GOODWIN 5 Not surprisingly, public REITs have listened and heard. The current crop of REIT proxy statements present 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. And it is not just window dressing. We do not sense an equilibrium that is out of balance; rather, we detect a trend of greater direct stockholder engagement that is here to stay. Governance in the public REIT sector, as in corporate America generally, has and will continue to evolve. Over the past 3-5 years, large numbers of REITs have adopted, and continue to adopt, important governance enhancements. At the beginning of 2018, for example, over 75% of all public equity REITs had adopted either majority voting or a director resignation policy for uncontested elections, only 18% of REIT boards were classified and only 1.3% maintained an active shareholder rights plan (or “poison pill”). By contrast, 74% of the companies making up the Russell 2000 Index still elected directors by pure plurality voting at the beginning of 2016, a full 45% of index members still had classified boards1 and nearly 5% currently maintain an active shareholder rights plans.2 And, candidly, there are governance areas where the MSCI US REIT Index (RMZ) as a whole diverges somewhat from much larger-cap indices. For example, at the beginning of 2018 only 8% of S&P 500 companies still had classified boards.3 Moreover, a majority of REITs incorporated in Maryland retain the ability to unilaterally classify their boards under the Maryland Unsolicited Takeover Act (“MUTA”). We have had numerous occasions in recent years to emphasize that, in our view, corporate governance is not a “one-size-fits-all” proposition. See for example our REIT Alert “Barbarians at the (REIT) Gates: REITs Should Be Prepared for a New World Order of Shareholder Activists, Hostile Overtures and Proxy Fights”, which discusses a variety of approaches to REIT corporate As we head into the heart of the annual meeting season, corporate governance for public REITs continues to be front and center. This is true not only of those companies that have faced or are facing activist campaigns or other perceived threats, but of all REITs, large and small, across all sectors. Virtually every industry conference and seminar in recent years has included a discussion of corporate governance and REIT investors – whether dedicated, income-based, index oriented or otherwise – are increasingly sensitive to corporate governance developments. Investors have also become more vocal about their governance preferences, both in direct conversation with management and at the ballot box. 1 See Governance Trends at Russell 2000 Companies, EY Center for Board Matters, October 2016. russell-2000-companies/$FILE/EY-cbm-russell-2000-governance-trends.pdf 2 Source: Capital IQ, Inc., a division of Standard & Poor’s. 3 See 2017 Spencer Stuart Board Index available at research-and-insight/ssbi-2017. CORPORATE GOVERNANCE TRENDS IN THE PUBLIC REIT SECTOR: AN EVOLVING LANDSCAPE MARCH 2018