2023 Guide to REIT Executive Compensation

Vesting, Acceleration and CiC Thoughtfully structured vesting provisions, and vesting acceleration provisions in particular, are critical to an equity award’s effectiveness in achieving desired retention and business objectives. Careful consideration must be given not only to vesting periods and conditions, but also to when and how exceptions to vesting requirements will apply in connection with various termination/transaction scenarios, including: The most appropriate acceleration treatment often varies under each termination scenario. Consideration must also be given to tax, accounting and, if applicable, proxy statement or other disclosure implications. As with other design aspects of an equity award, the more thought and planning that go into an award’s vesting provisions, the more effective the award will be in achieving desired objectives and avoiding messy interpretive, tax and other pitfalls. Termination Scenario Common Acceleration Alternatives (May have both time and performance-based triggers) Time-Based Equity Performance-Based Equity ■ Death ■ Disability ■ By the Company, with “Cause” ■ By the Company, without “Cause” ■ By Employee, with “Good Reason” ■ By Employee, without “Good Reason” ■ CiC and walk away right (modified single trigger) ■ CiC and qualifying termination (double-trigger) ■ Retirement ■ Forfeit all unvested awards ■ Immediate and full vesting of all outstanding time-based awards ■ Pro-rata vesting for the time elapsed during the vesting period ■ Forfeit all unearned awards ■ Accelerate all unearned awards at target ■ Accelerate all unearned awards at target and pro-rate for time elapsed during the performance period ■ Accelerate all unearned awards based on actual performance (either at time of termination or at the end of the performance period) ■ Accelerate all unearned awards based on actual performance and pro-rate for time elapsed during the performance period 33 | 2023 Guide to REIT Executive Compensation