BXP reached an agreement to lock in stable leadership as the office landlord navigates the choppy recovery of commercial real estate’s worst-hit sector during the pandemic.
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Owen Thomas will stay on as CEO and chairman of the board of directors at BXP, the largest publicly traded office landlord in the U.S., through at least 2029, the REIT announced Monday. BXP’s board negotiated the extension of Thomas’ contract, which also includes a new bonus program tied to the stock's performance.
“Owen’s vision, industry expertise, and proven execution make him the ideal leader to ensure continuity, drive our action plan forward, and guide BXP through its next phase of growth,” Joel Klein, BXP’s lead independent director, said in a statement.
The new employment agreement is “fundamentally the same” as Thomas’ previous contract, which was set to end next December, according to BXP. Thomas has been CEO of the REIT since 2013.
Thomas is set to have a base salary of $950K per year, the potential to earn up to $2.35M by reaching performance targets, eligibility for additional equity compensation as determined by an internal committee and access to a company car, according to the employment agreement filed at the Securities and Exchange Commission on Monday.
Boston-based BXP’s stock was trading down more than a percentage point in early trading Tuesday, putting it at under $69 per share. Shares have slid by 6% this year. The company's portfolio of office buildings was 86.6% occupied at the end of the third quarter, excluding three recently delivered projects.
The REIT’s board also approved another incentive bonus program as part of Thomas’ compensation package that is tied to the stock’s performance.
Thomas and other executives will unlock additional compensation if BXP’s stock reaches $90 per share and trades there for at least 20 consecutive days. The payout will increase for every $4 per share above the $90 floor at which the stock trades, with a cap at $118 per share.
BXP expects the bonus program will result in roughly $32M in payments over its four-year period, ending in December 2029, including $11.6M in expenses it expects to recognize next year.
The office REIT owns roughly 55M SF of office space across 187 properties, including eight under-construction developments.
It was hammered by the pandemic, and shares went from $130 per share in April 2022 to below $50 per share by May 2023. The stock briefly approached $90 per share last October.
BXP posted a net loss of $122M in the third quarter driven by $141M in writedowns for a life sciences campus in San Francisco. The REIT cut its dividend by nearly 30% in September and has been looking to sell off some properties, sometimes for a loss.
But the company’s third-quarter leasing volume, at 1.5M SF across 79 transactions, was the strongest since 2019. Executives on the firm’s third-quarter earnings call said the REIT would surpass 4M SF of leasing activity by the end of the year.
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