2026 Proxy Report: Method Unsound versus no Method at All

Research evidence excerpt

2026 Proxy Report: Method Unsound versus no Method at All

r WELL and REXR

(Exhibit 3)-both of which were temporarily high in terms of total compensation packages. Excluding the

two companies, the relationship improves (Exhibit 4), but there are outliers in hotels and office.

○Total (including long term) compensation was slightly more constructive, as better performing sectors

on a three-year basis tended to have greater compensation (Exhibit 5).

●Comp plans where consensus beats are incentivized. We count 12 REITs and CRE Services companies where

(1) at least ~25% of compensation is tied to an earnings metric and (2) our estimate of the high watermark

for compensation (typically tied to the high end of guidance or higher) is at least 150 bp above consensus.

Companies in this group are primarily in CRE Services (WD, JLL), residential (CPT, AVB, EQR, UDR, MAA) and

hotels (INN, XHR, DRH).

●The "big stories" in REIT compensation include the following:

○Welltower revamped its compensation plan to be entirely long term compensation. The plan has gotten

focus for the size of the potential payout, which has potential to be the largest compensation plan in REIT

history (and could lead to a new round of CEO wage inflation in the sector). Our view is high compensation

does not bother us if performance is strong. Instead, we highlight the scenario where compensation could

be very high even if WELL underperforms the REIT index going forward (if WELL lags the REIT sector in

an up market). So now what? At the moment, we do not see this as a base outcome. We believe the most

likely outlook for REIT shares is ~flat, making WELL's heavy incentive for return of capital useful, while

we see little pricing power outside of senior housing. As such, we continue to recommend an overweight