Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Appointment of Christie B. Kelly as Chief Financial Officer
On October 12, 2020, the Board of Directors (the "Board") of Realty Income
Corporation (the "Company") appointed Christie B. Kelly as Chief Financial
Officer of the Company, effective as of January 19, 2021 (such date, or such
other date as may be determined by the Board, the "Appointment Date"). In
connection with Ms. Kelly's appointment, Ms. Kelly will resign as a member of
the Board, effective as of the Appointment Date.
In addition, in connection with Ms. Kelly's appointment as Chief Financial
Officer of the Company, the Compensation Committee of the Board (the
"Committee") approved the following compensation for Ms. Kelly as Chief
Financial Officer of the Company, effective as of the Appointment Date: an
annual base salary of $600,000, a target annual cash bonus of $600,000, an
initial target long-term incentive plan award of $1,800,000, and a relocation
allowance of $50,000. In addition, the Board approved, effective as of the
Appointment Date, an amendment to Ms. Kelly's outstanding restricted stock
awards granted under the Company's 2012 Incentive Award Plan that provides that
such restricted stock awards will continue to vest and be subject to forfeiture
based on Ms. Kelly's continued employment with the Company following the
Appointment Date, notwithstanding her resignation as a member of the Board.
Information about Ms. Kelly, including a biographical summary, information about
positions and offices she has held with the Company, her prior compensation
arrangements with the Company, and information about her business experience,
may be found in the Company's definitive proxy statement for the 2020 Annual
Meeting of Stockholders on Schedule 14A filed on April 1, 2020.
Participation in Executive Severance Plan
On October 12, 2020, in connection with Ms. Kelly's appointment as Chief
Financial Officer of the Company, the Committee designated Ms. Kelly as a
participant in the Company's Executive Severance Plan (the "Severance Plan"),
effective as of the Appointment Date, and Ms. Kelly and the Company entered into
a participation agreement under the Severance Plan (the "Participation
Agreement"), which will be effective upon the Appointment Date, in each case
subject to the commencement of Ms. Kelly's employment as Chief Financial Officer
of the Company. Pursuant to the Severance Plan and the Participation Agreement,
following the commencement of Ms. Kelly's employment as Chief Financial Officer
of the Company, if Ms. Kelly's employment with the Company is terminated by the
Company without "cause" or by Ms. Kelly due to a "constructive termination"
(each as defined in the Severance Plan), then, subject to her execution and
non-revocation of a severance agreement and general release of claims, Ms. Kelly
will be entitled to receive:
· a lump-sum cash payment in an amount equal to the product of (x) one (or, in
the event of a termination within 12 months following a change in control of
the Company, two), and (y) the sum of (i) Ms. Kelly's then-current annual base
salary, plus (ii) the average annual cash bonus earned by Ms. Kelly for the
previous three years (or, if Ms. Kelly was not previously eligible to earn an
annual cash bonus, her target annual cash bonus);
· continued group health insurance coverage at the Company's expense during the
12 month period (or, in the event of a termination within 12 months following a
change in control of the Company, the 18 month period) following Ms. Kelly's
termination date or until Ms. Kelly becomes covered under another group health
insurance plan, whichever occurs first; and
· each outstanding and unvested time-vesting restricted stock and restricted
stock unit award held by Ms. Kelly will vest in full as of her termination
date, and each outstanding and unvested performance-vesting equity award held
by Ms. Kelly will be treated in accordance with the terms of the applicable
plan and award agreement governing such award. In addition, for purposes of any
equity award held by Ms. Kelly, "Retirement" will mean her separation from
service from the Company, other than as a result of her death or termination by
the Company for cause, at a time when (i) the sum of Ms. Kelly's age and
consecutive years of service as an employee of the Company equals or exceeds
65, and (ii) Ms. Kelly has completed at least three consecutive years of
service as an employee of the Company.
If Ms. Kelly's employment with the Company is terminated by reason of her death
or disability, then, each outstanding and unvested time-vesting restricted stock
and restricted stock unit award held by Ms. Kelly will fully vest as of such
Ms. Kelly's right to receive and retain the severance benefits payable under the
Severance Plan is conditioned on her continued compliance with any restrictive
covenants with respect to which she is bound and her timely return of all
Company property in her possession following her termination date. The
Participation Agreement contains certain restrictive covenants that will apply
to Ms. Kelly, including a confidentiality covenant that extends indefinitely.
The foregoing descriptions of the Severance Plan and the Participation Agreement
are not complete and are subject to and qualified in their entirety by the terms
of the Severance Plan previously filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K, filed on January 18, 2019 and the Participation Agreement
filed as Exhibit 10.1 to this Current Report on Form 8-K, and which are
incorporated herein by reference.
This Current Report on Form 8-K contains forward-looking statements which are
based on current expectations, forecasts and assumptions that involve risks and
uncertainties that could cause actual outcomes and results to differ materially,
including statements related to the disclosures contained herein. These risks
and uncertainties include, among others, the risks and uncertainties included in
the reports and other filings by the Company with the U.S. Securities and
Exchange Commission, including the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, 2020 and June 30, 2020 and in our Annual Report on
Form 10-K for the year ended December 31, 2019 under the heading "Risk Factors."
The Company disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
Item 7.01 Regulation of FD Disclosure.
On October 13, 2020, the Company issued a press release announcing the Company's
planned appointment of Ms. Kelly as Chief Financial Officer and her resignation
as director. A copy of this press release is furnished herewith as Exhibit 99.1.
The information in Item 7.01 of this Current Report on Form 8-K and the
information contained in Exhibit 99.1 shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended, and is not
incorporated by reference into any of the Company's filings under the Securities
Act of 1933, as amended, whether made before or after the date hereof,
regardless of any general incorporation language in any such filing.
Item 9.01 Financial Statements and Exhibits
10.1 Participation Agreement to Realty Income Executive Severance Plan,
dated as of October 12, 2020, by and between Realty Income Corporation
and Christie B. Kelly.
99.1 Press Release issued by Realty Income Corporation dated October 13,
104 Cover Page Interactive Data File (formatted as inline XBRL and
contained in Exhibit 101)
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