Value of REIT CEO Equity Plummets

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. January 13, 2009

JANUARY 13, 2009 - The value of equity holdings among CEOs of REITs has been cut in half, as stock prices in the sector tumble. CEOs at 159 public REITs began 2008 with $12.1 billion in equity value in their companies before losing an aggregate of $5.6 billion this past year.

Over the same period, stock price performance for these companies dropped a median of 46 percent. The findings are based on a recently completed joint study conducted by Steven Hall & Partners, independent executive compensation consultants, and Equinox Partners, an executive search firm focused exclusively in the real estate industry.

'Equity compensation plans are designed to align the interests of shareholders and executives, and this is working as intended,' commented Steve Hall, Managing Director of Steven Hall & Partners. 'CEOs are clearly feeling shareholders' pain, but Boards may be well served by examining compensation programs to ensure that they have adequate glue on key talent critical to spearheading efforts to recoup shareholder value.'

'Similar losses in values have occurred across senior management ranks,' added Anthony LoPinto, CEO of Equinox Partners. 'These dramatic declines in equity values provide companies with the opportunity to recruit top talent with the lure of attractively priced equity grants. Now is also the time to use fresh equity grants to defend key players in the organization from recruitment.'

For the entire study group, at the median, individual CEOs sustained losses of 49 percent of the value of their total equity holdings. The median value of total equity holdings, which includes shares owned outright, exercisable and unexercisable options, and unvested restricted and performance shares, fell from $15.6 million at the beginning of the period to just over $8 million at year end.

Founders fared slightly worse than their non-founder brethren. While non-founder CEOs lost a median of 48 percent, the twenty-five founders in the group suffered a median loss in equity value of 52 percent. This trend reflects each group's respective stock price performance, companies led by non-founders saw median stock price declines of 43 percent, while stock prices at founder-led companies depreciated 50 percent. The median value of total equity holdings for non-founder CEOs fell from $13.5 million to $7.9 million. The median value of total equity holdings for founder CEOs fell from $20.7 million to $8.9 million.

About the Study

The study included Chief Executive Officers at 159 publicly traded REITs. All results include stock, exercisable and unexercisable stock options, and unvested shares. Amounts are calculated for the period beginning at each company's respective fiscal year end (typically December 31, 2007) and ending December 31, 2008, using equity holdings as disclosed in the companies' most recent proxies. Values may not reflect changes in equity holdings occurring after the disclosure of the most recent proxy. Contact Nora McCord at Steven Hall & Partners, 212-488-5400, or [email protected], to request additional details regarding the study methodology.