TORONTO - Colliers International Group Inc. (TSX, NASDAQ: NASDAQ:CIGI), a global leader in professional services and investment management in real estate, has announced the extension of its Global Chairman and CEO Jay S. Hennick's management services agreement until January 1, 2029. The original contract was set to expire in April 2026.
Hennick, who is also the company's largest shareholder, has been at the helm since Colliers' initial acquisition in 2004, overseeing its expansion and diversification. The company's market capitalization has seen significant growth under his leadership, rising from around US$1.5 billion in 2015 when Colliers became a standalone public entity, to US$6.1 billion as of December 31, 2023.
In conjunction with the contract extension, Colliers has implemented a new performance-based long-term incentive plan for Hennick, which links a substantial portion of his total compensation to the achievement of specific market capitalization-based growth targets. Hennick has been awarded 428,174 cash-settled performance units, which will vest based on the fulfillment of these targets by January 1, 2029. For the full vesting of the units, Colliers' market capitalization would need to double from its December 31, 2023, value to approximately US$12.3 billion. Partial vesting is possible if certain lower market capitalization thresholds are met. The performance units will not result in share settlement and do not confer shareholder rights to Hennick.
Jack Curtin, Colliers' lead director, expressed the Board's enthusiasm for Hennick's continued leadership and contribution to the company's growth and value creation. The new incentive plan is designed to align with the long-term interests of shareholders and support the company's ongoing success.
Additional details regarding the incentive plan will be disclosed in the management information circular for the next annual meeting of shareholders, scheduled for early 2025.
Based on a press release statement, Colliers operates in 68 countries with 22,000 professionals and has delivered approximately 20% compound annual investment returns for shareholders over 29 years. The company, with annual revenues exceeding $4.4 billion and assets under management of $96 billion, aims to maximize the potential of property and real assets for its clients and investors.
In other recent news, Colliers International reported a robust performance in the second quarter, with growth observed across all service lines and segments. The company's leasing revenues exceeded expectations, and for the first time in two years, the capital markets experienced modest growth. The acquisition of Englobe is anticipated to increase high-value recurring revenue streams to 72%. Despite some investors reducing their investments, the company remains optimistic about the remainder of the year.
Colliers International is also realigning its segment reporting to focus on real estate services, engineering, and investment management, and anticipates mid- to high single-digit revenue growth in outsourcing advisory and investment management. The company expects deal activity and sales volumes to recover, aided by lower interest rates, greater availability of debt, and narrowing bid-ask spreads. The company is also considering strategic moves, including potential splits, to generate additional value.
Despite facing lower profitability per loan in the loan origination business, the company believes its stock is undervalued and is exploring options to enhance share value. The company is also optimistic about growth in Europe, Australia, and New Zealand, and the Englobe acquisition provides opportunities for cross-border business and cost synergies.
InvestingPro Insights
Colliers International Group Inc.'s recent contract extension for CEO Jay S. Hennick aligns well with the company's strong market performance and growth trajectory. According to InvestingPro data, Colliers has demonstrated impressive financial results, with a market capitalization of $7.64 billion, surpassing the $6.1 billion reported at the end of 2023. This growth underscores the company's continued expansion under Hennick's leadership.
The new performance-based incentive plan for Hennick, targeting a market capitalization of $12.3 billion by 2029, appears ambitious yet potentially achievable given Colliers' recent performance. InvestingPro Tips highlight that Colliers has shown a "high return over the last year" and a "strong return over the last three months," with a remarkable 59.78% one-year price total return and a 41.69% three-month price total return.
Furthermore, Colliers' financial health appears robust. The company operates with a moderate level of debt and is expected to see net income growth this year. With a P/E ratio of 51.38, Colliers is trading at a high earnings multiple, which could be justified by its strong market position and growth prospects. The company's revenue for the last twelve months stands at $4.43 billion, aligning closely with the annual revenues mentioned in the article.
Investors considering Colliers might be interested to know that InvestingPro offers 14 additional tips for this stock, providing a more comprehensive analysis of its investment potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.