Under pressure as the coronavirus pandemic grows, Realogy is reducing salaries and employee workweeks for a majority of the company’s employees, according to Securities and Exchange Commission papers filed Wednesday.
Realogy CEO Ryan Schneider is taking the biggest hit, with a 90 percent salary reduction effective April 4. All of his direct reports are taking a 50 percent pay cut.
“These measures will be assessed on an ongoing basis and may be extended and/or expanded to include, for example, temporary employment furloughs and/or workforce reductions,” the company’s 8-K filing with the U.S. Securities and Exchange Commission (SEC) read. “The Company also expects to work with vendors and other partners to preserve its working capital.”
Schneider’s base salary for 2020 was set to be $1 million, with eligibility for an incentive bonus up to 150 percent of his earnings. He’s also entitled to an annual long-term incentive award that can be allocated across unspecified equity vehicles, according to a recent SEC filing.
Realogy is also delaying investments in certain strategic initiatives according to the filling — although it’s not clear which initiatives those are — as well as pulling back marketing expenses. The company had previously borrowed an additional $400 million under its revolving credit facility this month and, as of March 23, had approximately $487 million of cash on hand.
For franchisees, the company is accelerating franchise rebates scheduled for April 15 to be paid on April 1, retaining franchise rebate tiers at last year’s level, waiving domestic brand marketing fees and waiving minimum royalty fees due in the second quarter.
“In actions designed to provide enhanced liquidity to its franchisees, the Company has taken [these actions], which we believe are meaningful to our franchisees, but are not expected to have a material impact on the Company’s financial results for the second quarter of 2020,” the filing reads.
Realogy has been among the companies hit hardest by the coronavirus-fueled stock market sell-off. The company’s stock opened the day at $3.44 per share but was up to as high as $13 per share last month. It’s gone as low as $2.29 per share in the past week.
Other companies have taken action in the wake of the real estate industry’s slump. Compass is reportedly set to lay off 15 percent of its staff, while Zillow is cutting expenses by 25 percent. RE/MAX also removed its year-end guidance. Every major iBuyer has stopped buying houses.
Read the company’s full statement on measures it’s taking amid the global market slowdown and pandemic, below:
The health and safety of our employees, affiliated agents, owners and customers is always our number one priority. As the coronavirus (COVID-19) crisis continues to rapidly evolve, we have moved fast to continue serving our affiliated agents and franchisees through an agile, tech-enabled virtual workforce.
Over this time, we have also been actively working with federal, state and local governments to ensure affiliated agents, owners and the industry are well-represented as leaders and policymakers around the country work to slow the spread of coronavirus and create new relief measures to ease the impacts of the virus on our economy and our industry.
Our legislative priorities include:
- We want independent contractors included in income relief bills;
- We want robust small business relief enacted to support our franchise owners; and
- We want transaction closings to be considered equivalent to banking activities when determining essential services.
Similarly, we are working at the state and local level to:
- Assist recording offices and county agents to swiftly move to digital solutions wherever possible;
- Designate title insurance and mortgage activities as essential services; and
- Clarify shelter in place orders and their implications for real estate transactions for our affiliates, agents, and customers.
More recently, as it has become clearer the impact coronavirus could have on our industry and our business, we have also made proactive and informed moves, including increasing Realogy’s cash on hand to support our operations, providing relief actions for our franchisees and reducing controllable costs across the company.
Every move we make is about putting our people first and helping them navigate the dynamics of this common global crisis. At Realogy, we are acting from a position of strength today in order to support affiliated agents, franchisees and employees through this time of uncertainty, so that when the recovery comes, we can help get America moving again, together.