The 2008 economic downturn was the impetus in a quiet revolution in the governance of the boards of real estate investment trusts and other real estate-related businesses, according to a soon-to-be released research paper by Ferguson Partners Ltd.
Bill Ferguson, chairman and CEO of the Chicago-based executive recruitment firm, which conducts an annual corporate governance survey, held in-depth interviews with 12 chairmen and lead independent directors, half of whom had business ties to REITs. The group was kept small to dig deeper into the issues surrounding the 2008 meltdown.
One of the big sea changes since 2008, is that boards are now including members with industry experience, he said. In the past, boards were mostly made up of corporate executives who relied on management for industry expertise, Mr. Ferguson said. Lead directors now want at least half of the board's independent directors to have industry expertise.
When you look at Lehman Brothers and Bear Stearns, you have to ask where the boards were and what we should learn from that lesson, Mr. Ferguson said. I would generally say everyone I talked to ... (felt) the board had to take its own share of accountability if the world fell apart.