DEF 14A of Marcus & Millichap, Inc.
Filed Mar 22, 2024 · FY20230001193125-24-075212
PROPOSAL 1: Election of Directors
PROPOSAL 1: Election of Directors We are asking our stockholders to vote “FOR” three nominees to election as Class II Directors, each to serve on our Board of Directors (the “Board,” and each member a “Director”) for a three-year term until the 2027 Annual Meeting of Stockholders or until his or her successor is elected and qualified or, if earlier, the Director’s death, resignation, or removal.
Nominees and Continuing Directors
Nominees and Continuing Directors The following table sets forth information regarding the nominees standing for election at the Annual Meeting and our continuing Directors.
Nominees and Continuing Directors
| Nominee or Director Name | Class | Election Year | Age | Position(s) | Director Since | | Nominees: | | | | | | | Collete English Dixon | II | 2024 | 66 | Director | 2021 | | Lauralee E. Martin | II | 2024 | 73 | Director | 2019 | | Nicholas F. McClanahan | II | 2024 | 79 | Director | 2013 | | Continuing Directors: | | | | | | | George M. Marcus | III | 2025 | 82 | Director, Founder, Chair of the Board | 1971 | | George T. Shaheen | III | 2025 | 79 | Director | 2013 | | Don C. Watters | III | 2025 | 81 | Director, Lead Independent Director | 2013 | | Norma J. Lawrence | I | 2026 | 69 | Director | 2013 | | Hessam Nadji | I | 2026 | 58 | Director, President, Chief Executive Officer | 2016 |
Nominees and Continuing Directors
| Recommendation of the Board Provided that there is a quorum at the Annual Meeting, Directors are elected by a plurality of the votes cast by the stockholders entitled to vote at such election. Accordingly, subject to our Director Resignation Policy described in the “Corporate Governance” section below, the three nominees receiving the highest number of affirmative votes will be elected. The individuals named as proxyholders will vote your shares for the election of these three nominees unless you direct them to withhold your vote. If any nominee is unable to serve or for good cause will not serve as a Director, the individuals named as proxyholders may vote for a substitute nominee. | THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH NOMINEE FOR DIRECTOR. |
Nominee Selection Process
Nominee Selection Process The Board is responsible for nominating persons for election as Directors of the Company. Our Board has delegated responsibility for identifying and evaluating individuals as members of the Board to our Nominating and Corporate Governance Committee.
Nominee Selection Process
| 1 Identify the Candidate | Our Nominating and Corporate Governance Committee is charged with identifying, evaluating, and recommending director nominees to the full Board. When seeking new director candidates, the Nominating and Corporate Governance Committee will consider potential candidates for directors submitted by Board members, members of our management, and our stockholders. The Nominating and Corporate Governance Committee does not evaluate candidates differently based upon the source of the nominee. | | | | | 2 Confirm Candidate Qualifications | Once a candidate has been identified, our Nominating and Corporate Governance Committee will confirm that the candidate meets the following general criteria: ◾ Nominees should have a reputation for integrity, honesty, and adherence to high ethical standards; ◾ Nominees should have demonstrated business acumen, experience, and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making process of the Company; ◾ Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board and its committees; ◾ Nominees should have the interest and ability to understand the sometimes-conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors, and the general public, and to act in the interests of all stockholders; and, ◾ Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director. While we do not have a formal diversity policy for Board membership, we look for potential candidates that help ensure that the Board has a wide range of perspectives and backgrounds, and we understand the benefits of seeking qualified candidates reflecting the diversity in our community to include in the pool from which we select new Board members. We also look for financial oversight experience, financial community experience, and a good reputation with the financial community; business management experience; business contacts, business knowledge, and influence that may be useful to our business; and knowledge about our industry. |
Nominee Selection Process
| 3 Candidate Evaluation | The Nominating and Corporate Governance Committee takes such measures that it considers appropriate in connection with the evaluation of a candidate, including candidate interviews, inquiries of the person recommending the candidate, engagement of an outside search or personnel firm to gather additional information, or reliance on the knowledge of the members of the committee, the Board or management. | | | | | 4 Committee Recommendation | The Nominating and Corporate Governance Committee recommends to the Board the persons to be nominated for election as directors at any meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board, taking into consideration direct input from the Chair of the Board, the Chief Executive Officer (“CEO”), and, if one is appointed, the Lead Independent Director. | | | | | 5 Stockholder Vote | Stockholders vote on director nominees at the Annual Meeting of Stockholders. | | | | | 6 Implementation | Since 2019, two new independent Directors have been added, both of whom will continue to serve as Directors after the Annual Meeting. We believe each of our Directors brings a diverse set of skills and perspectives that add significant value to our governance and oversight. |
Attributes, Skills and Experience of our Nominees and Continuing Directors
Attributes, Skills and Experience of our Nominees and Continuing Directors The Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the skills and characteristics of Board members, as well as the composition of the Board as a whole. This assessment includes determining whether members of the Board may be classified as “independent” and assessing their skills and experience in the context of the needs of the Board. The assessment also includes considering the diversity of the members’ skills and experience in areas that are relevant to the Company’s business and activities, including operations, finance, marketing, and sales.
Board Composition and Diversity
Board Composition and Diversity
Board Composition and Diversity
| DIVERSITY | 50% of Directors are gender and/or racially diverse Three Directors are Female One Director is African American One Director is Middle Eastern | TENURE Average tenure of eight years as of the end of 2023. | | | | | 0 to 5 Years | | | | | 5 to 10 Years | | | | | > 10 Years | |
Background and Qualifications of Director Nominees and Continuing Directors
Background and Qualifications of Director Nominees and Continuing Directors Set forth on the following pages are the names and ages of the Director nominees and the continuing Directors, the years they became Directors, their principal occupations or employment for at least the past five years, and the names of other public companies for which they serve as a Director or have served as a Director during the past five years. Also set forth below are the specific experiences, qualifications, or skills that led our Nominating and Corporate Governance Committee to conclude that each person should serve as a Director.
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
| Collete English Dixon Executive Director, Marshall Bennett Institute of Real Estate, Roosevelt University Independent |
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
| Director Since | Age | Committees | | 2021 | 66 | Nominating and Corporate Governance |
Director Qualifications
Director Qualifications
Director Qualifications
| ◾ | Ms. Martin has extensive experience with the commercial real estate services industry and in evaluating acquisition opportunities, managing banking relationships and investor relations as well as significant experience serving on the boards of other public companies. |
Experience and Biography
Experience and Biography
Experience and Biography
| ◾ | Ms. Martin served as chief executive officer and president of Healthpeak Properties, Inc. (formerly HCP, Inc.), a real estate investment trust focusing on properties serving the healthcare industry, from October 2013 to July 2016. |
Experience and Biography
| ◾ | Served as chief executive officer of the Americas Division of Jones Lang LaSalle, Inc., a financial and professional services firm specializing in real estate services and investment management, from January 2013 to October 2013. |
Experience and Biography
| ◾ | Executive vice president and chief financial officer of Jones Lang LaSalle from January 2002 and was appointed chief operating and financial officer in October 2005 and served in that capacity until January 2013. |
Experience and Biography
| ◾ | 15 years with Heller Financial, Inc., a commercial finance company with international operations, where she was vice president, chief financial officer, senior group president and president of the Real Estate group. |
Experience and Biography
| ◾ | Ms. Martin currently serves on the boards of Kaiser Aluminum Corporation and QuadReal Property Group, is an advisor to Beacon Capital Partners, and previously served on the board of Healthpeak Properties, Inc., ABM Industries, KeyCorp and Gables Residential Trust. |
Experience and Biography
| ◾ | Ms. Martin received a B.A. in English from Oregon State University and an M.B.A. from the University of Connecticut. |
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
| Nicholas F. McClanahan Former Managing Director, Accretive Advisor Inc. Independent |
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
| Director Since | Age | Committees: | | 2013 | 79 | Nominating and Corporate Governance (Chair), Compensation |
Director Qualifications
Director Qualifications
Director Qualifications
| ◾ | Mr. Marcus is our founder and has served as our chair of the Board since 1971. He has extensive knowledge of the Company, over 45 years of experience working in the real estate industry and significant experience serving on boards of other public companies. |
Experience and Biography
Experience and Biography
Experience and Biography
| ◾ | Founder and chair of Marcus & Millichap Company, the parent company of a diversified group of real estate service investment and development firms, including, SummerHill Housing Group, Pacific Urban Investors and Meridian Property Company. |
Experience and Biography
| ◾ | Founder and chair of the board of Essex Property Trust, a public multifamily real estate investment trust, and was one of the original directors of Plaza Commerce Bank and Greater Bay Bancorp, both of which were formerly publicly held financial institutions. |
Experience and Biography
| ◾ | Professional memberships include Real Estate Roundtable, Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley and Urban Land Institute, as well as numerous other professional and community organizations. |
Experience and Biography
| ◾ | Mr. Marcus graduated with a B.S. degree in Economics from San Francisco State University in 1965, was honored as Alumnus of the Millennium in 1999, and received his honorary doctorate in 2011. In June 2019, Mr. Marcus received an honorary doctorate from the American College of Greece. He is also a graduate of Harvard Business School’s Owner/President Management Program and Georgetown University’s Leadership Program. |
Experience and Biography
| George T. Shaheen Advisor Andersen Global Independent |
Experience and Biography
| Director Since | Age | Committees | | 2013 | 79 | Audit, Compensation, Nominating and Corporate Governance |
Director Qualifications
Director Qualifications
Director Qualifications
| ◾ | Mr. Shaheen has extensive experience as a senior executive and director of numerous companies, and he possesses significant business and leadership knowledge and experience. |
Experience and Biography
Experience and Biography
Experience and Biography
| ◾ | Mr. Watters is a director (senior partner) emeritus of McKinsey & Company, a global management consulting firm. During his 28 years with McKinsey & Company, Mr. Watters served primarily Fortune 500 sized private sector clients in over a dozen different industries on issues of strategy, organization and operations. |
Experience and Biography
| ◾ | Served on the board of directors of Merant PLC, a publicly traded company based in the United Kingdom from the late 1990s to 2004. |
Experience and Biography
| ◾ | Was on the advisory board of Cunningham Communication, Inc. Mr. Watters has served on the board of directors of numerous non-profit organizations, including the San Jose Ballet, the Tech Museum of Innovation, the American Leadership Forum Silicon Valley, the American Leadership Forum National, United Way Silicon Valley and the Bay Area Garden Railway Society, and is a member of the El Camino Hospital Board of Directors. |
Experience and Biography
| ◾ | Mr. Watters received a B.S. in engineering from the University of Michigan and an M.B.A. from Stanford University. |
Experience and Biography
| Norma J. Lawrence Former Partner KPMG LLP Independent Director |
Experience and Biography
| Director Since | Age | Committees | | 2013 | 69 | Audit (Chair), Nominating and Corporate Governance |
Director Qualifications
Director Qualifications
Director Qualifications
| ◾ | Ms. Lawrence possesses particular knowledge and expertise in accounting and financial matters in the real estate industry. |
Experience and Biography
Experience and Biography
Experience and Biography
| ◾ | Ms. Lawrence previously served on the board of Broadmark Realty Capital Inc. |
Experience and Biography
| ◾ | Served as a partner in the audit department of KPMG LLP where she specialized in real estate. |
Experience and Biography
| ◾ | Ms. Lawrence was with KPMG from 1979 through 2012 and she was a member of the National Association of Real Estate Investment Trusts, the Pension Real Estate Association, the National Council of Real Estate Investment Fiduciaries, the California Society of Certified Public Accountants, and the American Institute of Certified Public Accountants, and was a member of WomanCorporateDirectors. |
Experience and Biography
| ◾ | Ms. Lawrence received a B.A. in mathematics and an M.B.A. in finance and accounting from the University of California, Los Angeles. |
Experience and Biography
| Hessam Nadji President and CEO Marcus & Millichap, Inc. Non-Independent |
Experience and Biography
| Director Since | Age | Committees | | 2016 | 58 | Executive |
Director Qualifications
Director Qualifications
Director Qualifications
| ◾ | Mr. Nadji has extensive knowledge of the Company and over 35 years of experience working in the real estate industry. |
Compensation Policies and Practices
| What We Do | What We Don’t Do | | ✓ Pay-for-performance philosophy and culture ✓ More than two-thirds of our current NEOs’ total target direct compensation is performance-based and/or at risk ✓ Independent compensation committee ✓ Independent compensation consultant ✓ Compensation recovery policy for executive officers on cash and equity incentives ✓ Responsible use of shares under our long-term incentive program ✓ Robust stock ownership requirements ✓ Annual risk assessment of our compensation program ✓ Limited perquisites and personal benefits | × Minimum guaranteed vesting for performance-based equity awards × Allow for pledging and hedging of Company stock by executive officers, Directors, employees, and independent contractor agents × Single trigger vesting of equity awards × Excessive severance or change in control benefits × Payout or settlement of dividends and dividend equivalents on unvested equity awards × Reprice, cash-out or exchange “underwater” stock options without stockholder approval × Tax gross-ups × Executive pension plans or supplemental retirement plans |
Elements of 2023 Compensation
| Direct Compensation | Indirect Compensation | | ◾ Base Salary | ◾ Employee Benefits | | ◾ Annual Cash Incentives | | | ◾ Long-Term Equity Incentives | |
Annual Cash Incentives
Annual Cash Incentives In 2023, all our executive officers participated in the 2023 Executive Short-Term Incentive Plan (the “2023 Annual Incentive Plan”). The Compensation Committee established certain financial and non-financial goals in February 2023, which are discussed in more detail below. Annual cash incentives are designed to reward annual accomplishments against pre-established financial and strategic goals. The Compensation Committee approved 2023 target short-term cash incentive award opportunities for the NEOs in the amounts set forth below, which represented a 15% decrease from each NEO’s target annual incentive opportunity in 2022. In making this decision, the Compensation Committee considered each NEO’s individual performance and responsibilities, historical target amounts, business conditions and a market data analysis of the Company’s peer group and, ultimately, determined that business conditions warranted a uniform decrease in target annual cash incentive opportunities.
Annual Cash Incentives
| NEO | 2023 Target Annual Incentive Opportunity | 2022 Target Annual Incentive Opportunity | Percentage Decrease | | Hessam Nadji | $2,295,000 | $2,700,000 | (15%) | | Steven F. DeGennaro | $807,500 | $950,000 | (15%) | | Richard Matricaria | $1,317,500 | $1,550,000 | (15%) | | John David Parker | $1,317,500 | $1,550,000 | (15%) | | Gregory A. LaBerge | $467,500 | $550,000 | (15%) |
Annual Cash Incentives
Actual annual incentive awards could range from 0% to 200% of each NEO’s target based on performance against the performance goals. In addition, the Compensation Committee retained the flexibility to adjust awards based on the Company and each NEO’s performance and any other factors they deem appropriate. Annual incentives for 2023 were based on a combination of financial and individual strategic performance goals. The weightings between each performance category for each NEO were as follows:
Annual Cash Incentives
| NEO | MMI Financial Performance | Individual/Strategic Performance | | Hessam Nadji | 50% | 50% | | Steven F. DeGennaro | 40% | 60% | | Richard Matricaria | 40% | 60% | | John David Parker | 40% | 60% | | Gregory A. LaBerge | 25% | 75% |
Annual Cash Incentives
Financial Objectives for 2023. Pre-tax net income is used for the financial performance goal for the Company’s Annual Incentive Plan because it provides a consistent, firm, and accurate measure of the Company’s overall financial performance and profitability, as it excludes the impact of tax considerations, which can be complex and variable due to the nature of our business, and the various state, local, and foreign taxes that we are subject to. As discussed in more detail above, our business was negatively impacted by the significant market headwinds experienced across the U.S. commercial real estate industry starting in the second half of 2022 and continuing through 2023. As a result, our internal operating plan anticipated significantly lower net income than that achieved in 2022. To ensure our annual cash incentive program was appropriately rigorous, the Compensation Committee set the pre-tax net income financial performance target 19% higher than our internal operating plan (i.e., the annual cash incentive program target was pre-tax net income of $65 million versus our pre-tax net income budget of $54.6 million). The 2023 target goal was established on the premise of the Federal Reserve’s interest rate hikes ending by the second quarter and bringing about improving market conditions starting in the third quarter, which ultimately did not occur. The Compensation Committee also determined that approving such an aggressive goal in combination with reducing each NEO’s target annual incentive opportunity by 15% was appropriate given the prior year’s results and the desire to incentivize strong financial performance. Despite being the top ranked brokerage firm by transactions in 2023, we incurred a pre-tax net loss of $40.4 million, due to the significant decline in total transactions, as well as expenses related to the capital that we invested in talent acquisition and retention, technological innovations and expanding our platform. This resulted in no payout for the financial performance component of each NEO’s target annual incentive opportunity. Individual Strategic Objectives for 2023. Individual strategic goals varied for each executive and related to the following:
Annual Cash Incentives
| NEO | Individual Strategic Performance Goals | | Hessam Nadji | Retention rate, recruiting, sales force advancements, marketing, technology and skill development initiatives, and strategic initiatives | | Steven F. DeGennaro | Financial services operational improvements, analyst expectation management, investor relations function management, and strategic initiatives, including executing strategic priorities in partnership with the CEO | | Richard Matricaria | Retention rate, recruiting, and strategic initiatives, including successfully executing key initiatives and supporting the CEO in managing positive outcomes for key people and projects | | John David Parker | Retention rate, recruiting, and strategic initiatives, including leading special projects and focuses, successfully executing key initiatives and supporting the CEO in managing outcomes for key people and projects | | Gregory A. LaBerge | Retention rate, technology enhancements, strategic initiatives, and operational and administrative support improvements |
Annual Cash Incentives
The Compensation Committee evaluated each NEO’s performance against his strategic goals to make an overall determination of the aggregate achievement for each NEO. Based on this evaluation, the Compensation Committee determined that each NEO met or largely achieved most of his strategic goals. Key performance highlights that were considered by the Compensation Committee in assessing the achievements of the NEOs included:
Annual Cash Incentives
| ◾ | Provided business development support to the salesforce through research content, industry conferences and private label events. |
Annual Cash Incentives
| ◾ | Achieved a pre-established retention rate at 95% of target, despite a highly competitive landscape for talent. |
Annual Cash Incentives
| ◾ | Aggressively explored several adjacent growth opportunities to further diversify our business geographically and to expand into complementary services. |
Annual Cash Incentives
| ◾ | Adopted a range of strategic measures to mitigate the impact of the market disruption while also strengthening the MMI platform. |
Annual Cash Incentives
| ◾ | Implemented cost control initiatives aimed at reducing the interim impact of lower revenue while continuing to make well-underwritten investments essential to long-term growth. |
Annual Cash Incentives
| ◾ | Prioritized enhancing our ability to serve client needs by expanding marketing efforts, further integrating our auction teams into the sales process, and leveraging technology. |
Annual Cash Incentives
Despite these individual achievements, given the Company’s overall financial performance, the Compensation Committee chose to reduce the earned amount of each NEO’s annual incentive award by $175,000 in the case of Mr. Nadji, $100,000 in the case of Mr. Matricaria and Mr. Parker, and $50,000 in the case of Mr. DeGennaro and Mr. LaBerge. The earned amount of each NEO’s annual incentive award prior to the reduction and the amount of each NEO’s actual annual incentive award are set forth in the table below.
Annual Cash Incentives
| NEO | Target Annual Incentive Opportunity ($) | Award Earned Prior to Reduction ($) | Actual Award Following Reduction ($) | Actual Award (% of Target) | | Hessam Nadji | $2,295,000 | $986,850 | $811,850 | 35.4% | | Steven F. DeGennaro | $807,500 | $464,313 | $414,313 | 51.3% | | Richard Matricaria | $1,317,500 | $523,706 | $423,706 | 32.2% | | John David Parker | $1,317,500 | $645,575 | $545,575 | 41.4% | | Gregory A. LaBerge | $467,500 | $305,044 | $255,044 | 54.6% |
Long-Term Incentives
Long-Term Incentives Our long-term incentive program generally consists of annual grants of RSUs, which align the interests of management with those of stockholders, promote retention of key talent, and reward total stockholder return performance. When determining the appropriate RSU grants for the NEOs, the Compensation Committee considers each NEO’s role, responsibilities, past performance, future potential, current level of ownership, and amount of unvested equity holdings. Generally, for NEOs other than the CEO, the Compensation Committee has chosen to award RSUs that have a grant date fair value that does not exceed 50% of each NEO’s actual annual incentive award for the prior year, with the actual number of RSUs to be determined based on the consideration of the foregoing factors. After considering the Company’s and each NEO’s 2022 performance relative to the metrics set forth in the annual incentive plan for 2022, each NEO’s current equity holdings in the Company, a market data analysis of the Company’s peer group, and the current equity ownership of our NEOs, in February 2023, the Compensation Committee granted 92,000 RSUs to Hessam Nadji, 12,508 RSUs to Steven DeGennaro, 20,362 RSUs to Richard Matricaria, 20,657 RSUs to John David Parker, and 6,590 RSUs to Gregory A. LaBerge in connection with the annual compensation review process. Despite their strong individual performance in 2022, Messrs. DeGennaro, Matricaria, Parker, and LaBerge received significantly less RSUs in 2023, as the value of each NEO’s RSU award was tied to 50% of his actual annual incentive award for 2022, which was reflective of the Company not achieving its 2022 target pre-tax net income goal. The table below sets forth the number of RSUs granted to each of Messrs. DeGennaro, Matricaria, Parker, and LaBerge in 2022 and 2023, as well as the difference in grant date fair value.
Long-Term Incentives
| NEO | 2023 RSUs | 2022 RSUs | Difference in Grant Date Fair Value | | Steven F. DeGennaro | 12,508 | 44,272 | $(1,646,087) | | Richard Matricaria | 20,362 | 58,788 | $(2,051,532) | | John David Parker | 20,657 | 58,788 | $(2,040,977) | | Gregory A. LaBerge | 6,590 | 26,766 | $(1,029,974) |
Long-Term Incentives
The Compensation Committee determined that Mr. Nadji’s personal growth, leadership during a difficult fiscal year, positive perception in the marketplace and overall strong performance supported Mr. Nadji receiving the same number of annual RSUs in 2023 as 2022 (i.e., 92,000 RSUs). In addition, in August 2023, the Compensation Committee made a one-time special retention grant of 150,000 RSUs to Mr. Nadji. The Compensation Committee made the grant to encourage Mr. Nadji’s retention and to incentivize Mr. Nadji to focus on leading the Company through this period of significant market disruption. In determining whether to make the grant and the size of the grant, the Compensation Committee considered the retentive power of Mr. Nadji’s current equity award holdings, the equity compensation holdings of the chief executive officers of the companies for which we compete for talent, Mr. Nadji’s role in reshaping the Company’s leadership team and in acquiring several strategically important companies in key spaces, and his contribution to the significant growth of our key operating and financial metrics, since his appointment as CEO on March 31, 2016. Further, the Compensation Committee’s decision to make the grant was informed by discussions with FW Cook, its independent compensation consultant, and the Chair of the Board. Each NEO’s RSUs vest in five equal annual installments, with the first vesting date beginning on March 10, 2024 (or September 10, 2024 with respect to Mr. Nadji’s August 2023 grant), subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving a change in control. See “Severance and Change in Control Benefits” below for more information. The grant date value of these RSU awards is disclosed in the Grants of Plan-Based Awards table. As discussed above, given the Company’s financial results in 2023, the Compensation Committee reduced the size of Mr. Nadji’s annual grant for 2024 from 92,000 RSUs to 72,000 RSUs, which represented a 22% decrease in the number of annual grant RSUs from 2023.
Role of Consultants
Role of Consultants The Compensation Committee has engaged FW Cook as its independent executive compensation advisor. FW Cook reports directly to the Compensation Committee and does no work for management that is not under the Compensation Committee’s purview. FW Cook provides independent advice to the Compensation Committee on the reasonableness of executive compensation levels in comparison with typical market practices, and on the appropriateness of the compensation program structure in supporting the Company’s business objectives. A representative of FW Cook attends meetings of the Compensation Committee, and communicates with the Compensation Committee Chair between meetings. The Compensation Committee assessed the independence of FW Cook pursuant to SEC rules and stock exchange listing standards and concluded that no conflicts of interest exist.
Role of Competitive Data
Role of Competitive Data In establishing 2022 target pay opportunities for our NEOs, the Compensation Committee considered competitive market data from an analysis prepared by FW Cook in April 2022. In light of the Company’s challenging business conditions and the Compensation Committee’s intention to reduce target pay opportunities in 2023, FW Cook did not provide updated competitive market data between April 2022 and the Committee’s determination of 2023 target pay opportunities. Because there are not many publicly traded commercial real estate services firms similar in size and business model to us, development of an appropriate “peer group” of companies against which to compare pay levels and practices proves challenging. Therefore, the Compensation Committee, with the assistance of FW Cook, used the following more expansive criteria to select a peer group consisting of 13 business services companies:
Role of Competitive Data
| ◾ | reasonable comparability in size to the Company in terms of annual revenue and market cap; |
Role of Competitive Data
| ◾ | executives are responsible for managing large numbers of professional employees; and |
Role of Competitive Data
| ◾ | generally engaged in the business of providing transactional services to businesses and individuals. |
Role of Competitive Data
Based on the above criteria, the Compensation Committee selected the following companies as our peer group.
Role of Competitive Data
| B. Riley Financial | Moelis & Company | Ryan Specialty Group | | Brown & Brown | Newmark Group* | SelectQuote | | Crawford & Company | Oppenheimer Holdings | Walker & Dunlop | | Douglas Elliman* | Piper Sandler | | | Houlihan Lokey | PJT Partners | |
Role of Competitive Data
| * As noted above, there are not many publicly traded commercial real estate services firms similar in size and business model to us. However, Douglas Elliman and Newmark Group represent two real estate companies that the Compensation Committee, with the assistance of its independent compensation consultant, determined to be similar enough to warrant inclusion in our peer group. |
Role of Competitive Data
The Compensation Committee also considered CBRE Group, Colliers International, Cushman & Wakefield, and Jones Lang LaSalle, which we consider to be our direct competitors for inclusion in the peer group, but it was ultimately determined that these companies were too large to include in the peer group.
Compensation Recovery Policy
Compensation Recovery Policy The SEC and the New York Stock Exchange recently adopted long-awaited final rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require listed companies to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers. In accordance with these final rules, on October 31, 2023, the Compensation Committee approved the restatement of the Marcus & Millichap, Inc. Compensation Recovery Policy, which provides that in the event the Company is required to restate any of its financial statements that have been filed with the SEC, then the Compensation Committee will seek to recover any erroneously awarded performance-based incentive-based compensation (including any performance-based cash and equity awards and salary increases earned wholly or in part based on the attainment of financial performance goals) received by any person who is or was a Section 16 Officer or a division manager of a subsidiary of the Company during the three-fiscal year recovery period. In addition, in the event the Company is required to restate any of its financial statements that have been filed with the SEC, the Compensation Committee may also, in its sole discretion, seek recovery of all or any portion of time-based incentive compensation received by any person who is or was a Section 16 Officer or a division manager of a subsidiary of the Company during the three-fiscal year recovery period. The restated Marcus & Millichap, Inc. Compensation Recovery Policy further provides that, in the event any person who is or was a Section 16 Officer or a division manager of a subsidiary of the Company has engaged in improper conduct, then the Compensation Committee may, in its sole discretion, seek to recover all or any portion of any incentive-based compensation (including both performance-based and time-based cash and equity awards) received by any such person during the year of improper conduct and the three completed fiscal years immediately preceding the date of improper conduct.
Severance and Change in Control Benefits
Severance and Change in Control Benefits We maintain a change in control policy, which is designed to align the interests of management and stockholders when considering the long-term future for the Company. The primary purpose of these arrangements is to keep our executive officers and key employees focused on pursuing all corporate transaction activity that is in the best interests of our stockholders regardless of whether those transactions may result in their own job loss. The change in control policy provides that if an executive officer’s employment is terminated by the Company without “cause” or an executive officer resigns for “good reason” (each as defined in the change in control policy), in each case, within 12 months following the change in control, then the executive will be entitled to receive the following severance payments and benefits: (1) a lump sum payment equal to 12 months’ base salary; (2) a lump sum equal to the target annual incentive opportunity for the year of termination (or if less, the target annual incentive opportunity for the year immediately preceding the year of termination); (3) acceleration of vesting of all outstanding and unvested RSUs; (4) COBRA premium reimbursement for up to 12 months; and (5) up to $25,000 toward appropriate executive-level outplacement or job search assistance. Further, we will seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive officer to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits. The change in control policy does not provide for a “gross-up” or other reimbursement payment for any tax liability that the executive officer may owe as a result of the application of Sections 280G or 4999 of the Code, and we have not agreed and are not otherwise obligated to provide any executive officer with such a “gross-up” or other reimbursement. We also maintain a death and disability policy, which is designed to align with typical market practices. The policy provides that upon a termination of service due to death or disability, in each case, after at least one year of service, then vesting of all of the executive officer’s outstanding and unvested RSUs will accelerate. In addition, in the event of termination of service due to disability after at least one year of service, the executive officer will be entitled to receive COBRA premium reimbursement for up to 12 months. Our Amended and Restated 2013 Omnibus Equity Incentive Plan (the “Equity Plan”) also provides that in the event of a change in control (as defined in the Equity Plan) in which the surviving corporation does not assume or continue outstanding awards granted under the Equity Plan or substitute similar awards for such awards, the vesting of such awards (including awards held by the NEOs) will fully accelerate. This is a change in control benefit that many companies provide. Finally, Mr. DeGennaro’s employment agreement provides that in the event that Mr. DeGennaro resigns for good reason or is terminated without cause by the Company, and complies with certain post-termination obligations, Mr. DeGennaro will receive cash severance benefits in an amount equal to six months of his base salary and 50% of the last annual cash incentive that he earned.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Non- Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | Hessam Nadji President and CEO | 2023 | 700,000 | — | 8,646,760 | 811,850 | 240,454 | 8,500 | 10,407,564 | | | 2022 | 675,000 | — | 4,350,680 | 2,339,750 | 145,470 | 22,000 | 7,532,900 | | | 2021 | 562,500 | 437,500 | 3,597,200 | 3,500,000 | 114,077 | 13,500 | 8,224,777 | | Steven F. DeGennaro | 2023 | 400,000 | — | 447,536 | 414,313 | — | 8,500 | 1,270,349 | | Executive Vice President and Chief Financial Officer | 2022 | 400,000 | — | 2,093,623 | 895,125 | — | 22,000 | 3,410,748 | | | 2021 | 400,000 | 150,000 | 294,600 | 1,200,000 | — | 17,500 | 2,062,100 | | Richard Matricaria | 2023 | 400,000 | — | 728,552 | 423,706 | — | 12,562 | 1,564,820 | | Executive Vice President and Chief Operating Officer, Western Division | 2022 | 387,500 | — | 2,780,085 | 1,457,125 | — | 14,853 | 4,639,563 | | | 2021 | 350,000 | 250,000 | 822,340 | 2,000,000 | — | 11,013 | 3,433,353 | | John David Parker | 2023 | 400,000 | — | 739,107 | 545,575 | — | 4,587 | 1,689,269 | | Executive Vice President and Chief Operating Officer, Eastern Division | 2022 | 387,500 | — | 2,780,085 | 1,478,250 | — | 5,562 | 4,651,397 | | | 2021 | 350,000 | 250,000 | 878,019 | 2,000,000 | — | 7,237 | 3,485,256 | | Gregory A. LaBerge | 2023 | 350,000 | — | 235,790 | 255,044 | — | 7,750 | 848,584 | | Senior Vice President, Chief Administrative Officer | 2022 | 337,500 | — | 1,265,764 | 471,625 | — | 19,000 | 2,093,889 | | | 2021 | 298,125 | — | 198,159 | 800,000 | — | 15,000 | 1,311,284 |
Summary Compensation Table
| (1) The amounts shown in this column represent the actual amount of salary earned during the applicable year by each NEO. |
Summary Compensation Table
| (2) The amounts shown in this column represent the aggregate grant date fair value of RSUs granted during the applicable year to certain of our NEOs, which was computed in accordance with Accounting Standards Codification (“ASC”) 718. The fair value of these awards was calculated based on the fair market value of our common stock on the accounting measurement date multiplied by the number of shares subject to the award and may not represent the actual value that may be realized. |
Summary Compensation Table
| (3) The amounts listed in this column reflect the cash awards paid under the Company’s Executive Incentive Plan for performance in the applicable year. Despite each NEO’s individual achievements, given the Company’s overall financial performance, the Compensation Committee chose to reduce the earned amount of each NEO’s annual incentive award by $175,000 in the case of Mr. Nadji, $100,000 in the case of Mr. Matricaria and Mr. Parker, and $50,000 in the case of Mr. DeGennaro and Mr. LaBerge. See the “Compensation Discussion and Analysis” section for a more complete description of how the cash |
Summary Compensation Table
| incentive awards were determined for 2023, including the earned amount of each NEO’s annual incentive award prior to the reduction and the amount of each NEO’s actual annual incentive award. |
Summary Compensation Table
| (4) The amounts listed in this column include the interest on Mr. Nadji’s cash-settled SARs for 2023: |
Summary Compensation Table
| Named Executive Officer | Increased Value of SARs during Fiscal Year ($) | Aggregate Value of SARs as of Fiscal Year End ($) | | Hessam Nadji | 240,454 | 4,393,374 |
Summary Compensation Table
For further information regarding the SARs, please refer to the discussion under the heading “Nonqualified Deferred Compensation.”
Summary Compensation Table
| (5) The following table reflects the breakout of the items and amounts included in this column for 2023: |
Summary Compensation Table
| | Nadji ($) | DeGennaro ($) | Matricaria ($) | Parker ($) | LaBerge ($) | | Auto Benefit | 4,500 | 4,500 | 8,562 | 1,587 | 3,750 | | 401(k) Match | 4,000 | 4,000 | 4,000 | 3,000 | 4,000 | | Total for Other | 8,500 | 8,500 | 12,562 | 4,587 | 7,750 |
Grants of Plan Based Awards Table
Grants of Plan Based Awards Table The following table provides information regarding the incentive awards granted to the NEOs for 2023.
Grants of Plan Based Awards Table
| | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | Grant Date Fair Value of Stock Awards ($) (3) | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | | | | Hessam Nadji | N/A | — | 2,295,000 | 4,590,000 | — | — | | | 2/9/2023 | — | — | — | 92,000 | 3,291,760 | | | 8/11/2023 | — | — | — | 150,000 | 5,355,000 | | Steven F. DeGennaro | N/A | — | 807,500 | 1,615,000 | — | — | | | 2/9/2023 | — | — | — | 12,508 | 447,536 | | Richard Matricaria | N/A | — | 1,317,500 | 2,635,000 | — | — | | | 2/9/2023 | — | — | — | 20,362 | 728,552 | | John David Parker | N/A | — | 1,317,500 | 2,635,000 | — | — | | | 2/9/2023 | — | — | — | 20,657 | 739,107 | | Gregory A. LaBerge | N/A | — | 467,500 | 935,000 | — | — | | | 2/9/2023 | — | — | — | 6,590 | 235,790 |
Grants of Plan Based Awards Table
| (1) The Compensation Committee established certain financial and non-financial goals in May 2023, which are discussed in more detail in the “Compensation Discussion and Analysis.” |
Grants of Plan Based Awards Table
| (2) Messrs. Nadji, DeGennaro, Matricaria, Parker, and LaBerge’s RSUs vest in five equal annual installments, with the first vesting date beginning on March 10, 2024 (or September 10, 2024, with respect to Mr. Nadji’s August 2023 grant), subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Severance and Change in Control Benefits” below for more information. |
Grants of Plan Based Awards Table
| (3) The amounts shown in this column represent the aggregate grant date fair value of the RSUs granted in 2023 to certain of our NEOs, which was computed in accordance with ASC 718. The fair value of these awards was calculated based on the fair market value of our common stock on the accounting measurement date multiplied by the number of shares subject to the award and may not represent the actual value that may be realized. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table provides information about outstanding equity awards as of December 31, 2023 for the NEOs. None of the NEOs hold any stock options.
Outstanding Equity Awards at Fiscal Year End
| Name | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(1) | | Hessam Nadji | 18,400(2) | 803,712 | | | 36,800(3) | 1,607,424 | | | 55,200(4) | 2,411,136 | | | 73,600(5) | 3,214,848 | | | 92,000(6) | 4,018,560 | | | 150,000(7) | 6,552,000 | | Steven F. DeGennaro | 35,418(5) | 1,547,058 | | | 12,508(6) | 546,349 | | | 3,000(8) | 131,040 | | | 4,500(9) | 196,560 | | Richard Matricaria | 1,376(2) | 60,104 | | | 3,752(3) | 163,887 | | | 7,094(4) | 309,866 | | | 47,032(5) | 2,054,358 | | | 20,362(6) | 889,412 | | | 3,000(10) | 131,040 | | | 6,000(11) | 262,080 | | John David Parker | 1,780(2) | 77,750 | | | 4,416(3) | 192,891 | | | 7,950(4) | 347,256 | | | 47,032(5) | 2,054,358 | | | 20,657(6) | 902,298 | | | 3,000(10) | 131,040 | | | 6,000(11) | 262,080 | | Gregory A. LaBerge | 392(2) | 17,123 | | | 1,221(3) | 53,333 | | | 3,044(4) | 132,962 | | | 21,414(5) | 935,364 | | | 6,590(6) | 287,851 | | | 2,000(12) | 87,360 |
Outstanding Equity Awards at Fiscal Year End
| (1) Based upon the closing price of our common stock of $43.68 on December 29, 2023, the last trading day before the end of the 2023 fiscal year. |
Outstanding Equity Awards at Fiscal Year End
| (2) Messrs. Nadji, Matricaria, Parker, and LaBerge were awarded 92,000, 6,864, 8,892, and 1,956 RSUs, respectively, effective February 13, 2019, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2020. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (3) Messrs. Nadji, Matricaria, Parker, and LaBerge were awarded 92,000, 9,374, 11,028, and 3,051 RSUs, respectively, effective February 11, 2020, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2021. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (4) Messrs. Nadji, Matricaria, Parker, and LaBerge were awarded 92,000, 11,822, 13,246, and 5,068 RSUs, respectively, effective February 11, 2021, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2022. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (5) Messrs. Nadji, DeGennaro, Matricaria, Parker, and LaBerge were awarded 92,000, 44,272, 58,788, 58,788, and 26,766 RSUs, respectively, effective February 10, 2022, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2023. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (6) Messrs. Nadji, DeGennaro, Matricaria, Parker, and LaBerge were awarded 92,000, 12,508, 20,362, 20,657, and 6,590 RSUs, respectively, effective February 9, 2023, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2024. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (7) Mr. Nadji was awarded 150,000 RSUs, effective August 11, 2023, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on September 10, 2024. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (8) Mr. DeGennaro was awarded 7,500 RSUs, effective August 4, 2020, which vest in five equal annual installments with 20% of such shares vesting beginning on August 10, 2021. The vesting of the RSUs is subject to Mr. DeGennaro’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (9) Mr. DeGennaro was awarded 7,500 RSUs, effective August 3, 2021, which vest in five equal annual installments with 20% of such shares vesting beginning on August 10, 2022. The vesting of the RSUs is subject to Mr. DeGennaro’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (10) Messrs. Matricaria and Parker were each awarded 15,000 RSUs, effective May 2, 2019, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on May 10, 2020. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (11) Messrs. Matricaria and Parker were each awarded 10,000 RSUs, effective May 4, 2021, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on May 10, 2022. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Outstanding Equity Awards at Fiscal Year End
| (12) Mr. LaBerge was awarded 5,000 RSUs effective May 5, 2020, which vest in five equal annual installments with 20% of such shares vesting beginning on May 10, 2021. The vesting of the RSUs is subject to Mr. LaBerge’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Option Exercises and Stock Vested Table
Option Exercises and Stock Vested Table The following table provides information about stock awards that vested during 2023 for the NEOs. None of the NEOs have been granted any stock options.
Option Exercises and Stock Vested Table
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | | Hessam Nadji | 76,600 | 2,461,280 | | Steven F. DeGennaro | 11,854 | 392,686 | | Richard Matricaria | 23,660 | 740,319 | | John David Parker | 25,400 | 796,260 | | Gregory A. LaBerge | 8,870 | 281,100 |
Option Exercises and Stock Vested Table
| (1) Includes shares withheld to cover taxes. |
Option Exercises and Stock Vested Table
| (2) The value realized upon vesting was calculated by multiplying the number of shares acquired on vesting by the closing share price of the Company’s common stock on the NYSE on the vesting date, except where such vesting date fell on a day that was not a trading day, in which case such value was calculated by multiplying the number of shares acquired on vesting by the closing share price on the first trading day immediately following the vesting date. |
Pension Benefits
Pension Benefits We do not maintain any defined benefit pension plans.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The following table provides information regarding the contributions, earnings, and withdrawals during 2023, and account balances as of December 31, 2023 for our NEOs under the NQDC Plan and SARs:
Nonqualified Deferred Compensation—Fiscal 2023
Nonqualified Deferred Compensation—Fiscal 2023
Nonqualified Deferred Compensation—Fiscal 2023
| Name | Plan | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(3) | | Hessam Nadji | SARs | — | — | 240,454 | — | 4,393,374 | | Steven F. DeGennaro | NQDC Plan | 250,000 | — | 74,614 | — | 545,931 | | Richard Matricaria | — | — | — | — | — | — | | John David Parker | — | — | — | — | — | — | | Gregory A. LaBerge | — | — | — | — | — | — |
Nonqualified Deferred Compensation—Fiscal 2023
| (1) The amount reflected includes executive contributions of the cash award earned under the Executive Incentive Plan in respect of service in 2023, which is reported as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for 2023. |
Nonqualified Deferred Compensation—Fiscal 2023
| (2) The SARs are included in the Summary Compensation Table because such earnings were determined to be preferential or above-market. The earnings on the SARs represent interest on the SAR Account Balances (as defined below) for 2023. |
Nonqualified Deferred Compensation—Fiscal 2023
| (3) A portion of these amounts were previously reported as compensation to the NEO in our Summary Compensation table for fiscal years prior to 2023: Hessam Nadji: SARs: $1,764,043 in interest; Steven F. DeGennaro: NQDC: $500,000. |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control
CEO Pay Ratio
CEO Pay Ratio The annual total compensation of Hessam Nadji, our CEO, was $10,407,564 in 2023, as reflected in the Summary Compensation Table above. Based on reasonable estimates, the median annual total compensation of all employees of the Company and its subsidiaries, excluding our CEO, was $84,062 for 2023. Accordingly, for 2023, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our other employees was 124 to 1. Most of our investment sales professionals are classified as independent contractors under state and U.S. Internal Revenue Service guidelines, so they are not included in the employee population, which would have had the effect of decreasing the pay ratio. To identify the “median employee” from our employee population, we collected the total gross compensation earned during the 12-month period ending November 30, 2023 by each person who was employed by the Company or one of its subsidiaries on November 30, 2023, other than those persons who were employed in Canada. We also annualized the salary of permanent employees who were employed on November 30, 2023, but commenced employment after December 1, 2022. As permitted by SEC rules, we excluded from our analysis all 38 of our employees who resided in Canada on November 30, 2023, which represented less than 5% of our employee population as a whole on such date. Our employee population on November 30, 2023, prior to taking into consideration this exclusion, consisted of 893 individuals. Our employee population on November 30, 2023, after taking into consideration this exclusion, consisted of 855 individuals. We identified and calculated the elements of the median employee’s annual total compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $84,062. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column for 2023 in our Summary Compensation Table included in this Proxy Statement.
Pay Versus Performance
Pay Versus Performance This section provides disclosure about the relationship between executive compensation actually paid to our principal executive officer (PEO) and non-PEO NEOs and certain financial performance measures of the Company for the fiscal years listed below. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Securities Exchange Act of 1934 (the “Pay Versus Performance Rules”) and does not necessarily reflect how the Compensation Committee evaluates compensation decisions.
Pay Versus Performance
| Year (1) | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO (2)(3) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs (2)(4) | Value of Initial Fixed $100 Investment Based On: (5) | | Net Income (millions) | Pre-Tax Net Income (millions) (6) | | | | | | | Total Stockholder Return | Peer Group Total Stockholder Return | | | | 2023 | $10,407,564 | $13,852,094 | $1,343,256 | $1,896,804 | $123.12 | $128.05 | $(34.0) | $(40.4) | | 2022 | $7,532,900 | $3,519,692 | $3,698,899 | $2,691,110 | $95.24 | $106.44 | $104.2 | $142.0 | | 2021 | $8,224,777 | $10,965,723 | $2,572,998 | $2,981,491 | $138.15 | $163.37 | $142.5 | $193.3 | | 2020 | $5,257,504 | $5,059,672 | $714,373 | $749,696 | $99.95 | $93.48 | $42.8 | $59.4 |
Pay Versus Performance
| (1) The following table lists the PEO and non-PEO NEOs for each of fiscal years 2020, 2021, 2022 and 2023. |
Pay Versus Performance
| | PEO | Non-PEO NEOs | | 2023 | Hessam Nadji | Steven F. DeGennaro, Richard Matricaria, John David Parker, and Gregory A. LaBerge | | 2022 | Hessam Nadji | Steven F. DeGennaro, Richard Matricaria, John David Parker, and Gregory A. LaBerge | | 2021 | Hessam Nadji | Steven F. DeGennaro, Richard Matricaria, John David Parker, and Gregory A. LaBerge | | 2020 | Hessam Nadji | Steven F. DeGennaro, Martin E. Louie, and Gregory A. LaBerge |
Pay Versus Performance
| (2) The dollar amounts reported represent the amount of “compensation actually paid,” as calculated in accordance with the Pay Versus Performance Rules. These dollar amounts do not reflect the actual amounts of compensation earned by or paid to our NEOs during the applicable year. For purposes of calculating “compensation actually paid,” the fair value of equity awards is calculated in accordance with ASC Topic 718 using the same assumption methodologies used to calculate the grant date fair value of awards for purposes of the Summary Compensation Table (refer to “Executive Compensation and Other Information – Summary Compensation Table” for additional information). |
Pay Versus Performance
| (3) The following table shows the amounts deducted from and added to the Summary Compensation Table total to calculate “compensation actually paid” to Mr. Nadji in accordance with the Pay Versus Performance Rules: |
Pay Versus Performance
| | | Pension Plan Adjustments | | Equity Award Adjustments | | | | | | | Compensation Actually Paid to PEO | | | Summary Compensation Table Total for PEO | Change in Pension Value | Pension Service Cost | Stock Awards | Year End Fair Value of Equity Awards Granted in the Year and Unvested at Year End | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | | | 2023 | $10,407,564 | $— | $— | $8,646,760 | $10,570,560 | $1,698,320 | $— | $(177,590) | $— | $— | $13,852,094 | | 2022 | $7,532,900 | $— | $— | $4,350,680 | $3,169,400 | ($2,588,010) | $— | ($243,918) | $— | $— | $3,519,692 | | 2021 | $8,224,777 | $— | $— | $3,597,200 | $4,581,600 | $1,856,196 | $— | ($99,650) | $— | $— | $10,965,723 | | 2020 | $5,257,504 | $— | $— | $3,376,400 | $3,314,760 | ($826) | $— | ($135,366) | $— | $— | $5,059,672 |
Pay Versus Performance
| (4) The following table shows the amounts deducted from and added to the average Summary Compensation Table total compensation to calculate the average “compensation actually paid” to our non-PEO NEOs in accordance with the Pay Versus Performance Rules: |
Pay Versus Performance
| | | Pension Plan Adjustments | | Equity Award Adjustments | | | | | | | Compensation Actually Paid to Non-PEO NEOs | | | Summary Compensation Table Total for Non-PEO NEOs | Change in Pension Value | Pension Service Cost | Stock Awards | Year End Fair Value of Equity Awards Granted in the Year and Unvested at Year End | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | | | 2023 | $1,343,256 | $— | $— | $537,746 | $656,478 | $483,239 | $— | $(48,423) | $— | $— | $1,896,804 | | 2022 | $3,698,899 | $— | $— | $2,229,889 | $1,624,438 | ($347,643) | $— | ($54,695) | $— | $— | $2,691,110 | | 2021 | $2,572,998 | $— | $— | $548,280 | $717,568 | $237,467 | $— | $1,738 | $— | $— | $2,981,491 | | 2020 | $714,373 | $— | $— | $179,888 | $216,912 | ($26) | $— | ($1,675) | $— | $— | $749,696 |
Pay Versus Performance
| (5) In accordance with the Pay Versus Performance Rules, the Company and the Company’s peer group total stockholder return (the “Peer Group TSR”) is determined based on the value of an initial fixed investment of $100 on December 31, 2019, through the end of the listed fiscal year. The Peer Group TSR set forth in this table was determined using the Company’s industry peer group (“Peer Group Index”), which we also use in preparing the stock performance graph required by Item 201(e) of Regulation S-K for our Annual Report for the fiscal year ended December 31, 2023. The Peer Group Index is comprised of the following publicly-traded real estate services companies: CBRE Group, Inc., Colliers International Group, Inc., Cushman & Wakefield plc, Jones Lang LaSalle Incorporated, and Newmark Group Inc. The Peer Group Index is weighted by each company’s stock market capitalization at the beginning of each fiscal year. |
Pay Versus Performance
| (6) We have determined that pre-tax net income is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure used to link “compensation actually paid” to our NEOs, for fiscal year 2023, to company performance (the “Company Selected Measure” as defined in the Pay Versus Performance Rules). |
Relationship Between “Compensation Actually Paid” and Performance Measures
Relationship Between “Compensation Actually Paid” and Performance Measures In accordance with the Pay Versus Performance Rules, the charts below illustrate how “compensation actually paid” to the NEOs aligns with the Company’s financial performance as measured by TSR, net income, and net income, as well as a comparison of TSR and Peer Group TSR. Compensation Actually Paid and TSR * Assumes $100 invested on 12/31/2019 Compensation Actually Paid and Net Income and Pre-Tax Net Income TSR of the Company and TSR of the Peer Group * Assumes $100 invested on 12/31/2019
Director Compensation
Director Compensation
Director Compensation Highlights
Director Compensation Highlights
Director Compensation Highlights
| ◾ | Emphasis on equity in the overall compensation mix. |
Director Compensation Highlights
| ◾ | Equity grants under a fixed-value annual grant policy with one-year vesting. |
Director Compensation Highlights
| ◾ | A robust stock ownership guideline set at five times the annual cash retainer to support stockholder alignment. |
Director Compensation Highlights
| ◾ | Stockholder-approved annual director compensation limit on cash and equity awards to non-employee directors. |
Director Compensation Highlights
| ◾ | No performance awards, perquisites, or special benefits. |
Director Compensation Policy
Director Compensation Policy Pursuant to the terms of our director compensation policy, each non-employee director typically receives annual cash fees for their services, payable quarterly in arrears, as follows:
Director Compensation Policy
| ◾ | Board Member, including the Chair—$65,000 per year |
Director Compensation Policy
| ◾ | Chair of Audit Committee—an additional $20,000 per year; other Audit Committee members—an additional $10,000 per year |
Director Compensation Policy
| ◾ | Chair of Compensation Committee—an additional $15,000 per year; other Compensation Committee members—an additional $5,000 per year |
Director Compensation Policy
| ◾ | Chair of Nominating and Corporate Governance Committee—an additional $10,000 per year; other Nominating and Corporate Governance Committee members—an additional $5,000 per year |
Director Compensation Policy
| ◾ | Executive Committee Member—an additional $10,000 per year for independent board members |
Director Compensation Policy
Each continuing non-employee director is also entitled to receive an annual restricted stock grant on the date of each annual meeting of stockholders equal to $75,000 divided by the fair market value of our common stock on the date of grant. Each annual restricted stock grant will vest in full on the earlier of the first anniversary of the date of grant and the next annual meeting of stockholders. Any new non-employee director will automatically receive a pro-rated annual restricted stock grant based on the number of months from the time the non-employee director joins the Board until the next annual meeting of stockholders. Such pro-rated annual restricted stock grants will vest in full on the date of the next annual meeting of stockholders. Under our change in control policy, the vesting of restricted stock awards held by our non-employee directors will fully accelerate upon a change in control, regardless of whether equity awards are otherwise assumed, continued, or substituted. In addition, under our death and disability policy, the vesting of all outstanding and unvested restricted stock awards held by our non-employee directors will vest in full upon a termination of service due to death or disability, in each case, after at least one year of service.
2023 Director Compensation
2023 Director Compensation
Director Compensation Table
Director Compensation Table The following table sets forth the total compensation for our non-employee directors for the year ended December 31, 2023:
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | All Other Compensation ($) | Total ($) | | Collete English Dixon | 70,000 | 74,979 | — | 144,979 | | Norma J. Lawrence | 90,000 | 74,979 | — | 164,979 | | George M. Marcus | 65,000 | 74,979 | — | 139,979 | | Lauralee E. Martin | 85,000 | 74,979 | — | 159,979 | | Nicholas F. McClanahan | 80,000 | 74,979 | — | 154,979 | | George T. Shaheen | 85,000 | 74,979 | — | 159,979 | | Don C. Watters | 90,000 | 74,979 | — | 164,979 |
Director Compensation Table
| (1) This column represents the aggregate grant date fair value of restricted stock granted in 2023, computed in accordance with ASC 718. On May 2, 2023, each non-employee director received a grant of 2,477 shares of restricted stock, which vests on the first anniversary of the date of grant, and the value represented here with respect to each such Director’s restricted stock grant is based on 2,477 shares multiplied by the closing price of $30.27 on the grant date of May 2, 2023. These amounts reflect our calculation of the value of these awards, and do not necessarily correspond to the actual value that may ultimately be realized by the Directors. |
Director Compensation Table
| (2) As of December 31, 2023, each non-employee director has 2,477 shares of restricted stock in the aggregate outstanding and subject to vesting. |
Director Compensation Limit
Director Compensation Limit We have a stockholder-approved $500,000 limit on the total value of cash and equity compensation that may be paid or granted to a non-employee director each fiscal year.
The Amended Plan Reflects Governance Best Practices
| ◾ | Limit on Non-Employee Director Awards . The aggregate value of all compensation paid or granted, as applicable, to any individual for service as a non-employee director of our Board with respect to any fiscal year, including awards granted under the 2013 Plan and cash fees paid by us to such non-employee director, will not exceed $500,000 in total value. |