Dive Brief:

• Real estate bigwigs are taking a pay cut as retail properties empty out — a correction to the over-built retail environment and a result of the shift to e-commerce, The Wall Street Journal reports.

• Simon Property Group, GGP and Macerich executives are taking cuts to their compensation because of how tightly their packages are tied to their companies’ performance on Wall Street, according to the report.

• Simon has eliminated stock grants, according to a proxy statement filed with the Securities and Exchange Commission cited by the Journal, which rewarded millions in shares to executives when the company’s stock did well.

Dive Insight:

Simon Property Group Chairman and CEO David Simon has remained adamant in recent years that the decline of malls (and retail in general) is over-hyped, along with the role of e-commerce in damaging brick-and-mortar retail sales. In April, the company reported that occupancy in its U.S. malls and premium outlet properties was 95.6% at the end of its first quarter, unchanged from the same point last year, and that base minimum rent per square foot in those properties rose 4.4% to $51.87.

That reflects "strong retailer demand and pricing power for our locations," Simon said, while leasing spread for the trailing 12-months rose 13% to $8.31 per square foot. Reported retailer sales per square foot for the malls and outlets rose 30 basis points to $615, compared to $613 per foot in the prior year period.

At that time, he nudged retailers to do their part in keeping up their properties and making an effort to draw shoppers to stores. "I'm hopeful that they're going to reinvest in their stores, improve their inventory mix and service their customer better," he said. "And, by the way, we've got to have the same pressure on us to do that. So, it's a two-way street. We are up for the challenge. We have the conviction in our business to do that, as you know if you go through our properties."

But the report in the Journal suggests even Simon is under pressure. Investment is in part a perception game, so that stock prices reflect anticipation of performance at least as much as past performance.

The reality is that North America has too many brick-and-mortar retail stores. That’s not just because e-commerce (at least to some extent) is replacing shopping in the real world, but also because many retailers, most notably Macy’s, expanded their store fleets beyond what could be supported in any era. The Great Recession helped accelerate a natural correction, experts say. Last year, retail analyst Jan Kniffen, CEO of J. Rogers Kniffen Worldwide Enterprises, said that while America at the time had about 1,100 enclosed malls, that number should be around 700 — meaning that roughly a third are destined to close.

Those remaining will likely be robust, according to Nick Egelanian, president of retail development consultants SiteWorks International. "Contrary to popular belief, internet sales are contributing little to department store declines, and internet sales strategies will do little to end the bleeding or stop the closure of thousands of additional department stores and hundreds of B and C malls, which are being rendered functionally obsolete," he told Retail Dive earlier this year.

"In a strange twist, however, the smaller number of malls that remain operating when the dust settles will become virtually indestructible by offering only best-in-class higher end merchandise in exclusive collections.  We already know who the winners will be, and the vast majority are owned and operated by four REITs: Simon, Westfield, Macerich and GGP."