4 Quick Questions with Jeremy Banoff

Jeremy Banoff, Senior Managing Director, FPL Associates L.P. 

11/6/2013 | By Carisa Chappell

Published in the November/December 2013 issue of REIT magazine.

Using the most recent NAREIT Compensation Survey as a guide, how would you describe the hiring practices of REITs today?

It is important to keep in mind that the survey was conducted between March and May of this year. At that time, 58 percent of companies expected to increase their workforce somewhere between 1 and 10 percent. Only 15 percent of responding companies expected to decrease headcount.

Unfortunately, since the time the survey was conducted there has been a relatively high degree of uncertainty surrounding the broader economy and concerns have been raised again. That appears to have caused many companies planning to staff up to push the pause button on those plans.

Last year, there was significant discussion surrounding “say-on-pay,” the term used for a rule in which a firm’s shareholders have the right to vote on the compensation of executives. What appears to be this year’s hot-button, compensation-related topic?

From my experience in the boardroom I would say that “say-on-pay” continues to certainly be a significant discussion topic, although this year I’ve also seen quite a bit of discussion around succession planning. You’re seeing a relatively large number of changes at the C-suite level across the industry, as well as a renewed focus or even a first-time focus on grooming for the next generation of REIT leadership.

REITs have earned high marks for their governance and compensation practices as a whole. What are some of the areas where you think REITs particularly stand out?

In looking back over the prior three fiscal years, REITs have generally been well aligned with respect to pay and performance (the latter defined by total shareholder return).

From a survey perspective, one thing to note is what sets the stage on compensation: 79 percent of participating companies rated their financial performance in 2012 as being better than 2011. This also follows up on the fact that 2011 was better than the previous year. And, interestingly enough, 25 percent of participants reported that 2012 was their best year ever.

So, 2012 being another strong year performance-wise and the culmination of three consecutive strong years led to pay being at all-time highs. As a result, you can kind of draw a connection with pay and performance here that 25 percent have had their best year ever; performance has increased year over year for three straight years of the survey; and what’s been paid out and earned is also at the height. That said, very preliminary indications for 2013 suggest that last year may be the high-water mark in this regard and, given performance year to date, 2013 may be the first true test of pay and performance alignment.

What are some of the challenges REITs still face in this area?

As previously mentioned, “say-on-pay” still dominates the executive pay discussion—not just the amount of compensation, but perhaps more notably the structure of pay. On the one hand, REITs fared quite well with respect to “say-on-pay” as the vast majority of companies in the REIT industry (80 percent) had at least 90 percent of their shareholders voting “for,” which outpaced the broader market. On the other hand, the REITs that didn’t do so well were among the lowest-ranking in “say-on-pay” voting among publicly traded companies.

The other thing I would mention goes back to succession planning. I think that’s a challenge a lot of REITs will face and too many only begin to deal with it at the last minute.



Jeremy Banoff is a senior managing director at FPL Associates L.P. FPL partners with NAREIT on the annual NAREIT Compensation Survey, which looks at compensation data for 124 positions across 28 functions, including a variety of unique real estate roles. Banoff advises a wide array of real estate companies on executive and board pay matters, with a particular focus in the public REIT sector.

Other Features

Kenneth Campbell
Four Quick Questions With CBRE Clarion Securities Co-founder Kenneth Campbell
Kenneth Campbell had a front-row seat shortly after the birth of the REIT industry, founding the first REIT-dedicated publication, Realty Trust...
Ken Kies
Four Quick Questions With Federal Policy Group's Ken Kies
Ken Kies is the managing director of the Federal Policy Group, LLC, which advises clients on tax policy matters before Congress, the Treasury...
Sean Ruhmann
Four Quick Questions With NEPC's Sean Ruhmann
Sean Ruhmann is a partner at investment consulting firm NEPC, LLC and heads the firm’s real estate and real assets research group. Prior to joining...
Four Quick Questions With Jim Fetgatter, Chief Executive, AFIRE
Jim Fetgatter has served as chief executive of the Association of Foreign Investors in Real Estate (AFIRE) for more than 20 years. AFIRE represents...
David Kiron of MIT Sloan Management Review’s Big Ideas Initiative
Where does sustainability stand today in terms of being a strategic corporate priority? In our surveys , about 65 percent of companies report that...
Mark Decker Jr.
Four Quick Questions With Mark Decker Jr. of BMO Capital Markets
Mark Decker Jr. is a managing director with BMO Capital Markets and head of the firm’s U.S. Real Estate, Lodging & Leisure Group. Since the...
Scott Schaevitz
Scott Schaevitz, Co-Head of Americas Real Estate Investment Banking, Barclays
Scott Schaevitz is co-head of Americas real estate investment banking with Barclays. Prior to joining Barclays in 2008, he served as a Managing...
Jeremy Banoff
Jeremy I. Banoff, Senior Managing Director, FPL Associates L.P.
In general, what were the key findings of the 2014 NAREIT Compensation Survey in terms of hiring practices? This year’s survey findings included...
Peter Verwer, Chief Executive, APREA
Peter Verwer, Chief Executive, APREA
What do you consider to be your most immediate priority as head of the Asia Pacific Real Estate Association (APREA)? The Asian century is an urban...
Evan Urbania, CEO, ChatterBlast Media
We’re starting to read commentary in the media along the lines of “Twitter is dead” and other dismal prognoses for the various social media platforms...