CEO pay cut? Sliding retail stock performance cuts into executive compensation

Another vision of the apocalypse: executives at retail REITs are losing multimillion-dollar stock awards.

Senior management teams at the REITs that own the country’s largest malls — including Simon Property Group Inc. and GGP Inc. — are cutting their own compensation to tackle falling share prices as retail struggles.

Simon, the largest mall owner in the U.S., is taking stock awards away from its top executives due to the “challenging business conditions” the company faces, according to its proxy statement filed with the Securities and Exchange Commission. The company will not award stock grants to its employees this year — a drastic change from the $2.5 million or $3 million grants top executives received in previous years.

Executives in other sectors are less likely to be affected by drops in share prices, since their pay isn’t closely tied to stock performance, the Wall Street Journal reported. But REITs tend to have pay plans tied to the interests of shareholders, Jeremy Banoff of compensation consulting firm FPL Associates LP, told the Journal.

While popular malls are maintaining a relatively stable occupancy rate and rent, compared to lower-quality malls, their share prices are still falling. Many investors are losing faith in the traditional retail market as a whole. [WSJ] — Naiwen Tian