Performance Incentive Plan

12 Months Ended

Dec. 31, 2013

Performance Incentive Plan [Abstract]

Performance Incentive Plan

Performance Incentive Plan:

In June 2007, NNN filed a registration statement on Form S-8 with the Commission which permits the issuance of up to 5,900,000 shares of common stock pursuant to NNN’s 2007 Performance Incentive Plan (the “2007 Plan”). The 2007 Plan replaced NNN’s previous Performance Incentive Plan. The 2007 Plan allows NNN to award or grant to key employees, directors and persons performing consulting or advisory services for NNN or its affiliates, stock options, stock awards, stock appreciation rights, Phantom Stock Awards, Performance Awards and Leveraged Stock Purchase Awards, each as defined in the 2007 Plan.

There were no options outstanding or exercisable at December 31, 2013.

Pursuant to the 2007 Plan, NNN has granted and issued shares of restricted stock to certain officers and key associates of NNN. The following summarizes the restricted stock activity for the year ended December 31, 2013:

	Number of Shares		Weighted Average Share Price
Non-vested restricted shares, January 1	964,612		$	23.40
Restricted shares granted	298,896		33.73
Restricted shares vested	(446,607	)	21.41
Restricted shares forfeited	(241	)	30.68
Restricted shares repurchased	(8,474	)	24.36
Non-vested restricted shares, December 31	808,186		$	28.18

Compensation expense for the restricted stock which is not contingent upon NNN’s performance goals is determined based upon the fair value at the date of grant and is recognized as the greater of the amount amortized over a straight lined basis or the amount vested over the vesting periods. Vesting periods for officers and key associates of NNN range from three to five years and generally vest yearly. NNN recognizes compensation expense on a straight-line basis for awards with only service conditions.

During the years ended December 31, 2013 and 2012, NNN granted 152,901 and 185,915, respectively, performance based shares subject to its total shareholder return growth after a three years period relative to its peers. The shares were granted to certain executive officers and had weighted average grant price of $33.73 and $26.85, respectively, per share. Once the performance criteria are met and the actual number of shares earned is determined, the shares vest immediately. For the 2013 and 2012 grants, the conditions are based on market conditions, and the fair value was determined at the grant date (for a fair value share price of $21.54 and $15.71, respectively). Compensation expense is recognized over the requisite service period for both grants.

The following summarizes other grants made during the year ended December 31, 2013, pursuant to the 2007 Plan.

	Shares	Weighted Average   Share Price
Other share grants under the 2007 Plan:
Directors’ fees	16,605	$	35.08
Deferred directors’ fees	12,308	35.09
	28,913	$	35.08
Shares available under the 2007 Plan for grant, end of period	3,958,300

The total compensation cost for share-based payments for the years ended December 31, 2013, 2012 and 2011, totaled $7,459,000, $8,131,000 and $6,390,000, respectively, of such compensation expense. At December 31, 2013, NNN had $10,929,000 of unrecognized compensation cost related to non-vested share-based compensation arrangements under the 2007 Plan. This cost is expected to be recognized over a weighted average period of 2.5 years. In addition, NNN recognized performance based long term incentive cash compensation of $729,000, $1,684,000 and $1,702,000 for the years ended December 31, 2013, 2012 and 2011 respectively.