REITs Executive Compensation Guide

6. how specific forms of compensation are structured and implemented to reflect the items of corporate performance, including whether discretion can be exercised; 7. how specific forms of compensation are structured and implemented to reflect the NEO’s individual performance and/or individual contribution to items of corporate performance; 8. the company’s policies and decisions regarding the adjustment or recovery of awards or payments if relevant corporate performance measures are restated or adjusted; 9. the factors considered in decisions to increase or decrease compensation materially; 10. how compensation or amounts realizable from prior compensation are considered in setting other elements of compensation; 11. with respect to any contract, agreement, plan or arrangement, whether written or unwritten, that provides for payment at, following, or in connection with any termination or CiC, the basis for selecting particular events as triggering payment; 12. the impact of accounting and tax treatments on the particular form of compensation; 13. the company’s policies regarding equity or other security ownership requirements or guidelines, as well as any company policies regarding hedging the economic risk of ownership of the company’s securities; 14. whether the company engages in benchmarking of total compensation, or any other material element of compensation; and 15. the role of executive officers in determining executive compensation.

The CD&A requirement is a “principles-based” rule, outlining principles for disclosure while providing guidance to help companies determine what items are material and must be disclosed. Specifically, the rule identifies the following factors that a company must address when preparing the CD&A disclosure:

the objectives of the company’s compensation policies;

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■ what the compensation program is designed to reward;

each element of compensation;

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■ why the company chooses to pay each element of compensation; ■ how the company determines the amount and, where applicable, the formula for each element of compensation; ■ how each element of compensation and the company’s decisions regarding that element fit into the company’s overall compensation objectives and affect decisions regarding other elements of compensation; and whether, and, if so, how, the company has considered the results of the most recent Say-on-Pay vote in determining compensation policies and decisions, and, if so, how that consideration has affected the company’s executive compensation decisions and policies. The CD&A requirement provides further guidance through the following examples of matters that will often be material for a company: 1. the polices for allocating between long-term and currently paid-out compensation; 2. the policies for allocating between cash and non-cash compensation, and among different forms of non-cash compensation; 3. for long-term compensation, the basis for allocating compensation to each different form of award; 4. how the determination is made as to when awards are granted; 5. what specific forms of corporate performance are taken into account in setting compensation policies and making compensation decisions; ■

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