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.

Last week, 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 $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.

“We remain concerned that it is uncapped, generous relative to its size, rewards only senior management and is not tied to Kilroy’s outperformance relative to its peers,” the analysts wrote in their Jan. 12 report.

Kilroy is expected to utilize a “more modest compensation plan” when the current one expires at the end of this year, which may boost the company’s 2006 earnings, according to the report. The analysts don’t expect to hear details of the new plan until mid-year.

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.

Calls to Kilroy officials seeking comment weren’t returned.

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 Friday at $39.49.