REITs Executive Compensation Guide

LTI Modifier Prevalence

100

80

71.70%

60

40

20

15.09%

7.55% 5.66%

0

Absolute TSR Relative TSR Absolute & Relative TSR

Other/ Discretionary

Not all REITs are remaining complacent in their LTI design, with more REITs conducting extensive reviews of their performance share plans as non-TSR metrics are gaining traction. In particular, many REITs have been reviewing existing plans to ensure that the relationship between pay and performance are properly correlated. Scrutiny of LTI program design from investors and proxy advisory firms likely will become more pronounced as a result of the SEC’s new pay-versus-performance disclosure rules, which expressly require disclosure of the relationship between executive compensation and financial performance, including TSR. Accordingly, we have seen — and we expect to continue to see — more innovation in LTI design in the past several years, including time-based equity awards with added performance conditions to provide an upside for the achievement of operational, strategic and/ or financial goals (although REITs also may elect to disclose the relationship to relative TSR in addition to absolute TSR).

13 | 2023 Guide to REIT Executive Compensation