DEF 14A of Realty Income Corp, Apr 1, 2020

DEF 14A of Realty Income Corp

Filed Apr 1, 2020 · FY20190001140361-20-007691

Open on EDGAR

  1. Michael R. Pfeiffer Executive Vice President, Chief Administrative Officer, General Counsel and Secretary April 1, 2020

    | Potential Payments upon Termination or Change in Control | 51 | | Termination and Change in Control Scenario Table | 55 | | CEO Pay Ratio | 56 | | Related Party Transactions | 57 | | Security Ownership of Certain Beneficial Owners and Management | 58 | | Equity Compensation Plan Information as of December 31, 2019 | 59 | | Audit Related Matters | 60 | | Fees Paid to Independent Registered Public Accounting Firm | 60 | | Pre-approval Policies and Procedures | 60 | | Audit Committee Report | 61 | | Frequently Asked Questions | 62 | | Stockholder Proposals for our 2021 Annual Meeting | 66 | | Forward-Looking Statements | 66 | | Householding of Proxy Materials | 66 | | Incorporation by Reference | 67 | | Appendix A | 68 |

  2. Proposal 1 - Election of Directors

    Proposal 1 - Election of Directors Our Board of Directors currently consists of ten directors who we believe contribute the breadth of knowledge and experience necessary for the advancement of our business strategies and objectives. Based on the recommendation of our Nominating/Corporate Governance Committee, our Board of Directors has nominated the following current ten directors, for re-election at the Annual Meeting, each to serve for a one-year term expiring at our annual meeting of stockholders in 2021 and until their respective successors have been duly elected and qualify:

  3. Proposal 1 - Election of Directors

    | (1) Non-Executive Independent Chairman of the Board of Directors. |

  4. Proposal 1 - Election of Directors

    For more information regarding our nominees, please see the “Board of Directors and Corporate Governance” section of this Proxy Statement beginning on page 10.

  5. Proposal 1 - Election of Directors

    | | OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH OF THE NOMINEES LISTED ABOVE |

  6. Director Nominees

    Director Nominees The Board of Directors has nominated the following ten current directors, identified below, for re-election at the Annual Meeting, each to serve for a one-year term expiring at our annual meeting of stockholders in 2021, and until their respective successors are duly elected and qualify. The information presented below highlights each director nominee’s specific experience, qualifications, attributes, and skills that led our Board of Directors to the conclusion that he or she should serve as a director. We believe that all of our director nominees have a reputation for integrity, honesty, and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Realty Income and our Board of Directors. We also value the additional perspective that comes from serving on other companies’ boards of directors and board committees. We continue to review the composition of the Board of Directors in an effort to assemble a group that can best perpetuate the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in various areas. Since our last annual meeting of the stockholders in 2019, we added a new director, Christie Kelly, to the Board of Directors. We believe this new addition to our Board of Directors has expanded our Board of Director’s diversity of composition, thought and experience, and has provided our Board of Directors with a fresh perspective.

  7. Director Nominees

    | Kathleen R. Allen, Ph.D. Age: 74 Director Since: 2000 Committees: Audit Independent: Yes | Experience | | | Kathleen R. Allen, Ph.D. is Professor Emerita at the Marshall School of Business and the founding director of the Center for Technology Commercialization at the University of Southern California (1991-2016). She was the co-founder and chairwoman of Gentech Corporation (1994-2004) and in 2006 co-founded and became the Chief Executive Officer and served on the board of directors of N2TEC Institute, a nonprofit company focused on technology commercialization in rural America, until it completed its mission in 2013. Dr. Allen has co-founded four private companies, is currently a principal and on the board of directors of a real estate investment and development company, and serves on the board of advisors for two life science companies. She was a Visiting Scholar at the Department of Homeland Security, where she advised on issues related to technology deployment, including cybersecurity. She is the author of 15 books in the field of entrepreneurship and technology commercialization, a field in which she is considered an expert. | | | Qualifications | | | As a distinguished businesswoman, entrepreneur, and consultant, Dr. Allen has helped our Board of Directors identify and assess the risks associated with new endeavors. She has also worked with many early-growth and established companies to develop effective leadership and team-building skills. With her years of experience in risk management in the areas of business models, investment opportunities, and technology, Dr. Allen brings to the Board of Directors achievement in strategic business planning, which is a key part of our growth strategy. |

  8. Director Nominees

    | A. Larry Chapman Age: 73 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: 56 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 allows him to provide diverse and valuable perspectives to our Board of Directors. |

  9. Director Nominees

    | Priya Cherian Huskins Age: 48 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. 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. | | Christie B. Kelly Age: 58 Director Since: 2019 Committees: Audit Independent: Yes | Experience | | | Ms. Kelly has served as a director on the Board since November 2019. Ms. Kelly most recently served as Global Chief Financial Officer of Jones Lang LaSalle Incorporated (NYSE: JLL) (July 2013-September 2018), a publicly traded financial and professional services firm specializing in real estate. Prior to her tenure at JLL, Ms. Kelly served as Executive Vice President and Chief Financial Officer of Duke Realty Corporation (NYSE: DRE) (2009-June 2013). Prior to joining Duke in 2009, Ms. Kelly served as Senior Vice President, Global Real Estate at Lehman Brothers (2007-2009), where she led real estate equity syndication in the United States and Canada. Prior to that, Ms. Kelly served at General Electric Company (NYSE: GE) (1983-2007) in numerous finance and operational financial management positions in the United States, Europe and Asia that included responsibility for mergers and acquisitions, process improvements, internal audit and enterprise risk management. Ms. Kelly currently serves on the board of directors of Kite Realty Group Trust (NYSE: KRG) and Park Hotel and Resorts, Inc. (NYSE: PK) as well as Gilbane, Inc. a privately held company. She previously served on the board of directors of TIER REIT (TIER) (January 2019-June 2019), the board of directors of Executives Club of Chicago (2017-2019), the board of directors of World Business Chicago (2016-2018), and on the board of directors of Park Tudor School (2012-2016). | | | Qualifications | | | Ms. Kelly brings to the Board extensive leadership, finance, real estate, and public company experience through her background as a senior executive and director of real estate companies, including publicly traded REITs. Additionally, Ms. Kelly’s international experience as the Global Chief Financial Officer for JLL will be additive to the Board. |

  10. Director Nominees

    | Gerardo I. Lopez Age: 60 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 30 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 |

  11. Director Nominees

    | Michael D. McKee Age: 74 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. (NYSE: HCP) (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. (NYSE: HCP) (1987-2018), Bentall Kennedy (U.S.) (2008-2012), First American Financial Corporation (NYSE: FAF) (2011-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: 60 Director Since: 2007 Committees: Audit and Compensation Independent: Yes | Experience | | | Gregory T. McLaughlin is the Chief Executive Officer of the PGA TOUR First Tee Foundation, a subsidiary of the PGA TOUR and World Golf Foundation (2018-present). Mr. McLaughlin was formerly President, PGA TOUR Champions and Executive Vice President with the PGA TOUR in Ponte Vedra Beach, Florida (2014-2018). Prior to joining the PGA TOUR, Mr. McLaughlin was President and Chief Executive Officer of TGR Live and Tiger Woods Foundation in Irvine, California (1999-2014); Vice President of Business Development of the Western Golf Association / Evans Scholars Foundation (1993-1999); and Vice President of Business Development of the Los Angeles Junior Chamber of Commerce (1988-1993). | | | Qualifications | | | With his diverse background, Mr. McLaughlin offers a unique perspective to the Board of Directors on a variety of business, finance and legal matters. His business and legal experience includes tax-exempt status and financing as well as business development, capital raising, and program development. Additionally, his leadership skills in managing a variety of different organizations brings financial reporting expertise, especially as it relates to audit and tax matters. His proven effectiveness working with complex issues makes him a valuable member of our Board of Directors. |

  12. Director Nominees

    | Ronald L. Merriman Age: 75 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 Aircastle Limited (NYSE: AYR) (2006-present) and serves as the chairman of its audit committee (2006-present) and on the compensation committee (2012-present). Additionally, 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 on the board of directors of Haemonetics Corporation (NYSE: HAE) (2005-2017). | | | 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: 50 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. | | | 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. |

  13. Director Compensation

    Director Compensation The Compensation Committee is responsible for reviewing the compensation of members of the Board of Directors. Compensation for the independent directors of our Board of Directors for 2019 consisted of a base annual cash retainer, plus additional cash retainers for service as the Non-Executive Chairman or Chairperson of one of the committees of our Board of Directors in amounts as set forth below. In addition, each independent director receives an annual equity retainer based on a fixed number of shares provided for in the 2012 Incentive Award Plan.

  14. Director Compensation

    | POSITION HELD | ANNUAL EQUITY GRANT (IN SHARES)(1) | ANNUAL CASH RETAINER | | Board of Directors – Member (including Non-Executive Chair) | 4,000 | $25,000 | | Board of Directors – Non-Executive Chair(2) | — | 125,000 | | Audit Committee Chair | — | 25,000 | | Compensation Committee Chair | — | 25,000 | | Nominating/Corporate Governance Committee Chair | — | 10,000 |

  15. Director Compensation

    | (1) The value of the annual equity retainer is variable, based on the closing share price on the date of grant. |

  16. Director Compensation

    | (2) Effective July 16, 2019, the Board of Directors increased the annual cash retainer for the Board of Directors – Non-Executive Chair from $35,000 to $125,000. The prorated annual cash retainer for 2019 was $76,332. |

  17. Director Compensation

    Our directors received the following aggregate amounts of compensation for the year ended December 31, 2019:

  18. Director Compensation

    | NAME | FEES EARNED OR PAID IN CASH | STOCK AWARDS(1) | ALL OTHER COMPENSATION(2) | TOTAL | | Kathleen R. Allen, Ph.D.(3) | $25,000 | $276,040 | $— | $301,040 | | A. Larry Chapman(3) | 25,000 | 276,040 | — | 301,040 | | Reginald H. Gilyard(3) | 29,592 | 276,040 | — | 305,632 | | Priya Cherian Huskins(3) | 50,000 | 276,040 | — | 326,040 | | Christie B. Kelly(3)(4) | 2,853 | 311,960 | — | 314,813 | | Gerardo I. Lopez(3) | 25,000 | 276,040 | — | 301,040 | | Michael D. McKee(3) | 106,739 | 276,040 | — | 382,779 | | Gregory T. McLaughlin(3) | 25,000 | 276,040 | 10,000 | 311,040 | | Ronald L. Merriman(3) | 50,000 | 276,040 | — | 326,040 | | Sumit Roy(5) | — | — | — | — | | Stephen E. Sterrett(6) | 9,272 | — | — | 9,272 |

  19. Director Compensation

    | (1) On May 14, 2019, the date of our 2019 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 $276,040 which is calculated by multiplying the 4,000 shares by the closing market price per share of our common stock on May 14, 2019 of $69.01, as prescribed by Accounting Standards Codification Topic 718. On November 20, 2019, upon election to the Board of Directors, Ms. Kelly received 4,000 shares of restricted stock with a grant date fair value of $311,960, which is calculated by multiplying the 4,000 shares by the closing market price per share of our common stock on November 20, 2019 of $77.99 per share. 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. |

  20. Director Compensation

    | (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. |

  21. Director Compensation

    | (3) As of December 31, 2019, the non-employee directors did not hold any stock options. Other than Messrs. Chapman, Gilyard, Lopez and Ms. Kelly, who held 8,001, 6,667, 6,667 and 4,000 shares of unvested restricted stock, respectively, the non-employee directors did not hold any shares of restricted stock. |

  22. Director Compensation

    | (4) Ms. Kelly was elected as a member of the Board on November 20, 2019. |

  23. Director Compensation

    | (5) 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 2019. His compensation is reflected as part of the “Summary Compensation Table” on page 47. |

  24. Director Compensation

    | (6) Mr. Sterrett was a member of the board until his term expired on May 14th, 2019, the date of the 2019 annual meeting. |

  25. Director Compensation

    | Director Compensation |

  26. Director Compensation

    Stock Awards for Directors The 2012 Incentive Award Plan provides that upon the initial election to our Board of Directors, and at each annual meeting of stockholders thereafter, if the director continues to serve as a director after the meeting, each non-employee director is automatically granted 4,000 shares of restricted stock. This annual equity grant of 4,000 shares is specifically provided for in the 2012 Incentive Award Plan, which has been approved by our stockholders. For 2019, approximately 88% of director compensation was in the form of restricted shares of the company's stock, which effectively aligns the interests of our Board with those of our stockholders. The vesting schedule for restricted shares granted to non-employee directors is as follows and is subject to the director’s continued service through each applicable vesting date:

  27. 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 |

  28. Director Compensation

    Other Payments for Directors The members of our Board of Directors are also entitled to reimbursement of their travel expenses incurred in connection with attendance at Board of Directors and Board committee meetings. Additionally, the members of our Board of Directors are reimbursed for expenses incurred in connection with attending continuing education programs and conferences to assist them in remaining abreast of developments in corporate governance and other critical issues relating to the operation of public company boards. Director Stock Ownership Guidelines Our non-employee directors are subject to stock ownership guidelines. Under these guidelines, each non-employee director is required to hold stock valued at no less than five times the amount of the annual cash retainer of $25,000 paid to such director for service as a member of the Board of Directors, without reference to committee or chair service. The current stock ownership goal for each of our non-employee directors is five times their annual cash retainers as of December 31, 2019 of $25,000, or $125,000, divided by the closing price per share of our common stock as of December 31, 2019 of $73.63. This equals a minimum share ownership requirement of 1,698 shares. All vested and unvested restricted stock awards qualify towards satisfaction of the requirement. For any new director, compliance with the guidelines will be required within five years after being elected to the Board of Directors. As of December 31, 2019, each director subject to the guidelines met or exceeded the stock ownership requirements.

  29. Executive Summary

    | ✓ | Link executive compensation to the company’s short-term and long-term performance; and |

  30. Executive Summary

    | ✓ | Attract, motivate, and retain highly qualified executive officers through competitive compensation arrangements. |

  31. Executive Summary

    | WHAT WE DO: | | WHAT WE DO NOT DO: | | ✓ | DO employ the services of an independent compensation consultant that reports to the Compensation Committee of the Board of DirectorsX | Do NOT provide for excise tax gross ups | | ✓ | DO grant performance-based equity, which is at-risk and not guaranteedX | Do NOT provide supplemental or other retirement plans, other than a 401(k) plan | | | X | Do NOT have employment contracts with our NEOs |

  32. Compensation Process

    | ✓ | Providing peer information to assist the Compensation Committee in selecting the appropriate peer group; |

  33. Compensation Process

    | ✓ | Benchmarking the compensation for the named executive officers against the appropriate peer group; |

  34. Compensation Process

    | ✓ | 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; |

  35. Compensation Process

    | ✓ | 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 |

  36. Compensation Process

    FPL reports to the Compensation Committee and works with management as directed by the Compensation Committee. The Compensation Committee retains the right to terminate or replace FPL at any time. Pursuant to the Compensation Committee’s Charter, the Compensation Committee has the power to engage other consultants and advisors as required. Through review and consultation with FPL, the Compensation Committee assessed the independence of FPL in light of, among other factors, the independence factors established by the NYSE. As a result of this assessment, the Compensation Committee has determined that FPL’s work raised no conflict of interest currently or during the year ended December 31, 2019. Peer Group Data The Compensation Committee uses comparison data from various companies it considers peers as a guide in its review and determination of base salaries, cash bonus payments, equity awards, and long-term performance awards. Prior to approving the 2019 incentive compensation program, the Compensation Committee reviewed peer group data to assist in its determination of total target direct compensation (on an aggregate and individual basis), as well as the appropriate mix of equity versus cash, short-term versus long-term, and performance-based versus time-based awards to be paid or granted for 2019 performance. The Compensation Committee evaluates whether the compensation elements and levels that are provided to our named executive officers are generally appropriate relative to the compensation elements and levels provided to their counterparts at peer companies, in light of our performance relative to peers and in light of each named executive officer’s contribution to performance. This approach allows us to respond to competitive dynamics in the market and provides us with the flexibility to maintain and enhance our named executive officers’ engagement, focus, and motivation. 2019 Peer Group for 2019 Compensation Decisions The Compensation Committee, with the help of FPL, annually reviews the composition of our peer group and the criteria and data used in compiling our peer group to ensure that each company’s size and operations remain comparable to ours. The peer group recommended by FPL and used by the Compensation Committee for 2019 compensation decisions (2019 Peer Group) remains unchanged from the group used for 2018 compensation decisions. Our 2019 Peer Group consists of the following 18 public real estate companies:

  37. Compensation Process

    | 2019 PEER GROUP | | | Avalon Bay Communities, Inc. | National Retail Properties, Inc.* | | Boston Properties, Inc. | Spirit Realty Capital, Inc.* | | Digital Realty Trust, Inc. | The Macerich Company | | Equinix, Inc. | UDR, Inc. | | Essex Property Trust, Inc. | Ventas, Inc. | | Federal Realty Investment Trust | VEREIT, Inc.* | | Healthpeak Properties, Inc. | Vornado Realty Trust | | Host Hotels & Resorts, Inc. | W.P. Carey, Inc.* | | Kimco Realty Corporation | Welltower, Inc. |

  38. Compensation Process

    *Denotes a net lease peer The companies in our 2019 Peer Group focus on a variety of asset classes with similar lease types, and those that are similar to us in size in terms of total market capitalization (common and preferred stock, partnership units convertible into stock and long and short-term debt) and equity market capitalization (common stock and convertible partnership units). The Compensation Committee believes that total market and equity market capitalization are the most relevant indicators of size for real estate companies, acknowledging that other industries may use different indicators like revenue. Using total market capitalization and equity market capitalization to determine peer groups is consistent with real estate industry practices. The companies were selected so that our total and equity market capitalization remained near the median of the peer group. All companies selected were less than 2.0x our size based on total market capitalization, and the majority of companies selected were below our size based on total market capitalization as further demonstrated in the 2019 Peer Group Comparison chart below. Larger companies included in the 2019 Peer Group balance the inclusion of our net lease peers, which generally are of significantly smaller size, such as Spirit Realty Capital, Inc. (approximately 20% of our total market capitalization) and National Retail Properties, Inc. (approximately 45% of our total market capitalization). 2019 Peer Group Comparison (1) (in billions)

  39. Compensation Process

    | (1) As of December 31, 2018, the 2019 Peer Group had total market capitalization ranging from approximately $5.3 billion to $42.2 billion, placing us in the 67th percentile of our peer group. In terms of equity market capitalization, we were in the 72nd percentile of our peer group. Data sourced from S&P Global Market Intelligence as of December 31, 2018. |

  40. Compensation Process

    The Compensation Committee evaluates our peer group annually and may make adjustments to this peer group to reflect changes in the size or operations of the company or our peers. Please refer to page 44 for a discussion of the changes made to our 2020 peer group. Management Involvement In setting compensation for named executive officers in 2019, the Compensation Committee solicited input from the CEO concerning each of the named executive officers other than himself. In addition, from time to time, the Compensation Committee will direct management to work with the Compensation Committee’s consultant in providing proposals, program design, and compensation recommendations. Each year, the CEO provides the Compensation Committee with a report of the company’s operating and financial results for the past fiscal year relative to the company’s performance metrics. He also discusses his personal assessment of individual performance of each of the other named executive officers. In addition, at the request of the Compensation Committee, the CEO makes recommendations regarding salary and incentive compensation awards for each named executive officer other than himself. The Compensation Committee considers these recommendations and other factors as discussed above in making the final determinations.

  41. Elements of Compensation

    | ELEMENT | OBJECTIVE SERVED | | Base Salary | Fixed base pay rewards performance of core job duties and recognizes individual achievements, contributions, and experience. | | Short-term Incentive Program | Variable cash compensation motivates each executive to achieve our short-term corporate operating and financial goals, rewards personal performance, aligns the interests of executives with stockholders, and facilitates executive retention. | | Long-term Incentive Program | Variable equity compensation motivates executives to achieve long-term financial goals, such as relative TSR, balance sheet strength, and consistency of our dividend. | | Time-Based Restricted Shares | Fixed equity compensation that vests over future periods fosters retention and aligns the named executive officers’ interest with the best interests of the company. |

  42. Elements of Compensation

    Incentive Programs and Performance Metrics Each year, the Compensation Committee, with input from FPL, reviews the metrics underlying the short-term and long-term incentive programs, and considers various industry performance indicators, including GAAP and non-GAAP earnings metrics. The Compensation Committee believes that the current mix of operational, liquidity, and financial earning metrics used for the 2019 performance year aligns with our strategy to attain long-term financial stability that will support sustained cash flows beneficial to our stockholders. In 2019, consistent with peer group compensation practices, the Compensation Committee maintained STIP and LTIP programs with maximum payouts at 200% of target, which required a corresponding level of rigor relative to projections to achieve maximum performance to further motivate and reward outstanding performance. The composition of our programs are weighted heavily in equity, along with a portion of compensation tied to long term, three-year performance. Total Target Direct Compensation The Compensation Committee worked with FPL to determine the levels of total target direct compensation to achieve the appropriate balance between (i) cash and equity compensation, (ii) long-term and short-term compensation, (iii) performance-based and time-based equity, and (iv) fixed and variable or at-risk compensation. As an initial reference point, the Committee reviewed the median benchmark of each executive as well as the aggregate level of total target direct compensation. This process allows the Committee to ensure pay is competitive for the individual and account for the individual’s tenure and experience, as well as ensure that the total amount for our executive team is reasonable. The Compensation Committee reviewed the median and aggregate total target direct compensation within our peer group based on market data provided in January 2019 by FPL. When establishing total target direct compensation levels for each named executive officer, the Compensation Committee gave consideration and special emphasis to individuals’ personal contributions to the organization, as well as skill sets, qualifications, and experience, seeking to incentivize high performing named executive officers with competitive pay. After review and consideration, the Compensation Committee approved the following total target direct compensation and structure for 2019 compensation. Total target direct compensation for 2019 was composed of (i) base salary, (ii) target annual short-term incentive opportunity (awarded in cash), (iii) performance shares, and (iv) the annual grant of time-based restricted shares.

  43. Elements of Compensation

    | CEO ANNUAL CASH | | CEO ANNUAL EQUITY | | CEO TOTAL | | ANNUAL SALARY | T ARGET STIP CASH AWARD | TARGET LTIP PERFORMANCE SHARES | TIME-BASED LTIP RESTRICTED SHARES | TOTAL TARGET DIRECT COMPENSATION | | $850,000 | $1,487,500 | $3,000,000 | $1,000,000 | $6,337,500 |

  44. Elements of Compensation

    CEO Total Target Direct Compensation The Compensation Committee believes that a significant portion of executive compensation should be at-risk and tied to our performance in order to best align management’s interests with the best interests of the company. In 2019, approximately 71% of our CEO’s total target direct compensation consisted of compensation that is at-risk based on achievement of certain objective performance metrics. General Note to Discussion of Pay Components Some of the components of 2019 compensation disclosed in the following sections of this “Compensation Discussion and Analysis” section differ from the “Summary Compensation Table” on page 47. SEC rules require that the Summary Compensation Table include equity compensation in the year granted, while in our case, the Compensation Committee awards time-based restricted stock equity compensation after the performance year, upon the successful completion of the external year-end audit process. Therefore, time-based equity awards granted in February 2019 for the 2018 performance year are shown in the Summary Compensation Table as 2019 compensation. The time-based restricted stock equity awards for 2019 discussed in the following sections for all named executive officers will be included in the Summary Compensation Table in next year’s proxy statement. Base Salaries In connection with its review of fiscal 2018 performance, and in consideration of the increased responsibilities that come with the continued growth of the company, the Compensation Committee decided to increase the base salaries paid to certain of our named executive officers commencing on January 1, 2019. When making its decision to increase 2019 salaries, the Compensation Committee sought to incentivize high-performing named executive officers with competitive pay. The 2018 and 2019 annualized base salaries are reflected in the table below.

  45. Elements of Compensation

    Short-Term Incentive Program (STIP) During February 2019, the Compensation Committee approved the 2019 STIP, which is structured so that the named executive officers’ annual incentive awards closely align with the company’s operating and financial performance. The components of the 2019 STIP were as follows:

  46. Elements of Compensation

    | ✓ | No compensation was awarded for below-threshold performance and maximum payouts were capped at 200% of target. |

  47. Elements of Compensation

    | PERFORMANCE GOALS | WEIGHTING | THRESHOLD 50% | TARGET 100% | MAXIMUM 200% | 2019 ACTUAL | 2019 % EARNED (2) | | AFFO per share(1) | 40% | $3.23 | $3.28 | $3.32 | $3.32 | 200% | | Fixed charge coverage ratio | 20% | 3.9x | 4.2x | 4.5x | 5.0x | 200% | | Portfolio occupancy | 10% | 96.75% | 98.00% | 98.40% | 98.60% | 200% | | Total Weighted Payout Prior to Individual Performance | | | | | | 200% |

  48. AFFO per share

    AFFO per share Why we believe this metric is important: We believe that AFFO per share, a non-GAAP financial measure, provides useful information to investors because it is a widely accepted industry measure of the operating performance of REITs that is used by industry analysts and investors who look at and compare those companies. In particular, AFFO per share is included in the compensation program because it provides an additional measure to compare the operating performance of REITs without having to account for differing depreciation assumptions and other unique revenue and expense items which we believe are not pertinent to measuring a particular company’s on-going operating performance. Therefore, we determined that AFFO per share is an appropriate performance metric, and that the most appropriate GAAP performance metric to which AFFO should be reconciled is net income available to common stockholders per share. How the Compensation Committee set the 2019 goal: In our 2019 public guidance at the time the performance goals were set, we projected AFFO per share in a range of $3.25 to $3.31. Our 2019 target performance was set at $3.28 per share, or the midpoint of our performance benchmark range. The range of $0.04 to $0.05 per share around target resulted in a threshold of $3.23 per share and a maximum of $3.32 per share. The threshold of $3.23 per share exceeded our generation of $3.19 in AFFO per share in 2018 by $0.04. The maximum score was set at $0.01 per share above the high end of our public guidance at the time the performance goals were set. Maximum performance would only be achieved if we exceeded the high end of such guidance. AFFO per share for 2019 was $3.32, resulting in an achievement of 200% of target. AFFO of $3.32 per share outperformed target primarily due to higher-than-anticipated acquisition growth. Acquisition growth continues to be challenging due to lower cap rates and general market factors in the real estate industry; therefore, attaining $3.7 billion in acquisitions requires extensive research, discipline and a well-established strategy.

  49. Portfolio Occupancy

    | | INCENTIVE OPPORTUNITY | | EARNED INCENTIVE COMPENSATION | | | NAMED EXECUTIVE OFFICER | TARGET ANNUAL INCENTIVE(1) | MAXIMUM ANNUAL INCENTIVE(1) | PERCENTAGE OF MAXIMUM EARNED(2) | ACTUAL 2019 INCENTIVE EARNED | | Sumit Roy | $1,487,500 | $2,975,000 | 96.3% | $2,863,438 | | Paul M. Meurer | 669,000 | 1,338,000 | 81.3% | 1,087,125 | | Michael R. Pfeiffer | 508,000 | 1,016,000 | 96.3% | 977,900 | | Neil M. Abraham | 422,500 | 845,000 | 96.3% | 813,313 | | Mark E. Hagan | 395,000 | 790,000 | 92.5% | 730,750 |

  50. Portfolio Occupancy

    | (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. |

  51. Portfolio Occupancy

    | Relative TSR Performance – Weighted 71% Debt-to-Adjusted EBITDAre Ratio – Weighted 13% Dividend per Share Growth Rate – Weighted 16% |

  52. Portfolio Occupancy

    | ✓ | Long-term performance shares were awarded in February 2019 and will be earned based on our performance over the three-year period from January 2019 to December 2021. |

  53. Portfolio Occupancy

    | ✓ | 50% of the performance shares earned based on the achievement of the performance goals during the 2019-2021 performance period will vest on January 1, 2022, and the remaining 50% will vest on January 1, 2023, 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. |

  54. Portfolio Occupancy

    | ✓ | 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, 2019 through the date on which the shares are issued. |

  55. Portfolio Occupancy

    | PERFORMANCE GOALS | WEIGHTING | THRESHOLD 50%(1) | TARGET 100% | MAXIMUM 200%(1) | | TSR ranking relative to MSCI US REIT Index(2) | 45% | 35th Percentile | 55th Percentile | 80th Percentile (or greater) | | TSR ranking relative to J.P. Morgan Net Lease Peer Group(2) | 26% | 35th Percentile | 55th Percentile | 80th Percentile (or greater) | | Dividend per share Growth Rate | 16% | 2.0% | 6.0% | 10.0% | | Debt-to-Adjusted EBITDAre Ratio(3) | 13% | 6.1x | 5.75x | 5.5x (or less) |

  56. Portfolio Occupancy

    | (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. |

  57. Debt-to-Adjusted EBITDAre Ratio

    | NAMED EXECUTIVE OFFICER | PERFORMANCE SHARE TARGET DOLLAR VALUE | PERFORMANCE SHARES GRANTED AT TARGET(1) | | Sumit Roy | $3,000,000 | 50,847 | | Paul M. Meurer | 1,073,250 | 18,191 | | Michael R. Pfeiffer | 819,000 | 13,881 | | Neil M. Abraham | 763,125 | 12,934 | | Mark E. Hagan | 708,750 | 12,013 |

  58. Debt-to-Adjusted EBITDAre Ratio

    | (1) The number of performance shares granted at target value reflect the grant date fair value of $61.30 per share (excluding the dividend equivalent rights), using a multifactor Monte Carlo simulation model for the market conditions associated with the TSR performance goals, valued at $40.91 per share, plus $20.39 per share for the two performance conditions of debt-to-Adjusted EBITDAre ratio and dividend growth rate. |

  59. Debt-to-Adjusted EBITDAre Ratio

    | (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. |

  60. Debt-to-Adjusted EBITDAre Ratio

    Restricted Shares Granted in February 2019 for 2018 Performance Our time-vesting, restricted share and restricted share unit awards are typically granted after fiscal year-end in recognition of the company’s prior year performance under the performance metrics for that year. For a discussion of restricted share awards granted in February 2019, which were intended to be compensation for 2018, see pages 36 to 43 of the company’s 2019 Proxy Statement filed with the SEC on April 1, 2019. Restricted Share Vesting Our restricted shares and restricted share units typically vest 25% per year on January 1, but are subject to accelerated vesting in the event of retirement, which is defined as a voluntary termination of employment by persons who are at least 60 years of age and who have provided at least ten years of service to the company. The Compensation Committee believes that this vesting approach is (i) consistent with market practices, (ii) easy to administer, and (iii) preserves the benefit of acceleration, which occurs only upon actual retirement. Given that Mr. Pfeiffer is eligible for retirement prior to the end of the vesting period, he was granted RSUs in February 2017, February 2018, February 2019, and February 2020 instead of restricted shares in order to preserve the deferral of his income taxation until the issuance of the shares upon vesting. The RSUs have dividend equivalents that pay out concurrently on the payment date of the dividend, regardless of the vested status of the RSUs. This provides the RSUs with the same economic rights as shares of restricted stock, which are entitled to cash dividends on the dividend payment date. 2017 LTIP Award Payout 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 following metrics during the three-year performance period ending December 31, 2019:

  61. Debt-to-Adjusted EBITDAre Ratio

    | PERFORMANCE GOALS | WEIGHTING | THRESHOLD 50% | TARGET 100% | MAXIMUM 200% | 2019 ACTUAL | % EARNED | | TSR ranking relative to MSCI US REIT Index | 45% | 35th Percentile | 55th Percentile | 80th Percentile (or greater) | 75th Percentile | 179.2% | | TSR ranking relative to J.P. Morgan Net Lease Peer Group | 26% | 35th Percentile | 55th Percentile | 80th Percentile (or greater) | 55th Percentile | 98.8%(1) | | Debt-to-EBITDA Ratio | 13% | 6.3x | 6.0x | 5.5x (or less) | 5.5x | 200% | | Dividend Per Share Growth Rate | 16% | 2% | 6% | 12% | 13.3% | 200% | | Total Weighted Payout | | | | | | 164.6% |

  62. Debt-to-Adjusted EBITDAre Ratio

    | NAMED EXECUTIVE OFFICER | TARGET PERFORMANCE SHARES GRANTED | PERFORMANCE SHARES EARNED | | Sumit Roy | 24,955 | 41,079 | | Paul M. Meurer | 13,872 | 22,835 | | Michael R. Pfeiffer | 9,982 | 16,431 | | Neil M. Abraham | 9,982 | 16,431 |

  63. Debt-to-Adjusted EBITDAre Ratio

    | NAMED EXECUTIVE OFFICER | 2020 BASE SALARY | 2020 TARGET STIP(1) | 2020 TARGET LTIP(2) | 2020 TOTAL TARGET COMPENSATION | | Sumit Roy | $900,000 | $1,600,000 | $5,000,000 | $7,500,000 | | Michael R. Pfeiffer | 515,000 | 517,000 | 1,118,000 | 2,150,000 | | Neil M. Abraham | 475,000 | 427,000 | 1,148,000 | 2,050,000 | | Mark E. Hagan | 430,000 | 425,000 | 1,045,000 | 1,900,000 |

  64. Debt-to-Adjusted EBITDAre Ratio

    | (1) The 2020 STIP will be awarded entirely in cash. |

  65. Debt-to-Adjusted EBITDAre Ratio

    | (2) The 2020 LTIP consists of awards of performance shares and time-vesting restricted stock or RSUs. Approximately 75% of the NEOs’ 2020 LTIP opportunity is in the form of performance shares and 25% is in the form of time-vesting restricted stock or RSUs. |

  66. Debt-to-Adjusted EBITDAre Ratio

    | 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% | 6.0% | 9.0% | | Net Debt-to-Adjusted EBITDAre Ratio | 15% | 6.1x | 5.75x | 5.5x (or less) |

  67. Debt-to-Adjusted EBITDAre Ratio

    Changes to 2020 Peer Group The Compensation Committee reviews our peer group and makes updates from time to time. Consistent with our standard practices, the Compensation Committee, with the help of FPL, reviewed the composition of our 2019 Peer Group to ensure that each company’s size and operations remained comparable to ours for 2020. Given our company’s continued growth during 2019, and that we have been above the median of our peer group for the past several years, the Compensation Committee determined that substitutions were warranted to ensure, among other factors, that our total and equity market capitalization remained near the median of the peer group for 2020. The Compensation Committee met in November 2019 to review the peer group to be used for 2020 compensation decisions (2020 Peer Group) and decided to make the following modifications to the 2020 Peer Group, as recommended by FPL:

  68. Debt-to-Adjusted EBITDAre Ratio

    Alexandria Real Estate Equities, Inc., Equity Residential, Public Storage, and Simon Property Group, Inc. were added to incorporate additional appropriately sized, best-in-class S&P 500 REITs, and a similar level of operational intensity. Equinix, Inc., Federal Realty Investment Trust, National Retail Properties, Inc., Spirit Realty Capital, Inc., The Macerich Company, and UDR, Inc. were removed based on relative size and/or additional qualitative factors. These substitutions resulted in a net decrease of two companies to the number of peers and positions us at the 50th percentile in terms of total market capitalization, and at the 63rd percentile in terms of equity market capitalization relative to this updated peer group. The Compensation Committee evaluates our peer group periodically and may make adjustments to this peer group to reflect changes in the size or operations of the company or our peers. Severance and Change in Control Arrangements Effective as of January 15, 2019, the Compensation Committee adopted the Company’s Executive Severance Plan (the “Severance Plan”), which provides severance compensation upon the occurrence of certain events. In connection with the adoption of the Severance Plan, the employment agreements previously in place between the company and Messrs. Roy, Meurer, Pfeiffer, Abraham and Hagan were terminated. In addition, our award agreements provide certain rights in connection with a change in control and certain terminations of employment. The following is a list of the scenarios under which the named executive officers have rights to receive severance compensation.

  69. Debt-to-Adjusted EBITDAre Ratio

    | ✓ | Change in Control Termination |

  70. Debt-to-Adjusted EBITDAre Ratio

    Further detail surrounding the payments and benefits upon the occurrence of each scenario can be found in the section titled “Potential Payments Upon Termination or Change in Control” on page 51. The Compensation Committee believes these benefits are reasonable. The payments and benefit levels under the Severance Plan did not influence and were not influenced by other elements of compensation. The Severance Plan was designed to help (i) attract and retain key employees, (ii) preserve key employee’s morale and productivity, (iii) align with best practices, and (iv) promote continuity of management in the event of an actual or threatened change in control. These change in control benefits allow executives to assess takeover bids objectively without regard to the potential impact on their individual job security. Severance Agreement with Mr. Meurer Mr. Meurer departed from his role as Chief Financial Officer of the company effective January 29, 2020. Mr. Meurer continued to serve as a senior advisor to the company at his most current annual base salary rate during a transition period which ended on March 31, 2020. Please refer to footnote 6 to the “Termination and Change in Control Scenario Table” on page 55 for additional details regarding his severance payments. Other Benefits and Policies We provide medical and other benefits to our named executive officers that are similar to those benefits offered to all of our full-time employees, including a 401(k) plan with a matching contribution by the company and coverage under a health and disability insurance program. Executive Stock Ownership Requirements Effective January 1, 2013, the Board of Directors implemented stock ownership requirements for the company’s CEO and the other named executive officers to closely align the interests of these individuals with the best interests of the company. The minimum share requirement is five times base salary for our CEO and three times base salary for the other named executive officers using their salary on January 1, 2013 or the date they became subject to the stock ownership requirements. Each executive has five years from the later of the date of adoption or date of appointment to an executive-level position to achieve the requirement. All vested and unvested restricted share and RSU awards, and earned performance share units subject to time vesting qualify towards satisfaction of the requirement. Performance shares do not qualify towards the requirement. Compliance is evaluated on an annual basis as of December 31 of each year. The following table sets forth the requirements for each of our named executive officers:

  71. Summary Compensation Table

    Summary Compensation Table The following table sets forth information concerning the compensation of our President and Chief Executive Officer, former Chief Financial Officer and three other most highly compensated executive officers (collectively, the named executive officers), for the fiscal years ended December 31, 2019, 2018 and 2017. In general, non-equity incentive plan compensation aligns with the performance year noted; however, stock awards are included in the year of grant which may not align with the performance year to which they relate.

  72. Summary Compensation Table

    | NAME AND PRINCIPAL POSITION IN 2019 | YEAR | SALARY(1) | STOCK AWARDS(2)(3) | NON-EQUITY INCENTIVE PLAN COMPENSATION(4) | ALL OTHER COMPENSATION(5) | TOTAL | | Sumit Roy President, Chief Executive Officer | 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 | | | 2017 | 550,000 | 2,666,419 | 1,449,643 | 68,786 | 4,734,848 | | Paul M. Meurer Executive Vice President, Chief Financial Officer and Treasurer | 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 | | | 2017 | 475,000 | 1,550,480 | 954,241 | 67,082 | 3,046,803 | | Michael R. Pfeiffer(6) Executive Vice President, Chief Administrative Officer, General Counsel and Secretary | 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 | | | 2017 | 450,000 | 1,060,783 | 655,714 | 60,960 | 2,227,457 | | Neil M. Abraham Executive Vice President, Chief Strategy Officer | 2019 | 410,000 | 988,353 | 813,313 | 45,010 | 2,256,676 | | | 2018 | 385,000 | 903,403 | 635,250 | 9,240 | 1,932,893 | | | 2017 | 375,000 | 1,006,242 | 546,429 | 9,090 | 1,936,761 | | Mark E. Hagan(7) Executive Vice President, Chief Investment Officer | 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 |

  73. Summary Compensation Table

    | (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. |

  74. Summary Compensation Table

    | (2) For 2019, the amounts shown represent the grant date fair value of restricted stock grants on February 13, 2019 under our annual time-based restricted stock program and the grant date fair value of performance share grants on February 13, 2019, in each case, calculated in accordance with Accounting Standards Codification (ASC) Topic 718. 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 $61.30 per share, using a multifactor Monte Carlo simulation model, based on two market conditions associated with TSR performance goals, valued at $40.91 per share, plus $20.39 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 $5.34 per share determined for the Dividend Equivalent Rights (DERs), associated with the market conditions. The Monte Carlo inputs for the 2019 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 2.5%, 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 4.2% 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 and the volatility implied by the prices of publicly traded options on the company’s common stock. The maximum grant date fair values of the performance shares, assuming maximum performance of all conditions and employing the $61.30 per share valuation for the February 13, 2019 grants are as follows: |

  75. Summary Compensation Table

    | NAMED EXECUTIVE OFFICER | GRANT DATE FAIR VALUE | MAXIMUM VALUE | | Sumit Roy | $3,116,678 | $6,233,356 | | Paul M. Meurer | 1,115,023 | 2,230,046 | | Michael R. Pfeiffer | 850,838 | 1,701,676 | | Neil M. Abraham | 792,797 | 1,585,594 | | Mark E. Hagan | 736,331 | 1,472,662 |

  76. Summary Compensation Table

    | (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 February 13, 2020, which represents the restricted share awards earned by each of the named executive officers, including the restricted share units earned by Mr. Pfeiffer, based on 2019 performance under our annual time-based restricted stock program. See footnote 3 to the “Grants of Plan-Based Awards Table.” |

  77. Summary Compensation Table

    | (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 2019, 2018 and 2017 STIP were paid entirely in the form of cash. See “Compensation Discussion and Analysis—Short-Term Incentive Program” on page 35 for more information. |

  78. Summary Compensation Table

    | (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 2019, and dividends paid on earned performance shares. |

  79. Summary Compensation Table

    | NAMED EXECUTIVE OFFICER | 401(k) MATCHING CONTRIBUTIONS | GROUP TERM LIFE INSURANCE PAYMENTS | DIVIDENDS ON EARNED PERFORMANCE SHARES | | Sumit Roy | $8,400 | $1,518 | $159,883 | | Paul M. Meurer | 8,400 | 1,518 | 123,855 | | Michael R. Pfeiffer | 8,400 | 2,838 | 97,453 | | Neil M. Abraham | 8,400 | 990 | 35,620 | | Mark E. Hagan | 8,400 | 1,518 | — |

  80. Summary Compensation Table

    | (6) Mr. Pfeiffer was promoted to Chief Administrative Officer effective February 13, 2019. |

  81. Summary Compensation Table

    | (7) Mr. Hagan became our Executive Vice President, Chief Investment Officer in May 2018, accordingly, we are only presenting compensation for 2019 and 2018. |

  82. Grants of Plan-Based Awards Table

    Grants of Plan-Based Awards Table The following table sets forth summary information concerning all grants of plan-based awards made to the named executive officers during 2019. These awards consist of cash bonus amounts pursuant to the 2018 STIP, time-based restricted stock awards pursuant to the 2018 compensation program, and performance shares granted pursuant to the 2019 LTIP. Additionally, we have provided supplemental information in footnote 3 with respect to stock awards pursuant to the 2019 STIP granted in February 2020, and time-based restricted stock awards granted in February 2020 that is considered 2019 compensation.

  83. Grants of Plan-Based Awards Table

    | 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 | 2/13/2019 | — | — | — | — | — | — | 7,394 | $514,444 | | | 2/13/2019 | — | — | — | 25,424 | 50,847 | 101,694 | — | 3,116,678 | | | | $743,750 | $1,487,500 | $2,975,000 | — | — | — | — | — | | Paul M. Meurer | 2/13/2019 | — | — | — | — | — | — | 4,212 | 293,056 | | | 2/13/2019 | — | — | — | 9,096 | 18,191 | 36,382 | — | 1,115,023 | | | | 334,500 | 669,000 | 1,338,000 | — | — | — | — | — | | Michael R. Pfeiffer | 2/13/2019 | — | — | — | — | — | — | 2,715 | 188,889 | | | 2/13/2019 | — | — | — | 6,941 | 13,881 | 27,762 | — | 850,838 | | | | 254,000 | 508,000 | 1,016,000 | — | — | — | — | — | | Neil M. Abraham | 2/13/2019 | — | — | — | — | — | — | 2,811 | 195,556 | | | 2/13/2019 | — | — | — | 6,467 | 12,934 | 25,868 | — | 792,797 | | | | 211,250 | 422,500 | 845,000 | — | — | — | — | — | | Mark E. Hagan | 2/13/2019 | — | — | — | — | — | — | 2,491 | 173,333 | | | 2/13/2019 | — | — | — | 6,007 | 12,013 | 24,026 | — | 736,331 | | | | 197,500 | 395,000 | 790,000 | — | — | — | — | — |

  84. Grants of Plan-Based Awards Table

    | (1) These columns represent cash incentive amounts that could have been paid to the named executive officers under the STIP for 2019 performance. These targets were established by the Compensation Committee on February 13, 2019. 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 35. The actual cash paid in February 2020 for performance in 2019 are listed under 2019 in the “Summary Compensation Table” on page 47 as “Non-Equity Incentive Plan Compensation.” |

  85. Grants of Plan-Based Awards Table

    | (2) Amounts shown as granted on February 13, 2019 reflect the Threshold, Target, and Maximum awards for the 2019-2021 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 39. 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. |

  86. Grants of Plan-Based Awards Table

    | (3) The February 13, 2019 stock awards shown in the first row of this column reflect the annual grants of time-based restricted stock made in February 2019, at a price of $69.58 per share, based on 2018 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 13, 2020, representing the annual grants of time-based restricted stock intended as 2019 compensation and granted in February 2020. Thus, the following chart reflects all grants made as compensation for 2019 performance: |

  87. Grants of Plan-Based Awards Table

    | NAMED EXECUTIVE OFFICER | TIME-BASED RESTRICTED SHARES GRANTED UNDER 2019 LTIP(a) | PERFORMANCE SHARES GRANTED UNDER 2019 LTIP | TOTAL STOCK AWARD COMPENSATION FOR 2019 PERFORMANCE | TOTAL 2019 STOCK AWARD COMPENSATION PRESENTED IN SUMMARY COMPENSATION TABLE | | Sumit Roy | $1,000,000 | $3,116,678 | $4,116,678 | $3,631,122 | | Paul M. Meurer | 357,750 | 1,115,023 | 1,472,773 | 1,408,079 | | Michael R. Pfeiffer(b) | 273,000 | 850,838 | 1,123,838 | 1,039,727 | | Neil M. Abraham | 254,375 | 792,797 | 1,047,172 | 988,353 | | Mark E. Hagan | 236,250 | 736,331 | 972,581 | 909,664 |

  88. Grants of Plan-Based Awards Table

    | (a) The grant date fair value of restricted stock has been calculated by multiplying the closing market price of our common stock at February 13, 2020 of $78.79 by the number of shares of restricted stock awarded in February 2020 for 2019 performance, as prescribed under ASC Topic 718. |

  89. Grants of Plan-Based Awards Table

    | (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. |

  90. Grants of Plan-Based Awards Table

    | (4) For restricted stock granted on February 13, 2019, the grant date fair value has been calculated by multiplying the closing market price of our common stock on the grant date of $69.58 per share by the number of restricted stock awards. Fair value for performance |

  91. Grants of Plan-Based Awards Table

    shares granted on February 13, 2019 was estimated on the date of grant at $61.30 per share, using a multifactor Monte Carlo simulation model for the market conditions associated with the TSR performance goals, valued at $40.91 per share, plus $20.39 per share for the performance conditions of debt-to-Adjusted EBITDAre ratio and dividend growth rate, reflecting the probable outcome of such performance conditions, and excludes the value of $5.34 per share determined for the DERs associated with the market conditions. The Monte Carlo inputs for the 2019 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 2.5%, 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 4.2% 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 and the volatility implied by the prices of publicly traded options on the company’s common stock. The grant date fair value for the restricted stock and performance shares are computed in accordance with ASC Topic 718.

  92. Grants of Plan-Based Awards Table

    | (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. |

  93. Outstanding Equity Awards Table as of December 31, 2019

    Outstanding Equity Awards Table as of December 31, 2019 The following table sets forth summary information concerning outstanding restricted stock and performance shares held by each named executive officer as of December 31, 2019. None of the named executive officers held any exercisable or unexercisable options as of December 31, 2019.

  94. Outstanding Equity Awards Table as of December 31, 2019

    | | STOCK AWARDS | | | | | NAMED EXECUTIVE OFFICER | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED AS OF DECEMBER 31, 2019(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) | 86,678 | $6,382,101 | 171,913 | $12,657,954 | | Paul M. Meurer(5) | 27,199 | 2,002,662 | 86,590 | 6,375,622 | | Michael R. Pfeiffer(6) | 19,116 | 1,407,511 | 59,681 | 4,394,312 | | Neil M. Abraham(7) | 16,527 | 1,216,883 | 59,770 | 4,400,865 | | Mark E. Hagan(8) | 8,227 | 605,754 | 37,751 | 2,779,606 |

  95. Outstanding Equity Awards Table as of December 31, 2019

    | (1) The amounts in this column represent the portion of restricted stock awards and units that were granted from 1/15/15 through 12/31/19 to the named executive officers and that were unvested at 12/31/19, and the unvested performance shares and units earned for the 2016-2018 performance period that remained subject to service vesting conditions. In February 2019, the Compensation Committee certified the achievement for the 2016-2018 performance shares that were granted in January 2016 based on our performance relative to the metrics during the three-year performance period. |

  96. Outstanding Equity Awards Table as of December 31, 2019

    | (2) Market value has been calculated by multiplying the closing market price of our common stock at 12/31/19 of $73.63 per share by the outstanding shares of restricted stock awards for each named executive officer. |

  97. Outstanding Equity Awards Table as of December 31, 2019

    | (3) This column represents unvested performance shares and units earned for the 2017-2019 performance period based on actual performance. 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. This column also includes the performance shares as if they were earned at the maximum level for the 2018-2020 performance period, since company performance is currently between threshold and maximum levels for this performance period. The performance shares for the 2019-2021 performance period represent shares earned at the target level since company performance is between threshold and target 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. |

  98. Outstanding Equity Awards Table as of December 31, 2019

    | (4) The restricted stock awards for Mr. Roy vest according to the following schedule: 19,086 shares vested on 1/1/20, 2,303 shares vest on 11/10/20, 15,068 shares vest on 1/1/21, 17,376 shares vest on 10/16/21, 4,211 shares vest on 1/1/22, 17,376 shares vest on 10/16/22, and 1,849 shares vest on 1/1/23. The 9,409 unvested performance shares earned for the 2016-2018 performance period vested on 1/1/20. |

  99. Outstanding Equity Awards Table as of December 31, 2019

    | (5) Of the 20,314 restricted stock awards outstanding for Mr. Meurer, 8,935 shares vested on 1/1/20. The 6,885 unvested performance shares earned for the 2016-2018 performance period also vested on 1/1/20. In accordance with the Realty Income Corporation Executive Severance Plan (the “Severance Plan”), each remaining outstanding company equity-based award held by Mr. Meurer that is subject to time-based vesting will vest in full on March 31, 2020, the date of his termination of employment. In addition, the company will grant him his annual 2019 equity grant with a fair value of $357,750 divided by the closing price of our common stock on February 13, 2020. The performance-vesting restricted stock units granted to Mr. Meurer as of February 16, 2018 will vest based on actual company performance as of the date of his termination of employment, without pro ration based on the period of his employment. The performance-vesting restricted stock units granted to Mr. Meurer as of February 13, 2019 will vest based on actual company performance as of the date of his termination of employment, with proration based on the period of his employment. |

  100. Outstanding Equity Awards Table as of December 31, 2019

    | (6) The restricted stock and restricted stock unit awards for Mr. Pfeiffer vest according to the following schedule: 5,942 shares vested on 1/1/20, 922 shares vest on 11/10/20, 4,505 shares vest on 1/1/21, 1,624 shares vest on 1/1/22, and 679 shares vest on 1/1/23. The 5,444 unvested performance shares earned for the 2016-2018 performance period vested on 1/1/20. |

  101. Outstanding Equity Awards Table as of December 31, 2019

    | (7) The restricted stock awards for Mr. Abraham vest according to the following schedule: 4,398 shares vested on 1/1/20, 922 shares vest on 11/10/20, 4,400 shares vest on 1/1/21, 1,648 shares vest on 1/1/22, and 703 shares vest on 1/1/23. The 4,456 unvested performance shares earned for the 2016-2018 performance period vested on 1/1/20. |

  102. Outstanding Equity Awards Table as of December 31, 2019

    | (8) The restricted stock awards for Mr. Hagan vest according to the following schedule: 622 shares vested on 1/1/20, 1,912 shares vest on 5/21/20, 623 shares vest on 1/1/21, 1,912 shares vest on 5/21/21, 623 shares vest on 1/1/22, 1,912 shares vest on 5/21/22, and 623 shares vest on 1/1/23. |

  103. Stock Vested During 2019 Table

    Stock Vested During 2019 Table The following table sets forth summary information concerning the vesting of restricted stock and performance shares for each named executive officer during the year ended December 31, 2019. None of the named executive officers held or exercised any stock options in 2019.

  104. Stock Vested During 2019 Table

    | | STOCK AWARDS | | | NAMED EXECUTIVE OFFICER | NUMBER OF SHARES ACQUIRED ON VESTING(1)(2) | VALUE REALIZED ON VESTING(3) | | Sumit Roy | 42,023 | $2,741,242 | | Paul M. Meurer | 27,020 | 1,760,587 | | Michael R. Pfeiffer | 20,684 | 1,351,747 | | Neil M. Abraham | 9,073 | 613,329 | | Mark E. Hagan | 1,911 | 131,955 |

  105. Stock Vested During 2019 Table

    | (1) For Messrs. Roy, Meurer, Pfeiffer and Abraham, this includes the portion of their stock awards that vested on January 1, 2019, February 13, 2019, and November 10, 2019. For Mr. Hagan, this includes the portion of his stock awards that vested on May 21, 2019. |

  106. Stock Vested During 2019 Table

    | (2) The number of shares acquired on vesting includes shares withheld to pay federal and state income taxes. |

  107. Stock Vested During 2019 Table

    | (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. |

  108. No Pension Benefits or Nonqualified Deferred Compensation

    No Pension Benefits or Nonqualified Deferred Compensation We do not provide any retirement benefits other than the opportunity to participate in a 401(k) plan. We do not currently sponsor any qualified or non-qualified defined benefit plans, any non-qualified defined contribution plans or deferred compensation plans. The Compensation Committee may elect to adopt such benefits if they determine that doing so is in the company’s best interests.

  109. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control Executive Severance Plan. In January 2019, the Compensation Committee adopted the Company’s Executive Severance Plan (the “Severance Plan”), which provides severance compensation upon the occurrence of certain events, subject to the executive’s execution and nonrevocation of a general release of claims in favor of the company. In addition, our award agreements provide certain rights in connection with a change of control and certain terminations of employment. During calendar year 2019, each of the named executive officers had the right to receive severance compensation upon the occurrence of certain events as specified in the Severance Plan. The Severance Plan provided that the named executive officers would be entitled to receive severance payments upon a “Qualifying Termination” which was defined as:

  110. Potential Payments Upon Termination or Change in Control

    | ✓ | a termination by us without “cause,” or |

  111. Potential Payments Upon Termination or Change in Control

    | ✓ | a “constructive termination” by the executive, as applicable. |

  112. Potential Payments Upon Termination or Change in Control

    Severance Plan for Mr. Roy. For Mr. Roy, the Severance Plan stipulated the following severance payments and benefits upon the occurrence of each scenario listed below:

  113. Potential Payments Upon Termination or Change in Control

    | 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 |

  114. Potential Payments Upon Termination or Change in Control

    | 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 |

  115. Potential Payments Upon Termination or 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 |

  116. Potential Payments Upon Termination or Change in Control

    Severance Plan for Named Executive Officers. For our named executive officers other than Mr. Roy, the Severance Plan stipulated the following severance payments and benefits upon the occurrence of each scenario listed below:

  117. Potential Payments Upon Termination or Change in Control

    | 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 |

  118. Potential Payments Upon Termination or Change in Control

    | 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 |

  119. Potential Payments Upon Termination or 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 |

  120. Potential Payments Upon Termination or Change in Control

    Additionally, compensation and benefits under the Severance Plan are contingent upon the executive's execution, and non-revocation, of a standard release of claims in favor of the company and continued compliance with restrictive covenants, including customary confidentiality provisions. Change in Control without a Qualifying Termination. Vesting of outstanding restricted stock awards that were granted prior to December 2015 accelerate in the event of a change in control without a Qualifying Termination. Restricted stock awards granted after December 2015 accelerate only if there is a Qualifying Termination following a change in control. Outstanding performance shares accelerate 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. Retirement. None of the named executive officers were retirement eligible as of December 31, 2019. In the event that an executive officer retires, which can occur after a named executive officer turns 60 and has provided ten years of service, the named executive officer is entitled to receive accelerated vesting of 100% of any equity awards granted. In the event of a retirement (employing the same 60-year-old with ten years of service definition), restricted stock awards granted will become fully vested. Additionally, in the event that a named executive officer retires during an outstanding performance period, the number of performance shares will vest based on the executive’s achievement of the performance goals through the retirement date, and pro-rated based on the amount of time the executive was employed during the performance period. If the named executive officer retires after the completion of the performance period, but prior to the vesting of performance shares earned, unvested performance shares will vest on the date of retirement. Termination for Cause. Upon termination for failure to perform duties, the named executive officer would not be entitled to any payment or benefit other than the payment of accrued but unpaid wages and accrued but unused vacation as of the date of such termination, and the pro-rated vesting of the portion of unvested restricted shares that are scheduled to vest at the next vesting date. Termination by Named Executive Officer. The named executive officer could also terminate the agreement at any time, upon two weeks’ notice to the company, which would not result in any severance payments.

  121. CEO Pay Ratio

    CEO Pay Ratio Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and applicable SEC rules, we have prepared the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees. For 2019, we used the same median employee that was identified in 2018 since there has been no change in our employee population or employee compensation arrangements that we believe would significantly impact our pay ratio disclosure. We then determined the annual total compensation of our median employee, which includes base salary for 2019, annual cash bonus earned for 2019, the grant date fair value of equity awards granted during the 2019 measurement period, health care costs paid by the company, matching 401(k) contributions, and the taxable cost of group term life insurance. The annual total compensation of our median employee for 2019 was $99,644. The annual total compensation for 2019 for Mr. Roy, our CEO, was $7,538,883, which includes compensation as disclosed in the “Summary Compensation Table” on page 47. Based on the foregoing, our estimate of the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee was 76 to 1. Given the different methodologies that various public companies use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.