REIT Chief Executive Officer (CEO) Compensation in the New Era

50 Pages Posted: 14 Dec 2021

See all articles by Zifeng Feng

Zifeng Feng

The University of Texas at El Paso

William G. Hardin

Florida International University (FIU) - College of Business Administration

Zhonghua Wu

Florida International University (FIU)

Date Written: December 07, 2021

Abstract

Relations between REIT CEO compensation, firm stock performance and risk, after FASB accounting changes and additional SEC compensation disclosure requirements in 2006, are examined. Total compensation becomes more weighted to bonus payments and stock grants and away from options and salary. The majority of REIT CEO compensation comes from bonus payments and stock grants. REIT CEO compensation is found to be positively correlated with lagged firm stock performance, but not lagged firm risk measures. A new metric related to the REIT dividend requirement, dividends paid to CEOs from share ownership, is positively related to CEO total compensation, and the positive relation is driven by a strong association between cash dividends to CEOs and their equity-based compensation. These findings suggest that REIT CEOs trade-off certainty in cash compensation for equity-based wealth and related cash flows. Most important, our results suggest that REIT CEOs are paid for performance and are less likely to earn windfalls that have been associated with the use of options and mis-priced firm risk in non-REIT firms.

Keywords: Executive Compensation, CEO, Performance, Risk, REIT

JEL Classification: G34, G32, R30

Suggested Citation

Feng, Zifeng and Hardin, William G. and Wu, Zhonghua, REIT Chief Executive Officer (CEO) Compensation in the New Era (December 07, 2021). Available at SSRN: https://ssrn.com/abstract=3983347 or http://dx.doi.org/10.2139/ssrn.3983347

Zifeng Feng (Contact Author)

The University of Texas at El Paso ( email )

500 W. University Ave.
El Paso, TX 79968
United States

HOME PAGE: http://https://sites.google.com/view/zifeng-feng/home

William G. Hardin

Florida International University (FIU) - College of Business Administration ( email )

Miami, FL 33199
United States

Zhonghua Wu

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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