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Carnival's CEO on Steering a Turnaround: Listen to Your Employees

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06/13/2018 | 04:15pm CEST

By Vanessa Fuhrmans

A knack for blackjack turned Arnold Donald into a cruise-goer in his 20s. He had heard ship casinos didn't shuffle their decks all that much, making it possible to count cards. His winnings, he says, often paid for much of the vacation.

Taking the helm of Carnival Corp. in 2013 was more of a gamble. The year before, Carnival's Costa Concordia capsized off the Italian coast, killing 32 people. Then in early 2013, an engine-room fire aboard the Carnival Triumph sparked another crisis, leaving more than 3,000 passengers to contend with overflowing toilets and no air conditioning for days in the Gulf of Mexico.

Mr. Donald, a director on Carnival's board who had built much of his career at agrochemical giant Monsanto Co., was pulled in to right the corporate ship. He spent his first months as CEO sounding out employees.

"If you listen to your employees that do all the work, they'll tell you how to execute," he says.

Mr. Donald, 63 years old, has since steered a turnaround. Carnival's market value has nearly doubled to $45 billion and net profit has climbed to $2.6 billion in 2017 from $1.1 billion in 2013.

One of his biggest tasks today is convincing more consumers that cruises aren't just for the "newly wed and almost dead," he says. Mr. Donald recently sat down with The Wall Street Journal. Here are edited excerpts from the interview:

The Wall Street Journal: You took over at a difficult time. How did you boost employee morale?

Mr. Donald: I pulled the top leadership together and said, "What does success look like for you and your family five years from now? What does success look like for you and your department? Now share that with each other." I wanted us to get listening established in the organization. I said, "Wait a minute. If I had told you guys this stuff, you wouldn't feel the same. That's how your people are, too. We have to pull together your direct reports around the world and have them do this too."

WSJ: What's the coolest new cruising technology?

Mr. Donald: It's technology enabling our crew to deliver to guests highly personalized service. You carry a little disc and wear it on a bracelet, or in your pocket, and that disc is like a license plate. For example, you're at a bar -- the bartender will know your name. They know what drink you'll have. Or you're in Alaska, there's a whale off the bow of the ship. You run out with everybody else to see the whale, and the drink will come to you.

WSJ: Last year's hurricane season was especially intense. How has that affected Carnival's business in the Caribbean?

Mr. Donald: The reality is five ports that are heavily frequented by cruise liners were directly impacted. There are 80 ports in the Caribbean. So even though there was a bad hurricane season, the Caribbean was open for business the whole time.

WSJ: Carnival was briefly the target of an anti-Trump boycott campaign last year because it helped sponsor the New Celebrity Apprentice and the president was an executive producer. How did you weigh the decision to no longer sponsor the show?

Mr. Donald: We didn't really stop the sponsorship. We were on two episodes, the show ended and that was it. We weren't making any kind of statement one way or the other. There are a lot of people who are Trump supporters and there are people who are not -- all of them cruise with us.

WSJ: Are there political issues you would feel compelled, as a CEO, to take a public stand on?

Mr. Donald: We all have our own personal feelings, but I don't own this company -- the shareholders do. I have a responsibility to my employees, to the shareholders and to the communities we touch and operate in. You have to look at each case that way.

An example is Bermuda [which banned same-sex marriage this year before its top court overturned that law last week]. We have ships that are flagged in Bermuda. We also have a lot of people who get married on our ships, and our company position is that we are supportive of same-sex marriage. We have to comply with the laws, but that doesn't keep us from saying to Bermuda, "You may want to think about this." I wrote a letter and asked it to reconsider. There are other issues where we wouldn't take a position, because it's not relevant to our business.

WSJ: You've been a vocal champion of greater diversity in corporate America. Why is it so tough for companies to move the needle on this?

Mr. Donald: Most places don't get there because people don't own diversity as a business imperative. It can't be just the right thing to say. If you have very different people who are aligned around a common objective, they will out-solution a homogeneous group almost every time -- that's real. So if you own it, you make diversity an integral part of your whole thought process on how to create shareholder value.

WSJ: What advice do you privately give other business leaders on boosting diversity?

Mr. Donald: Start at the top. Everybody wants to start at the bottom or the middle. They say they can't start at the top because "the people don't know our culture," or "they don't have the experience." Well, yeah, start at the top and take a risk. And then don't quit on them immediately when they don't fit. What you have to do is say, "This person is different -- that's why we brought him here. What are we going to do to accommodate that difference?"

Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CARNIVAL -0.09% 4595 Delayed Quote.-5.99%
CARNIVAL CORP 0.96% 52.5 Delayed Quote.-7.43%
CARNIVAL CORP -0.19% 59.71 Delayed Quote.-9.85%
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Financials ($)
Sales 2018 18 869 M
EBIT 2018 3 233 M
Net income 2018 2 962 M
Debt 2018 9 765 M
Yield 2018 3,06%
P/E ratio 2018 13,84
P/E ratio 2019 12,26
EV / Sales 2018 2,72x
EV / Sales 2019 2,55x
Capitalization 41 477 M
Duration : Period :
Carnival Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends CARNIVAL
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 10
Average target price 74,3 $
Spread / Average Target 27%
EPS Revisions
Arnold W. Donald President, Chief Executive Officer & Director
Micky Meir Arison Chairman
David Bernstein Chief Financial Officer & Accounting Officer
Alan B. Buckelew Chief Information Officer
John Parker Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
CARNIVAL-5.99%41 571
CARNIVAL CORP-9.85%41 571
ACCOR0.00%14 082