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Perspective

REIT CEO and CFO checkbooks are brimming this year.  That’s the upshot of a study of 117 REITs we conducted recently in collaboration with executive-compensation consultant Steven Hall & Partners.  The study revealed that total pay for REIT CEOs and CFOs increased at a rate of double the general industry.  CEO pay rose 24%, compared with 10% for the general industry, and CFO’s total compensation increased by 32%, compared with 9.7% for the industry as a whole.  Along with these increases, many REIT comp committees are restructuring long-term incentives and providing for increasingly bigger handcuffs to retain key executives and focus their efforts on the creation of corporate and shareholder value.  The study highlighted that, in 2005, long-term incentives represented 64% of the CEO pay package, versus 52% in 2004.  For CFOs, long-term incentives grew to 54% from 44% of total remuneration.  These increases are on top of double-digit increases the prior year and clearly reflect the REIT sector’s performance in the midst of a Bull market.  Stay tuned for the next round of reporting. I expect that the trend will continue, albeit not at the same rate.

Tony LoPinto is CEO of Equinox Partners, an executive search firm specializing in the real estate industry, and parent company of SelectLeaders.The views expressed in this article are the author’s own.

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