DEF: Highwoods Properties Sets 2026 Annual Meeting Agenda

Highwoods Properties, Inc. announced its 2026 annual meeting of stockholders, focusing on director elections, auditor ratification, and an advisory vote on executive compensation.

Summary

• The 2026 annual meeting of stockholders will be held virtually on Tuesday, May 12, 2026, at 11:30 A.M. Eastern Time.
• Stockholders of record as of March 3, 2026, are eligible to vote on the election of seven directors, the ratification of Deloitte & Touche LLP as the independent auditor for 2026, and an advisory vote on executive compensation.
• The company's executive compensation program received overwhelming stockholder approval in 2025, with 95.4% of votes cast in favor.
• The compensation philosophy emphasizes variable compensation, alignment with performance, and competitive pay practices, with target total cash compensation generally approximating the 50th percentile of its peer group.
• Named executives received base salary adjustments of 2.5% effective March 23, 2025, and 2% effective March 22, 2026.
• The 2025 annual non-equity incentive program achieved an average performance factor of 119% based on FFO per share, net operating income growth, and average occupancy metrics.
• For 2025 payouts, CEO Theodore J. Klinck and CFO Brendan C. Maiorana elected to receive their annual non-equity incentive in time-based restricted stock, vesting ratably over three years.
• The company's total stockholder return for 2025 was $90.72 (from a $100 investment on Dec 31, 2020), outperforming its peer group's average of $75.73.
• The CEO's 2025 annual total compensation was approximately 62 times that of the median employee ($82,694).

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive filing, reflecting strong governance, outperformance against peer group TSR, and exceeding FFO and NOI targets, despite a slight miss on occupancy and an overall decline in TSR from 2020.

Positives

• The company's executive compensation program received strong stockholder support, with 95.4% of votes cast in favor at the 2025 annual meeting.
• The 2025 annual non-equity incentive program achieved an average performance factor of 119%, indicating performance exceeded target levels in key areas.
• FFO per share performance for 2025 reached $3.45, exceeding the target of $3.35, resulting in a 150% performance factor for this metric.
• Net Operating Income Growth for 2025 was (0.98)%, which was better than the target of (1.50)%, resulting in a 109% performance factor.
• The company's total stockholder return of $90.72 (from a $100 investment on December 31, 2020) outperformed its peer group's average total stockholder return of $75.73 for the same period.
• The board maintains a strong corporate governance structure, including separate Chair and CEO roles, independent directors, and robust committee oversight.
• The company prohibits hedging transactions for named executives and directors, aligning their interests with long-term stockholder value.

Negatives

• Average occupancy for 2025 was 86.90%, slightly below the target of 87.00%, resulting in a 97% performance factor for this metric.
• The company's total stockholder return for 2025 was $90.72, indicating a decline from an initial $100 investment on December 31, 2020, despite outperforming its peer group.
• The weighted average exercise price of outstanding stock options is $47.89, which is significantly higher than the 2026 total return-based restricted stock starting price of $22.49, suggesting many options may be out-of-the-money.
• Audit fees increased from $1,557,853 in 2024 to $1,942,192 in 2025, representing a 24.7% increase.

Risks

• The board regularly evaluates internal attributes and external threats that could hinder the company from achieving its strategic goals and adversely affect the long-term outlook for stockholders.
• The compensation and governance committee is responsible for ensuring that compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company.
• The audit committee oversees management's risk assessment and risk management processes designed to monitor and control financial risk exposures, including cybersecurity risk.
• The audit committee also oversees risks to the long-term resiliency of the business, operations, and financial condition, including risks associated with climate change.
• The company's development cash incentive plan and leasing commissions are structured to mitigate inappropriate risks by requiring approvals from named executives or senior leadership who are not eligible for such incentives/commissions.
• The company's reliance on major customers, with Bank of America (4.3%) and Asurion (3.5%) accounting for more than 3% of annualized cash revenues as of December 31, 2025, could pose a concentration risk if these relationships change.

Future Outlook

The company aims to continue its "work-placemaking" strategy by owning and operating high-quality workplaces in Best Business Districts (BBDs), maintaining a strong balance sheet, employing a talented team, and communicating transparently. For 2026, the annual non-equity incentive program targets FFO per share between $3.39 and $3.60, Net Operating Income Growth between 1.00% and 5.00%, and Average Occupancy between 86.00% and 91.00%.

Management Comments

• "We are in the work-placemaking business and believe that by creating exceptional environments and experiences, we can deliver greater value to our customers, their teammates and, in turn, our shareholders."
• "Our mission is to create environments and experiences that inspire our teammates and our customers to achieve more together."
• "Our simple strategy is to own and operate high-quality workplaces in the Best Business Districts (BBDs) within our footprint, maintain a strong balance sheet to be opportunistic throughout economic cycles, employ a talented and dedicated team and communicate transparently with all stakeholders."
• "The board believes it is prudent that the positions of chair and chief executive officer continue to be separate."
• "We believe being a fully-integrated REIT is in the best long-term interests of our stockholders."

Industry Context

StockSavvy.ai notes that Highwoods Properties operates as a fully-integrated office REIT, a model that contrasts with many REITs that outsource property management and leasing. This integrated approach is cited by management as a competitive advantage, allowing for better customer responsiveness, cost-effective services, and deeper market insights. The company's focus on "Best Business Districts" (BBDs) aligns with a broader industry trend of emphasizing high-quality, amenity-rich properties to attract and retain talent in a competitive office market. The peer group analysis, which includes other publicly-traded office REITs like Brandywine Realty Trust and Kilroy Realty Corporation, highlights the competitive landscape and the importance of relative performance in total stockholder return. The removal of City Office REIT, Inc. from the peer group in 2026 due to acquisition reflects ongoing consolidation and market dynamics within the office REIT sector.

Comparison to Industry Standards

• Highwoods Properties' total stockholder return of $90.72 (from a $100 investment on December 31, 2020) outperformed its peer group's average total stockholder return of $75.73 over the same period. This indicates stronger relative performance compared to direct competitors such as Brandywine Realty Trust (-41.1% TSR in 2025), Hudson Pacific Properties, Inc. (-48.9% TSR in 2025), and Cousins Properties Incorporated (-12.1% TSR in 2025).
• The company's 2025 FFO per share of $3.45 exceeded its internal target of $3.35, suggesting effective operational management relative to its own projections.
• The 2025 average occupancy of 86.90% was slightly below the target of 87.00%. While specific peer occupancy rates are not provided for direct comparison, this indicates a slight underperformance against internal goals in a key operational metric for office REITs.
• The CEO pay ratio of 62:1 is presented in the context of Highwoods being a fully-integrated REIT, which typically has a larger employee base compared to outsourced models. This ratio should be assessed against other fully-integrated REITs rather than those with outsourced operations for a more accurate comparison.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Direct impact through voting on directors, auditor, and executive compensation; potential for long-term value creation through strategic focus on BBDs and performance-linked compensation; transparency through regular communication and engagement opportunities.
• Employees: Benefits from company-wide programs, 401(k) matching, and health insurance; named executives have performance-based incentives and retirement plans; the fully-integrated REIT model supports a larger internal workforce.
• Customers: Focus on "work-placemaking" and creating exceptional environments and experiences aims to enhance customer satisfaction and retention; in-house services provide better responsiveness and cost-effective solutions.
• Communities: The company's mission to contribute to the vitality of communities where it operates, and the compensation and governance committee's oversight of corporate and social citizenship, indicate a commitment to local impact.
• Creditors: Maintenance of a strong balance sheet is a stated strategic objective, which benefits creditors by ensuring financial stability.

Next Steps

• Stockholders to vote on director elections, auditor ratification, and executive compensation at the virtual annual meeting on May 12, 2026.
• The board will consider the outcome of the advisory vote on executive compensation when making future compensation decisions.
• The audit committee anticipates engaging Deloitte & Touche as independent auditor for 2026, but will consider a different auditor for 2027 if the appointment is not ratified.
• Stockholders interested in nominating candidates or proposing business for the 2027 annual meeting must submit notice between October 28, 2026, and November 27, 2026.

Key Dates

Recommendation

StockSavvy.ai recommends a "hold" for Highwoods Properties based on this filing. While the company demonstrates strong corporate governance, effective executive compensation alignment with performance, and outperformance against its peer group in total stockholder return, the overall negative total stockholder return from 2020 to 2025 and the slight miss on average occupancy targets suggest a cautious approach. The increase in audit fees and the high weighted average exercise price of outstanding options also warrant attention. The filing primarily outlines routine annual meeting proposals and compensation structures, without presenting new information that would significantly alter the investment thesis for a seasoned investor.

Keywords

Highwoods Properties, HIW, Proxy Statement, SEC Filing, Corporate Governance, Executive Compensation, REIT, Real Estate, Office Properties, Stockholder Meeting, Director Election, Auditor Ratification, Financial Performance, FFO, Net Operating Income, Occupancy, Stockholder Return, Compensation Committee, Board of Directors, Risk Management, Equity Awards