Office landlord Paramount Group doubled CEO Albert Behler’s total pay including stock grants to about $20 million last year, SEC filings show, even as the company’s stock price fell from about $6 a share to $5.
Midtown-based Paramount capped off a challenging 2023 by advising shareholders in February that it had fully written down two San Francisco properties and may hand them over to lenders because cash flows aren’t sufficient to cover debt obligations. The landlord also faces challenges filling the 330,000 square feet space at 31 W. 52nd St. that law firm Clifford Chance is expected to vacate in June. Evercore ISI expects occupancy rates across the portfolio will fall to 84% this year from about 86%.
Nonetheless, the Paramount board substantially raised Behler’s total compensation. It did so by awarding him new shares to help replace older grants rendered worthless by the two-thirds decline in the stock price since early 2020. The board said the new awards were meant to encourage Behler, 72, to stay on the job he’s held since 1991.
“The decline in the company’s stock price has dramatically impacted the value of previously-awarded equity compensation, impairing the strength of retention and contributing to significantly higher rates of employee turnover,” Paramount said in a regulatory filing last week that disclosed pay also doubled for its chief operating officer and its head of real estate.
The company’s largest shareholders, with a 15% stake, are the heirs of German businessman Werner Otto, who acquired the Paramount Building at 1633 Broadway in 1976 for $84 million. Paramount owns 13 million square feet of Class A space in Manhattan and San Francisco.
The firm got a bit of good news last month when a big San Francisco tenant, KPMG, agreed to extend its lease through the fall of 2026. Paramount and partner Blackstone Group recently refinanced a $975 million mortgage for a San Francisco building at a new rate of just 4.08%, although the loan expires in three years.
Behler’s $1.1 million base salary was unchanged last year and he received $1.7 million in cash bonus pay, half of which he swapped for stock.
His pay boost came via two share grants valued by the company at $11 million. In order to qualify for the first grant, Paramount’s stock price must rise to $8.96 a share within 10 years, or nearly twice its current value of $4.65 a share. Behler was awarded a second bucket of stock vesting in 2027, regardless of the stock’s performance, so long as he still works for the company.
The shares grants “are intended to be in lieu of the 2024 and 2025 annual equity awards,” Paramount said.
Aaron Elstein , 2024-04-08 18:59:25
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