East that caused quite a bit of disruption to our business, the tsunami in Japan, just so many events around the world, the softness in the European economy that has started to become more severe during 2011. So it was a challenging year for us. But despite all of those challenges, we were able to grow our revenue by $1.3 million. The left-hand bars show our revenue growth between 2011 and 2010. And our earnings per share were down to $2.42 from $2.47, not too badly off considering many of the headwinds that we had during 2011. As I mentioned, revenues were up 9%. 5% of that was capacity-driven, 4% was in the form of higher revenue yields for the year. North American brand yields increased 4%. EAA, Europe, Australia and Asia yields held steady despite the geopolitical disruptions in the Middle East and North Africa. By the way, the 4% is a constant dollar number compared to the 4% higher revenue yields for the total group. It's 4% for North America compared to 2% overall for the year.
The biggest challenge we probably had was escalating fuel prices, and it cost us $535 million during 2011 or $0.68 a share. And despite all of those challenges, we managed to come in just below 2010's earnings. So we think it's a pretty good year, albeit it would have been a whole lot better year had we not had some of these major challenges during 2011.
We are a very strong generator of positive cash flow beyond our capital requirements for building new ships and the capital cost of maintaining our ships in a very competitive way. So excess cash flow of $1.1 billion in 2011 was distributed to shareholders in 2 different ways. We increased our dividend early in the year to $0.25 a quarter from $0.10 a quarter, and we also repurchased almost 15 million shares for $455 million for the year. So we've been able to deploy this cash and we think in ways that return money to our shareholders and also, over time, will give us increasing returns on invested capital for our shareholders.
Strengthening our long-standing commitment to safety obviously has become our priority since the tragic event of the Concordia grounding in mid-January. Just so you know and what it says on the slide is just, as an industry, we've had a remarkable performance over a long period of time. There's 28 marine casualties, with 223 million passengers over a number of years. So -- and while any loss of anybody and a casualty is tragic, we believe that our industry, our cruise industry, holds up very well versus other forms of vacations in terms of their safety records. So we think it's a pretty remarkable performance.
As a company, we've taken a number of measures over the years just to strengthen our safety. And if you -- as you look at this slide, you'll see there is 3 concentric
in which we kind of provide oversight into all the safety mechanisms we have on our ships. Well, the first is the smallest one, and that is the operating company. So that would be companies like Carnival, Holland America, P&O and so on. They have their own organizations within those companies that audit the ships for safety, that have people shoreside that manage those audits. And they also work in conjunction with the next layer of what we call Corporate Maritime or Maritime Policy & Compliance group. And that's a group in our corporate office that sets fleet-wide maritime policy and also has audit teams that go out to ships. Every ship is visited once every third year to review their safety practices and as well as other parts of the ship, health, environment and security, as part of their audits. And they, in turn, report to a board committee, which is chaired by Sir John Parker called HESS, which is the acronym for, as I mentioned before, Health, Environment, Safety & Security. This committee was established a number of years ago by your [ph] corporation to provide board oversight into this most important part of our business because safety is our #1 priority and has been functioning for many, many years under the able leadership of John Parker. And we continue to put emphasis on all of these issues, and I'll talk a little bit about that in a few seconds.
We're also -- questions come up about how -- who regulates us. And so not to get into a whole lot of detail about it, but IMO, if you look back to the lower part of the slide, is the International Maritime Organization. It's part of the UN. It's comprised of all the ship nations -- shipping nations in the world, and it regulates shipping and establishes ship standards for shipping, including safety. We believe we're not only complying with all IMO regulations, we exceed IMO regulations. We're much more cautious. Standards are set. In most cases, we go beyond the standards set. Flag and port states also regulate us. Coast guards, whether we're in the U.S. or in Italy or in the U.K., come on board our ships. They inspect our ships, they test our ships, they watch how we do our crew training. And certainly, if anything comes up in what they see, we certainly hear about it from the various coast guards around the world. And then there's class [classification] society such as Lloyd's or DNV or RINA, are organizations that come in also and review and check our ship's equipment, make sure everything is working, also review our procedures and so on. So there's a multitude of different layers of organizations that come on a ship. And by the way, this is only 3 organizations, there are many, many more. We have the health department. No matter where we are in the world, we invite these organizations to come on our ships and to inspect them. And if we have anything wrong, we correct them and we make special efforts to do that.
Since the Concordia incident, as we have indicated in our public announcements, we have started a complete review of our operational and safety standards throughout our fleet. As you look at this chart, you can see that the first 2 items -- and there's really 3 elements to it because we had to phase it in over the course of 2012. It is a very thorough and complete review. But the first 2 areas are bridge team management, how we operate our ships on the bridge. We do -- and I'll show you this in a second. We do have our own bridge simulator where we train our officers, and I think we're the only company in the cruise industry to have its own bridge simulator. And how we manage the bridge, how we employ and manage the bridge, who needs to be on the bridge, how many officers, who says what and how it's managed by the master. Evacuation procedures, obviously very critical in light of the Concordia incidents, so we did a thorough and complete review of our evacuation procedures.
Phase 1 is expected to be completed next month, by the end of May. So we'll have the first part of that done. The second phase includes the incidents learned from the Concordia accident. We -- of course, we have quite a bit of information which we're acting on right now. But there's still information that we're still waiting on, information that we don't have access to, which we need to have access to in order to kind of close the loop on all sorts [ph] of things. So -- but despite that, we are starting on Phase 2 items as well. HESS audit procedures, which is done by the MP&C, Maritime Policy & Compliance Department, we're reviewing all the procedures we use in terms of our audit. So we're doing them effectively. When we come up with comments and recommendations, are they followed through. And in many of these cases, by the way, I should tell you, we have external consultants who are independently looking at what we are doing as well as part of this whole task force effort. Damage control on the ships, what do we do from a procedures equipment standpoint to ensure that we've got everything in place to mitigate damages when they arise and the implications in terms of what happened in terms of new ship designs. We'll also be looking at that as well.
And the last part of this, which is -- takes a little bit longer, is the emergency response procedures and making sure that we're doing everything possible from a training and compliance standpoint to make sure that we have everything in place that needs to be in place and where improvements can be made, we will do that. Clearly, we comply today with IMO, so we're doing everything right. But there's always better ways of doing things, so we're going to reexamine everything that we do in that regard.
Safety management review as well. We have Safety Management Systems on all of our ships. We want to make sure that they are effective tools for managing safety on the ships, so we're reviewing the different Safety Management Systems that we have to ensure that they're user-friendly and can work effectively for our offices and crew.
And lastly, probably a big challenge for us is human resource side of the business, the staffing of our ships, the training of our ships and the process that we go through to bring our crew on board and how well we do that. And that's going to take a little bit more time, as you might imagine.
Once we finish with all this, and as we actually -- as we are going through the process, we are sharing any newly established best practices with the cruise industry. Jim Hunn is leading our effort in that regard. He is also chairing CLIA, which is the Cruise Line Industry Association efforts to do the same thing on a global basis. So everything we come up with will be and is being shared, I guess, even concurrently with the rest of our colleagues in the cruise industry.
This is CSMART, which is our simulator, our engine -- our bridge simulators. We have 2 of them. It's -- they are located in Almere, about an hour outside, I think, of Amsterdam. And we've put over 1,300 of our senior officers through the program already. This does -- and we've established a number of years ago in 2009, but it does take time to get everybody processed through this. And it's not just simulation, it's also how do you manage the bridge. So those processes are -- these are changes that are taking place as we speak right now in our different brands. And we are also just established in 2000 -- this year, 2012, an engine simulator program for -- in Almere. So it's a very effective training tool for all of our brands, but we also share this facility with our colleagues in the industry, should they so wish to come, although we take quite a bit of time ourselves. And other shipping companies are using it as well. So it is the latest state-of-the-art simulator program in the world today for shipping.
So 2012 certainly has gotten off to some challenges for us, and I'll take you through that right now. First quarter results, as you can see, our revenue is up again by a couple of hundred million, but our earnings is down largely as a result of the continued impact we're getting on higher fuel prices by $0.18. So earnings were $0.02 for the year versus $0.19, and clearly, that's been a challenge. The impact of the incident, which occurred on January 13, was midway through the quarter. So the full impact of that is really going to be felt for the rest of this year, and I'll take you through that now.
We now -- because of changes that we've had to make in our forecast, the biggest gross impact was for Costa, and they are feeling the major effect from this incident in Europe and in their major markets in Europe. Although, I will comment on later, they are starting to see some returns, some levels of normalcy in terms of their booking patterns, but it's going to be a challenge for Costa, certainly for 2012.
North American brand yields or North America basically is expected to perform a little bit better than Europe and Asia this year and Australia, largely because it's been less impacted, I think. There's been less effect in North America as a result of the Concordia incident. Plus, the North American economy seems to be slowly strengthening, which has been a positive factor for us in North America. Still, we still feel the effects though of what happened and we're still feeling the effects of a softer European economy. You can see, EAA revenue yields are expected to be down slightly. This is all x Costa now when I talk about this. And that's largely the softness in the European economies, and we expect that to continue for the rest of the year. And many of you have been reading about that, together with the more severe, more impact of the Concordia incident on our European brands.
Fuel prices are also expected to be a drag on earnings for this year by about $400 million or just over $0.50 a share. So with all of those factors -- and now our earnings guidance for the year is a midpoint of $1.55, a range of $1.40 to $1.70 versus $2.42 last year. And so it's going to be a challenge for 2011. And -- well, we are -- everybody's working very hard to make sure that we do as well as that or better. And there are some signs -- positive signs out there, but it's still a challenge, particularly in Europe.
Let me turn to recent booking trends. We provided guidance in our last earnings call. And as you look at this particular bar chart, if you can make it out, by the way, these are volumes and pricing trends x Costa. We've taken Costa out of the equation. I'll comment on Costa separately, if you will, and certainly from a directional standpoint. Our booking volumes for that first 6 weeks after the Concordia incident were down about 9%, and pricing on the right-hand side of the slide was down for that first 6-week period. We're down 3%. I talk about pricing in broad terms. It's net yields. It's a combination of a lot of factors. And in the last 5 weeks or the 6 -- after the first -- that first 6-week period, as I mentioned, we've seen some uptick in volumes. But in order to achieve that, this -- the first 6 weeks of lost volume came during the most critical part of our year, which is what we call wave season, which is January, February, March. And once you lose that much volume, 9% during that 6-week period, it's a challenge to make it up during the rest of the year. And -- but in order to make it up, you see we're trying to book better on a year-over-year basis by 3%, we've had to stimulate the market with pricing initiatives. And you can see, pricing is down during the last 5 weeks by some 5%, sort of an average. It's still very dynamic, and these things can change over the next couple of months. But that's sort of the current data that we have that we wanted to share with our shareholders here.
From a Costa standpoint, during that first 6-week period, they did really virtually no marketing, so their bookings were off significantly, like something in the neighborhood of 75%, 80%. And it's only in the last couple of weeks actually, during this last 5-week period, that they have reinstituted marketing, particularly in Italy. And so that pricing is better than where it was, but it's still down significantly in double digits. But their volumes have increased, which is a major positive. So while the volumes are still down, they're not down as severely as the 80%. So there is some light at the end of the tunnel for Costa.
We are a great believer in the Costa brand, and we very much support the Costa team and the efforts that they have made. As Micky mentioned, they've done a remarkable job in the most challenging and trying of circumstances that anyone could possibly imagine. And -- but the brand is powerful in Europe. And as we get through this process, we think it will come back quite nicely. So we're very optimistic about Costa going forward.
In terms of the resilience, when we think about what we're going through this year, the challenges we had in 2011, now even increasing challenges in 2012, we still think this is a great business, and we have -- we think this is tremendously a resilient business. It provides vacations to millions and millions of people with great value, and our guest response to our vacations is that it's a great value for money and they will be coming back. In some of these next group of slides, we'll talk a little bit about why we are so optimistic about our business going forward.
In terms of our brand portfolio, we have 10 brands. And what these 2 pie charts attempt to do is show you our share of markets, so to speak, based on the guest source, where they're coming from and so on. So on the left-hand side, the U.S. markets, the Carnival group of companies has 50% market share, with 2 of our other competitors, about 35%, and the rest of the cruise industry at 15%.
Shifting over to the rest of the world, EAA, if you well, Carnival has 47% of the market share, almost the same as in the U.S. And with our competitors at 40%, 2 major competitors, and the rest of the cruise industry in the rest of the world at some 13%. So we continue to maintain our market share, and that is our plan going forward, to keep our market share where it is. And our newbuilding program is dedicated towards that effort.
Passenger demographics for us and for the cruise industry are very, very strong. So -- and if you look at this slide, you can see on the North American side, we're going to grow between 2011 and 2021. Those people, 45 years and older, will grow by 19 million in North America and the same similar sizes in Europe, 18 million in Europe. This is the primary cruising age for cruising. So it is really our target, broad target market. And so the potential to grow our business is still very, very strong, and that's the reason that we still are ordering 2 to 3 ships a year for the next several years.
There's been a movement in changes in the mix of our business, if you will, the people coming on board on our ships. So in 2006, on the left-hand side, in that pie chart, it shows that first-time cruises, it was 46%. The cruises who have gone on, on our brands and are repeating on those same brands was 33%, and those that came from other brands and have gone on our brands, coming on our brands, including within our group, was 21%. If you go to 2011, you can see how this mix has started to change. The first-time cruises have come down to 33%. Why has that happened? Well, our brand loyalist has gone up to 44%, so people that go out on our ships, our guests and our passengers, enjoy the experience and they're rebooking their cruises. Many -- as you can see, they are very brand loyal. So once we get them, we keep them. It's a great source for us of our repeat business. And first, the brand is relatively the same, just up slightly from 23% to 21%, also a very positive sign that we're also maintaining, are getting passengers from other competitors and putting them on our ships or even within our group. So that's a real positive. And that gives us -- makes us very optimistic about this business. Also, repeat cruises tend to select the highest cabin categories, the higher cabin categories and are probably the best spenders when they get on board our ships. So from a profit standpoint, it's a much better element of our business. That doesn't mean we don't still focus on getting new cruises. We need to expand the base, but as you can see, we've gone from 7 million passengers in 2006 to 10 million passengers this past year, close to 10 million passengers this past year. So it continues to grow enormously.
New markets is certainly our latest focus in terms of potentially going East, if you will, but not just East, but South as well. So on this pie chart, you can see where North America was 74% of our total mix in 2006 and Europe was 19%, with other markets at 7%. Now, the numbers have changed in 2011, so that as North America starts to mature, we have focused our capacity additions into Europe. And when I look at the 26% in Europe for last year, those are the major European markets, that orange or -- slide -- that orange pie -- piece of the pie. Is that orange or is that -- yes, it's orange, okay. And then 14% is emerging markets. This becomes very important to us because that is our future. I'm colorblind, so I need some help. Sorry. But going from 7% to 14% is very encouraging for us, and that includes Australia, Asia, South America and very positive development for us. And we continue to put more resources, more capacity in those markets and build market share. We think that's going to be the future growth of this business in a much steeper way. We're going to grow that fairly quickly.
Costa was the first company to enter China 5, 6 years ago here, something like that, and they dipped their toes in the water. It is the first company to operate in China and continues to operate in China. This year, they're going to source -- have 60,000 Chinese guests come on the ships. Just in Shanghai, Beijing and Guangdong alone, there are 150 million people. We've all been reading about China, it's an amazing opportunity for us, as well as our competitors. They're also going into China. But I think we've got a good head start and we've got Costa as a very significant brand already established in China. And it is a Chinese product that they have. The ships that we're putting into, we're taking the Costa Classico and moving it into other itineraries that was in China last year. It's a 1,300-bed ship. And this year, we're moving the Costa Victoria, 1,900 beds, into the China market. So -- and it's getting an easier market from a logistics standpoint in terms of communicating with travel agents, getting information and getting our word out there. So we think there's a tremendous growth prospect for our business in the Chinese mainland, so we're very, very excited about that.
You can look at the bars down below where you can see that we had virtually nothing in 2006 in terms of source of Chinese passengers, and we're at 1.5% of our total sourcing for 2012 -- 2011, 2012. So it really has started to grow nicely.
Princess announced about a month ago that they are entering the Japanese market. They're going to reposition the Sun Princess, which is an Australia -- year-round Australia ship, over to Japan in April to July of 2013. It will be designed for the Japanese market. As we all know, Japan is a very, very wealthy country, with many, many retirees, and there are 36 million people in and around Tokyo. So it's a huge potential market for us. We have established our wholly-owned sales office in Japan. But also, Princess is going to take the first major initiative into the Japanese market, and we think, potentially, that's a very exciting opportunity for us as well.
Looking backwards a little bit and as well as forward, and this just talks about the supply/demand balance in the last 5 years. Between 2007 and 2011, we've grown our fleet by 6.7%. That is increased capacity from new ships being built, where in the industry, it's 5.6%. So we continue to grow our fleet nicely versus the industry. And from 2012 to 2014, we've slowed our growth to 2.7%, 3.2% for the industry. Well, why is that happening? Well, to some degree, there's a theory that if we have less capacity coming into the market -- into the markets, we'll be able to lift our pricing. And I think for many, many years, the feeling was that we and our competitors have put so much new capacity into the industry, it's effectively cannibalized our pricing, so we haven't been able -- we don't have a nice enough pricing to leverage. By slowing capacity, we believe we will get higher pricing in the future years which -- and pricing and the way our numbers work has tremendous leverage when it comes to our bottom line profit. And so we slow our growth, focus more on pricing, and we think that's going to be our strategy going forward, at least for the next several years.
So just to kind of wrap it up for you, in terms of why we feel so good about our business notwithstanding the current environment, we have the strongest brands in each of the major cruise markets around the world. That has given us the ability to have so much more market share than our competitors do when they bring their U.S.-based ships into those markets. We think there's a potential opportunity, a great opportunity to grow our ship in Asia, China, Japan, but also other Asian countries. And our cash flow will fund our 10 ship deliveries over the ensuing several years. So what I mean by that is we don't have to borrow any money to pay for our ships. And beyond that, we will also be generating significant cash flow to return to shareholders. So it's a pretty remarkable company in that sense. And we have a very strong investment grade rating, we plan to keep it that way, and we have a very strong balance sheet. That is the way we have run our company historically, and we will continue to run it in the future.
So with that, and I hope I haven't taken up too much time, probably talked longer than I thought, we will open up for questions. I think I need to put this slide on. It's a looking-forward statements and responsibilities, our compliance. People tell me I have to show this, and you can all have an opportunity to read it at your leisure. But thank you very much.
All the proposals being considered at this year's annual meetings are joint electorate actions, meaning that they will need to be passed by both the Carnival Corporation and Carnival plc shareholders voting together as a joint voting electorate. Proposals 21 and 22 will be proposed as special resolutions. For the special resolutions, the required majority is not less than 75% of the combined votes cast at this meeting and at the Carnival Corporation annual meeting. The notice of this meeting is set out in the notice of Annual General Meeting starting on Page 4 of the proxy statement that was posted to you on or about March 1, 2012. Please note that your board has recommended you vote in favor of Proposals 1 through 22 and against Proposal 23. Proposal 23 is a shareholder proposal by Robert, Harold and Sheila Curde [ph], requesting additional disclosures of our political contributions and expenditures. Because of the DLC structure, this proposal is relevant for all Carnival shareholders. Is a representative from the Curde [ph] family available to present a short statement regarding the proposal?
Yes, I am.
I think it's still morning, at least. Good morning. My name is Robert Curde [ph], and I'm here to present our proposal calling for greater disclosure of corporate political spending by Carnival Corporation and plc. Unfortunately, in the wake of the Citizens United decision, the SEC has failed to adopt a comprehensive system of disclosure of corporate political spending. It has been left to groups such as the Council of Institutional Investors, CalPERS, TIAA-CREF and the Center for Political Accountability to mount the campaign to improve corporate political spending disclosure. Today, about 60% of the S&P 100 and over 100 large-cap companies have agreed to some form of voluntary disclosure of corporate political spending. Simply informing shareholders of the existence of 2 political action committees, the HAL and Princess PACs, combined with the urging to access a U.S. Senate website, the website of the Federal Elections Commission and the relevant websites of each state to learn about lobbying at the state level, is not a sufficient level of disclosure. Quite simply, as shareholders of Carnival Corp. & plc, we remain in the dark as to the level of corporate political spending of our company. In a speech in February, SEC Commissioner Luis Aguilar said, "Withholding information from shareholders is a fundamental deprivation that undermines the securities regulatory framework, which requires investors to receive adequate and appropriate information so that they can make informed decisions about whether to purchase, hold or sell shares and how to exercise their voting rights." The shareholders of our company deserve a higher level of accountability and transparency than that proposed by the board. We urge our fellow shareholders to vote in favor of our proposal. Thank you.
Thank you. Howard, would you like to present the response from the corporation?
Howard S. Frank
Thank you, Arnie. As set forth in our proxy statement sent to shareholders in March, your board unanimously recommends that you vote against this proposal. First, the proposal is unnecessary. Federal law currently prohibits corporations from making contributions directly to candidates for federal office and to national party committees. As a result, Carnival does not make contributions, such contributions. Although some states have not banned corporate contributions to candidates or political parties, all states require that such contributions be disclosed either by the recipient or by the donor. That information is already publicly available.
In addition, the law requires us to submit reports to Congress if we employ someone who engages in federal lobbying activities. All those reports are also publicly available. Our business is subject to extensive regulation at the international, federal, state and local levels. We seek to be an effective participant in the political process by making prudent political contributions consistent with the law. We are fully committed to complying with all laws concerning political contributions, including laws require -- requiring public disclosure. As a result of the disclosures mandated by law, like the ones I just reviewed with you, our Board of Directors have concluded that ample disclosure already exists regarding our political contributions to alleviate the concerns cited in this shareholder proposal. For these reasons, the board unanimously recommends a vote against Proposal 23.
Thank you, Howard. We will now vote on the proposals. Voting will be by way of a poll that will be conducted by our registrars, Equiniti Limited. I would like to remind you that the board has recommended that you vote in favor of Proposals 1 through 22 and that you vote against Proposal 23.
I would now like to explain the poll procedure to you. Please remain in your seats while the poll is being conducted. Carnival plc shareholders and their corporate representatives and proxy holders may participate in the poll. However, please note, any Carnival Corporation shareholders present may not vote at this meeting. You will be given the chance to vote on these same proposals at the Carnival Corporation Annual Meeting to be held shortly after this meeting closes. Each Carnival plc shareholder should have been given a poll card when you registered this morning. If anyone thinks they do not have this poll card, please raise your hand and the registrar will either help identify this card or provide you with a new one. Does anybody need any assistance? I think there's one at the back.
On a poll, each holder of Carnival plc ordinary shares was present in person by corporate representative or by proxy has 1 vote for every share held. If you have already lodged the form of proxy, you need to take no further actions. And it will speed up the poll if you do not vote again now. However, if you have lodged a proxy form and wish to change your vote, you should also now complete a proxy card. If you are representing more than 1 shareholder, you should have received a separate poll card for each holding. If this is not the case, please raise your hand and the registrar will be able to provide you with additional cards as necessary. You may vote for, against or abstain by ticking the relevant box next to each proposal. Please do this now. Remember to sign the poll card where indicated to ensure it is valid. Completed poll cards should be handed to representatives of the registrar. If you are unsure as to what to do, please raise your hand and someone will come and assist you as soon as possible.
While this part of the poll should not take too long, the count of the poll is a more lengthy business. Details have to be checked against the register and compared with the proxy cards previously lodged and the results combined with those votes cast on the same proposals at the immediately following annual meeting of Carnival Corporation. It is expected that the results of the polls will be announced to the market tomorrow and will shortly thereafter be disclosed in a current report on Form 8-K filed with the United States Securities and Exchange Commission and posted on our website.
Have all the poll cards been handed in? Thank you, ladies and gentlemen. The registrar will now process your poll cards. The poll will technically remain open until the results of the immediately following Carnival Corporation Annual Meeting are known and cast on the Carnival plc special voting share.
I would like to hand the meeting over to the Chairman to conclude the meeting.
Micky M. Arison
Thank you, Arnie. I declare this Carnival plc meeting closed. Please remain in your seats while I formally open the Carnival Corporation Annual Meeting to enable its shareholders to vote in exactly the same manner.
Shareholders of Carnival Corporation and members of the Carnival Corporation Board of Directors and shareholders of Carnival plc here as our guests, the Annual General Meeting of Carnival plc is closed, and I now welcome you to the annual meeting of the shareholders of Carnival Corporation. I now call this annual meeting of shareholders of Carnival Corporation to order.
I am joined by the directors of Carnival Corporation who were introduced to you earlier in their capacity as directors of Carnival plc. As you know, the composition of the 2 boards of the companies -- of the boards of the 2 companies are identical. Our Secretary will now report on the mailing of the notice of the annual meeting, the presence of a quorum and explain the procedure for the meeting and for voting by ballot. Arnie?
Thank you, Mr. Chairman. The first order of business is presentation of the affidavit of the transfer agent attesting to the mailing of the notice of annual meeting and proxy statement to all holders of record of common stock of Carnival Corporation as of February 13, 2012. A list of all the Carnival Corporation shareholders entitled to vote at the meeting reflecting the number of shares held by each on the date of record and certified by the transfer agent is available for inspection at the table where the inspector of elections is sitting and will be filed with the records of Carnival Corporation. The affidavit of the mailing will also be filed with the records of Carnival Corporation. I can certify that holders of more than 1/3 of the total votes entitled to be cast are present in person or by proxy. The proxies from which the count was taken are located at the table where the inspector of elections is seated.
Since holders of more than 1/3 of the total votes entitled to be cast at the annual meeting and the holder of the Carnival Corporation special voting share are represented here today, I hereby declare a quorum present at this meeting in accordance with the Carnival Corporation bylaws. The proxies will be filed with the records of Carnival Corporation. Jeff Seiders of Computershare Investor Services, our transfer agent, has been appointed to act as inspector of elections for this meeting. Ballots will now be distributed to any Carnival Corporation shareholders who have not voted and who wish to vote at this time. If you have already voted by proxy, it will not be necessary to receive a ballot unless you wish to change your vote. Any shareholder who desires a ballot should now raise his or her hand.
As stated in the Notice of Meeting and further described in the proxy statement, there are 23 items of business on today's agenda which are identical to those considered at the Carnival plc meeting. Since these items are set forth in the annual proxy statement, I will not read them at this time. The Board of Directors of Carnival Corporation has recommended that you vote your shares for Proposals 1 through 22 and against Proposal 23. Proposals 1 through 20 and 23 require the approval of the majority of shares cast at the annual meeting to pass, while Proposals 21 and 22 require the approval of 75% for votes cast. Unless there's some objection, we will dispense with the formal reading of the notice of annual meeting. I will now entertain motions regarding the proposals.
Mr. Secretary, I move for the approval of Proposals 1 through 22 as set forth in the notice to shareholders, and I also move to bring Proposal 23 to a vote, noting that the Board of Directors' recommendation to vote against Proposal 23. Do I have a second for this motion?
I second the motion.
The presentation of the proposals to the meeting is now completed. The polls are now open, and your votes will be taken. Shareholders present in person who have not previously filed a proxy and who want to vote in person or shareholders who have already voted by proxy but wish to change their earlier votes should mark their ballot as desired in relation to the proposals presented today at this meeting. You may vote for, against or abstain for each of the proposals. If you abstain, it has no effect on the outcome of the votes. After you have marked your ballot, please raise your hand in order that the ballot may be collected.
Have all the ballots been collected? I also ask that the inspector of elections tally the votes of shareholders present at the meeting, together with the votes of shareholders by proxy. It is expected that the final results of the votes will be announced to the market tomorrow and will shortly thereafter be disclosed in a current report on Form 8-K filed with the United States Securities and Exchange Commission and posted on our website. The polls for both Carnival plc and Carnival Corporation will be formally closed once the special voting shares of each company have been voted.
There being no further business, the meeting is adjourned. Thank you very much for coming.
Micky M. Arison
I just like to apologize for the chaos that may have occurred outside. It may appear that we were totally disorganized, but we had no prior warning of the demonstration that occurred, so we weren't geared up for that many people. So again, I apologize if you were inconvenienced outside. I thank you, all, for coming.
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