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  • Writer's pictureRealFacts Editorial Team

Vornado Realty Trust Shareholders Challenge CEO Steven Roth's Compensation Package


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Vornado Realty Trust is facing significant shareholder pushback regarding CEO Steven Roth’s proposed multimillion-dollar compensation package, as reported by Crain’s New York Business. Over 40% of investors voted against doubling Roth's annual pay to $19.7 million, a notable deviation from the typical shareholder support for CEO pay packages on the Russell 3000 index, which averages 92%.


At Vornado’s recent annual meeting, Institutional Shareholder Services (ISS) advised investors to vote against Roth’s pay, citing “unmitigated pay-for-performance misalignment.” Despite the recommendation, the proposal to increase Roth's pay includes substantial shares and stock options along with a $3.7 million cash bonus. This package also reflects a $2.2 million bonus for the redevelopment of 350 Park Ave., a project not slated to begin until next year and expected to complete by 2032.


The opposition to Roth's compensation follows a period of financial struggle for Vornado. The real estate investment trust (REIT) reported a net loss of $9 million in the first quarter, contrasting with a $5.2 million profit in the same period last year. Additionally, Vornado reduced its dividend payout by 68% due to declining earnings and suspended dividend payouts to common shareholders for most of 2023.


Public companies are required to have shareholders vote on executive compensation, although these votes are non-binding. Vornado’s SEC filing clarified that bonuses, including those received by Roth, will be made episodically rather than annually, due to the extensive scale and duration of development projects. All bonus allocations must be approved by the Compensation Committee and the Board of Trustees.


Three other Vornado executives also received $1.4 million bonuses connected to the 350 Park Ave. project, derived from a $25 million initial payment received from a development deal with Citadel founder Ken Griffin and Rudin. The joint venture plans to construct a 62-story, 1.8 million square foot office tower, with Citadel and Citadel Securities occupying 800,000 square feet.


The shareholder dissent against Roth’s compensation reflects broader concerns about the alignment of executive pay with company performance and financial health, particularly as Vornado navigates through its current challenges.


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