Ernest S. Rady
About Ernest S. Rady
Ernest S. Rady, 87, is Executive Chairman of American Assets Trust (AAT). He served as Chairman & CEO from September 2015–December 2024 and as Executive Chairman from AAT’s 2011 IPO to September 2015 . He holds commerce and law degrees from the University of Manitoba and has 55+ years of real estate and financial services experience . Under his leadership, AAT reported record 2024 results: revenue $457.90m, net income $72.82m, FFO $197.50m ($2.58/share), and record NOI $290.13m; FFO/share CAGR since IPO of 6.7% was cited, and 2024 TSR outperformed the S&P 600 Real Estate Index for the 2023–2024 vesting window (Company TSR 43.07% vs 28.54%) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| American Assets Trust, Inc. | Executive Chairman | 2011–2015; 2025–present | Led governance and strategy through IPO and CEO transition . |
| American Assets Trust, Inc. | Chairman & CEO | 2015–2024 | Oversaw record FFO, NOI, revenue, investment-grade ratings, and financing initiatives . |
| American Assets, Inc. (AAI) | Founder, President & Chairman | 1967–present | Built diversified real estate platform; affiliate relationships with AAT disclosed . |
| Westcorp | Chairman & CEO | 1973–2006 | Grew financial services platform; sold to Wachovia . |
| Western Financial Bank | Chairman; CEO (periods) | 1982–2006 (CEO 1994–1996; 1998–2006) | Led bank operations and strategy . |
| WFS Financial Inc. | Director; Chairman | 1988–2006; 1995–2006 | Oversaw auto finance growth . |
| Wachovia Corp. | Chair of dealer finance and CA banking; Director | 2006–2007; 2006–2008 | Managed integration/transition post-Westcorp transaction . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Insurance Company of the West | Chairman, Board of Directors | Current | Controlled within Rady-affiliated group . |
| Rady School of Management (UC San Diego) | Chairman, Dean’s Advisory Council | Current | Governance/academic engagement . |
| AAI Aviation, Inc. | Aircraft services provider to AAT | 2024 | AAT expensed ~$0.2m for aircraft services/reimbursements . |
| AAI (tenant at AAT property) | Lease at Torrey Point | 2024 | AAT received ~$0.3m in rent . |
| Ensight, Inc. (Rady affiliate) | Tenant at Torrey Reserve Campus | 2024 | AAT received ~$0.1m in rent . |
Board Governance and Service
- Executive Chairman, not independent; 4 of 5 directors are independent; average tenure 11 years; average age 69; 40% female .
- Committee memberships: Rady serves on no committees. Audit: Olinger (Chair), Schaefer, Tran. Compensation: Sullivan (Chair), Olinger, Schaefer. Governance: Schaefer (Chair), Sullivan, Tran .
- Executive sessions: independent directors meet without management at each regular meeting; presiding independent director rotates quarterly; all directors attended 100% of 2024 Board/committee meetings .
- Leadership structure: Board affirms Executive Chairman model as appropriate; independent presiding director balances authority .
- Director pay: Rady receives no director fees; director compensation applies only to non-employee directors .
Fixed Compensation
| Item | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Base Salary ($) | 650,000 | 700,000 | 750,000 | 600,000 (post-transition) |
| Target Bonus (% of Salary) | Discretionary | Discretionary | Discretionary | 100% |
| Actual Cash Bonus ($) | 1,250,000 | 2,100,000 | 2,490,000 | N/A |
| Director Fees | — | — | — | — |
Notes: From 2025, target bonus set at 100% of salary; base cut reflects transition to Executive Chairman .
Performance Compensation
Annual Cash Incentive (plan design and 2024 outcomes)
| Component | Weighting | Metric/Targeting | 2024 Targets | 2024 Actual/Outcome | Payout Mechanics |
|---|---|---|---|---|---|
| Corporate performance (for NEOs other than Rady) | 50% | FFO/share (threshold/target/max) | $2.00 / $2.10 / $2.20 | $2.58 (noted $2.30 adj. ex one-time items) | Corporate multiplier 200% for 2024 |
| Individual/Discretionary (for NEOs other than Rady) | 50% | Committee discretion + ESG assessment | N/A | Awarded at 200% of target | Capped at 250% total |
| Rady-specific | N/A | Entirely discretionary in 2024 | N/A | $2,490,000 (332% of base salary) | Increased to offset inability to grant equity due to ownership limit |
Long-Term Incentives (LTI) – structure and vesting
- Vehicle: Performance-based restricted stock; 3 annual performance tranches (1-, 2-, 3-year), each measured on FFO/share vs internal budget (threshold/target/max: 50%/100%/150%) and relative TSR vs S&P 600 Real Estate Index (±20% adjustment; 50%–150% cap) .
- 2023 awards (vesting at 11/30/2024): FFO $2.58 → FFO multiplier 150%; TSR 43.07% vs 28.54% → TSR adj +10%; resulted in vesting at 150% of target for eligible tranche .
- 2022 awards (vesting measured to 11/30/2024): FFO $2.40 (2023) → FFO multiplier 150%; TSR underperformed → TSR adj −10%; vesting at 140% of target for eligible tranche .
- Rady equity grant constraint: No 2024 grant due to REIT charter 19.9% ownership cap for him/affiliates .
2024 Equity Grant Values (targets, grant-date methodology)
| Executive | 2024 Performance RS – Target Shares | 2024 Performance RS – Max Shares | Target Value | Max Value |
|---|---|---|---|---|
| Ernest S. Rady | N/A | N/A | N/A | N/A |
| Adam Wyll | 58,416 | 87,624 | $1,600,000 | $2,400,000 |
| Robert F. Barton | 40,161 | 60,241 | $1,100,000 | $1,650,000 |
| Jerry Gammieri | 15,334 | 23,001 | $420,000 | $630,000 |
Note: Conversion used 50-day average close of ~$27.3898 on 12/4/2024 . Wyll also received a one-time time-based RS grant ($1.6m) vesting equally on 12/4/2025, 12/4/2026, 12/4/2027 in connection with CEO transition .
Equity Ownership & Alignment
| Metric | Value |
|---|---|
| Beneficial ownership (Rady) – shares and units | 27,615,851 |
| Ownership as % of all shares | 36.35% |
| Ownership as % of all shares + units | 35.72% |
| Stock ownership guideline (executives) | 3x base salary for Rady; in compliance |
| Director fee policy for employees | Rady receives no director fees |
| Hedging policy | Prohibited for directors/officers/employees |
| Pledging policy and status | Pre-approval required; ≤7% cap; no outstanding pledges by Rady as of 12/31/2024 and none intended |
| Upcoming maximum vesting exposure (Rady) | 41,654 performance shares eligible in 2025 (max) |
Charter ownership limit: AAT’s REIT charter prevents Rady/affiliates from beneficially or constructively owning >19.9% of outstanding common stock, which blocked a 2024 grant .
Employment Terms
| Term | Key provisions |
|---|---|
| Agreement type/term | Restated agreements effective 1/1/2025; initial 1-year term; auto-renews annually (subject to non-renewal) . |
| Reporting | Rady and CEO report to the Board . |
| Base + bonus targets (2025) | Base $600,000; target bonus 100% of salary . |
| LTI target (2025) | Annual equity award target $800,000 (subject to charter limits) . |
| Severance (no CoC) | One-times (salary + 3-yr avg bonus) for Rady; 12 months health benefits; 50% equity acceleration unless award says otherwise . |
| Severance (within 12 months post-CoC) | Two-times (salary + 3-yr avg bonus) for Rady; 12 months health; 100% equity acceleration unless award says otherwise (double-trigger) . |
| Non-renewal | Treated as without cause for severance purposes . |
| Death/Disability | Full acceleration of outstanding equity (unless award provides otherwise) . |
| Covenants | Confidentiality and non-solicitation . |
| Clawback | NYSE/Rule 10D-1 compliant recovery policy . |
| Excise tax gross-ups | Not provided (“What we don’t do”) . |
Potential payments (as of 12/31/2024) per proxy scenario analysis:
- Termination w/o cause, resignation for good reason, or non-renewal (no CoC): $2,696,667 cash; $1,093,834 equity acceleration; $26,046 medical; total $3,816,547 .
- Same within 12 months of CoC: $5,393,333 cash; $1,093,834 equity; $26,046 medical; total $6,513,213 .
- Death/Disability: $1,093,834 (equity acceleration) .
Performance & Track Record
| Measure | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net income ($000s) | 35,588 | 36,593 | 55,877 | 64,690 | 72,819 |
| FFO ($000s) | 143,880 | 152,899 | 179,215 | 183,441 | 197,526 |
| FFO/share ($) | 1.89 | 2.00 | 2.34 | 2.40 | 2.58 |
| NOI ($000s) | 223,454 | 246,054 | 270,215 | 277,207 | 290,128 |
| Revenue ($m) | — | — | — | — | 457.90 |
| TSR (value of $100) | 65.04 | 87.17 | 64.19 | 58.01 | 71.58 |
Additional 2024 operating highlights:
- Maintained investment-grade ratings (Moody’s Baa3/Stable; S&P BBB-/Stable; Fitch BBB/Stable) .
- Issued $525m 6.15% senior notes due 2034 (4x+ oversubscribed); used to repay $300m and for general purposes .
- Highest total dividends per share since IPO: $1.34 (+2% YoY) .
- Liquidity $825.7m at 12/31/2024 ($425.7m cash and $400m revolver availability) .
- Strong leasing and portfolio metrics across office, retail, and multifamily .
Compensation Committee and Say‑on‑Pay
- Committee composition: Sullivan (Chair), Olinger, Schaefer; no external consultant was used for 2024 decisions .
- Market benchmarking: NAREIT Compensation Survey ($3–$5bn total capitalization cohort); target around median positioning .
- Say‑on‑pay: 2024 approval >91%; average since 2011 IPO ~98%; annual vote cadence .
Related‑Party Transactions (Governance Risk Indicators)
- Partnership agreement and OP unit rights (including redemptions/exchanges and restrictions on AAT transferring OP interest before the later of the deaths of Mr. and Mrs. Rady) .
- Registration rights for Rady/affiliates for secondary offerings; company bears registration expenses .
- AAI Aviation aircraft services ($0.2m); AAI lease ($0.3m rent); Ensight lease (~$0.1m rent); transition services between OP and AAI (cost reimbursement) .
- Related-party transactions reviewed/approved under formal policy by Audit Committee .
Equity Ownership & Director Governance Policies
- Executive stock ownership guidelines (Rady: 3x salary; in compliance) and holding requirements if not in compliance .
- Non-employee director ownership guidelines: 5x annual retainer; all in compliance .
- Insider trading: pre-clearance required; hedging prohibited .
- Pledging: permitted only with Audit Committee pre-approval; limited to ≤7% outstanding shares; no outstanding pledges by Rady as of 12/31/2024 and none intended .
Investment Implications
- Alignment: High insider ownership (Rady ~36% of shares; ~36% shares+units) strongly aligns him with equity outcomes; hedging banned and no current pledging reduces misalignment/forced-sale risk .
- Pay-for-performance: AAT ties incentives primarily to FFO/share and relative TSR; recent vesting outcomes (150% for 2023 tranche) reflect strong operating and market performance; Rady’s 2024 cash bonus was discretionary due to equity grant limits, an important nuance when assessing pay mix and cash comp optics .
- Retention/CoC risk: Rady’s severance is 1x (2x if CoC within 12 months) with health coverage and equity acceleration (double-trigger for 100%); not excessive and no excise gross-ups—supports governance quality while limiting entrenchment concerns .
- Governance: Executive Chairman structure with fully independent committees and regular independent sessions provides checks; however, related-party transactions and OP agreement constraints require ongoing monitoring for minority shareholder protections .
- Trading signals: No active pledges and disclosed 2025 performance share tranche (max 41,654) suggest limited forced selling pressure from Rady; monitor Form 4s around annual vesting windows for liquidity events .