Total compensation levels within the real estate investment trust industry increased in 2009 by a median of three to 15 per cent, depending on employee level.

The larger increases were generally paid to employees at higher levels within the organisation, including members of executive and senior management.

FTI Schonbraun McCann Group, the real estate advisory business of FTI Consulting, conducted the survey of 45 public and private real estate companies across all sectors of the real estate industry in August 2010.

Larry Portal, senior managing director and co-head of FTI Schonbraun McCann's executive compensation group, says: "Our study revealed significant swings in compensation levels from 2007 through 2009. Many real estate companies have been trying to balance liquidity and dilution concerns while also trying to retain employees and keep them motivated during these difficult economic times. In 2010/2011, we expect to see fewer companies experiencing drastic compensation adjustments such as 20 per cent increases or 20 per cent decreases as people become more comfortable with current economic conditions. We also expect to continue to see notable increases through the utilisation of performance-based shares, and while there is a current compensation/grant date value associated with such awards, the actual value realised by recipients will ultimately depend on sustained company performance."

Specifically, the study found that the larger increases in compensation of approximately ten to 15 per cent were primarily attributed to rebounds in stock prices and companies implementing performance-based equity programmes.

Lower level employees, including middle management and other professional staff members, typically experienced more moderate increases of three to ten per cent as their compensation is more heavily weighted towards base salary and moderate cash bonuses and, therefore, varies less year over year.

Most employees experienced no changes or limited increases in base salaries, with overall increases of approximately 2.5 per cent at the median for those receiving increases in both 2009 and 2010. Salary budgets in 2011 are not expected to increase substantially, with estimated increases in the 2.8-3.0 per cent range, although more employees can expect to receive a raise in 2010 with approximately 85-90 per cent of employees forecasted to receive increases in 2011.

Participating companies paid out bonuses at approximately 90-95 per cent of target depending on the employee group. This represents a significant increase over 2008 payouts with bonuses representing 75 per cent of targeted amounts, at the median.

Time-based restricted stock continues to be the predominant equity compensation vehicle for Reits, with approximately 80 per cent of Reits granting such shares. However, stock options (used by 34 per cent of Reits) and performance-based restricted stock (used by 31 per cent of Reits) have grown more prevalent in recent years.