Erik L. Johnson
About Erik L. Johnson
Erik L. Johnson (age 57) is President and CEO of Transcontinental Realty Investors, Inc. (TCI) since May 28, 2024; he previously served as EVP and CFO of TCI and American Realty Investors (ARL) from August 2020 to May 2024 and is a Certified Public Accountant. Prior roles include VP of Financial Reporting at The Macerich Company (2005–June 2020), CAO of North American Scientific, Inc. (2001–2005), Controller of Launch Media (2000–2001), and earlier auditor at PwC . TCI is externally managed by Pillar Income Asset Management; TCI has no employees and pays no executive compensation—executives (including Johnson) are compensated by Pillar .
Company performance during the latest fiscal year: total revenue declined modestly while cash from operations turned positive; EBITDA increased year-over-year. See table below for detail (Revenue, Net Income from 10-K; EBITDA from S&P Global).
Company financial performance
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Total revenue ($000s) | 49,905 | 47,070 |
| Rental revenue ($000s) | 47,023 | 44,763 |
| EBITDA ($000s) | 5,639* | 7,467* |
| Net income attributable to TCI ($000s) | 5,937 | 5,862 |
| Net cash from operating activities ($000s) | (31,073) | 1,310 |
*Values retrieved from S&P Global.
- 2024 revenue decreased year-over-year (Total revenue -5.7%; Rental revenue -4.8%) while EBITDA increased (approx. +32%*) and operating cash flow improved to positive $1.3 million .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Macerich Company (NYSE: MAC) | VP, Financial Reporting | 2005–Jun 2020 | Led public REIT reporting for large mall portfolio . |
| North American Scientific, Inc. (NASDAQ: NASI) | Controller/Chief Accounting Officer | 2001–2005 | Public company controllership and SEC reporting . |
| Launch Media, Inc. (NASDAQ: LAUN) | Controller | 2000–2001 | Led controllership for public digital media firm . |
| PwC | Auditor | Early career | Public accounting foundation; CPA credential . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Pillar Income Asset Management, Inc. | President & CEO; Director | 2024–present | Pillar is TCI’s external advisor; Johnson is an executive and director of Pillar . |
| Transcontinental Realty Acquisition Corporation (TRAC) | Director | Current | TRAC is wholly owned by ARL; attribution used in TCI beneficial ownership tables . |
Fixed Compensation
TCI pays no salary, bonus, equity, or benefits to executive officers; all executive compensation is paid by Pillar. TCI discloses only director fees and fees to Pillar (advisory/expense reimbursements). Pillar does not allocate its executives’ cash compensation among advised entities .
| Component | TCI Disclosure |
|---|---|
| Base salary | Not paid by TCI; executives compensated by Pillar . |
| Target/actual bonus | Not paid by TCI; determined by Pillar . |
| Perquisites, retirement, deferred comp | Not paid by TCI . |
| Options/stock awards from TCI | None; executive officers hold no options granted by TCI . |
Performance Compensation
While TCI does not pay executive incentives, the advisory agreement with Pillar embeds incentive economics tied to company performance:
| Metric | Weighting | Target/Terms | Payout/Frequency | Vesting |
|---|---|---|---|---|
| Gross Asset Value (GAV) Fee | N/A | 0.0625% per month (up to 0.75% p.a.) of average “Gross Asset Value” | Monthly/annual per contract | N/A |
| Net Income Fee | N/A | 7.5% of “Adjusted Net Income”; payable quarterly after 10-Q/10-K; not cumulative | Quarterly | N/A |
Sources and definitions: Amended Advisory Agreement effective Jan 1, 2024; definitions of “Adjusted Net Income” and “Gross Asset Value” provided in proxy . Compensation Committee oversees policies but TCI itself pays no executive compensation .
Advisory-related payments:
| Category | FY 2023 | FY 2024 |
|---|---|---|
| Advisory fee to Pillar ($000s) | 9,156 | 8,058 |
| Expense reimbursements to Pillar ($000s) | 3,700 (proxy disclosure) | 3,700 (proxy disclosure) |
- 2025 proxy also notes 2024 advisory fees of $8.1 million and $3.7 million in reimbursements (rounded), consistent with 10-K .
Implication: Johnson’s compensation is set by Pillar, but the advisor collects a formulaic base fee on assets and an income-based fee—tying firm economics to AUM and adjusted net income rather than explicit equity-linked pay at TCI .
Equity Ownership & Alignment
| Holder/Attribution | Shares | % of TCI | Notes |
|---|---|---|---|
| May Realty Holdings, Inc. (MRHI) | 7,447,230 | 86.20% | 2024 record date; controlling stockholder . |
| American Realty Investors, Inc. (ARL) | 5,383,192 + 5,300 (EQK) | 62.37% | ARL direct + EQK Holdings; part of MRHI group . |
| TRAC (wholly owned by ARL) | 1,383,226 | 16.01% | Director of TRAC is E. L. Johnson; deemed attribution; disclaimed . |
| Realty Advisors, Inc. (RAI) | 675,512 | 7.82% | 100% owned by MRHI . |
| Erik L. Johnson | 7,447,230 (attributed) | 86.20% | May be deemed beneficial owner via roles at ARL/RAI/TRAC; disclaims beneficial ownership . |
Additional ownership/control context:
- Affiliates/related parties held ~86.44% (2025 proxy) and ~86.20% (2024 proxy) of shares outstanding—producing a very low public float and voting control .
- No pledging or hedging by executives was disclosed; no ownership guidelines disclosed in the proxies .
Employment Terms
| Term | Disclosure |
|---|---|
| Employment start (CEO) | Appointed President & CEO effective May 28, 2024 . |
| Prior roles | EVP & CFO of TCI/ARL (Aug 17, 2020–May 28, 2024) . |
| Employer of record | Pillar (TCI has no employees) . |
| Contract term/auto-renewal | Not disclosed for Johnson; Advisory Agreement auto-renews annually . |
| Severance/Change-in-control | Not disclosed for Johnson at TCI (executives compensated by Pillar) . |
| Clawback/Tax gross-ups | Not disclosed specific to executive compensation at TCI . |
| Non-compete/Non-solicit | Not disclosed. |
Performance & Track Record
- Corporate initiatives during 2024 under Pillar/TCI management included multiple development projects (Alera, Merano, Bandera Ridge, Mountain Creek) with construction loans and defined budgets; development fees are payable to Pillar per agreements .
- 2024 results: total revenue $47.1m (down 5.7% YoY), EBITDA up to $7.5m*, and net cash from operations positive $1.3m; net income attributable to TCI roughly flat at $5.9m .
- Capital allocation included refinancing/loan actions and continued related-party receivable management (interest on Pillar receivable moved from prime+1% to SOFR on Jan 1, 2024) .
*EBITDA value from S&P Global.
Compensation Structure Analysis
- External management model: TCI pays Pillar (base fee on GAV and a 7.5% Net Income Fee) rather than compensating executives directly—reducing transparency into Johnson’s personal incentive design and potentially weakening direct pay-for-performance alignment with TCI’s public shareholders .
- Cash vs equity mix: No TCI equity awards to executives are disclosed; no options/RSUs outstanding for executive officers—eliminating company-level vesting overhang/selling pressure from awards but also limiting direct equity alignment for TCI-level performance .
- Related-party economics: Advisory fees and development/property fees paid to affiliates (Pillar, Regis) are material and recurring (e.g., 2024 advisory fee $8.058m; development fees to Pillar $2.236m in 2024), creating potential conflicts if fee growth outpaces shareholder returns .
Risk Indicators & Red Flags
- Control and float: Related parties control ~86% of shares, potentially limiting governance levers for minority investors and affecting trading dynamics (low float) .
- Related-party receivables: Large balance sheet receivable from related parties ($163.5m at Dec 31, 2024) and a Pillar receivable ($62.8m at Dec 31, 2024) create counterparty and liquidity risks if collection timing shifts .
- Externalization/conflicts: TCI relies on Pillar for day-to-day operations, development, and cash management; fee structures and intra-group transactions necessitate ongoing independent director oversight .
Say-on-Pay & Shareholder Feedback
- TCI does not hold a say-on-pay vote for executive officers since TCI pays no executive compensation; Compensation Committee oversees policies but compensation is paid by Pillar .
Expertise & Qualifications
- CPA credential; extensive public-company finance, SEC reporting, and real estate experience (MAC; NASI; Launch Media; PwC) .
Equity Ownership & Control Table (Company Level)
| Item | 2024 Proxy | 2025 Proxy |
|---|---|---|
| Shares outstanding (record date) | 8,639,316 | 8,639,316 |
| Affiliate/related party ownership | 86.20% | 86.44% |
Additional Trading Context
| Item | 2024/2025 |
|---|---|
| No common dividends declared for 2022–2024 | Board maintained no-dividend policy in 2024; future dividends at Board’s discretion . |
| Repurchase authorization | Program authorized up to 1,637,000 shares; 650,250 shares remain available; no repurchases in 2024 . |
| Share price reference | Closing price $28.12 on Mar 19, 2025 (10-K) . |
Investment Implications
- Alignment: Johnson’s compensation is determined by Pillar; at the TCI level, incentives operate via the advisor’s GAV and Net Income fee structure rather than executive equity—raising classic external-manager alignment questions (AUM growth vs per-share value, fee sensitivity vs shareholder returns) .
- Retention risk: As a Pillar employee and officer/director, Johnson’s retention hinges on Pillar rather than TCI contracts; no TCI-specific severance/CoC terms disclosed. Stability of the advisory relationship and Pillar economics are more relevant than TCI employment agreements .
- Trading/float: With ~86% insider/affiliate control, TCI’s float is thin. That can constrain liquidity, magnify price moves, and limit activist pathways; governance relies heavily on independent directors overseeing related-party dealings .
- Execution: 2024 showed positive turn in operating cash flow and higher EBITDA*, alongside continued development pipeline and refinancing activity. However, related-party receivables and fee payments are sizable; monitoring cash conversion, fee drag, and project-level returns remains critical .
*EBITDA from S&P Global.