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United States

Securities and Exchange Commission
Washington, D.C. 20549

 

Form 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report: October 12, 2020

(Date of Earliest Event Reported)

 

REALTY INCOME CORPORATION

(Exact name of registrant as specified in its charter)

 

Maryland 1-13374 33-0580106
(State or Other Jurisdiction of
Incorporation or Organization) 		(Commission File Number) (IRS Employer Identification No.)

 

11995 El Camino Real, San Diego, California 92130

(Address of principal executive offices)

 

(858) 284-5000

(Registrant’s telephone number, including area code)

 

N/A

(former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol   Name of Each Exchange On Which
Registered
Common Stock, $0.01 Par Value   O   New York Stock Exchange
1.625% Notes due 2030   O30   New York Stock Exchange

 

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

  

 

 

 

Item 5.02               Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Appointment of Christie B. Kelly as Chief Financial Officer

 

On October 12, 2020, the Board of Directors (the “Board”) of Realty Income Corporation (the “Company”) appointed Christie B. Kelly as Chief Financial Officer of the Company, effective as of January 19, 2021 (such date, or such other date as may be determined by the Board, the “Appointment Date”). In connection with Ms. Kelly’s appointment, Ms. Kelly will resign as a member of the Board, effective as of the Appointment Date.

 

In addition, in connection with Ms. Kelly’s appointment as Chief Financial Officer of the Company, the Compensation Committee of the Board (the “Committee”) approved the following compensation for Ms. Kelly as Chief Financial Officer of the Company, effective as of the Appointment Date: an annual base salary of $600,000, a target annual cash bonus of $600,000, an initial target long-term incentive plan award of $1,800,000, and a relocation allowance of $50,000. In addition, the Board approved, effective as of the Appointment Date, an amendment to Ms. Kelly’s outstanding restricted stock awards granted under the Company’s 2012 Incentive Award Plan that provides that such restricted stock awards will continue to vest and be subject to forfeiture based on Ms. Kelly’s continued employment with the Company following the Appointment Date, notwithstanding her resignation as a member of the Board.

 

Information about Ms. Kelly, including a biographical summary, information about positions and offices she has held with the Company, her prior compensation arrangements with the Company, and information about her business experience, may be found in the Company’s definitive proxy statement for the 2020 Annual Meeting of Stockholders on Schedule 14A filed on April 1, 2020.

 

Participation in Executive Severance Plan

 

On October 12, 2020, in connection with Ms. Kelly’s appointment as Chief Financial Officer of the Company, the Committee designated Ms. Kelly as a participant in the Company’s Executive Severance Plan (the “Severance Plan”), effective as of the Appointment Date, and Ms. Kelly and the Company entered into a participation agreement under the Severance Plan (the “Participation Agreement”), which will be effective upon the Appointment Date, in each case subject to the commencement of Ms. Kelly’s employment as Chief Financial Officer of the Company. Pursuant to the Severance Plan and the Participation Agreement, following the commencement of Ms. Kelly’s employment as Chief Financial Officer of the Company, if Ms. Kelly’s employment with the Company is terminated by the Company without “cause” or by Ms. Kelly due to a “constructive termination” (each as defined in the Severance Plan), then, subject to her execution and non-revocation of a severance agreement and general release of claims, Ms. Kelly will be entitled to receive:

 

· a lump-sum cash payment in an amount equal to the product of (x) one (or, in the event of a termination within 12 months following a change in control of the Company, two), and (y) the sum of (i) Ms. Kelly’s then-current annual base salary, plus (ii) the average annual cash bonus earned by Ms. Kelly for the previous three years (or, if Ms. Kelly was not previously eligible to earn an annual cash bonus, her target annual cash bonus);

 

· continued group health insurance coverage at the Company’s expense during the 12 month period (or, in the event of a termination within 12 months following a change in control of the Company, the 18 month period) following Ms. Kelly’s termination date or until Ms. Kelly becomes covered under another group health insurance plan, whichever occurs first; and

 

· each outstanding and unvested time-vesting restricted stock and restricted stock unit award held by Ms. Kelly will vest in full as of her termination date, and each outstanding and unvested performance-vesting equity award held by Ms. Kelly will be treated in accordance with the terms of the applicable plan and award agreement governing such award. In addition, for purposes of any equity award held by Ms. Kelly, “Retirement” will mean her separation from service from the Company, other than as a result of her death or termination by the Company for cause, at a time when (i) the sum of Ms. Kelly’s age and consecutive years of service as an employee of the Company equals or exceeds 65, and (ii) Ms. Kelly has completed at least three consecutive years of service as an employee of the Company.

 

 

 

If Ms. Kelly’s employment with the Company is terminated by reason of her death or disability, then, each outstanding and unvested time-vesting restricted stock and restricted stock unit award held by Ms. Kelly will fully vest as of such termination date.

 

Ms. Kelly’s right to receive and retain the severance benefits payable under the Severance Plan is conditioned on her continued compliance with any restrictive covenants with respect to which she is bound and her timely return of all Company property in her possession following her termination date. The Participation Agreement contains certain restrictive covenants that will apply to Ms. Kelly, including a confidentiality covenant that extends indefinitely.

 

The foregoing descriptions of the Severance Plan and the Participation Agreement are not complete and are subject to and qualified in their entirety by the terms of the Severance Plan previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 18, 2019 and the Participation Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K, and which are incorporated herein by reference.

 

Forward-Looking Statements

 

This Current Report on Form 8-K contains forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to the disclosures contained herein. These risks and uncertainties include, among others, the risks and uncertainties included in the reports and other filings by the Company with the U.S. Securities and Exchange Commission, including the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and in our Annual Report on Form 10-K for the year ended December 31, 2019 under the heading “Risk Factors.” The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Item 7.01 Regulation of FD Disclosure.

 

On October 13, 2020, the Company issued a press release announcing the Company’s planned appointment of Ms. Kelly as Chief Financial Officer and her resignation as director. A copy of this press release is furnished herewith as Exhibit 99.1.

 

The information in Item 7.01 of this Current Report on Form 8-K and the information contained in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in any such filing.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

10.1 Participation Agreement to Realty Income Executive Severance Plan, dated as of October 12, 2020, by and between Realty Income Corporation and Christie B. Kelly.
     
99.1 Press Release issued by Realty Income Corporation dated October 13, 2020
     
  104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: October 13, 2020 REALTY INCOME CORPORATION
   
 
By: 		/s/ MICHAEL R. PFEIFFER  
    Michael R. Pfeiffer
    Executive Vice President, General Counsel and Secretary

 

 

 

 

Exhibit 10.1

 

PARTICIPATION AGREEMENT

 

REALTY INCOME CORPORATION

EXECUTIVE SEVERANCE PLAN

 

October 12, 2020

 

Dear Christie:

 

We are pleased to inform you that the Compensation Committee of the Board of Directors of Realty Income Corporation (the “Company”) has determined that, effective as of the date on which you commence your employment with the Company (currently expected to be on or about January 19, 2021) (the “Participation Date”), you shall be eligible to participate in the Company’s Executive Severance Plan (the “Plan”) as a Participant thereunder, subject to your execution and delivery of this Participation Agreement to the Company and subject to the terms and conditions of the Plan and this Participation Agreement. Capitalized terms used but not otherwise defined in this Participation Agreement will have the definitions provided in the Plan. This Participation Agreement shall be of no force or effect unless and until you commence employment with the Company, and, in the event that you do not commence employment with the Company on or prior to February 1, 2021, for any reason, this Participation Agreement shall thereupon automatically terminate and be of no further force or effect, and the Company shall have no liability to you with respect thereto, whether hereunder, under the Plan or otherwise.

 

For purposes of determining your Severance Benefits under the Plan:

 

• Your Qualifying Termination Cash Severance Multiple shall be one (1).

 

• Your CIC Termination Cash Severance Multiple shall be two (2).

 

• Your Healthcare Continuation Period shall be equal to twelve (12) months in the event that you experience a Qualifying Termination (other than a CIC Termination) and eighteen (18) months in the event that you experience a CIC Termination.

 

In addition, notwithstanding anything to the contrary contained in any agreement governing any equity-based award granted to you by the Company (an “Award Agreement”), for purposes of any such Award Agreement, “Retirement” shall mean your “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code) with the Company, other than as a result of your death or termination by the Company for Cause, at a time when (i) the sum of your age and your consecutive years of service as an employee of the Company equals or exceeds sixty-five (65), and (ii) you have completed at least three (3) consecutive years of service as an employee of the Company.

 

1

 

 

This Participation Agreement is subject in all respects to the terms, conditions and provisions of the Plan, as amended from time to time, all of which are made a part of and incorporated by reference into this Participation Agreement. In the event of any conflict between the terms of this Participation Agreement and the terms of the Plan, the terms of the Plan shall govern. By signing this Participation Agreement, and as a condition of your eligibility for the payments and benefits set forth in the Plan, you agree to comply with the provisions of the Plan and you agree to comply with the provisions of this Participation Agreement (including, without limitation, the Restrictive Covenants set forth below) during your employment with the Company or any Subsidiary and, to the extent required by the Restrictive Covenants, after the termination of your employment regardless of the reason for such termination.

 

This Participation Agreement and the Plan constitute the entire agreement between you and the Company with respect to the subject matter hereof and, as of the Participation Date, shall supersede in all respects any and all prior agreements between you and the Company concerning such subject matter.

 

Restrictive Covenants

 

By signing below, you hereby acknowledge and agree that:

 

1.             During your employment with the Company, except as may be specifically permitted by the Board in writing, you shall not be engaged in any other business activity which would interfere with the performance of your duties with the Company or be competitive with the business of the Company. The foregoing restrictions shall not be construed as preventing you from making passive investments in other businesses or enterprises; provided, however, that such other investments will not require services on your part which would in any manner impair the performance of your duties with the Company, and provided further that such other businesses or enterprises are not engaged in any business competitive to the business of the Company.

 

2.             In light of the value to the Company of your knowledge, contacts and working relationships involving the business of the Company, you agree to utilize all of such capacities for the sole use and benefit of the Company and to first offer to the Company any and all of those opportunities which shall come to your knowledge which are within the area of business of the Company.

 

3.             In the course of your employment with the Company, you will receive certain trade secrets, know-how, lists of customers, employee records and other confidential information and knowledge concerning the business of the Company (hereinafter collectively referred to as “information”) which the Company desires to protect. You understand that such information is confidential, and you agree not to reveal such information to anyone outside the Company during the term of your employment with the Company and indefinitely thereafter. You further agree that during the term of your employment with the Company and indefinitely thereafter, you will not use such information, directly or indirectly, to compete against the Company. At such time as you shall cease to be employed by the Company, you shall surrender to the Company all papers, documents, writings and other property produced by you or coming into your possession by or through your employment with the Company and relating to the information referred to in this paragraph, and you agree that all such materials will at all times remain the property of the Company.

 

2

 

 

4.             During the term of your employment with the Company, all patents, processes and other proprietary information developed by you in the course of your employment shall be the sole and exclusive property of the Company. You covenant and agree to execute any documents or take any action necessary to effectively transfer any rights you may have in such proprietary information to the Company and to maintain the rights, interest and title of the Company in and to such information. Nothing herein shall be deemed to deny you the protection afforded by California Labor Code Section 2870.

 

5.             A remedy at law for any breach or attempted breach of Paragraphs 1, 2 and 3 above will be inadequate, and you therefore agree that the Company shall be entitled to specific performance and injunctive and other equitable relief in case of any such breach or attempted breach, and you further agree to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or any other equitable relief.

 

By signing below, you agree to the terms and conditions set forth herein and in the Plan, including without limitation, the Restrictive Covenants set forth above, and acknowledge: (a) your participation in the Plan as of the Participation Date; (b) that you have received and read a copy of the Plan; and (c) that the Restrictive Covenants set forth above shall survive and continue to apply in accordance with their terms notwithstanding a termination of your employment with the Company.

 

  Sincerely,
   
  REALTY INCOME CORPORATION
   
  By: /s/ Sumit Roy
  Name: Sumit Roy
  Title: President, CEO
   
   
  Accepted and Agreed
   
  By: /s/ Christie B. Kelly    
  Name: Christie B. Kelly

 

3

 

 

Exhibit A

 

Realty Income Corporation Executive Severance Plan

 

Exhibit A

 

 

Exhibit 99.1

 

 

 

REALTY INCOME APPOINTS CHRISTIE KELLY AS CHIEF FINANCIAL OFFICER

 

SAN DIEGO, CALIFORNIA, October 13, 2020….Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company®, today announced that Christie Kelly will become Executive Vice President, Chief Financial Officer and Treasurer. Ms. Kelly joined the company’s Board of Directors in November 2019 and currently serves as a member of the Audit Committee. The appointment of Ms. Kelly to Chief Financial Officer will take effect January 19, 2021, at which time Ms. Kelly will resign from the company’s Board of Directors.

 

Ms. Kelly is the former Global Chief Financial Officer of Jones Lang LaSalle Incorporated (“JLL”), a publicly traded financial and professional services firm specializing in real estate. She worked with JLL from 2013 – 2018, bringing with her 25 years of experience in financial management, international real estate, mergers and acquisitions, information technology and investment banking. From 2009 – 2013, Ms. Kelly was the Executive Vice President and Chief Financial Officer of Duke Realty Corporation, a publicly traded industrial REIT. Prior to that, she was a Senior Vice President, Global Real Estate, with Lehman Brothers, where she led real estate equity syndication in the United States and Canada. Ms. Kelly holds a B.A. degree in economics from Bucknell University.

 

“Christie has been a valuable addition to our company since joining the board last year, and we look forward to her continued contributions as Chief Financial Officer,” said Michael D. McKee, Chairman of the Board of Directors. “Her extensive industry experience as both a senior executive and director, as well as her service on Realty Income’s Audit Committee, will allow for a seamless transition.”

 

Commenting on Ms. Kelly’s appointment to Chief Financial Officer, Sumit Roy, President and Chief Executive Officer, said, “We are honored to welcome Christie to our senior management team. It has been my pleasure to work with Christie on our Board of Directors, and I am excited to be a partner with her in continuing to advance Realty Income’s strategy and objectives. Her breadth of knowledge and experience with leading real estate companies will be immediately additive to our team.”

 

“I have witnessed the extent and depth of Realty Income’s team while serving as a director throughout the past year, and I look forward to joining the company as Chief Financial Officer,” added Christie Kelly. “Realty Income’s strength in the market as a leading S&P 500 REIT is impressive and I am excited to continue working with the team to drive the business forward.”

 

About the Company

 

Realty Income, The Monthly Dividend Company®, is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants. To date, the company has declared 603 consecutive common stock monthly dividends throughout its 51-year operating history and increased the dividend 108 times since Realty Income's public listing in 1994 (NYSE: O). The company is a member of the S&P 500 Dividend Aristocrats® index. Additional information about the company can be obtained from the corporate website at www.realtyincome.com.

 

Investor Contact:

Jonathan Pong, CFA, CPA

SVP, Capital Markets and Finance

(858) 284-5177