REITs Executive Compensation Guide

■ New Plan Benefits Table : a table disclosing the benefits or amounts that will be allocated to (a) each NEO, (b) all current executive officers as a group, (c) all current directors who are not executive officers as a group and (d) all employees, including all current officers who are not executive officers, as a group, if such benefits or amounts are determinable. If such information is not determinable, then the company should provide information for each of the foregoing as if the plan had been in effect during the previous fiscal year. 28 If the information is not determinable (e.g., if grants are not made pursuant to a formula and there are no pre-approved grants that are contingent upon stockholder approval of the plan), the company should disclose that fact and not include a New Plan Benefits Table. PRACTICE POINT: If the compensation committee or the board approves grants under the plan prior to the adoption of the plan but subject to stockholder approval of the plan, those approved grants should be included in the New Plan Benefits Table. Otherwise, it is often the case that grants are not determinable and the New Plan Benefits Table is excluded. ■ Plans Containing Options, Warrants or Rights. If a plan containing options, warrants or rights (or a specific grant of options, warrants or rights) is submitted for stockholder approval, the company must disclose: (a) the title and amount of securities underlying options, warrants or rights; (b) the prices, expiration dates and other material conditions related to exercise; (c) the consideration received or to be received for the grant or extension; (d) the market value of securities underlying the options, warrants or rights as of the latest practicable date; and (e) in case of options, the federal income tax consequences of the issuance and exercise of such options to the recipient and company. Furthermore, the company must state separately the amount of options received or to be received by the following (if such benefits are determinable): (a) each NEO; (b) all current

a group; (d) each nominee for election as director; (e) each associate of any such directors, executive officers or nominees; (f) each other person who received or is to receive 5% of such options, warrants or rights; and (g) all employees, including current officers who are not executive officers, as a group. SEC staff interpretations make it clear that this requirement to state the amount of options received or to be received applies to all options received at any time (not just last year) and options to be received (if determinable) by the specified persons and groups, and that the information called for under this item requirement should be given for each individual and group (including those for which the amount of options received or to be received is “0”). 29 PRACTICE POINT: When seeking stockholder approval of an amendment to an existing plan, many REITs take the position that disclosure under Item 10(b)(2)(ii) with respect to options received or to be received by the individuals and groups of individuals named in (a) through (g) above should be included not only for options, but for all awards previously granted under the plan that is being amended. Similarly, although the item only requires a discussion of federal income tax consequences of options, it is common practice to include a discussion of the federal income tax consequences of other types of awards as well.

executive officers as a group; (c) all current directors who are not executive officers as

28 See SEC Compliance and Disclosure Interpretations—Proxy Rules and Schedules14A/14C Question 161.06. Disclosure under this item is only required when action is being taken on an existing plan (as opposed to a new plan) if the existing plan is being amended to alter a formula or other objective criteria to be applied to determine benefits. 29 See SEC Compliance and Disclosure Interpretations—Proxy Rules and Schedules 14A/14C Question 161.12.

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