REITs Executive Compensation Guide

The footnote disclosure should, among other things, quantify each separate form of compensation included in the aggregate total reported, and amounts attributable to single-trigger arrangements and amounts attributable to double-trigger arrangements. The narrative disclosure of any golden parachute compensation should address, among other things, the circumstances under which the payments will be made, including a discussion of any reasonable estimates or assumptions applicable to the payments and any material conditions that must be satisfied prior to the receipt of payment (i.e., non-compete, non-solicitation, non-disparagement and similar obligations, see “Change-in-Control and Severance Disclosures”). In this respect, the disclosure of potential golden parachute compensation payable to the company’s NEOs is similar to the disclosure required to be included in proxy statements relating to annual meetings of stockholders in accordance with Rule 402(j) of Regulation S-K (i.e., potential payments upon termination or CiC). Making changes to the compensation arrangements of its NEOs in advance of a golden parachute transaction, such as changing double-trigger CiC arrangements to single-trigger CiC arrangements (see “Vesting, Acceleration and CiC” above), providing additional compensation to the NEOs, accelerating vesting of unvested equity award, or providing excise tax gross-ups increases the likelihood that proxy advisory firms such as ISS and Glass Lewis will recommend a vote against the company’s Say-on-Golden Parachute advisory proposal.

THE FOLLOWING IS SAMPLE DISCLOSURE THAT A COMPANY MAY USE IN CONNECTION WITH A SAY-ON-GOLDEN PARACHUTE PROPOSAL:

In accordance with Section 14A of the Exchange Act, we are providing our stockholders with the opportunity to cast a vote on a non-binding, advisory basis, on the compensation that may be paid or become payable to our NEOs that is based on or otherwise relates to the mergers. As required by those rules, we are asking our stockholders to vote on the adoption of the following resolution: RESOLVED, that the stockholders of REIT X hereby approve, on a non-binding, advisory basis, specified compensation to be paid or that may become payable by REIT X to its NEOs that is based on or otherwise relates to the mergers as disclosed pursuant to Item 402(t) of Regulation S-K in the section of the proxy statement entitled “Proposal 2: Proposal to Approve, on an Advisory Basis, the Merger-Related Compensation— ‘Golden Parachute’ Compensation.”

As with the required Say-on-Pay and Say-on Frequency votes, the Say-on-Golden Parachute vote is non-binding and advisory in nature and does not require the company to take any action as a result of a positive or negative vote. However, the failure of the company to obtain a majority vote on Say-on-Golden Parachute could subject the company to stockholder litigation during the pendency of the golden parachute transaction and the acquirer to stockholder litigation post-closing.

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