2016 Real Estate Industry Annual Incentive Plan Report

2016 Executive Compensation Report: Real Estate Industry Annual Incentive Plans

Annual Incentive Practices for Executives at the Top 125 REITs

Real Estate & Infrastructure

December 19, 2016

The FTI Consulting, Inc. Real Estate Industry Annual Incentive Plan (“AIP”) report provides an overview of annual cash bonus compensation practices at the top 125 publicly-traded REITs. The top 125 REITs provide statistically significant and valuable insight into current and emerging compensation trends, and accordingly, our report focuses on these companies. Any reference in this report to “REIT(s)” only denotes the top 125 REITs included in the report.

The following information is based on our extensive review and analysis of compensation-related disclosure obtained through public documents filed with the Securities and Exchange Commission. FTI has specifically analyzed short-term incentive information disclosed within the most recently filed proxy statements, plus any subsequent materials filed in a Form 8-K. Our goal is to provide the most “forward looking” and accurate information available for a more in-depth understanding of the AIP structure and design used in the real estate industry.

The top 125 REITs were determined based on year-end 2015 enterprise values. Enterprise value is calculated as the value of common shares and OP Units (i.e., equity market capitalization), plus debt and the book value of any preferred shares less cash. Additionally, the following modifications were made to the constituent list:

  • Excludes externally-managed companies that do not directly pay cash compensation to their Named Executive Officers (“NEOs”)
  • Excludes any IPOs or REIT conversions that were completed after June 30, 2015
  • Adjusted to include select hotel companies that have not elected to qualify for REIT status for tax purposes but whose operations are comparable to other hotel REITs (e.g., Hyatt Hotels Corporation)

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