Study: Compensation for REIT Board Members Up 25%

It pays to be a real estate investment trust (REIT) board member these days. REIT board member compensation has increased 25% over the last decade, according to a study by New Jersey-based real estate consultant Schonbraun Safris McCann Bekritsky & Co.

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The finding of the study, which examined 150 publicly traded REITs, suggest that publicly traded REITs are increasing their board members’ compensation due to the increased scrutiny that independent board members have come under in recent years. With the recent high-profile accounting scandals, board members are suddenly on the hot seat — and the REITs they work for sympathize.

"Perhaps at no time in Wall Street’s history have boards of directors’ roles and responsibilities been more in the public spotlight. The real estate industry is no exception," says Larry Portal, head of the firm’s national compensation consulting practice. With companies and their shareholders keenly focused on how independent board members are compensated, the study suggests that the companies are placing a premium on heightened responsibility and accountability these days.

The SSMB study also found that REITs are moving away from stock options and instead are using restricted stock as a major part of board compensation. Portal says that the shift towards restricted stock is in line with how more and more REITs are compensating their senior executives.

Retention bonuses are also becoming more common. SSMB found that many REITs are willing to pay out additional retainers to "key" board members. And these retainers range from as much as $5,000 to $10,000 on top of base retainers.

"From a REIT shareholders’ point of view, this additional compensation usually signals that the company acknowledges and values the added responsibility and accountability these committee chairmen bear, especially the heads of audit committees," adds Portal.


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