Seeking Alpha

ARCP boss skips golf; set to earn a fortune

  • "It's not like I'm making $10M for showing up, staying at the office until 11 a.m., drinking a few cups of coffee and then playing golf the rest of the day," says American Realty Capital (ARCP) chief Nick Schorsch, who could make nearly $100M over the next five years according to an analysis of the company's "outperformance" plan released last month. The total executive pool is $222.1M. "I sleep four hours a night ... I haven't played a round of golf in years," says Schorsch.
  • "It's the highest pool that we've ever observed in the REIT space," says Jeremy Banoff, whose FPL Associates crunched the numbers. "It's definitely going to raise some eyebrows."
  • The company's annual meeting was yesterday and ISS and Glass, Lewis both urged shareholders to vote down ARCP's overall compensation plan (the tally isn't yet known), with ISS also criticizing the incentive program as "not rigorous relative to the potential payout values."
  • Last yea, the highest-paid REIT executive was GGP's CEO Sandeep Mathrani, who earned $16.5M in salary, bonus, and stock.
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Comments (21)
  • BidAskDividends
    , contributor
    Comments (45) | Send Message
     
    'I havent played a round of 'golf' in years', not gold. May want to update that line.
    30 May 2014, 09:40 AM Reply Like
  • embryorambo
    , contributor
    Comments (262) | Send Message
     
    I work so hard screwing over my shareholders that i'm going to get a 200 million pay package. Ask yourself who is the smart one. This guy keeps doing more and more bad deals so he can get the empire bigger to use as justification as why he should get paid more. As a shareholder i am more then disappointed and wondering if it is time to move on from this company. This is the same guy that said on a conference call heh we think our stock is undervalued and it would be crazy to issue equity at 13. Then a month later he issues more shares at a net of 11.59 to arcp. With no explanation of any sort. Nick is very smart, i am starting to feel very dumb for investing in his comany.
    30 May 2014, 12:22 PM Reply Like
  • knightline
    , contributor
    Comment (1) | Send Message
     
    When Cole went public and was eventually merged with ARCP, Cole CEO Chris Cole made nearly $500 million. It is common for principals in non-traded reits to get compensated with large dollar amounts upon their exit. But Schorsh has been vocal about his reits not containing those large internalization fees. They still sure get compensated well, albeit a bit less than what used to be routine internalization fees. $200 million is a bit much for someone who is so opposed to excessive internalization fees.
    30 May 2014, 09:43 AM Reply Like
  • JDoe20
    , contributor
    Comments (718) | Send Message
     
    This answers a lot of our(arcp sh's) questions on why he is doing the questionable deals of late. He cares about only one shareholder!

     

    Vote down this ridiculous pay plan and make our investment safe.
    30 May 2014, 09:45 AM Reply Like
  • NV_GARY
    , contributor
    Comments (3227) | Send Message
     
    JDOE-Looks like it is too late- vote was yesterday
    30 May 2014, 05:21 PM Reply Like
  • JDoe20
    , contributor
    Comments (718) | Send Message
     
    Yes, just saw that too.
    30 May 2014, 05:28 PM Reply Like
  • Ryan Schroeder
    , contributor
    Comments (163) | Send Message
     
    Could make 100M over 5 years... Would be nice to see the terms. If the stock price outperforms over 5 years I have no problem with that. Comes out to 20M a year, or slightly higher than the highest paid REIT CEO last year. As long as the "outperformance" plan is significantly stringent, this is a non-issue for me.

     

    Long ARCP.
    30 May 2014, 09:49 AM Reply Like
  • Union Trade Assoc
    , contributor
    Comments (867) | Send Message
     
    Spot On, Ryan
    30 May 2014, 11:49 AM Reply Like
  • Stock Market Mike
    , contributor
    Comments (2459) | Send Message
     
    It's very stringent, from what I've heard. For one thing, the REIT has to rise at least 7% every year or pay out that much in dividends in order to qualify.

     

    With ARCP now 20% off from its highs, he could qualify for much of that incentive plan if it took 3-4 years to recover to $15.

     

    -Mike
    5 Jun 2014, 02:13 AM Reply Like
  • King Rat
    , contributor
    Comments (849) | Send Message
     
    Mike, you know what? ARCP may just get to 15 out of virtue of the CEO being gone, but honestly, I don't understand all the hate against him. People here sound a little judgmental.
    20 Jun 2014, 04:07 PM Reply Like
  • yblarrr
    , contributor
    Comments (977) | Send Message
     
    Let's see taken stock from 16$ to 12.30$,sold a bunch of stock at 12$
    and now making more "fabulous" deals to put more money in HIS pocket.
    Doing a "great" job for the ARCP shareholders.
    So typical wall street, rewards for failures.
    30 May 2014, 10:00 AM Reply Like
  • Retired and loving it
    , contributor
    Comments (363) | Send Message
     
    A REIT is a simple business. Its original purpose was to allow investors to access a pool of unleveraged real estate. The structure has been warped into a binge borrowing property acquisition game. The managers of the REITs were originally incentivized in order to ensure the properties were well maintained and fully leased. Now the managers get huge bonuses for increasing the income of the REIT. They do this by borrowing piles of money and buying piles of new real estate. Risk is not a consideration. It is a one way bet. If the buying works out the manager gets a huge bonus. It the buying does not work out the manager walks and the REIT goes under causing all the unit holders to lose their money in what they thought was a riskless investment.

     

    It is time to put an end to this nonsense. The tax code should be amended so that when a REIT is set up it cannot be expanded. If the operator wants to expand they can set up another REIT.

     

    I would strongly advise any investor who owns a REIT to look very carefully at the balance sheet and cashflow statement of the REIT. Those who do will find that most REITS are extremely leveraged and mostly they borrow to pay the unit holders.
    30 May 2014, 10:15 AM Reply Like
  • King Rat
    , contributor
    Comments (849) | Send Message
     
    I see your point and agree with you somewhat, but here is the other side of the coin.
    Many REITs issue more stock to expand their business. To them Ke is cheaper than Kd. If share issuance is accretive to shareholders (unit holders), shareholders are in a weak position to complain.

     

    Many REITs operate like regular corporations save for dividend/tax purposes. I agree with you that they should operate more like a true "trust". Ultimately that would make them trade more like a taxable bond than as a stock because they would have so little room to grow. Avoiding that result is probably why many (but certainly not all) unit holders accept secondary issuance.
    20 Jun 2014, 04:13 PM Reply Like
  • financeminister
    , contributor
    Comments (924) | Send Message
     
    This is why I think insider buying which is generally portrayed as a sign of bullishness is sometimes just a token to instill confirmation bias within investors. If top executives get paid a couple of millions, why should it matter to them that they invest a few hundred thousands or a million or two in the company stock that they are supposed to prop up. They know that everyone is closely monitoring insider buying to get clues on whether they should be bullish on the stock or not.
    30 May 2014, 10:17 AM Reply Like
  • movies555
    , contributor
    Comments (994) | Send Message
     
    ...and glad I'm out. Nothing against the company, hope those who are in it do well, but this just really is starting to seem like too much an example of quantity over quality - and now this.
    30 May 2014, 10:18 AM Reply Like
  • Rudester
    , contributor
    Comments (2662) | Send Message
     
    Another example of corporate largess and a board of directors that can't spell the word "fiduciary". Did you all read the Fortune article on Coca Cola's executive compensation? It's an eye opener.
    30 May 2014, 10:37 AM Reply Like
  • westelk
    , contributor
    Comments (309) | Send Message
     
    Is this REIT being run by Nick Schorsch or Audrey McClendon? Another case of management enriching themselves rather than looking after the interests of the various stakeholders. American company management is increasingly turning into a game of "how much can I get short term" rather than running a business.
    30 May 2014, 11:09 AM Reply Like
  • kgerickson
    , contributor
    Comments (264) | Send Message
     
    Stock down..... time to reprice those stock options.
    30 May 2014, 11:42 AM Reply Like
  • bernie 1
    , contributor
    Comments (564) | Send Message
     
    Hey Nick, tell me you won't take all of that 10 M. until you get back to my break even of $14.65.
    I'm still long
    B.
    30 May 2014, 02:39 PM Reply Like
  • User 20118131
    , contributor
    Comments (24) | Send Message
     
    Why would you even believe him if he did? Based on his last conference call performance.
    30 May 2014, 03:55 PM Reply Like
  • confused_in_fl
    , contributor
    Comments (27) | Send Message
     
    The CEO's great increase in shareholder value is going to be bringing the stock back to 14.65 after having it run down because of the news of equity raise which ran teh stock down two points.

     

    BTW, the only people who think the CEO isn't overpaid are the members of the board of directors. [who also are grossly overpaid]
    1 Jun 2014, 05:07 AM Reply Like
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