One-third of real estate CEO comp is variable, up from 2016

According to the RealTrends Brokerage Compensation Report 2021, a full third of the compensation paid to non-controlling shareholder real estate CEOs is variable. This is up significantly from 2016, when the last report was published. “Something great has happened in the last five years,” said Steve Murray, RealTrends senior advisor. “Brokers have switched to a more performance-oriented variable remuneration. Non-controlling CEOs receive bonuses based on the profitability of the brokerage. “

This is the case today in many management positions at a broker. Regional sales managers, general sales managers, and office sales managers have much higher variable compensation – they receive bonuses and perks – than they did when RealTrends released this report in 2016.

Break down numbers

The RealTrends Brokerage Compensation Report provides compensation analysis for 12 senior positions in a real estate brokerage company. The report is broken down by region – Midwest, Northeast, Southeast, West – and company size. In the survey, large corporations have $ 54 million to $ 400 million in gross commission income (GCI) and 850-1,700 agents. Medium-sized firms have $ 37-53 million GCI and 390-415 agents, and small firms have $ 4-28 million GCI and 174-350 agents.

“When we started publishing this report in 2001, we found that variable compensation for sales managers who focus on recruiting was about 15-20% of their salaries,” says Murray. “So they had a relatively high base salary. What performance do you expect from them in certain measurable areas such as recruiting and production? In the beginning, the compensation was not designed that way. The good news with this current poll is that it is changing. “

The composition of the sales manager hasn’t changed much

The percentage of gross margin paid to sales managers has not changed significantly since RealTrends first conducted this survey in 2002. The national average is 9.9% of gross margin, with a maximum of 16.5% in the southeast region. Medium-sized firms paid about 12.6% while small brokerage firms paid the lowest price of any large company at around 9.2%.

If you consider the remuneration of sales managers as a percentage of the gross margin, it is highest in medium-sized companies. Regionally, the remuneration of sales managers is highest in the southeast. But for total dollar compensation, the West region is the highest, and large firms pay most in dollars.

Higher base, lower bonus

One area in which the variable compensation has not changed is that of the Chief Marketing Officer (CMO) and the Chief Technology Officer (CTO). The gross margin percentage bonus pay was surprisingly low, possibly because performance for these positions is much more difficult to measure compared to sales directors. Other roles where bonuses make up a much smaller percentage of compensation are human resource director, director of training, and in-house legal advisor.

For Chief Financial Officers (CFOs) the best spot for compensation was in the Northeast region, but the pay was close to that in the Southeast region. Big firms, of course, paid most of the money in actual dollar compensation.

Chief Marketing Officers / Directors of Marketing received a national average of 1.2% of gross margin. The west and south-east regions each achieved 1.5%.

This data was taken from the RealTrends Brokerage Compensation Report 2021. The full report is available to HW + members. This is where you can find all the numbers, including base, bonus, benefits, broken down by region and brokerage size. If you are not already a member and want to access the report, go here to join HW +

source https://www.bisayanews.com/2021/09/21/one-third-of-real-estate-ceo-comp-is-variable-up-from-2016/