The new year is bringing some major changes to Compass CEO Robert Reffkin’s compensation plan.
According to a document filed last week with the Securities and Exchange Commission, Reffkin is relinquishing $25 million in performance-based restricted stock unit awards in exchange for a $7 million cash bonus. In addition, his base salary is jumping up to $900,000 from $400,000 in 2022. His 2023 salary has not been made public yet.
On top of his salary, Reffkin will also receive a performance-based bonus and $2.25 million in restricted stock units (RSUs), which will vest annually over four years. Reffkin will receive a second set of RSU in 2025. As there are restrictions on when RSU shares can be sold, it is not known what the future value of the RSUs will be. There are also restrictions on Reffkin’s $7 million cash bonus. If he leaves or is fired from Compass within the next two years, he will have to pay at least some of the bonus back, with the amount decreasing each quarter he remains at the firm.
In the SEC filing, the firm noted that the changes to Reffkin’s compensation were made after a review by an independent compensation consultant, in order to provide “market-based CEO compensation.”
The firm has succeeded in bringing Reffkin’s compensation more in line with other industry CEOs, though Compass has not posted a profit yet.
For example, Anywhere Real Estate’s Ryan Schneider received a base salary of $1 million in 2023 with an $8 million equity grant and a $5 million cash bonus, mostly attributed to his work to reach settlement agreements in the Sitzer/Burnett, Moehrl and Nosalek commission lawsuits, according to a filing with the SEC. In Q3 2023, Anywhere reported $1.6 billion in revenue and $129 million in net income.
In comparison, Reffkin’s firm reported $1.34 billion in revenue and a net loss of $39 million in Q3 2023. Since going public in April 2021, Compass has yet to turn a profit, however, it did manage to achieve its goal of becoming free cash flow positive by the second quarter of 2023.
While the firm has succeeded in trimming costs and reducing operating expenses, it is now finding itself in the crosshairs of multiple copycat commission lawsuits, which will lead to an increase in legal costs.
For the changes to Reffkin’s compensation plan alone, Compass will pay $25,000 in legal fees, according to the SEC filing.
