Corporate Governance Trends in the Public REIT Sector: A 2026 Update

Overview: Governance Trends in the REIT Sector

In April 2017, we released our inaugural comprehensive survey of Corporate Governance Trends in the Public REIT Sector: An Evolving Landscape, updated in 2019, which measured and reported on an array of corporate governance practices in use, under consideration, or being monitored in the public REIT market. Our review found that while the public REIT sector compared favorably to the larger market in key governance areas, such as the limited use of classified boards, there were also areas where the REIT sector as a whole diverged from larger-cap indices in some areas, such as the ability of many Maryland REITs to unilaterally classify their boards under the Maryland Unsolicited Takeover Act (MUTA).

As we head into the 2026 annual meeting season, corporate governance for public REITs remains a central focus. This is true not only of those REITs that have faced or are facing activist campaigns or other perceived threats,¹ but of all REITs, large and small, across all industries. Virtually every industry conference and seminar in recent years has included a discussion of corporate governance, and REIT investors — whether active or passive, income-based, index oriented, or otherwise — are increasingly sensitive to market developments in corporate governance practices. Investors have also become more vocal about their governance preferences through their proxy voting and engagement policies, in direct conversations with management, and at the ballot box.

Public REITs have listened and heard. Over the past seven to 10 years, large numbers of REITs have adopted, and continue to adopt, important changes to their governance practices — in part by doing what has been asked of them by stockholders, but also by embracing the business case for improved governance. Many REIT proxy statements in recent years have presented detailed and thoughtful discussions on corporate governance, board composition, and other relevant policies, often accompanied by prominently placed graphics and charts highlighting stockholder-friendly policies and practices that have been adopted. These developments reflect a broader and ongoing evolution in REIT governance practices.

At the beginning of 2026, for example, fewer than 20% of all public equity REITs had a pure plurality voting standard for uncontested director elections, meaning that over 80% have adopted majority voting or similar standards. Additionally, only 5% of REIT boards were classified, reflecting board adoption of annual director elections. By contrast, among companies in the S&P MidCap 400 and S&P 500² indices, approximately 34% and 10% of companies, respectively, had plurality voting, and 31% and 12% of companies, respectively, had classified boards.³

We have nevertheless emphasized on numerous occasions that, in our view, corporate governance is not a one-size-fits-all proposition. ⁴ Not every REIT must measure itself exclusively against large-cap S&P 500 companies when it comes to governance. Rather, we recommend that the board of each public REIT regularly evaluate the company’s corporate governance profile in light of all relevant facts and circumstances unique to that company. See the more detailed discussion of our recommended approach to governance choices below.

To provide context for REIT boards evaluating corporate governance and structural defense practices in 2026, the table below provides updates on select metrics originally included in our 2017 Alert. We have reviewed data on these metrics as of January 2026 for each of the public equity REITs currently included in the MSCI US REIT Index (RMZ), the main index tracking publicly traded U.S. equity REITs.

To be sure, corporate governance discussions in recent years have also focused on additional practices and metrics, such as director tenure, retirement policies, potential overboarding, board succession planning, CEO succession planning, and board evaluations. For comparative purposes, however, our discussion in this article is limited primarily to the metrics and data set forth in the table above.

Select Corporate Governance Data Across the REIT Sector

Classified Board. Under a classified (or staggered) board structure, directors are divided into separate classes — typically three — with only one class standing for election in any given year. Because only a minority of the board can be replaced at a single annual meeting, stockholders — regardless of the level of support for change — cannot elect a majority of the board in one election cycle. This structural feature makes a classified board one of the most effective defenses against proxy contests and hostile takeovers. The eight publicly traded equity REITs currently employing this defensive structure represent a distinct minority of approximately 5%, as compared to approximately 31% of S&P MidCap 400 companies. ⁵

Combined Chief Executive Officer (CEO) and Chair. A significant minority of traded REITs (33%) do not require a separation of the CEO and chair of the board, while a majority have elected to separate those roles. Among REITs that have not separated the roles, most designate an independent director as the “lead independent director” who, among other things, sets the agenda for, and leads executive sessions of, the independent directors. Stockholders are typically willing to support the combined CEO/chair structure so long as a lead independent director with sufficiently broad responsibilities has been designated.

Boardroom Diversity. Boardroom gender and racial/ethnic diversity continues to be a focus area across industries, including among public REITs, even as the current anti-diversity, equity, and inclusion (DEI) climate has prompted some companies and institutional investors to recalibrate how they describe, implement, and disclose diversity-related initiatives. Against a backdrop of heightened political scrutiny and evolving legal and regulatory risk, we have seen companies reframing DEI-related initiatives in terms of background, experience, and broader “board refreshment” as they continue to monitor expectations and constraints.

As of January 2026, women held approximately 33% of all directorships across RMZ-constituent REITs, up from only 13% in 2017 and in line with current gender diversity percentages at S&P 500 companies.⁶ Fewer than 3% to 4% of REITs in the RMZ currently have no female directors, and the majority now have two or more.⁷ Generally, the larger the company, the higher the percentage of female representation.⁸ The arc of racial/ethnic board diversity has somewhat mirrored that of gender diversity. A Ferguson Partners 2022 analysis of 134 publicly traded, internally managed equity REITs found that 53% of new REIT directors were from a racial/ethnic minority, and that the number of REIT boards with at least one minority director increased 24% year over year (with an approximately twofold increase over the prior two years).

At the same time, from 2022 to 2025, the share of newly appointed women directors declined by 9% in the Russell 3000 and 7% in the S&P 500.⁹ In the REIT sector, approximately 28% of all new directors elected in the 2025 season were women.¹⁰ While we have not identified any recent RMZ-wide aggregated studies specifically tracking racial/ethnic board diversity, in practice the continued emphasis on diverse backgrounds and experiences may yield racially/ethnically diverse director candidates. It is also notable that public reporting on directors’ race and ethnicity has declined materially across corporate America. From 2024 to 2025, the proportion of companies providing disclosures on directors’ race and ethnicity fell by approximately 40% in the Russell 3000 and approximately 32% in the S&P 500.¹¹

This declining trend coincides with influential institutional investors, including BlackRock, State Street and Vanguard, scaling back prior gender diversity board requirements in their proxy voting policies,¹² and with the aforementioned anti-DEI political and regulatory environment. On the proxy advisory front, in 2025, Institutional Shareholder Services (ISS) suspended the consideration of gender and racial/ethnic diversity when making vote recommendations with respect to the election or reelection of directors at U.S. companies.¹³ Glass Lewis, on the other hand, has retained U.S. voting guidelines that generally call for votes against the nominating committee chair at Russell 3000 companies whose boards are less than 30% gender diverse, or against all nominating committee members where there are no gender-diverse directors, subject to company-specific circumstances.¹⁴ For companies outside the Russell 3000, Glass Lewis requires a minimum of one gender-diverse director.¹⁵ Glass Lewis will also generally recommend against the chair of the nominating committee of a board with fewer than one director from an underrepresented community at companies within the Russell 1000 Index.¹⁶

Dual-Class Voting Structure. A small number of REITs (3%) continue to maintain a dual-class voting structure whereby pre-IPO investors or sponsors hold a class of “high vote” stock that commands a disproportionately higher voting power than the class of stock held by the investing public. In most of these situations, the dual-class structure was implemented to permit holders of operating partnership units to vote their full economic interest at the parent REIT level.¹⁷

Majority Voting and/or Director Resignation Policy. Majority voting in uncontested elections continues to be a mainstay of REIT corporate governance. As of 2026, over 80% of public REITs have adopted either (i) a majority voting standard in uncontested elections, which requires a director nominee to receive at least a majority of votes cast in order to be elected, or (ii) a plurality standard coupled with a director resignation policy (a “plurality plus” standard), which requires directors to tender their resignations if they do not receive a majority of votes cast at the meeting. Conversely, fewer than 20% of public REITs retain a pure plurality standard, pursuant to which the director candidates receiving the largest number of FOR votes are elected, irrespective of whether the FOR votes outnumber the AGAINST or WITHHELD votes.

Stockholders’ Ability to Amend Bylaws.¹⁸ The ability of stockholders to directly and unilaterally amend a company’s bylaws remains a focus area for ISS and other proxy advisory firms. In recent years, the incidence of stockholders seeking to exercise the right to introduce more stockholder-friendly provisions to the bylaws has increased markedly across the broader market.¹⁹ This trend coincides with increasing pressure on corporations to reduce supermajority voting thresholds for amending bylaws.²⁰

Many Maryland REITs have responded by adopting changes to their organizational documents that give shareholders this right. While many REITs permit stockholders to propose bylaw amendments subject only to the same criteria necessary to submit Rule 14a-8 precatory proposals (e.g., a stockholder must have held at least $25,000 worth of stock for at least one year, $15,000 for at least two years, or $2,000 for at least three years), a significant minority of REITs have concluded that the gravitas of a binding bylaw amendment warrants some minimal additional safeguards. These include conditioning bylaw amendment proposals on having been received from a stockholder, or group of up to x stockholders, that have continuously owned at least y% of the outstanding common shares for at least z years (with the most common formulation currently being 1-1-5).²¹ Additional safeguards by some REITs have included limited ring-fencing to protect the board from being divested of its power to amend the bylaws and/or to safeguard director and officer indemnification provisions. The voting standard necessary to pass a stockholder-proposed bylaw amendment is often also set at a majority of votes entitled to be cast (rather than just a majority of votes cast) or, in a minority of cases, at a supermajority of the outstanding.²²

Exclusive Forum Provision. A majority of REITs — close to 60% — now have exclusive forum provisions in their bylaws or charter that require stockholder derivative and similar lawsuits to be brought in a specific forum, typically the jurisdiction of incorporation. One intent behind these provisions is to ensure that any such litigation be handled as efficiently as possible. Exclusive forum bylaws also deter stockholders from forum shopping and engaging in multi-forum and duplicative litigation, thereby reducing litigation costs for a company and ensuring that claims are adjudicated in the company’s state of incorporation.

Despite the benefits of exclusive forum provisions, some argue that these provisions can deter stockholder claims if the designated forum is more costly or inconvenient for the stockholder bringing the claim, making them arguably incongruent with stockholders’ best interests.²³

Proxy Access (any formulation). Proxy access refers to bylaw provisions that enable stockholders to use the company’s own proxy materials to nominate up to a specified number of director nominees. Over the past 10 years, adoption among traded REITs has increased significantly, from 19% to 48%, driven mainly by larger REITs. More recently, among REITs and more broadly, momentum has slowed as many of the larger companies that are most often the target of stockholder proposals have now adopted proxy access and the attention of institutional investors has shifted to other governance features, such as board refreshment.

Opt Out of MUTA. The Maryland Unsolicited Takeover Act (“MUTA”), among other things, permits public REITs incorporated in Maryland, notwithstanding any contrary provision in their charter or bylaws, to elect to classify their board without a stockholder vote.²⁴ When including non-Maryland REITs, approximately 48% of REITs overall currently do not have the ability to classify their boards without a stockholder vote. Solely among Maryland REITs, which account for nearly 80% of all REITs in the RMZ, 34% to date have affirmatively opted out of MUTA.

Stockholder Rights Plan. continue to be rare among public REITs. As we have discussed in detail elsewhere,²⁵ the organizational documents of almost all REITs already include a mechanism pursuant to which a stockholder whose actual and/or constructive share ownership surpasses stated ownership limits will have its shares automatically transferred to a trust and resold into the public market. A minority of REITs have affirmatively adopted corporate policies or bylaws prohibiting the company from adopting a rights plan without stockholder approval (or imposing an automatic sunset on any plan adopted without stockholder approval that is not subsequently ratified by stockholders).

Environmental and Social (E&S) Criteria. Institutional investors remain focused on high-performance sustainable real estate and continue to evaluate REIT boards and management teams through E&S metrics. Recent industry sustainability reporting shows that most REITs now publish stand-alone sustainability reports, including data on energy use, greenhouse gas emissions, resilience investments, workforce demographics and engagement, and community programs.

Despite current political, regulatory, and legal pressures, E&S initiatives have not disappeared; rather, they are being reframed around materiality and a clearer financial nexus to stockholder value. Across the broader corporate ecosystem, companies are taking a more disciplined, data-driven approach, becoming more selective about what they disclose and how, and sharpening the link among E&S priorities, risk mitigation, and long-term value creation. In the real estate context, and for REITs in particular, the environmental dimension often has the most immediate and quantifiable impact, given its connection to operating costs, asset valuation, tenant expectations, and rental rates. Environmental strategies drive energy- and water-efficiency gains that lower operating expenses, and they inform capital-expenditure decisions around retrofits and resilience, among others. In many property types, efficient, high-performance buildings also tend to command higher rents and support stronger tenant retention. At the same time, investors and other stakeholders remain attentive to social factors such as occupant health and safety, on-site labor practices, and community impacts, reflecting the fact that most REITs own and operate assets that are deeply embedded in the communities where they are located. Accordingly, E&S considerations continue to play a meaningful role in corporate risk management and capital-raising strategies.

Correlation of Governance and Performance

Numerous studies over the years have demonstrated that the line between corporate governance and total stockholder return is not a straight one.²⁷ On their own, the “best” or “blue ribbon” corporate governance practices are unlikely to overcome chronic underperformance on business fundamentals relative to a peer group. Conversely, numerous public REITs have consistently outperformed their peers over the long term, while also consistently scoring on the low end of the various quotients and metrics used by advisory firms to measure corporate governance. In fact, the data appears to show that REITs with higher scores in corporate governance do not, as a rule, outperform their peers with lower scores (or vice versa) — there are simply too many other factors at play that more directly affect performance.

Market observers have posited a number of explanations as to why the public REIT sector sometimes appears to depart from the generally accepted notion that “better corporate governance leads to higher relative valuations and better relative performance,” including:

• REITs operate in a regulated environment (e.g., the obligation to pay out at least 90% of net earnings and operational restrictions), which may serve to limit operational freedom.²⁸
• Since REITs are highly transparent and the properties in their portfolios are relatively easy to value, there may be less scope for agency problems.
• Investors value strong corporate governance mechanisms less in naturally strong institutional settings (such as the commercial real estate market) as opposed to weak institutional settings, where deviations from corporate governance norms can prove more costly to stockholders.

Whatever the explanation for a perceived lack of correlation between governance and performance for public REITs, our view is that a company’s corporate governance profile is still a critical factor, albeit one of many, in making an investment decision. Performance correlation data reflects total stockholder returns over a fixed measurement period, but it does not measure or reflect something that many investors may prize above all else: the ability to influence outcomes at an inflection point that could involve a fundamental corporate transaction.

To illustrate, at a REIT with relatively high structural defenses — classified board, plurality voting standard, and “for cause” basis for director removal — such a governance profile may make it more difficult for stockholders to be heard at a time when the company faces a strategic crossroads. A board and management team that is more insulated from stockholders may be less incentivized to make decisions in the best interests of all stockholders.

On the other hand, at a REIT with relatively modest structural defenses — directors elected annually, majority voting standard, removal of directors without cause, and stockholder approval for the adoption of a stockholder rights plan — such a governance profile may render a board more susceptible to pressure from activist stockholders or would-be acquirors whose objectives may not be in the best interests of all stockholders. In this case, the governance profile may inhibit the directors’ ability to be thoughtful stewards of long-term stockholder value when it matters most.

A Balanced Approach to Governance Choices

Our view is that the right approach to corporate governance is a subjective, case-by-case analysis, rather than a check-the-box comparison of “good” vs. “bad” governance features. At any given time we believe that each REIT board should assess their company’s individual governance profile in light of all facts and circumstances then relevant to that particular sector and particular company. Moreover, since more permissive corporate governance for REITs does not translate automatically into better returns for stockholders, it follows that boards are not necessarily doing their stockholders a favor by chasing higher governance scores, no matter the cost.

REITs must evaluate their corporate governance profile holistically, with careful consideration not just to particular metrics but to the interconnectedness of each metric with others and to other provisions in the REIT’s organizational documents. It is not enough to say, “MUTA is bad, let’s opt out,” or “ISS likes bylaw amendments by stockholders, let’s opt in” — since either of these, by itself or when used in conjunction with other available governance arrangements, can prove critical in permitting a board acting in good faith to act in the best interests of all stockholders. The question should be: For this company, at this particular time, taking into account current conditions and long-term strategic objectives, what makes sense in terms of an overall governance profile? And by “makes sense,” we mean that bundle of board and stockholder rights that strikes the right balance between owners and managers for that particular REIT — the one that will ultimately inure to the benefit of the REIT’s long-term value proposition.

In addition, we believe that truly good corporate governance is more meaningfully defined by real-world behavior — does the REIT have an engaged and thoughtful board of directors, comprised of persons with relevant and useful experience, who consistently take action with the aim of maximizing stockholder value over the long term? Does the senior management team regularly and meaningfully engage with stockholders? Which boxes on the corporate governance matrix can be checked — and how many — becomes of secondary importance to these fundamental questions.

This is particularly true given the evolving nature of the public REIT sector’s stockholder base. With the elevation of real estate to a headline sector under the Global Industry Classification Standard (GICS) and the proliferation of REIT exchange-traded funds (ETFs), the typical public REIT’s stockholder base is increasingly large, diverse, and fluid. In this environment, stockholders will not always speak with one voice, and different groups of stockholders may have different, and even conflicting, interests. For example, retail investors and some institutional funds may be focused on maintaining stable dividends, while other funds may be facing life-cycle events and/or termination dates that cause their focus to be on near-term liquidity. Likewise, passive index funds may have interests that diverge from those of actively managed funds, and certainly from those of short-term activist funds. So while corporate governance must not be misused or abused with the effect of, say, entrenching an underperforming board, a REIT’s stockholders are not necessarily better off with a “cookie-cutter” permissive governance profile that enables one subset of stockholders to effectively hijack the overall value proposition to the detriment of other stockholder groups.