Real estate industry CEOs and CFOs were the highest paid across eight major industry sectors during 2014, according to The BDO 600 CEO and CFO Pay Study. Last year, real estate CEOs and CFOs were the second most compensated, falling right behind executive leaders from the energy sector. The analysis was conducted by BDO’s dedicated Executive & HR Practice, and examined proxy statements of public real estate companies with annual revenues between $25 million to $1 billion.
This number one ranking could be attributed to the positive economic climate during 2014 and an increase in overall business. It could also be due to real estate CEOs’ and CFOs’ growing role and the increased complexity of the real estate industry, which now necessitates not only an understanding of their industry, but how advancements in other sectors, like technology, are significantly impacting their business. Another factor possibly contributing to the ranking is the sophistication required to navigate the changing debt and equity markets, which saw significant swings for real estate companies.
While the real estate sector comprises the highest compensated executives, real estate CEOs did experience a 1 percent decline to $4,515,764, from $4,553,611. Average real estate CFO compensation, however, increased to $1,818,693, an 8 percent year-over-year increase. This disparity between real estate CEO and CFO pay was in alignment with the study’s overall finding that in 2014 CFO year-over-year compensation outpaced that of the CEO.
According to Randy Ramirez, a senior director in the Global Employer Practice at BDO, “There is clearly a sense of cautious optimism when it comes to the economy given its skittish performance and high volatility. Because of this, CEO and CFO compensation is rising at a more measured pace when compared to last year.”
Ramirez continued, “Companies also want to capitalize on bullish market days and, as a result, are incentivizing their executives to accelerate bottom-line growth and unlock greater shareholder value. CFO compensation, in particular, is benefiting as it outpaced CEO pay growth. One possible explanation is the increased responsibility placed on CFOs to leverage market momentum in order to realize a company’s financial vision.”
The increased complexity of the CEO/CFO roles demand the skills and expertise of accountants, advisors and wealth planners who understand not only the real estate industry, but how the wealth needs of the C-level execs are interwoven into the business. If you have any questions, please call us at 404-874-6244 or simply fill out the form below.
By Anthony La Malfa
This article originally appeared in BDO USA, LLP's "Real Estate Monitor" newsletter (Winter 2016). Copyright 2016 BDO USA, LL. All rights served. www.bdo.com.