Filed by the Registrant ☒
|
| |
Filed by a Party other than the Registrant ☐
|
☐
|
Preliminary Proxy Statement
|
☐
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
☒
|
Definitive Proxy Statement
|
☐
|
Definitive Additional Materials
|
☐
|
Soliciting Material Pursuant to §240.14a-12
|
|
MEETING DATE:
|
| |
Tuesday, May 18, 2021
|
|
|
MEETING TIME:
|
| |
9:00 a.m. Pacific Time
|
|
|
VIRTUAL MEETING ACCESS:
|
| |
www.virtualshareholdermeeting.com/realty2021
|
|
|
1.
|
| |
The election of nine director nominees named in this Proxy Statement to serve
until the 2022 annual meeting of stockholders and until their respective successors are duly elected and qualified.
|
|
|
2.
|
| |
The ratification of the appointment of KPMG LLP as our independent registered
public accounting firm for the year ending December 31, 2021.
|
|
|
3.
|
| |
A non-binding advisory proposal to approve the compensation of our named
executive officers as described in this Proxy Statement.
|
|
|
4.
|
| |
The approval of the Realty Income Corporation 2021 Incentive Award Plan.
|
|
|
5.
|
| |
The transaction of such other business as may properly come before the Annual
Meeting or any postponement or adjournment of the Annual Meeting.
|
|
|
MEETING DATE:
|
| |
Tuesday, May 18, 2021
|
|
|
MEETING TIME:
|
| |
9:00 a.m. Pacific Time
|
|
|
VIRTUAL MEETING ACCESS:
|
| |
www.virtualshareholdermeeting.com/realty2021
|
|
|
RECORD DATE:
|
| |
March 12, 2021
|
|
Realty Income │ 2021 Proxy Statement 1
|
Proxy Summary
|
2 Realty Income │ 2021 Proxy Statement
|
Proxy Summary
|
|
PROPOSAL
|
| |
PAGE
|
| |
BOARD VOTE
RECOMMENDATION
|
|
|
PROPOSAL 1 – ELECTION OF DIRECTORS
|
| |
|
| |
|
|
|
Our Board of Directors believes that the nine director nominees named herein
contribute the breadth and diversity of knowledge and experience needed for the advancement of our business strategies and objectives.
|
| | | |
For
|
| |
|
PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
|
| |
|
| |
|
|
|
The Audit Committee of our Board of Directors has appointed KPMG LLP as the
independent registered public accounting firm for the year ending December 31, 2021 and requests stockholders to ratify the appointment.
|
| | | |
For
|
| |
|
PROPOSAL 3 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS
|
| |
|
| |
|
|
|
Our Board of Directors believes our compensation program is appropriately
structured to reward our named executive officers for the continued performance of the company, encourage a disciplined approach to management, and maintain focus on the creation of long-term value for our stockholders.
|
| | | |
For
|
| |
|
PROPOSAL 4 – APPROVAL OF THE REALTY INCOME CORPORATION
2021 INCENTIVE AWARD PLAN
|
| |
|
| |
|
|
|
Our Board of Directors believes that the Realty Income Corporation 2021
Incentive Award Plan is important to our continued growth and success and its approval will assist us in attracting, motivating and retaining selected individuals who will serve as our employees, directors, and consultants, and who are
expected to contribute to our success and the achievement of our long-term objectives.
|
| | | |
For
|
|
Realty Income │ 2021 Proxy Statement 3
|
Proxy Summary
|
|
|
|
|
(1)
|
| |
For a reconciliation of net income to AFFO, see Appendix A on page 81 of this Proxy Statement.
|
|
|
|
|
|
(1)
|
| |
TSR is calculated assuming the contemporaneous reinvestment of dividends on the
ex-dividend date. Data sourced from Bloomberg as of December 31, 2020.
|
|
4 Realty Income │ 2021 Proxy Statement
|
Proxy Summary
|
Realty Income │ 2021 Proxy Statement 5
|
Proxy Summary
|
6 Realty Income │ 2021 Proxy Statement
|
Proxy Summary
|
•
|
Transitioned all employees to working remotely through secure systems supported by our IT department;
|
•
|
Utilized online meetings, email, conference calls, and a “drive-through check-in with our CEO” to support regular
communication, collaboration, and continued training;
|
•
|
Virtually trained on new safety office protocols, physical building safety enhancements, and universal cleanliness and
environmental health practices;
|
•
|
Increased dialogue from our team leaders, including our CEO, who scheduled regular check-in calls with departments and
employees;
|
•
|
Conducted our sesquiennial (every 18 months) employee engagement survey; and
|
•
|
Administered an employee survey to gather perspectives on what we should consider when reopening our office
|
•
|
Provided resources to employees who were directly impacted by the COVID-19 pandemic;
|
•
|
Financial support
|
•
|
Work-life balance flexibility
|
•
|
Connected employees to our “Resources for Living” program, which provides support for financial, legal, mental, and emotional
well-being, life and family resources, and more. Areas that our team members can access range from parenting, care-giving (adult and child), COVID-19 knowledge, managing stress, depression, suicide prevention, and pet resources to staying
healthy, self-improvement, and coping with trauma, grief, and loss
|
•
|
Transitioned our well-being program, which we refer to as our “O”verall Well-Being program, to virtual and addressed topics
such as mindfulness, exercise, nutrition, and at-home office ergonomics, 20-day wellness learning path, along with financial wellness webinars
|
•
|
Implemented a business continuity plan that includes emergency planning, disaster recovery, alternative communication outlets,
and real-time testing simulations; and
|
•
|
Established virtual engagement activities to bring colleagues together through the “Team Building Committee” and “Green Team.”
|
•
|
Increased the financial matching donation made by employees to nonprofits to $500 per person to double the impact of their
charitable gifts
|
•
|
Increased the financial contribution of employees donations to nonprofits who volunteer their time to $400 per person to double
the impact of their volunteer time
|
•
|
Made corporate financial donations to San Diego Habitat for Humanity, San Diego COVID-19 Community Response Fund, and San Diego
Center for Children
|
•
|
Held virtual employee contests with prizes where an employee could choose to donate to a nonprofit of their choice
|
•
|
Held virtual employee contests with prizes that supported local businesses, included those focused on minorities, women,
disabled veterans, those who identify as LGBTQ, and other underrepresented communities
|
•
|
Highlighted locally owned businesses in our monthly employee newsletter, included those focused on minorities, women, disabled
veterans, those who identify as LGBTQ, and other underrepresented communities
|
Realty Income │ 2021 Proxy Statement 7
|
Proxy Summary
|
|
Corporate Governance Highlights
|
| |||||||||
|
✓
|
| |
All directors are subject to annual election with a majority voting standard in uncontested
elections.
|
| |
✓
|
| |
Our directors conduct annual self-evaluations and participate in orientation and continuing
education programs.
|
|
|
✓
|
| |
All directors, with the exception of our CEO, are independent, and all Board committee members are
independent.
|
| |
✓
|
| |
Our directors, officers, and other employees are subject to a Code of Business Ethics.
|
|
|
✓
|
| |
An Enterprise Risk Management evaluation is conducted annually to identify and assess company risk.
|
| |
✓
|
| |
Our directors, officers, and employees are subject to anti-hedging and anti-pledging policies.
|
|
|
✓
|
| |
Anonymous reporting is available through our whistleblower hotline, which is tested annually and
reported quarterly to our Audit Committee or Nominating/Corporate Governance Committee, as appropriate.
|
| |
✓
|
| |
Our directors and named executive officers have minimum stock ownership requirements.
|
|
|
✓
|
| |
Cash and equity incentive compensation is subject to a formal clawback policy.
|
| |
✓
|
| |
Our Bylaws permit stockholders to request the calling of a special meeting.
|
|
|
✓
|
| |
No stockholder rights plan is in effect.
|
| |
✓
|
| |
Our Bylaws permit stockholders to propose amendments to our Bylaws.
|
|
|
✓
|
| |
The restricted stock and restricted stock unit awards for our named executive officers have
“double-trigger” acceleration provisions.
|
| |
✓
|
| |
Our Bylaws include market-standard proxy access nominating provisions.
|
|
|
✓
|
| |
Our Board of Directors conducts regular executive sessions of independent directors.
|
| |
✓
|
| |
We annually submit our executive compensation to a “say-on-pay” advisory vote by our stockholders.
|
|
|
✓
|
| |
We have a Chairman of the Board who is separate from and independent of our Chief Executive
Officer.
|
| |
✓
|
| |
Our Board’s Nominating/Corporate Governance Committee maintains direct oversight of the company’s
ESG initiatives.
|
|
8 Realty Income │ 2021 Proxy Statement
|
Proxy Summary
|
✓
✓
✓
|
| |
Reached out to stockholders collectively representing approximately 51% of shares outstanding and
engaged with stockholders collectively representing approximately 30% of shares outstanding.
Our Board of Directors’ Independent Chairman participated in our stockholder engagement, providing
stockholders direct access to our Board of Directors.
Discussed various topics, including environmental, social and governance considerations, executive
compensation, board refreshment, composition and structure of our Board, and company culture.
|
| |
✓
✓
✓
✓
|
| |
Identified and regularly reported consistent themes from our outreach activities to our Board of
Directors.
Considered input provided by our stockholders and our advisors as our Board reviewed and considered
enhancements to its governance practices and public disclosures.
Pursuant to action taken by the Board, the Nominating and Corporate Governance Committee oversees
the Company’s current and new ESG initiatives and strategies.
Continued to grow our ESG initiatives and enhance disclosure, including through issuing our
inaugural Sustainability Report in April 2021.
|
Realty Income │ 2021 Proxy Statement 9
|
(1)
|
Non-Executive Independent Chairman of the Board of Directors.
|
|
|
| |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF THE
NOMINEES LISTED ABOVE
|
|
|
| |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION
OF THE APPOINTMENT OF KPMG LLP
|
10 Realty Income │ 2021 Proxy Statement
|
Proposals
|
|
|
| |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” APPROVAL ON A
NON-BINDING ADVISORY BASIS OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
|
Realty Income │ 2021 Proxy Statement 11
|
Proposals
|
•
|
In setting the size of the share reserve under the 2021 Plan, our Board of Directors considered the historical amounts of
equity awards granted under the 2012 Plan in the past three years. In 2018, 2019 and 2020, equity awards representing a total of approximately 462,203 shares, 221,390 shares, and 250,168 shares, respectively, were granted under the 2012
Plan, for a three-year average burn rate, as adjusted consistent with Institutional Shareholder Services’ burn rate calculation approach, based on
|
12 Realty Income │ 2021 Proxy Statement
|
Proposals
|
•
|
The company expects the share authorization under the 2021 Plan to provide enough shares for awards for at least ten years,
assuming the company continues to grant awards consistent with its current practices and historical usage, as reflected in its historical burn rate, and further dependent on the price of its shares and hiring activity during the next few
years, and noting that future circumstances may require the company to change its current equity grant practices. The company cannot predict its future equity grant practices, the future price of its shares of common stock or future
hiring activity with any degree of certainty at this time, and the share reserve under the 2021 Plan could last for a shorter or longer time.
|
•
|
In 2018, 2019 and 2020, the end of year overhang rate was 0.5%, 0.4%, and 0.3%, respectively. If the 2021 Plan is approved by
stockholders, the company expects its overhang at the end of 2021 will be approximately 2.1%. Overhang is calculated by dividing (1) the sum of the number of shares subject to equity awards outstanding at the end of the fiscal year plus
shares remaining available for issuance for future awards at the end of the fiscal year by (2) the number of shares outstanding at the end of the fiscal year.
|
•
|
No Repricing or Replacement of Options or Stock Appreciation Rights. The 2021 Plan
prohibits, without stockholder approval: (i) the amendment of options or stock appreciation rights to reduce the exercise price and (ii) the replacement of an option or stock appreciation right with cash or any other award when the
exercise price per share of the option or stock appreciation right exceeds the fair market value of underlying shares.
|
•
|
Share Counting. The 2021 Plan provides that the following shares may not be reused
for additional grants under the 2021 Plan: (i) shares tendered or withheld to satisfy grant or exercise price or tax withholding obligations associated with an award, (ii) shares subject to a stock appreciation right that are not issued
in connection with the stock settlement of the stock appreciation right on its exercise, and (iii) shares purchased on the open market with the cash proceeds from the exercise of options.
|
•
|
Independent Administration. The Compensation Committee, which consists of only
independent directors, will administer the 2021 Plan except with respect to awards granted to non-employee directors.
|
•
|
Claw-Back. The 2021 Plan provides that all awards granted pursuant to the 2021 Plan
will be subject to the provisions of our claw-back policy and any claw-back policy that we may implement in the future to the extent set forth therein or in an applicable award agreement.
|
•
|
Director Compensation Limits. The 2021 Plan provides that the sum of any cash
compensation and the aggregate grant date fair value of all awards granted to a non-employee director as compensation for services as a non-employee director during any calendar year (the “director limit”) may not exceed $1,000,000
(subject to limited exceptions).
|
•
|
No Discounted Awards. The 2021 Plan provides that stock options and stock appreciation
rights must be granted at not less than 100% of fair market value on the date of grant.
|
Realty Income │ 2021 Proxy Statement 13
|
Proposals
|
14 Realty Income │ 2021 Proxy Statement
|
Proposals
|
•
|
Stock Options. Stock options provide for the purchase of shares of our common stock in
the future at an exercise price set on the grant date. ISOs, by contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the
Internal Revenue Code are satisfied. The exercise price of a stock option may not be less than 100% of the fair market value of the underlying share on the date of grant (or 110% in the case of ISOs granted to certain significant
stockholders) and the term of a stock option may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders). Vesting conditions may apply to stock options and may include continued
service, performance and/or other conditions as set forth in the applicable award agreement.
|
•
|
SARs. SARs entitle their holder, upon exercise, to receive from us an amount equal to
the appreciation of the shares subject to the award between the grant date and the exercise date. The exercise price of a SAR may not be less than 100% of the fair market value of the underlying share on the date of grant and the term of
a SAR may not be longer than ten years. Vesting conditions may apply to SARs and may include continued service, performance and/or other conditions as set forth in the applicable award agreement.
|
•
|
Restricted Stock and RSUs. Restricted stock is an award of nontransferable shares of
our common stock that remain forfeitable unless and until specified conditions are met, and which may be subject to a purchase price. RSUs are contractual promises to deliver shares of our common stock in the future, which may also remain
forfeitable unless and until specified conditions are met, and may be accompanied by the right to receive the equivalent value of dividends paid on shares of our common stock prior to the delivery of the underlying shares. Delivery of the
shares underlying RSUs may be deferred under the terms of the award or at the election of the participant, if the plan administrator permits such a deferral. Conditions applicable to restricted stock and RSUs may be based on continuing
service, the attainment of performance goals and/or such other conditions as set forth in the applicable award agreement.
|
•
|
Other Stock or Cash Based Awards. Other stock or cash based awards are awards of cash,
fully vested shares of our common stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of our common stock. Other stock or cash based awards may be granted to participants and may also be
available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of base salary, bonus, fees or other cash compensation otherwise payable to any individual who is eligible to receive awards.
|
•
|
Dividend Equivalents. Dividend equivalents represent the right to receive the
equivalent value of dividends paid on shares of our common stock and may be granted in tandem with awards of restricted stock units. Dividend equivalents may be paid currently or credited to an account for the participant, settled in cash
or shares and may be subject to the same restrictions on transferability and forfeitability as the restricted stock units with respect to which the dividend equivalents are granted.
|
Realty Income │ 2021 Proxy Statement 15
|
Proposals
|
•
|
Shares of restricted stock granted to non-employee directors with fewer than six years of service will vest as to one-third of
the restricted shares subject to the award on each of the first three anniversaries of the applicable grant date.
|
•
|
Shares of restricted stock granted to non-employee directors with at least six, but fewer than seven, years of service will
vest as to one-half of the restricted shares subject to the award on each of the first two anniversaries of the applicable grant date.
|
•
|
Shares of restricted stock granted to non-employee directors with at least seven, but fewer than eight, years of service will
vest in full on the first anniversary of the applicable grant date.
|
•
|
Shares of restricted stock granted to non-employee directors with eight or more years of service will be fully vested as of the
grant date.
|
16 Realty Income │ 2021 Proxy Statement
|
Proposals
|
Realty Income │ 2021 Proxy Statement 17
|
Proposals
|
18 Realty Income │ 2021 Proxy Statement
|
Proposals
|
|
NAMED EXECUTIVE OFFICERS
|
| |
DOLLAR VALUE
|
| |
NUMBER OF UNITS
|
|
|
Sumit Roy
|
| |
|
| |
|
|
|
Michael R. Pfeiffer
|
| |
|
| |
|
|
|
Christie B. Kelly
|
| |
|
| |
|
|
|
Neil M. Abraham
|
| |
|
| |
|
|
|
Mark E. Hagan
|
| |
|
| |
|
|
|
Sean P. Nugent
|
| |
|
| |
|
|
|
All current executive officers, as a group
|
| |
|
| |
|
|
|
All current non-executive officer directors, as a group
|
| |
(1)
|
| |
36,000(2)
|
|
|
All non-executive officer employees as a group
|
| |
|
| |
|
|
(1)
|
The dollar value of the shares of restricted stock to be granted to non-employee directors on the date of
the 2021 Annual Meeting of Stockholders is not determinable at this time.
|
(2)
|
Includes 4,000 shares expected to be granted to each of the eight non-employee directors on the date of the
2021 Annual Meeting of Stockholders and an additional 4,000 shares for a director expected to be elected before December 31, 2021 to replace Christie Kelly, who resigned from the Board of Directors during January 2021 to become Chief
Financial Officer of the company.
|
|
|
| |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” APPROVAL OF THE
REALTY INCOME CORPORATION 2021 INCENTIVE AWARD PLAN.
|
Realty Income │ 2021 Proxy Statement 19
|
20 Realty Income │ 2021 Proxy Statement
|
Board of Directors and Corporate Governance
|
|
| |
|
A. Larry Chapman
Age: 74
Director Since: 2012
Committees: Audit
Independent: Yes
|
| |
Experience
|
|
A. Larry Chapman is a retired 37-year veteran of Wells Fargo, having served
most recently as Executive Vice President and the Head of Commercial Real Estate from 2006 until his retirement in June 2011, and as a member of the Wells Fargo Management Committee. Mr. Chapman joined Wells Fargo in 1974 in its Houston
Real Estate office. In 1987, he was promoted to President of Wells Fargo Realty Advisors, a wholly-owned subsidiary of Wells Fargo & Co. The subsidiary’s primary responsibility was managing Wells Fargo Mortgage and Equity Trust, which
was formed in 1970 and sold in 1989. He remained President of Wells Fargo Realty Advisors until 1990, and was promoted to Group Head of the Wells Fargo Real Estate Group in 1993. Mr. Chapman managed the Wells Fargo Real Estate Group until
his 2006 promotion to Executive Vice President and Head of Commercial Real Estate for Wells Fargo on a nationwide basis. Mr. Chapman is a former board member of the Fisher Center for Real Estate and Urban Economics at the University of
California, Berkeley, past governor and trustee of the Urban Land Institute, former member of the National Association of Real Estate Investment Trusts (Nareit), and member and past trustee of the International Council of Shopping Centers
(ICSC). He currently serves on the board of directors of CBL & Associates Properties, Inc. (NYSE: CBL) (August 2013-present).
|
||
|
Qualifications
|
||
|
Mr. Chapman’s financial acumen and extensive commercial real estate experience
across many industries and tenant types provide valuable insight and expertise to the Board of Directors and our senior management team as we continue to expand our real estate portfolio. In addition, his background as a leader of a
Fortune 500 company, and as a member of its management team, further enhances the quality of leadership and oversight provided by our Board of Directors.
|
||
|
|||
Reginald H. Gilyard
Age: 57
Director Since: 2018
Committees: Nominating/Corporate Governance (Chair)
Independent: Yes
|
| |
Experience
|
|
Reginald H. Gilyard is a Senior Advisor at the Boston Consulting Group, Inc.
(BCG) where he is a recognized leader in strategy development and execution (2017-present). Prior to this role, Mr. Gilyard served as Dean of the Argyros School of Business and Economics at Chapman University (2012-2017). Under
Mr. Gilyard’s leadership, the school significantly increased its national rankings at the undergraduate and graduate levels. Prior to joining Chapman University, Mr. Gilyard served as Partner and Managing Director at BCG where he led
national and multi-national engagements with large corporations in strategy, M&A, and business transformation (1996-2012). Prior to BCG, Mr. Gilyard served nine years in the U.S. Air Force as a Program Manager, and was then promoted
to Major in the U.S. Air Force Reserves where he served for an additional three years. Mr. Gilyard currently serves on the board of directors of First American Financial Corporation (NYSE:FAF) (2017-present), and CBRE Group Inc. (NYSE:
CBRE) (2018-present), and is the Board Chair for Pacific Charter School Development, a 501(c)(3) real estate development company serving low-income families in urban centers across the United States.
|
||
|
Qualifications
|
||
|
Mr. Gilyard offers valuable knowledge regarding strategy development and
execution, having worked with management teams and boards to develop and implement successful strategies for over 20 years. His extensive consulting experience includes leading national and multi-national strategic engagements, pre-and
post-M&A activity, and business transformation. Mr. Gilyard’s skill set and experience in a broad array of industries allow him to provide diverse and valuable perspectives to our Board of Directors.
|
Realty Income │ 2021 Proxy Statement 21
|
Board of Directors and Corporate Governance
|
|
|||
Priya Cherian Huskins
Age: 49
Director
Since: 2007
Committees:
Compensation
(Chair) and Nominating/Corporate
Governance
Independent:
Yes
|
| |
Experience
|
|
Priya Cherian Huskins is Senior Vice President and partner at Woodruff-Sawyer
& Co., a commercial insurance brokerage firm (2003-present). Prior to joining Woodruff-Sawyer & Co., Ms. Huskins served as a corporate and securities attorney at the law firm of Wilson Sonsini Goodrich & Rosati (1997-2003).
She has served on the advisory board of the Stanford Rock Center for Corporate Governance since 2012, and the board of directors of Woodruff-Sawyer & Co. since 2016, as well as NMI Holdings, Inc. and Anzu SPAC 1 since 2021. She
previously served on the board of directors of the Silicon Valley Directors’ Exchange (SVDX) (2013-2018), and served on the board of directors of the National Association of Corporate Directors, Silicon Valley Chapter (2006-2013).
|
||
|
Qualifications
|
||
|
With her background in law, insurance, and risk management, Ms. Huskins brings
a focus on these areas to our Board of Directors. As a recognized expert in directors and officers liability risk and its mitigation, Ms. Huskins provides valuable insight into our risk management strategy. In addition, she brings
experience regarding corporate governance matters, including compensation best practices, and ways that corporate governance can enhance stockholder value. Ms. Huskins’ experience makes her a valuable member of a well-rounded Board of
Directors.
|
||
|
|||
Gerardo I. Lopez
Age: 61
Director Since: 2018
Committees: Compensation
Independent: Yes
|
| |
Experience
|
|
Gerardo I. Lopez is currently an Operating Partner and Head of the Operating
Group for Softbank Investment Advisers (December 2018-present). Prior to this role, Mr. Lopez was an Operating Partner at High Bluff Capital Partners, a private equity firm focused on investing in consumer-facing companies, and Executive
Chairman of Quiznos, Inc. which is privately owned by High Bluff Capital Partners (June 2018 – December 2018). Previously, Mr. Lopez served as President and Chief Executive Officer of Extended Stay America, Inc. and its paired-share REIT,
ESH Hospitality, Inc. (paired together as NYSE: STAY), the largest owner/operator of company-branded hotels in North America (2015-2017). Mr. Lopez also served as President and Chief Executive Officer of AMC Entertainment Holdings, Inc.
(NYSE: AMC), the top global theater operator, where he led the reinvention of the customer theater experience (2009-2015). Prior to AMC, Mr. Lopez held various positions, including Executive Vice President of Starbucks Coffee Company
(NASDAQ: SBUX) and President of its Global Consumer Products, Seattle’s Best Coffee and Foodservice division (2004-2009), and President of the Handleman Entertainment Resources division of Handleman Company (2001-2004). Mr. Lopez has also
held a variety of executive management positions with International Home Foods (1997-2000), PepsiCo, Inc. (NYSE: PEP) (1986-1996), and the Procter & Gamble Company (NYSE: PG) (1983-1986). Mr. Lopez currently serves on the board of
directors of CBRE Group, Inc. (NYSE: CBRE) (2015-present), Newell Brands (NYSE: NWL) (2018-present) and OYO Hotels (2020-present).
|
||
|
Qualifications
|
||
|
Mr. Lopez brings extensive operational and leadership knowledge through serving
as a senior executive at entertainment, hospitality, and consumer products companies. He has over 36 years of experience in marketing, sales and operations, and management of public and private companies, particularly across
consumer-focused industries. Mr. Lopez adds real estate expertise and diverse board experience as an independent board member of private and public companies. The depth and breadth of his operational knowledge and leadership experience
across various industries makes him a valuable contributor to our Board of Directors.
|
22 Realty Income │ 2021 Proxy Statement
|
Board of Directors and Corporate Governance
|
|
|||
Michael D. McKee
Age: 75
Director
Since: 1994
Non-Executive
Chairman Since:
2012
Committees:
Compensation and
Nominating/Corporate
Governance
Independent:
Yes
|
| |
Experience
|
|
Michael D. McKee is a Principal at The Contrarian Group (March 2018-present).
Mr. McKee previously served as Executive Chairman of HCP, Inc. (now Healthpeak Properties; NYSE: PEAK) (May 2016-February 2018), Chief Executive Officer of Bentall Kennedy (U.S.), a registered real estate investment advisor (February
2010-April 2016), and was the Vice Chairman (1999-2008) and Chief Executive Officer (2007-2008) of The Irvine Company, a privately-held real estate investment company, as well as its Chief Operating Officer (2001-2007), Chief Financial
Officer (1997-2001) and Executive Vice President (1994-1999). Prior to joining The Irvine Company, Mr. McKee was a partner in the law firm of Latham & Watkins (1986-1994). Through each of these positions, Mr. McKee has obtained
extensive real estate experience and provides valuable insight and expertise to the Board and our senior management team. He has served on the board of directors of HCP, Inc. (1987-2018), Bentall Kennedy (U.S.) (2008-2012), First American
Financial Corporation (NYSE: FAF) (2011-present), Seattle Pacific University (2017-present), the Tiger Woods Foundation (2006-present), The Irvine Company (1998-2008) and Hoag Hospital Foundation (1999-2008).
|
||
|
Qualifications
|
||
|
Mr. McKee’s business and legal experience includes numerous acquisition and
disposition transactions, as well as a variety of public and private offerings of equity and debt securities. Additionally, he has been exposed to various compliance issues as they relate to REITs. With his knowledge of the complex issues
facing real estate companies today and his understanding of what makes businesses work effectively and efficiently, Mr. McKee provides valuable insight to our Board of Directors.
|
||
|
|||
Gregory T. McLaughlin
Age: 61
Director Since: 2007
Committees: Audit and Compensation
Independent: Yes
|
| |
Experience
|
|
Since 2018, Gregory T. McLaughlin has served in a dual role as the Chief
Executive Officer of the PGA TOUR First Tee Foundation, a subsidiary of the PGA TOUR, and the World Golf Hall of Fame. Under Mr. McLaughlin's leadership, the First Tee Foundation and World Golf Hall of Fame have grown in global prominence
to become among the world's top golf organizations. Most importantly, Mr. McLaughlin has served as a vital ambassador and spokesperson for the game of golf throughout the U.S. and abroad. Previously, Mr. McLaughlin served as the President
of the PGA TOUR Champions and an Executive Vice President of the PGA TOUR (2014 – 2018). Prior to joining the PGA TOUR, Mr. McLaughlin served as the President and Chief Executive Officer of TGR Live and Tiger Woods Foundation in Irvine,
California (1999 – 2014), the Vice President of Business Development of the Western Golf Association / Evans Scholars Foundation in Glenview Illinois (1993 – 1999), and the Vice President of Business Development of the Los Angeles Junior
Chamber of Commerce in Los Angeles, California (1988 – 1993). Mr. McLaughlin currently serves on the Executive Committee of the PGA TOUR and formerly served on the board of directors of Nielsen Sports (2012 – 2014). Mr. McLaughlin holds a
Juris Doctorate degree from Chicago-Kent School of Law and a Bachelor of Science degree in Economics from The Ohio State University.
|
||
|
Qualifications
|
||
|
As a result of his extensive experience working in golf, Mr. McLaughlin offers
a unique perspective to the Board of Directors on a variety of business, finance, human resources and legal matters. Mr. McLaughlin’s robust experience includes tax-exempt financing, business development, capital raising, and program
development Additionally, his leadership skills in managing a variety of different organizations bring financial reporting expertise, especially as it relates to audit and tax matters. His proven effectiveness working with complex issues
makes him a valued member of the Board of Directors.
|
Realty Income │ 2021 Proxy Statement 23
|
Board of Directors and Corporate Governance
|
|
|||
Ronald L. Merriman
Age: 76
Director Since: 2005
Committees: Audit (Chair) and
Nominating/Corporate
Governance
Independent: Yes
|
| |
Experience
|
|
Ronald L. Merriman is a retired Vice Chairman and partner of KPMG LLP, a global
accounting and consulting firm (1967-1997). At KPMG LLP, Mr. Merriman served as Vice Chairman of the Executive Management Committee. More recently, Mr. Merriman was the managing director of Merriman Partners, a management advisory firm
(2003-2011). Prior to founding Merriman Partners, Mr. Merriman served as a managing director of O’Melveny & Myers law firm (2000-2003), Executive Vice President of Carlson Wagonlit Travel (1999-2000) and President of Ambassador
Performance Group, Inc. (1997-1999). Mr. Merriman serves on the board of directors of nVent Electric plc (NYSE: NVT) (2018-present) and serves as the chairman of its audit and finance committee. Mr. Merriman served on the board of
directors of Pentair, Plc, formerly Pentair, Ltd. (NYSE: PNR) (2005-2018), and was the chairman of its audit committee. Mr. Merriman formerly served as the chairman of the audit committee and was a member of the compensation committee of
Haemonetics Corporation (NYSE: HAE) (2005-2017). Mr. Merriman served on the board of directors of Aircastle Limited (NYSE: AYR) (2006-2020) and served as the chairman of its audit committee (2006-2020) and was a member of the nomination
and governance committee (2012-2020).
|
||
|
Qualifications
|
||
|
Mr. Merriman is an experienced financial leader with the skills necessary to
lead our Audit Committee. Throughout his career, he has been exposed to various global issues involving accounting and auditing standards, business law and corporate ethics. His professional background and experience on other audit
committees make him a valuable asset, both on our Board of Directors and as the Chair of our Audit Committee. Mr. Merriman’s positions have provided him with a wealth of knowledge in addressing financial and accounting matters. The depth
and breadth of his exposure to complex global financial issues makes him a skilled member of the Board of Directors.
|
||
|
|||
Sumit Roy
Age: 51
Director Since: 2018
Committees: None
Independent: No
|
| |
Experience
|
|
Mr. Roy has been our Chief Executive Officer since October 2018, and our
President since November 2015. Mr. Roy served as Executive Vice President, Chief Operating Officer from October 2014 to October 2018, and as Chief Investment Officer from October 2013 to November 2015. Prior to that, Mr. Roy served as
Executive Vice President, Acquisitions from March 2013 to October 2013, after being promoted from his prior role as Senior Vice President, Acquisitions from September 2011 to February 2013. Prior to joining us in September 2011, Mr. Roy
was an Executive Director, Global Real Estate, Lodging & Leisure for UBS Investment Bank. Mr. Roy has also held positions at Merrill Lynch, and at Cap Gemini Ernst & Young LLP. Mr. Roy currently serves on the Advisory Board of
Governors for the National Association of Real Estate Investment Trusts (Nareit).
|
||
|
Qualifications
|
||
|
Mr. Roy brings a deep understanding of financial strategy, real estate, and
REITs through his experience in the financial and real estate industries. Additionally, he provides insight regarding strategic planning and execution through his consulting and advisory experience. His extensive knowledge of the
company’s investments and operations across all areas of the business makes him a valuable contributor to our Board of Directors.
|
24 Realty Income │ 2021 Proxy Statement
|
Board of Directors and Corporate Governance
|
Realty Income │ 2021 Proxy Statement 25
|
Board of Directors and Corporate Governance
|
AUDIT
COMMITTEE
|
| |
|
| |
|
| |
|
|
| |
Responsibilities
|
||||||
Members:
Ronald L. Merriman (Chair)
Kathleen R. Allen, Ph.D.
A. Larry Chapman
Christie B. Kelly*
Gregory T. McLaughlin
Independent: All
Meetings in 2020: 8
|
| |
⯀
|
| |
Oversee compliance with legal and regulatory requirements;
|
|||
|
⯀
|
| |
Oversee the integrity of our financial statements;
|
|||||
|
⯀
|
| |
Provide assistance to our Board of Directors in its oversight of cybersecurity, information
technology, and other data privacy risks, and enterprise-level risks that may effect our financial statements, operations, business continuity and reputation;
|
|||||
|
⯀
|
| |
Provide assistance to our Board of Directors in its oversight of our guidelines and policies with
respect to enterprise risk management;
|
|||||
|
⯀
|
| |
Appoint, retain, and oversee our independent registered public accounting firm, approve any special
assignments given to the independent registered public accounting firm, and review:
|
|||||
|
|
| |
•
|
| |
The scope and results of the audit engagement with the independent registered public accounting
firm, including the independent registered public accounting firm’s letters to the Audit Committee;
|
||
|
|
| |
•
|
| |
The independence and qualifications of the independent registered public accounting firm;
|
||
|
|
| |
•
|
| |
The compensation of the independent registered public accounting firm;
|
||
|
|
| |
•
|
| |
The performance of our internal audit function;
|
||
|
|
| |
•
|
| |
Critical audit matters of the company; and
|
||
|
|
| |
•
|
| |
Any significant proposed accounting changes.
|
||
|
|||||||||
Our Board of Directors has determined that Messrs. Merriman, Chapman and
McLaughlin, and Dr. Allen qualify, and that Ms. Kelly qualified during her tenure as audit committee financial experts, as defined in Item 407(d) of Regulation S-K, and that all members of the Audit Committee are financially literate
under the current listing standards of the NYSE and meet the SEC independence requirements for audit committee membership.
|
|||||||||
|
|||||||||
*Christie B. Kelly resigned from our Board of Directors upon her appointment
as our Executive Vice President, Chief Financial Officer and Treasurer in January 2021.
|
|||||||||
|
26 Realty Income │ 2021 Proxy Statement
|
Board of Directors and Corporate Governance
|
Realty Income │ 2021 Proxy Statement 27
|
Board of Directors and Corporate Governance
|
We maintain a Code of Business Ethics that applies to our directors, officers, and
other employees, and addresses items such as (i) our policy on political contributions, (ii) disclosures and financial reporting, and (iii) protection and use of company assets. The Board of Directors adopted the Code of Business Ethics
to codify and formalize certain of our long-standing policies and principles that help ensure our business is conducted in accordance with the highest standards of ethical behavior. We conduct annual training with our employees regarding
ethical behavior and require all employees to acknowledge the terms of,
|
| |
Whistleblower Policy
Our Board of
Directors oversees the company’s “whistleblower” policy, which outlines a procedure
for all interested parties, including employees, to submit confidential complaints,
concerns, unethical business practices, violations or suspected violations for any and
all matters pertaining to accounting, internal control, or auditing.
|
|
and abide by, our Code of Business Ethics. The full text of our Code of
Business Ethics is available on our company’s website at www.realtyincome.com/investors/corporate-governance. We intend to disclose any future amendments to, or waivers of, certain provisions of our Code of Business Ethics applicable to
our officers and directors on our website, within five business days following such amendment or waiver, or as otherwise required by the SEC or the NYSE.
|
|
(i)
|
a decision by the Audit Committee to effect an accounting restatement of previously published financial statements caused by
material non-compliance by the company with any financial reporting requirement under the federal securities laws due to fraud, misconduct, negligence, or lack of sufficient oversight on the part of any named executive officer, and/or
|
28 Realty Income │ 2021 Proxy Statement
|
Board of Directors and Corporate Governance
|
(ii)
|
a decision by the Compensation Committee that one or more performance metrics used for determining previously paid compensation
was incorrectly calculated and, if calculated correctly, would have resulted in a lower payment to one or more executive officers.
|
•
|
Environmental, social, and governance considerations;
|
•
|
Diversity, equality and inclusion;
|
•
|
Executive compensation;
|
•
|
Board refreshment;
|
•
|
Board composition and structure; and
|
•
|
Company culture.
|
•
|
Business and professional background;
|
•
|
Diversity in background, expertise, perspectives, and thought;
|
Realty Income │ 2021 Proxy Statement 29
|
Board of Directors and Corporate Governance
|
•
|
History of leadership or contributions to other organizations;
|
•
|
Functional skill set and expertise;
|
•
|
General understanding of marketing, finance, accounting, corporate governance, federal securities and other relevant laws and
regulations, international experience, and other elements relevant to the success of a publicly-traded company in today’s business environment;
|
•
|
Experience as a member of the board of directors of another publicly-held company;
|
•
|
Commitment to devoting the time and effort necessary to be a responsible and productive member of the Board of Directors; and
|
•
|
Ability to perpetuate the success of the business and represent stakeholder interests through the exercise of sound business
judgment.
|
30 Realty Income │ 2021 Proxy Statement
|
Board of Directors and Corporate Governance
|
(1)
|
We define underrepresented communities in accordance with California Assembly Bill No. 979 as “an individual
who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.” We have captured individuals
who self-identify as South Asian or Indian under the “Asian” category.
|
Realty Income │ 2021 Proxy Statement 31
|
Board of Directors and Corporate Governance
|
•
|
The Audit Committee oversees our risk policies and processes relating to the financial statements and financial reporting
procedures, focusing on internal controls, as well as key credit risks, liquidity risks, cybersecurity risks, information technology risks, data privacy risks, market risks and compliance, and the guidelines, policies and procedures for
monitoring and mitigating those risks and discuss major enterprise-level risk exposures;
|
•
|
The Compensation Committee monitors the risks associated with management resources and structure, including evaluating the
effect the compensation structure may have on risk decisions; and
|
•
|
The Nominating/Corporate Governance Committee oversees the risk related to our governance structure and processes and risks
arising from related party transactions.
|
32 Realty Income │ 2021 Proxy Statement
|
Board of Directors and Corporate Governance
|
|
Email:
Non-Executive Chairman of the Board of
Directors
c/o Corporate Secretary
mbushore@realtyincome.com
|
| |
Mail:
Non-Executive Chairman of the Board of
Directors
c/o Corporate Secretary
Realty Income Corporation
11995 El Camino Real
San Diego, CA 92130
|
|
Realty Income │ 2021 Proxy Statement 33
|
|
POSITION HELD
|
| |
ANNUAL EQUITY
GRANT (IN SHARES)(1)
|
| |
ANNUAL CASH
RETAINER(2)
|
|
|
Board of Directors – Member (including Non-Executive Chair)
|
| |
4,000
|
| |
$25,000
|
|
|
Board of Directors – Non-Executive Chair
|
| |
—
|
| |
125,000
|
|
|
Audit Committee Chair
|
| |
—
|
| |
25,000
|
|
|
Compensation Committee Chair
|
| |
—
|
| |
25,000
|
|
|
Nominating/Corporate Governance Committee Chair
|
| |
—
|
| |
10,000
|
|
(1)
|
The value of the annual equity retainer is variable, based on the closing share price on the date of grant.
|
(2)
|
Effective January 1, 2021, the annual cash retainer for the Audit Committee Chair increased to $30,000 and
the Nominating/Corporate Governance Committee Chair increased to $15,000.
|
|
NAME
|
| |
FEES EARNED OR
PAID IN CASH
|
| |
STOCK
AWARDS(1)
|
| |
ALL OTHER
COMPENSATION(2)
|
| |
TOTAL
|
|
|
Kathleen R. Allen, Ph.D.(3)
|
| |
$25,000
|
| |
$206,680
|
| |
$—
|
| |
$231,680
|
|
|
A. Larry Chapman(3)
|
| |
25,000
|
| |
206,680
|
| |
—
|
| |
231,680
|
|
|
Reginald H. Gilyard(3)
|
| |
35,000
|
| |
206,680
|
| |
—
|
| |
241,680
|
|
|
Priya Cherian Huskins(3)
|
| |
50,000
|
| |
206,680
|
| |
—
|
| |
256,680
|
|
|
Christie B. Kelly(3)
|
| |
25,000
|
| |
206,680
|
| |
—
|
| |
231,680
|
|
|
Gerardo I. Lopez(3)
|
| |
25,000
|
| |
206,680
|
| |
—
|
| |
231,680
|
|
|
Michael D. McKee(3)
|
| |
150,000
|
| |
206,680
|
| |
—
|
| |
356,680
|
|
|
Gregory T. McLaughlin(3)
|
| |
25,000
|
| |
206,680
|
| |
10,000
|
| |
241,680
|
|
|
Ronald L. Merriman(3)
|
| |
50,000
|
| |
206,680
|
| |
—
|
| |
256,680
|
|
|
Sumit Roy(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
(1)
|
On May 12, 2020, the date of our 2020 Annual Meeting of Stockholders, each non-employee director at that
time received 4,000 shares of restricted stock with a grant date fair value of $206,680 which is calculated by multiplying the 4,000 shares by the closing market price per share of our common stock on May 12, 2020 of $51.67, as prescribed
by Accounting Standards Codification Topic 718. All of these restricted stock grants vest according to the vesting schedule described below under “Stock Awards for Directors” and include dividends paid from the date of grant.
|
(2)
|
Amount represents the annual retainer of $10,000 for serving as the director of Crest Net Lease, Inc.
(“Crest”), a wholly-owned subsidiary of Realty Income.
|
(3)
|
As of December 31, 2020, the non-employee directors did not hold any stock options. Other than Messrs.
Chapman, Gilyard, Lopez, and Ms. Kelly, who held 667, 8,001, 8,001 and 6,667 shares of unvested restricted stock, respectively, the non-employee directors did not hold any shares of restricted stock.
|
(4)
|
Mr. Roy, our President, Chief Executive Officer and Director, did not receive any compensation for his
services on our Board of Directors or as a director of Crest during 2020. His compensation is reflected as part of the “Summary Compensation Table” on page 60.
|
34 Realty Income │ 2021 Proxy Statement
|
Director Compensation
|
|
YEARS OF SERVICE
|
| |
VESTING
|
|
|
< 6 years
|
| |
33.33% increments on each of the first three anniversaries of the grant date
|
|
|
6 years
|
| |
50% increments on each of the first two anniversaries of the grant date
|
|
|
7 years
|
| |
100% vested on the first anniversary of the grant date
|
|
|
≥ 8 years
|
| |
Immediately
|
|
Realty Income │ 2021 Proxy Statement 35
|
|
NAME AND CURRENT TITLE
|
| |
AGE
|
| |
BUSINESS EXPERIENCE
|
|
|
Sumit Roy
President and Chief
Executive Officer
|
| |
51
|
| |
Mr. Roy’s business experience is set forth in this Proxy Statement under
“Director Nominees” on page 20.
|
|
|
Michael R. Pfeiffer
Executive Vice
President, Chief
Administrative Officer
|
| |
60
|
| |
Mr. Pfeiffer has been our Chief Administrative Officer since February 2019.
He joined us in 1990 and served as Corporate Counsel until 1995, when he was named General Counsel and Secretary. Mr. Pfeiffer left us in September 2001 and served as Executive Vice President and General Counsel for Westfield Corporation,
Inc., a retail shopping mall owner, until May 2002, at which time he returned to us as Executive Vice President, General Counsel and Secretary and served in this role until the January 2021 announcement of his planned retirement on or
around June 30, 2021. Prior to joining us, Mr. Pfeiffer was in private practice with a law firm specializing in real estate transactional law and served as associate counsel with First American Title Insurance Company. He is a licensed
attorney and member of the State Bar of California and Florida. Mr. Pfeiffer is a licensed Real Estate Broker in California and holds the real estate officer license for us.
|
|
|
Christie B. Kelly
Executive Vice
President, Chief
Financial Officer,
and Treasurer
|
| |
59
|
| |
Ms. Kelly served on our Board of Directors from November 2019 to January 19,
2021, at which time she resigned from the company’s Board of Directors and assumed the role of Executive Vice President, Chief Financial Officer, and Treasurer. Prior to joining us, Ms. Kelly served as the Global Chief Financial Officer
at Jones Lang LaSalle Incorporated (2013-2018), Executive Vice President and Chief Financial Officer at Duke Realty Corporation (2009-2013) and Senior Vice President, Global Real Estate at Lehman Brothers.
|
|
|
Neil M. Abraham
Executive Vice
President, Chief
Strategy Officer
|
| |
50
|
| |
Mr. Abraham has been our Executive Vice President, Chief Strategy Officer
since May 2018. He served as Executive Vice President, Chief Investment Officer from November 2015 to May 2018. Prior to that, he was our Senior Vice President, Investments, a position he held from April 2015 to November 2015. Prior to
joining us, Mr. Abraham was a Portfolio Manager for equity and mortgage REITs at AllianceBernstein – Global Equities in New York (2007-2015). Prior to joining AllianceBernstein, he held positions as Associate Principal for McKinsey &
Company, and Vice President, Fixed Income Derivatives at Salomon Brothers.
|
|
|
Mark E. Hagan
Executive Vice
President, Chief
Investment Officer
|
| |
54
|
| |
Mr. Hagan has been our Executive Vice President, Chief Investment Officer
since May 2018. Prior to joining us, Mr. Hagan served as Managing Director, Real Estate Investment Banking at RBC Capital Markets, LLC (2010-2018), Managing Director, Real Estate Investment Banking at Deutsche Bank Securities, Inc.
(2005-2009), and Director, Real Estate Investment Banking at Merrill Lynch & Co., Inc. (1998-2005).
|
|
|
Michelle Bushore
Executive Vice
President, Chief
Legal Officer,
General Counsel
and Secretary
|
| |
53
|
| |
Ms. Bushore has been our Executive Vice President, Chief Legal Officer,
General Counsel and Secretary since February 2021. Prior to joining us, Ms. Bushore served as Executive Vice President, General Counsel, Chief Legal & Risk Officer and Corporate Secretary at Caesars Entertainment, Inc. (2018-2020),
and Deputy General Counsel and Corporate Secretary at Monsanto (2016-2018), as well as Chief Legal Officer of The Climate Corporation. Earlier, she was in private practice with Latham & Watkins LLP.
|
|
36 Realty Income │ 2021 Proxy Statement
|
Information about our Executive Officers
|
|
NAME AND CURRENT TITLE
|
| |
AGE
|
| |
BUSINESS EXPERIENCE
|
|
|
Benjamin N. Fox
Executive Vice
President, Asset
Management and
Real Estate
Operations
|
| |
41
|
| |
Mr. Fox has been our Executive Vice President, Asset Management and Real
Estate Operations since January 2018. He joined us in 2007 and served as Senior Vice President, Asset and Portfolio Management (2015-2017), Vice President, Asset Management (2013-2015), Vice President of Strategic Investments (2011-2013),
and Acquisitions Director (2007-2011) before being promoted to his current position. Prior to joining us, Mr. Fox worked in investment banking at JPMorgan and in merchant banking at Cappello Capital.
|
|
|
Sean P. Nugent
Senior Vice
President,
Controller
|
| |
48
|
| |
Mr. Nugent served as our interim Principal Financial Officer and Treasurer
from January 2020 to January 2021. He has been our Senior Vice President, Controller since 2017. He joined us in 2006 and served as Accounting Manager before being promoted to Associate Vice President, Assistant Controller, in 2012 and to
Vice President, Controller in 2014. Prior to joining us, Mr. Nugent worked in various accounting positions for a number of San Diego companies. Mr. Nugent is a licensed Certified Public Accountant in California.
|
|
Realty Income │ 2021 Proxy Statement 37
|
|
NAME
|
| |
CURRENT TITLE
|
|
|
Sumit Roy
|
| |
President and Chief Executive Officer
|
|
|
Michael R. Pfeiffer(1)
|
| |
Executive Vice President, Chief Administrative Officer
|
|
|
Neil M. Abraham
|
| |
Executive Vice President, Chief Strategy Officer
|
|
|
Mark E. Hagan
|
| |
Executive Vice President, Chief Investment Officer
|
|
|
Sean P. Nugent(2)
|
| |
Senior Vice President and Controller, Former Interim Principal Financial
Officer and Treasurer
|
|
|
Paul M. Meurer(2)
|
| |
Former Executive Vice President, Chief Financial Officer and Treasurer
|
|
(1)
|
Effective February 8, 2021, Michelle Bushore joined the company as our new Executive Vice President, Chief
Legal Officer, General Counsel and Secretary. Mr. Pfeiffer, our previous Executive Vice President, Chief Legal Officer, General Counsel and Secretary who plans to retire on or around June 30, 2021, continues to serve as our Executive Vice
President, Chief Administrative Officer, until his retirement.
|
(2)
|
Mr. Meurer served as Executive Vice President, Chief Financial Officer and Treasurer through January 29,
2020, at which time he transitioned into his role as a senior advisor to the company. Mr. Meurer departed from the company on March 31, 2020. Mr. Nugent is included as an NEO since he served the role of Interim Principal Financial Officer
from January 30, 2020 until January 19, 2021, when Christie Kelly became our Executive Vice President, Chief Financial Officer and Treasurer. His 2020 base salary, cash incentive award and restricted stock award, each as disclosed in the
tables that follow this section, were discretionary and based on the recommendation of our CEO.
|
✓
|
Align the interests of management with those of stakeholders;
|
✓
|
Link executive compensation to the company’s short-term and long-term
performance; and
|
✓
|
Attract, motivate, and retain highly qualified executive officers
through competitive compensation arrangements.
|
|
WHAT WE DO:
|
| |
WHAT WE DO NOT DO:
|
| ||||||
|
✓
|
| |
DO align pay to performance by linking a substantial portion of compensation to
the achievement of predefined performance metrics that drive stockholder value creation
|
| |
X
|
| |
Do NOT allow for uncapped award opportunities
|
|
|
✓
|
| |
DO cap payouts for awards under our Short-Term Incentive Program (STIP) and our
Long-Term Incentive Program (LTIP)
|
| |
X
|
| |
Do NOT provide any perquisites to our named executive officers
|
|
|
✓
|
| |
DO set meaningful and measurable performance goals at the beginning of the
performance period and evaluate such performance over both an annual and multi-year period on a relative basis
|
| |
X
|
| |
Do NOT permit executive officers or directors to pledge or hedge our securities
|
|
|
✓
|
| |
DO maintain stock ownership requirements for our directors, CEO, and other
named executive officers
|
| |
X
|
| |
Do NOT incentivize excessive risk taking
|
|
38 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
|
WHAT WE DO:
|
| |
WHAT WE DO NOT DO:
|
| ||||||
|
✓
|
| |
DO perform an annual compensation risk assessment to ensure our compensation
programs and policies do not encourage excessive risk-taking behavior
|
| |
X
|
| |
Do NOT pay accrued dividends on performance shares unless and until they vest
|
|
|
✓
|
| |
DO allow for the Board to “clawback” incentive compensation in the event of
certain financial restatements or incentive miscalculations
|
| |
X
|
| |
Do NOT provide our named executive officers with tax gross-ups on perquisites
or other benefits
|
|
|
✓
|
| |
DO employ the services of an independent compensation consultant that reports
to the Compensation Committee of the Board of Directors
|
| |
X
|
| |
Do NOT provide for excise tax gross ups
|
|
|
✓
|
| |
DO grant performance-based equity, which is at-risk and not guaranteed
|
| |
X
|
| |
Do NOT provide supplemental or other retirement plans, other than a 401(k) plan
|
|
|
✓
|
| |
DO align certain ESG initiatives to individual performance goals, rigorously
reviewed by the Compensation Committee of the Board of Directors
|
| |
X
|
| |
Do NOT have employment contracts with our NEOs
|
|
|
Continued our disciplined acquisition strategy, targeting well-located,
freestanding, single-tenant commercial properties at favorable risk-adjusted returns.
|
| ||||||
|
|
| ||||||
|
|
| |
✓
|
| |
We sourced $63.6 billion in real estate acquisition opportunities and remained
selective in our investment strategy, acquiring $2.3 billion, representing 3.6% of the amount sourced.
|
|
|
|
| |
✓
|
| |
We remained committed to diversifying our portfolio by client, industry,
geography, and property type, while maintaining excellent credit quality in the portfolio. As of December 31, 2020, 50.5% of our annualized rental revenue was generated from investment-grade clients, their subsidiaries or affiliated
companies.
|
|
|
|
| ||||||
|
Actively managed our portfolio to further enhance stockholder value
|
| ||||||
|
|
| ||||||
|
|
| |
✓
|
| |
We achieved a strong year-end occupancy of 97.9%.
|
|
|
|
| |
✓
|
| |
We recaptured 100% of expiring rent on properties released during the year.
|
|
|
|
| |
✓
|
| |
We disposed of approximately $262.5 million of non-strategic assets and
redeployed that capital into properties that better fit our investment strategy and support our ongoing portfolio optimization efforts, which was further developed in response to the COVID-19 pandemic.
|
|
|
|
| ||||||
|
Maintained a conservative balance sheet
|
| ||||||
|
|
| ||||||
|
|
| |
✓
|
| |
Our balance sheet remains strong with our Moody’s and S&P credit ratings
at A3/A- with a stable outlook, respectively in 2020.
|
|
|
|
| |
✓
|
| |
We ended the year with a fixed charge coverage ratio of 5.1x, increasing our
coverage by 0.1x compared to last year.
|
|
|
|
| |
✓
|
| |
Maintained a strong financial position through occasionally turbulent market
conditions during 2020 and remain committed to being one of only a handful of REITs with at least two credit ratings of A3/A- or better by the major rating agencies.
|
|
|
|
| |
✓
|
| |
Established a $1.0 billion commercial paper program during the year, which
further strengthens our financial position by providing additional access to low-cost debt financing, and we completed our debut public issuance of Sterling-denominated unsecured notes.
|
|
|
|
| |
✓
|
| |
Raised approximately $1.9 billion of equity capital and $2.2 billion of
long-term fixed-rate debt, achieving record-low coupon rates in the REIT sector for the 5-year and 12-year unsecured notes we issued in December 2020.
|
|
|
|
| |
✓
|
| |
Remained well-positioned for 2021 with a conservative capital structure and
strong liquidity, ending the year with full availability on our $3.0 billion multi-currency revolving credit facility and no outstanding balance under our $1.0 billion commercial paper program.
|
|
Realty Income │ 2021 Proxy Statement 39
|
Executive Compensation
|
•
|
The Compensation Committee’s assessment of the alignment of our compensation program with our financial and operational
objectives;
|
•
|
Retention and recognition of individual contribution towards our performance;
|
•
|
Recommendations provided by its independent consultant; and
|
•
|
A review of peer data.
|
40 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
✓
|
Evaluating the current compensation program design and guidelines for
named executive officers and assisting in structuring a compensation program that meets the objectives outlined by the Compensation Committee;
|
✓
|
Providing peer information to assist the Compensation Committee in
selecting the appropriate peer group;
|
✓
|
Benchmarking the compensation for the named executive officers against
the appropriate peer group;
|
✓
|
Identifying the appropriate mix of compensation components, including
base salary, annual incentives, and short-term and long-term incentive compensation to ensure proper incentive alignment;
|
✓
|
Conducting an annual independent risk assessment on behalf of the
Compensation Committee to ensure that our executive compensation is appropriately structured;
|
✓
|
Discussing market-based incentive programs, including performance
metrics and targets, within our peer group companies, and providing guidance and recommendations for modifications to program elements to ensure competitiveness; and
|
✓
|
Reviewing an overview of industry trends related to human capital across
the entire real estate industry.
|
Realty Income │ 2021 Proxy Statement 41
|
Executive Compensation
|
|
2020 PEER GROUP (1)
|
| |||
|
Alexandria Real Estate Equities, Inc.
|
| |
Kimco Realty Corporation
|
|
|
Avalon Bay Communities, Inc.
|
| |
Public Storage
|
|
|
Boston Properties, Inc.
|
| |
Simon Property Group, Inc.
|
|
|
Digital Realty Trust, Inc.
|
| |
Ventas, Inc.
|
|
|
Equity Residential
|
| |
VEREIT, Inc.*
|
|
|
Essex Property Trust, Inc.
|
| |
Vornado Realty Trust
|
|
|
Healthpeak Properties, Inc.
|
| |
W.P. Carey, Inc.*
|
|
|
Host Hotels & Resorts, Inc.
|
| |
Welltower, Inc.
|
|
*
|
Denotes a net lease peer
|
(1)
|
With the exception of the net lease peers, the remainder of the 2020 group consists of S&P 500 REIT’s.
|
(1)
|
As of December 31, 2019, the 2020 Peer Group had total market capitalization ranging from approximately
$14.5 billion to $84.0 billion, placing us in the 50th percentile of our peer group. In terms of equity market capitalization, we were in the 63rd percentile of our peer group. Data sourced from S&P Global Market
Intelligence as of December 31, 2019.
|
42 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
Realty Income │ 2021 Proxy Statement 43
|
Executive Compensation
|
|
TOTAL TARGET DIRECT COMPENSATION(1)
|
| ||||||
|
EXECUTIVE
|
| |
2019
|
| |
2020
|
|
|
Sumit Roy(2)
|
| |
$6,337,500
|
| |
$7,500,000
|
|
|
Michael R. Pfeiffer
|
| |
2,100,000
|
| |
2,150,000
|
|
|
Neil M. Abraham
|
| |
1,850,000
|
| |
2,050,000
|
|
|
Mark E. Hagan
|
| |
1,750,000
|
| |
1,900,000
|
|
|
Total
|
| |
$12,037,500
|
| |
$13,600,000
|
|
(1)
|
Mr. Meurer’s departure from the company was announced on January 29, 2020. As a result, total target direct
compensation for Mr. Meurer was not applicable for 2020.
|
(2)
|
Mr. Roy was promoted to CEO effective October 2018. As a newly promoted CEO, his 2019 total target direct
compensation fell below the median of our 2019 peer group. After demonstrating success over his first full year as CEO, the Compensation Committee made adjustments to his total target direct compensation for 2020 to bring him into closer
alignment with the median peer group.
|
44 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
|
CEO ANNUAL CASH
|
| |
CEO ANNUAL EQUITY
|
| |
CEO TOTAL
|
| ||||||
|
ANNUAL
SALARY
|
| |
TARGET STIP
CASH AWARD
|
| |
TARGET LTIP
PERFORMANCE
SHARES
|
| |
TIME-BASED
LTIP
RESTRICTED
SHARES
|
| |
TOTAL TARGET
DIRECT
COMPENSATION
|
|
|
$900,000
|
| |
$1,600,000
|
| |
$3,750,000
|
| |
$1,250,000
|
| |
$7,500,000
|
|
|
NAMED
EXECUTIVE OFFICER
|
| |
|
| |
SALARIES FOR FISCAL YEAR
|
| |||
|
PRINCIPAL POSITION IN 2020
|
| |
2019
|
| |
2020
|
| |||
|
Sumit Roy(1)
|
| |
President, Chief Executive Officer
|
| |
$850,000
|
| |
$900,000
|
|
|
Michael R. Pfeiffer
|
| |
Executive Vice President, Chief Administrative Officer, General Counsel and Secretary
|
| |
500,000
|
| |
515,000
|
|
|
Neil M. Abraham
|
| |
Executive Vice President, Chief Strategy Officer
|
| |
410,000
|
| |
475,000
|
|
|
Mark E. Hagan
|
| |
Executive Vice President, Chief Investment Officer
|
| |
410,000
|
| |
430,000
|
|
|
Paul M. Meurer(2)
|
| |
Former Executive Vice President, Chief Financial Officer and Treasurer
|
| |
550,000
|
| |
137,500
|
|
(1)
|
The increase in base salary for Mr. Roy from 2019 to 2020 was reflective of the multi-year phase-in approach
by the Compensation Committee to bring him into alignment with the median peer group.
|
(2)
|
Mr. Meurer’s salary for 2020 is for the first three months of the year, as he departed from the company on
March 31, 2020.
|
Realty Income │ 2021 Proxy Statement 45
|
Executive Compensation
|
Objective Company Performance Criteria – Weighted 70%
|
Individual Performance – Weighted 30%
|
✓
|
All of the compensation awarded under this program was at-risk.
|
✓
|
No compensation was awarded for below-threshold performance and
maximum payouts were capped at 200% of target.
|
✓
|
Awards were paid entirely in the form of cash.
|
46 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
Realty Income │ 2021 Proxy Statement 47
|
Executive Compensation
|
(1)
|
Total weighted payout prior to individual performance was 70% .
|
(2)
|
AFFO per share is defined as Funds from Operations adjusted for unique revenue and expense items, which we
believe are not as pertinent to the measurement of our ongoing operating performance, and is consistent with the presentation of AFFO in our public SEC filings. Please refer to Appendix A on page 81 for a
reconciliation of AFFO to net income.
|
(3)
|
Performance in excess of maximum goals was capped at 200% of target for that measure.
|
✓
|
At the beginning of 2020, our Compensation Committee worked with the
CEO to formulate his individual performance objectives for the year and reviewed with the CEO the performance objectives for the other named executive officers. Through this process, the individual performance objectives for our CEO and the other named executive
officers are preset for the year. Performance objectives are defined and measurable, and the Compensation Committee assesses progress against the objectives throughout the year.
|
48 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
✓
|
In November 2020, the Compensation Committee reviewed each named
executive officer’s individual performance objectives.
|
✓
|
The CEO evaluated each named executive officer’s performance, other
than his own, and recommended to the Compensation Committee the percentages that should be earned under the individual performance component.
|
✓
|
The Compensation Committee engaged in a discussion with the CEO
regarding his recommendations and his assessments and made the final determination regarding this metric.
|
✓
|
The Compensation Committee engaged in a review of the CEO’s
performance as it relates to the company’s performance, as well as the state of our industry and market competitive practices, in determining the percentage that the CEO earned under his individual performance component.
|
Sumit Roy - 200%
Mr. Roy actively engaged with stockholders and other constituencies to
communicate our results and advanced the strategic vision that included an agile response to the global pandemic, continuing to build an international presence, $4.1 billion raised in capital, including our debut Sterling denominated
unsecured bond issuance and an all-time low coupon rate in the REIT sector for 5-year and 12-year unsecured USD note issuances. Additionally, we had an active year on the acquisitions front, investing $2.3 billion in real estate,
alongside another year of strong portfolio occupancy despite the challenges with the COVID-19 pandemic, particularly with our theaters and health clubs. Under Mr. Roy’s leadership, management thoughtfully managed the balance sheet,
maintaining low leverage to effectively deal with the pandemic and position the company to continue to grow the dividend and earnings going forward. Mr. Roy was essential to our success via the following initiatives: (1) continued talent
development through ongoing leadership development, (2) the cultivation of an inclusive culture, supported by several open dialogue sessions with African American employees and small group meetings with our broader employee groups, and
(3) continued employee engagement surveys, which yielded more positive results than last year. Mr. Roy continues to advocate for our newly formed Sustainability Department, where we participated in several reporting platforms that will
culminate in the release of our inaugural Sustainability Report. Additionally, we were added to the S&P 500 Dividend Aristocrats index in 2020, and became one of only three REITs recognized as having increased dividends for over 25
consecutive years. The Compensation Committee determined that his performance well exceeded his objectives.
|
Michael R. Pfeiffer - 185%
Mr. Pfeiffer’s objectives focused on strategy, leadership and operations. In
the area of strategy, Mr. Pfeiffer continued his focus on international growth, optimizing our legal entity structure and creating diligence processes to mitigate potential risks. During 2020, Mr. Pfeiffer championed the Sustainability
Department through broadening the depth, structure and rigor relating to ESG topics, including preparing for our initial Sustainability Report. During the year, the technology committee continued bringing focus and discipline to
integration of technology platforms aimed at increasing efficiencies. In leadership, Mr. Pfeiffer positively promoted continued development of key employees within the legal, technology and internal audit areas and other employees within
the organization. He developed an action plan to improve employee engagement between departments. He successfully provided oversight and legal expertise for the $2.3 billion of acquisitions closed during the year and approximately
$4.1 billion of capital raised. He also continued to enhance the company’s risk management oversight. Based on the foregoing, the Compensation Committee determined that his performance exceeded his objectives.
|
Neil M. Abraham - 190%
Mr. Abraham focused on several key initiatives in 2020, most notably
improving employee engagement, growing the company’s international platform, collaboratively creating the company’s predictive analytics platform, and supporting the development of DE&I and ESG initiatives. His team’s collective
action plan to improve employee engagement through communication, transparency, and commitment to individual and joint success resulted in engagement scores that the team is very proud of. This engagement also manifested itself in the
team’s dedication to the company’s success during the throes of the pandemic as it shifted gears to
|
Realty Income │ 2021 Proxy Statement 49
|
Executive Compensation
|
support efforts to engage with clients and understand their financials in
real-time, thereby supporting the company’s rent and financial forecasts. In parallel, Mr. Abraham’s team worked closely with the Acquisitions and Asset Management & Real Estate Operations teams to design an “optimal portfolio” for
the company, reflecting lessons learned during the pandemic. This was partly underpinned by the company’s new predictive analytics capability, which leverages machine learning and “big data” to provide risk analytics and asset level
insights. These insights helped inform and accelerate the company’s investment activity during the year. This includes the investments made by the international platform in the U.K., where the team deployed almost $1 billion in its first
full year and recruited a senior leader in anticipation of further European growth. The Compensation Committee determined that his performance exceeded his objectives.
|
Mark E. Hagan - 195%
Mr. Hagan successfully executed our investment strategy in 2020, driving the
acquisition of approximately $2.3 billion of high-quality real estate properties at attractive yields, while remaining selective and disciplined with our investment strategy. This level of property acquisitions, the second highest in the
company’s history when excluding mergers & acquisitions, was achieved despite the challenges presented by the COVID-19 pandemic. At the onset of the pandemic, Mr. Hagan immediately pivoted our acquisition focus and resources from
growing the investment pipeline to assisting with other key cross-departmental initiatives, such as client outreach, rent collection and asset optimization, while simultaneously keeping the team actively engaged in maintaining our
investment sourcing channels. This balance proved to be instrumental in enabling us to rapidly shift back to growth mode as soon as it became prudent to do so, quickly rebuild the investment pipeline, and complete approximately
$1.7 billion of property acquisitions in the second half of the year. Mr. Hagan also played a key role in our initiative to review our investment strategy and optimal portfolio in light of the pandemic, and he successfully aligned our
property acquisitions with such strategy, including increasing our investment in high-quality industrial properties. Mr. Hagan’s other key objectives included employee engagement and leadership/talent development. Mr. Hagan furthered
employee engagement by implementing an action plan that focused on communication, connectivity, collaboration, inclusion, and a healthy work life balance; all of which took on greater importance while working remotely. As a result of
these efforts, Mr. Hagan achieved stronger results in our 2020 Employee Engagement Survey than the already successful results he attained in the 2019 survey. The Compensation Committee determined that his performance exceeded his
objectives.
|
50 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
|
|
| |
INCENTIVE OPPORTUNITY
|
| |
EARNED INCENTIVE COMPENSATION
|
| |||||||||
|
NAMED
EXECUTIVE
OFFICER
|
| |
TARGET
ANNUAL
INCENTIVE(1)
|
| |
MAXIMUM
ANNUAL
INCENTIVE(1)
|
| |
PERCENTAGE
OF TARGET
EARNED(2)
|
| |
PERCENTAGE
OF MAXIMUM
EARNED(2)
|
| |
ACTUAL 2020
INCENTIVE
EARNED
|
|
|
Sumit Roy
|
| |
$1,600,000
|
| |
$3,200,000
|
| |
108.9%
|
| |
54.4%
|
| |
$1,742,222
|
|
|
Michael R. Pfeiffer
|
| |
517,000
|
| |
1,034,000
|
| |
104.4%
|
| |
52.2%
|
| |
539,691
|
|
|
Neil M. Abraham
|
| |
427,000
|
| |
854,000
|
| |
105.9%
|
| |
52.9%
|
| |
452,146
|
|
|
Mark E. Hagan
|
| |
425,000
|
| |
850,000
|
| |
107.4%
|
| |
53.7%
|
| |
456,403
|
|
(1)
|
The maximum annual incentive is equal to 200% of target, and threshold annual incentive is equal to 50% of
target. No compensation is awarded for below-threshold performance.
|
(2)
|
Captures the weighted average percentage achieved based on the company performance criteria and the
individual performance criteria.
|
Relative TSR Performance – Weighted 70%
Net Debt-to-Adjusted EBITDAre Ratio – Weighted 15%
Dividend per Share Growth Rate – Weighted 15%
|
✓
|
Long-term performance shares were awarded in February 2020 and will be
earned based on our performance over the three-year period from January 2020 to December 2022.
|
✓
|
No compensation is awarded for below-threshold performance and maximum
goals are capped at 200% of target.
|
✓
|
50% of the performance shares earned based on the achievement of the
performance goals during the 2020-2022 performance period will vest on January 1, 2023, and the remaining 50% will vest on January 1, 2024, subject to continued service with the company. Performance shares not earned as a result of the failure to achieve the
applicable performance goals will be forfeited.
|
✓
|
The performance shares provide for a cash payment following vesting
equal to the aggregate cash dividends that would have been paid on the total number of performance shares earned, if any, as if the shares had been outstanding from January 1, 2020 through the date on which the shares are issued.
|
Realty Income │ 2021 Proxy Statement 51
|
Executive Compensation
|
(1)
|
The maximum number of performance shares earned is equal to 200% of target, and threshold annual incentive
is equal to 50% of target, with linear interpolation between threshold and maximum. No shares are earned for below-threshold performance.
|
(2)
|
TSR is calculated by comparing the trailing 20-trading-day average stock price at the end of the performance
period, assuming contemporaneous reinvestment of dividends, to the closing stock price on December 31, 2020.
|
(3)
|
The National Association of Real Estate Investment Trust (Nareit) came to the conclusion that a
Nareit-defined EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDAre) would provide investors with a consistent measure to help make investment decisions among REITs. Our definition of “Adjusted EBITDAre” is
generally consistent with the Nareit definition, other than our adjustment to remove foreign currency and derivative gains and losses, as described below (which is consistent with our previous calculations of “Adjusted EBITDAre”). We
define Adjusted EBITDAre, a non-GAAP financial measure, for the most recent quarter, as earnings (net income) before (i) interest expense, including non-cash loss (gain) on swaps, (ii) income and franchise taxes, (iii) real estate
depreciation and amortization, (iv) provisions for impairment, (v) gain on sales of real estate, and (vi) foreign currency and derivative gains, net. Our Adjusted EBITDAre may not be comparable to Adjusted EBITDAre reported by other
companies or as defined by Nareit, and other companies may interpret or define Adjusted EBITDAre differently than we do. Our ratio of net debt-to-Adjusted EBITDAre, which is used by management as a measure of leverage, is calculated as
total debt per the consolidated balance sheet debt, less cash and cash equivalents, divided by annualized quarterly Adjusted EBITDAre.
|
52 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
Realty Income │ 2021 Proxy Statement 53
|
Executive Compensation
|
|
NAMED EXECUTIVE OFFICER
|
| |
PERFORMANCE SHARE
TARGET DOLLAR VALUE
|
| |
PERFORMANCE SHARES
GRANTED AT TARGET(1)
|
|
|
Sumit Roy
|
| |
$3,750,000
|
| |
46,394
|
|
|
Michael R. Pfeiffer
|
| |
838,500
|
| |
10,374
|
|
|
Neil M. Abraham
|
| |
861,000
|
| |
10,652
|
|
|
Mark E. Hagan
|
| |
783,750
|
| |
9,696
|
|
(1)
|
The number of performance shares granted at target value reflect the grant date fair value of $83.37 per
share (excluding the dividend equivalent rights), using a multifactor Monte Carlo simulation model for the market condition associated with the TSR performance goal, valued at $59.73 per share, plus $23.64 per share for the two
performance conditions of net debt-to-Adjusted EBITDAre ratio and dividend growth rate.
|
|
NAMED EXECUTIVE OFFICER
|
| |
RESTRICTED SHARE
DOLLAR VALUE
|
| |
TIME-BASED
RESTRICTED
SHARES GRANTED(1)
|
|
|
Sumit Roy
|
| |
$1,250,000
|
| |
20,240
|
|
|
Michael R. Pfeiffer(2)
|
| |
279,500
|
| |
4,526
|
|
|
Neil M. Abraham
|
| |
287,000
|
| |
4,647
|
|
|
Mark E. Hagan
|
| |
261,250
|
| |
4,230
|
|
(1)
|
Time-based restricted shares reflect the actual number of shares that were granted by the Compensation
Committee on February 17, 2021 for all NEOs. The number of time-based restricted shares was calculated by dividing the dollar value authorized by the Compensation Committee by the closing price per share of our common stock on the date of
grant, February 17, 2021, of $61.76, and rounded to the nearest whole number.
|
(2)
|
Given that Mr. Pfeiffer is retirement eligible prior to the final vesting date of shares granted, he was
granted restricted share units (RSUs) instead of restricted shares in order to preserve the deferral of his income taxation until the issuance of the shares to him upon vesting. Mr. Pfeiffer’s restricted stock unit awards fully vest upon
his retirement.
|
54 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
|
PERFORMANCE GOALS
|
| |
WEIGHTING
|
| |
THRESHOLD
50%
|
| |
TARGET
100%
|
| |
MAXIMUM
200%
|
| |
2020
ACTUAL
|
| |
%
EARNED
|
|
|
TSR ranking relative to
MSCI US REIT Index
|
| |
45%
|
| |
35th
Percentile
|
| |
55th
Percentile
|
| |
80th Percentile
(or greater)
|
| |
69th
Percentile
|
| |
154.0%
|
|
|
TSR ranking relative to
J.P. Morgan Net Lease
Peer Group
|
| |
26%
|
| |
35th
Percentile
|
| |
55th
Percentile
|
| |
80th Percentile
(or greater)
|
| |
33rd
Percentile
|
| |
0.0%
|
|
|
Debt-to- Adjusted
EBITDAre Ratio(1)
|
| |
13%
|
| |
6.3x
|
| |
5.9x
|
| |
5.5x
(or less)
|
| |
5.9x
|
| |
100%
|
|
|
Dividend Per Share Growth
Rate
|
| |
16%
|
| |
2%
|
| |
6%
|
| |
12%
|
| |
10.6%
|
| |
176.2%
|
|
|
Total Weighted Payout
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
111.1%
|
|
(1)
|
For the 2018 LTIP performance share awards, cash and cash equivalents are not excluded in the calculation of
the Debt-to-Adjusted EBITDAre ratio
|
|
NAMED EXECUTIVE OFFICER
|
| |
TARGET PERFORMANCE
SHARES GRANTED
|
| |
PERFORMANCE
SHARES EARNED
|
|
|
Sumit Roy
|
| |
39,995
|
| |
44,440
|
|
|
Michael R. Pfeiffer
|
| |
14,685
|
| |
16,317
|
|
|
Neil M. Abraham
|
| |
15,203
|
| |
16,893
|
|
|
Mark E. Hagan
|
| |
12,869
|
| |
14,299
|
|
Realty Income │ 2021 Proxy Statement 55
|
Executive Compensation
|
|
EXECUTIVE OFFICER
|
| |
2021 BASE
SALARY
|
| |
2021 TARGET
STIP(1)
|
| |
2021 TARGET
LTIP(2)
|
| |
2021 TOTAL TARGET
COMPENSATION
|
|
|
Sumit Roy
|
| |
$950,000
|
| |
$1,750,000
|
| |
$5,550,000
|
| |
$8,250,000
|
|
|
Christie B. Kelly
|
| |
600,000
|
| |
600,000
|
| |
1,800,000
|
| |
3,000,000
|
|
|
Neil M. Abraham
|
| |
500,000
|
| |
440,000
|
| |
1,410,000
|
| |
2,350,000
|
|
|
Mark E. Hagan
|
| |
475,000
|
| |
445,000
|
| |
1,380,000
|
| |
2,300,000
|
|
(1)
|
The 2021 STIP will be awarded entirely in cash.
|
(2)
|
The 2021 LTIP consists of awards of performance shares and time-vesting restricted stock or RSUs.
Approximately 75% of the NEOs’ 2021 LTIP opportunity is in the form of performance shares and 25% is in the form of time-vesting restricted stock or RSUs.
|
|
PERFORMANCE GOALS
|
| |
WEIGHTING
|
| |
THRESHOLD
50%
|
| |
TARGET
100%
|
| |
MAXIMUM
200%
|
|
|
TSR ranking relative to
MSCI US REIT Index
|
| |
70%
|
| |
35th Percentile
|
| |
55th Percentile
|
| |
80th Percentile
(or greater)
|
|
|
Dividend per share Growth Rate
|
| |
15%
|
| |
2.0%
|
| |
4.0%
|
| |
6.0%
|
|
|
Net Debt-to-Pro Forma Adjusted
EBITDAre Ratio
|
| |
15%
|
| |
6.1x
|
| |
5.75x
|
| |
5.5x
(or less)
|
|
56 Realty Income │ 2021 Proxy Statement
|
Executive Compensation
|
✓
|
Qualifying Termination
|
✓
|
Change in Control Termination
|
✓
|
Death
|
✓
|
Disability
|
Realty Income │ 2021 Proxy Statement 57
|
Executive Compensation
|
|
NAMED EXECUTIVE OFFICER
|
| |
GUIDELINE
|
| |
MINIMUM STOCK
OWNERSHIP
REQUIREMENT(1)
|
| |
STOCK OWNERSHIP
AS OF
DECEMBER 31, 2020(2)
|
|
|
Sumit Roy
|
| |
5x base salary
|
| |
74,205
|
| |
132,937
|
|
|
Michael R. Pfeiffer
|
| |
3x base salary
|
| |
26,448
|
| |
36,901
|
|
|
Neil M. Abraham
|
| |
3x base salary
|
| |
18,817
|
| |
33,131
|
|
|
Mark E. Hagan
|
| |
3x base salary
|
| |
22,619
|
| |
10,721
|
|
(1)
|
The requirement for each NEO was determined first in dollars as a multiple of the executive’s annual base
salary as of the date he became subject to this requirement, and then by converting such amount to a fixed number of shares based on the company’s average closing common stock price per share for the 60 trading days prior to such date. An
executive’s stock ownership requirement will only be re-established upon a change to a different executive position.
|
(2)
|
As of December 31, 2020, all of our named executive officers satisfied their ownership requirements, except
for Mr. Hagan, who became subject to the requirements on May 21, 2018 and has until May 21, 2023 to achieve the requirement.
|
58 Realty Income │ 2021 Proxy Statement
|
|
Realty Income │ 2021 Proxy Statement 59
|
|
NAME AND PRINCIPAL
POSITION IN 2020
|
| |
YEAR
|
| |
SALARY(1)
|
| |
BONUS
|
| |
STOCK
AWARDS(2)(3)
|
| |
NON-EQUITY
INCENTIVE PLAN
COMPENSATION(4)
|
| |
ALL OTHER
COMPENSATION(5)
|
| |
TOTAL
|
|
|
Sumit Roy
President, Chief Executive Officer
|
| |
2020
|
| |
$900,000
|
| |
$ -
|
| |
$4,867,776
|
| |
$1,742,222
|
| |
$277,649
|
| |
$7,787,647
|
|
|
2019
|
| |
850,000
|
| |
-
|
| |
3,631,122
|
| |
2,863,438
|
| |
169,801
|
| |
7,514,361
|
| |||
|
2018
|
| |
613,288
|
| |
-
|
| |
4,351,917
|
| |
1,892,799
|
| |
152,015
|
| |
7,010,019
|
| |||
|
Michael R. Pfeiffer
Executive Vice President, Chief Administrative Officer, General Counsel and Secretary
|
| |
2020
|
| |
515,000
|
| |
-
|
| |
1,137,861
|
| |
539,691
|
| |
137,163
|
| |
2,329,715
|
|
|
2019
|
| |
500,000
|
| |
-
|
| |
1,039,727
|
| |
977,900
|
| |
108,691
|
| |
2,626,318
|
| |||
|
2018
|
| |
450,000
|
| |
-
|
| |
879,062
|
| |
900,000
|
| |
117,518
|
| |
2,346,580
|
| |||
|
Neil M. Abraham
Executive Vice President, Chief Strategy Officer
|
| |
2020
|
| |
475,000
|
| |
-
|
| |
1,142,408
|
| |
452,146
|
| |
124,199
|
| |
2,193,753
|
|
|
2019
|
| |
410,000
|
| |
-
|
| |
988,353
|
| |
813,313
|
| |
45,010
|
| |
2,256,676
|
| |||
|
2018
|
| |
385,000
|
| |
-
|
| |
903,403
|
| |
635,250
|
| |
9,240
|
| |
1,932,893
|
| |||
|
Mark E. Hagan
Executive Vice President, Chief Investment Officer
|
| |
2020
|
| |
430,000
|
| |
-
|
| |
1,044,585
|
| |
456,403
|
| |
10,068
|
| |
1,941,056
|
|
|
2019
|
| |
410,000
|
| |
-
|
| |
909,664
|
| |
730,750
|
| |
9,918
|
| |
2,060,332
|
| |||
|
2018
|
| |
237,910
|
| |
-
|
| |
1,030,438
|
| |
606,375
|
| |
37,237
|
| |
1,911,960
|
| |||
|
Sean P. Nugent
Senior Vice President, Interim Principal Financial Officer and Treasurer
|
| |
2020
|
| |
225,000
|
| |
135,000
|
| |
145,000
|
| |
-
|
| |
6,563
|
| |
511,563
|
|
|
Paul M. Meurer
Executive Vice President, Chief Financial Officer and Treasurer
|
| |
2020
|
| |
137,500
|
| |
-
|
| |
357,750
|
| |
-
|
| |
2,253,898
|
| |
2,749,148
|
|
|
2019
|
| |
550,000
|
| |
-
|
| |
1,408,079
|
| |
1,087,125
|
| |
133,773
|
| |
3,178,977
|
| |||
|
2018
|
| |
525,000
|
| |
-
|
| |
1,333,261
|
| |
1,082,813
|
| |
137,349
|
| |
3,078,423
|
|
(1)
|
The amounts shown include amounts earned, but a portion of such amount may be deferred, at the election of
the officers under our 401(k) retirement plan.
|
(2)
|
With the exception of Mr. Nugent, the amounts shown represent the grant date fair value of restricted stock
grants on February 13, 2020 under our annual time-based restricted stock program and the grant date fair value of performance share grants on February 13, 2020, in each case, calculated in accordance with Accounting Standards Codification
(ASC) Topic 718. Mr. Meurer was not granted any performance shares on February 13, 2020. Fair value of restricted stock grants is calculated by multiplying the applicable shares by the closing market price of our common stock on the date
of grant. Fair value for performance shares was estimated in accordance with ASC Topic 718 on the date of grant at $83.37 per share, using a multifactor Monte Carlo simulation model, based on market conditions associated with a TSR
performance goal, valued at $59.73 per share, plus $23.64 per share for the two performance conditions of debt-to-Adjusted EBITDAre ratio and dividend growth rate, which reflect the probable
outcome of such performance conditions. This column excludes the value of $7.30 per share determined for the Dividend Equivalent Rights (DERs), associated with the market conditions. The Monte Carlo inputs for the 2020 performance shares
grant date fair value include: (i) an expected life of 2.9 years, based on the remaining term as of the grant date; (ii) a risk-free rate of 1.4%, based on the yield on zero-coupon U.S. Treasury securities with a term equal to the
expected life of the performance shares; (iii) a dividend yield of 3.9% for Realty Income, based on historical and current yields of the company; and (iv) a volatility of 17% for Realty Income, based on the historical volatility of the
company’s common stock. The maximum grant date fair values of the performance shares, assuming maximum performance of all conditions and employing the $83.37 per share valuation for the February 13, 2020 grants are as follows:
|
|
NAMED EXECUTIVE OFFICER
|
| |
GRANT DATE
FAIR VALUE
|
| |
MAXIMUM
VALUE
|
|
|
Sumit Roy
|
| |
$3,867,776
|
| |
$7,735,553
|
|
|
Michael R. Pfeiffer
|
| |
864,861
|
| |
1,729,722
|
|
|
Neil M. Abraham
|
| |
888,033
|
| |
1,776,067
|
|
|
Mark E. Hagan
|
| |
808,335
|
| |
1,616,670
|
|
(3)
|
The stock awards shown reflect the grants of restricted stock during each of the fiscal years presented.
Because we believe that the information is relevant to our investors, we have chosen to present supplemental disclosure regarding the grant of restricted stock on
|
60 Realty Income │ 2021 Proxy Statement
|
Compensation Tables
|
(4)
|
This column represents the cash incentive award earned in the year indicated pursuant to our STIP, which is
paid the following year. The amounts earned under the 2020, 2019 and 2018 STIP were paid entirely in the form of cash. See “Compensation Discussion and Analysis—Short-Term Incentive Program” on page 46 for more
information.
|
(5)
|
The following table sets forth matching contributions by us to the named executive officers’ 401(k) savings
account, the cost of term life insurance paid by us in 2020, and dividends paid on earned performance shares.
|
|
NAMED
EXECUTIVE
OFFICER
|
| |
401(k) MATCHING
CONTRIBUTIONS
|
| |
GROUP TERM LIFE
INSURANCE PAYMENTS
|
| |
DIVIDENDS ON EARNED
PERFORMANCE SHARES
|
| |
OTHER (a)
|
|
|
Sumit Roy
|
| |
$8,550
|
| |
$1,518
|
| |
$267,581
|
| |
$ -
|
|
|
Michael R. Pfeiffer
|
| |
8,550
|
| |
4,356
|
| |
124,257
|
| |
-
|
|
|
Neil M. Abraham
|
| |
8,550
|
| |
1,518
|
| |
114,131
|
| |
-
|
|
|
Mark E. Hagan
|
| |
8,550
|
| |
1,518
|
| |
-
|
| |
-
|
|
|
Sean P. Nugent
|
| |
5,573
|
| |
990
|
| |
-
|
| |
-
|
|
|
Paul M. Meurer
|
| |
8,550
|
| |
710
|
| |
557,318
|
| |
1,687,320
|
|
(a)
|
“Other” for Mr. Meurer includes his one-time severance payment of $1,591,393, the value of accrued and
unused PTO in the amount of $8,990, continued health and welfare benefits for twelve months in the amount of $29,092, and attorney fees paid in connection with his departure from the company in the amount of $57,845. For further
information on Mr. Meurer’s separation from the company, see “Termination and Change in Control Scenario Table – Meurer Severance Agreement” on page 67.
|
Realty Income │ 2021 Proxy Statement 61
|
Compensation Tables
|
|
NEO
|
| |
GRANT
DATE
|
| |
ESTIMATED FUTURE PAYOUTS
UNDER NON-EQUITY INCENTIVE
PLAN AWARDS(1)
|
| |
ESTIMATED FUTURE PAYOUTS
UNDER EQUITY INCENTIVE
PLAN AWARDS(2)
|
| |
ALL OTHER STOCK
AWARDS: NUMBER
OF SHARES OF
STOCK OR UNITS(3)
|
| |
GRANT DATE
FAIR VALUE
OF STOCK
AND OPTION
AWARDS(4)(5)
|
| ||||||||||||
|
THRESHOLD
|
| |
TARGET
|
| |
MAXIMUM
|
| |
THRESHOLD
|
| |
TARGET
|
| |
MAXIMUM
|
| ||||||||||||
|
Sumit Roy
|
| |
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
12,692
|
| |
$1,000,000
|
|
|
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
23,197
|
| |
46,394
|
| |
92,788
|
| |
—
|
| |
3,867,776
|
| |||
|
|
| |
$800,000
|
| |
$1,600,000
|
| |
$3,200,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |||
|
Michael R. Pfeiffer
|
| |
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,465
|
| |
273,000
|
|
|
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
5,187
|
| |
10,374
|
| |
20,748
|
| |
—
|
| |
864,861
|
| |||
|
|
| |
258,500
|
| |
517,000
|
| |
1,034,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |||
|
Neil M. Abraham
|
| |
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,229
|
| |
254,375
|
|
|
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
5,326
|
| |
10,652
|
| |
21,304
|
| |
—
|
| |
888,033
|
| |||
|
|
| |
213,500
|
| |
427,000
|
| |
854,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |||
|
Mark E. Hagan
|
| |
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,998
|
| |
236,250
|
|
|
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
4,848
|
| |
9,696
|
| |
19,392
|
| |
—
|
| |
808,335
|
| |||
|
|
| |
212,500
|
| |
425,000
|
| |
850,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |||
|
Sean P. Nugent
|
| |
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,840
|
| |
145,000
|
|
|
Paul M. Meurer
|
| |
2/13/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
4,541
|
| |
357,750
|
|
(1)
|
These columns represent cash incentive amounts that could have been paid to the named executive officers
under the STIP for 2020 performance. These targets were established by the Compensation Committee on February 13, 2020. Total amounts earned under the STIP are paid entirely in the form of cash. The STIP is described in more detail in the
“Compensation Discussion and Analysis—Short-Term Incentive Program” on page 46. The actual cash paid in February 2021 for performance in 2020 are listed under 2020 in the “Summary Compensation Table” on page 60 as “Non-Equity Incentive Plan Compensation.”
|
(2)
|
Amounts shown as granted on February 13, 2020 reflect the Threshold, Target, and Maximum awards for the
2020-2022 performance shares granted under the LTIP and our 2012 Incentive Award Plan, which are described in detail in the “Compensation Discussion and Analysis—Long-Term Incentive Program” beginning on page 51.
Threshold reflects 50% of the target performance shares granted, and maximum reflects 200% of the target performance shares granted. Each performance share earned vests 50% at the end of the applicable performance period and 50% one year
later.
|
(3)
|
The February 13, 2020 stock awards shown in the first row of this column reflect the annual grants of
time-based restricted stock made in February 2020, at a price of $78.79 per share, based on 2019 performance. Because we believe that the information is relevant to our investors, we have chosen to present supplemental disclosure
regarding the grants of restricted stock on February 17, 2021, representing the annual grants of time-based restricted stock intended as 2020 compensation and granted in February 2021. Thus, the following chart reflects all grants made as
compensation for 2020 performance:
|
|
NAMED EXECUTIVE
OFFICER
|
| |
TIME-BASED
RESTRICTED
SHARES GRANTED
UNDER 2020 LTIP(a)
|
| |
PERFORMANCE
SHARES GRANTED
UNDER 2020 LTIP
|
| |
TOTAL STOCK AWARD
COMPENSATION
FOR 2020 PERFORMANCE
|
| |
TOTAL 2020 STOCK
AWARD COMPENSATION
PRESENTED IN SUMMARY
COMPENSATION TABLE
|
|
|
Sumit Roy
|
| |
$1,250,000
|
| |
$3,867,776
|
| |
$5,117,776
|
| |
$4,867,776
|
|
|
Michael R. Pfeiffer(b)
|
| |
279,500
|
| |
864,861
|
| |
1,144,361
|
| |
1,137,861
|
|
|
Neil M. Abraham
|
| |
287,000
|
| |
888,033
|
| |
1,175,033
|
| |
1,142,408
|
|
|
Mark E. Hagan
|
| |
261,250
|
| |
808,335
|
| |
1,069,585
|
| |
1,044,585
|
|
(a)
|
The grant date fair value of restricted stock has been calculated by multiplying the closing market price of
our common stock at February 17, 2021 of $61.76 by the number of shares of restricted stock awarded in February 2021 for 2020 performance, as prescribed under ASC Topic 718.
|
(b)
|
Given that Mr. Pfeiffer is retirement eligible prior to the final vesting date of shares granted, he was
granted RSUs instead of restricted shares in order to preserve the deferral of his income taxation until the issuance of the shares to him upon vesting. In January 2021, Mr. Pfeiffer announced his planned retirement on or around June 30,
2021. Mr. Pfeiffer’s unvested restricted stock unit awards fully vest upon his retirement.
|
(4)
|
For restricted stock granted on February 13, 2020, the grant date fair value has been calculated by
multiplying the closing market price of our common stock on the grant date of $78.79 per share by the number of restricted stock awards. Fair value for performance shares granted on February 13, 2020 was estimated on the date of grant at
$83.37 per share, using a multifactor Monte Carlo
|
62 Realty Income │ 2021 Proxy Statement
|
Compensation Tables
|
(5)
|
The Compensation Committee grants restricted stock awards in accordance with the provisions of our 2012
Incentive Award Plan. The vesting schedule for restricted stock granted is 25% per year over a four-year period, commencing on January 1 of the year following the grant, subject to acceleration upon certain events, such as retirement, and
qualifying terminations.
|
|
|
| |
STOCK AWARDS
|
| |||||||||
|
NAMED
EXECUTIVE OFFICER
|
| |
NUMBER OF SHARES OR
UNITS OF STOCK THAT
HAVE NOT VESTED AS OF
DECEMBER 31, 2020(1)
|
| |
MARKET VALUE OF
SHARES OR UNITS
OF STOCK THAT
HAVE NOT YET
VESTED(2)
|
| |
EQUITY INCENTIVE
PLAN AWARDS:
NUMBER OF
UNEARNED SHARES
THAT HAVE NOT
VESTED(3)
|
| |
EQUITY INCENTIVE
PLAN AWARDS:
MARKET VALUE OF
UNEARNED SHARES
THAT HAVE NOT
VESTED(2)(3)
|
|
|
Sumit Roy(4)
|
| |
89,112
|
| |
$5,540,093
|
| |
188,075
|
| |
$11,692,623
|
|
|
Michael R. Pfeiffer(5)
|
| |
17,991
|
| |
1,118,500
|
| |
50,946
|
| |
3,167,313
|
|
|
Neil M. Abraham(6)
|
| |
18,196
|
| |
1,131,245
|
| |
51,131
|
| |
3,178,814
|
|
|
Mark E. Hagan(7)
|
| |
8,691
|
| |
540,319
|
| |
45,704
|
| |
2,841,418
|
|
|
Sean P. Nugent(8)
|
| |
5,372
|
| |
333,977
|
| |
—
|
| |
—
|
|
|
Paul M. Meurer
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
(1)
|
The amounts in this column represent the portion of restricted stock awards and units that were granted from
1/14/16 through 2/13/20 to the named executive officers and that were unvested at 12/31/20, and the unvested performance shares and units earned for the 2017-2019 performance period that remained subject to service vesting conditions. In February 2020, the Compensation Committee certified the achievement for the 2017-2019 performance shares that were granted in February 2017 based on our performance relative to the
metrics during the three-year performance period.
|
(2)
|
Market value has been calculated by multiplying the closing market price of our common stock at 12/31/20 of
$62.17 per share by the outstanding shares of restricted stock awards for each named executive officer.
|
(3)
|
This column includes unvested performance shares and units earned for the 2018-2020 performance period based
on actual performance. In February 2021, the Compensation Committee certified the achievement for the 2018-2020 performance shares that were granted in February 2018, based on our performance relative to the metrics during the three-year
performance period. This column also includes the performance shares as if they were earned at the target level for the 2019-2021 performance period, since company performance is currently between threshold and target levels for this
performance period. The performance shares for the 2020-2022 performance period represent shares earned at the maximum level since company performance is between target and maximum levels for this performance period. The number of
performance shares earned for these open performance periods will be determined at the end of each performance period, and will vest in 50% increments on the first and second January after the three-year performance periods.
|
(4)
|
The restricted stock awards for Mr. Roy vest according to the following schedule: 18,241 shares vested on
1/1/21, 17,376 shares vest on 10/16/21, 7,384 shares vest on 1/1/22, 17,376 shares vest on 10/16/22, 5,022 shares vest on 1/1/23, and 3,173 shares vest on 1/1/24. The 20,540 unvested performance shares earned for the 2017-2019 performance
period vested on 1/1/21.
|
(5)
|
The restricted stock and restricted stock unit awards for Mr. Pfeiffer vest according to the following
schedule: 5,109 shares vested on 1/1/21, 2,401 shares vest on 1/1/22, 1,456 shares vest on 1/1/23, and 809 shares vest on 1/1/24. The 8,216 unvested performance shares earned for the 2017-2019 performance period vested on 1/1/21. In
January 2021, Mr. Pfeiffer announced his planned retirement on or around June 30, 2021. Mr. Pfeiffer’s unvested restricted stock and restricted stock unit awards fully vest upon his retirement.
|
(6)
|
The restricted stock awards for Mr. Abraham vest according to the following schedule: 5,208 shares vested on
1/1/21, 2,455 shares vest on 1/1/22, 1,510 shares vest on 1/1/23 and 807 shares vest on 1/1/24. The 8,216 unvested performance shares earned for the 2016-2018 performance period vested on 1/1/21.
|
(7)
|
The restricted stock awards for Mr. Hagan vest according to the following schedule: 1,373 shares vested on
1/1/21, 1,912 shares vest on 5/21/21, 1,373 shares vest on 1/1/22, 1,912 shares vest on 5/21/22, 1,372 shares vest on 1/1/23 and 749 shares vest on 1/1/24.
|
(8)
|
The restricted stock awards for Mr. Nugent vest according to the following schedule: 2,164 shares vested on
1/1/21, 1,839 shares vest on 1/1/22, 909 shares vest on 1/1/23 and 460 shares vest on 1/1/24.
|
Realty Income │ 2021 Proxy Statement 63
|
Compensation Tables
|
|
|
| |
STOCK AWARDS
|
| |||
|
NAMED EXECUTIVE OFFICER
|
| |
NUMBER OF SHARES
ACQUIRED ON VESTING(1)(2)
|
| |
VALUE REALIZED
ON VESTING(3)
|
|
|
Sumit Roy
|
| |
51,337
|
| |
$3,865,290
|
|
|
Michael R. Pfeiffer
|
| |
20,522
|
| |
1,545,163
|
|
|
Neil M. Abraham
|
| |
17,991
|
| |
1,358,806
|
|
|
Mark E. Hagan
|
| |
2,534
|
| |
144,744
|
|
|
Sean P. Nugent
|
| |
2,914
|
| |
206,297
|
|
|
Paul M. Meurer
|
| |
107,590
|
| |
6,070,749
|
|
(1)
|
For Messrs. Roy, Pfeiffer and Abraham, this includes the portion of their stock awards that vested on
January 1, 2020, February 13, 2020, and November 10, 2020. For Mr. Hagan, this includes the portion of his stock awards that vested on January 1, 2020 and May 21, 2020. For Mr. Meurer, this includes 15,819 stock awards that vested on
January 1, 2020 in accordance with the normal vesting schedule of the respective award agreements, 11,417 shares that vested on February 13, 2020 immediately upon the Compensation Committee's certification for the achievement of the
2017-2020 performance shares that were granted February 2017 and 80,354 that vested on March 31, 2020 in accordance with the terms of his Severance Agreement, as more fully described on page 68. For Mr. Nugent, this
includes 1,992 stock awards that vested on January 1, 2020 and 922 stock awards that vested on November 10, 2020.
|
(2)
|
The number of shares acquired on vesting includes shares withheld to pay federal and state income taxes.
|
(3)
|
This column represents the value realized on vesting as calculated by multiplying the closing market price
of our common stock on the applicable vesting dates by the number of shares that vested.
|
64 Realty Income │ 2021 Proxy Statement
|
Compensation Tables
|
|
Qualifying Termination Not in Connection with a Change in Control
|
| |
|
•
|
a severance payment equal to twenty-four months’ base salary
|
|
|
•
|
an amount equal to two times the average of the last three years’ cash bonus paid to Mr. Roy
|
|
|
•
|
any accrued but unpaid wages and accrued but unused vacation pay
|
|
|
•
|
continuation of medical insurance coverage, at our expense, for a period of eighteen months from
the date of termination or until he becomes covered under another group medical insurance plan, whichever occurs first
|
|
|
•
|
all unvested time-based restricted stock shall immediately vest, and outstanding performance shares
would be accelerated based on achievement of the performance goals through the termination date, pro-rated based on the amount of time the executive was employed during the performance period through the termination date
|
|
|
Qualifying Termination in Connection with a Change in Control
|
| |
|
•
|
a severance payment equal to thirty-six months’ base salary
|
|
|
•
|
an amount equal to three times the average of the last three years’ cash bonuses paid to Mr. Roy
|
|
|
•
|
any accrued but unpaid wages and accrued but unused vacation pay
|
|
|
•
|
continuation of medical insurance coverage, at our expense, for a period of eighteen months from
the date of termination or until Mr. Roy becomes covered under another group medical insurance plan, whichever occurs first
|
|
|
•
|
all unvested time-based restricted stock shall immediately vest, and outstanding performance shares
would be accelerated based on achievement of the performance goals through the change in control date, pro-rated based on the amount of time the executive was employed during the performance period through the change in control
|
|
|
Death or Disability
|
| |
|
•
|
accrued but unpaid wages and accrued but unused vacation pay, if any, as of the date of his death
or disability
|
|
|
•
|
if the executive dies or becomes disabled during the performance period, the executive will vest in
all of the target number of performance shares. If the executive dies or becomes disabled after the performance period, the executive will vest in the remaining unvested earned performance shares
|
|
|
•
|
in the case of death, the executives’ heirs will be entitled to life insurance benefits under our
group life insurance program and all shares of unvested time-based restricted stock held by the employee will immediately vest in full
|
|
|
•
|
in the case of disability, all shares of unvested time-based restricted stock will continue to vest
as scheduled
|
|
Realty Income │ 2021 Proxy Statement 65
|
Compensation Tables
|
|
Qualifying Termination Not in Connection with a Change in Control
|
| |
|
•
|
a severance payment equal to twelve months’ base salary
|
|
|
•
|
an amount equal to the average of the last three years’ cash bonus paid (or, with respect to an
executive who was eligible to earn an annual cash bonus for at least one, but fewer than three, of the fiscal years of the company immediately preceding the termination date, the average annual cash bonus earned by such executive for such
fiscal year(s))
|
|
|
•
|
any accrued but unpaid wages and accrued but unused vacation pay
|
|
|
•
|
continuation of medical insurance coverage, at our expense, for a period of twelve months from the
date of termination or until the named executive officer becomes covered under another group medical insurance plan, whichever occurs first
|
|
|
•
|
all unvested time-based restricted stock and restricted stock units shall immediately vest, and
outstanding performance shares would be accelerated based on achievement of the performance goals through the termination date, pro-rated based on the amount of time the executive was employed during the performance period through the
termination date
|
|
|
Qualifying Termination in Connection with a Change in Control
|
| |
|
•
|
a severance payment equal to twenty-four months’ base salary
|
|
|
•
|
an amount equal to two times the average of the last three years’ cash bonuses paid
|
|
|
•
|
any accrued but unpaid wages and accrued but unused vacation pay
|
|
|
•
|
continuation of medical insurance coverage, at our expense, for a period of eighteen months from
the date of termination or until the named executive officer becomes covered under another group medical insurance plan, whichever occurs first
|
|
|
•
|
all unvested time-based restricted stock and restricted stock units shall immediately vest, and
outstanding performance shares would be accelerated based on achievement of the performance goals through the change in control date, pro-rated based on the amount of time the executive was employed during the performance period through
the change in control
|
|
|
Death or Disability
|
| |
|
•
|
accrued but unpaid wages and accrued but unused vacation pay, if any, as of the date of his death
or disability
|
|
|
•
|
if the executive dies or becomes disabled during the performance period, the executive will vest in
all of the target number of performance shares. If the executive dies or becomes disabled after the performance period, the executive will vest in the remaining unvested earned performance shares
|
|
|
•
|
in the case of death, the executives’ heirs will be entitled to life insurance benefits under our
group life insurance program and all shares of unvested time-based restricted stock held by the employee will immediately vest in full
|
|
|
•
|
in the case of disability, all shares of unvested time-based restricted stock and restricted stock
units will continue to vest as scheduled
|
|
66 Realty Income │ 2021 Proxy Statement
|
Compensation Tables
|
Realty Income │ 2021 Proxy Statement 67
|
Compensation Tables
|
|
NEO AND
TRIGGER
|
| |
SEVERANCE
PAYMENTS(1)
|
| |
BONUS
PAYMENTS(2)
|
| |
MEDICAL
BENEFITS(3)
|
| |
VALUE OF
ACCELERATED
EQUITY
AWARDS(4)
|
| |
LIFE
INSURANCE
BENEFIT(5)
|
| |
TOTAL
|
| |||
|
Sumit Roy
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |||
|
Qualifying Termination
|
| |
$1,800,000
|
| |
$4,332,306
|
| |
$30,736
|
| |
$12,333,243
|
| |
$—
|
| |
$18,496,285
|
| |||
|
Change in Control Termination
|
| |
2,700,000
|
| |
6,498,459
|
| |
30,736
|
| |
12,333,243
|
| |
—
|
| |
$21,562,438
|
| |||
|
Change in Control
|
| |
—
|
| |
—
|
| |
—
|
| |
8,070,122
|
| |
—
|
| |
$8,070,122
|
| |||
|
Death
|
| |
—
|
| |
—
|
| |
—
|
| |
14,348,401
|
| |
600,000
|
| |
$14,948,401
|
| |||
|
Disability
|
| |
—
|
| |
—
|
| |
—
|
| |
14,348,401
|
| |
—
|
| |
$14,348,401
|
| |||
|
Michael R. Pfeiffer
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |||
|
Qualifying Termination
|
| |
515,000
|
| |
805,864
|
| |
16,756
|
| |
3,138,217
|
| |
—
|
| |
$4,475,837
|
| |||
|
Change in Control Termination
|
| |
1,030,000
|
| |
1,611,728
|
| |
25,134
|
| |
3,138,217
|
| |
—
|
| |
$5,805,079
|
| |||
|
Change in Control
|
| |
—
|
| |
—
|
| |
—
|
| |
2,530,506
|
| |
—
|
| |
$2,530,506
|
| |||
|
Death
|
| |
—
|
| |
—
|
| |
—
|
| |
3,640,862
|
| |
600,000
|
| |
$4,240,862
|
| |||
|
Disability
|
| |
—
|
| |
—
|
| |
—
|
| |
3,640,862
|
| |
—
|
| |
$3,640,862
|
| |||
|
Neil M. Abraham
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |||
|
Qualifying Termination
|
| |
475,000
|
| |
633,570
|
| |
20,490
|
| |
3,159,044
|
| |
—
|
| |
$4,288,104
|
| |||
|
Change in Control Termination
|
| |
950,000
|
| |
1,267,140
|
| |
30,736
|
| |
3,159,044
|
| |
—
|
| |
$5,406,920
|
| |||
|
Change in Control
|
| |
—
|
| |
—
|
| |
—
|
| |
2,538,588
|
| |
—
|
| |
$2,538,588
|
| |||
|
Death
|
| |
—
|
| |
—
|
| |
—
|
| |
3,647,825
|
| |
600,000
|
| |
$4,247,825
|
| |||
|
Disability
|
| |
—
|
| |
—
|
| |
—
|
| |
3,647,825
|
| |
—
|
| |
$3,647,825
|
| |||
|
Mark E. Hagan
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |||
|
Qualifying Termination
|
| |
430,000
|
| |
597,843
|
| |
20,490
|
| |
2,329,054
|
| |
—
|
| |
$3,377,387
|
| |||
|
Change in Control Termination
|
| |
860,000
|
| |
1,195,686
|
| |
30,736
|
| |
2,329,054
|
| |
—
|
| |
$4,415,476
|
| |||
|
Change in Control
|
| |
—
|
| |
—
|
| |
—
|
| |
1,788,735
|
| |
—
|
| |
$1,788,735
|
| |||
|
Death
|
| |
—
|
| |
—
|
| |
—
|
| |
2,778,937
|
| |
600,000
|
| |
$3,378,937
|
| |||
|
Disability
|
| |
—
|
| |
—
|
| |
—
|
| |
2,778,937
|
| |
—
|
| |
$2,778,937
|
|
(1)
|
For Mr. Roy, amount represents 24 months base salary in the case of a Qualifying Termination and 36 months
base salary in the case of a Change in Control Termination. For all named executive officers other than Mr. Roy, amount represents 12 months base salary in the case of a Qualifying Termination and 24 months base salary in the case of a
Change in Control Termination.
|
(2)
|
Amount represents the applicable scenario multiple of the average of annual bonuses paid based on
performance for 2020, 2019 and 2018 (includes amounts presented as non-equity incentive compensation awarded for 2020, 2019 and 2018 performance in the “Summary Compensation Table”).
|
(3)
|
For Mr. Roy, amount represents estimated continuation of group medical insurance coverage at our expense for
a period of 18 months whether such termination is a Qualifying Termination or a Change in Control Termination. For all named executive officers other than Mr. Roy, amount represents estimated continuation of group medical insurance
coverage at our expense for a period of 12 months in the case of a Qualifying Termination and for 18 months in the case of a Change in Control Termination.
|
(4)
|
Amount represents the aggregate value of the acceleration of vesting of the named executive officer’s
outstanding restricted stock and restricted stock units. For purposes of this calculation, each named executive officer’s total unvested restricted stock awards on December 31, 2020 are multiplied by our common stock closing price on
December 31, 2020 of $62.17 per share. For termination scenarios, other than death or disability, the amount also includes the estimated amount payable under the outstanding performance shares consistent with the valuation of these awards
set forth in the “Outstanding Equity Awards Table as of December 31, 2020” on page 63, which reflects unvested performance shares and units earned for the 2017-2019 and 2018-2020 performance periods based on actual
performance, performance shares as if they were earned at the target level for the 2019-2021 performance periods, since our performance is currently between threshold and target levels for this performance period. The performance shares
for the 2020-2022 performance period represent shares earned at the maximum level since our performance is between target and maximum levels for this performance period. The performance shares are pro-rated for the amount of time passed
under each outstanding performance period. For death and disability, the amount reflects the value of the granted target performance shares, based on the December 31, 2020 stock price, and the value of the continued vesting of the
executive’s restricted stock in accordance with its original vesting schedule in the event of a termination of employment as a result of disability, based on the December 31, 2020 stock price. The vesting schedule is set forth under the
“Outstanding Equity Awards Table as of December 31, 2020” on page 63.
|
(5)
|
Amount represents life insurance benefits that would have been paid by a third-party insurance company to
the beneficiaries of the named executive officers if they had died on December 31, 2020. This amount is calculated as two times the sum of the 2020 base salary and 2019 bonus of each named executive officer plus $15,000, up to a maximum
amount of $600,000. Amounts payable under our disability insurance policies upon disability are not included as they are available to all employees on a non-discriminatory basis.
|
68 Realty Income │ 2021 Proxy Statement
|
Compensation Tables
|
|
|
| |
SEVERANCE
PAYMENTS
|
| |
MEDICAL
BENEFITS(1)
|
| |
TREATMENT OF
EQUITY
AWARDS(2)
|
| |
TOTAL
|
|
|
Paul M. Meurer
|
| |
$1,591,393
|
| |
$29,092
|
| |
$4,006,450
|
| |
$5,626,935
|
|
(1)
|
Value based on company-paid premiums at 2020 enrollment rates for a period of 12 months.
|
(2)
|
Each outstanding company equity-based award held by Mr. Meurer as of the date of his departure from the
company was treated in accordance with the terms of the applicable award agreements pursuant with his qualifying termination under Section 4.2 of the Severance Plan. The market value of these equity-based awards has been calculated by
multiplying the closing market price for a share of our common stock on March 31, 2020, the date of Mr. Meurer's departure, by the outstanding shares that vested on such date.
|
Realty Income │ 2021 Proxy Statement 69
|
|
70 Realty Income │ 2021 Proxy Statement
|
|
NAME OF BENEFICIAL OWNER
|
| |
SHARES OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
OF THE COMPANY
|
| |
PERCENT OF CLASS
|
|
|
Sumit Roy(1)
|
| |
142,341
|
| |
*
|
|
|
Michael R. Pfeiffer(2)
|
| |
37,965
|
| |
*
|
|
|
Christie B. Kelly(3)
|
| |
8,000
|
| |
*
|
|
|
Neil M. Abraham(4)
|
| |
34,310
|
| |
*
|
|
|
Mark E. Hagan(5)
|
| |
17,428
|
| |
*
|
|
|
Michael D. McKee(6)
|
| |
153,500
|
| |
*
|
|
|
Kathleen R. Allen(7)
|
| |
86,000
|
| |
*
|
|
|
A. Larry Chapman(8)
|
| |
9,757
|
| |
*
|
|
|
Reginald H. Gilyard(9)
|
| |
12,000
|
| |
*
|
|
|
Priya Cherian Huskins(10)
|
| |
31,400
|
| |
*
|
|
|
Gerardo I. Lopez(11)
|
| |
12,000
|
| |
*
|
|
|
Ronald L. Merriman(12)
|
| |
22,075
|
| |
*
|
|
|
Gregory T. McLaughlin(13)
|
| |
21,886
|
| |
*
|
|
|
All current directors and executive officers of the company, as a group (16
persons)
|
| |
615,437
|
| |
0.2
|
|
*
|
Less than one-tenth of one percent
|
|
STOCKHOLDERS HOLDING 5% OR MORE
|
| |
SHARES OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
OF THE COMPANY
|
| |
PERCENT OF CLASS
|
|
|
The Vanguard Group, Inc.(14)
100 Vanguard Blvd.
Malvern, PA 19355
|
| |
54,456,584
|
| |
15.52%
|
|
|
BlackRock, Inc.(15)
55 East 52nd Street
New York, NY 10055
|
| |
34,281,689
|
| |
9.80%
|
|
|
State Street Corporation (16)
One Lincoln St.
Boston, MA 02111
|
| |
24,523,999
|
| |
6.99%
|
|
(1)
|
Mr. Roy’s total includes 70,571 shares of unvested restricted stock and 71,770 shares of stock directly owned.
|
(2)
|
Mr. Pfeiffer’s total includes 28,806 shares owned of record by the Pfeiffer Revocable Living Trust dated
November 23, 2009, of which he is a trustee and has sole voting and investment power and 9,159 shares of restricted stock units.
|
(3)
|
Ms. Kelly’s total includes 6,667 shares of unvested restricted stock and 1,333 shares of stock directly owned.
|
(4)
|
Mr. Abraham’s total includes 9,419 shares of unvested restricted stock and 24,891 shares of stock directly
owned.
|
(5)
|
Mr. Hagan’s total includes 11,548 shares of unvested restricted stock and 5,880 shares of stock directly owned.
|
(6)
|
Mr. McKee’s total includes 121,200 shares owned of record by The McKee Family Trust dated February 11, 1995,
of which he is a trustee and has shared voting and investment power, 6,400 shares owned of record by MCR Holdings, LLC, a family limited liability company, of which he and his wife have shared voting and investment power, 6,400 shares
owned of record by MCC Ventures, LLC, a family limited liability company, of which he and his wife have shared voting and investment power, and 19,500 shares owned of record by an IRA, in the account of Mr. McKee.
|
(7)
|
Dr. Allen’s total includes 86,000 shares owned of record by The Allen Family Trust dated December 5, 2006,
of which she is a trustee and has shared voting and investment power.
|
Realty Income │ 2021 Proxy Statement 71
|
|
(8)
|
Mr. Chapman’s total includes 667 shares of unvested restricted stock and 9,090 shares of vested stock owned
of record by A. Larry Chapman and Patricia L. Chapman, Trustees of the Chapman Family Trust, dated March 18, 1998, of which he is a trustee and has sole voting power and shared investment power.
|
(9)
|
Mr. Gilyard’s total includes 8,001 shares of unvested restricted stock and 3,999 shares of stock.
|
(10)
|
Ms. Huskins’s total includes 31,400 shares owned of record by The Michael and Priya Huskins Revocable Trust
dated February 12, 2001, of which she is a trustee and has shared voting and investment power.
|
(11)
|
Mr. Lopez’s total includes 8,001 shares of unvested restricted stock and 3,999 shares of stock.
|
(12)
|
Mr. Merriman’s total includes 22,075 shares owned of record by The Ronald Merriman Family Trust dated
July 17, 1997, of which he is a trustee and has shared voting and investment power.
|
(13)
|
Mr. McLaughlin’s total includes 21,886 shares owned of record by The McLaughlin Family Trust dated May 28,
2009, of which he is a trustee and has shared voting and investment power.
|
(14)
|
Based on the information provided pursuant to a statement on a Schedule 13G/A filed with the SEC on
February 10, 2021, The Vanguard Group, Inc. (Vanguard) has sole power to dispose or direct the disposition of 52,167,354 shares of our common stock and shared power to vote or direct the vote and shared power to dispose or direct the
disposition of 1,334,833 and 2,289,230 shares of our common stock, respectively. The Vanguard group does not have the sole power to vote or direct the vote of any shares of our common stock.
|
(15)
|
Based on the information provided pursuant to a statement on a Schedule 13G/A filed with the SEC on
February 1, 2021 BlackRock, Inc. has sole power to vote or direct the vote of 31,231,787 shares of our common stock, and sole power to dispose or direct the disposition of 34,281,689 shares of our common stock. BlackRock, Inc. does not
have the shared power to vote or direct the vote of or the shared power to dispose or direct the disposition of any shares of our common stock.
|
(16)
|
Based on the information provided pursuant to a statement on a Schedule 13G filed with the SEC on
February 10, 2021, State Street Corporation does not have the power to vote or direct the vote of any shares of our common stock, or to dispose or direct the disposition of any shares of our common stock. State Street Corporation has the
shared power to vote or direct the vote of 22,043,018 and the shared power to dispose or direct the disposition of 24,511,953 shares of our common stock.
|
|
PLAN CATEGORY(1)
|
| |
NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS, AND RIGHTS
(a)
|
| |
WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
(b)
|
| |
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
COMPENSATION PLANS
(EXCLUDING SECURITIES
REFLECTED IN COLUMN (a))
(c)
|
|
|
Equity compensation plans approved by security holders
|
| |
310,429(2)
|
| |
n/a
|
| |
594,052(3)
|
|
|
Equity compensation plans not approved by security holders
|
| |
—
|
| |
n/a
|
| |
—
|
|
|
Total
|
| |
310,429
|
| |
|
| |
594,052
|
|
(1)
|
Each of our equity compensation plans has been approved by our stockholders.
|
(2)
|
Represents shares of common stock that were subject to awards of RSUs, and potential awards under our LTIPs
assuming the issuance of shares based on target performance, but excluding unvested restricted stock.
|
(3)
|
Represents shares of our common stock available for issuance under our 2012 Stock Incentive Award Plan. This
amount has been reduced by the 291,759 performance shares assuming target performance, and 18,670 restricted stock units outstanding at December 31, 2020.
|
72 Realty Income │ 2021 Proxy Statement
|
|
|
| |
2020(1)
|
| |
2019(1)
|
|
|
Total audit fees(2)
|
| |
$3,506,414
|
| |
$3,133,013
|
|
|
Tax fees(3)
|
| |
669,961
|
| |
633,581
|
|
(1)
|
There were no additional audit-related fees or other fees incurred during 2020 or 2019 other than those set
forth above.
|
(2)
|
Includes the aggregate fees billed by KPMG LLP for the audit of our annual financial statements, the reviews
of the financial statements included in our Quarterly Reports on Form 10-Q, the issuances of comfort letters to underwriters, the reviews of registration statements in connection with the issuance of consents totaling approximately
$435,000 in 2020 and $323,000 in 2019, statutory audit fees of $474,814 in 2020 and $177,317 in 2019 for 12 entities in the United Kingdom, and the audit of internal controls.
|
(3)
|
Includes the aggregate fees billed by KPMG LLP for tax services. Tax services consisted of tax return
preparation and tax compliance.
|
✓
|
Select members of management have authority up to $100,000;
|
✓
|
The Audit Committee Chair has authority up to $250,000; and
|
✓
|
Engagement services of greater than $250,000 require approval from the
Audit Committee.
|
Realty Income │ 2021 Proxy Statement 73
|
Audit Related Matters
|
|
| |
Ronald L. Merriman, Chair
Kathleen R. Allen, Ph.D.
A. Larry Chapman
Gregory T. McLaughlin
|
74 Realty Income │ 2021 Proxy Statement
|
•
|
The election of nine director nominees named in this Proxy Statement to serve until the 2022 annual meeting of stockholders and
until their respective successors are duly elected and qualified;
|
•
|
The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending
December 31, 2021;
|
•
|
A non-binding advisory proposal to approve the compensation of our named executive officers as described in this Proxy
Statement (also known as the “say-on-pay” vote);
|
•
|
The approval of the Realty Income Corporation 2021 Incentive Award Plan; and
|
•
|
The transaction of such other business as may properly come before the Annual Meeting or any postponement or adjournment of the
Annual Meeting.
|
Realty Income │ 2021 Proxy Statement 75
|
Frequently Asked Questions
|
By Internet
|
|||
|
| |
Authorize a proxy to vote your shares via the website www.proxyvote.com, which is available
24 hours per day until 11:59 p.m., Eastern Time, on May 17, 2021. In order to authorize your proxy, you will need to have available the control number that appears on the voting instructions included in the Proxy Materials that you
received. If you authorize your proxy via the Internet, you do not need to return your proxy or voting instruction card.
|
By Telephone
|
|||
|
| |
Authorize a proxy to vote your shares by calling toll-free 1-800-690-6903, 24 hours per day until
11:59 p.m., Eastern Time, on May 17, 2021. When you call, please have the voting instructions in hand that accompanied the Proxy Materials you received, along with the control number that appears therein. Follow the series of prompts to
instruct your proxy how to vote your shares. If you authorize your proxy by telephone, you do not need to return your proxy or voting instruction card.
|
By Mail
|
|||
|
| |
If you received and/or requested via the Notice a printed set of the Proxy Materials (including the
Proxy Statement, proxy card, and Annual Report), authorize a proxy to vote your shares by completing, signing, and returning the proxy in the prepaid envelope provided. If the prepaid envelope is missing, please mail your completed proxy
to: Realty Income Corporation, Vote Processing, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717.
|
Virtual Meeting Access
|
|||
|
| |
Vote your shares by logging onto and voting at the virtual Annual Meeting at
www.virtualshareholdermeeting.com/realty2021 on May 18, 2021. You may also be represented by another person at the Annual Meeting by executing a proper proxy designating that person as your representative. If you are a beneficial owner of
shares, you will need your unique control number, which appears on the instructions that accompanied the Proxy Materials.
|
✓
|
Proposal 1: FOR the election to the Board of Directors of the nine nominees listed in this Proxy Statement;
|
✓
|
Proposal 2: FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021;
|
✓
|
Proposal 3: FOR the say-on-pay vote; and
|
✓
|
Proposal 4: FOR the approval of the Realty Income Corporation 2021 Incentive Award Plan.
|
✓
|
Proposal 1: FOR the election to the Board of Directors of the nine nominees listed in this Proxy Statement;
|
76 Realty Income │ 2021 Proxy Statement
|
Frequently Asked Questions
|
✓
|
Proposal 2: FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021;
|
✓
|
Proposal 3: FOR the say-on-pay vote; and
|
✓
|
Proposal 4: FOR the approval of the Realty Income Corporation 2021 Incentive Award Plan.
|
•
|
delivering to our Corporate Secretary a written notice of revocation (the contact information for our Corporate Secretary is
provided below);
|
•
|
signing and returning to our Corporate Secretary a proxy bearing a later date;
|
•
|
authorizing another proxy by telephone or on the Internet (your most recent telephone or Internet authorization will be used);
or
|
•
|
logging onto and voting at the virtual Annual Meeting.
|
|
PROPOSAL
NUMBER
|
| |
SUBJECT
|
| |
VOTE REQUIRED(2)
|
| |
IMPACT OF ABSTENTIONS AND BROKER
NON-VOTES, IF ANY
|
|
|
1
|
| |
Election of Directors(1)
|
| |
The affirmative vote of a majority of the votes cast is necessary for the election of each director
nominee.
|
| |
An abstention or a broker non-vote will not count as a vote cast “FOR” or
“AGAINST” a nominee’s election and thus will have no effect in determining whether a director nominee has received a majority of the votes cast. Brokers do not have discretionary authority to vote your shares for director nominees.
|
|
|
2
|
| |
Ratification of Appointment of Independent Registered Public Accounting Firm
|
| |
The affirmative vote of a majority of the votes cast is necessary for the ratification of the
appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2021.
|
| |
An abstention will have no effect on the outcome of the vote. Broker non-votes
are not expected to result from this proposal since as a beneficial owner, your bank, broker, or other holder of record is permitted to vote your shares even if the broker does not receive voting instructions from you.
|
|
Realty Income │ 2021 Proxy Statement 77
|
Frequently Asked Questions
|
|
PROPOSAL
NUMBER
|
| |
SUBJECT
|
| |
VOTE REQUIRED(2)
|
| |
IMPACT OF ABSTENTIONS AND BROKER
NON-VOTES, IF ANY
|
|
|
3
|
| |
Say-on-Pay Vote
|
| |
The affirmative vote of a majority of the votes cast is necessary for the approval of the say-on-pay
vote.
|
| |
An abstention or a broker non-vote will not count as a vote cast and thus will
have no effect on the outcome of the vote. Brokers do not have discretionary authority to vote your shares for the say-on-pay vote.
|
|
|
4
|
| |
Approval of the Realty Income Corporation 2021 Incentive Award Plan
|
| |
The affirmative vote of a majority of the votes cast is necessary for the approval of the Realty
Income Corporation 2021 Incentive Award Plan.
|
| |
An abstention or a broker non-vote will not count as a vote cast and thus will
have no effect on the outcome of the vote. Brokers do not have discretionary authority to vote your shares for the approval of the Realty Income Corporation 2021 Incentive Award Plan.
|
|
(1)
|
In accordance with the policy adopted by our Board of Directors, in this election, an incumbent candidate
for director who does not receive the required votes for re-election is expected to offer his or her resignation to the Board of Directors. The Nominating/Corporate Governance Committee of the Board, or a committee of independent
directors in the event the incumbent is a member of the Nominating/Corporate Governance Committee, will then make a determination as to whether to accept or reject the tendered offer of resignation, generally within 90 days after
certification of the election results of the stockholder vote. Following such determination, we will publicly disclose the decision regarding any tendered offer of resignation and the rationale behind such decision in a filing of a
Current Report on Form 8-K with the SEC. If a director’s offer to resign is not accepted by the Board of Directors (or properly constituted committee) or such director does not otherwise submit his or her resignation to the Board, such
director shall continue to serve until his or her successor is duly elected and qualified, or until his or her earlier resignation or removal.
|
(2)
|
Pursuant to our Bylaws, a “majority of votes cast” standard requires that the number of votes cast “FOR” a
proposal or director nominee must exceed the number of votes cast “AGAINST” such proposal or director nominee.
|
78 Realty Income │ 2021 Proxy Statement
|
Realty Income │ 2021 Proxy Statement 79
|
|
| |
By Order of the Board of Directors,
|
|
| |
|
|
| |
Michelle Bushore
|
|
| |
Executive Vice President, Chief Legal Officer, General Counsel and Secretary
|
80 Realty Income │ 2021 Proxy Statement
|
|
|
| |
2020
|
| |
2019
|
| |
2018
|
|
|
Net income available to common stockholders(1)
|
| |
$395,486
|
| |
$436,482
|
| |
$363,614
|
|
|
Depreciation and amortization
|
| |
677,038
|
| |
593,961
|
| |
539,780
|
|
|
Depreciation of furniture, fixtures and equipment
|
| |
(588)
|
| |
(565)
|
| |
(650)
|
|
|
Provisions for impairment
|
| |
147,232
|
| |
40,186
|
| |
26,269
|
|
|
Gain on sales of real estate
|
| |
(76,232)
|
| |
(29,996)
|
| |
(24,643)
|
|
|
FFO adjustments allocable to noncontrolling interests
|
| |
(817)
|
| |
(477)
|
| |
(1,113)
|
|
|
FFO available to common stockholders
|
| |
1,142,119
|
| |
1,039,591
|
| |
903,257
|
|
|
Executive severance charge(2)
|
| |
3,463
|
| |
—
|
| |
18,651
|
|
|
Loss on extinguishment of debt
|
| |
9,819
|
| |
—
|
| |
—
|
|
|
Amortization of share-based compensation
|
| |
14,727
|
| |
13,662
|
| |
15,470
|
|
|
Amortization of deferred financing costs(3)
|
| |
4,968
|
| |
4,754
|
| |
3,991
|
|
|
Amortization of net mortgage premiums
|
| |
(1,258)
|
| |
(1,415)
|
| |
(1,520)
|
|
|
Loss (gain) on interest rate swaps
|
| |
4,353
|
| |
2,752
|
| |
(2,733)
|
|
|
Straight-line payments from cross-currency swaps(4)
|
| |
2,573
|
| |
4,316
|
| |
—
|
|
|
Leasing costs and commissions
|
| |
(1,859)
|
| |
(2,102)
|
| |
(3,907)
|
|
|
Recurring capital expenditures
|
| |
(198)
|
| |
(801)
|
| |
(1,084)
|
|
|
Straight-line rent
|
| |
(26,502)
|
| |
(28,674)
|
| |
(24,687)
|
|
|
Amortization of above and below-market leases, net
|
| |
22,940
|
| |
19,336
|
| |
16,852
|
|
|
Other adjustments (5)
|
| |
(2,519)
|
| |
(1,404)
|
| |
268
|
|
|
Total AFFO available to common stockholders
|
| |
$1,172,626
|
| |
$1,050,015
|
| |
$924,558
|
|
|
AFFO allocable to dilutive noncontrolling interests
|
| |
1,438
|
| |
1,442
|
| |
901
|
|
|
Diluted AFFO
|
| |
$1,174,064
|
| |
$1,051,457
|
| |
$925,459
|
|
|
AFFO per common share
|
| |
|
| |
|
| |
|
|
|
Basic
|
| |
$3.40
|
| |
$3.32
|
| |
$3.19
|
|
|
Diluted
|
| |
$3.39
|
| |
$3.32
|
| |
$3.19
|
|
|
Distributions paid to common stockholders
|
| |
$964,167
|
| |
$852,134
|
| |
$761,582
|
|
|
AFFO available to common stockholders in excess of distributions paid to
common stockholders
|
| |
$208,459
|
| |
$197,881
|
| |
$162,976
|
|
|
Weighted average number of common shares used for computation per share:
|
| |
|
| |
|
| |
|
|
|
Basic
|
| |
345,280,126
|
| |
315,837,012
|
| |
289,427,430
|
|
|
Diluted
|
| |
345,878,377
|
| |
316,601,350
|
| |
289,923,984
|
|
(1)
|
As of December 31, 2020, there was $24.5 million of uncollected rent deferred as a result of lease
concessions we granted in response to the COVID-19 pandemic and recognized under the practical expedient provided by the FASB and $51.9 million of uncollected rent for which we have not granted a lease concession. Deferrals accounted for
as modifications totaling $236,000 for 2020 have not been added back to AFFO.
|
(2)
|
The executive severance charge in 2020 represents the incremental costs incurred upon our former CFO's
departure in March 2020, consisting of $1.6 million of cash, $1.8 million of share-based compensation expense and $58,000 of professional fees. The executive severance charge in 2018 represents the incremental costs incurred upon our
former CEO's departure in October 2018, consisting of $9.8 million of cash, $17.9 million of share-based compensation expense and $574,000 of professional fees, reduced by $9.6 million accrued for CEO compensation prior to separation.
|
(3)
|
Includes the amortization of costs incurred and capitalized upon issuance of our notes payable, assumption
of our mortgages payable and upon issuance of our current and previous term loans. The deferred financing costs are being amortized over the lives of the respective mortgages and term loans. No costs associated with our credit facility
agreements or annual fees paid to credit rating agencies have been included.
|
(4)
|
Straight-line payments from cross-currency swaps represent quarterly payments in U.S. dollars received by us
from counterparties in exchange for associated foreign currency payments. These USD payments are fixed and determinable for the duration of the associated hedging transaction.
|
(5)
|
Includes adjustments allocable to noncontrolling interests, obligations related to financing lease
liabilities, and foreign currency gains and losses as a result of intercompany debt and remeasurement transactions.
|
Realty Income │ 2021 Proxy Statement 81
|
APPENDIX A(continued)
|
|
|
| |
2020
|
| |
2019
|
| |
2018
|
|
|
Net income available to common stockholders(1)
|
| |
$118,150
|
| |
$129,553
|
| |
$85,303
|
|
|
Interest
|
| |
78,764
|
| |
75,073
|
| |
70,635
|
|
|
Income taxes
|
| |
4,500
|
| |
1,736
|
| |
1,607
|
|
|
Depreciation and amortization
|
| |
175,041
|
| |
156,594
|
| |
137,711
|
|
|
Executive severance charge(2)
|
| |
—
|
| |
—
|
| |
18,651
|
|
|
Provisions for impairment
|
| |
23,790
|
| |
8,950
|
| |
1,235
|
|
|
Gain on sales of real estate
|
| |
(22,667)
|
| |
(14,168)
|
| |
(5,825)
|
|
|
Foreign currency and derivative gains, net
|
| |
(3,311)
|
| |
(1,792)
|
| |
—
|
|
|
Quarterly Adjusted EBITDAre
|
| |
$374,267
|
| |
$355,946
|
| |
$309,317
|
|
|
Annualized Adjusted EBITDAre
|
| |
$1,479,068
|
| |
$1,423,784
|
| |
$1,237,268
|
|
|
Annualized Pro Forma Adjustments
|
| |
25,910
|
| |
77,793
|
| |
11,306
|
|
|
Annualized Pro Forma Adjusted EBITDAre
|
| |
$1,522,978
|
| |
$1,501,577
|
| |
$1,248,574
|
|
|
|
| |
|
| |
|
| |
|
|
|
Net Debt(4)
|
| |
$7,992,991
|
| |
$7,847,536
|
| |
$6,489,589
|
|
|
Net Debt/Adjusted EBITDAre
|
| |
5.3
|
| |
5.5
|
| |
5.2
|
|
|
Net Debt/Pro forma Adjusted EBITDAre
|
| |
5.2
|
| |
5.2
|
| |
5.2
|
|
(1)
|
Net income for 2020 was negatively impacted by $18.1 million of rent reserves recorded as reductions of
rental revenue, of which $3.3 million relates to straight-line rent.
|
(2)
|
The executive severance charge in 2018 reflects an $18.7 million severance charge for our former CEO upon
his departure in October 2018.
|
(3)
|
We calculate Annualized Adjusted EBITDAre by multiplying the Quarterly
Adjusted EBITDAre by four.
|
(4)
|
Net Debt is total debt per the consolidated balance sheet, less of cash and cash equivalents.
|
|
Dollars in thousands
|
| |
2020
|
| |
2019
|
| |
2018
|
|
|
Annualized pro forma adjustments from properties acquired or stabilized
|
| |
$27,431
|
| |
$77,431
|
| |
$14,633
|
|
|
Annualized pro forma adjustments from properties disposed
|
| |
(1,521)
|
| |
362
|
| |
(3,327)
|
|
|
Annualized Pro forma Adjustments
|
| |
$25,910
|
| |
$77,793
|
| |
$11,306
|
|
82 Realty Income │ 2021 Proxy Statement
|
Realty Income │ 2021 Proxy Statement 83
|
APPENDIX B(continued)
|
84 Realty Income │ 2021 Proxy Statement
|
APPENDIX B(continued)
|
Realty Income │ 2021 Proxy Statement 85
|
APPENDIX B(continued)
|
86 Realty Income │ 2021 Proxy Statement
|
APPENDIX B(continued)
|
Realty Income │ 2021 Proxy Statement 87
|
APPENDIX B(continued)
|
88 Realty Income │ 2021 Proxy Statement
|
APPENDIX B(continued)
|
Realty Income │ 2021 Proxy Statement 89
|
APPENDIX B(continued)
|
90 Realty Income │ 2021 Proxy Statement
|
APPENDIX B(continued)
|
Realty Income │ 2021 Proxy Statement 91
|
APPENDIX B(continued)
|
92 Realty Income │ 2021 Proxy Statement
|
APPENDIX B(continued)
|
Realty Income │ 2021 Proxy Statement 93
|
APPENDIX B(continued)
|
94 Realty Income │ 2021 Proxy Statement
|
APPENDIX B(continued)
|
Realty Income │ 2021 Proxy Statement 95
|
APPENDIX B(continued)
|
96 Realty Income │ 2021 Proxy Statement
|
APPENDIX B(continued)
|
Realty Income │ 2021 Proxy Statement 97
|
APPENDIX B(continued)
|
98 Realty Income │ 2021 Proxy Statement
|