2018 Real Estate Industry Long-Term Incentive Compensation Practices

The FTI Consulting, Inc. Real Estate Industry Long-Term Incentive (LTI) Compensation Practices report provides an overview of equity-based compensation practices at publicly-traded REITs. 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.

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 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. Our goal is to provide the most timely and accurate information available for a more in-depth understanding of the LTI vehicles used in the real estate industry.

Long-term incentives remain the largest pay element for NEOs and accounted for approximately 48% of total compensation at the median in 2017 (and for CEO’s, represented 58% of compensation). 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.