How some execs are making money off assets they don’t even own

Execs at some companies collect dividends from shares they don’t own

Vornado Realty Trust chairman Steven Roth (Credit: Getty Images)
Vornado Realty Trust chairman Steven Roth (Credit: Getty Images)

Vornado Realty Trust’s Steven Roth is not just one of New York’s top commercial landlords. He is also one of its top collectors of dividends from shares he does not own.

Vornado made $463,000 worth of such payments to Roth last year, which equals almost half of his salary, according to Crain’s. Other executives who received money from dividends include AllianceBernstein CEO Seth Bernstein and Philip Morris International CEO André Calantzopoulos.

Crain’s identified nine companies in the New York area that pay dividends on unowned shares, a practice that appears most common at real estate investment firms and financial institutions. Companies generally only disclose the information in regulatory filings’ fine print and do not say precisely how much money is involved.

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Executives are regularly paid through restricted shares that will not vest for years, but some companies pay them dividends before the shares vest as if they own them. Firms defend the practice by saying the totals are not very large compared to total salary and are a good way to keep executive talent.

However, investor groups have said compensating executives this way can weaken the link between performance and pay.

The Real Deal recently examined how much the CEOs at seven top public real estate firms made in 2017 and found that SL Green’s Marc Holliday topped the list with an income of $17.41 million. Roth made $10.47 million. There has been a growing belief at REITs that CEOs should be punished or rewarded based more on the company’s performance and portfolio than on investor moods. [Crain’s] – Eddie Small