W.P. Carey, a major commercial landlord, cut its CEO’s pay last year by 28%, according to a regulatory filing.
Jason Fox’s total 2024 compensation dropped to $10.2 million from the prior year’s $13 million after a disappointing year for the company and its shareholders.
“Good for them to do that. It is atypical,” said a Wall Street analyst who asked for anonymity because supervisors hadn’t cleared him to speak. “Normally CEOs get paid good, bad, or indifferent.”
Manhattan-based W.P. Carey owns 176 million square feet nationwide of net-leased space, which means tenants pay the property tax and electric bills. Carey properties are 98.6% occupied and mostly industrial, manufacturing, and retail sites.
Last year Carey purged its balance sheet of its riskiest assets by offloading 59 net-leased office properties into a new entity called, yes, Net Lease Office Properties.The newcomer’s stock price has doubled since its debut.
But in spite of these investor-friendly moves, Carey’s stock fell by 16% last year. That was an especially disappointing performance considering the MSCI U.S. Real Estate Index rose by 9% and the S&P 500 produced a 25% shareholder return. W.P. Carey didn’t respond to an email seeking comment.
In a regulatory filing published today, W.P. Carey’s board said its “philosophy” for compensating the CEO is to “generally” rely on “formulaic incentive programs.” But directors reserve the right to go with their gut evaluating the CEO’s “strategic performance,” which includes such things as talent development, investor outreach and “operational efficiency.”
Based on his performance as a strategist, the board awarded Fox 75% of his “target” cash bonus, reducing his payout by $100,000, to $1.4 million. His $1 million salary was unchanged. Equity awards, the vast majority of Fox’s pay, fell to $7.7 million from $10.5 million the prior year.
W.P. Carey’s stock fell shortly after it spun off Net Lease Operating Properties because, the Wall Street analyst said, certain investors who trade first and ask questions later saw W.P. Carey’s earnings would fall but didn’t take the next step to discover that was because the company was getting rid of office buildings.
“It was a smart move and I thought the company articulated it well,” the analyst said. “But obviously the market didn’t agree.”
However, investors have started to reassess W.P. Carey. Its stock price has risen 14% this year, to $62 a share, while shares in office landlords like SL Green and Vornado Realty Trust have fallen 15% and 13%, respectively. A portfolio that’s 98.6% leased to tenants paying the bills has a lot of value, after all.
