2017 Executive Compensation Report: Real Estate Industry Long-Term Incentive Practices
Long Term Incentive Practices for Executives at the Top 150 REITs
The FTI Consulting, Inc. Real Estate Industry Long-Term Incentive (LTI) report provides an overview of equity-based compensation practices at the top 150 publicly-traded REITs. We believe that the top 150 REITs provide the best insight into current and emerging compensation trends, and accordingly, our report concentrates on these companies. Any reference in this report to “REIT(s)” only denotes the top 150 REITs included in the study.
The information in this report is based on our extensive review and analysis of compensation-related disclosure obtained through public documents filed with the Securities and Exchange Commission. FTI Consulting has specifically analyzed long-term incentive information based on the most forward-looking pay packages for the Named Executive Officers (NEO) disclosed within the most recently filed proxy statements, plus any subsequent materials filed in a Form 4 or Form 8-K.
Executive Summary and Key Findings
Long-term incentives remain the largest pay element for NEOs and accounted for approximately 46% of total compensation at the median in 2016 (and for CEO’s, represented 58% of compensation). Furthermore, design concerns related to long-term incentive plans are one of the largest contributors to Say-on-Pay issues from proxy advisory firms, such as Institutional Shareholder Services (ISS). Accordingly, a well-designed LTI compensation program is essential to ensure that key employees are properly retained and motivated, while also being mindful of best governance practices.