REITs Executive Compensation Guide

Company Management While it is important that executive compensation, particularly with respect to the CEO, is analyzed and discussed independent of significant management influence, it would be ineffective and impracticable to entirely exclude management participation. Indeed, management has the best insights into the company’s strategy and factors impacting the organization and, accordingly, management’s input is imperative to designing an effective compensation program. While the roles of executives vary from company to company, it is critical that the process is fully transparent and that compensation for the CEO is always discussed in an executive session outside of the presence, and without the participation, of the CEO. The most common roles for management in the executive compensation process include: ■ management often provides input related to the company’s most comparable competitors as part of the peer group selection process; the CEO should provide input into the performance of the other NEOs and often provides recommendations for any discretionary compensation components for this group of individuals; ■ the finance department (including the CFO) often provides budgeting and forecasting information to assist in the establishment of performance goals for the cash bonus and performance-based equity programs; ■ members of any ESG, sustainability or similar committee may provide input on non-financial metrics that are designed to support the company’s ESG initiatives; and ■ individuals in the human resources and/or legal departments often facilitate the overall process and serve as the liaison between all parties. ■

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