Item 5.02 Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Christie B. Kelly as
Chief Financial Officer
On October 12, 2020, the Board of Directors
(the “Board”) of Realty Income Corporation (the “Company”) appointed Christie B. Kelly as Chief Financial
Officer of the Company, effective as of January 19, 2021 (such date, or such other date as may be determined by the Board, the
“Appointment Date”). In connection with Ms. Kelly’s appointment, Ms. Kelly will resign as a member of the Board,
effective as of the Appointment Date.
In addition, in connection with Ms. Kelly’s
appointment as Chief Financial Officer of the Company, the Compensation Committee of the Board (the “Committee”) approved
the following compensation for Ms. Kelly as Chief Financial Officer of the Company, effective as of the Appointment Date: an annual
base salary of $600,000, a target annual cash bonus of $600,000, an initial target long-term incentive plan award of $1,800,000,
and a relocation allowance of $50,000. In addition, the Board approved, effective as of the Appointment Date, an amendment to Ms.
Kelly’s outstanding restricted stock awards granted under the Company’s 2012 Incentive Award Plan that provides that
such restricted stock awards will continue to vest and be subject to forfeiture based on Ms. Kelly’s continued employment
with the Company following the Appointment Date, notwithstanding her resignation as a member of the Board.
Information about Ms. Kelly, including
a biographical summary, information about positions and offices she has held with the Company, her prior compensation arrangements
with the Company, and information about her business experience, may be found in the Company’s definitive proxy statement
for the 2020 Annual Meeting of Stockholders on Schedule 14A filed on April 1, 2020.
Participation in Executive Severance Plan
On October 12,
2020, in connection with Ms. Kelly’s appointment as Chief Financial Officer of the Company, the Committee designated Ms.
Kelly as a participant in the Company’s Executive Severance Plan (the “Severance Plan”), effective as of the
Appointment Date, and Ms. Kelly and the Company entered into a participation agreement under the Severance Plan (the “Participation
Agreement”), which will be effective upon the Appointment Date, in each case subject to the commencement of Ms. Kelly’s
employment as Chief Financial Officer of the Company. Pursuant to the Severance Plan and the Participation Agreement, following
the commencement of Ms. Kelly’s employment as Chief Financial Officer of the Company, if Ms. Kelly’s employment with
the Company is terminated by the Company without “cause” or by Ms. Kelly due to a “constructive termination”
(each as defined in the Severance Plan), then, subject to her execution and non-revocation of a severance agreement and general
release of claims, Ms. Kelly will be entitled to receive:
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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);
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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
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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.
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If Ms. Kelly’s
employment with the Company is terminated by reason of her death or disability, then, each outstanding and unvested time-vesting
restricted stock and restricted stock unit award held by Ms. Kelly will fully vest as of such termination date.
Ms. Kelly’s
right to receive and retain the severance benefits payable under the Severance Plan is conditioned on her continued compliance
with any restrictive covenants with respect to which she is bound and her timely return of all Company property in her possession
following her termination date. The Participation Agreement contains certain restrictive covenants that will apply to Ms. Kelly,
including a confidentiality covenant that extends indefinitely.
The foregoing
descriptions of the Severance Plan and the Participation Agreement are not complete and are subject to and qualified in their entirety
by the terms of the Severance Plan previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on
January 18, 2019 and the Participation Agreement filed as Exhibit 10.1 to this Current Report on Form 8-K, and which
are incorporated herein by reference.
Forward-Looking Statements
This Current Report on Form 8-K contains
forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties
that could cause actual outcomes and results to differ materially, including statements related to the disclosures contained herein.
These risks and uncertainties include, among others, the risks and uncertainties included in the reports and other filings by the
Company with the U.S. Securities and Exchange Commission, including the Company’s Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2020 and June 30, 2020 and in our Annual Report on Form 10-K for the year ended December 31, 2019 under
the heading “Risk Factors.” The Company disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.