The CEO gold rush

Behind the astronomical pay real estate chiefs pull in — and get slammed for

Dec.December 01, 2017 11:00 AM

520 Park

When Newmark Knight Frank filed paperwork in October for its planned initial public offering, it didn’t just reveal how much revenue the firm was throwing off or how much property it was selling. Tucked into the U.S. Securities and Exchange Commission filing was the disclosure that CEO Barry Gosin took home nearly $30 million in 2015. While that pay package may have shocked many in the industry, monstrous hauls for real estate executives and corporate CEOs are, of course, par for the course these days. But aggressive maneuvering to rein in that pay has also taken on a life of its own in the last few years. This year, stockholders at several real estate companies made their voices heard by rejecting the top bosses’ compensation packages. In addition, starting this fiscal year, new rules, drafted during the post-recession regulation crackdown, require public companies to report the ratio of their CEOs’ pay to median pay for their workers. As for Gosin, he has plenty of company in the world of astronomically paid real estate chiefs. Vornado Realty Trust’s Steven Roth, for one, took home more than $11 million — including salary, bonus and restricted stock — in 2016, and there are a slew of others in the same boat.

$115K

The median amount NYC brokers took home annually between 2013 and 2016. Of course, those selling multimillion-dollar apartments at trophy buildings like 432 Park Avenue or Zeckendorf Development’s 520 Park can take home millions each year.

$475K

Barry Gosin’s base salary in 2015. Like so many of his CEO counterparts, that amount did not remotely reflect what he took home. He also landed a one-time $24 million advance, which was based on his targeted bonus in future years — plus a $2.3 million bonus and $2.6 million in commissions.

31.5%

The chop in compensation that Equity Residential CEO David Neithercut saw between 2015 and 2016, when his salary dropped to $8.7 million from $12.7 million. The move came after the company made its executive compensation structure more performance-dependent.

$5B

The amount S&P 500 firms paid their CEOs in performance-dependent pay in 2016. That pay structure has skyrocketed since 1993, when President Bill Clinton pushed to limit CEO salaries by incentivizing performance through tax breaks. The effect was the opposite of what was intended.

$47M

Blackstone Group CEO Stephen Schwarzman’s compensation in 2016, not including the $378 million in dividends he took home from his company shares. The mogul is consistently the highest paid CEO of a real estate-related company — the firm has $111 billion in real estate assets under management.

$11.3M

The amount JLL paid its now-retired CEO Colin Dyer in 2016. That “golden parachute” was slammed by Generation Investment Management — a fund that was co-founded by Al Gore and owns a 7.5 percent stake in the brokerage. Generation called it “wholly inappropriate,” especially given the disappointing returns JLL’s investors saw during the prior three years. 

271-to-1

The ratio of CEO take-home compensation — salary, bonuses, restricted stock grants and more — in 2016 at top U.S. companies compared to what typical employees in those firms’ industries rake in. That’s a huge jump from about 40 years ago, when CEOs made about $30 to every $1 a worker made.

4

The unusually high number of U.S. REITs — SL Green Realty, Whitestone REIT, Senior Housing Properties and Hospitality Properties Trust — that saw shareholders reject CEO compensation in nonbinding votes this year. The $17.3 million SL Green paid Marc Holliday was the heftiest. It included a 29 percent base-salary hike, despite SL Green’s recent lackluster performance.


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