2018 Real Estate Industry Annual Incentive Plan Practices
November 29, 2018
The FTI Consulting, Inc. Real Estate Industry Annual Incentive Plan (AIP) Practices report provides an overview of annual incentive bonus practices at publicly-traded REITs. FTI Consulting has specifically analyzed annual 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.
Short-term annual incentive plans are generally the second largest compensation vehicle for senior executives, accounting for approximately 24% of compensation on average in 2017. AIPs, generally payable in cash, are designed to reward employees for annual performance relating to key operational and financial measures, as well as individual performance and significant non-financial achievements. Accordingly, a well-designed annual incentive plan is essential to ensure that key employees are properly retained and motivated in the short-term, while also being mindful of long-term strategy.