REITs Executive Compensation Guide

Section 16

General

Thereafter, unless exempt from reporting or eligible for deferred reporting, any subsequent change in the beneficial ownership by a reporting person (not just purchases and sales) must be reported on a Form 4 within two business days after the change occurs. Subject to certain limited exceptions, the grant, exercise, conversion, transfer or divestment by any reporting person of any employee stock options, RSUs, restricted stock, SARs, LTIP units or other derivative securities of the company triggers the Section 16(a) reporting requirement, and a Form 4 must be filed within two business days following such change. In addition, Form 5 is a “clean-up” report that is due within 45 days after the end of a company’s fiscal year with respect to transactions by the reporting person (primarily gifts) that were otherwise exempt from the two-business-day Form 4 filing requirements. Often, however, reporting persons choose to voluntarily file a Form 4 to report these Form 5-eligible transactions in order to maintain continuity in the reporting person’s equity holdings and to avoid an inadvertent filing violation because of the delayed reporting.

Section 16 of the Exchange Act and the rules promulgated thereunder are intended to deter insiders (including directors, executive officers and certain other officers of a public company, as well as any person or entity that beneficially holds more than 10% of any class of the company’s equity securities) from misusing confidential information for personal trading gain. Section 16 generally operates to restrict trading activities of insiders by (1) requiring public disclosure of their ownership of, and transfers involving, the issuer’s equity securities (including securities acquired as compensation) under Section 16(a) and (2) permitting recovery by the issuer under Section 16(b) of any profits realized by the insiders on certain purchase and sale transactions. transactions and holdings in the common stock or other equity security of the company. An initial report on Form 3 must be filed by every reporting person within 10 calendar days after he or she becomes an insider (or, if a filing is being made in connection with an initial public offering of the company, at the time of effectiveness of the registration statement with respect to such initial public offering). For instance, if a public REIT promotes or hires a person that will be designated a Section 16 reporting person, the reporting person must file a Form 3 within 10 calendar days of the promotion or hiring, as applicable, and disclose his or her beneficial ownership of the REIT’s equity securities. Disclosure Requirements Section 16(a) requires that each Section 16 reporting person file electronic reports regarding their

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