REITS get big on pay-for-performance.

With Board governance and executive accountability continuing to dominate headlines, corporate compensation committees have been highly focused in their review of company compensation programs.

Many real estate investment trusts are working with new metrics to formulate their executive compensation plans, according to the Schonbraun McCann Group (SMG), a national real estate financial consulting firm. In fact, a majority of REITs have already made dramatic changes or are in the process of addressing changes in their compensation programs to include pay-for-performance (PFP) features to compensate their top executives, the firm reports.

According to Larry Portal, co-head of the firm's Executive Compensation Consulting practice, "The REIT industry has recognized that one of the most important issues on shareholders' minds today is how executives at those companies in which they have a stake are compensated. An overwhelming majority of investors want to see executive management compensation correlate to profitability, value creation and how well their companies are run. Compensation based on time-in-the-saddle is a thing of the past."

According to Institutional Shareholder Services, this year, the number of companies with PFP proposals on their ballots this proxy season is nearly five times the number of companies with similar proposals on their ballots last proxy season.

"The differences between the old ways of compensating executives and the new PFP models can be dramatic in terms of how much variability there is in potential compensation," Portal noted. Now, according to SMG studies, the potential highs are that much higher, and the potential lows are that much lower. Given strong REIT performance over the past few years, key executives have clearly benefited.

"There is a strong incentive these days for REIT executives to be more accountable than ever for their company's performance and to have their compensation align with such performance. In general, REITs are being better managed than ever and shareholders recognize this," Portal noted.