- The Washington Times - Monday, March 16, 2009

NEW YORK (AP) - The president and chief executive of Host Hotels & Resorts Inc., a real estate investment trust, received compensation valued at about $2 million in 2008, according to an Associated Press calculation.

W. Edward Walter’s pay package was 42 percent higher than his compensation in 2007, when the company’s top executives were not granted any equity awards under a three-year long-term incentive plan. However, a large portion of his award last year was granted in restricted stock, which has since deteriorated in value.

In a Securities and Exchange Commission filing on Monday, Host Hotels reported paying Walter a salary of $750,000, up from about $542,000 in 2007.

He received a performance-based cash award of $467,625, down 38 percent from the prior year because the company’s 2008 funds from operations fell short of its goal.

Funds from operations, or FFO, which adds such items as amortization and depreciation back to net income, is considered a key measure of strength for REITs because it provides a more accurate picture of cash performance.

In 2008, Host reported FFO totaling $1.74 per share, down from $1.91 per share, in the prior year. Its target FFO was set at $1.92 in February 2008.

Host Hotels’ top executives were not granted restricted stock under the company’s long-term incentive plan during 2007 because the company’s stock performance missed expectations. The company’s stock performance also fell short of its targets in 2008, but the executives were granted time-based awards for continued employment.

Walter received restricted stock valued at about $679,889 on the day it was granted in early 2008. But Host Hotels’ stock lost more than 50 percent of its value in 2008 _ dropping from a 52-week high of $18.81 last May to close at $7.57 on Dec. 31.

Walter’s “other compensation” totaled about $130,000 and included more than $30,000 for rooms, dining and other hotel services.

The Associated Press’ compensation formula is designed to isolate the value the company’s board placed on the executive’s total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don’t include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC, which reflect the size of the accounting charge taken for the executive’s compensation in the previous fiscal year.

Apart from his 2008 compensation, Walter realized about $600,000 from vesting stock awards.

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