REALTY INCOME CORPORATION Item 1.01. Entry into a Material Definitive Agreement.
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The description of the Separation and Distribution Agreement contained in this Current Report on Form 8-K (this "Current Report") does not purport to be complete and are qualified in their entirety by reference to the full text of the Separation and Distribution Agreement, attached as Exhibit 2.1 to this Current Report, which is incorporated by reference herein.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangements of
Certain Officers.
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Performance Shares
General. Pursuant to the performance share awards, each executive is eligible to vest in a number of performance shares ranging from 80% to 100% of the total performance shares granted, based on the attainment of the performance goals described below (the "Performance Goals") during a one-year period (with respect to AFFO accretion targets) or a two-year period (with respect to general and administrative expense synergies), in each case, commencing on the date on which the VEREIT Transaction closed (each a "Performance Period"), subject to the executive's continued service through the conclusion of the applicable Performance Period except as described below.
Performance Vesting. Performance shares are eligible to vest based on achievement of AFFO accretion targets (50%) and general and administrative expense synergies (50%), over the applicable Performance Period.
Each performance share was granted in tandem with a dividend equivalent award, which will entitle the applicable executive to payment of a cash amount equal to the aggregate dividends paid by the Company on vested performance shares. The executives will not be entitled to any payment in respect to dividend equivalents underlying performance shares that do not vest for any reason.
Upon the completion of the Performance Period, any performance shares that satisfy the applicable performance vesting condition ("Performance Vested Shares") will become fully vested and cease to be subject to forfeiture with respect to 50% of the Performance Vested Shares on each of (i) the completion of the applicable Performance Period, and (ii) the one year anniversary of the completion of the applicable Performance Period, in each case, subject to the executive's continued service through such date except as described below.
Change in Control. In the event of a change in control of the Company (as defined in the applicable award agreement) prior to the end of an applicable Performance Period, the performance shares will vest on a pro rata basis, based on the number of days that the executive was employed during the applicable Performance Period, determined based on actual achievement of the applicable Performance Goal (pro-rated as of such date) on the date of such change in control, subject to the executive's continued service until at least immediately prior to the change in control. In addition, all outstanding Performance Vested Shares (including any performance shares that become Performance Vested Shares in connection with such change in control, if any), will become fully vested and cease to be subject to forfeiture as of the date of the change in control, subject to the executive's continued service until at least immediately prior to the change in control.
Certain Terminations of Service. Except as otherwise described below, any performance shares that have not fully vested as of the date on which an executive's service terminates for any reason will be cancelled and forfeited by the executive.
If an executive's service terminates due to death or disability prior to the completion of the applicable Performance Period, the total number of performance shares subject to such award (and the corresponding dividend equivalents) will vest in full upon such termination.
If an executive's service is terminated by the Company without "cause" or by the executive by reason of (i) a "constructive termination" or, (ii) such executive's "retirement" (each such term as defined in the applicable award agreement), in any case, prior to the completion of an applicable Performance Period, the performance shares will vest on a pro rata basis, based on the number of days that the executive was employed during the applicable Performance Period, determined based on actual achievement of the applicable Performance Goals (pro-rated as of such date) on the date of such termination. Any performance shares that do not become Performance Vested will be cancelled and forfeited upon the completion of the Performance Period. In addition, in the event that such termination occurs following the end of the Performance Period but prior to the first anniversary of the completion of the Performance Period, all outstanding Performance Vested Shares will become fully vested and cease to be subject to forfeiture as of the date of such termination.
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Named Executive Officer Award Value Sumit Roy$ 2,250,000 Mark E. Hagan$ 712,500 Christie B. Kelly$ 675,000 Neil M. Abraham$ 675,000 Michelle Bushore$ 675,000
The foregoing description of the performance share awards is qualified in its
entirety by the full text of the form of performance share award agreement, a
copy of which will be filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended
One-Time Cash Bonus OnNovember 15, 2021 , in connection with the closing of the VEREIT Transaction, the Compensation Committee approved one-time cash bonuses to the executives as follows: Named Executive Officer Cash Bonus Amount Sumit Roy $ 750,000 Mark E. Hagan $ 237,500 Christie B. Kelly $ 225,000 Neil M. Abraham $ 225,000 Michelle Bushore $ 225,000
Fifty percent of each cash bonus will be paid to the executive within 30 days following the closing of the VEREIT Transaction and the remaining 50% will be paid within 30 days following the six month anniversary of the closing the VEREIT Transaction, subject to the applicable executive's continued employment on the payment date.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. Exhibit No Description 2.1 Separation and Distribution Agreement, by and amongRealty Income Corporation , Orion Office REIT Inc., andOrion Office REIT LP .* 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*Pursuant to Item 601 (6)(2) of Regulation S-K, the Disclosure Letters to the
Merger Agreement (identified therein) have been omitted from this Report and
will be furnished to the
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