Kilroy pay draws criticism.

Kilroy Realty Corp.'s generous compensation plan for its senior executives may cut into its fourth quarter earnings, according to analysts at Banc of America Securities.

This month, Banc of America analysts John P. Kim and Ross Nussbaum, who have had a "sell" rating on Kilroy stock since November, lowered their estimate of the company's fourth quarter funds from operations by 15 cents per share because of the plan.

Kilroy's compensation plan awards its senior executives bonuses based on the growth in the company's stock price, which increased by $4.72 a share in the three-month period ended Dec. 31.

The analysts said the plan calls for $25 million to $30 million in payouts over three years--although the accrual may be reduced if Kilroy's stock price declines.

In 2003, John B. Kilroy Jr., the company's president and chief executive, drew a salary of $875,000 and received a $1.1 million bonus. He also received stock options worth nearly $2.1 million, according to the most recent company filings with the Securities and Exchange Commission.

Kilroy shares peaked at $44.08 on Dec. 28, and have risen 31.5 percent over the past 12 months, adjusted to reflect dividend payments. They closed on Jan. 19 at $40.30.