REITs Executive Compensation Guide
approves compensation in excess of or less than what is provided for in the company’s compensation plans, or when the amount of compensation for an NEO has been increased or decreased due to an NEO’s individual performance, companies are expected to discuss the individual performance that was considered in making those decisions. A frequent area of consideration when preparing the CD&A is determining whether disclosure of the use of “benchmarking” is required. For purposes of the CD&A, the term “benchmarking” refers to the tying of specific elements of compensation or total compensation to a benchmark that is based on other companies, as opposed to using comparable company data as a “market check” after arriving at compensation decisions using some other methodology. If a company does engage in benchmarking compensation elements or total compensation, the Staff expects disclosure of all of the companies comprising the peer group or survey, as well as the methodology used when considering that information. A company is also expected to identify where its compensation decisions fall within (or outside of) the benchmarked parameters. Tabular Compensation Disclosure The following tables and related disclosure with respect to executive compensation are required to be presented in a company’s annual proxy statement pursuant to Item 402 of Regulation S-K:
An area of Staff focus has been the disclosure of performance targets. The CD&A must include disclosure of any specific items of corporate performance that are taken into account in setting compensation policies and making compensation decisions. As a result, the CD&A is expected to include material performance targets and the extent to which those performance targets have been achieved; however, no disclosure is required for performance targets that are not material or that would cause competitive harm to the company. If a company relies on the competitive harm exclusion to omit specific performance targets, the Staff may request that the company describe the nature of the competitive harm that it would suffer if the specific performance targets were disclosed, including the specific ways in which the company’s competitors would actually use the information. The Staff has generally been more accepting of an argument that disclosure of a performance target would cause competitive harm when a performance target relates to non-financial operational performance, or performance goals for specific business units. In general, the Staff does not expect companies to disclose financial performance targets for the current or a future period, if a company is able to argue that performance targets for the current or a future period are not material to an understanding of compensation policies and decisions with respect to the fiscal year being discussed in the CD&A. When a company uses performance targets that are based on a non-GAAP financial measure, an explanation of how the non-GAAP financial measure is calculated must be provided, but a reconciliation to GAAP and related disclosures are not required. The Staff has also focused on disclosure of individual performance goals for NEOs, requesting details as to how the level of individual achievement affects the actual compensation received by the executive, or why the compensation committee adopted a particular individual performance goal and how achievement is measured. Companies are expected to identify the extent to which achievement of individual performance goals affects the compensation for each NEO, and if such individual performance goals were a material factor in determining compensation, then the specific performance goals and achievements must be disclosed, even if the goals are subjective and not quantifiable. When the compensation committee
Summary Compensation Table Pay-Versus-Performance Table Equity Compensation Tables
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Grants of Plan-Based Awards Table Outstanding Equity Awards at Fiscal Year-End Table Option Exercises and Stock Vested Table
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Post Retirement Benefit Tables
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Pension Benefits Table
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Nonqualified Deferred Compensation Table
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■ Change in Control and Severance Disclosure
51 | 2023 Guide to REIT Executive Compensation
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