X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NEW YORK CITY-The plunge in value of many REIT stocks over the last year has taken sharp cuts in chief executives’ equity stakes, according to a recent study by Equinox Partners and Steven Hall & Partners. The equity value of CEOs’ stakes in 159 public companies examined totaled $12.1 billion at the beginning of the year and dropped by $5.6 billion by the end of 2008.

As stock prices of the companies dropped a median of 46% over the course of the year, CEO’s lost, at the median, 49% of their equity value in firms. When taking into account total equity holdings, which includes shares owned outright, exercisable and unexercisable options, their values fell from $15.6 billion to just over $8 billion.

Founders of companies were hurt worse than non-founding executives, losing 52% of their equity value compared with 48%. Companies with non-founders at the helm saw their stocks drop 43%, while those led by founders slid 50%.

But these losses could bring a bit of good news for companies looking to hire right now, says Tony LoPinto, chief executive officer of executive-search firm Equinox. “These dramatic declines in equity values provide companies with the opportunity to recruit top talent with the lure of attractively priced equity grants,” he says. “Now is also the time to use fresh equity grants to defend key players in the organization from recruitment.”

This could also be proof that chief executives are deservedly feeling the financial burden when their companies suffer. Says Steve Hall, managing director of his self-named compensation consulting firm, “Equity compensation plans are designed to align the interests of shareholders and executives, and this is working as intended.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.