Common Stock Incentive Plan

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Common Stock Incentive Plan

Common Stock Incentive Plan

In March 2021, our Board of Directors adopted, and in May 2021, stockholders approved, the Realty Income 2021 Incentive Award Plan, or 2021 Plan. This note should be read in conjunction with the more complete discussion of our 2021 Plan included in note 17 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022.

The amount of share-based compensation costs recognized in 'General and administrative' in the consolidated statements of income and comprehensive income was $6.3 million and $5.0 million during the three months ended March 31, 2023, and 2022, respectively.

A.    Restricted Stock and Restricted Stock Units

During the three months ended March 31, 2023, we granted 170,241 shares of common stock under the 2021 Plan. Our restricted stock awards granted to employees vest over a service period not exceeding four-years.

During the three months ended March 31, 2023, we also granted 13,375 restricted stock units, all of which vest over a four-year service period.

As of March 31, 2023, the remaining unamortized share-based compensation expense related to restricted stock awards and units totaled $23.0 million, which is being amortized on a straight-line basis over the service period of each applicable award. The amount of share-based compensation is based on the fair value of the stock at the grant date. We define the grant date as the date the recipient and Realty Income have a mutual understanding of the key terms and conditions of the award, and the recipient of the grant begins to benefit from, or be adversely affected by, subsequent changes in the price of the shares.

B.    Performance Shares

During the three months ended March 31, 2023, we granted 193,868 performance shares, as well as dividend equivalent rights, to our executive officers. The performance shares are earned based on our Total Shareholder Return (TSR) performance relative to select industry indices and peer groups as well as achievement of certain operating metrics, and vest 50% on the first and second January 1 after the end of the three-year performance period, subject to continued service.

As of March 31, 2023, the remaining share-based compensation expense related to the performance shares totaled $27.7 million. The performance shares are being recognized on a tranche-by-tranche basis over the service period. The fair value of the performance shares was estimated on the date of grant using a Monte Carlo Simulation model.