REIT and REOC CEOs make an annual median base salary of $325,000 and long-term incentives account for more than 40 percent of total compensation among senior REIT executives, according to the 1999 Executive Compensation Survey conducted for NAREIT by Deloitte & Touche.

"These long-term incentive awards are issued in various forms," explained Chuck DiRocco, director of industry analysis, NAREIT. "Over half of the participants polled are issuing restricted stock shares as a form of compensation. In addition, incentive and non-qualified stock options continue to be a frequent method to compensate senior management. Issuing stock based awards links executive compensation to their common shareholders. They want to perform well, not only for the benefit of the company, but also for their personal financial rewards."

The increased use of restricted stock has grown notably in the last several years, as REITs look for alternatives to traditional stock options to compensate key employees, according to Anne Schulte, senior consultant, Deloitte & Touche.

Unlike ordinary common stock that must appreciate before a shareholder receives any financial benefit, a share of restricted stock gives the participant the full value of the stock. In addition, the participant benefits from dividends and any future appreciation.

However, there is a downside to awarding restricted stock to employees.

"Shareholders tend to think it's a giveaway because you're granted a certain amount of stock and as long as you stay with an organization for a designated time period, the stock is yours," said Schulte.

Of the 62 respondents, 90 percent have some type of formal salary administration program in place for senior executives, eight out of 10 companies indicated that they have, or plan to provide, some type of performance management process, and 85 percent said FFO per share continues to be a critical performance measure.

"I think because REITs are growing rapidly they're feeling a need to update their compensation systems to align with the way they're doing business. REITs also want to make sure they have the infrastructure in place to provide competitive compensation packages while controlling their costs," said Schulte.

The study also showed that 45 percent of the respondents have added or plan to add new positions with technology being the most rapidly growing. Of that 45 percent, 75 percent have added technology positions within the past 24 months and 32 percent report that they plan to add technology positions with the next 12 months. The median base salary for these positions start at $38,300 for a web designer to $85,000 for the head of MIS.