EXHIBIT 10.27

 

 

DESCRIPTION OF ANNUAL CASH INCENTIVE AWARDS TO EXECUTIVES

 

The Compensation Committee of the Board of Trustees (the “Compensation
Committee”) of Corporate Office Properties Trust (the “Company”) considers the
award of annual cash incentive awards designed to correlate executive
compensation to the overall performance of the Company and to the performance of
each executive’s specific business unit.

 

The Compensation Committee establishes target performance levels for the Company
in general and for the business units specifically by using two REIT peer
groups' bonus information, along with a summary of the objectives for the
Company and its business units. The Committee then establishes annual cash
incentive award targets based on different thresholds of performance in meeting
the performance levels.

 

The Committee uses the median bonus level for executive positions in the REIT
peer groups as a guideline for determining a Company executive’s target bonus to
be awarded if the Company and the executive’s business unit meet target
performance levels. Each executive may generally earn up to an established
maximum percentage of his or her annual salary if higher-than-target performance
levels are achieved, and will generally receive less than the target bonus if
the target performance levels are not met, although bonuses could not be paid at
all if a defined minimum performance level is not met.

 

The measures used in defining overall Company performance objectives for
determining bonuses are diluted funds from operations per share and diluted
adjusted funds from operations per share (both of which are measurements used by
equity REITs to evaluate financial performance).  The measures used in defining
business unit performance are tailored to apply to the nature of each business
unit’s operations.  The measures used in computing the bonus of the Chief
Operating Officer include only overall Company performance measures.  The
measures used in computing the bonuses of the other executives include overall
Company performance measures as well as measures applicable to each executive’s
business unit.

 

The Compensation Committee has the discretion to award higher or lower annual
cash incentive awards to executives relative to amounts computed in accordance
with the methodology set forth above.

 

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