BETHESDA, MD – First Potomac Realty Trust CEO Robert Milkovich received $3.6 million in total compensation in 2016, up from a total of $978,000 in 2015, according to a filing with the Securities and Exchange Commission.
The CEO’s increase in compensation was driven primarily by a special equity award of 150,000 restricted common shares worth about $1.5 million.
CFO Andrew Blocher and General Counsel Samantha Gallagher each saw their total compensation more than double in 2016, also driven by awards of special equity.
In total compensation, Blocher received $2.2 million in 2016, up from $987,000 in 2015, and Gallagher received $1.9 million, up from $812,000 in 2015.
Total compensation for executives at First Potomac is comprised of base salary, short and long term incentive compensation, and special equity awards.
In the past First Potomac has relied only upon base salary and incentive-based pay to retain executive talent.
In a proxy statement filed with the SEC, the company said that it has not made special equity awards in the past.
The company acknowledges that the significant jump in compensation “may appear outsized with respect to historical practices,” but maintains that the additional pay is necessary in light of increased responsibility.
The executives have had to take on more important roles in the company as leadership and strategic goals have changed dramatically in the past 18 months.
Milkovich was promoted in November 2015 from chief operating officer to the additional role of chief executive officer. He replaced Douglas J. Donatelli, one of the two founding partners, who resigned unexpectedly.
Donatelli had served as the company’s CEO since the company was founded by himself and Nicholas R. Smith in 1997. Smith also resigned from his position as chief investment officer in November 2015.
Donatelli and Smith resigned at a time when the company’s board wanted to implement significant strategic changes. The board sought to de-risk the portfolio, de-lever the balance sheet and maximize asset values.
In 2015 this strategy took the form of a $200 million reduction in underperforming assets, the proceeds from which were used to buy back shares.
The company also justified the special equity awards by the fact that they will vest over a five-year period in one-quarter increments, maximizing the potential for retention and long-term performance.
In 2016, Blocher received 75,000 shares of restricted common stock worth about $750,000, and Gallagher received 65,000 shares worth about $650,000.
All three executives saw their base salaries increase 2.75 percent for 2017.
In the fourth quarter of 2016 the company reported core funds from operations of 27 cents per share, beating the consensus expectation of 26 cents per share.
The company’s stock rose 7 cents to $10.59 in Friday afternoon trading.
This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism