In addition to serving as national online editor for, John Salustri is a contributor to Real Estate Forum, from which this article was excerpted.

You’ve arrived. You’ve got your office in the C-suite of a major real estate-services company. Your perks are many, including status; recognition; and, of course, compensation. What’s more, over the past decade, those perks have accelerated, keeping pace with the industry’s growing corporate status and global presence.

Not only are CEOs, CFOs and COOs in this industry pulling down record compensation packages, but the numbers on their 1040s are in line with many of their counterparts in the Fortune 1000. Like the industry itself, senior-executive compensation levels have been on an upward trajectory over the past few years, and that should continue as long as this capital-rich real estate cycle holds up.

Of course, the tide doesn’t raise all yachts equally. Company performance is bound to vary year to year, impacting many of the incentive packages executives collect. And the figures you’ll see quoted here are for the most part median numbers, indicating that there are highs and lows, sometimes with great expanses in between.

Naturally, compensation also varies by company type and size. It stands to reason that the CEO of a private regional firm will collect less than his counterpart in a global, public operation. But even on the global scale not all packages are equal, and experts report that REITs, for example, need to recognize their position relative to the Fortune 1000 and start compensating accordingly.

Before we explore specific pay scales, we should note that not everyone interviewed thought it was a great idea. Cross-industry comparisons are a tricky proposition, they argued, owing to the specialized nature of real estate. Outside of certain skills, such as human resources or accounting, where credits are transferable from one industry to another, the discussion is misleading at best. But others insist that, despite the apparent disconnect, it’s an important comparison to make, for benchmarking purposes as well as an aid for those who might be considering a switch to this field.

Anthony J. LoPinto, CEO of New York City-based Equinox Partners, is one of those who argue that the question is misguided. “You have to take it from the standpoint that it’s such a specialized field,” he says. “It’s very difficult, if not impossible, to recruit effectively from outside the industry into those senior-level job functions because the transferability of skills is fairly limited. The comparison should not be real estate vs. airlines vs. insurance, but rather Cushman & Wakefield compared to Jones Lang LaSalle compared to Trammell Crow. The compensation schemes should be viewed competitively within their industry groups.

“I haven’t seen any material move to recruit CEOs who don’t have a foundation in real estate,” LoPinto adds. Colin Dyer, who became president and chief executive of JLL two years ago, is the exception, not the rule, he says. (Dyer had been head of an Internet company outside of real estate.)

Steven Hall, founder and managing director of Steven Hall & Partners in Manhattan, disagrees. “No matter the industry, this level of executive position attracts the same kind of people,” argues Hall. “They each bring something important to the mix, and the companies thrive or fail in large part because of their individual efforts.” The skill sets are essentially the same, he states, regardless of the industry in question. “It’s all about talent and imagination.”

LoPinto concedes that there can be a basis for cross-industry comparison, but it’s a little lower on the totem pole–at the CFO and human resources levels, specifically. In accounting and HR, the industry needs to be competitive with outside fields, he says. In a post-Sarbanes-Oxley world, “there has occurred a very serious shortage of accounting and finance professionals. Given the emergence of the law, and the regulations that both public and private companies are adopting, you need someone in that CFO chair who has relevant reporting experience.”

Hall agrees. “The CFO position has gotten a lot more recognition in recent years because of the risks and responsibilities of the job. Their signatures are on the SEC documents, right along with the CEOs’, and the penalties are focused squarely on both. But the CEO always had his signature on those documents. The CFO can provide a lot of value, or a lot of pain if he doesn’t do his job right.”

LoPinto sees the need for comparison as well in human resources, which over the past few years has matured into a corner-office concern. “HR on the real estate side wasn’t previously part of the C-suite team,” he states. “If a real estate company decides to recruit an HR executive from outside, that company will have to provide a significantly higher level of compensation for that function than they would have historically. To hire C-suite-level HR execs, the price is what the price is.”

Human resources professionals from outside introduce more than outside salaries; they also bring the potential for strategies previously not part of the discussion in real estate boardrooms. “They have the potential to bring different approaches that can have a material effect throughout the organization,” says LoPinto, “in such areas as compensation, succession planning and talent management.”

James B. Wright, managing partner of Los Angeles-based CEL Compensation Advisors LLC, agrees that the cross-industry comparison is tough to make, but that’s no argument for not making it. “Real estate has always had its own characteristics, and it’s difficult to find analogies when comparing it with manufacturing or retail or financial services,” he concedes. But apples and oranges aside, he says the comparisons are important to boards of directors and to compensation committees, who are indeed looking at the relative numbers. “They’re looking at comparable sizes of companies and performances and compensations outside of the sector. They’re looking if for no other reason than as a point of reference.”

So, sticking just to the C-suite, and focusing on global, public-service firms, how does executive compensation stack up against other industries? “Truly global organizations in our industry are relatively new over the past 10 or 15 years,” says Wright. “If you lined up the few we have against similarly sized companies in other service industries, you’d find correlations in total compensation. It might come in different forms, but at the top level there’s definitely an analogy.”

In most cases, just under half of an executive’s total draw comes in the form of base salary plus bonus, and the rest from longer-term incentives such as stock options or restricted shares. There can be wild swings here from year to year, based on performance. “Depending on what the annual bonus triggers are,” says Wright, “it could send things higher or lower, and perhaps by large amounts.”

Steven Hall says that he’s seen salaries grow by under 10% in years when incentives jumped by nearly 30%. On the other hand, he’s seen base pay grow by nearly 40% in years when total remunerations slumped by 16%.

Getting down to basics, CEL research shows that 2004/2005 total median compensation for CEOs of REITs and REOCs with annual revenues from $1.2 billion to $3 billion came in at $3.8 million. True to form, less than half of that was base salary, which came in at $700,100. The remainder was in bonuses and long-term awards.

“Total returns last year were at 12.3% or 12.5% in the REIT sector,” Wright observes. “And in the years before that it was in the 25%-to-35% range. They’ve had a lot to brag about.” Clearly, benefits aside, they reward well for the bragging rights.

Similar patterns emerged last year for CEOs of global real estate service firms–public and private. They pulled down $3.1 million in total pay. Less than half of that ($400,000) was base salary and the rest came in bonuses and long-term awards. The research embraces firms with annual revenues from $.75 billion to $2.5 billion.

Not surprisingly, pay scales for private nationals and multi-regionals were less, and CEOs there cashed total paychecks of $2.8 million, on base salaries of around $378,600. The private numbers, based largely on anecdotal evidence, show that the privates aren’t “out of whack with the public sector,” Wright says. The difference between the two comes primarily in the incentive mix. Maybe the C-suite can’t enjoy stock options, “but deal participation is very big in the privates.”

On this point, Tony LoPinto agrees. “Different companies have a different blending of compensations,” he states. “The total may be identical but the combination might be different. One may have a lower cash component but a larger equity piece.”

Comparing those numbers with outside industries, real estate as a whole has been taking good care of its chief executives in recent years, enough for the Brett Whites and Bruce Moslers to maintain a standard of living on par with their counterparts in other fields. That is, as long as they don’t move across the street from a media mogul. Based on company proxy data, CEOs of communications firms smoked all other players we compared–with pay scales hovering at $5.5 million.

Other industries seemed to fall more in line with real estate. Heads of financial-services firms pulled down $3.6 million in 2005, while insurance CEOs made an average $3.5 million. While heads of health-care companies hardly have their pockets turned inside out, their total compensation last year was lowest of all the industries addressed in the survey–$3.1 million.

Wright explains that he chose these outside service industries as benchmarks for specific reasons: Financial for its overall similarity with real estate, health care because of its bricks-and-mortar focus and insurance simply to provide a range of industries. He selected communications, he says, because in a broad sense, it was Colin Dyer’s alma mater.

The 2005 compensation levels are part of a fairly consistent pattern of growth that has taken place over the past few years. According to Steven Hall, in the REIT sector alone, CEO salaries jumped 23% from 2004 to 2005, while COOs gained a paltry 3%. CFOs, with their new industry status, gained 29%. Hall says other sectors posted similar gains. And the increases should continue in 2006. Hall predicts, conservatively, that total compensation for top real estates execs in 2006 should bump up by “4% or 5%.” Wright predicts a slightly higher ’06 hike but says it won’t approach 10%.

The salaries may not surprise many in the industry. What might come as more of a surprise is their alignment with the other fields. But the reality of the situation is that commercial real estate has grown up.

“The industry has matured and is a far more efficient market for investment than it ever was,” says Wright. “We’re no longer the quiet little clubby industry we once were. We’re competing in the broader, global market, and we’ve gained credibility. With that comes status and, of course, compensation.”

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