Arnaldo Perez came to Carnival Corporation as assistant general counsel in the legal department 23 years ago. After nine years in private practice as a corporate securities attorney, he had been looking for more flexibility in his work and a better balance between his professional and family life. Two years later, he found himself moving up to fill the general counsel spot for the cruise giant. He sits down with Hispanic Executive to discuss how the company has grown and honed its focus during his tenure.
Can you give a thumbnail description of the types of legal matters you handle at Carnival?
Other than maritime issues, like the purchase and sale of vessels, our responsibilities are similar to any other global, publicly traded company that focuses on retail customers. We handle public reporting requirements with the Securities Exchange Commission, protection of intellectual property, compliance with laws like the Foreign Corrupt Practices Act and the Americans With Disabilities Act. We do all that with a team of seven lawyers based in Miami, three of whom have been with me here for more than 20 years.
During your time with Carnival, what changes have you seen for the cruise industry, and how have they impacted the legal department?
The biggest change is how much Carnival and the cruise industry in general have grown. When I started, we had three operating brands. Now we have 10 companies operating more than 100 ships around the world. That growth brought about more demands in terms of scale and volume but didn’t really change the nature of our work.
Aside from evolving concerns about cybersecurity and data privacy, the biggest impact came from the 2008 financial crisis, Dodd-Frank and the wave of regulatory compliance that followed. That certainly hasn’t been unique to the cruise industry, but it has meant that we’ve had to dedicate many more resources to compliance issues.
What are some unique challenges for companies like Carnival that operate in markets all over the world?
Our business is broken down into local or regional businesses and the attorneys who report to those individual management teams. Here in Miami, we’re still responsible for monitoring what goes on throughout the world, but the day-to-day management of issues is handled by the local brands.
Historically, the biggest challenge I’ve faced was handling a two-year hostile takeover transaction with a UK-based company called P&O Princess. Instead of a traditional acquisition in which P&O would have been merged into Carnival, we decided to establish a dual listed company structure. That meant P&O would remain in existence as a UK company, would continue to be traded on the London Stock Exchange, and would be able to preserve its very loyal base of institutional shareholders. A traditional merger would have required those investors to divest themselves of their shares under UK practices. So now we are technically two separate companies joined by a contract that provides the same board of directors and senior management to both enterprises. My department manages compliance with all applicable financial regulations in the US for Carnival and in the UK for P&O. There are only a handful of companies in the world with that kind of governance.
Carnival has been expanding a great deal in China. How is the legal department impacted by that growth?
One of our companies, Costa Crociere, has been operating in China for years. We have now grown to two brands operating four ships out of Chinese ports. We expect to be offering four million cruise days—the number of days each guest is booked as a passenger—by 2016. That total is separate from our other Asia-Pacific business that serves guests from Europe and the US. The legal department’s current focus is on a couple of potential joint ventures with Chinese partners. My team is involved in negotiating joint venture agreements that ensure that all Chinese and American laws are respected as well as assisting with the commercial terms of the deals.
Does the Chinese expansion present any unique legal hurdles?
It has been well documented that China has significant compliance challenges, particularly around corruption issues. But it’s a market that’s predicted by 2020 to grow to about half the size of the US cruise market—the biggest in the world—and to be as large by 2025. So, we’ve taken several steps to build a strong foundation that will address the compliance issues. Our COO relocated to Shanghai more than a year ago, and we have sales staff, marketing, HR, and other key departments based there as well. We also provide extensive training in anti-bribery and antitrust regulations, as well as in our associated internal policies. Because of the distance and difficulties in coordinating travel and meetings, we also hired a Mandarin-speaking compliance expert in China who monitors day-to-day activities.
Did you ever expect you would spend more than two decades of your career with Carnival?
I never imagined I’d be here this long. But I look at it as being the second best decision I ever made in my life. The first, of course, was marrying my wife.