REITs Executive Compensation Guide

Outside Law Firm REITs often engage outside legal counsel to address a variety of matters relating to executive compensation. For instance, it is common for outside legal counsel to handle the following compensation-related matters for REITs: drafting the REIT’s equity incentive plans, deferred compensation plans, non-equity incentive compensation plans and similar plans; ■ drafting the forms of award agreements relating to incentive compensation payable under the REIT’s executive compensation plans and policies; ■ ■ drafting, or assisting the REIT in drafting, the REIT’s executive compensation disclosures for its annual proxy statement, including the CD&A and tabular disclosures (see “Proxy Statements — Compensation Discussion and Analysis” and “Proxy Statements — Tabular Compensation Disclosure” below); ■ drafting, or assisting the REIT in drafting, any executive compensation-related proposals to be included in the REIT’s proxy statement, including proposals seeking the approval of new or amended equity plans (to the extent required under stock exchange listing rules) and proposals related to “Say-on-Pay,” “Say-on-Frequency” and “Say-on-Golden Parachutes” (see “Stockholder Approval of Equity Plans” and “Stockholder Advisory Votes on Executive Compensation” below); ■ assessing the tax implications of the REIT’s compensation plans and policies, including the tax implications of different forms of equity awards and tax withholding obligations; ■ drafting the REIT’s registration statement on Form S-8 relating to the registration of offers and sales of securities under the REIT’s equity incentive plan and drafting the plan prospectus required under Form S-8 (see “Form S-8” below); and ■ drafting or reviewing drafts of board of director and compensation committee resolutions and minutes relating to compensation-related matters. ■ drafting and/or negotiating employment agreements, severance agreements or similar arrangements between the REIT and its executive officers;

REITs that have an internal legal department or other employees with expertise in executive compensation matters, including securities law and tax law expertise, may address many of the foregoing matters themselves, rather than engaging outside legal counsel to handle those matters. However, even in those instances where internal legal counsel takes the lead on many compensation-related matters, it is still common for outside legal counsel to be consulted, particularly with respect to complicated tax matters, the nuances of the SEC’s disclosure rules relating to executive compensation and “best practices” in corporate governance relating to compensation matters. Each REIT’s circumstances are unique and will dictate whether, and the extent to which, outside legal counsel should be engaged to address matters relating to executive compensation. the compensation committee determines that it is advisable to have its own counsel to address compensation-related matters. As discussed in the section entitled “Stock Exchange Requirements for Compensation Committees” above, both the NYSE and Nasdaq require listed companies to permit the compensation committee to engage its own counsel and to provide appropriate funding for the payment of reasonable compensation to independent legal counsel. A compensation committee may determine that it is advisable to engage its own legal counsel for a variety of reasons, including the desire to demonstrate the compensation committee’s independence from management and, by extension, the company’s existing outside legal counsel, who may have real or perceived conflicts of interest due to their desire to maintain good relationships with members of senior management. Outside legal counsel also may be engaged directly by the REIT’s compensation committee to the extent

25 | 2023 Guide to REIT Executive Compensation