☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to §240.14a-12 |
☒ | No fee required |
☐ | Fee paid previously with preliminary materials |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
Notice of 2024 Annual Meeting of Stockholders and Proxy Statement
Marcus & Millichap, Inc.
May 2, 2024, 2:00 p.m. Pacific Time
A Different Kind of Brokerage
23975 Park Sorrento, Suite 400
Calabasas, California 91302
(818) 212-2250
March 22, 2024
Dear Stockholder:
We are pleased to invite you to attend the 2024 Annual Meeting of Stockholders of Marcus & Millichap, Inc., which will be held virtually on May 2, 2024.
We are furnishing our proxy materials to stockholders primarily over the Internet. This process expedites stockholders’ receipt of proxy materials, while significantly lowering the costs of our annual meeting and conserving natural resources. On March 22, 2024, we mailed to our stockholders a notice containing instructions on how to access our Proxy Statement and 2023 Annual Report to Stockholders and to vote online. The notice also included instructions on how you can receive a paper copy of your annual meeting materials. If you received your annual meeting materials by mail, the Proxy Statement, 2023 Annual Report to Stockholders, and proxy card were enclosed.
At this year’s annual meeting, the agenda includes the following items:
Agenda Item | Board Recommendation | |
1. Election of directors |
FOR | |
2. Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024 |
FOR | |
3. Advisory vote to approve executive compensation |
FOR | |
4. Approval of the Amended and Restated 2013 Omnibus Equity Incentive Plan |
FOR | |
5. Approval of the Amended and Restated 2013 Employee Stock Purchase Plan |
FOR |
Details regarding the meeting and the business to be conducted are more fully described in the accompanying Notice of 2024 Annual Meeting of Stockholders and Proxy Statement.
Your vote is important. Whether or not you plan to attend the annual meeting, I hope you will vote as soon as possible. You may vote over the Internet before or at the annual meeting or, if you receive your proxy materials by U.S. mail, you also may vote by mailing a proxy card or voting by telephone. Please review the instructions on the notice or on the proxy card regarding your voting options.
Sincerely yours,
Hessam Nadji
President and Chief Executive Officer
Table of Contents
March 22, 2024
Notice of 2024 Annual Meeting of Stockholders
TO BE HELD ON MAY 2, 2024
Date and Time | Virtual Meeting | Record Date | ||
Thursday, May 2, 2024, 2:00 p.m. Pacific Time |
Via the Internet https://web.lumiagm.com/204691330 (password: Mm2024) |
March 12, 2024 |
The 2024 Virtual Annual Meeting of Stockholders (“Annual Meeting”) of Marcus & Millichap, Inc. (“Marcus & Millichap,” “MMI,” or the “Company”) will be held as a virtual-only meeting on Thursday, May 2, 2024 at 2:00 p.m. Pacific Time. The platform for the virtual Annual Meeting includes functionality that affords validated stockholders substantially the same meeting participation rights and opportunities they would have at an in-person meeting. Once admitted to the Annual Meeting, stockholders may view reference materials, submit questions, and vote their shares by following the instructions that will be available on the Annual Meeting website.
Agenda
At the Annual Meeting, stockholders will be asked to vote on the following proposals:
PROPOSAL | BOARD VOTING RECOMMENDATION |
PAGE REFERENCE (FOR MORE DETAIL) | ||||||||
Management Proposals |
||||||||||
Elect three Class II Directors nominated by our Board of Directors, each to serve for a three-year term |
|
FOR each nominated Director |
|
7 | ||||||
Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024 |
FOR | 29 | ||||||||
Advisory vote to approve executive compensation |
FOR | 31 | ||||||||
Approval of the Amended and Restated 2013 Omnibus Equity Incentive Plan |
FOR | 63 | ||||||||
Approval of the Amended and Restated 2013 Employee Stock Purchase Plan |
FOR | 79 |
Other Important Information
Stockholders will also transact such other business as may properly come before the annual meeting (including adjournments and postponements).
You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on March 12, 2024, the record date, or hold a legal proxy for the Annual Meeting provided by your bank, broker, or other nominee.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 1
It remains very important that your shares are represented and voted at the Annual Meeting. We therefore strongly encourage you to vote in advance of the Annual Meeting. See “Voting Methods” on the next page for instructions for various voting methods.
By Order of the Board of Directors,
Hessam Nadji
President and Chief Executive Officer
Calabasas, California
March 22, 2024
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 2, 2024: The Notice of 2024 Annual Meeting of Stockholders the Proxy Statement and the 2023 Annual Report to Stockholders are available at http://www.astproxyportal.com/ast/18576.
|
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 2
Voting Methods
Before the Annual Meeting | During the Annual Meeting | |||||||||
Vote by Internet | Vote by Phone | Vote by Mail | Vote by Internet | |||||||
Go to www.voteproxy.com until 11:59 p.m. Eastern Time on May 1, 2024. | Call toll-free 1 (800) 776-9437 in the United States or 1 (201) 299-4446 from foreign countries until 11:59 p.m. Eastern Time on May 1, 2024. | Complete, sign, and date the proxy card/voting instruction card and return it in the postage-paid envelope that is enclosed with your proxy materials. | Go to https://web.lumiagm.com/204691330 and vote during the Annual Meeting by entering the 11-digit control number included in your proxy materials and the password “Mm2024” and following the instructions on the Annual Meeting website. |
As noted above, we strongly encourage you to vote in advance of the Annual Meeting by using one of the methods set forth above under “Before the Annual Meeting”, whether or not you plan to attend the Annual Meeting. You have the right to revoke your proxy before it is exercised at the Annual Meeting at any time before the polls close by submitting a later-dated proxy card/voting instruction card, by attending the Annual Meeting virtually and voting by Internet, by delivering instructions to our Corporate Secretary before the Annual Meeting, or by voting again using the Internet or by telephone before the cut-off time. Your latest Internet or telephone proxy is the one that will be counted. If you hold shares through a broker, bank, or other nominee, you may revoke any prior voting instructions by contacting that firm.
List of Stockholders
The names of stockholders of record entitled to vote will be available for inspection by stockholders of record for ten (10) days prior to the Annual Meeting and during the virtual Annual Meeting. If you are a stockholder of record and want to inspect the stockholder list, please send a written request to our Corporate Secretary at 23975 Park Sorrento, Suite 400, Calabasas, California 91302, or Steve.DeGennaro@marcusmillichap.com to arrange for electronic access to the stockholder list.
Internet Availability of Proxy Materials
We are furnishing proxy materials to our stockholders primarily via the Internet. On March 22, 2024, we mailed most of our stockholders as of the record date, a Notice Regarding the Availability of Proxy Materials (“Notice of Internet Availability”) containing instructions on how to access and review all the important information contained in our proxy materials, including our Proxy Statement and our 2023 Annual Report to Stockholders. The Notice of Internet Availability also instructs you on how to vote via the Internet. Other stockholders, in accordance with their prior requests, have been mailed paper copies of our proxy materials, and a proxy card or voting form.
Internet distribution of our proxy materials is designed to expedite receipt by stockholders, lower the cost of the annual meeting, and conserve natural resources. However, if you would prefer to receive paper copies of proxy materials, please follow the instructions included in the Notice of Internet Availability.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 3
Letter from the CEO & Chair of the Board
To our Stockholders:
MMI remained resilient and continued to make progress toward our long-term goals despite significant market headwinds experienced across the U.S. commercial real estate industry last year. The real estate market faced declining transaction volume resulting from the most aggressive Federal Reserve tightening policy in 40 years, culminating in interest rate increases of 525 basis points in 18 months. An already constrained lending environment was further exacerbated by the regional banking crisis. Although the broader economy performed well, interest rate volatility presented challenges for transaction closings with widening bid-ask spreads and higher borrowing costs. According to CoStar and MSCI, 2023 U.S. commercial real estate transaction volume declined by an estimated 55% compared to prior year.
In this environment, our team delivered revenue of $646 million and a net loss of $34 million, which largely reflects the impact of a 39% decline in total transactions. Our earnings were particularly pressured by expenses related to capital invested in top talent acquisition and retention, technological innovations and expanding our technology platform. We believe these investments will be instrumental in helping us lead in the recovery and long-term growth. We believe the company is well positioned to not only withstand the current market dislocation but to leverage the downturn to our advantage. We ended the year with $407 million in cash, cash equivalents, and marketable debt securities, available-for-sale.
In 2023, our management team adopted a range of strategic measures to mitigate the impact of the market disruption while also strengthening the MMI platform. We implemented cost control initiatives aimed at reducing the interim impact of lower revenue while continuing to make well-underwritten investments essential to long-term growth. Focusing on our people, we continued to provide broker training, retention of top producers and recruitment of experienced professionals and teams. We prioritized enhancing our ability to serve client needs by expanding marketing efforts, further integrating our auction teams into the sales process and leveraging technology. These combined efforts resulted in over 7,000 closings and nearly $45 billion
in volume, keeping MMI as the top ranked brokerage firm by transactions last year.
Our commitment to strategic capital allocation that best aligns with the long-term interests of our stockholders remains constant. In 2023, we returned $20 million to stockholders in the form of dividends and another $39 million through share repurchases. We concluded the year with $72 million of share repurchase authorization remaining under our current program which is inclusive of the additional $70 million authorization that was announced in May. Recruitment and retention of top producers remains a key priority for our core business. Concurrently, we have aggressively explored several adjacent growth opportunities to further diversify our business geographically and to expand into complementary services. Although these transactions did not close due to a valuation gap, we continue to develop our pipeline and actively evaluate strategic acquisition opportunities.
Industry Position
The company’s leading position in investment sales and financing was accomplished through the efforts of our 1,783 member strong salesforce, the largest in our industry. Whether it was our participation in major industry conferences, our client webcasts which drew over 40,000 investors or providing insightful research and analysis, we are proud of the client guidance and touchpoints our team delivered at a difficult time for most investors. As we have highlighted in the past, we believe that the private client segment of the market will lead the turnaround and we feel confident in our positioning when activity inevitably does pick up.
Market Environment
We believe the Federal Reserve’s decision to pause interest rate hikes and turn to a more dovish stance has increased the market’s confidence in a soft landing for the economy. Despite ongoing challenges in the form of wide bid-ask spreads and tighter lending standards, clarity on interest rates and price adjustments are expected to provide positive tailwinds to the market in the second half of the year. Other factors such as distress in some sectors and debt maturities could also provide additional catalysts for activity.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 4
Looking Forward
As we turn to 2024 and beyond, MMI will stay the course and maintain the laser focus that has enabled our company to persist and thrive through multiple cycles since our founding over 50 years ago. We will strive to continue to drive operational excellence and refine our strategic capital allocation policy all with the goal of serving our clients and stockholders in the best way possible. Progress was made in 2023 to position our company for the eventual market recovery, and we will continue our efforts in strengthening our resilience and competitiveness going forward.
We thank our team for their hard work and our stockholders for their confidence in us over the past year and look forward to our continued partnership.
Sincerely,
Hessam Nadji
President, Chief Executive Officer
George M. Marcus
Chair of the Board of Directors
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This letter includes forward-looking statements, including statements regarding the company’s business outlook, strategies and industry position, and the market environment. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Please see our 2023 Annual Report on Form 10-K, which was filed with the SEC on February 27, 2024, for more information regarding the factors that could cause such differences. Forward-looking statements speak only as of the date of this letter. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable laws.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 5
About Marcus & Millichap
Marcus & Millichap, Inc. (“MMI”) is a leading national real estate services firm specializing in commercial real estate investment sales, financing services, research, and advisory services. We are the leading national investment brokerage company in the $1 million to $10 million private client market segment. This is the largest and most active market segment and comprised approximately 80% of total U.S. commercial property transactions greater than $1 million in the marketplace in 2023.
As of December 31, 2023, we had 1,783 investment sales and financing professionals that are primarily exclusive commission-based independent contractors who provide real estate investment brokerage and financing services to sellers and buyers of commercial real estate in over 80 offices in the United States and Canada. In 2023, we closed 7,546 sales, financing, and other transactions with total sales volume of approximately $43.6 billion.
We service clients by underwriting, marketing, selling, and financing commercial real estate properties in a manner that maximizes value for sellers, provides buyers with the largest and most diverse inventory of commercial properties, and secures the most competitive financing from lenders for borrowers.
We were founded in 1971 in the western United States, and we continue to increase our presence throughout North America through execution of our growth strategies by targeting markets based on population, employment, level of commercial real estate sales, inventory, and competitive landscape opportunities where we believe the markets will benefit from our business model. We have grown to have offices in 34 states across the United States and in four provinces in Canada.
Company Overview
At Marcus & Millichap, our commitment is to help our clients create and preserve wealth by providing them with the best real estate investment sales, financing, research, and advisory services.
National Platform Focused on
| ||
◾ Over 50 years of experience dedicated to perfecting real estate investment brokerage ◾ Designed to maximize real estate value, facilitate investment options by geography and property type, and create liquidity for investors | ||
Market Leader in the Private Client Market Segment
| ||
◾ Only national brokerage firm predominantly focused on servicing the Private Client Market segment which consistently accounts for 80%+ of CRE transactions in the U.S. ◾ Private client business has been supplemented with penetration in larger transactions and institutional clients for over a decade | ||
Platform Built for Maximizing Investor Value
| ||
◾ Marcus & Millichap Capital Corporation (“MMCC”), Research & Advisory support client dialogue, financing, strategy, and sales execution ◾ Culture and policy of information sharing is key to maximizing investor value | ||
Management With Significant
| ||
◾ Non-competitive management with extensive investment brokerage experience, committed to training, coaching, and supporting investment sales professionals ◾ Culture creates a competitive advantage through agent retention and better client results | ||
Well-Positioned to Execute on Strategic Growth Plan
| ||
◾ Positioned to increase Private Client Market segment share, expand presence in specialty niches/larger transaction business, and grow the MMCC division ◾ Strong balance sheet with no debt provides financial flexibility to pursue strategic acquisitions |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 6
PROPOSAL 1: Election of Directors
We are asking our stockholders to vote “FOR” three nominees to election as Class II Directors, each to serve on our Board of Directors (the “Board,” and each member a “Director”) for a three-year term until the 2027 Annual Meeting of Stockholders or until his or her successor is elected and qualified or, if earlier, the Director’s death, resignation, or removal.
Nominees and Continuing Directors
The following table sets forth information regarding the nominees standing for election at the Annual Meeting and our continuing Directors.
Nominee or Director Name |
Class | Election Year |
Age | Position(s) | Director Since |
|||||||
Nominees: | ||||||||||||
Collete English Dixon | II | 2024 | 66 | Director | 2021 | |||||||
Lauralee E. Martin | II | 2024 | 73 | Director | 2019 | |||||||
Nicholas F. McClanahan | II | 2024 | 79 | Director | 2013 | |||||||
Continuing Directors: | ||||||||||||
George M. Marcus | III | 2025 | 82 | Director, Founder, Chair of the Board |
1971 | |||||||
George T. Shaheen | III | 2025 | 79 | Director | 2013 | |||||||
Don C. Watters | III | 2025 | 81 | Director, Lead Independent Director |
2013 | |||||||
Norma J. Lawrence | I | 2026 | 69 | Director | 2013 | |||||||
Hessam Nadji | I | 2026 | 58 | Director, President, Chief Executive Officer | 2016 |
Recommendation of the Board
Provided that there is a quorum at the Annual Meeting, Directors are elected by a plurality of the votes cast by the stockholders entitled to vote at such election. Accordingly, subject to our Director Resignation Policy described in the “Corporate Governance” section below, the three nominees receiving the highest number of affirmative votes will be elected.
The individuals named as proxyholders will vote your shares for the election of these three nominees unless you direct them to withhold your vote. If any nominee is unable to serve or for good cause will not serve as a Director, the individuals named as proxyholders may vote for a substitute nominee. |
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH NOMINEE FOR DIRECTOR. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 7
Election of Directors
Nominee Selection Process
The Board is responsible for nominating persons for election as Directors of the Company. Our Board has delegated responsibility for identifying and evaluating individuals as members of the Board to our Nominating and Corporate Governance Committee.
1 Identify the |
Our Nominating and Corporate Governance Committee is charged with identifying, evaluating, and recommending director nominees to the full Board.
When seeking new director candidates, the Nominating and Corporate Governance Committee will consider potential candidates for directors submitted by Board members, members of our management, and our stockholders. The Nominating and Corporate Governance Committee does not evaluate candidates differently based upon the source of the nominee. |
|||||
2 Confirm Candidate |
Once a candidate has been identified, our Nominating and Corporate Governance Committee will confirm that the candidate meets the following general criteria:
◾ Nominees should have a reputation for integrity, honesty, and adherence to high ethical standards;
◾ Nominees should have demonstrated business acumen, experience, and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making process of the Company;
◾ Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board and its committees;
◾ Nominees should have the interest and ability to understand the sometimes-conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors, and the general public, and to act in the interests of all stockholders; and,
◾ Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director.
While we do not have a formal diversity policy for Board membership, we look for potential candidates that help ensure that the Board has a wide range of perspectives and backgrounds, and we understand the benefits of seeking qualified candidates reflecting the diversity in our community to include in the pool from which we select new Board members.
We also look for financial oversight experience, financial community experience, and a good reputation with the financial community; business management experience; business contacts, business knowledge, and influence that may be useful to our business; and knowledge about our industry. |
|||||
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 8
Election of Directors
3 Candidate |
The Nominating and Corporate Governance Committee takes such measures that it considers appropriate in connection with the evaluation of a candidate, including candidate interviews, inquiries of the person recommending the candidate, engagement of an outside search or personnel firm to gather additional information, or reliance on the knowledge of the members of the committee, the Board or management. | |||||
4 Committee |
The Nominating and Corporate Governance Committee recommends to the Board the persons to be nominated for election as directors at any meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board, taking into consideration direct input from the Chair of the Board, the Chief Executive Officer (“CEO”), and, if one is appointed, the Lead Independent Director. | |||||
5 Stockholder Vote |
Stockholders vote on director nominees at the Annual Meeting of Stockholders. | |||||
6 Implementation |
Since 2019, two new independent Directors have been added, both of whom will continue to serve as Directors after the Annual Meeting. We believe each of our Directors brings a diverse set of skills and perspectives that add significant value to our governance and oversight. | |||||
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 9
Election of Directors
Attributes, Skills and Experience of our Nominees and Continuing Directors
The Nominating and Corporate Governance Committee is responsible for reviewing with the Board, on an annual basis, the skills and characteristics of Board members, as well as the composition of the Board as a whole. This assessment includes determining whether members of the Board may be classified as “independent” and assessing their skills and experience in the context of the needs of the Board. The assessment also includes considering the diversity of the members’ skills and experience in areas that are relevant to the Company’s business and activities, including operations, finance, marketing, and sales.
Board Composition and Diversity
DIVERSITY
|
50% of Directors are gender and/or racially diverse Three Directors are Female One Director is African American One Director is Middle Eastern |
TENURE
Average tenure of eight years as of the end of 2023.
| ||||||||
0 to 5 Years | ||||||||||
5 to 10 Years | ||||||||||
> 10 Years | ||||||||||
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 10
Election of Directors
Background and Qualifications of Director Nominees and Continuing Directors
Set forth on the following pages are the names and ages of the Director nominees and the continuing Directors, the years they became Directors, their principal occupations or employment for at least the past five years, and the names of other public companies for which they serve as a Director or have served as a Director during the past five years. Also set forth below are the specific experiences, qualifications, or skills that led our Nominating and Corporate Governance Committee to conclude that each person should serve as a Director.
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
Collete English Dixon
Executive Director, Marshall Bennett Institute of Real Estate, Roosevelt University
Independent |
Director Since | Age | Committees | ||
2021 | 66 | Nominating and Corporate Governance |
Director Qualifications
◾ | Ms. English Dixon has extensive experience with the commercial real estate services industry and in evaluating acquisition opportunities as well as significant experience serving on the boards of several private companies. |
Experience and Biography
◾ | Serves as executive director of the Marshall Bennett Institute of Real Estate, Roosevelt University in Chicago. |
◾ | Currently serves as a managing principal of Libra Investment Group, LLC, a real estate consulting group, a position which she has held since September 2016. |
◾ | Previously held various key officer and management roles at PGIM Real Estate/Prudential Real Estate Investors (“PREI”), which is a business unit of Prudential Financial. |
◾ | In her role as executive director, vice president of transactions and as co-leader of PREI’s national investment dispositions program, she managed a number of real estate professionals and oversaw the sale of investment properties throughout the United States. |
◾ | Ms. English Dixon received a B.B.A. in finance and international business economics from the University of Notre Dame and an M.B.A. from Mercer University. |
Lauralee E. Martin
Former CEO and President, Healthpeak Properties, Inc.
Independent
|
Director Since | Age | Committees | ||
2019 | 73 | Audit, Executive |
Director Qualifications
◾ | Ms. Martin has extensive experience with the commercial real estate services industry and in evaluating acquisition opportunities, managing banking relationships and investor relations as well as significant experience serving on the boards of other public companies. |
Experience and Biography
◾ | Ms. Martin served as chief executive officer and president of Healthpeak Properties, Inc. (formerly HCP, Inc.), a real estate investment trust focusing on properties serving the healthcare industry, from October 2013 to July 2016. |
◾ | Served as chief executive officer of the Americas Division of Jones Lang LaSalle, Inc., a financial and professional services firm specializing in real estate services and investment management, from January 2013 to October 2013. |
◾ | Executive vice president and chief financial officer of Jones Lang LaSalle from January 2002 and was appointed chief operating and financial officer in October 2005 and served in that capacity until January 2013. |
◾ | 15 years with Heller Financial, Inc., a commercial finance company with international operations, where she was vice president, chief financial officer, senior group president and president of the Real Estate group. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 11
Election of Directors
◾ | Ms. Martin currently serves on the boards of Kaiser Aluminum Corporation and QuadReal Property Group, is an advisor to Beacon Capital Partners, and previously served on the board of Healthpeak Properties, Inc., ABM Industries, KeyCorp and Gables Residential Trust. |
◾ | Ms. Martin received a B.A. in English from Oregon State University and an M.B.A. from the University of Connecticut. |
Nominees for Election for a Three-Year Term Ending with the 2027 Annual Meeting of Stockholders
Nicholas F. McClanahan
Former Managing Director, Accretive Advisor Inc.
Independent |
Director Since | Age | Committees: | ||
2013 | 79 | Nominating and Corporate Governance (Chair), Compensation |
Director Qualifications
◾ | Mr. McClanahan possesses particular knowledge and experience in finance, capital structure, strategic planning, management and investment. |
Experience and Biography
◾ | Served as managing director of strategic relationships at Accretive Advisor Inc. from September 2010 to February 2012. |
◾ | From April 1971 through April 2006, Mr. McClanahan worked at Merrill Lynch & Co. in various positions, including as executive vice president of Merrill Lynch Canada and managing director of Merrill Lynch Private Banking Group from 2003 to 2005. |
◾ | Mr. McClanahan received a B.B.A. in finance from Florida Atlantic University and is a graduate of the Securities Industry Institute executive education program at The Wharton School at the University of Pennsylvania. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 12
Election of Directors
Directors Continuing in Office until the 2025 Annual Meeting of Stockholders
George M. Marcus
Founder, Chair Marcus & Millichap, Inc.
Non-Independent Director |
Director Since | Age | Committees | ||
1971 | 82 | Executive (Chair) |
Director Qualifications
◾ | Mr. Marcus is our founder and has served as our chair of the Board since 1971. He has extensive knowledge of the Company, over 45 years of experience working in the real estate industry and significant experience serving on boards of other public companies. |
Experience and Biography
◾ | Founder and chair of Marcus & Millichap Company, the parent company of a diversified group of real estate service investment and development firms, including, SummerHill Housing Group, Pacific Urban Investors and Meridian Property Company. |
◾ | Founder and chair of the board of Essex Property Trust, a public multifamily real estate investment trust, and was one of the original directors of Plaza Commerce Bank and Greater Bay Bancorp, both of which were formerly publicly held financial institutions. |
◾ | Professional memberships include Real Estate Roundtable, Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley and Urban Land Institute, as well as numerous other professional and community organizations. |
◾ | Mr. Marcus graduated with a B.S. degree in Economics from San Francisco State University in 1965, was honored as Alumnus of the Millennium in 1999, and received his honorary doctorate in 2011. In June 2019, Mr. Marcus received an honorary doctorate from the American College of Greece. He is also a graduate of Harvard Business School’s Owner/President Management Program and Georgetown University’s Leadership Program. |
George T. Shaheen
Advisor Andersen Global
Independent |
Director Since | Age | Committees | ||
2013 | 79 | Audit, Compensation, Nominating and Corporate Governance |
Director Qualifications
◾ | Mr. Shaheen has extensive experience as a senior executive and director of numerous companies, and he possesses significant business and leadership knowledge and experience. |
Experience and Biography
◾ | Currently serves as a director of NetApp, Inc., [24]7.ai, and Green Dot Corporation, along with its wholly owned subsidiary, Green Dot Bank. |
◾ | Currently serves as an advisor to Andersen Global, an international tax and legal advisory firm. |
◾ | Previously was the chief executive officer of Siebel Systems, Inc., a CRM software company, from April 2005 until the sale of the company in January 2006. |
◾ | From October 1999 to April 2001, he served as the chief executive officer and chair of the board of Webvan Group, Inc. |
◾ | Previously was the officer and global managing partner of Andersen Consulting, which later became Accenture, from 1988 to 1999. |
◾ | He has served as an IT Governor of the World Economic Forum and as a member of the board of advisors for the Northwestern University Kellogg Graduate School of Management. He has also served on the board of trustees of Bradley University. |
◾ | Mr. Shaheen received a B.S. in marketing and an M.B.A. in management from Bradley University. Mr. Shaheen has extensive experience as a senior executive and director of numerous companies, and he possesses significant business and leadership knowledge and experience. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 13
Election of Directors
Directors Continuing in Office until the 2025 Annual Meeting of Stockholders
Don C. Watters
Director Emeritus McKinsey & Company
Independent |
Director Since | Age | Committees: | ||
2013 | 81 | Compensation (Chair), Audit |
Director Qualifications
◾ | Mr. Watters possesses substantial knowledge and experience in strategic planning, organization, operations, and leadership of complex organizations. |
Experience and Biography
◾ | Mr. Watters is a director (senior partner) emeritus of McKinsey & Company, a global management consulting firm. During his 28 years with McKinsey & Company, Mr. Watters served primarily Fortune 500 sized private sector clients in over a dozen different industries on issues of strategy, organization and operations. |
◾ | Served on the board of directors of Merant PLC, a publicly traded company based in the United Kingdom from the late 1990s to 2004. |
◾ | Was on the advisory board of Cunningham Communication, Inc. Mr. Watters has served on the board of directors of numerous non-profit organizations, including the San Jose Ballet, the Tech Museum of Innovation, the American Leadership Forum Silicon Valley, the American Leadership Forum National, United Way Silicon Valley and the Bay Area Garden Railway Society, and is a member of the El Camino Hospital Board of Directors. |
◾ | Mr. Watters received a B.S. in engineering from the University of Michigan and an M.B.A. from Stanford University. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 14
Election of Directors
Directors Continuing in Office until the 2026 Annual Meeting of Stockholders
Norma J. Lawrence
Former Partner KPMG LLP
Independent Director |
Director Since | Age | Committees | ||
2013 | 69 | Audit (Chair), Nominating and Corporate Governance |
Director Qualifications
◾ | Ms. Lawrence possesses particular knowledge and expertise in accounting and financial matters in the real estate industry. |
Experience and Biography
◾ | Ms. Lawrence previously served on the board of Broadmark Realty Capital Inc. |
◾ | Served as a partner in the audit department of KPMG LLP where she specialized in real estate. |
◾ | Ms. Lawrence was with KPMG from 1979 through 2012 and she was a member of the National Association of Real Estate Investment Trusts, the Pension Real Estate Association, the National Council of Real Estate Investment Fiduciaries, the California Society of Certified Public Accountants, and the American Institute of Certified Public Accountants, and was a member of WomanCorporateDirectors. |
◾ | Ms. Lawrence received a B.A. in mathematics and an M.B.A. in finance and accounting from the University of California, Los Angeles. |
Hessam Nadji
President and CEO Marcus & Millichap, Inc.
Non-Independent |
Director Since | Age | Committees | ||
2016 | 58 | Executive |
Director Qualifications
◾ | Mr. Nadji has extensive knowledge of the Company and over 35 years of experience working in the real estate industry. |
Experience and Biography
◾ | Previously served as senior executive vice president and chief strategy officer at Marcus & Millichap, Inc. |
◾ | He joined the Company as vice president of research in 1996 and held various other senior management roles through the years, including chief marketing officer and head of the Company’s specialty brokerage divisions. |
◾ | Mr. Nadji received a B.S. in information management and computer science from City University in Seattle. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 15
Corporate Governance
Governance Highlights
The Board is committed to governance practices that promote long-term stockholder value and strengthen Board and management accountability to our stockholders, clients, and other stakeholders. The following table highlights many of our key governance practices.
◾ | Six of our eight Directors are independent |
◾ | We have a Lead Independent Director |
◾ | Separate CEO and Board Chair positions |
◾ | Independent standing board committees |
◾ | Regular meetings of our independent Directors without management present |
◾ | Four of our eight Directors are female and/or diverse |
◾ | Average Board tenure of eight years since initial public offering (as of the end of 2023) |
◾ | Annual Board and committee self-assessment process |
◾ | Strong focus on pay-for-performance |
◾ | Stock ownership guidelines for executive officers and Directors |
◾ | Policies prohibiting hedging, short selling, and pledging of our common stock |
◾ | Compensation recovery policy on executive compensation |
◾ | Review of cybersecurity, social issues, diversity, environmental sustainability, and public policy at the Board and Committee level |
Board Responsibilities and Structure
Our Board oversees, counsels, and directs management in the long-term interests of the Company and our stockholders. Among other things, the Board’s responsibilities include:
◾ | selecting the CEO and other executive officers; |
◾ | overseeing the risks that the Company faces; |
◾ | reviewing and approving our major financial objectives, strategic and operating plans, and other significant actions; |
◾ | overseeing the conduct of our business and the assessment of our business and other enterprise risks to evaluate whether the business is being properly managed; and |
◾ | overseeing the processes for maintaining our integrity regarding our financial statements and other public disclosures, and compliance with law and ethics. |
Board Classes
The Board is divided into three classes. Any Director appointed to fill a vacancy on the Board in a given year will stand for election at the Company’s annual meeting of stockholders in respect of the class to which the Director is appointed.
The Class I Directors are Norma J. Lawrence and Hessam Nadji, whose terms will expire at the 2026 Annual Meeting of Stockholders.
The Class II Directors are Collete English Dixon, Lauralee E. Martin, and Nicholas F. McClanahan, who are nominated to be elected at the Annual Meeting.
The Class III Directors are George M. Marcus, George T. Shaheen, and Don C. Watters, whose terms will expire at the 2025 Annual Meeting of Stockholders.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 16
Corporate Governance
Leadership of the Board
Our Amended and Restated Bylaws (“Bylaws”) do not dictate a particular Board structure, and the Board is free to determine whether to have a Chair of the Board and, if so, to select that Chair and our CEO in the manner it considers in our best interest. Additionally, when the Chair of the Board also serves as the CEO, or is not otherwise an independent Director, the Board may designate an independent Director to act as a Lead Independent Director. Currently, the Company has a separate Chair of the Board, Lead Independent Director, and CEO.
Chair of the Board | Lead Independent Director | Chief Executive Officer | ||
George M. Marcus | Don C. Watters | Hessam Nadji | ||
The responsibilities of the Chair include, among other responsibilities:
◾ Presiding over meetings of the Board
◾ Presiding over meetings of stockholders
◾ Preparing the agenda for each Board meeting
◾ In conjunction with the Compensation Committee, evaluating the performance of the CEO and reviewing CEO compensation |
The responsibilities of the Lead Independent Director include, among other responsibilities:
◾ Consulting with the Chair as to an appropriate schedule of Board meetings and providing the Chair with input as to the preparation of meeting agendas
◾ Consulting with the Chair as to the quality, quantity, and timeliness of the flow of information from Company management to the Board
◾ Acting as principal liaison between the Chair and the independent Directors
◾ Coordinating and presiding over meetings of independent Directors at which the Chair is not present
|
The responsibilities of the CEO include, among other responsibilities:
◾ Leading the affairs of the Company, subject to the overall direction and supervision of the Board and its committees
◾ Consulting and advising the Board and its committees on the business and affairs of the Company
◾ Performing such other duties as may be assigned by the Board |
Currently, the Board has selected George M. Marcus to hold the position of Chair of the Board. Mr. Marcus’ experience at the Company has afforded him intimate knowledge of the issues, challenges, and opportunities facing the Company’s business. Accordingly, he is well-positioned to focus the Board’s attention on the most pressing issues facing the Company.
The Board has appointed Don C. Watters as its Lead Independent Director. As Lead Independent Director, Mr. Watters oversees the executive sessions of the independent Directors and serves as a liaison between the independent Directors and the Chair of the Board.
The Board believes its administration of its risk oversight function has not affected the Board’s leadership structure.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 17
Corporate Governance
Director Independence
The Board is currently composed of eight Directors, six of whom are independent.
Our Corporate Governance Guidelines provide that our Board must be comprised of a majority of Directors who are not current employees of the Company and otherwise meet appropriate independence standards. In determining independence, the Board considers the definition of “independence” or “independent director” in the listing standards of the New York Stock Exchange (“NYSE”), laws and regulations applicable to the Company, and other factors that contribute to effective oversight and decision-making by the Board.
The Board has undertaken a review of its composition, the composition of its committees and, in coordination with the Nominating and Corporate Governance Committee, the independence of each Director. Based upon information requested from and provided by each Director concerning his or her background, employment, and affiliations, including family relationships, the Nominating and Corporate Governance Committee has recommended that the Board determine and the Board has determined that Collete English Dixon, Norma J. Lawrence, Lauralee E. Martin, Nicholas F. McClanahan, George T. Shaheen, and Don C. Watters, representing six of our eight Directors who served during 2023, do not or did not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director and that each of these Directors is “independent,” as that term is defined under the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and the listing requirements and rules of the NYSE.
Transactions Considered in Independence Determinations
In making its independence determinations, the Board considered any transactions that occurred since the beginning of 2023 between the Company and entities associated with the independent Directors or members of their immediate family. All identified transactions are described below in “Certain Relationships and Related Party Transactions.”
None of our Directors are disqualified from being “independent” under the NYSE objective standards, except for Mr. Nadji, our CEO. However, the Board also considered any transactions in the context of the NYSE objective standards, the special standards established by the SEC for members of audit committees, the SEC and NYSE standards for compensation committee members, and the beneficial ownership of our capital stock by each non-employee director. Based on the foregoing, as required by the NYSE rules, the Board made a subjective determination that no relationships exist that, in the opinion of the Board, would impair our non-employee directors’ independence, except in the case of Mr. Marcus.
Independent Directors
|
6 of 8 Directors are Independent |
Independent Committee Leadership
Audit Committee Chair | Independent | |||
Compensation Committee Chair | Independent | |||
Nominating and Corporate Governance Committee Chair | Independent |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 18
Corporate Governance
The Board of Directors and its Committees
The Board delegates various responsibilities and authority to different Board committees. Committees regularly report on their activities and actions to the full Board. The Board currently has, and appoints the members of, a standing Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Executive Committee.
Each of the Board committees has a written charter approved by the Board, and we post the charters on our website at https://ir. marcusmillichap.com/corporate-governance/governance-documents. Each committee can engage outside experts, advisors, and counsel to assist the committee in its work.
The following table identifies the current committee members.
Chair | Member |
Board Members | Independent | Audit | Compensation | Nominating and Corporate Governance |
Executive | |||||
Collete English Dixon | Yes | |||||||||
Norma J. Lawrence | Yes | |||||||||
George M. Marcus | ||||||||||
Lauralee E. Martin | Yes | |||||||||
Nicholas F. McClanahan | Yes | |||||||||
Hessam Nadji | ||||||||||
George T. Shaheen | Yes | |||||||||
Don C. Watters | Yes | |||||||||
Number of Committee Meetings Held in 2023 |
4 | 4 | 4 | 1 |
Attendance at Board, Committee, and Annual Stockholders’ Meetings
The Board and its committees meet throughout the year on a set schedule, hold special meetings, and act by written consent from time to time as appropriate. The Board held 5 meetings in 2023.
We expect each Director to attend every meeting of the Board and the committees on which he or she serves, and we encourage them to attend the annual meetings of the stockholders. None of our Directors attended fewer than 75% of the total number of meetings of the Board and committees on which he or she serves that were held during the time that he or she served on the Board or such committees during 2023. Everyone who served as a Director on the date of the 2023 Annual Meeting of Stockholders attended that meeting. We expect that all current directors will attend the upcoming Annual Meeting.
2023 Average Board and Committee Meeting Attendance
|
96%
|
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 19
Corporate Governance
Audit Committee
Current Members
Norma J Lawrence (Chair)
Lauralee E. Martin
George T. Shaheen
Don C. Watters
Independence
The Board has affirmatively determined that each member of the Audit Committee meets the definition of “independent director” for purposes of the NYSE rules and the independence requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The Board has also determined that each of Norma J. Lawrence and Lauralee E. Martin qualifies as an “audit committee financial expert” under the applicable SEC rules and regulations and that they are “financially literate” as that term is defined by the NYSE corporate governance requirements.
Meetings
The Audit Committee held 4 meetings in 2023.
Attendance |
Responsibilities
Among other responsibilities, the Audit Committee is charged by the Board with the authority and responsibility to:
◾ review and approve the selection of our independent registered public accounting firm, and approving the audit and non-audit services to be performed by our independent registered public accounting firm;
◾ monitor the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;
◾ review the adequacy and effectiveness of our internal control policies and procedures;
◾ oversee our internal audit function;
◾ discuss the scope and results of the audit with the independent registered public accounting firm, and review with management and the independent registered public accounting firm, our interim and year-end operating results;
◾ review, with management, cybersecurity and other risks relevant to the Company’s computerized information system controls and security, and determine if any such risks and incidents should be disclosed in the Company’s periodic filings with the SEC;
◾ oversee the principal risk exposures facing the Company and the Company’s mitigation efforts in respect of such risks, including, but not limited to financial reporting risks and credit and liquidity risks; and
◾ preparing the Audit Committee Report that the SEC requires in our annual proxy statement. |
2023 Average Audit Committee Meeting Attendance
|
94%
|
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 20
Corporate Governance
Compensation Committee
Current Members
Don C. Watters (Chair)
Nicholas F. McClanahan
George T. Shaheen
Independence
The Board has affirmatively determined that each of these Directors meets the definition of “independent director” for purposes of the NYSE rules and the independence requirements of the Exchange Act.
Meetings
The Compensation Committee held 4 meetings in 2023.
Attendance |
Responsibilities
Among other responsibilities, the Compensation Committee is charged by the Board with the authority and responsibility to:
◾ oversee our compensation policies, plans, and benefit programs;
◾ review and approve for our executive officers: annual base salary, annual cash incentives, including the specific goals and amount, equity compensation, employment agreements, severance arrangements, change in control arrangements, and any other benefits, compensation, or arrangements;
◾ administer our equity compensation plans;
◾ prepare the Compensation Committee Report that the SEC requires in our annual proxy statement; and
◾ oversee the development, implementation and effectiveness of our policies, strategies, programs, and practices relating to human capital management. |
2023 Average Compensation Committee Meeting Attendance
|
92%
|
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 21
Corporate Governance
Nominating and Corporate Governance Committee
Current Members
Nicholas F. McClanahan (Chair)
Collete English Dixon
Norma J. Lawrence
George T. Shaheen
Independence
The Board has affirmatively determined that each of these Directors meets the definition of “independent director” for purposes of the NYSE rules and the independence requirements of the Exchange Act.
Meetings
The Nominating and Corporate Governance Committee held 4 meetings in 2023.
Attendance
|
Responsibilities
Among other responsibilities, the Nominating and Corporate Governance Committee is charged by the Board with the authority and responsibility to:
◾ identify, evaluate, and recommend to the Board for nomination candidates for membership on the Board;
◾ review with the Board on an annual basis, the independence, skills and characteristics of Board members, and the skills and characteristics of the Board as a whole, in determining whether to recommend incumbent Directors in the class subject to re-election;
◾ prepare and recommend to the Board corporate governance guidelines and policies;
◾ review and evaluate our policies and practices and monitoring our efforts and risk oversight in the areas of social issues, diversity, environmental sustainability, and public policy, and recommend changes for approval by the Board; and
◾ identify, evaluate, and recommend to the Board the chair and membership of each committee of the Board. |
2023 Average Nominating and Corporate Governance Committee Meeting Attendance
|
100%
|
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 22
Corporate Governance
Executive Committee
Current Members
George M. Marcus (Chair)
Lauralee E. Martin
Hessam Nadji
Independence
The Board has affirmatively determined that Lauralee E. Martin meets the definition of an “independent director” for purposes of the NYSE rules and the independence requirements of the Exchange Act.
Meetings
The Executive Committee held 1 meeting in 2023.
Attendance |
Responsibilities
The Executive Committee is charged by the Board with the authority and responsibility to take any and all actions which may be taken by the Board, including acting upon recommendations of other Committees of the Board, and administering the Company’s stock plans (including the granting of stock options and stock awards thereunder), except those actions reserved by law to the full Board or as limited by the Executive Committee Charter. |
2023 Average Executive Committee Meeting Attendance
|
100%
|
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 23
Corporate Governance
Director Resignation Policy
A Director who changes the business or professional responsibility they held when they were elected to the Board, or whose personal circumstances have changed to the extent that it affects his or her ability to contribute to the Company’s continued development, should consult with the Chair of the Board and the Chair of the Nominating and Corporate Governance Committee and shall tender his or her resignation to the Board. The Nominating and Corporate Governance Committee will recommend to the Board the action, if any, to be taken with respect to the resignation. Any executive officer of the Company who serves on the Board shall submit his or her resignation to the Board at the time such officer ceases to be an executive officer of the Company.
The Board believes that term or age limits are, on balance, not the best way to maximize the effectiveness of the Board. While term limits may introduce fresh perspectives and viewpoints to the Board, they may also have the countervailing effect of causing the loss of contributions from Directors who have developed deep insight into the Company through years of experience.
As an alternative to term limits the Nominating and Corporate Governance Committee reviews the appropriateness of each Board member’s continued service every three years in connection with evaluating the appropriateness of their recommendation. Likewise, the Board does not believe that a mandatory retirement age is appropriate but will assess each Director’s ability to continue serving on the Board every three years in connection with evaluating the appropriateness of their recommendation.
Director Time Commitments
We believe that our Directors should be committed to enhancing stockholder value and should dedicate sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. We believe our Directors should not serve on an excessive number of boards of other public companies to permit them, given their individual circumstances, to perform and carry out all Director duties in a responsible manner.
Board and Committee Evaluations
The Board conducts a self-evaluation of its performance and the performance of individual Directors from time to time. The Nominating and Corporate Governance Committee is responsible for establishing the evaluation criteria and overseeing the evaluations. Each committee also evaluates its performance periodically.
Director Orientation and Continuing Education
In connection with the appointment of new members to the Board, management provides new Board members with Director orientation materials, including presentations from senior executives and Company policies. Each Director is expected to participate in continuing education programs to maintain the necessary level of expertise to perform his or her responsibilities.
CEO Evaluation and Succession Planning
The Compensation Committee conducts a review of the performance of the CEO at least annually. The Compensation Committee establishes the evaluation process and determines the specific criteria on which the performance of the CEO is evaluated. The results of the review and evaluation are communicated to the CEO by the Chair of the Board and the Chair of the Compensation Committee.
The CEO reviews succession planning and management development with the Board on an annual basis.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 24
Corporate Governance
The Board’s Role in Risk Oversight
Our Company faces a number of risks, including operational, economic, financial, legal, regulatory, and competitive risks. Our management is responsible for the day-to-day management of the risks we face. While our Board, as a whole, has the ultimate responsibility for the oversight of risk management, it administers its risk oversight role in part through the Board committee structure, with the Audit, Compensation, and Nominating and Corporate Governance Committees being responsible for monitoring and reporting on the material risks associated with their respective subject matter areas.
The Board | ||||
The Board’s role in our risk oversight process includes receiving regular reports from members of senior management, as well as external advisors, on areas of material risk to us, including operational, economic, financial, legal, regulatory, cybersecurity, and competitive risks. The full Board (or the appropriate committee in the case of risks that are reviewed by a particular committee) receives these reports from those responsible for the relevant risk to better understand our risk exposures and the steps that management may take to monitor and control these exposures. When a committee receives the report, the chair of the relevant committee generally will provide a summary to the full Board at the next Board meeting, allowing the Board and its committees to coordinate the risk oversight role. | ||||
Committee Responsibilities | ||||
Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | ||
The Audit Committee assists the Board in oversight and monitoring of principal risk exposures related to financial statements, legal, regulatory, cybersecurity, and other matters, as well as related mitigation efforts and receives regular reports on such matters from the Company’s Chief Information Officer and Chief Compliance Officer. | The Compensation Committee assesses, at least annually, the risks associated with our compensation policies. | The Nominating and Corporate Governance Committee assists the Board in oversight of risks that we have relative to compliance with corporate governance standards.
This includes oversight of risks related to social issues, diversity, environmental sustainability, and public policy. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 25
Corporate Governance
Cybersecurity and Risk Oversight
Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board and management.
The Role of the Board
The Audit Committee of our Board, which is comprised entirely of independent Directors, is responsible for the oversight of risks from cybersecurity threats and other risks relevant to the Company’s information technology controls and security.
At least quarterly, the Audit Committee receives an overview from management of our cybersecurity threat risk management and strategy processes covering topics such as data security posture, results from third-party assessments, progress towards pre-determined risk-mitigation-related goals, our incident response plan, and material cybersecurity threat risks or incidents and developments, as well as the steps management has taken to respond to such risks. In such sessions, the Audit Committee generally receives materials indicating current and emerging material cybersecurity threat risks, and describing the company’s ability to mitigate those risks, and discusses such matters with our Chief Information Officer.
Members of the Audit Committee are also encouraged to regularly engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.
Material cybersecurity threat risks are also considered during separate Board meeting discussions of important matters like risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters.
The Role of Management
Our cybersecurity risk management and strategy processes are led by our Chief Information Officer, who is ultimately responsible for our information
security program. This includes identifying threats, detecting potential attacks, and protecting all of our information assets.
Our process for identifying and assessing material risks from cybersecurity threats operates alongside our broader overall risk assessment process, covering all company risks. As part of this process, appropriate disclosure personnel collaborate with subject matter specialists, as necessary, to gather insights for identifying and assessing material cybersecurity threat risks, their severity, and potential mitigations.
Additionally, we maintain a cybersecurity-specific risk assessment process which helps identify our cybersecurity threat risks. This process also aims to provide for the availability of critical data and systems, maintain regulatory compliance, identify and manage our risks from cybersecurity threats, and protect against, detect, and respond to cybersecurity incidents. This includes periodic comparison of our processes to standards set by the National Institute of Standards and Technology.
We carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident.
As part of our information security program, we maintain an incident response plan which coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
The firm’s senior executive team, inclusive of the CEO, CFO, COO, CAO and Legal, are informed about and monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 26
Corporate Governance
Our Cybersecurity Oversight Structure
The Board |
Audit Committee |
Chief Information Officer |
Cybersecurity Team |
Corporate Governance Guidelines
We are committed to having sound corporate governance practices and have adopted formal Corporate Governance Guidelines to enhance our effectiveness.
The Nominating and Corporate Governance Committee is responsible for developing and reviewing our Corporate Governance Guidelines, and for preparing and recommending any changes to our Corporate Governance Guidelines and policies to the Board.
Having such principles is essential to running our business efficiently and maintaining our integrity in the marketplace. A copy of our Corporate Governance Guidelines is available on our website at https://ir.marcusmillichap.com/corporate-governance/governance-documents.
Code of Ethics
We strive to conduct our business with the highest integrity and standards of ethics and governance that support our values. This includes promoting fair labor practices, upholding human rights, and compliance with legal requirements, including those that address bribery and corruption. This also includes implementing policies, practices, and trainings that convey our expectations and values and meet stakeholder needs.
As part of this effort, we adopted a Code of Ethics. The Code of Ethics does not attempt to identify every possible category of ethical and legal behavior, but instead sets forth our clear expectations for ethical and honest behavior. We are committed to legal compliance, fair dealing, and addressing internal and external ethical concerns, which we do in part through our Ethics Hotline, which allows for anonymous reporting and direct communication with the Company’s Compliance Officer. Our expectations for ethics are further embedded into our practices through cross-discipline education and trainings, which are provided at the individual, office, and company-wide levels.
Our Audit Committee is responsible for reviewing and evaluating our policies and practices and monitoring our efforts in the area of ethics.
Our Code of Ethics can be found at https://ir. marcusmillichap.com/corporate-governance/governance-documents. Any amendments to the Code of Ethics, or any waivers of their requirements required to be disclosed pursuant to SEC or NYSE requirements, will be disclosed on the website.
Human Capital Oversight
Our Compensation Committee is responsible for the development, implementation and effectiveness of our policies, strategies, programs, and practices relating to human capital management including but not limited to those regarding recruiting, talent development and retention, culture, human health and safety and total rewards.
Our Nominating and Corporate Governance Committee is responsible for reviewing and evaluating our policies and practices and monitoring our efforts and risk oversight in the area of diversity.
For more information about our human capital efforts, please refer to the section entitled “Human Capital” in our Annual Report on Form 10-K for 2023.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 27
Corporate Governance
Sustainability
We recognize that operating our business in a sustainable manner is important to our success. For this reason, we are exploring ways to address the environmental impact of our business, reduce carbon emissions, increase energy efficiency, reduce waste, and limit our consumption of natural resources.
More information on our Commitment to Sustainability policy can be found at: https://ir.marcusmillichap.com/esg/a-commitment-to-sustainability.
Commitment to People and Community – Corporate Responsibility
Marcus & Millichap maintains a Corporate Responsibility Policy. This policy memorializes our commitment to our employees, our community, and our stakeholders, as we believe taking into account the interests of our stakeholders drive the success of our business.
More information on our Corporate Responsibility Policy can be found at:
https://ir.marcusmillichap.com/esg/corporate-social-responsibility.
Communications from Stockholders and Other Interested Parties to Directors
The Board recommends that stockholders and other interested parties initiate communications with the Board, any committee of the Board, or any individual Director in writing to the attention of our Corporate Secretary at our principal executive office at 23975 Park Sorrento, Suite 400, Calabasas, CA 91302. This process will assist the Board in reviewing and responding to stockholder communications in an appropriate manner. The Board has instructed our Corporate Secretary to review such correspondence and, at the Corporate Secretary’s discretion, not to forward items if the Corporate Secretary deems them to be of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 28
PROPOSAL 2: Ratification of Appointment of Independent Registered Public Accounting Firm for 2024
Ernst & Young LLP has served as our independent registered public accounting firm since 2013. The Audit Committee has once again selected Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2024. As a matter of good corporate governance, the Audit Committee is submitting its appointment to our stockholders for ratification. If the appointment of Ernst & Young LLP is not ratified by a majority of the shares of our common stock present or represented at the Annual Meeting and entitled to vote on the proposal, the Audit Committee will review its future appointment of an independent registered public accounting firm in light of that vote result.
The Audit Committee pre-approves and reviews audit and non-audit services performed by our independent registered public accounting firm, as well as the fees charged for audit services. In its pre-approval and review of non-audit services, the Audit Committee considers, among other factors, the possible effect of the performance of such services on the auditor’s independence. For additional information concerning the Audit Committee and its activities with the independent registered public accounting firm, see “Corporate Governance” and “Audit Committee Report” in this Proxy Statement.
We expect that a representative of Ernst & Young LLP will attend the Annual Meeting, and the representative will have an opportunity to make a statement if he or she so chooses. The representative will also be available to respond to appropriate questions from stockholders.
Fees Billed by Independent Registered Public Accounting Firm
The following table shows the fees and related expenses for audit and other services provided by Ernst & Young LLP in 2023 and 2022. The services described in the following fee table were approved in conformity with the Audit Committee’s pre-approval process.
2023 | 2022 | |||||||
Audit Fees |
$ | 1,340,482 | $ | 1,278,537 | ||||
Audit-Related Fees |
— | — | ||||||
Tax Fees |
— | — | ||||||
All Other Fees |
— | — | ||||||
|
|
|
|
|||||
Total |
$ | 1,340,482 | $ | 1,278,537 | ||||
|
|
|
|
Audit Fees. This category includes fees for (i) the audit of our annual consolidated financial statements, (ii) reviews of our quarterly condensed consolidated financial statements, and (iii) services that are normally provided by our independent auditors in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. This category includes fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.”
Tax Fees. This category includes fees for professional services for tax compliance, tax advice, and tax planning. These services include assistance regarding federal, state, and international tax compliance, assistance with tax reporting requirements and audit compliance, tax planning, consulting, and assistance on business restructuring.
All Other Fees. This category includes fees for products and services other than the services reported above. These services included cyber security consultation and impact analysis and environmental, social and governance framework development and materiality assessment.
The Audit Committee determined that Ernst & Young LLP’s provision of these services, and the fees that we paid for these services, are compatible with maintaining the independence of the independent registered public accounting firm. The Audit Committee pre-approved all services that Ernst & Young LLP provided for 2022 and 2023 in accordance with the pre-approval policy discussed above.
Recommendation of the Board
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2024.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 29
Audit Committee Report
The Audit Committee of the Board consists of the four Directors whose names appear below. The Audit Committee is composed exclusively of Directors, who are independent under the NYSE listing standards and the SEC rules.
The Audit Committee’s general role is to assist the Board in monitoring the Company’s financial reporting process and related matters. Its specific responsibilities are set forth in its charter.
The Audit Committee has reviewed the Company’s audited financial statements for the year ended December 31, 2023, and met with management, as well as with representatives of Ernst & Young LLP, the Company’s independent registered public accounting firm, to discuss the financial statements. The Audit Committee also discussed with members of Ernst & Young LLP, the matters required to be discussed by the applicable Public Company Accounting Oversight Board and SEC requirements.
In addition, the Audit Committee received the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with members of Ernst & Young LLP, its independence.
Based on these discussions, the financial statement review, and other matters it deemed relevant, the Audit Committee recommended to the Board that the Company’s audited financial statements for the year ended December 31, 2023 be included in the Company’s Annual Report on Form 10-K for 2023.
Norma J. Lawrence (Chair)
Lauralee E. Martin
George T. Shaheen
Don C. Watters
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 30
PROPOSAL 3: Advisory Vote to Approve Executive Compensation
In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, our stockholders are being asked to cast an advisory vote to approve the compensation of our named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables (a “say-on-pay” vote).
Our executive compensation program is designed to reward performance in a simple and effective way. We believe the compensation paid to our named executive officers for 2023 appropriately reflects and rewards their contributions to our performance and is aligned with the long-term interests of our stockholders.
We encourage stockholders to read the Compensation Discussion and Analysis, beginning on page 32 of this Proxy Statement, which describes the details of our executive compensation program and the decisions made by the Compensation Committee in 2023.
Stockholders are being asked to approve the following resolution at the Annual Meeting:
“RESOLVED, that the compensation paid to the named executive officers, as disclosed in this Proxy Statement pursuant to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables), is hereby approved.”
As an advisory vote, this proposal is not binding on the Company, the Board, or the Compensation Committee. However, the Board and the Compensation Committee value the opinions expressed by stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding named executive officers.
We currently conduct annual advisory votes on executive compensation, and we expect to conduct the next advisory vote on executive compensation at our 2025 Annual Meeting of Stockholders.
Recommendation of the Board
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE NON-BINDING RESOLUTION TO APPROVE EXECUTIVE COMPENSATION.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 31
Compensation
Compensation Discussion and Analysis
In this Compensation Discussion and Analysis, we discuss our compensation philosophy and executive compensation program, as well as describe and analyze our compensation actions and decisions for our named executive officers for the fiscal year ended December 31, 2023 (each, an “NEO”). For 2023, our NEOs and their designated titles are as follows:
◾ | Hessam Nadji, President and Chief Executive Officer |
◾ | Steven F. DeGennaro, Executive Vice President and Chief Financial Officer |
◾ | Richard Matricaria, Executive Vice President and Chief Operating Officer, Western Division |
◾ | John David Parker, Executive Vice President and Chief Operating Officer, Eastern Division |
◾ | Gregory A. LaBerge, Senior Vice President, Chief Administrative Officer |
2023 Business Overview
We remained resilient and continued to make progress toward our long-term goals despite significant market headwinds experienced across the U.S. commercial real estate industry last year. According to CoStar and MSCI, 2023 U.S. commercial real estate transaction volume declined by an estimated 55% compared to prior year driven by the Federal Reserve’s fight against inflation, which resulted in significant interest rate volatility, and the regional banking crisis, which further exacerbated an already constrained lending environment.
In this environment, our team delivered revenue of $646 million and a net loss of $34 million in 2023, which largely reflects the impact of a 39% decline in total transactions. In addition, our earnings were pressured by expenses related to capital invested in top talent acquisition and retention, technological innovations and expanding our technology platform, which we believe will be instrumental in helping us lead in the recovery and long-term growth of the Company. We believe the Company is well positioned to not only withstand the current market dislocation but to leverage the downturn to our advantage. We ended the year with $407 million in cash, cash equivalents, and marketable debt securities, available-for-sale.
In 2023, our management team also adopted a range of strategic measures to mitigate the impact of the market disruption while also strengthening the MMI platform. We implemented cost control initiatives aimed at reducing the interim impact of lower revenue while continuing to make well-underwritten investments essential to long-term growth. Focusing on our people, we continued to provide broker training, retention of top producers and recruitment of experienced professionals and teams. We prioritized enhancing our ability to serve client needs by expanding marketing efforts, further integrating our auction teams into the sales process and leveraging technology. The ongoing elevation of our brand was on pace once again with marquee client webcasts, industry-leading research content, and commanding presence in the media as well as at industry conferences. These combined efforts helped contribute to over 7,000 closings and nearly $45 billion in volume, keeping MMI as the top ranked commercial real estate brokerage firm by transactions last year.
Our commitment to strategic capital allocation that best aligns with the long-term interests of our stockholders also remained constant. In 2023, we returned $20 million to stockholders in the form of dividends and another $39 million through share repurchases.
While we continue to navigate near-term challenges, we remain committed to sustaining our long-term mindset. This includes building competitive advantages, continuing to prioritize delivering best-in-class services for our clients, and strategically deploying capital to further strengthen our internal resources and enhancing growth opportunities externally in the coming years.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 32
Compensation
Alignment of CEO Compensation and Company Performance
We designed our 2023 executive compensation program to motivate and reward executive performance. The chart below indicates the Summary Compensation Table total compensation and compensation actually paid for Hessam Nadji, our President and CEO, for each of 2021, 2022 and 2023, as reported in the 2023 Summary Compensation Table and the Pay Versus Performance Table, respectively. Mr. Nadji’s Summary Compensation Table total compensation for 2023 increased primarily due to an additional grant he received, as further described below. As the chart illustrates, our CEO compensation is generally aligned with total stockholder return (“TSR”). While we did not achieve our pre-tax net income target for our annual incentive plan, which is reflected in our CEO’s annual cash incentive award and annual restricted stock unit (“RSU”) grant, our stock price increased in 2023 from $34.45 to $43.68, or a 27% increase, which is reflected in the value of his unvested equity awards as of the end of 2023.
Given the Company’s overall financial performance in 2023, the Compensation Committee reduced the earned amount of our CEO’s annual cash incentive award for 2023 by an additional $175,000, which resulted in a 65% decrease in our CEO’s earned annual incentive award from 2022. In addition, the Compensation Committee also reduced the size of his 2024 annual RSU grant from 92,000 RSUs to 72,000 RSUs, which represented a 22% decrease in the number of RSUs from 2023.
Compensation Philosophy
Our executive compensation program is intended to achieve the following objectives:
◾ | Attract and incentivize talented individuals to lead and manage our business |
◾ | Align our executive officers’ compensation with our business objectives and the interests of our stockholders |
◾ | Reward our executive officers fairly over time based on actual performance and retain those individuals who continue to meet our high expectations |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 33
Compensation
Compensation Policies and Practices
Our executive compensation program and corporate governance policies are designed to link pay with operational performance and increase in long-term stockholder value while striking a responsible balance between risk and reward. To accomplish these objectives, we have adopted the following policies and practices over time:
What We Do |
What We Don’t Do | |
✓ Pay-for-performance philosophy and culture
✓ More than two-thirds of our current NEOs’ total target direct compensation is performance-based and/or at risk
✓ Independent compensation committee
✓ Independent compensation consultant
✓ Compensation recovery policy for executive officers on cash and equity incentives
✓ Responsible use of shares under our long-term incentive program
✓ Robust stock ownership requirements
✓ Annual risk assessment of our compensation program
✓ Limited perquisites and personal benefits |
× Minimum guaranteed vesting for performance-based equity awards
× Allow for pledging and hedging of Company stock by executive officers, Directors, employees, and independent contractor agents
× Single trigger vesting of equity awards
× Excessive severance or change in control benefits
× Payout or settlement of dividends and dividend equivalents on unvested equity awards
× Reprice, cash-out or exchange “underwater” stock options without stockholder approval
× Tax gross-ups
× Executive pension plans or supplemental retirement plans |
Stockholder Advisory Vote on Executive Compensation
The Compensation Committee is interested in the ideas and any concerns of our stockholders regarding executive compensation. At last year’s Annual Meeting of Stockholders, approximately 92.6% of votes cast (for or against) by stockholders supported the advisory vote on executive compensation. In evaluating our compensation practices in 2023, the Compensation Committee was mindful of the strong support our stockholders expressed for the Company’s philosophy of linking compensation to operational objectives and the enhancement of stockholder value. As a result, no changes to the executive compensation program were made based on the results of the 2023 advisory vote.
Elements of 2023 Compensation
This section describes the elements of our NEOs’ 2023 compensation, which consist of the following:
Direct Compensation |
Indirect Compensation | |
◾ Base Salary |
◾ Employee Benefits | |
◾ Annual Cash Incentives |
||
◾ Long-Term Equity Incentives |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 34
Compensation
In 2023, approximately 94% of our CEO’s and about 80% on average of our other NEOs’ target total direct compensation was “at-risk” and/or performance-based.
(1) | Reflects target amounts and not amounts actually earned. |
Base Salary
Base salary is a fixed component of our NEOs’ compensation and does not vary with Company performance. Base salaries are set at levels intended to be competitive and commensurate with each executive officer’s position, performance, skills, and experience to attract and retain the best talent. The Compensation Committee reviews base salaries for our executive officers annually and adjusts them, if needed, to reflect changes in market conditions or other factors, including business climate and changing responsibilities as our executive officers’ positions evolve.
In February 2023, after considering each NEO’s individual performance and responsibilities, as well as the business climate and a market data analysis of the Company’s peer group, the Compensation Committee determined that each NEO’s base salary remained market competitive and commensurate with each NEO’s role, responsibilities, and performance.
The table below sets forth our NEOs’ 2023 base salary levels and our NEOs’ base salary increases compared to 2022 base salary levels.
NEO |
2023 Annual Base Salary |
2022 Annual Base Salary |
Percentage Increase | |||||||
Hessam Nadji |
$ | 700,000 | $ | 700,000 | — | |||||
Steven F. DeGennaro |
$ | 400,000 | $ | 400,000 | — | |||||
Richard Matricaria |
$ | 400,000 | $ | 400,000 | — | |||||
John David Parker |
$ | 400,000 | $ | 400,000 | — | |||||
Gregory A. LaBerge |
$ | 350,000 | $ | 350,000 | — |
Annual Cash Incentives
In 2023, all our executive officers participated in the 2023 Executive Short-Term Incentive Plan (the “2023 Annual Incentive Plan”). The Compensation Committee established certain financial and non-financial goals in February 2023, which are discussed in more detail below.
Annual cash incentives are designed to reward annual accomplishments against pre-established financial and strategic goals. The Compensation Committee approved 2023 target short-term cash incentive award opportunities for the NEOs in the amounts set forth below, which represented a 15% decrease from each NEO’s target annual incentive opportunity in 2022. In making this decision, the Compensation Committee considered each NEO’s individual performance and responsibilities, historical target amounts, business conditions and a
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 35
Compensation
market data analysis of the Company’s peer group and, ultimately, determined that business conditions warranted a uniform decrease in target annual cash incentive opportunities.
NEO |
2023 Target Annual Incentive Opportunity |
2022 Target Annual Incentive Opportunity |
Percentage Decrease | |||||||
Hessam Nadji |
$ | 2,295,000 | $ | 2,700,000 | (15%) | |||||
Steven F. DeGennaro |
$ | 807,500 | $ | 950,000 | (15%) | |||||
Richard Matricaria |
$ | 1,317,500 | $ | 1,550,000 | (15%) | |||||
John David Parker |
$ | 1,317,500 | $ | 1,550,000 | (15%) | |||||
Gregory A. LaBerge |
$ | 467,500 | $ | 550,000 | (15%) |
Actual annual incentive awards could range from 0% to 200% of each NEO’s target based on performance against the performance goals. In addition, the Compensation Committee retained the flexibility to adjust awards based on the Company and each NEO’s performance and any other factors they deem appropriate.
Annual incentives for 2023 were based on a combination of financial and individual strategic performance goals.
The weightings between each performance category for each NEO were as follows:
NEO |
MMI Financial Performance |
Individual/Strategic Performance |
||||||
Hessam Nadji |
50% | 50% | ||||||
Steven F. DeGennaro |
40% | 60% | ||||||
Richard Matricaria |
40% | 60% | ||||||
John David Parker |
40% | 60% | ||||||
Gregory A. LaBerge |
25% | 75% |
Financial Objectives for 2023.
Pre-tax net income is used for the financial performance goal for the Company’s Annual Incentive Plan because it provides a consistent, firm, and accurate measure of the Company’s overall financial performance and profitability, as it excludes the impact of tax considerations, which can be complex and variable due to the nature of our business, and the various state, local, and foreign taxes that we are subject to.
As discussed in more detail above, our business was negatively impacted by the significant market headwinds experienced across the U.S. commercial real estate industry starting in the second half of 2022 and continuing through 2023. As a result, our internal operating plan anticipated significantly lower net income than that achieved in 2022. To ensure our annual cash incentive program was appropriately rigorous, the Compensation Committee set the pre-tax net income financial performance target 19% higher than our internal operating plan (i.e., the annual cash incentive program target was pre-tax net income of $65 million versus our pre-tax net income budget of $54.6 million). The 2023 target goal was established on the premise of the Federal Reserve’s interest rate hikes ending by the second quarter and bringing about improving market conditions starting in the third quarter, which ultimately did not occur. The Compensation Committee also determined that approving such an aggressive goal in combination with reducing each NEO’s target annual incentive opportunity by 15% was appropriate given the prior year’s results and the desire to incentivize strong financial performance.
Despite being the top ranked brokerage firm by transactions in 2023, we incurred a pre-tax net loss of $40.4 million, due to the significant decline in total transactions, as well as expenses related to the capital that we invested in talent acquisition and retention, technological innovations and expanding our platform. This resulted in no payout for the financial performance component of each NEO’s target annual incentive opportunity.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 36
Compensation
Individual Strategic Objectives for 2023.
Individual strategic goals varied for each executive and related to the following:
NEO |
Individual Strategic Performance Goals | |
Hessam Nadji | Retention rate, recruiting, sales force advancements, marketing, technology and skill development initiatives, and strategic initiatives | |
Steven F. DeGennaro | Financial services operational improvements, analyst expectation management, investor relations function management, and strategic initiatives, including executing strategic priorities in partnership with the CEO | |
Richard Matricaria | Retention rate, recruiting, and strategic initiatives, including successfully executing key initiatives and supporting the CEO in managing positive outcomes for key people and projects | |
John David Parker | Retention rate, recruiting, and strategic initiatives, including leading special projects and focuses, successfully executing key initiatives and supporting the CEO in managing outcomes for key people and projects | |
Gregory A. LaBerge | Retention rate, technology enhancements, strategic initiatives, and operational and administrative support improvements |
The Compensation Committee evaluated each NEO’s performance against his strategic goals to make an overall determination of the aggregate achievement for each NEO. Based on this evaluation, the Compensation Committee determined that each NEO met or largely achieved most of his strategic goals. Key performance highlights that were considered by the Compensation Committee in assessing the achievements of the NEOs included:
◾ | Provided business development support to the salesforce through research content, industry conferences and private label events. |
◾ | Achieved a pre-established retention rate at 95% of target, despite a highly competitive landscape for talent. |
◾ | Aggressively explored several adjacent growth opportunities to further diversify our business geographically and to expand into complementary services. |
◾ | Adopted a range of strategic measures to mitigate the impact of the market disruption while also strengthening the MMI platform. |
◾ | Implemented cost control initiatives aimed at reducing the interim impact of lower revenue while continuing to make well-underwritten investments essential to long-term growth. |
◾ | Prioritized enhancing our ability to serve client needs by expanding marketing efforts, further integrating our auction teams into the sales process, and leveraging technology. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 37
Compensation
Despite these individual achievements, given the Company’s overall financial performance, the Compensation Committee chose to reduce the earned amount of each NEO’s annual incentive award by $175,000 in the case of Mr. Nadji, $100,000 in the case of Mr. Matricaria and Mr. Parker, and $50,000 in the case of Mr. DeGennaro and Mr. LaBerge. The earned amount of each NEO’s annual incentive award prior to the reduction and the amount of each NEO’s actual annual incentive award are set forth in the table below.
NEO |
Target Annual Incentive Opportunity ($) |
Award Earned Prior to Reduction ($) |
Actual Award Following Reduction ($) |
Actual Award (% of Target) | ||||||||||
Hessam Nadji |
$ | 2,295,000 | $ | 986,850 | $ | 811,850 | 35.4% | |||||||
Steven F. DeGennaro |
$ | 807,500 | $ | 464,313 | $ | 414,313 | 51.3% | |||||||
Richard Matricaria |
$ | 1,317,500 | $ | 523,706 | $ | 423,706 | 32.2% | |||||||
John David Parker |
$ | 1,317,500 | $ | 645,575 | $ | 545,575 | 41.4% | |||||||
Gregory A. LaBerge |
$ | 467,500 | $ | 305,044 | $ | 255,044 | 54.6% |
Long-Term Incentives
Our long-term incentive program generally consists of annual grants of RSUs, which align the interests of management with those of stockholders, promote retention of key talent, and reward total stockholder return performance. When determining the appropriate RSU grants for the NEOs, the Compensation Committee considers each NEO’s role, responsibilities, past performance, future potential, current level of ownership, and amount of unvested equity holdings. Generally, for NEOs other than the CEO, the Compensation Committee has chosen to award RSUs that have a grant date fair value that does not exceed 50% of each NEO’s actual annual incentive award for the prior year, with the actual number of RSUs to be determined based on the consideration of the foregoing factors.
After considering the Company’s and each NEO’s 2022 performance relative to the metrics set forth in the annual incentive plan for 2022, each NEO’s current equity holdings in the Company, a market data analysis of the Company’s peer group, and the current equity ownership of our NEOs, in February 2023, the Compensation Committee granted 92,000 RSUs to Hessam Nadji, 12,508 RSUs to Steven DeGennaro, 20,362 RSUs to Richard Matricaria, 20,657 RSUs to John David Parker, and 6,590 RSUs to Gregory A. LaBerge in connection with the annual compensation review process. Despite their strong individual performance in 2022, Messrs. DeGennaro, Matricaria, Parker, and LaBerge received significantly less RSUs in 2023, as the value of each NEO’s RSU award was tied to 50% of his actual annual incentive award for 2022, which was reflective of the Company not achieving its 2022 target pre-tax net income goal. The table below sets forth the number of RSUs granted to each of Messrs. DeGennaro, Matricaria, Parker, and LaBerge in 2022 and 2023, as well as the difference in grant date fair value.
NEO |
2023 RSUs | 2022 RSUs | Difference in Grant Date Fair Value | |||
Steven F. DeGennaro |
12,508 | 44,272 | $(1,646,087) | |||
Richard Matricaria |
20,362 | 58,788 | $(2,051,532) | |||
John David Parker |
20,657 | 58,788 | $(2,040,977) | |||
Gregory A. LaBerge |
6,590 | 26,766 | $(1,029,974) |
The Compensation Committee determined that Mr. Nadji’s personal growth, leadership during a difficult fiscal year, positive perception in the marketplace and overall strong performance supported Mr. Nadji receiving the same number of annual RSUs in 2023 as 2022 (i.e., 92,000 RSUs). In addition, in August 2023, the Compensation Committee made a one-time special retention grant of 150,000 RSUs to Mr. Nadji. The Compensation Committee made the grant to encourage Mr. Nadji’s retention and to incentivize Mr. Nadji to focus on leading the Company through this period of significant market disruption. In determining whether to make the grant and the size of the grant, the Compensation Committee considered the retentive power of
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 38
Compensation
Mr. Nadji’s current equity award holdings, the equity compensation holdings of the chief executive officers of the companies for which we compete for talent, Mr. Nadji’s role in reshaping the Company’s leadership team and in acquiring several strategically important companies in key spaces, and his contribution to the significant growth of our key operating and financial metrics, since his appointment as CEO on March 31, 2016. Further, the Compensation Committee’s decision to make the grant was informed by discussions with FW Cook, its independent compensation consultant, and the Chair of the Board.
Each NEO’s RSUs vest in five equal annual installments, with the first vesting date beginning on March 10, 2024 (or September 10, 2024 with respect to Mr. Nadji’s August 2023 grant), subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving a change in control. See “Severance and Change in Control Benefits” below for more information. The grant date value of these RSU awards is disclosed in the Grants of Plan-Based Awards table.
As discussed above, given the Company’s financial results in 2023, the Compensation Committee reduced the size of Mr. Nadji’s annual grant for 2024 from 92,000 RSUs to 72,000 RSUs, which represented a 22% decrease in the number of annual grant RSUs from 2023.
Process for Determining Executive Compensation
Role of Compensation Committee and Management
The Compensation Committee has responsibility for administering and approving annually all elements of compensation for the Company’s NEOs, with input from our management team and advice from the Compensation Committee’s independent consultant, FW Cook.
At the start of the year, with the assistance of FW Cook and our management team, the Compensation Committee approves target pay opportunities for each current executive officer, including base salary, target annual incentive opportunity, and long-term equity awards. Our CEO develops recommendations for target pay opportunities for executives other than himself, informed by competitive market dynamics, the responsibilities and capabilities of each executive officer, internal fairness, past performance, and future potential. The CEO does not provide recommendations to the Compensation Committee for his own compensation. Our corporate performance and our CEO’s individual performance is reviewed annually by the Chair of the Board, who then presents his recommendation regarding the CEO’s target pay opportunities to our Compensation Committee for discussion. The Compensation Committee then makes the final determination on the target pay opportunities for our CEO.
At the start of the year, the Compensation Committee also determines the design of the incentive program, including performance measures, weightings, and goals, to ensure these programs support the Company’s business objectives and strategic priorities. With respect to performance measures and goals, the annual operating plan initially established by management, and subsequently approved by our Board, is an important input into the Compensation Committee’s decision-making process. Some members of the management team attend Compensation Committee meetings but are not present for executive sessions. The Compensation Committee makes all final decisions with respect to compensation of our NEOs.
After the end of the year, the Compensation Committee determines the earned incentive amounts for each of our executive officers, based on a thorough review of Company and individual performance. In determining earned amounts, the Compensation Committee considers: (i) the CEO’s evaluation of each executive officer other than himself, (ii) the Compensation Committee’s qualitative evaluation of each executive officer’s overall and corporate performance, (iii) the Chair of the Board’s qualitative evaluation of our corporate performance and our CEO’s individual performance, and (iv) the objective assessment of each executive officer’s actual performance against pre-established goals and financial targets.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 39
Compensation
The Compensation Committee also approves compensation packages for new executive officers, which generally include an initial base salary, target annual incentive opportunity, and long-term equity award, and may include severance benefits. Such compensation packages are typically approved after consulting with FW Cook and our management team, including our CEO, and are informed by competitive market dynamics, the responsibilities associated with the position, and internal fairness.
Role of Consultants
The Compensation Committee has engaged FW Cook as its independent executive compensation advisor. FW Cook reports directly to the Compensation Committee and does no work for management that is not under the Compensation Committee’s purview. FW Cook provides independent advice to the Compensation Committee on the reasonableness of executive compensation levels in comparison with typical market practices, and on the appropriateness of the compensation program structure in supporting the Company’s business objectives. A representative of FW Cook attends meetings of the Compensation Committee, and communicates with the Compensation Committee Chair between meetings. The Compensation Committee assessed the independence of FW Cook pursuant to SEC rules and stock exchange listing standards and concluded that no conflicts of interest exist.
Role of Competitive Data
In establishing 2022 target pay opportunities for our NEOs, the Compensation Committee considered competitive market data from an analysis prepared by FW Cook in April 2022. In light of the Company’s challenging business conditions and the Compensation Committee’s intention to reduce target pay opportunities in 2023, FW Cook did not provide updated competitive market data between April 2022 and the Committee’s determination of 2023 target pay opportunities.
Because there are not many publicly traded commercial real estate services firms similar in size and business model to us, development of an appropriate “peer group” of companies against which to compare pay levels and practices proves challenging. Therefore, the Compensation Committee, with the assistance of FW Cook, used the following more expansive criteria to select a peer group consisting of 13 business services companies:
◾ | reasonable comparability in size to the Company in terms of annual revenue and market cap; |
◾ | executives are responsible for managing large numbers of professional employees; and |
◾ | generally engaged in the business of providing transactional services to businesses and individuals. |
Based on the above criteria, the Compensation Committee selected the following companies as our peer group.
B. Riley Financial | Moelis & Company | Ryan Specialty Group | ||
Brown & Brown | Newmark Group* | SelectQuote | ||
Crawford & Company | Oppenheimer Holdings | Walker & Dunlop | ||
Douglas Elliman* | Piper Sandler | |||
Houlihan Lokey | PJT Partners |
* | As noted above, there are not many publicly traded commercial real estate services firms similar in size and business model to us. However, Douglas Elliman and Newmark Group represent two real estate companies that the Compensation Committee, with the assistance of its independent compensation consultant, determined to be similar enough to warrant inclusion in our peer group. |
The Compensation Committee also considered CBRE Group, Colliers International, Cushman & Wakefield, and Jones Lang LaSalle, which we consider to be our direct competitors for inclusion in the peer group, but it was ultimately determined that these companies were too large to include in the peer group.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 40
Compensation
Policies for Compensation Risk Mitigation
Compensation Recovery Policy
The SEC and the New York Stock Exchange recently adopted long-awaited final rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require listed companies to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers.
In accordance with these final rules, on October 31, 2023, the Compensation Committee approved the restatement of the Marcus & Millichap, Inc. Compensation Recovery Policy, which provides that in the event the Company is required to restate any of its financial statements that have been filed with the SEC, then the Compensation Committee will seek to recover any erroneously awarded performance-based incentive-based compensation (including any performance-based cash and equity awards and salary increases earned wholly or in part based on the attainment of financial performance goals) received by any person who is or was a Section 16 Officer or a division manager of a subsidiary of the Company during the three-fiscal year recovery period. In addition, in the event the Company is required to restate any of its financial statements that have been filed with the SEC, the Compensation Committee may also, in its sole discretion, seek recovery of all or any portion of time-based incentive compensation received by any person who is or was a Section 16 Officer or a division manager of a subsidiary of the Company during the three-fiscal year recovery period.
The restated Marcus & Millichap, Inc. Compensation Recovery Policy further provides that, in the event any person who is or was a Section 16 Officer or a division manager of a subsidiary of the Company has engaged in improper conduct, then the Compensation Committee may, in its sole discretion, seek to recover all or any portion of any incentive-based compensation (including both performance-based and time-based cash and equity awards) received by any such person during the year of improper conduct and the three completed fiscal years immediately preceding the date of improper conduct.
Hedging, Pledging and Insider Trading Policies
Our Insider Trading Policy expressly bars hedging, derivative, or any other speculative transactions involving the Company’s stock by all officers, employees, and independent contractor agents of the Company and its subsidiaries, all members of the Board, and any consultants, advisors, and contractors to the Company and its subsidiaries that the Company designates, as well as members of the immediate families and households of these persons. Such prohibited transactions include hedging or derivative transactions, such as “cashless” collars, forward contracts, equity swaps or other similar or related transactions, or any short sale, “sale against the box” or equivalent transaction involving the Company’s stock or the stock of certain business partners. We also generally prohibit such covered persons from pledging Company stock to secure a loan, or from purchasing Company stock on margin (including in connection with exercising any Company stock options). In addition, we prohibit covered persons from purchasing or selling our securities while in possession of material, non-public information, or otherwise using such information for their personal benefit, and maintain a quarterly black-out window where applicable individuals may not trade. We may, in appropriate circumstances, permit transactions pursuant to a blind trust or a pre-arranged trading program that complies with Rule 10b5-1 to take place during periods in which the individual entering into the transaction may have material nonpublic information or during black-out periods.
Indemnification Agreements
Indemnification agreements indemnify our executive officers and the members of our Board of Directors, as well as those who act as directors and officers of other entities at our request, against expenses, judgments, fines, settlements, and other amounts, actually and reasonably incurred in connection with any proceedings arising out of their services to us and our subsidiaries.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 41
Compensation
A Culture of Ownership
The Company’s stock ownership guidelines are designed to encourage our executive officers and other key employees to achieve and maintain a significant equity stake in the Company and closely align their interests with those of our stockholders. The stock ownership guidelines call for each executive officer and key employee that is subject to the guidelines to own shares of our common stock (including directly owned shares, beneficially owned shares held indirectly by family members, trusts or otherwise, vested share units in a non-qualified deferral arrangement, shares held in the 401(k) plan, and unvested restricted shares and RSUs that vest solely on continued service) having a value equal to a multiple of their annual base salary within five years from the date they become subject to the share ownership guidelines as set forth below:
Position |
Ownership Requirement |
|||
Chief Executive Officer |
6x Base Salary | |||
Other NEOs and Senior Executives |
3x Base Salary | |||
Division Managers and Specialty Directors |
2x Base Salary |
If an executive officer or key employee is promoted to a position with a higher ownership requirement, he or she will have five years from such promotion to achieve the higher ownership level. Until these minimums are achieved, executive officers must retain 50% of the net after tax shares earned at exercise of stock options or stock appreciation rights, payment of performance shares/units, and vesting of restricted shares/RSUs, in each case, during the five-year initial compliance period and 100% thereafter.
The Compensation Committee conducts an annual review to assess compliance with the guidelines. Specifically, as of the last day of each fiscal year, the number of shares each executive officer is required to own is calculated based on the then-current annual salary and an average of the closing stock prices for the prior 60 trading days. This number of shares will be the required ownership level until the next annual calculation. At the end of 2023, each of our NEOs had satisfied his stock ownership guideline requirement.
Exceptions to the stock ownership guidelines may be made at the discretion of the Compensation Committee. It is expected that these instances will be rare. If an exception is granted in whole or in part, the Compensation Committee will, in consultation with the affected executive, develop an alternative stock ownership and holding requirement for such individual that reflects both the intention of the policy and such individual’s particular circumstances.
Compensation Risk Assessment
For 2023, FW Cook conducted a review of the compensation-related risks associated with our executive compensation program as well as the Company’s compensation practices for regional managers, staff employees, and independent contractor agents, which included the different levels of compensation for regional managers, the basic commission programs and splits available to independent contractor agents, and the equity award program available to agents, as well as the deferred commission program in which many agents participate. The risk assessment concluded that our compensation programs do not encourage behaviors that would create material risk. FW Cook also found a reasonable balance in fixed versus variable pay, cash and equity, corporation, business unit and individual goals, and appropriate mix of financial and non-financial metrics. Finally, it was determined that there are appropriate policies in place to mitigate compensation-related risk, including stock ownership guidelines for executives, insider-trading prohibitions, anti-hedging and anti-pledging policies, the recoupment policy, and independent Compensation Committee oversight of our executive compensation programs. Based on this information, the Compensation Committee concluded that our compensation programs do not create material risks that are likely to have a material adverse effect on the Company.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 42
Compensation
Other Compensation Practices and Policies
Benefits and Limited Perquisites
Our benefits philosophy is to provide our executive officers, including our NEOs, with the same benefits available to all other employees, including health and welfare, retirement (which includes our 401(k) plan that provides for matching contributions), and life insurance benefits.
In addition to these Company-wide benefits, our NEOs are offered Company-paid automobile allowances or leases. We believe that it is important to compensate our executive officers for all expenses incurred while traveling for work to allow our NEOs to concentrate on their responsibilities and our future success.
Deferred Compensation
Our NEOs are eligible to voluntarily defer base salary and annual cash incentives through the Marcus & Millichap, Inc. Deferred Compensation Plan (the “NQDC Plan”). This is a standard management benefit plan offered by many public companies to provide executives tax-planning flexibility. In addition, Mr. Nadji holds fully vested cash-settled stock appreciation rights (“SARs”), which were granted before our initial public offering that constitute deferred compensation as they are cash-settled awards only payable upon death, a long-term disability of three months or longer, a mutual termination, a termination other than for cause, a resignation, or a change in control. The specific benefits and a more detailed description of features of these arrangements are set forth in the section entitled “Non-Qualified Deferred Compensation” below. In 2022, Mr. DeGennaro elected to defer receipt of $250,000 of the cash award he earned under the Executive Incentive Plan in respect of his service in 2023. None of our other NEOs participated in the NQDC Plan in 2023.
Policy Regarding Deduction Limit
While Section 162(m) of the Internal Revenue Code (the “Code”) places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers, the Compensation Committee retains the discretion to award and pay compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation and to structure a program that we consider to be the most effective in attracting, motivating, and retaining key executives.
Severance and Change in Control Benefits
We maintain a change in control policy, which is designed to align the interests of management and stockholders when considering the long-term future for the Company. The primary purpose of these arrangements is to keep our executive officers and key employees focused on pursuing all corporate transaction activity that is in the best interests of our stockholders regardless of whether those transactions may result in their own job loss.
The change in control policy provides that if an executive officer’s employment is terminated by the Company without “cause” or an executive officer resigns for “good reason” (each as defined in the change in control policy), in each case, within 12 months following the change in control, then the executive will be entitled to receive the following severance payments and benefits: (1) a lump sum payment equal to 12 months’ base salary; (2) a lump sum equal to the target annual incentive opportunity for the year of termination (or if less, the target annual incentive opportunity for the year immediately preceding the year of termination); (3) acceleration of vesting of all outstanding and unvested RSUs; (4) COBRA premium reimbursement for up to 12 months; and (5) up to $25,000 toward appropriate executive-level outplacement or job search assistance. Further, we will seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive officer to sign a separation and release agreement acceptable to us as a condition to receiving post-employment compensation payments or benefits.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 43
Compensation
The change in control policy does not provide for a “gross-up” or other reimbursement payment for any tax liability that the executive officer may owe as a result of the application of Sections 280G or 4999 of the Code, and we have not agreed and are not otherwise obligated to provide any executive officer with such a “gross-up” or other reimbursement.
We also maintain a death and disability policy, which is designed to align with typical market practices. The policy provides that upon a termination of service due to death or disability, in each case, after at least one year of service, then vesting of all of the executive officer’s outstanding and unvested RSUs will accelerate. In addition, in the event of termination of service due to disability after at least one year of service, the executive officer will be entitled to receive COBRA premium reimbursement for up to 12 months.
Our Amended and Restated 2013 Omnibus Equity Incentive Plan (the “Equity Plan”) also provides that in the event of a change in control (as defined in the Equity Plan) in which the surviving corporation does not assume or continue outstanding awards granted under the Equity Plan or substitute similar awards for such awards, the vesting of such awards (including awards held by the NEOs) will fully accelerate. This is a change in control benefit that many companies provide.
Finally, Mr. DeGennaro’s employment agreement provides that in the event that Mr. DeGennaro resigns for good reason or is terminated without cause by the Company, and complies with certain post-termination obligations, Mr. DeGennaro will receive cash severance benefits in an amount equal to six months of his base salary and 50% of the last annual cash incentive that he earned.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this Proxy Statement with the Company’s management. Based on that review and those discussions, the Compensation Committee recommended to the Board that the “Compensation Discussion and Analysis” section be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for 2023.
Don C. Watters (Chair)
Nicholas F. McClanahan
George T. Shaheen
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during 2023 were: Don C. Watters, Nicholas F. McClanahan, and George T. Shaheen. No member of this committee was at any time during 2023 or at any other time an officer or employee of the Company, and no member of this committee had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K. No executive officer of the Company has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the Compensation Committee during 2023.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 44
Compensation
Executive Compensation Tables and Other Information
The following table provides information regarding certain compensation awarded to, or earned by, our NEOs for 2021, 2022, and 2023.
Summary Compensation Table
Name and Principal Position |
Fiscal Year |
Salary ($)(1) |
Bonus ($) |
Stock Awards ($)(2) |
Non- Equity Incentive Plan Compensation ($)(3) |
Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(4) |
All Other Compensation ($)(5) |
Total ($) |
||||||||||||||||||||||||
Hessam Nadji President and CEO |
2023 | 700,000 | — | 8,646,760 | 811,850 | 240,454 | 8,500 | 10,407,564 | ||||||||||||||||||||||||
2022 | 675,000 | — | 4,350,680 | 2,339,750 | 145,470 | 22,000 | 7,532,900 | |||||||||||||||||||||||||
2021 | 562,500 | 437,500 | 3,597,200 | 3,500,000 | 114,077 | 13,500 | 8,224,777 | |||||||||||||||||||||||||
Steven F. DeGennaro |
2023 | 400,000 | — | 447,536 | 414,313 | — | 8,500 | 1,270,349 | ||||||||||||||||||||||||
Executive Vice President and Chief Financial Officer |
2022 | 400,000 | — | 2,093,623 | 895,125 | — | 22,000 | 3,410,748 | ||||||||||||||||||||||||
2021 | 400,000 | 150,000 | 294,600 | 1,200,000 | — | 17,500 | 2,062,100 | |||||||||||||||||||||||||
Richard Matricaria |
2023 | 400,000 | — | 728,552 | 423,706 | — | 12,562 | 1,564,820 | ||||||||||||||||||||||||
Executive Vice President and Chief Operating Officer, Western Division |
2022 | 387,500 | — | 2,780,085 | 1,457,125 | — | 14,853 | 4,639,563 | ||||||||||||||||||||||||
2021 | 350,000 | 250,000 | 822,340 | 2,000,000 | — | 11,013 | 3,433,353 | |||||||||||||||||||||||||
John David Parker |
2023 | 400,000 | — | 739,107 | 545,575 | — | 4,587 | 1,689,269 | ||||||||||||||||||||||||
Executive Vice President and Chief Operating Officer, Eastern Division |
2022 | 387,500 | — | 2,780,085 | 1,478,250 | — | 5,562 | 4,651,397 | ||||||||||||||||||||||||
2021 | 350,000 | 250,000 | 878,019 | 2,000,000 | — | 7,237 | 3,485,256 | |||||||||||||||||||||||||
Gregory A. LaBerge |
2023 | 350,000 | — | 235,790 | 255,044 | — | 7,750 | 848,584 | ||||||||||||||||||||||||
Senior Vice President, Chief Administrative Officer |
2022 | 337,500 | — | 1,265,764 | 471,625 | — | 19,000 | 2,093,889 | ||||||||||||||||||||||||
2021 | 298,125 | — | 198,159 | 800,000 | — | 15,000 | 1,311,284 | |||||||||||||||||||||||||
(1) | The amounts shown in this column represent the actual amount of salary earned during the applicable year by each NEO. |
(2) | The amounts shown in this column represent the aggregate grant date fair value of RSUs granted during the applicable year to certain of our NEOs, which was computed in accordance with Accounting Standards Codification (“ASC”) 718. The fair value of these awards was calculated based on the fair market value of our common stock on the accounting measurement date multiplied by the number of shares subject to the award and may not represent the actual value that may be realized. |
(3) | The amounts listed in this column reflect the cash awards paid under the Company’s Executive Incentive Plan for performance in the applicable year. Despite each NEO’s individual achievements, given the Company’s overall financial performance, the Compensation Committee chose to reduce the earned amount of each NEO’s annual incentive award by $175,000 in the case of Mr. Nadji, $100,000 in the case of Mr. Matricaria and Mr. Parker, and $50,000 in the case of Mr. DeGennaro and Mr. LaBerge. See the “Compensation Discussion and Analysis” section for a more complete description of how the cash |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 45
Compensation
incentive awards were determined for 2023, including the earned amount of each NEO’s annual incentive award prior to the reduction and the amount of each NEO’s actual annual incentive award. |
(4) | The amounts listed in this column include the interest on Mr. Nadji’s cash-settled SARs for 2023: |
Named Executive Officer |
Increased Value of SARs during Fiscal Year ($) |
Aggregate Value of SARs as of Fiscal Year End ($) |
||||||
Hessam Nadji |
240,454 | 4,393,374 |
For further information regarding the SARs, please refer to the discussion under the heading “Nonqualified Deferred Compensation.”
(5) | The following table reflects the breakout of the items and amounts included in this column for 2023: |
Nadji ($) | DeGennaro ($) | Matricaria ($) | Parker ($) | LaBerge ($) | ||||||||||||||||
Auto Benefit |
4,500 | 4,500 | 8,562 | 1,587 | 3,750 | |||||||||||||||
401(k) Match |
4,000 | 4,000 | 4,000 | 3,000 | 4,000 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total for Other |
8,500 | 8,500 | 12,562 | 4,587 | 7,750 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 46
Compensation
Grants of Plan Based Awards Table
The following table provides information regarding the incentive awards granted to the NEOs for 2023.
All Other Stock Awards: Number of Shares of Stock or Units (#)(2) |
Grant Date Fair Value of Stock Awards ($) (3) |
|||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) |
||||||||||||||||||||||||
Name |
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
||||||||||||||||||||
Hessam Nadji |
N/A | — | 2,295,000 | 4,590,000 | — | — | ||||||||||||||||||
2/9/2023 | — | — | — | 92,000 | 3,291,760 | |||||||||||||||||||
8/11/2023 | — | — | — | 150,000 | 5,355,000 | |||||||||||||||||||
Steven F. DeGennaro |
N/A | — | 807,500 | 1,615,000 | — | — | ||||||||||||||||||
2/9/2023 | — | — | — | 12,508 | 447,536 | |||||||||||||||||||
Richard Matricaria |
N/A | — | 1,317,500 | 2,635,000 | — | — | ||||||||||||||||||
2/9/2023 | — | — | — | 20,362 | 728,552 | |||||||||||||||||||
John David Parker |
N/A | — | 1,317,500 | 2,635,000 | — | — | ||||||||||||||||||
2/9/2023 | — | — | — | 20,657 | 739,107 | |||||||||||||||||||
Gregory A. LaBerge |
N/A | — | 467,500 | 935,000 | — | — | ||||||||||||||||||
2/9/2023 | — | — | — | 6,590 | 235,790 |
(1) | The Compensation Committee established certain financial and non-financial goals in May 2023, which are discussed in more detail in the “Compensation Discussion and Analysis.” |
(2) | Messrs. Nadji, DeGennaro, Matricaria, Parker, and LaBerge’s RSUs vest in five equal annual installments, with the first vesting date beginning on March 10, 2024 (or September 10, 2024, with respect to Mr. Nadji’s August 2023 grant), subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Severance and Change in Control Benefits” below for more information. |
(3) | The amounts shown in this column represent the aggregate grant date fair value of the RSUs granted in 2023 to certain of our NEOs, which was computed in accordance with ASC 718. The fair value of these awards was calculated based on the fair market value of our common stock on the accounting measurement date multiplied by the number of shares subject to the award and may not represent the actual value that may be realized. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 47
Compensation
Outstanding Equity Awards at Fiscal Year End
The following table provides information about outstanding equity awards as of December 31, 2023 for the NEOs. None of the NEOs hold any stock options.
Name |
Number of shares or units of stock that have not vested (#) |
Market value of shares or units of stock that have not vested ($)(1) |
||||||
Hessam Nadji |
18,400 | (2) | 803,712 | |||||
36,800 | (3) | 1,607,424 | ||||||
55,200 | (4) | 2,411,136 | ||||||
73,600 | (5) | 3,214,848 | ||||||
92,000 | (6) | 4,018,560 | ||||||
150,000 | (7) | 6,552,000 | ||||||
Steven F. DeGennaro |
35,418 | (5) | 1,547,058 | |||||
12,508 | (6) | 546,349 | ||||||
3,000 | (8) | 131,040 | ||||||
4,500 | (9) | 196,560 | ||||||
Richard Matricaria |
1,376 | (2) | 60,104 | |||||
3,752 | (3) | 163,887 | ||||||
7,094 | (4) | 309,866 | ||||||
47,032 | (5) | 2,054,358 | ||||||
20,362 | (6) | 889,412 | ||||||
3,000 | (10) | 131,040 | ||||||
6,000 | (11) | 262,080 | ||||||
John David Parker |
1,780 | (2) | 77,750 | |||||
4,416 | (3) | 192,891 | ||||||
7,950 | (4) | 347,256 | ||||||
47,032 | (5) | 2,054,358 | ||||||
20,657 | (6) | 902,298 | ||||||
3,000 | (10) | 131,040 | ||||||
6,000 | (11) | 262,080 | ||||||
Gregory A. LaBerge |
392 | (2) | 17,123 | |||||
1,221 | (3) | 53,333 | ||||||
3,044 | (4) | 132,962 | ||||||
21,414 | (5) | 935,364 | ||||||
6,590 | (6) | 287,851 | ||||||
2,000 | (12) | 87,360 |
(1) | Based upon the closing price of our common stock of $43.68 on December 29, 2023, the last trading day before the end of the 2023 fiscal year. |
(2) | Messrs. Nadji, Matricaria, Parker, and LaBerge were awarded 92,000, 6,864, 8,892, and 1,956 RSUs, respectively, effective February 13, 2019, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2020. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 48
Compensation
(3) | Messrs. Nadji, Matricaria, Parker, and LaBerge were awarded 92,000, 9,374, 11,028, and 3,051 RSUs, respectively, effective February 11, 2020, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2021. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(4) | Messrs. Nadji, Matricaria, Parker, and LaBerge were awarded 92,000, 11,822, 13,246, and 5,068 RSUs, respectively, effective February 11, 2021, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2022. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(5) | Messrs. Nadji, DeGennaro, Matricaria, Parker, and LaBerge were awarded 92,000, 44,272, 58,788, 58,788, and 26,766 RSUs, respectively, effective February 10, 2022, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2023. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(6) | Messrs. Nadji, DeGennaro, Matricaria, Parker, and LaBerge were awarded 92,000, 12,508, 20,362, 20,657, and 6,590 RSUs, respectively, effective February 9, 2023, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on March 10, 2024. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(7) | Mr. Nadji was awarded 150,000 RSUs, effective August 11, 2023, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on September 10, 2024. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(8) | Mr. DeGennaro was awarded 7,500 RSUs, effective August 4, 2020, which vest in five equal annual installments with 20% of such shares vesting beginning on August 10, 2021. The vesting of the RSUs is subject to Mr. DeGennaro’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(9) | Mr. DeGennaro was awarded 7,500 RSUs, effective August 3, 2021, which vest in five equal annual installments with 20% of such shares vesting beginning on August 10, 2022. The vesting of the RSUs is subject to Mr. DeGennaro’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(10) | Messrs. Matricaria and Parker were each awarded 15,000 RSUs, effective May 2, 2019, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on May 10, 2020. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(11) | Messrs. Matricaria and Parker were each awarded 10,000 RSUs, effective May 4, 2021, which, in each case, vest in five equal annual installments with 20% of such shares vesting beginning on May 10, 2022. The vesting of the RSUs is subject to the applicable NEO’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
(12) | Mr. LaBerge was awarded 5,000 RSUs effective May 5, 2020, which vest in five equal annual installments with 20% of such shares vesting beginning on May 10, 2021. The vesting of the RSUs is subject to Mr. LaBerge’s continuous service through each vesting date, except in certain limited circumstances involving termination of service and/or a change in control. See “Potential Payments Upon Termination or Change in Control” below for more information. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 49
Compensation
Option Exercises and Stock Vested Table
The following table provides information about stock awards that vested during 2023 for the NEOs. None of the NEOs have been granted any stock options.
Stock Awards | ||||||||
Name |
Number of Shares Acquired on Vesting (#)(1) |
Value Realized on Vesting ($)(2) |
||||||
Hessam Nadji |
76,600 | 2,461,280 | ||||||
Steven F. DeGennaro |
11,854 | 392,686 | ||||||
Richard Matricaria |
23,660 | 740,319 | ||||||
John David Parker |
25,400 | 796,260 | ||||||
Gregory A. LaBerge |
8,870 | 281,100 |
(1) | Includes shares withheld to cover taxes. |
(2) | The value realized upon vesting was calculated by multiplying the number of shares acquired on vesting by the closing share price of the Company’s common stock on the NYSE on the vesting date, except where such vesting date fell on a day that was not a trading day, in which case such value was calculated by multiplying the number of shares acquired on vesting by the closing share price on the first trading day immediately following the vesting date. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 50
Compensation
Employment Agreements
Hessam Nadji
We entered into an employment agreement with Hessam Nadji, our President and CEO, effective March 31, 2016. The employment agreement has no specific term and constitutes at-will employment. Either the Company or Mr. Nadji may terminate the agreement at any time, with or without cause, upon 15 days’ prior written notice. Mr. Nadji’s base salary is $700,000 and he is eligible to receive annual non-equity incentive compensation, subject to his continued employment through the payment date, as described in more detail in the Compensation Discussion and Analysis. Mr. Nadji is not entitled to any severance compensation under his employment agreement if his employment terminates for any reason. Mr. Nadji’s employment agreement also includes terms concerning non-competition, non-solicitation, confidentiality, and arbitration.
Steven F. DeGennaro
We entered into an employment agreement with Steven F. DeGennaro, our Executive Vice President and Chief Financial Officer, effective August 4, 2020. In accordance with his employment agreement, Mr. DeGennaro’s base salary is currently $400,000 and he is eligible to receive annual non-equity incentive compensation, subject to his continued employment through the payment date, as described in more detail in the Compensation Discussion and Analysis.
Mr. DeGennaro’s employment agreement provides that in the event that Mr. DeGennaro resigns for good reason or is terminated without cause by the Company, and complies with certain post-termination obligations, Mr. DeGennaro will receive cash severance benefits in an amount equal to six months of his base salary and 50% of the last annual cash incentive award that he earned. Mr. DeGennaro’s employment agreement also provides for certain change in control severance benefits that were superseded by the change in control policy. Mr. DeGennaro’s employment agreement also includes terms concerning non-competition, non-solicitation, confidentiality, and arbitration.
Richard Matricaria
We entered into an employment agreement with Richard Matricaria, our Executive Vice President and Chief Operating Officer, Western Division, effective August 4, 2022. The employment agreement has no specific term and constitutes at-will employment. Either the Company or Mr. Matricaria may terminate the agreement at any time, with or without cause. Mr. Matricaria’s base salary is $400,000 and he is eligible to receive annual non-equity incentive compensation, subject to his continued employment through the payment date, as described in more detail in the Compensation Discussion and Analysis. Mr. Matricaria is not entitled to any severance compensation under his employment agreement if his employment terminates for any reason. Mr. Matricaria’s employment agreement also includes terms concerning non-competition, non-solicitation, confidentiality, and arbitration.
John David Parker
We entered into an employment agreement with John David Parker, our Executive Vice President and Chief Operating Officer, Eastern Division, effective August 4, 2022. The employment agreement has no specific term and constitutes at-will employment. Either the Company or Mr. Parker may terminate the agreement at any time, with or without cause. Mr. Parker’s base salary is $400,000 and he is eligible to receive annual non-equity incentive compensation, subject to his continued employment through the payment date, as described in more detail in the Compensation Discussion and Analysis. Mr. Parker is not entitled to any severance compensation under his employment agreement if his employment terminates for any reason. Mr. Parker’s employment agreement also includes terms concerning non-competition, non-solicitation, non-disparagement, confidentiality, and arbitration.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 51
Compensation
Pension Benefits
We do not maintain any defined benefit pension plans.
Nonqualified Deferred Compensation
The following table provides information regarding the contributions, earnings, and withdrawals during 2023, and account balances as of December 31, 2023 for our NEOs under the NQDC Plan and SARs:
Nonqualified Deferred Compensation—Fiscal 2023
Name |
Plan | Executive Contributions in Last FY ($)(1) |
Registrant Contributions in Last FY ($) |
Aggregate Earnings in Last FY ($)(2) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at Last FYE ($)(3) |
||||||||||||||||||
Hessam Nadji |
SARs | — | — | 240,454 | — | 4,393,374 | ||||||||||||||||||
Steven F. DeGennaro |
NQDC Plan | 250,000 | — | 74,614 | — | 545,931 | ||||||||||||||||||
Richard Matricaria |
— | — | — | — | — | — | ||||||||||||||||||
John David Parker |
— | — | — | — | — | — | ||||||||||||||||||
Gregory A. LaBerge |
— | — | — | — | — | — |
(1) | The amount reflected includes executive contributions of the cash award earned under the Executive Incentive Plan in respect of service in 2023, which is reported as “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for 2023. |
(2) | The SARs are included in the Summary Compensation Table because such earnings were determined to be preferential or above-market. The earnings on the SARs represent interest on the SAR Account Balances (as defined below) for 2023. |
(3) | A portion of these amounts were previously reported as compensation to the NEO in our Summary Compensation table for fiscal years prior to 2023: Hessam Nadji: SARs: $1,764,043 in interest; Steven F. DeGennaro: NQDC: $500,000. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 52
Compensation
Deferred Compensation Plan
The NQDC Plan is designed to allow a select group of management and highly compensated employees, including the Company’s NEOs, to defer receipt of a specified percentage or amount of their base salaries (up to 25%) and annual cash incentives or supplemental bonuses (up to 100%). Further, the Company may make discretionary contributions on behalf of participants in the NQDC Plan, which will vest based on years of service with the Company. Such discretionary amounts will vest in full upon the participant’s death, disability, or retirement. Mr. DeGennaro is enrolled in the NQDC Plan. In 2022, he elected to defer receipt of $250,000 of the cash award he earned under the Executive Incentive Plan in respect of his service in 2023. None of our other NEOs participated in the NQDC Plan in 2023.
Amounts deferred by a participant and any employer contributions will be credited to a bookkeeping account maintained on behalf of each participant. These amounts will be periodically adjusted for earnings and/or losses at a rate that is equal to the various hypothetical investment funds (also referred to as measurement funds) selected by the plan administrator and elected by the participant. Participants may reallocate previously invested money among each of the available measurement funds.
Under the NQDC Plan, if a participant has attained age 50 or has 10 or more years of service with the Company, a participant will be permitted to elect a single lump-sum payment or quarterly installment payments for up to 15 years following termination of employment with respect to each year’s deferrals, any discretionary company contributions, and any earnings associated with such amounts. Otherwise, such amounts will be paid out in a lump sum. Deferrals, but not discretionary Company contributions, also may be paid out prior to a participant’s termination of employment in the event of a financial hardship or if the participant makes a short-term payout election. In the event of a participant’s death or disability, such participant’s benefits will be paid out in a single lump sum.
The Company elected to fund the NQDC Plan through company owned variable life insurance policies. The NQDC Plan is managed by a third-party institutional fund manager, and the deferred compensation and investment earnings are held as Company assets in a rabbi trust. The assets in the trust are restricted unless the Company becomes insolvent in which case the trust assets are subject to the claims of the Company creditors.
Stock Appreciation Rights
The SARs constitute deferred compensation as they are cash-settled awards only payable upon death, a long-term disability of three months or longer, a mutual termination, a termination other than for cause, a resignation, or a change in control. In connection with our initial public offering (“IPO”), all of the outstanding SARs were fully vested and frozen at a liability amount calculated as of March 31, 2013 (such liability value, the “SAR Account Balance”). The Company began to accrue interest starting on January 1, 2014, based on SAR Account Balances as of December 31, 2013. In 2023, the accrued interest credited to SAR Account Balances was based on an interest rate of 5.79%, which, in turn, was based on a 10-Year Treasury Note plus 200 basis points. Upon a termination other than for cause or a resignation other than by mutual agreement, the executive only receives 75% of the appreciation value on the vested portion.
Upon a payment event other than a change in control, the SAR Account Balance is paid to the NEO in 10 annual installments, with the first installment due within 30 days following the date of the event giving rise to the distribution or the last day of the calendar year in which the event giving rise to the distribution occurs, and the remaining portion of the account balance will be paid in cash within 30 days of each of the first nine anniversaries of the initial payment date. However, no amount payable on account of the NEO’s termination of service which constitutes a “deferral of compensation” within the meaning of Section 409A will be paid unless and until the NEO has incurred a “separation from service” within the meaning of Section 409A. The account balance will continue to be credited with deemed earnings during the payment term until it is fully distributed. In the event of a change of control of the Company (as defined in the Equity Plan), the NEO’s entire SAR Account Balance will be paid to the NEO upon the consummation of the change in control.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 53
Compensation
Potential Payments upon Termination or Change in Control
Current NEOs
As described above, the change in control policy, the amended and restated death and disability policy, Mr. DeGennaro’s employment agreement and Mr. Nadji’s SARs provide for certain payments and/or benefits in the event of a qualifying termination or change in control. In addition, the Equity Plan provides that in the event of a change in control (as defined in the Equity Plan) in which the surviving corporation does not assume or continue outstanding awards granted under the Equity Plan or substitute similar awards for such awards, the vesting schedule of such awards (including awards held by the NEOs) will fully accelerate.
Estimated Termination and Change in Control Payments for Current NEOs
The table below provides information regarding the estimated value that may be realized by each of the NEOs in the event of the following:
◾ | Death |
◾ | Disability |
◾ | Mutual termination |
◾ | Termination other than for cause |
◾ | Resignation other than by mutual agreement |
◾ | Resignation for good reason |
◾ | Change in control where equity awards are assumed or substituted |
◾ | Change in control where equity awards are not assumed or substituted |
◾ | Termination other than for cause or resignation for good reason in connection with a change in control |
The table does not include any information regarding the benefits available generally to salaried employees, such as distributions under the Company’s 401(k) plan.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 54
Compensation
The amounts shown below assume that the applicable termination event or change in control event occurred on December 31, 2023. The actual amounts that would be paid can only be determined at the time of the actual event. The amounts with respect to an NEO’s SARs do not include any deemed earnings that would be credited during the payment term until his SAR Account Balance is fully distributed. The amounts with respect to the RSUs are based on the $43.68 per share closing price of the Company’s common stock on the NYSE on December 29, 2023, the last trading day before the end of the 2023 fiscal year.
Name |
Type of Benefit |
Death ($) |
Disability ($) |
Mutual Termination ($) |
Termination other than for Cause ($) |
Resignation Other than by Mutual Agreement ($) |
Resignation for Good Reason ($) |
Change in Control Where Awards are Assumed ($) |
Change in Control Where Awards are Not Assumed ($) |
Termination other than for Cause or Resignation for Good Reason in Connection with a Change in Control ($)(1) |
||||||||||||||||||||||||||||||
Hessam Nadji |
Cash Severance | — | — | — | — | — | — | — | — | 2,995,000 | (3) | |||||||||||||||||||||||||||||
|
COBRA Reimbursement |
|
31,125 | 31,125 | — | — | — | — | — | — | 31,125 | |||||||||||||||||||||||||||||
Outplacement | — | — | — | — | — | — | — | — | 25,000 | |||||||||||||||||||||||||||||||
SARs Payout | 4,393,374 | 4,393,374 | 4,393,374 | 3,295,030 | 3,295,030 | 3,295,030 | 4,393,374 | 4,393,374 | 3,295,030 | |||||||||||||||||||||||||||||||
RSU Acceleration | 18,607,680 | 18,607,680 | — | — | — | — | — | 18,607,680 | 18,607,680 | |||||||||||||||||||||||||||||||
Steven F. DeGennaro |
Cash Severance | — | — | — | 647,563 | (2) | — | 647,563 | (2) | — | — | 1,207,500 | (3) | |||||||||||||||||||||||||||
|
COBRA Reimbursement |
|
21,247 | 21,247 | — | — | — | — | — | — | 21,247 | |||||||||||||||||||||||||||||
Outplacement | — | — | — | — | — | — | — | — | 25,000 | |||||||||||||||||||||||||||||||
RSU Acceleration | 2,421,007 | 2,421,007 | — | — | — | — | — | 2,421,007 | 2,421,007 | |||||||||||||||||||||||||||||||
Richard Matricaria |
Cash Severance | — | — | — | — | — | — | — | — | 1,717,500 | (3) | |||||||||||||||||||||||||||||
|
COBRA Reimbursement |
|
33,758 | 33,758 | — | — | — | — | — | — | 33,758 | |||||||||||||||||||||||||||||
Outplacement | — | — | — | — | — | — | — | — | 25,000 | |||||||||||||||||||||||||||||||
RSU Acceleration | 3,870,747 | 3,870,747 | — | — | — | — | — | 3,870,747 | 3,870,747 | |||||||||||||||||||||||||||||||
John David Parker |
Cash Severance | — | — | — | — | — | — | — | — | 1,717,500 | (3) | |||||||||||||||||||||||||||||
|
COBRA Reimbursement |
|
31,041 | 31,041 | — | — | — | — | — | — | 31,041 | |||||||||||||||||||||||||||||
Outplacement | — | — | — | — | — | — | — | — | 25,000 | |||||||||||||||||||||||||||||||
RSU Acceleration | 3,967,673 | 3,967,673 | — | — | — | — | — | 3,967,673 | 3,967,673 | |||||||||||||||||||||||||||||||
Gregory A. LaBerge |
Cash Severance | — | — | — | — | — | — | — | — | 817,500 | (3) | |||||||||||||||||||||||||||||
|
COBRA Reimbursement |
|
33,758 | 33,758 | — | — | — | — | — | — | 33,758 | |||||||||||||||||||||||||||||
Outplacement | — | — | — | — | — | — | — | — | 25,000 | |||||||||||||||||||||||||||||||
RSU Acceleration | 1,513,993 | 1,513,993 | — | — | — | — | — | 1,513,993 | 1,513,993 |
(1) | Represents payments and benefits that would have been provided for under the Company’s Change in Control Policy or any SARs held by the NEO. |
(2) | Represents six months of Mr. DeGennaro’s base salary and 50% of the annual cash incentive award that Mr. DeGennaro earned in respect of his service in 2022. |
(3) | Represents the sum of 12 months of the executive’s base salary and 2023 target annual incentive opportunity as the Company’s change in control policy provides for cash severance equal to the sum of 12 months’ base salary and the lesser of the target annual incentive opportunity for the year of termination or the year immediately preceding the year of termination. |
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 55
Compensation
CEO Pay Ratio
The annual total compensation of Hessam Nadji, our CEO, was $10,407,564 in 2023, as reflected in the Summary Compensation Table above. Based on reasonable estimates, the median annual total compensation of all employees of the Company and its subsidiaries, excluding our CEO, was $84,062 for 2023. Accordingly, for 2023, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our other employees was 124 to 1. Most of our investment sales professionals are classified as independent contractors under state and U.S. Internal Revenue Service guidelines, so they are not included in the employee population, which would have had the effect of decreasing the pay ratio.
To identify the “median employee” from our employee population, we collected the total gross compensation earned during the 12-month period ending November 30, 2023 by each person who was employed by the Company or one of its subsidiaries on November 30, 2023, other than those persons who were employed in Canada. We also annualized the salary of permanent employees who were employed on November 30, 2023, but commenced employment after December 1, 2022. As permitted by SEC rules, we excluded from our analysis all 38 of our employees who resided in Canada on November 30, 2023, which represented less than 5% of our employee population as a whole on such date. Our employee population on November 30, 2023, prior to taking into consideration this exclusion, consisted of 893 individuals. Our employee population on November 30, 2023, after taking into consideration this exclusion, consisted of 855 individuals.
We identified and calculated the elements of the median employee’s annual total compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $84,062. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column for 2023 in our Summary Compensation Table included in this Proxy Statement.
Marcus & Millichap, Inc. | 2024 Proxy Statement | Page 56
Year (1) |
Summary Compensation Table Total for PEO |
Compensation Actually Paid to PEO (2)(3) |
Average Summary Compensation Table Total for Non-PEO NEOs |
Average Compensation Actually Paid to Non-PEO NEOs (2)(4) |
Value of Initial Fixed $100 Investment Based On: (5) |
Net Income (millions) |
Pre-Tax Net Income (millions) (6) |
|||||||||||||||||||||||||
Total Stockholder Return |
Peer Group Total Stockholder Return |
|||||||||||||||||||||||||||||||
2023 |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | ( |
) | ||||||||||||||
2022 |
$ | $ | $ | $ | $ | $ | $ | |
$ | |
||||||||||||||||||||||
2021 |
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
2020 |
$ | $ | $ | $ | $ | $ | $ | $ |
(1) | The following table lists the PEO and non-PEO NEOs for each of fiscal years 2020, 2021, 2022 and 2023. |
PEO |
Non-PEO NEOs | |||
2023 | Hessam Nadji | Steven F. DeGennaro, Richard Matricaria, John David Parker, and Gregory A. LaBerge | ||
2022 | Hessam Nadji | Steven F. DeGennaro, Richard Matricaria, John David Parker, and Gregory A. LaBerge | ||
2021 | Hessam Nadji | Steven F. DeGennaro, Richard Matricaria, John David Parker, and Gregory A. LaBerge | ||
2020 | Hessam Nadji | Steven F. DeGennaro, Martin E. Louie, and Gregory A. LaBerge |
(2) | The dollar amounts reported represent the amount of “compensation actually paid,” as calculated in accordance with the Pay Versus Performance Rules. These dollar amounts do not reflect the actual amounts of compensation earned by or paid to our NEOs during the applicable year. For purposes of calculating “compensation actually paid,” the fair value of equity awards is calculated in accordance with ASC Topic 718 using the same assumption methodologies used to calculate the grant date fair value of awards for purposes of the Summary Compensation Table (refer to “Executive Compensation and Other Information – Summary Compensation Table” for additional information). |
(3) | The following table shows the amounts deducted from and added to the Summary Compensation Table total to calculate “compensation actually paid” to |
Pension Plan Adjustments |
Equity Award Adjustments |
Compensation Actually Paid to PEO | ||||||||||||||||||||
Summary Compensation Table Total for PEO |
Change in Pension Value |
Pension Service Cost |
Stock Awards |
Year End Fair Value of Equity Awards Granted in the Year and Unvested at Year End |
Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years |
Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year |
Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year |
Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year |
Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | |||||||||||||
2023 |
$ |
$— | $— | $ |
$ |
$ |
$— | $( |
$— | $— | $ | |||||||||||
2022 |
$ |
$— | $— | $ |
$ |
($ |
$— | ($ |
$— | $— | $ | |||||||||||
2021 |
$ |
$— | $— | $ |
$ |
$ |
$— | ($ |
$— | $— | $ | |||||||||||
2020 |
$ |
$— | $— | $ |
$ |
($ |
$— | ($ |
$— | $— | $ |
(4) | The following table shows the amounts deducted from and added to the average Summary Compensation Table total compensation to calculate the average “compensation actually paid” to our non-PEO NEOs in accordance with the Pay Versus Performance Rules: |
Pension Plan Adjustments |
Equity Award Adjustments |
Compensation Actually Paid to Non-PEO NEOs | ||||||||||||||||||||
Summary Compensation Table Total for Non-PEO NEOs |
Change in Pension Value |
Pension Service Cost |
Stock Awards |
Year End Fair Value of Equity Awards Granted in the Year and Unvested at Year End |
Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years |
Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year |
Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year |
Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year |
Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | |||||||||||||
2023 |
$ |
$— | $— | $ |
$ |
$ |
$— | $( |
$— | $— | $ | |||||||||||
2022 |
$ |
$— | $— | $ |
$ |
($ |
$— | ($ |
$— | $— | $ | |||||||||||
2021 |
$ |
$— | $— | $ |
$ |
$ |
$— | $ |
$— | $— | $ | |||||||||||
2020 |
$ |
$— | $— | $ |
$ |
($ |
$— | ($ |
$— | $— | $ |
(5) | S-K for our Annual Report for the fiscal year ended December 31, 2023. The Peer Group Index is comprised of the following publicly-traded real estate services companies: CBRE Group, Inc., Colliers International Group, Inc., Cushman & Wakefield plc, Jones Lang LaSalle Incorporated, and Newmark Group Inc. The Peer Group Index is weighted by each company’s stock market capitalization at the beginning of each fiscal year. |
(6) | We have determined that pre-tax net income is the financial performance measure that, in the Company’s assessment, represents the most important financial performance measure used to link “compensation actually paid” to our NEOs, for fiscal year 2023, to company performance (the “Company Selected Measure” as defined in the Pay Versus Performance Rules). |
◾ |
Emphasis on equity in the overall compensation mix. |
◾ |
Equity grants under a fixed-value annual grant policy with one-year vesting. |
◾ |
A robust stock ownership guideline set at five times the annual cash retainer to support stockholder alignment. |
◾ |
Stockholder-approved annual director compensation limit on cash and equity awards to non-employee directors. |
◾ |
No performance awards, perquisites, or special benefits. |
◾ |
Board Member, including the Chair—$65,000 per year |
◾ |
Chair of Audit Committee—an additional $20,000 per year; other Audit Committee members—an additional $10,000 per year |
◾ |
Chair of Compensation Committee—an additional $15,000 per year; other Compensation Committee members—an additional $5,000 per year |
◾ |
Chair of Nominating and Corporate Governance Committee—an additional $10,000 per year; other Nominating and Corporate Governance Committee members—an additional $5,000 per year |
◾ |
Executive Committee Member—an additional $10,000 per year for independent board members |
Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($)(1)(2) |
All Other Compensation ($) |
Total ($) |
||||||||||||
Collete English Dixon |
70,000 | 74,979 | — | 144,979 | ||||||||||||
Norma J. Lawrence |
90,000 | 74,979 | — | 164,979 | ||||||||||||
George M. Marcus |
65,000 | 74,979 | — | 139,979 | ||||||||||||
Lauralee E. Martin |
85,000 | 74,979 | — | 159,979 | ||||||||||||
Nicholas F. McClanahan |
80,000 | 74,979 | — | 154,979 | ||||||||||||
George T. Shaheen |
85,000 | 74,979 | — | 159,979 | ||||||||||||
Don C. Watters |
90,000 | 74,979 | — | 164,979 |
(1) | This column represents the aggregate grant date fair value of restricted stock granted in 2023, computed in accordance with ASC 718. On May 2, 2023, each non-employee director received a grant of 2,477 shares of restricted stock, which vests on the first anniversary of the date of grant, and the value represented here with respect to each such Director’s restricted stock grant is based on 2,477 shares multiplied by the closing price of $30.27 on the grant date of May 2, 2023. These amounts reflect our calculation of the value of these awards, and do not necessarily correspond to the actual value that may ultimately be realized by the Directors. |
(2) | As of December 31, 2023, each non-employee director has 2,477 shares of restricted stock in the aggregate outstanding and subject to vesting. |
◾ |
Aligns executive, employee, non-employee director, independent contractor, and stockholder interests. non-employee directors and independent contractors. We believe that our stock-based compensation program, along with our stock ownership guidelines for our non-employee directors and executives, help align the interests of our executives, employees, non-employee directors, and independent contractors with the interests of our stockholders by giving them a sense of ownership and long-term personal involvement in and accountability for the development and financial success of the Company. If the Amended Plan is approved, we will be able to continue to use equity to align the interests of our executives, employees, non-employee directors, and independent contractors with the interests of our stockholders. |
◾ |
Attracts and retains talent. . |
◾ |
Supports our pay-for-performance pay-for-performance |
◾ |
Avoids disruption in our compensation programs and mitigates the need for significant cash compensation. |
program. If the Amended Plan is not approved, we would need to replace components of compensation previously awarded in equity (including the Ungranted Approved Awards) with cash or with other instruments that may not necessarily support our goals of strengthening longer-term retention and aligning employee interests with those of our stockholders. Additionally, replacing equity with cash would increase our cash compensation expense and significantly deplete cash that could be better utilized for other strategic purposes or returned to stockholders. |
◾ |
Balances appropriately our need to attract and retain talent with stockholder interests regarding dilution. the number of shares authorized for issuance under the Amended Plan will not increase |
◾ |
Protects stockholder interests and embraces sound stock-based compensation practices. |
◾ |
Eliminate Term and Provide for Incentive Stock Option Limit ten-year anniversary of the Board’s approval of the Amended Plan. |
◾ |
Eliminate Liberal Share Counting of Stock Options or Stock Appreciation Rights (“SARs”) |
◾ |
Provide for Specific Disclosure of Equity Award Vesting Upon a Change in Control |
◾ |
Clarify That No Dividends and Dividend Equivalents Will Be Paid on Unvested Awards. |
◾ |
Remove Section 162(m) References |
◾ |
Provide for Additional Requirements on Vesting and Transferability of Awards |
◾ |
Provide that Awards are Subject to Compliance Requirements |
◾ |
No Repricing or Buyout of Underwater Options or SARs |
◾ |
No Discounted Options and SARs |
◾ |
No Evergreen Provision |
◾ |
No Single Trigger and Specific Disclosure of Equity Award Vesting upon a Change in Control |
◾ |
Prohibition on Payment of Dividends and Dividend Equivalents on Unvested Awards |
◾ |
Limit on Non-Employee Director Awardsnon-employee director of our Board with respect to any fiscal year, including awards granted under the 2013 Plan and cash fees paid by us to such non-employee director, will not exceed $500,000 in total value. |
◾ |
No Automatic Grants |
◾ |
No Tax Gross-ups gross-ups. |
◾ |
No Transferability |
◾ |
No Reload Grants |
Equity Plan |
Stock Options (# of shares) |
Weighted- Average Exercise Price Per Share ($) |
Weighted- Average Remaining Contractual Term (In Years) |
Full Value Awards (# of shares) (1) |
Shares Available for Future Grant (# of shares) (2) |
|||||||||||||||
2013 Plan |
- | - | - | 1,999,745 | 3,221,417 |
Fiscal 2023 |
Fiscal 2022 |
Fiscal 2021 | ||||
Gross Burn Rate (1) |
1.90% | 2.75% | 0.96% | |||
Net Burn Rate (2) |
1.87% | 2.68% | 0.86% | |||
Equity Overhang (3) |
11.86% | 12.23% | 12.46% |
Fiscal Year |
Option Awards Granted |
Total Full Value Awards Granted (1) |
Time Based Full Value Awards Granted (1) |
|||||||||
2023 |
- | 734,388 | 734,888 | |||||||||
2022 |
- | 1,094,507 | 1,094,507 | |||||||||
2021 |
- | 381,215 | 381,215 |
◾ |
Options and SARs |
◾ |
RSAs and RSUs |
◾ |
Performance Units and Performance Shares |
(i) | The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if the Company’s stockholders immediately prior to such merger, consolidation or reorganization cease to directly or indirectly own immediately after such merger, consolidation or reorganization at least a majority of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization; |
(ii) | The consummation of the sale, transfer or other disposition of all or substantially all of the Company’s assets (other than (x) to a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company, (y) to a corporation or other entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company or (z) to a continuing or surviving entity in connection with a merger, consolidation or corporate reorganization which does not result in a change in control under clause (i) above; |
(iii) | A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; |
(iv) | The consummation of any transaction as a result of which any person becomes the beneficial owner, directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company’s then outstanding voting securities. |
Name and Position |
Dollar Value |
Number of Shares(1) |
||||||
Hessam Nadji |
||||||||
President and CEO(2) |
— | 72,000 | ||||||
Steven F. DeGennaro |
||||||||
Executive Vice President and Chief Financial Officer(2) |
— | 10,701 | ||||||
Richard Matricaria |
||||||||
Executive Vice President and Chief Operating Officer, Western Division(2) |
— | 8,730 | ||||||
John David Parker |
||||||||
Executive Vice President and Chief Operating Officer, Eastern Division(2) |
— | 17,460 | ||||||
Gregory A. LaBerge |
||||||||
Senior Vice President, Chief Administrative Officer(2) |
— | 6,195 | ||||||
All current executive officers as a group(2) |
— | 115,086 | ||||||
All current Directors who are not executive officers as a group(3)(4) |
$525,000 | — | ||||||
All employees, including all current officers who are not executive officers, as a group(2)(5) |
— | 295,317 |
(1) | The number of shares for each person or group (other than Mr. Nadji and our non-employee directors) was calculated based on the Ungranted Unapproved Award cash value that was approved by the Compensation Committee, divided by our $37.73 closing price on February 8, 2024, the date the Compensation Committee approved the Ungranted Approved Awards. |
(2) | The actual grant date dollar value of such RSU grants will not be determinable until the grant date. |
(3) | Number of shares is not determinable because it is based on the dollar amount of the award divided by the closing price on the grant date. |
(4) | Includes the grant date fair value of the RSAs that will be granted to our current non-employee directors after the Annual Meeting. |
(5) | Excludes Ungranted Approved Awards that will be granted to non-employee service providers covering an aggregate of 252,107 shares. |
Name and Position |
Total Number of Shares Subject to Stock Awards or Stock- Based Awards(1) | |
Hessam Nadji |
837,042 | |
President and CEO |
||
Steven F. DeGennaro |
71,780 | |
Executive Vice President and Chief Financial Officer |
||
Richard Matricaria |
159,586 | |
Executive Vice President and Chief Operating Officer, Western Division |
||
John David Parker |
187,213 | |
Executive Vice President and Chief Operating Officer, Eastern Division |
||
Gregory A. LaBerge |
88,267 | |
Senior Vice President, Chief Administrative Officer |
||
All current executive officers as a group |
1,343,888 | |
All current Directors who are not executive officers as a group |
265,938 | |
Each nominee for election as a Director |
||
Collete English Dixon |
4,950 | |
Lauralee E. Martin |
11,253 | |
Nicholas F. McClanahan |
28,767 | |
Each associate of any executive officer, current Director, or director nominee |
— | |
Each person who received 5% or more of the awards granted under the 2013 Plan |
||
Hessam Nadji |
837,042 | |
President and CEO |
||
Gene Berman |
573,728 | |
Former Executive Vice President |
||
John Kerin |
416,124 | |
Former President and Chief Executive Officer |
||
All employees, including all current officers who are not executive officers, as a group(2) |
4,994,820 |
(1) | Excludes any Ungranted Approved Awards. |
(2) | Excludes stock awards granted to non-employee service providers covering an aggregate of 2,225,015 shares since the 2013 Plan became effective until February 13, 2024. |
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants, and rights(a)(1) |
Weighted average exercise price of outstanding options, warrants, and rights(b)(2) |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) (c)(3) |
|||||||||
Equity compensation plans approved by security holders |
2,016,929 | $ | — | 3,332,511 | ||||||||
Equity compensation plans not approved by security holders |
— | — | ||||||||||
Total |
$ | — | 3,332,511 |
(1) | Consists of RSUs granted under our 2013 Plan. Excludes RSAs granted under the 2013 Plan, the Ungranted Approved Awards under the 2013 Plan, and purchase rights granted under our ESPP. |
(2) | Outstanding RSUs have no exercise price. |
(3) | Includes 3,221,417 shares available for future issuance under the 2013 Plan (excluding the Ungranted Approved Awards). Includes 111,094 shares available for future issuance under the ESPP, including shares subject to purchase during the current offering period, which commenced on October 6, 2023 (the exact number of which will not be known until the purchase date on May 15, 2024). Subject to the number of shares remaining in the share reserve, the maximum number of shares purchasable by any participant on any one purchase date for any purchase period, including the current purchase period, may not exceed 1,250 shares. |