Where Everyone's an Owner
Where Everyone's an Owner
I never considered real estate as a career. I planned to be an actor like my uncle, George Segal. I grew up in New York and graduated from Vassar College with a Bachelor of Arts degree in dramatic arts and a minor in economics, and in 1984 I moved to Los Angeles.
I got small parts in TV shows and movies, but nothing really big. Then, while doing commercials for Hostess Pudding Pie, I met another actor who also was a real estate agent. We became friends, and I asked him to tell me what the job was all about. I thought, “Okay, I think I’d rather do that.”
Company: Partners Trust Real Estate Brokerage & Acquisitions
Beverly Hills, Calif.
Number of offices: 7 residential, 1 commercial, all in the Los Angeles area
Number of sales associates: 186 total
2013 gross sales: $1.6 billion with 904 transaction sides
2014 estimated sales: $2 billion with 1,200 transaction sides
Coming Up With New Ideas
I got my license in 1989 and joined a small company as its 12th agent. I really took to the business and started becoming creative. I told the owners I was getting a pretty good handle on doing listing presentations and asked if they’d like me to show the rest of the company how I did them. They said yes, and pretty soon I was doing training. Then I said, “Why don’t we offer a service guarantee?” If ever we don’t do what we say we are going to do, clients can cancel their agreements with us with a 24-hour notice. So we adopted that. Over time, I became more and more involved, both selling and managing, and became one of the owners.
By 2004 our company had grown to 650 agents in 9 offices, and we sold to Sotheby’s International Realty. I served as senior vice president and managed the Brentwood office for four years. Then four of us stepped down to form Partners Trust. We began with one office and 35 agents.
Stock Plan Draws, Retains Talent
We wanted to differentiate ourselves from other real estate brokerages and attract top agents in the area to work with us. One of the first things we did was develop an equity ownership plan. We carved out 10 percent of our company to be gifted over the first four years to those agents and staff who were willing to take a shot with our startup company.
We gave out 2 percent the first year, 3 percent the second year, 3 percent the third year, and 2 percent the fourth year. So, anyone who was with us the first year got a share of the 2 percent, based on their contributions to the company. The second year, they got a share of 3 percent, and so on. The earlier you came to work for us, the bigger the bite of the collective apple you got. The equity ownership plan is in addition to the traditional commission structure.
Dividend Checks Are Awarded
Associates receive annual dividends based on company profit and the amount of stock owned. Last year we awarded the first dividend checks. Some people got $1,000. One person got a check for $16,000. Several got $9,000.
As we expand, each new office is organized as a separate limited liability company, and 10 percent of the stock is set aside for the same ownership program for those associates. Associates have to stay with the company to keep realizing the dividends. If they leave, that stock reverts back to the company. If we were to sell the company, everyone would share in that.
Giving away 10 percent of the company stock means the founders own a smaller number of shares. I like to think I have a lesser portion of a greater good. Of course, we want to be profitable because that keeps the doors open and lights on, but we believe we have a vehicle that creates a better company and raises the integrity of the people we work with.
The Case Against Bonuses
Sure, we could have given out bonuses instead of stock, and that might have been easier and simpler. But stock is more tangible. It has more impact. It says that we’re all part of something together.
You do have to manage expectations. People who are coming on board need to understand they won’t have enough money in three years to buy a second home. It’s really about giving them skin in the game that creates loyalty and a cohesive group of people.
We’ve now grown to seven locations and more than 180 agents. Everyone has an ownership interest, and our retention rate has been tremendous. It’s north of 95 percent.