ARCP shareholders reject Schorsch's executive compensation plan

In nonbinding vote, stockholders turn thumbs down on incentive pay

Jun 2, 2014 @ 2:24 pm

By Bruce Kelly

In a striking rebuke for nontraded REIT czar Nicholas Schorsch, shareholders of American Realty Capital Properties Inc. rejected a new executive pay program that would have created a $222.1 million pool of incentive-related compensation for Mr. Schorsch and his team.

The resolution was non-binding and it was not clear whether the company would abide by the vote.

The company, known by its ticker ARCP, is the giant, traded net lease real estate investment trust run by Mr. Schorsch, who wears a number of hats in the real estate and brokerage business. He is chief executive of nontraded REIT sponsor American Realty Capital and executive chairman of RCS Capital Corp., a wholesaling and retailing broker-dealer.

Mr. Schorsch's share of the compensation plan alone was potentially $92.7 million, which was targeted to the company's performance and scheduled to be paid out over five years. Mr. Schorsch is CEO of ARCP.

(Read more about Mr. Schorsch's potential big payday)

“The company did not receive the requisite vote to approve the adoption of the non-binding resolution approving the named executive officers' compensation, as described in the company's proxy statement,” according to an ARCP filing Monday with the Securities and Exchange Commission. The vote, taken last Thursday at the company's annual shareholder meeting, was about 280 million share votes against, or 36.3% of the outstanding shares, and 134 million share votes for the new plan. Another 216 million share votes either abstained or were non-votes.

In a May 16 report, corporate governance watchdog Institutional Shareholders Services Inc. criticized ARCP's proposed executive incentive plan.

“While it is difficult to evaluate the (outperformance plan) goals, they do not seem rigorous relative to the potential payout values,” according to the report.

In a separate vote last Thursday, a plurality of ARCP shareholders voted in favor of annual approval of executive compensation.

Tony DeFazio, a spokesman for ARCP, did not have a comment by 2:15 on Monday afternoon.

Shareholders did approve the company's nominees for the board, including Mr. Schorsch, as well as the appointment of Grant Thornton as its independent auditor.

Earlier on Monday, Mr. Schorsch announced that his newly listed American Realty Capital Healthcare Trust Inc. is being acquired by giant health care REIT Ventas Inc. in a stock and cash transaction valued at $2.6 billion, or $11.33 per share.

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