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iStar Financial Inc. Message Board

  • helpontheway11 helpontheway11 Jun 28, 2009 6:45 PM Flag

    Executive Compensation

    I just started reviewing the executive compensation package that they just threw at Sugarman and others. Can you believe that if the stock just gets to $10 or so in a reasonable amount of time that the executives will walk away with $100+million in stock value. 15 million shares are being given to executives with performance hurdles that are absurdly low and based on the wrong performance measures. The stock will still be off from its high by over 75% but the executives will be rewarded because they are being given incentive based stock (hurdles will easily be surpassed) at absurd levels. I am going to do my research to put exact numbers to my understanding of the glutony and submit letters to CNBC, New York Times and Wall Street Journal. The Board should be sued and the executives should be canned. I own the stock because the executives are doing an okay job, but there is no way, no way that they deserve to be rewarded with over 10% of the company (15 million shares with only 100 million outstanding means they just gave themselves over 10% of the company). Am I missing something? This is company is a strong buy on asset valuation not on management as the recent Freemont and New York leases have proven.

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    • We're good.

      Quad

    • Reit and 4evr, I really didn't look at who posted what, just responded to Quad's message. I generally appreciate both reit and your posts. No biggie. Have a good one. Non rising stock price takes a toll on all longs. BTW, hasn't been much selling after the 8 million day, so while the price hasn't done much, the majority of shares have been held. Have a good one,

      Ed

      Ed

    • I'm really with you, Ed. No biggie. I wrote poorly. I combined two thoughts into a single rant. Quad, "apathy such as yours" was terrible, unintentially incendiary writing on my part and I understand your reaction. Like I said previously, my criticism is for the practice itself, not even SFI's program in particular and I didn't mean to make it sound personal. And I sure hope I am not being included (and I don;t think you are) as one assaulting Quad's credibility.

    • <<Someone else suggested I forfeited my credibility by not sharing his outrage.>>

      If you are referring to my post, my comment on your credibility has nothing to do with the debate about executive compensation (or your views on that topic). Apparently in your earlier post you were applying the word "control" in a very literal sense (i.e. Sugarman does not instruct investors on placing buy or sell orders for SFI or at what price). That literal definition for the word makes the line a pretty obvious and valueless statement, the type of line you don't usually throw around when trying to make a point. Shame on me for looking for deeper meaning than "CEO's don't place buy and sell orders for shareholders". My mistake.

      Verbatim et litteratim.

    • Quad,

      I have no problem with your voting for Suga stock, I didn't but it's not a biggie. I disagree somewhat on 'control' with buyback and decisions on how much to write off, etc, et al, again not a biggie. As for 'credibility' BS, just scam by scummers/idiots. Have a good one.

      Ed

    • I knew "apathy" was a charged word and I apologize again for not finding a better word. And it was meant not to be a personal comment but a comment about shareholders in general everywhere when it comes to their interest/ability to influence exec comp.

      Onward...

    • white -

      It is really interesting to me to observe the flak I am getting for not being outraged with the stock awards. Last time I checked this was a free country and group think wasn't a behavioral obligation. I'm okay with the people who don't like the award but apparently that tolerance isn't reciprocal.

      I said in my second post on this thread: "It could be excessive, I can't argue that it's not, but it's not absurd."

      Frankly, I don't see your justification for characterizing my difference of opinion with you about the awards as "apathy", by your own statement a "loaded" word. Apathy is indifference - however, I'm not indifferent, I just arrive at a different evaluation of the issue. I read the proxy, I considered the issues and I voted for the plan. It's hard to divine apathy out of that. Someone else suggested I forfeited my credibility by not sharing his outrage. I don't get it.

      Sugarman does not control the stock price. What he does in managing iStar influences the perception of the company and its value by the investor class, but that does not constitute control. I don't believe I ever said that his management decisions weren't relevant to the share price - I just said he has no control. A significant difference in my mind but a distinction apparently not acknowledged by some.

      Your stated: "If Sugar didn't believe his decisions could potentially influence share price, then what was his motivation to have come up with a plan to award himself more shares at a time and price when price has been decimated. "

      Control is not the same as "potentially influence share price." The position you attribute to me isn't mine.

      The shareholders voted to approve the plan. If it had met with uniform disfavor it wouldn't have been approved. I understand that you and others don't like it - I respect that and it's fine with me. However, in my mind management's comp plan is not detrimental to the investment thesis of the company, and I think of Sugarman as a partner whose interests are very closely aligned with mine.

      Quad

    • This IS like politics and I'm sure we'll just end up agreeing to disagree. So I'll just say my piece and then look forward to your continued insights on SFI in other areas. That's what got me into my SFI stake in the first place.

      I, too, don't want Barney Frank dictating executive compensation. I believe market forces ought to do that. Believing that, I often wonder what market conditions have exploded exec comp to such extraordinary relative levels in the past decade. I do not believe it's supply/demand - that there is far greater demand for exec skills than supply of skilled execs. I believe the prevailing market forces determining comp levels are apathy, and apologies for using a loaded word - apathy such as yours on this subject. I believe superior executive talent will always push the compensation envelope. It's indicative of their inherent skills. So if noone pushes back, you're where we are today and I as a shareholder, want to push back. Well, OK, if I WERE a shareholder, I would want to push back... I'm a preferred owner...I AM market forces.

      I do have one question for you, Quad, on this subject, then onward we go, If you truly believe what you say when you wrote, "I do not think Sugarman has any control whatsoever over share price. Nada; niente; zero," then why would voting him control over MORE shares provide him greater incentive to do anything to boost share price? If Sugar didn't believe his decisions could potentially influence share price, then what was his motivation to have come up with a plan to award himself more shares at a time and price when price has been decimated.

    • Quad, if iStar was profitable, the market would not have flattened it's share price indiscriminately. I agree with the notion that the Fremont deal was either a bad decision or bad timing, or both, however, iStar also has exhibited some bad underwriting decisions and other missteps prior to this situation. It could be argued that this all happened on Sugarman's watch, and therefore, although he can not directly control the share price, his past decision making has certainly contributed to the devaluation of the company.

      In that context, he has little choice now other than to be brilliant, as his reputation is concerned with the turnaround of SFI. If he does that, his compensation will be a non-issue. In the meantime, I think sentiment toward Sugar's comp is deservedly negative because of the large component that is not tied to performance.

      Quad, you have a lot of knowledge and great insight and I enjoy and benefit from your posts. I also think you can't always put a positive spin on everything, and I think although Sugar is brilliant and doing great now, he deserves some of the criticism for past moves and he ought to have to wait and get paid when the rest of us do.

    • jcreech@ymail.com jcreech Jun 30, 2009 9:52 PM Flag

      I agree with Pimm. I don't know what the compensation should have been, but my gut check said that the targets were too low and/or the compensation was too high. Sugarman deserves to be well compensated, but I thought it was too much. I voted against this proposal because I thought the company should have brought a better proposal to the shareholders - but when you can only say yea or nay ...

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