A month after laying off 15 percent of its staff, Compass announced widespread pay cuts on Wednesday, even as it continues to recruit agents.
The SoftBank-backed brokerage, which has raced to slash spending in the wake of Covid-19, said it would reduce salaries by 10 to 50 percent, according to an internal document reviewed by The Real Deal.
According to the internal document, Compass said the pay cuts will be temporary, impacting three months’ worth of pay. Reductions are being done in tiers: 10 percent cuts for those making under $75,000, 20 percent for those earning $75,000 to $150,000, and 30 percent for those making $150,000 or more. Some executives will see pay cuts of 50 percent. CEO Robert Reffkin previously said he would not take a salary for the rest of the year.
Employees will get the equivalent of their lost wages in the form of restricted stock on August 1, the document said.
“We are unfortunately taking steps to preserve as many jobs as possible during this unprecedented economic downturn,” the document said. “We thought we’d be working from home for weeks, with agents unable to show and sell home for weeks, and now it looks like a matter of months.”
The company declined to comment.
The pay cuts follow a round of layoffs last month, when Compass laid off roughly 375 people in anticipation of a projected 50 percent drop in revenue. At the end of last year, Compass had 15,500 agents nationwide and 2,500 staffers.
Despite raising $1.5 billion from investors to date, Compass has found itself in the same boat as other residential firms, whose agents are prevented from doing in-person showings during the pandemic. All are being forced to drastically cut costs while offices are closed, though some virtual closings are taking place.
Earlier this month, New York’s biggest firms, including the Corcoran Group, Douglas Elliman, Brown Harris Stevens and Halstead, laid off or furloughed staff.
Discount firm Redfin — which unlike many firms employs agents — put 41 percent of agents on furlough and cut 7 percent of its staff earlier this month. CEO Glenn Kelman gave up his salary for the rest of the year.
Realogy has also slashed salaries companywide, including CEO Ryan Schneider, who is taking a 90 percent pay cut. According to the document, Compass’ product and engineering team of around 500 people will not be impacted. Neither will its “strategic growth managers,” who are tasked with recruiting agents.
“We thought long and hard about this, but all of us came to Compass to build the tech platform for real estate,” the document said. “Our ability to recover from this downturn hinges on our ability to continue to do this work uninterrupted.”
Several industry sources said Compass has continued to recruit agents heavily during the pandemic.
Since mid-March, a Compass spokesperson said it hired 62 agents in the New York region. It brought on 43 agents in Short Hills, N.J., and 27 agents in Long Island, where it opened a new office in February.
All of the agents were onboarded virtually, and last month Compass rolled out a suite of virtual tools ranging from 3D video tours to targeted mobile ads.