Corporate Real Estate Compensation Sees Record Increase

Corporate real estate compensation is increasing at a record rate. According to the Global End User Compensation survey from CoreNet Global and Ferguson Partners, annual cash compensation and total cash remuneration from 2018 to 2019 had the biggest increase in history, growing to $462,900 and $658,969 respectively.

The companies surveyed 134 professionals, including end-users or occupiers of corporate real estate, at 122 large corporations across the globe, including in the US, Asia, Europe, Latin America, Canada and Australia/New Zealand. Each corporation had a total of 42,567 total employees and an average of 85 professionals in the corporate real estate department, according to the survey.

Of the professional surveyed, 79% received an increase in their base salary from 2019 and 2020, and 57% of participants expect to receive an increase between 2020 and 2021. In addition, 95% of those surveyed said that they were eligible for an annual incentive bonus.

Company performance had the largest impact on employee compensation, according to more than half of participants. Another 32% responded that individual performance had the most significant impact on employee performance. In addition, company goals and objectives, subjective and individual performance and company profits were the top metrics used to determine employee compensation.

A survey from survey from Willis Towers Watson at the end of last year also found that ESG goals were also becoming a metric to determine employee compensation. One-third of companies that responded to the survey plan to increase the prominence of ESG in incentive plans. Most companies—four in five or 78%—are planning to change the way that executive incentive plans incorporate ESG over the next three years; four in 10 companies plan to introduce ESG into long-term incentive plans over the next three years; and 37% of respondents plan to introduce ESG into annual incentive plans over the next three years.

While base salary rose, annual cash bonuses decreased, the CoreNet survey also found. From 2019 to 2018, cash bonuses increased among 47% of those surveyed. From 2019 to 2020, only 38% of respondents expect and increase in annual cash bonuses, a projected decrease of 33%. More professionals also anticipate a smaller cash bonus, with 23% expecting a decrease.

As for long-term incentives, 27% of participants received an increase in long-term incentive award payout in 2019 compared to 2018, according to the report. For 2020, that number decreased only slightly with 25% of respondents expecting an increase and the majority of respondents, 66%, expecting no change.

Employee compensation became a hot topic through the pandemic. In response to the rapid market change, several companies made the decision to cut executive pay. Newmark Group, Simon Property Group, Vornado Realty Trust, CBRE Group and Cushman & Wakefield all reduced executive pay to conserve cash. Newmark’s chairman Howard Lutnik, and CEO Barry Gosin took a 50% cuts to their $1 million base salaries and other executives took a 15% pay cuts.