FTI Consulting Study Finds REIT Executive Median Compensation Increased 5 Percent In 2016

WASHINGTON, D.C., Aug. 15, 2017 (GLOBE NEWSWIRE) -- FTI Consulting, Inc. (NYSE:FCN) has reported a slight increase in 2016 REIT executive compensation levels over the previous year (5 percent in 2016 as compared to 3 percent in 2015), with a tighter range in pay change by executive position (2 percent to 7 percent in 2016 as compared to 1 percent to 9 percent in 2015). These key findings were revealed in the firm's 2017 REIT Executive Compensation Trends study, which focuses on the pay practices at the nation's largest 150 REITs.

Conducted by the Real Estate & Infrastructure industry group of FTI Consulting, the study details year-over-year compensation changes and provides meaningful insight and commentary into recent REIT compensation market trends. According to the study, many REIT compensation committees and management teams have expressed a desire to simplify their compensation structures by streamlining performance-based equity programs into one long-term incentive plan and incorporating appropriate payout leverage for a range of performance.

In addition, many compensation committees have reduced the number of metrics in their annual incentive plans to no more than three to five key measures, while increasing the emphasis on annual incentive plan goal setting.

"Companies have been taking a deeper dive into performance goals to understand how meaningful and achievable they are, as the scrutiny on annual incentive plans by proxy advisory firms and investors has shifted from plan design (i.e., formulaic versus discretionary) to the appropriateness of the goals themselves," said Jarret Sues, a Managing Director in the Real Estate & Infrastructure industry group at FTI Consulting. "In addition, compensation committees and management are more focused on evaluating performance metrics beyond total shareholder return ('TSR') for equity awards and determining if certain operational metrics that drive long-term value creation are more appropriate."

REIT commitment to a pay-for-performance philosophy continues to increase, with 84 percent of REITs in the study now utilizing performance-based equity (exclusive of stock options) in the equity award mix, up from 82 percent in 2015 and 34 percent in 2010. In 2016, approximately 50 percent of equity awarded to REIT chief executive officers ("CEOs") was allocated to performance shares based on grant date fair value. 

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