Common Stock Incentive Plan

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Common Stock Incentive Plan

Common Stock Incentive PlanIn 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 $6.2 million and $5.1 million during the three months ended September 30, 2023, and 2022, respectively, and $20.2 million and $16.7 million during the nine months ended September 30, 2023, and 2022, respectively.

A.    Restricted Stock and Restricted Stock Units

During the nine months ended September 30, 2023, we granted 220,970 shares of common stock under the 2021 Plan. This included 40,000 total shares of restricted stock granted to the independent members of our Board of Directors in connection with our annual awards in May 2023, 20,000 shares of which vested immediately and 20,000 shares of which vest in equal parts over a three-year service period. Our restricted stock awards granted to employees vest over a service period not exceeding four-years.

During the nine months ended September 30, 2023, we also granted 15,065 restricted stock units, all of which vest over a four-year service period.

As of September 30, 2023, the remaining unamortized share-based compensation expense related to restricted stock awards and units totaled $18.7 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.

B.    Performance Shares

During the nine months ended September 30, 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 September 30, 2023, the remaining share-based compensation expense related to the performance shares totaled $20.9 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.