Outgoing Move CEO got millions
When former Chief Executive Officer Michael Long left Move Inc., the company gave him a golden parachute and then some – it paid him for the use of his airplane.
Even as shareholders saw losses in recent years, the Westlake Village company paid Long, who left in January, $4.3 million for the business use of his airplane over the last three years and boosted his pay. Other than saying the plane rides were for “business use,” Move did not say what the plane was used for or who used it.
On their way out the door, Long and another former executive who left earlier this year snatched $10.6 million in cash and stock-based compensation, while incoming CEO Steve Berkowitz, who came from Move’s board of directors, got a welcome present of $2.7 million in stock options. Move handed out $11 million in stock-based compensation in the first quarter alone.
Move is the parent of Realtor.com and Move.com, Web sites directed at listing, financing and selling homes. The company’s shares have taken a beating, falling about 50 percent over the past year, from the $3 range to near the $2 mark.
A Move spokeswoman refused to make anyone available to answer Business Times questions about the company’s reimbursement and executive compensation policies.
But blogger Michelle Leder, whose Footnoted.org examines the costs companies hide in footnotes to regulatory filings, said Move could be more forthcoming about the money it paid to Long for the “business use” of his plane from 2006 to 2008. The sum – $4.3 million – deserves more than a single-line explanation from a company with revenue of about $240 million a year, Leder said.
“They’re not providing enough detail here to figure out what’s going on. It kind of falls short on the disclosure end,” Leder said.
Leder also questioned why the money wasn’t included in the “other compensation” section of the company’s proxy statement, which lists the total compensation executives and directors receive. “The fact that there’s no ‘other compensation’ listed – it makes you wonder what’s going on there,” Leder said.
Being a director at Move pays pretty well, too. Joe Hanauer, chairman of the company’s board and a member of the firm’s compensation committee, pulled in $250,000 for his efforts in 2008. “That’s a lot of money for a board seat,” Leder said. “$250,000 for a part-time job is not bad money.”
Even business pundits who praise Move’s balance sheet and recommend its stock – at the end of the first quarter, it still had about $111 million of cash on hand – have noted its pay policies. “The company has been party to billions in litigation and has a history of losses, excessive executive compensation and ridiculous overhead – oh, and the real estate markets, the company’s bread and butter, have been horrific,” wrote RealMoney.com’s Jonathan Heller.
It’s not as though Move has done nothing to stem losses. It executed a painful restructuring last year that it estimated will save it $20 million. The company went from 1,555 employees at the end of 2007 to 1,181 at the end of 2008, shedding 374 employees, according to its annual reports.
But the losses remain. In 2007 and 2008, respectively, the company turned out net losses applicable to common stockholders of $3.9 million and $32.6 million, the losses ballooning as the housing market tanked.
In the same two-year period, CEO Long’s total compensation rose from $1.6 million to $2.9 million, according to the company’s proxy statement filed earlier this year. Total compensation for Lew Belote, the chief financial officer, rose from $829,000 to $1.5 million between 2007 and 2008.
The payouts continued into this year. In the first quarter of 2009, Move turned out a net loss applicable to common stock holders of $10.6 million after it shelled out $1.9 million in severance pay and $8.7 million in stock-based compensation related to the departure of Long, who left in January, and another former executive, along with the hiring of Berkowitz.
About $7 million of that cost came from speeding up stock options for Long and the other officer, former company President Lorna Borenstein, and extending the time to exercise stock options for one of them, though Move didn’t specify who it was.
Move also gave incoming CEO Berkowitz a nice welcome present. It awarded him $2.7 million in stock options to come aboard, the company said in its quarterly report for the three months ended March 31.
Move even worked some tax magic for Berkowitz. Seven hundred thousand shares of his sign-on stock options – $1.1 million worth – went to Berkowitz immediately. But the new chief executive turned around and gave the shares back to the company to cover his share of income taxes due because of the stock-compensation deal, Move’s most recent quarterly report said.