Bonus Compensation Structure
Hello All,
I have recently been offered a position as a Development and Acquisitions manager for a small hospitality company in a secondary market. The company currently owns and manages hotel assets in Virginia and North Carolina and is in the process of developing a few midscale properties in those markets. I was asked to figure out a reasonable way to structure my bonus for both these new developments as well as any new hotel acquisitions and wasn't sure what sort of metrics I should use as a basis for my bonus. Also, what would be considered a reasonable bonus percentage for both the new developments and the acquisitions?
bump
Congrats on the offer. How many years experience? Are you responsible for sourcing and underwriting the development deals or are they fed to you from an acquisition team? The title sounds like its all in one. Some guys get 20% and others get 100%. Varies so much. Target all in comp. If you are souring deals, it will be bonus heavy. Eat what you kill.
Thank you, I appreciate it! I have 3 years of experience and a Masters degree in Real Estate Development. At this point, I have not been given a detailed a job description, however, I will be responsible for managing a couple of new projects which are scheduled to break ground in the next few months and then I believe I will be responsible for sourcing and underwriting any new deals.
I always found it more valuable to have "skin in the game". Getting commission on an acquisition is nice, but its usually conflicting with your employer. You want a HIGH purchase price to get a bigger commission, but they want a low purchase price to achieve a higher margin. I would suggest equity and a piece of the promote on every deal you bring in.
Maybe you buy a piece of dirt for $50psf and maybe you develop a hotel. Maybe that hotel's ticket price is $500psf on the sale. You will be happy you have the promote.
That is the route I was leaning towards. Thank you!
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