Introduction
Carnival Corporation is among the world’s largest cruise ship operators with cruise lines in North America, Europe, Asia, and Australia. The corporation operates under three major brands, which include Princess Cruises, Seabourn, and Cunard. The company is owned by several shareholders, including individuals and institutions with different stakes and values (Carnival Corporation, 2021). Individual shareholders of Carnival are Arnold Donald, David Bernstein, and Randall Weisenburger. Randal has about a 1.4million shares that representing about 0.1% of the shares. Arnold Donald owns 499,515 of the outstanding shares, accounting for approximately 0.04%, while David Bernstein has 139934 shares of the corporation, which is 0.01% of the remaining shares (Carnival Corporation, 2021). The leading institutional shareholders include Micky Meir Arison, Vanguard Group, and Public Investment Fund. Arison owns over 121 million shares, about 13% of the outstanding shares by the end of 2020 (Syriopoulos et al., 2020). Vanguard Group holds about 63 million shares of the Corporation accounting for 6.8% of the claims, while the Public Investment Fund owns 5.5% (50.8 million) shares (Syriopoulos et al., 2020). The corporation is therefore owned by individuals and institutions who have control over the boards of management.
Carnival Corporation Boards of Directors has six committees that have special charters except for the executive committees. The Executive Committee is headed by Mickey Arison, Arnold Donald, and Randall Weisenburger. The other five committees have defined compositions and responsibilities. For instance, audit committees have a mandate to assist the company’s board in overseeing its business practices to ensure that they are of high integrity (Jones et al., 2017). Compensation committees assist the boards’ responsibilities of compensating company directors and executive officers. Compliance committees are responsible for enforcing the company’s ethics and compliance requirements. The executive committees are in charge of the whole board between meetings except when assigned duties to other committees during the environmental, safety, and security committees monitor and supervise health, environmental, and safety policies at sea and onshore and meet legal and policy requirements.
Agency Problems Facing Carnival Corporation
The agency problem refers to a conflict of interest that exists in any relationship where one party is anticipated to act in favor of another. This problem occurs when either party fails to represent the interests of the other one. Besides that, the problem may happen when there is incomplete representation. Carnival is likely to face issues such as delays in ship construction, which could reduce the operational capacity of the corporation. Furthermore, the company may also experience problems with the environmental regulatory institutions which will lead to legal disputes and fines for violations.
Carnival Corporation has experienced several instances of violating environmental regulations. The environmental advocacy group Friends of the Earth rated the performance of the 16 cruise lines under the company poorly. The majority of the Company’s ecological violations occurred in Alaska. The business enterprise’s governance, through the spokesperson, acknowledged the problem and stated the intervention measures the company was establishing. The creation of the position of the chief of compliance and ethics office would initiate strategies to promote environmental compliance. The management also utilizes the electrical shore power systems and other innovations to reduce its carbon footprint. It has achieved about a 25% drop intending to lower the rate to 40% by 2030 (Jones et al., 2019). Therefore, the firm’s management has established effective structures and policies to achieve environmental sustainability.
Carnival Corporation is also experiencing problems with the construction agencies with delays in the ship construction. The construction of the ships is a complex activity and involves various risks which delays in completion and delivery are significant. The shipyards have also experienced industrial actions and bankruptcy or financial challenges, which also cause delays. The company’s management has created contractual provisions and refund guarantees to limit the delays in delivering the cruise ships for the lines.
References
Carnival Corporation. (2021). Carnival Corporation & Plc. Web.
Jones, P., Comfort, D., & Hillier, D. (2019). Sustainability and the world’s leading ocean cruising companies. Journal of Public Affairs, 19(1).
Jones, P., Hillier, D., & Comfort, D. (2017). The two market leaders in ocean cruising and corporate sustainability. International Journal of Contemporary Hospitality Management, 29(1), 288-306.
Syriopoulos, T., Tsatsaronis, M., & Gorila, M. (2020). The global cruise industry: Financial performance evaluation. Research in Transportation Business & Management.