83.0% 84.0% 85.0% 86.0% 87.0% 88.0% 89.0% 90.0% 91.0% 92.0% 2020 91.0% 86.2% 89.9% 86.9% 88.7%88.7% 89.0% 87.1% 89.8% 87.9% 2021 2022 2023 2024 Companies are not required to use any specific language in asking for stockholder approval. Instead, each company has the flexibility to craft the exact language of the non-binding resolution that its stockholders will vote on, subject to the requirement that the resolution clearly identify that stockholders are being asked to approve the compensation of the NEOs. It is not uncommon for a company to accompany its Say-on-Pay proposal with a disclosure highlighting the components of the company’s compensation policies and practices that tend to demonstrate a strong alignment of interests with stockholders, including NEO compensation that is tied to the achievement of quantitative performance objectives. In addition, many companies engage in regular communications with their largest stockholders to ensure that concerns regarding the compensation of the company’s NEOs are addressed prior to making compensation determinations. Although the Say-on-Pay vote is non-binding, boards of directors (and particularly members of the board’s compensation committee) that elect not to address concerns with respect to NEO compensation after a company receives only modest support or a majority against the NEOs’ compensation do so at their peril. In particular, stockholders and proxy advisory firms may view the board’s decision not to engage with stockholders as an indication of the board’s indifference to stockholder concerns, which could adversely affect stockholder support for certain director nominees in subsequent years. Additionally, if a Say-on-Pay vote receives only modest support (70% according to ISS, 80% according to Glass Lewis), proxy advisory firms expect a robust response from the company and disclosure regarding such response in the company’s proxy statement the following year, including the company’s engagement with stockholders regarding their concerns and actions taken to address the issues that led to the low level of support. If a company has not demonstrated adequate responsiveness, proxy advisory firms may recommend voting against the Say-on-Pay vote and incumbent compensation committee members the following year. Say-on-Pay Results Overall, average Say-on-Pay results for all REITs continues to rise from the record low support seen in 2022. Average support for all REITs has increased from approximately 89% in 2023 to 90% in 2024, reflecting a trend applicable to all publicly reporting companies. The guarantee of +90% stockholder support with a positive ISS voting recommendation is fading as institutional investors and stockholders are relying more on their own due diligence, and, in some cases, institutional voting guidelines, rather than ISS. While ISS recommendations continue to carry significant weight in vote outcomes for Say-on-Pay proposals, fewer REITs failed their 2024 Say-on-Pay proposal despite an increase in the number of Against recommendations. In 2024, more REITs received “Against” recommendations, with three REITs receiving less than 50% support for their Say-on-Pay proposals, compared to four in 2023. Average Say-on-Pay Support Self-Managed REITs Externally Managed REITs 2024 Guide to REIT Executive Compensation | 58
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