Activist Shareholder Land & Buildings Denounces Welltower Executive Comp Plan

Activist shareholder Land & Buildings is condemning the compensation plan for executives at Welltower (NYSE: WELL), urging investors to sell their holdings and opt for other senior housing real estate investment trusts (REITs).

The Welltower structure could award CEO Shankh Mitra up to $3.3 billion over 10 years, according to a white paper released by Land & Buildings. The “scale of potential enrichment is staggering and historically unprecedented in the REIT industry, in our view,” the white paper states.

Welltower did not immediately respond to Senior Housing News’ request for comment on Tuesday afternoon.

The huge payout to Mitra would come through a grant of about 8.7 million LTIP (long-term incentive partnership) equity units, which would eclipse $3 billion in worth at the compensation plan’s cap of $350 per share, according to the white paper.

In addition, Welltower’s board cannot change its leadership “without massively enriching the executive it is removing,” as termination could trigger a payout from $500 million or more.

Another issue brought forward by Land & Buildings is that Welltower trades at a 33x its funds from operations, higher than a five-year average of 25x, and at an estimated 144% premium to Green Street Net Asset Value. This is the highest premium to NAV in the REIT’s history.

Investors get “roughly 50% more asset value per dollar invested, comparable senior housing exposure, higher dividend yields and freedom from the most aggressive executive compensation structure in REIT history” by investing in competitors such as Ventas (NYSE: VTR) and American Healthcare REIT (NYSE: AHR), Land & Buildings argues.

The white paper from Land & Buildings alleges the portfolio inherited by Mitra when he took over as CEO in 2020 already had been positioned for post-Covid recovery by shifting toward private-pay senior housing, geographic diversification, operator relationships and its data science platform.

“The rational response is to sell, in our view,” the white paper states. “Hubris in executive compensation, the belief that a management team is uniquely irreplaceable, that the current cycle justifies extraordinary rewards, that the rules of proportion and accountability can be suspended, may not end well for shareholders.”

Welltower shares dropped from $209.24 per share to $201.67 a share on Tuesday morning, but recovered to $206.39 at close of regular trading.

Land & Buildings has in the past taken an activist role with other senior living companies. The firm urged Brookdale Senior Living (NYSE: BKD) to monetize its owned real estate and sparred with Ventas as well. Ventas in March 2024 appointed two board members as part of a cooperation agreement with the activist.

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