There’s going to be a new captain steering Realogy’s ship, just not quite yet.
The New Jersey-based parent company of the Corcoran Group and Citi Habitats is officially hunting for a chief executive to succeed Smith, who last month vowed that Realogy would become a “recruiting machine” for top agents. Earlier this month, the board offered Smith a new, two-year contract while it formalizes a succession plan for the 63-year-old executive, according to regulatory filings.
Terms of Smith’s new contract include a $1 million base salary and other benefits, including $6.5 million in long-term incentives, the filings said.
Last year, Smith took home $8.65 million, including salary and benefits, according to filings. But thanks to a smaller bonus, that was shy of 2015’s total compensation of $9.1 million.
Realogy officials declined to elaborate on what’s likely to be an internal and external search, but analysts have been keeping tabs on Smith’s contract, which was to expire next month. Smith was named CEO in 2007 after spending 10 years at the helm of Cendant Corp.’s real estate division, which was spun off to create Realogy. Last year, Realogy generated $5.8 billion in revenue, up 2 percent from 2015.
Anthony Paolone, an analyst at JPMorgan Chase who follows Realogy, said since that Smith’s goal has been to get the business back on track, drive growth and pay down debt since the company’s IPO in 2012. He’s largely accomplished those goals. “He navigated Realogy through the worst housing crisis in history,” Paolone said. “This puts succession on the table.”
At 63, Smith is also nearing the traditional age of retirement. And while privately-held real estate firms have historically neglected succession planning, the boards of public companies are focused on ensuring the business can survive a leadership transition.
Still, Realogy may have to confront a lack of candidates ready to take over the C-suite. The housing crisis depleted the ranks of mid-level execs who would be candidates for top jobs today, according to Graham Beatty, a partner in the New York office of executive search firm Heidrick & Struggles. Beatty, who leads the firm’s real estate division, described a “barbell effect.”
“There are very senior and junior folks. But that mid-level has been impacted by the financial crisis,” he said. “Oftentimes, talent has left the real estate world and gone into different industries.”
In SEC filings, Realogy said it launched a committee in October to formally search for a CEO to succeed Smith. As part of the process, the committee is also looking for someone to fill a newly-created role of president and COO.
“We’re creating a new COO role to ensure we have a deep bench of management talent,” said Mark Panus, Realogy’s senior vice president of corporate communications.
Corcoran Group CEO Pam Liebman’s track record in New York has fed speculation that she’s being eyed for a larger role within NRT, the division of Realogy that owns Corcoran, Citi Habitats and Sotheby’s International Realty’s New York office. “She’s capable of running something much larger,” Smith told The Real Deal last year. “Someday, she could run NRT.”
Meanwhile, Smith is orchestrating more recruiting companywide.
“Don’t think there’s a start and finish to our recruitment efforts, we’re going to continue,” he said during a Feb. 24 earnings call. “We’re turning this company into a recruiting machine and that’s not going to stop.”
Miriam Hall contributed reporting.