By: Benyamin Davidsons

Shareholders of Vornado Realty Trust voiced their discontent at longtime CEO Steven Roth’s salary bonus.

As reported by Crain’s NY, on Thursday, over 40 percent of shareholders voted against Vornado doubling Roth’s salary to $19.7 million last year. The largely increased payday comes amid the New York-based commercial real estate giants’ falling earnings, which led it to cut dividend payments by 68 percent. Roth’s compensation was paid out mostly in shares and stock options, but there was also a $3.7 million cash bonus, which was meant to reward him for a project that won’t be complete for another eight years.

Roth, 82, founded Vornado in 1980. He is also co-founder and managing general partner of Interstate Properties, and chairman and chief executive officer of Alexander’s, which is a real estate investment trust that owns 7 properties in NYC.

Say-on-pay votes for CEOs have become mandatory for public companies since the financial crisis and they are non-binding. This year, shareholders in Russell 3000 companies voted approving most CEO pay packages with average support of 92%, according to consulting firm Semler Brossy. Only two CEO pay packages were rejected in 2024— both for energy companies. At Vornado’s annual meeting, Institutional Shareholder Services recommended investors vote against Roth’s pay increase, and 43% of shareholders voted against it.

Such a lack of support by shareholders has previously led to the need for assurances and tweaks to better align pay with performance. In 2012, former Citigroup CEO Vikram Pandit was even fired after a majority of investors voted against his pay.

Vornado is known as Manhattan’s second-largest commercial landlord, owning and operating close to 20 million square feet of prime office properties. The company, which trades on the NY Stock exchange, saw its stock trade at $23.50 a share on Friday, which is two thirds below its pre-pandemic level. In its first quarter 2024 financial results announced in May, the company reported a net loss of $9,034,000, or $0.05 per diluted share, for the quarter ended March 31, 2024. The previous year’s quarter had seen net income attributable to common shareholders of $5,168,000, or $0.03 per diluted share, as per a company press release.

As per Crain’s, last year, when shareholders voted, just 23% of shareholders had voted against Roth’s pay. This year, in December, Vornado’s board awarded Roth a $2.2 million cash bonus — which was linked to redeveloping 350 Park Ave. into a supertall tower office tower for Ken Griffin’s hedge fund firm, Citadel. Construction on the 62-story project is not slated to begin until next year and is not expected to be completed until 2032.

Still, members of the board at Vornado’s compensation committee rewarded Roth and other top execs for “seeking and finding new opportunities.” Seemingly, investors didn’t appreciate the bonus, being that they sustained a heavy cut in the dividend payouts. “The optics of creating a new…bonus pool when earnings continue to decline doesn’t look good,” said Piper Sandler analyst Alexander Goldfarb when the payment was disclosed.

In a regulatory filing, Vornado said bonuses based on long-term development projects will not be made annually but “only be made on an episodic basis”. Institutional Shareholder Services noted that the bonuses awarded to Roth and others “do not appear to have been conditioned on pre-set forward-looking goals.” Vornado declined to comment.