TripAdvisor CEO Tops Retail CEO Pay List

Summary

WSJ Your Money Briefing: "TripAdvisor CEO Tops Retail CEO Pay List"

Date: July 25, 2018
Host: JR Whalen
Guest: Patrick Thomas, Wall Street Journal Reporter

Episode Overview

This episode explores an eye-opening report on CEO compensation in the retail sector, highlighting how Stephen Kaufer of TripAdvisor became the highest-paid retail CEO in the U.S.—despite not heading a traditional retail company. WSJ's Patrick Thomas joins JR Whalen to break down how new definitions of "retail," compensation structures, and the changing landscape of commerce are shaking up expectations about executive pay in the sector.

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Key Discussion Points & Insights

Redefining the "Retail" Sector (02:21)

• Patrick Thomas explains how the S&P now classifies companies:
  • Many top earners—TripAdvisor, Booking Holdings, Netflix—are internet and direct marketing retailers, not traditional brick-and-mortar stores.
  • “[S&P] tries to lump [companies] into the ones that are the closest. So in this case, these travel companies fit into the retail category.” (Thomas, 02:41)

CEO Compensation: The Numbers (02:55)

• Stephen Kaufer (TripAdvisor)

  • 2017 Pay: $47.9 million
  • Compensation characterized by large, infrequent equity awards (next scheduled for 2021).
  • Typical yearly pay is much lower; outsized figure due to the timing of the award.

• Glenn Fogle (Booking Holdings)

  • 2017 Pay: $27.77 million (02:56)
  • Company operates major travel platforms: booking.com, kayak.com, priceline.com.

• Reed Hastings (Netflix)

  • Ranked third on the list, also within internet/direct marketing.

• Traditional Retail CEOs

  • Doug McMillon (Walmart): Highest among brick-and-mortar, at number four.
  • Others: TJX, Best Buy, Gap, Walgreens, Ross Stores.

Notable Disconnect: CEO Pay vs. Company Performance (03:59)

• 2017 saw a -26% shareholder return for TripAdvisor despite Kaufer's massive pay.

• Patrick Thomas: “It does look like another case of pay doesn't match performance, but this is kind of a rarity...if you spread [the award] across, it would look much more normal.” (04:30)

• Many traditional brick-and-mortar retailers (Best Buy, TJX, Walmart, etc.) reported positive shareholder returns, but their CEOs earned less than those from internet-based companies.

Changing Face of Retail Leadership (05:25)

• Online-centric companies now dominate pay rankings in the sector because of S&P’s inclusion of internet and direct marketing firms as "retail."
• JR Whalen: “The days of actual shopping, retail CEOs topping the list of retail CEO salaries—that could be behind us, at least for now.” (05:25)

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Notable Quotes & Memorable Moments

• JR Whalen on CEO Compensation:

  • “I suppose that we're all in the wrong business here because the numbers are fantastic if you're in the top management.” (02:55)

• Patrick Thomas on compensation structure:

  • “Mr. Kaufer's pay is a little bit different...he receives a one time Equity award every few years, and if you spread that out...it would look much more normal...” (03:22)

• JR Whalen on the disconnect between pay and performance:

  • “That all too prevalent story of the disconnect between CEO pay and shareholder return—that's rearing its head here.” (03:59)

• Patrick Thomas on S&P classification:

  • “It looks just the way the S and P classifies it… putting more and more Internet marketing type companies on this list...not a name you would probably think of when you're thinking of retail CEOs, but they fit the bill here.” (05:40)

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Important Timestamps

• 02:21 – Patrick Thomas explains non-traditional retail CEO rankings
• 02:55 – Breakdown of CEO pay numbers
• 03:22 – Explanation of Stephen Kaufer’s unusual compensation structure
• 03:59 – Discussion on CEO pay vs. company performance
• 04:59 – Transition to traditional retail CEOs ranked below internet companies
• 05:25 – Conversation about changing rankings with online commerce rise
• 06:05 – Quick rundown of other retailers on the list

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Closing Thoughts

The episode makes clear that the definition of "retail" in the business world is shifting, with online platforms increasingly dominating not only the marketplace but also pay scales for executives. It raises important questions about how CEO compensation is structured, perceived, and whether it always aligns with shareholder interests—especially in a landscape where sectors themselves are rapidly redefining.

For full details, the complete list of highest-paid retail CEOs is available at WSJ.com.

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Transcript

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[JR Whelan]

in Market Stories from the Wall Street Journal. I'm JR Whelan in New York. The top earning retail CEO in the US doesn't lead a traditional retail company. We'll explain in a moment. First, these Money headlines A survey by realtor.com of homeowners shows that living near a good school was so important to 78% of buyers they compromised on their home's features to make that desire a reality. And nearly 60% of buyers used test scores to determine a school district's quality. Additionally, buyers considered whether schools had gifted and talented programs in art and music education. A separate realtor.com survey found that the amenity the buyers most frequently gave up for the privilege of living near a better school was a garage. Nearly 20% of buyers, even though garages are the most sought after feature among prospective home buyers and the price of bitcoin has jumped above $8,000, extending a rally that has lifted the largest cryptocurrency by market value to its highest level in two months. After a dismal first half of the year, bitcoin has shown signs of life in recent weeks. It rose above $6,000 each in late June, surpassed $7,000 last week, and exceeded $8,000 on July 24. The 25% gain so far in July puts bitcoin on pace for its second biggest monthly gain this year. And the recent rebound also helped rival digital currencies such as ether and Ripple, pushing the market capitalization for the entire cryptocurrency market back above $290 billion. This is your Money briefing from the Wall Street Journal. Welcome back everybody. No doubt you've heard the commercials TripAdvisor, the latest reviews, the lowest prices TripAdvisor has become one of the most recognizable travel brands in America, and its CEO ranks as the highest paid CEO in the retail industry. The Wall Street Journal's Patrick Thomas is here to discuss. So Patrick, what's surprising here is the highest paid retail sector CEO doesn't come from the world of shopping or even a prominent store chain.

[Patrick Thomas]

Many no, it does not. It's Stephen Coffer from TripAdvisor. And actually the top three don't come from what you would think of as traditional retailers, your traditional brick and mortar stores. They come from what's classified by the S and P as Internet and direct marketing retailers. So Netflix Booking holdings and TripAdvisor. So the S and P takes all these different companies and classifies them into different sectors. And some of these companies don't always fit perfectly into these categories, so they try and lump them into ones that are the closest. So in this case, these travel companies fit into the retail category.

[JR Whelan]

And still these numbers are amazing. Stephen Coffer of TripAdvisor. His total pay last year was $47.9 million. And as you mentioned, number two on the list, Glenn Fogle of Booking Holdings, $27,774,000. I mean the online travel business. I suppose that we're all in the wrong business here because the numbers are far are fantastic if you're in the top management.

[Patrick Thomas]

Well, Mr. Coffer's pay is a little bit different the way it's structured. Now. Last year he only had about 1.2, $1.5 million in compensation. This year it was much larger by a long shot because of the way his compensation is set up, which is not really that normal. He receives a one time Equity award every few years and if you spread that out over the course of three, four years, it would look much more normal and in line with the rest of the group. But in this case, his last equity award was 2013. He received another one in 2017 and he probably won't receive another one till

[JR Whelan]

around 2021 in the case of Glenn Fogle. Number two on the list of booking holdings that runs travel sites, booking.com, kayak.com, also priceline.com so a lot of highly used and often used websites under that number two slot. So let's go back to Coffer for a moment. That all too prevalent story of the disconnect between CEO pay and shareholder return that's rearing its head here. Last year TripAdvisor posted a total shareholder return of negative 26%.

[Patrick Thomas]

Yeah, it doesn't look like the company did well in terms of shareholder returns, but his pay is so large because it's a one time Equity award for a couple of years built up and if you spread that across, it would look much more normal. But in this case, yeah, it does. It looks like another case of his pay doesn't match performance, but this is kind of a rarity.

[JR Whelan]

Number three on the list is Reed Hastings of Netflix. And then once we get to number four, we get to retail CEOs from the actual world of shopping.

[Patrick Thomas]

Yeah, no surprise really, at number four with Walmart leading the pack in terms of the traditional retailers, probably what most people expected tjx coming in at fifth with positive shareholder returns they've had, they've done much better. And a lot of the retailers posted positive shareholder returns. So a lot of the retailers looking good and rebounding. But after Walmart, that's where you start to see some of those more names. Best Buy, tjx, which does TJ Maxx, Marshalls and of course Walmart.

[JR Whelan]

And the way that these companies are classified and also just because of the new era we're in as far as online commerce goes, the days of actual shopping, retail CEOs topping the list of retail CEO salaries that could be behind us, at least for now.

[Patrick Thomas]

Yeah, absolutely. It looks just the way the S and P classifies it. They're putting more and more Internet marketing type companies on this list. And in this sector, as we see just from TripAdvisor and bookings and Netflix, that's definitely not a name you would probably think of when you're thinking of retail CEOs but they fit the bill here. That probably would be behind us unless Walmart gets a big, gets a big raise.

[JR Whelan]

Also on that list, tjx as Patrick mentioned, also Best Buy, Gap, Walgreens and Ross stores. The full list is on WSJ.com so definitely check it out. That's the Wall Street Journal's Patrick Thomas joining us here in our studio. Patrick, thanks for being with us.

[Patrick Thomas]

Thanks for having me. Appreciate it.

[JR Whelan]

And that's your money briefing. I'm JR Whalen in New York for

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