Vornado dealmaker scores one for herself…

April 21, 2011

In 2007, when Crain’s named Michelle Felman as one of the “100 Most Influential Women in NYC business,” she attributed much of her success to her intuition, explaining in this article:

“You understand other people’s motivations, and you can respond to them in a way that gets both sides what they want.”

If the proof is in the proxy that Vornado Realty Trust (VNO) filed late last week, we think that Felman – Vornado’s former executive vice president of acquisitions – knows what she’s talking about. After spending 13 years with the REIT (which owns 38.5 million square feet of commercial real estate in New York and Washington, D.C., as well as the Chicago Merchandise Mart and 25.6 million square feet of assorted retail space), she negotiated a deal for herself that many departing executives would envy, and that presumably got her what she wanted.

Felman left her job at Vornado at the end of last year. She didn’t have a formal employment agreement with Vornado, yet the board decided that it wanted to reward her past performance, and it did so in a big way:

“…management recommended and the Compensation Committee approved, following discussion with Towers Watson, a separation agreement pursuant to which Ms. Felman received a severance payment of $2.0 million, which represents approximately one times the sum of her 2010 base salary and cash bonus, and that provided for the acceleration of Ms. Felman’s unvested option awards and restricted units, which had a Fair Value at the time of approximately $6.9 million.”

But – as is so often the case – Felman’s not really leaving – at least, not for a while. She agreed to stay on as a consultant and help Vornado in the transition process as she gave up her duties. In exchange for doing that until the end of December, 2012, Vornado agreed to pay Felman $1 million per year, or roughly $83,333 per month. As the consulting gig may last as long as 23 months (it’s deemed to have started Jan. 1, 2011, according to this letter between the parties), it may be worth nearly $1.917M to Felman. As an extra bonus, the company agreed to give her “an office, secretary and standard medical benefits.”

Unlike some consulting arrangements, though, which can be rather vague, we know (from the letter sent to Vornado’s shareholders, also filed with the SEC April 15) that Felman will be “helping on LNR and our fund.” Vornado holds a 26.2% equity stake in LNR, which is the special servicer for $195.6 billion of Commercial Mortgage Backed Securities, or CMBS. The letter to shareholders also adds that LNR is “currently special servicing 1,467 loans with a face amount of $27.7 billion.”

Back when Felman was named to the list of top businesswomen in New York, Crain’s article quoted her as offering the following wisdom to “would-be deal-makers.” She said at the time, “Only worry about the important things, and deal with those first and up front. If you can’t figure out the one or two most important things, you should not be doing the deal.” Looks to us like she’s pretty good at practicing what she preaches.

Image source: Alphaundomikron via flickr

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