<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE
[X] Definitive Proxy Statement OF THE COMMISSION
[ ] Definitive Additional Materials ONLY (AS PERMITTED BY
[ ] Soliciting Material Pursuant to RULE 14a-6 (e)(2))
Rule 14a-11(c) or Rule 14a-12
REALTY INCOME CORPORATION
(Name of Registrant as Specified in its Charter)
Realty Income Corporation
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction
applies: ___________________________________________________
2) Aggregate number of securities to which transaction applies:
____________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rune 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): ___________________________________________
____________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________
5) Total fee paid: ____________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
____________________________________________________________
2) Form, Schedule or Registration Statement No.:
____________________________________________________________
3) Filing Party: ______________________________________________
4) Date Filed: ________________________________________________
<PAGE>
(Realty Income Corporation Letterhead)
March 31, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Realty Income Corporation to be held at 9:00 a.m.,
local time, on May 5, 1998 at the California Center for the Arts
Escondido, 340 North Escondido Boulevard, Escondido, California.
At the Annual Meeting, you will be asked to consider and vote
upon the election of two directors to the Board of Directors of the
Company.
The election of the members of the Board of Directors of the
Company are more fully described in the accompanying Proxy Statement.
We urge you to review carefully the Proxy Statement.
The Company's Board of Directors recommends a VOTE FOR the
election of each nominee to the Board of Directors named in the
accompanying Proxy Statement.
YOUR VOTE IS IMPORTANT TO THE COMPANY, WHETHER YOU OWN FEW OR
MANY SHARES! Please complete, date and sign the enclosed proxy card
and return it in the accompanying postage paid envelope, even if you
plan to attend the Annual Meeting. If you attend the Annual Meeting,
you may, if you wish, withdraw your proxy and vote in person.
Sincerely,
/s/THOMAS A. LEWIS
---------------------------
Vice Chairman of the Board
and Chief Executive Officer
<PAGE>
REALTY INCOME CORPORATION
220 West Crest Street
Escondido, California 92025-1707
-------------------
NOTICE OF ANNUAL MEETING TO BE HELD ON
May 5, 1998
-------------------
To the Stockholders of
Realty Income Corporation:
Notice is Hereby Given that the Annual Meeting of Stockholders
(the "Annual Meeting") of Realty Income Corporation, a Maryland
corporation (the "Company" or "Realty Income"), will be held at the
California Center for the Arts Escondido, 340 North Escondido
Boulevard, Escondido, California, 92025 at 9:00 a.m., local time, on
May 5, 1998, to consider and act upon:
1. The election of members of the Board of Directors of
the Company; and
2. Such other business as may properly come before the
Annual Meeting or any adjournment or postponement
thereof.
The election of directors is more fully described in the
accompanying Proxy Statement, which forms a part of this Notice.
During the course of the Annual Meeting, management will report
on the current activities of Realty Income and comment on its future
plans. A discussion period is planned so that stockholders will have
an opportunity to ask questions and present their comments.
The Board of Directors has fixed the close of business on
March 16, 1998 as the record date (the "Record Date") for the
determination of stockholders entitled to notice of and to vote at the
Annual Meeting or any adjournment or postponement thereof. Only
stockholders of record on the Record Date will be entitled to notice
of and to vote at the Annual Meeting or any adjournment or
postponement thereof. A list of such stockholders will be available
for inspection at the offices of the Company at 220 West Crest Street,
Escondido, California, at least ten days prior to the Annual Meeting.
If you plan to be present, please notify the undersigned so that
identification can be prepared for you. Whether or not you plan to
attend the Annual Meeting, please execute, date and return promptly
the enclosed proxy. A return envelope is enclosed for your
convenience and requires no postage for mailing in the United States.
If you are present at the Annual Meeting you may, if you wish,
<PAGE>
withdraw your proxy and vote in person. Thank you for your interest
and consideration.
Sincerely,
/s/ MICHAEL R. PFEIFFER
------------------------------
March 31, 1998 Senior Vice President, General
Counsel and Secretary
YOUR VOTE IS IMPORTANT
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED
PROXY AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE
<PAGE>
REALTY INCOME CORPORATION
220 West Crest Street
Escondido, California 92025-1707
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
May 5, 1998
This Proxy Statement is furnished to the stockholders of Realty
Income Corporation, a Maryland corporation ("Realty Income" or the
"Company"), in connection with the solicitation of proxies by the
Board of Directors of the Company for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 5, 1998, at 9:00
a.m., local time, at the California Center for the Arts Escondido, 340
North Escondido Boulevard, Escondido, California 92025, and at any
adjournment or postponement thereof. The approximate date on which
this proxy statement and form of proxy solicited on behalf of the
Board of Directors will first be sent to the Company's stockholders is
on or about March 31, 1998.
At the Annual Meeting, holders of record of shares of Realty
Income Common Stock will consider and vote upon (i) the election of
members of the Board of Directors of the Company and (ii) such other
business as may properly come before the Annual Meeting or any
adjournment or postponement thereof. The Board of Directors
recommends a vote FOR each person nominated to be elected to the Board
of Directors. See "Proposal to Elect Directors."
On March 16, 1998, the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting,
the Company had 26,464,471 shares of common stock, par value $1.00 per
share (the "Common Stock"), outstanding. Each such share of Common
Stock is entitled to one vote on all matters properly brought before
the meeting. Stockholders are not permitted to cumulate their shares
of Common Stock for the purpose of electing directors or otherwise.
Presence at the Annual Meeting, in person or by proxy, of a majority
of the outstanding shares of Common Stock will constitute a quorum for
the transaction of business at the Annual Meeting.
Unless contrary instructions are indicated on the proxy, all
shares of Common Stock represented by valid proxies received pursuant
to this solicitation (and not revoked before they are voted) will be
voted at the Annual Meeting FOR the election of the persons nominated
to the Board of Directors. With respect to any other business which
may properly come before the Annual Meeting and be submitted to a vote
of stockholders, proxies received by the Board of Directors will be
voted in the discretion of the designated proxy holders. A
stockholder may revoke his or her proxy at any time before exercise by
delivering to the Secretary of the Company a written notice of such
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<PAGE>
revocation, by filing with the Secretary of the Company a duly
executed proxy bearing a later date, or by voting in person at the
Annual Meeting. Attendance at the Annual Meeting will not by itself
be sufficient to revoke a proxy.
The election inspector will treat shares represented by properly
signed and returned proxies that reflect abstentions as shares that
are present and entitled to vote for purposes of determining the
presence of a quorum and for purposes of determining the outcome of
any matter submitted to the stockholders for a vote. Abstentions do
not constitute a vote "for" or "against" any matter and thus will not
be counted as votes cast and will have no effect on the result of the
vote.
If the Annual Meeting is postponed or adjourned for any reason,
at any subsequent reconvening of the Annual Meeting all proxies will
be voted in the same manner as such proxies would have been voted at
the original convening of the Annual Meeting (except for any proxies
that have theretofore effectively been revoked or withdrawn).
The Company will bear the cost of soliciting proxies from its
stockholders. In addition to solicitation by mail, directors, officers
and employees of the Company may solicit proxies by telephone,
telegram or otherwise. Such directors, officers and employees of the
Company will not be additionally compensated for such solicitation,
but may be reimbursed for out-of-pocket expenses incurred in
connection therewith. Brokerage firms, fiduciaries and other
custodians who forward soliciting material to the beneficial owners of
shares of Common Stock held of record by them will be reimbursed for
their reasonable expenses incurred in forwarding such material.
The Company's Common Stock is traded on the New York Stock
Exchange, Inc. ("NYSE") under the symbol "O". On March 16, 1998, the
last reported sale price for the Company's Common Stock on the NYSE
was $26.00 per share.
No person is authorized to make any representation with respect
to the matters described in this Proxy Statement other than those
contained herein and, if given or made, such information or
representation must not be relied upon as having been authorized by
the Company or any other person.
---------------------------
The date of this Proxy Statement is March 31, 1998.
Page 2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of seven
directors divided into three classes, designated as Class I, Class II,
and Class III. Each class is elected to a three-year term and the
election of directors is staggered, so that only one class of
directors is elected at each annual meeting of stockholders. The
Class I directors' terms expire at the 1998 annual meeting of
stockholders. As such, stockholders of record as of March 16, 1998
will be entitled to vote on the election of two Class I directors for
three-year terms at the Annual Meeting.
Vote Required; Board Recommendation
The two directors will be elected by a favorable vote of a
plurality of the shares of stock represented and entitled to vote, in
person or by proxy, at the Annual Meeting. Accordingly, abstentions
or broker non-votes as to the election of directors will not affect
the election of the candidates receiving the plurality of votes.
Unless instructed to the contrary, the shares represented by the
proxies will be voted FOR the election of each of the two nominees
named below as directors. Although it is anticipated that each
nominee will be able to serve as a director, should any nominee become
unavailable to serve, the shares represented by the proxies will be
voted for another person or persons designated by the Company's Board
of Directors. In no event will the proxies be voted for more than two
nominees.
Director Nominees
The following table sets forth certain information regarding the
Director nominees both of whom are current directors of Realty Income:
Name Age Title Class
Roger P. Kuppinger 57 Director I
Michael D. McKee 52 Director I
Roger P. Kuppinger has been a Director of the Company since
August 1994 and is a self-employed investment banker and financial
advisor and is an active investor in both private and public
companies. Prior to March 1994, he was a Managing Director at the
investment banking firm Sutro & Co. Inc. He graduated from
Northwestern University, B.S. and M.B.A., and from LaSalle University
in Chicago, LL.B. Prior to joining Sutro in 1969, he worked at First
Interstate Bank, formerly named United California Bank (1964-1969).
He has served on over ten boards of directors for both public and
private companies, and currently serves on the board of directors of
BRE Properties, Inc. Mr. Kuppinger is chairman of the Audit Committee
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and is a member of the Compensation Committee, the Special Committee
and the Corporate Governance Committee.
Michael D. McKee has been a Director of the Company since August
1994, has been Executive Vice President of The Irvine Company since
March 1994 and has served as Chief Financial Officer of The Irvine
Company since January 1997. Prior thereto, he was a partner in the
law firm of Latham & Watkins. He graduated from Azusa Pacific
University, B.A., University of Southern California, M.A., and
University of California at Los Angeles, J.D. His business and legal
experience includes numerous acquisition and disposition transactions,
as well as a variety of public and private offerings of equity and
debt securities. He is currently a member of the board of directors
of The Irvine Company, Health Care Property Investors, Inc., Circus
Circus Enterprises, Inc. and Irvine Apartment Communities, Inc. Mr.
McKee is chairman of the Special Committee and is a member of the
Compensation Committee, the Audit Committee and the Corporate
Governance Committee.
Incumbent Directors
Name Age Title Class
Thomas A. Lewis 45 Vice Chairman of the Board III
and Chief Executive Officer
Richard J. VanDerhoff 44 President and Chief Operating Officer III
William E. Clark 60 Chairman of the Board III
Donald R. Cameron 58 Director II
Willard H. Smith Jr. 61 Director II
Thomas A. Lewis has been Chief Executive Officer of the Company
since May 1997, the Vice Chairman of the Board of Directors and a
Director of the Company since September 1993 and had been with R.I.C.
Advisor, Inc. ("R.I.C. Advisor") from 1987 until the merger of R.I.C.
Advisor with the Company on August 17, 1995 (the "Merger"). From
September 1993 to May 1997, he served as Vice President, Capital
Markets. Prior to joining R.I.C. Advisor, he served in various
capacities, including Senior Vice President with Johnstown Capital, a
real estate management and syndication company (1982-1987), an
Investment Specialist with Sutro & Co., a member of the New York Stock
Exchange (1979-1982), and was employed by the Procter & Gamble Company
(1974-1979). He graduated from Chaminade University of Hawaii, B.A.
Richard J. VanDerhoff has been President and Chief Operating Officer
of Realty Income since November 1994 and a Director of the Company
since July 1996 and had been with R.I.C. Advisor from 1987 until the
Merger. From August 1994 to November 1994, he served as general
counsel of the Company. Prior to 1987, he was employed as Vice
President, General Counsel and Secretary of FNCO Corporation, an owner
and operator of community newspaper companies located throughout the
midwest United States (1984-1987) and was in private law practice
specializing in real property and business law (1980-1984). He
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<PAGE>
graduated from Jacksonville University, B.S., and the University of
San Diego School of Law, J.D.
William E. Clark has been the Chairman of the Board of Directors
and a Director of the Company since September 1993 and served as Chief
Executive Officer of the Company from September 1993 to May 1997. He
was co-founder and had been a director and an officer of R.I.C.
Advisor from 1969 until the Merger with Realty Income Corporation. He
has been involved as a principal in commercial real estate
acquisition, development, management and sales for over 30 years. His
involvement includes land acquisition, tenant lease negotiations,
construction and sales of prime commercial properties for regional and
national fast-food restaurants, automotive and retail chain store
operations throughout the United States. Mr. Clark is a member of the
Audit Committee, the Compensation Committee and the Corporate
Governance Committee.
Donald R. Cameron has been a Director of the Company since August
1994 and is a co-founder and President of Cameron, Murphy & Spangler,
Inc., a securities broker-dealer firm located in Pasadena, California.
He graduated from the University of Glasgow, Scotland, B.Sc. Prior to
founding Cameron, Murphy & Spangler in 1975, he worked at the
securities brokerage firm of Glore Forgan Staats, Inc. and its
successors (1969-1975). He is currently a director of Ayr United
Football and Athletic Club, Ltd. Mr. Cameron is chairman of the
Compensation Committee and is a member of the Audit Committee, the
Special Committee and the Corporate Governance Committee.
Willard H. Smith Jr. has been a Director of the Company since
July 1996 and was the Managing Director, Equity Capital Markets
Division, of Merrill Lynch & Co. from 1983 until his retirement in
1996. Prior to joining Merrill Lynch in 1979, he was employed by F.
Eberstadt & Co. (1971 - 1979). Mr. Smith also serves on the board of
directors of five investment companies: Cohen & Steers Realty Shares;
Cohen & Steers Realty Income Fund; Cohen & Steers Total Return Realty
Fund; Cohen & Steers Special Equity Fund, Inc., and Cohen & Steers
Equity Income Fund. Additionally, he is a member of the board of
directors of Essex Property Trust and Highwoods Property Trust, two
NYSE-listed REITs, and Willis Lease Finance Corporation, a NASDAQ-
listed company. Mr. Smith is chairman of the Corporate Governance
Committee and is a member of the Audit Committee, the Special
Committee and the Compensation Committee.
Committees of the Board of Directors
The Audit Committee of the Board of Directors is comprised of
Messrs. Cameron, Clark, Kuppinger (chairman), McKee and Smith. The
Audit Committee's principal responsibilities include recommending the
selection of the Company's independent auditors to the Board of
Directors, approving any special assignments given to the independent
auditors and reviewing (i) the scope and results of the audit
engagement with the independent auditors and management, including the
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accountant's letter of comments and management's responses thereto,
(ii) the independence of the independent auditors, (iii) the
effectiveness and efficiency of the Company's internal accounting
staff and (iv) any proposed significant accounting changes.
The Compensation Committee of the Board of Directors is comprised
of Messrs. Cameron (chairman), Clark, Kuppinger, McKee and Smith. The
Compensation Committee's principal responsibilities include
establishing remuneration levels for officers of the Company,
reviewing management organization and development, reviewing
significant employee benefits programs and establishing and
administering executive compensation programs, including bonus plans,
stock option and other equity-based programs, deferred compensation
plans and any other cash or stock incentive programs.
The Special Committee of the Board of Directors is comprised of
Messrs. Cameron, Kuppinger, McKee (chairman) and Smith. The Special
Committee was formed in August 1994 to explore the advisability of the
combination of the Company and R.I.C. Advisor. On behalf of Realty
Income, the Special Committee negotiated the terms of the Merger on
behalf of Realty Income which was consummated on August 17, 1995. The
Special Committee currently attends to certain post-closing items
regarding the Merger.
The Corporate Governance Committee of the Board of Directors was
formed in November 1996 and is comprised of Messrs. Cameron, Clark,
Kuppinger, McKee and Smith (chairman). The Corporate Governance
Committee's principal purpose is to provide counsel to the Board of
Directors with respect to (i) organization, membership and function of
the Board of Directors, (ii) structure and membership of the
committees of the Board of Directors and (iii) succession planning for
the executive management of the Company.
The Board of Directors may from time to time establish certain
other committees to facilitate the management of the Company.
Meetings and Attendance
The Board of Directors met 12 times during the fiscal year ended
December 31, 1997. The Audit Committee, Compensation Committee,
Corporate Governance Committee, Pricing Committee and Special
Committee met 2, 7, 5, 2, and 1 times in 1997, respectively. All
directors attended at least 75% of the aggregate of (i) the total
number of meetings of the Board while they were on the Board and (ii)
the total number of meetings of the committees of the Board on which
such directors served.
Compensation of the Company's Directors
No officer of the Company receives or will receive any
compensation for serving the Company as a member of the Board of
Directors or any of its committees. Directors who are not officers of
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the Company receive an annual fee of $15,000 for serving on the Board
of Directors and the Chairman of the Board of Directors receives an
annual fee of $30,000. Such directors also receive fees of $1,000 for
attending Board of Directors meetings in person ($1,500 for the
chairman of the Board), $500 for attending Board of Directors
committee meetings in person ($1,000 for the chairman of the
committee), $500 for attending Board of Directors meetings by
telephone ($750 for the chairman of the Board) and $250 for attending
Board of Directors committee meetings by telephone ($500 for the
chairman of the committee). The Company may also reimburse such
directors for travel expenses incurred in connection with their
activities on behalf of the Company. In addition, under the Company's
stock incentive plan, upon his or her initial election to the Board of
Directors and at each Annual Meeting of Shareholders thereafter, if
the Director is still serving as a Director, each Director who is not
an officer of the Company is automatically granted options to purchase
5,000 shares of Realty Income Common Stock at the then current market
price. These options vest during the Director's continued service
period on the first anniversary of the date of the grant. As of March
16, 1998, each of Messrs. Cameron, Kuppinger and McKee held options to
purchase 10,000 shares of Realty Income Common Stock at an exercise
price of $20.00 per share, of which options to purchase 7,500 shares
of Realty Income Common Stock are currently exercisable. As of March
16, 1998, Mr. Smith held options to purchase 10,000 shares of Realty
Income Common Stock at an exercise price of $21.625 per share, of
which 2,500 are currently exercisable. As of March 16, 1998, each of
Messrs. Cameron, Clark, Kuppinger, McKee and Smith held options to
purchase 5,000 shares of Realty Income Corporation Common Stock at an
exercise price of $25.375 per share, of which none are currently
exercisable.
OFFICERS OF THE COMPANY
Name Title Age
Thomas A. Lewis Vice Chairman of the Board and 45
Chief Executive Officer
Richard J. VanDerhoff Director and President and 44
Chief Operating Officer
Gary M. Malino Senior Vice President, 40
Chief Financial Officer and Treasurer
Michael R. Pfeiffer Senior Vice President, General Counsel 37
and Secretary
Richard G. Collins Senior Vice President, Portfolio 49
Acquisitions
Mark G. Selman Vice President, Portfolio Management 43
Teresa H. Miller Vice President, Corporate Communications 46
and Investor Relations
Kim S. Kundrak Vice President, Portfolio Acquisitions 41
Biographical information with respect to Messrs. Lewis and
VanDerhoff is set forth above under Incumbent Directors.
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Gary M. Malino has been Senior Vice President of the Company
since August 1997, the Treasurer of the Company since August 1995, the
Chief Financial Officer of the Company since August 1994 and had been
with R.I.C. Advisor from 1985 until the Merger. He also held the
position of Vice President of the Company from August 1995 to
August 1997, when his title was changed to Senior Vice President.
Prior to joining R.I.C. Advisor in 1985, he was a Certified Public
Accountant with Kendall & Forman, an accountancy corporation (1981-
1985) and Assistant Controller with McMillin Development Company, a
real estate development company (1979-1981). He graduated from San
Diego State University, B.S.
Michael R. Pfeiffer has been Senior Vice President of the Company
since August 1997 and the General Counsel and Secretary of the Company
since August 1995 and had been with R.I.C. Advisor from 1990 until the
Merger. He also served as Vice President of the Company from August
1995 to August 1997, when his title was changed to Senior Vice
President. Prior to joining R.I.C. Advisor he was in private practice
specializing in real estate transactional law (1987-1990), and was
employed as Associate Counsel with First American Title Insurance
Company (1986-1987). He graduated from the University of Rhode
Island, B.S., and the University of San Diego School of Law, J.D. He
is a licensed attorney and member of the State Bar of California and
the State Bar of Florida.
Richard G. Collins has been Senior Vice President, Portfolio
Acquisitions of the Company since August 1997 and had been with R.I.C.
Advisor from 1990 until the Merger. He also served as Vice President,
Portfolio Management of the Company from June 1997 to August 1997,
when his title was changed to Senior Vice President, Portfolio
Acquisitions. From August 1995 to June 1997, he served as Vice
President, Portfolio Management of the Company. Prior to joining
R.I.C. Advisor, he was involved as a principal in the acquisition and
sale of land and commercial real estate and a general partner for land
and commercial real estate partnerships (1979-1990) and a leasing and
sales specialist in the Office Properties Division for Grubb & Ellis
Commercial Real Estate Services (1974-1979). He graduated from San
Diego State University, B.S.
Mark G. Selman has been Vice President, Portfolio Management of
the Company since August 1997. He also served as Director, Portfolio
Management of the Company from April 1997 to August 1997. Prior to
joining Realty Income, he was with the Real Estate Consulting Group of
KPMG Peat Marwick LLP (1989-1997), was a Senior Manager at KPMG Peat
Marwick LLP (1995-1997), was an investment advisor and registered
representative for the investment firms of Wedbush, Noble, Cook (1983-
1986) and Kidder Peabody (1986-1988). He graduated from San Diego
State University, B.S., B.A., and a Masters in Business
Administration.
Teresa H. Miller has been Vice President, Corporate
Communications and Investor Relations of the Company since
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August 1997. She also served as Director, Corporate Communications
and Investors Relations of the Company from June 1997 to August 1997.
Prior to joining Realty Income, she was a Director of Corporation
Communications for Mentus, Inc., an advertising and public relations
firm (1992-1997), and was an investment advisor and registered
representative for the investment firm of PaineWebber (1981-1984).
She graduated from Pepperdine University, B.S.
Kim S. Kundrak has been Vice President, Portfolio Acquisitions
since November 1997. He also served as Associate Vice President,
Senior Acquisitions Director from August 1997 to November 1997 and
Senior Director, Portfolio Acquisitions from June 1996 to November
1997. Prior to joining Realty Income, he was with Burnham Pacific
Properties holding various positions, including, Senior Vice
President, Chief Financial Officer, and Vice President Asset
Management (1987-1995), was a Senior Real Estate Manager for John
Burnham & Co. (1985-1987), and was General Manager of a regional mall
for the Hahn Company (1982-1985). He graduated from Point Loma
College, B.A.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the
compensation awarded to, earned by or paid during the fiscal years
ended December 31, 1997, 1996 and 1995 to the Company's Chief
Executive Officer and to the other four most highly compensated
executive officers of the Company for the fiscal years ended
December 31, 1997, 1996 and 1995 (the "Named Executive Officers").
Annual Compensation Long-Term Compensation
------------------------- ----------------------
Awards (3)
---------------------
Name and Options Restricted
Principal Position Year Salary Bonus (#) Stock (4)
- -------------------- ------ -------- ----- ------- ---------
Thomas A. Lewis (2)
Vice Chairman of the 1997 $ 231,917 -- 63,800 3,400
Board and Chief 1996 $ 200,000 -- 14,900 1,400
Executive Officer 1995(1) $ 79,167 -- 4,800 500
William E. Clark (2)
Chairman of the 1997 $ 36,944 -- --(6) --
Board and Chief 1996 $250,000 -- 23,600 2,200
Executive Officer 1995(1) $ 98,958 -- 8,800 900
(continued on next page)
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(continued) Annual Compensation Long-Term Compensation
------------------------- ----------------------
Awards (3)
---------------------
Name and Options Restricted
Principal Position Year Salary Bonus (#) Stock (4)
- -------------------- ------ -------- ----- ------- ---------
Richard J. VanDerhoff
President, Chief 1997 $225,000 -- 62,000 3,300
Operating Officer 1996 $225,000 -- 17,000 1,600
1995(1) $ 89,063 -- 6,300 600
Gary M. Malino
Senior Vice President, 1997 $175,000 -- 37,600 2,000
Chief Financial 1996 $175,000 -- 11,400 1,100
1995(1) $ 69,271 -- 4,200 400
Michael R. Pfeiffer
Senior Vice President, 1997 $145,000 -- 31,200 1,700
General Counsel, 1996 $137,500 -- 6,800 700
Secretary 1995(1) $ 54,427 -- 2,200 200
Richard G. Collins
Senior Vice President, 1997 $137,945 -- 29,500 1,600
Portfolio 1996 $115,000 -- 5,000 500
Acquisitions 1995(1) $ 45,521 -- 1,900 200
(table continued) Long-Term Compensation
-----------------------
All Other
Name and LTIP Compensation
Principal Position Year Payouts (5)
- -------------------- ------ ------- ------------
Thomas A. Lewis (2)
Vice Chairman of the 1997 -- $4,750
Board and Chief 1996 -- $4,750
Executive Officer 1995(1) -- --
William E. Clark (2)
Chairman of the Board 1997 -- $1,125
and Chief Executive 1996 -- $4,750
Officer 1995(1) -- --
Richard J. VanDerhoff
President, Chief 1997 -- $4,750
Operating Officer 1996 -- $4,750
1995(1) -- --
(continued on next page)
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(table continued) Long-Term Compensation
-----------------------
All Other
Name and LTIP Compensation
Principal Position Year Payouts (5)
- -------------------- ------ ------- ------------
Gary M. Malino
Senior Vice President, 1997 -- $4,750
Chief Financial 1996 -- $4,750
Officer, Treasurer 1995(1) -- --
Michael R. Pfeiffer
Senior Vice President, 1997 -- $4,397
General Counsel, 1996 -- $4,125
Secretary 1995(1) -- --
Richard G. Collins
Senior Vice President, 1997 -- $ 750
Portfolio 1996 -- $1,198
Acquisitions 1995(1) -- --
(1) Prior to August 17, 1995, no executive officer of the Company,
including the Chief Executive Officer, received any compensation
from the Company, but rather received compensation from R.I.C.
Advisor for services as an employee and officer of R.I.C.
Advisor. Subsequent to the merger of R.I.C. Advisor with the
Company, all officers and employees of the Company were
compensated directly by the Company. In connection with the
merger of R.I.C. Advisor and the Company, Messrs. Clark, Lewis,
VanDerhoff, and Malino received Common Stock of the Company.
Salary figures are for the period from August 17, 1995 through
December 31, 1995 and are presented on annualized salaries of
$250,000; $225,000; $200,000; $175,000; $137,500 and $115,000,
for each of Messrs. Clark, VanDerhoff, Lewis, Malino, Pfeiffer,
and Collins respectively.
(2) William E. Clark served as Chief Executive Officer until
May 12, 1997. Thomas A. Lewis has served as Chief Executive
Officer since May 13, 1997.
(3) The options and restricted stock shown as compensation for 1997
were granted on January 1, 1998. The options and restricted
stock shown as compensation for 1996 were granted on
January 1, 1997. The options and restricted stock shown as
compensation for 1995 were granted on November 17, 1996. The
Company grants options and restricted stock from time to time to
executive officers based on performance during a fiscal year and,
since such performance often cannot be measured until after the
end of a fiscal year, the option and restricted stock grant may
be made in the subsequent fiscal year.
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<PAGE>
(4) Restricted Stock is awarded pursuant to the Company's management
incentive plan. All awards granted under the management
incentive plan are made in accordance with the provisions of the
Company's stock incentive plan. Restricted Stock vests over
three years. Restricted Stock is eligible to receive
distributions from the date of grant.
(5) Represents the amount the Company contributes pursuant to a
401(k) retirement plan. Under the terms of this plan, the
Company matches 50% of the employee's contribution to the plan,
up to 6% of the employee's salary. Employees may contribute up
to 15% of their salary, capped at $9,500, with the maximum amount
of the Company's contribution being $4,750.
(6) Excludes options to purchase 5,000 shares of Realty Income's
Common Stock granted to Mr. Clark as an outside director which
were granted to him after his term as Chief Executive Officer.
Option Grants in Last Fiscal Year
The following table provides information on options granted to the
Named Executive Officers on January 1, 1997 (as compensation for
performance in 1996) and on January 1, 1998 (as compensation for
performance in 1997).
Individual Grants
- ----------------------------------------------------------------------
% of Total
Number of Options
Shares Granted to
Year Underlying Employees Exercise Expir-
of Options in Fiscal Price ation
Name Award Granted(1) Year (5) Per Share Date
- ------------------- ----- ---------- ---------- --------- ------
Thomas A. Lewis 1996 14,900 16.2% $24.00 12/31/06
1997 63,800 22.8% $25.438 12/31/07
William E. Clark 1996 23,600 25.7% $24.00 08/12/97
(3) (4)
Richard J. VanDerhoff 1996 17,000 18.5% $24.00 12/31/06
1997 62,000 22.1% $25.438 12/31/07
Gary M. Malino 1996 11,400 12.4% $24.00 12/31/06
1997 37,600 13.4% $25.438 12/31/07
Michael R. Pfeiffer 1996 6,800 7.4% $24.00 12/31/06
1997 31,200 11.1% $25.438 12/31/07
Richard G. Collins 1996 5,000 5.5% $24.00 12/31/06
1997 29,500 10.5% $25.438 12/31/07
(continued on next page)
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<PAGE>
(continued) Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Year Option Term(2)
of -------------------------------
Name Award 5% 10%
- ------------------- ----- ------------- --------------
Thomas A. Lewis 1996 $ 224,893 $ 569,922
1997 $1,020,641 $2,586,505
William E. Clark 1996 $ 356,206 $ 902,696
(3) (4)
Richard J. VanDerhoff 1996 $ 256,589 $ 650,247
1997 $ 991,845 $2,513,531
Gary M. Malino 1996 $ 172,066 $ 436,048
1997 $ 601,506 $1,524,335
Michael R. Pfeiffer 1996 $ 102,636 $ 260,099
1997 $ 499,122 $1,264,874
Richard G. Collins 1996 $ 75,467 $ 191,249
1997 $ 471,926 $1,195,954
(1) Includes options of 63,800, 62,000, 37,600, 31,200 and 29,500,
which were granted on January 1, 1998 to Messrs. Lewis,
VanDerhoff, Malino, Pfeiffer and Collins, respectively, as
compensation for performance during 1997, in addition to options
of 14,900, 23,600, 17,000, 11,400, 6,800 and 5,000, which were
granted on January 1, 1997 to Messrs. Lewis, Clark, VanDerhoff,
Malino, Pfeiffer and Collins, respectively, as compensation for
performance during 1996. See "Executive Compensation -- Summary
Compensation Table." All such options vest ratably over three
years. Under the terms of the Company's stock incentive plan,
the Compensation Committee retains discretion, subject to certain
restrictions, to modify the terms of outstanding options and to
reprice outstanding options. Options are granted for a term of
10 years, subject to earlier termination in certain events
related to termination of employment. The option exercise price
is equal to the fair market value of the shares on the date of
grant.
(2) Assumed annual rates of stock price appreciation for illustrative
purposes only. Actual stock prices will vary from time to time
based upon market factors and the Company's financial
performance. No assurance can be given that these appreciation
rates will be achieved.
(3) Excludes options to purchase 5,000 shares of Realty Income's
Common Stock granted to Mr. Clark as an outside director which
were granted to him after his term as Chief Executive Officer.
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<PAGE>
(4) Options granted to Mr. Clark expired in August 1997, except for
2,622 options which were exercised.
(5) Percentages shown for 1996 and 1997 represent the percentage of
total options granted to employees as compensation for
performance in 1996 and 1997 which were granted on
January 1, 1997 and January 1, 1998, respectively.
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table provides information related to the exercise of
stock options during the year ended December 31, 1997 by each of the
Named Executive Officers and the 1997 fiscal year-end value of
unexercised options.
Value of
Unexercised
Number of In-the-Money
Shares Unexercised Options at
Acquir- Options FY- End
ed on Value at FY-End Exerciseable\
Exer- Real- Exercisable/ Unexerciseable
Name cise ized Unexerciseable (1) (3)
- --------------------- ------ ----- -------------- ---------------
Thomas A. Lewis -- -- 1,600 / 19,700 $3,692 / 32,495
William E. Clark (2) -- -- 0 / 0 $0 / 0
Richard J. VanDerhoff -- -- 2,100 / 23,300 $4,846 / 38,975
Gary M. Malino -- -- 1,400 / 15,600 $3,231 / 26,079
Michael R. Pfeiffer -- -- 733 / 9,000 $1,691 / 14,852
Richard G. Collins -- -- 633 / 6,900 $1,461 / 11,572
(1) Market value of underlying Common Stock on date of fiscal year-
end minus the exercise price. The share price as of
December 31, 1997 was $25.4375.
(2) Excludes options to purchase 5,000 shares of Realty Income's
Common Stock granted to Mr. Clark as an outside director which
were granted to him after his term as Chief Executive Officer.
(3) Excludes options granted on January 1, 1998 as compensation for
1997 (See "Executive Compensation-Summary Compensation Table").
Employment Agreements
Each of Messrs. Lewis, VanDerhoff, Malino, Pfeiffer and Collins
have entered into employment agreements with the Company pursuant to
which each employee receives a base salary of $250,000, $225,000,
$175,000, $145,000, and $145,000, respectively, and the right to
receive severance compensation upon the occurrence of certain events
as specified in the agreements. The term of each employment agreement
is indefinite. The employee may terminate the agreement at any time
upon two weeks' written notice to the Company. The Company may
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<PAGE>
terminate the agreement without cause at any time upon written notice
to the employee. The employment agreements provide that upon
termination by the Company, including termination resulting from a
change in control of the Company, the employee will be entitled to
receive monthly severance payments in an amount equal to the
employee's base salary, payable in monthly installments. Each of
Messrs. Lewis, VanDerhoff, Malino, and Pfeiffer is entitled to receive
severance payments for 12 months following termination, and Mr.
Collins is entitled to receive severance payments for six months
following termination. The amount of severance compensation is
increased by 50% in the event of a termination resulting from a change
in control of the Company. Mr. Clark received no severance
compensation upon his retirement in 1997 as Chief Executive Officer.
The employment agreements provide that the employee must devote
his full time, attention and energy to the business of the Company and
may not engage in any other business activity which would interfere
with the performance of his duties or be competitive with the Company,
unless specifically permitted by the Board. This restriction does not
prevent the employee from making passive investments in a business not
in competition with the Company, so long as the investment does not
require the employee's services in a manner that would impair the
performance of his duties under the employment agreement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is comprised of five
independent non-employee directors, is responsible for, among other
things, establishing remuneration levels for officers of the Company
and establishing and administering executive compensation programs.
The compensation policies of the Company have been structured to
link the compensation of the executive officers of the Company with
enhanced stockholder value. Through the establishment of short- and
long-term incentive plans, the Company seeks to align the financial
interests of the executive officers with those of its stockholders.
Executive Compensation Philosophy
In designing its compensation programs, the Company has followed
its belief that compensation should reflect the value created for
stockholders while supporting the business strategies and long-range
plans of the Company and the markets the Company serves. In doing so,
the compensation programs reflect the following themes:
A compensation program that stresses the Company's financial
performance and the executive officers' individual performance.
A compensation program that strengthens the relationship
between pay and performance by providing variable, at-risk
compensation that is reflective of current market practices and
Page 15
<PAGE>
comparable executive rates and is dependent upon the level of
success in meeting specified Company and individual performance
goals.
An annual incentive plan that supports a performance-
oriented environment and which generates a portion of
compensation based on the achievement of specific performance
goals, with superior performance resulting in total annual
compensation above competitive levels.
A long-term incentive plan that is designed to reward
executive officers for long-term strategic management of the
Company and the enhancement of stockholder value.
The Compensation Committee will review and determine the
compensation of the executive officers of the Company with this
philosophy on compensation as its basis.
Executive Compensation Components
The Company's executive compensation is based on two components,
each of which is intended to serve the overall compensation
philosophy.
Base Salary. Base salary is set at a level competitive with
amounts paid to executive officers of comparable companies with
similar business structure, size and marketplace orientation. In
determining appropriate salary levels, the Compensation Committee
considers the individual's scope of responsibility, experience and
performance. In addition, the Compensation Committee reviews
competitive market and industry data compiled by independent
compensation consultants. The data provided compares the Company's
compensation practices to a group of comparable companies which tend
to have similar business structure, size and marketplace orientation.
Salaries for executive officers are reviewed by the Compensation
Committee on an annual basis. Increases to base salaries will be
driven primarily by individual performance. Base salaries allow
executives to be rewarded for individual performance based on the
Company's evaluation process which encourages the development of
executives and sustained levels of contribution to the Company. Base
salaries also offer security to executives and allow the Company to
attract competent executive talent and maintain a stable management
team.
Executive Incentive Compensation. The Company has adopted a
Management Incentive Plan which is linked to the long term performance
of the Company. Executive officers are eligible to receive annual
grants of incentive stock options and restricted stock based upon the
achievement by the executive officers of annual financial criteria
stated in terms of target and maximum goals as determined by the
Compensation Committee at the beginning of the fiscal year and the
Page 16
<PAGE>
following three factors: (a) growth in the Company's funds from
operations ("FFO"), which is a common statistical benchmark in the
real estate investment trust ("REIT") industry, (b) the Company's
performance compared to a peer group of comparable companies, and (c)
the executive's individual performance. In keeping with the Company's
commitment to provide a total compensation package which emphasizes
at-risk components of compensation, awards granted under the plan are
intended to retain and motivate executive officers to improve long-
term stock market performance.
Chief Executive Officer Compensation. In 1997, William E. Clark,
the Company's Chairman and Chief Executive Officer, received an
annualized base compensation of $100,000. In accordance with the
terms of the Management Incentive Plan, the Compensation Committee
established an FFO performance target at the beginning of the 1997
fiscal year. On May 13, 1997, Thomas A. Lewis became the Company's
Chief Executive Officer and received base compensation of $250,000.
Mr. Lewis' award under the Management Incentive Plan was attributable
75% to FFO performance and 25% to total shareholder return as compared
to the Company's peer group. The restricted stock and the stock
options vest one-third each year.
Rule 162(m). The 1993 Omnibus Budget Reconciliation Act ("OBRA")
became law in August 1993. Under the new law, income tax deductions
of publicly-traded companies in tax years beginning on or after
January 1, 1994 may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises, and non-
qualified benefits) for certain executive officers exceeds $1 million
(less the amount of any "excess parachute-payments" as defined in
Section 280G of the Code) in any one year. Under OBRA, the deduction
limit does not apply to payments which qualify as "performance-based."
To qualify as "performance-based," compensation payments must be based
solely upon the achievement of objective performance goals and made
under a plan that is administered by a committee of outside directors.
In addition, the material terms of the plan must be disclosed to and
approved by stockholders, and the compensation committee must certify
that the performance goals were achieved before payments can be made.
The Compensation Committee has designed the Company's compensation to
conform with the OBRA legislation and related regulations so that
total compensation paid to any employee will not exceed $1 million in
any one year, except for compensation payments which qualify as
"performance-based." The Company may, however, pay compensation which
is not deductible in limited circumstances when sound management of
the Company so requires.
Donald R. Cameron, Chairman
William E. Clark
Roger P. Kuppinger
Michael D. McKee
Willard H. Smith Jr.
Date: March 31, 1998
Page 17
<PAGE>
The above report of the Compensation Committee will not be deemed
to be incorporated by reference into any filing by the Company under
the Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates the
same by reference.
STOCK PERFORMANCE GRAPH
As a part of the rules concerning executive compensation
disclosure, Realty Income is obligated to provide a chart comparing
the yearly percentage change in the cumulative total stockholder
return on Realty Income Common Stock over a five-year period.
However, since Realty Income Common Stock has been publicly traded
only since October 18, 1994, such information is provided from this
date through December 31, 1997.
The chart below compares the performance of Realty Income Common
Stock with the performance of an index including all securities for
U.S. companies listed on Standard & Poor's 500 Total Return Index (the
"S&P 500 Total Return Index") and of a peer group of companies,
measuring the changes in common stock prices from October 18, 1994
through December 31, 1997. The chart assumes an investment of $100 on
October 18, 1994, and as required by the Commission, all values shown
assume the reinvestment of all distributions, if any, and, in the case
of the peer group, are weighted to reflect the market capitalization
of the component companies. The peer group consists of Franchise
Finance Corporation of America, Lexington Corporate Properties, Inc.,
Commercial Net Lease Realty and Tri-Net Corporate Realty Trust.
TOTAL RETURN PERFORMANCE
[GRAPH]
Period Ending
----------------------------------------------------
Index 10/18/94 12/31/94 06/30/95 12/31/95 6/30/96
- ------------- -------- -------- -------- -------- -------
Realty Income
Corporation 100.00 110.02 142.36 159.69 152.86
S&P 500 100.00 98.83 118.80 135.96 149.68
Realty Income
Corporation
Peer Group 100.00 102.73 124.58 134.78 141.75
(continued) Period Ending
--------------------------------
Index 12/31/96 06/30/97 12/31/97
- ------------- -------- -------- --------
Realty Income
Corporation 183.27 209.22 210.21
S&P 500 167.05 201.47 222.79
Realty Income
Corporation
Peer Group 175.38 177.26 197.71
Page 18
<PAGE>
COMPLIANCE WITH FEDERAL SECURITIES LAWS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own
more than 10% of a registered class of the Company's equity securities
(collectively, "Insiders"), to file with the Commission initial
reports of ownership and reports of changes in ownership of Realty
Income Common Stock and other equity securities of the Company.
Insiders are required by regulation of the Commission to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of copies of Forms 3, 4, and
5, and the amendments thereto, received by the Company for the year
ended December 31, 1997, or written representations from certain
reporting persons that no Forms 5 were required to be filed by those
persons, the Company believes that during the period ended
December 31, 1997, all filings requirements were complied with by its
executive officers, directors and beneficial owners of more than ten
percent of the Company's stock, except that a Form 5 was not timely
filed for Ms. Miller in connection with the purchase by her of 100
shares of Common Stock on the open market in December 1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 16, 1998 certain
information with respect to the beneficial ownership of shares of
Realty Income Common Stock by (i) each director and Named Executive
Officer and (ii) all directors and executive officers of the Company
as a group. The Company does not know of any person who beneficially
owns 5% or more of the outstanding shares of Realty Income Common
Stock. Except as otherwise noted, the Company believes that the
beneficial owners of shares of Realty Income Common Stock listed
below, based on information furnished by such owners, have sole voting
and investment power with respect to such shares.
Shares of Realty Income
Common Stock
Beneficially Owned
-----------------------
Name Number Percent
- ------------------------- ------- -------
William E. Clark (1) 538,911 2.0%
Richard J. VanDerhoff (2) 93,645 *
Thomas A. Lewis (3) 91,520 *
Gary M. Malino (4) 73,269 *
Donald R. Cameron (5)(6) 18,028 *
Michael D. McKee (6) 9,500 *
Roger P. Kuppinger (6)(7) 8,450 *
Michael R. Pfeiffer (8) 6,433 *
(continued on next page)
Page 19
<PAGE>
(continued) Shares of Realty Income
Common Stock
Beneficially Owned
-----------------------
Name Number Percent
- ------------------------- ------- -------
Willard H. Smith Jr. (9) 3,500 *
Teresa H. Miller 200 *
Richard G. Collins 1,999 *
Kim S. Kundrak 100 *
Mark G. Selman 100 *
All directors and executive officers of the
Company, as a group (13 persons)(10) 845,655 3.2%
- ----------------------
*Less than one percent
(1) Mr. Clark's total includes 538,033 shares owned of record by The
William E. Clark, Jr. and Evelyn J. Clark Family Trust (the
"Clark Family Trust"), of which he is a trustee and 449 shares
owned of record by his wife. Mr. Clark disclaims beneficial
ownership of the shares owned of record by his wife.
(2) Mr. VanDerhoff's total includes 2,440 shares owned of record by
his wife 2,100 shares subject to options that became exercisable
on January 1, 1997 and 7,767 shares subject to options that
became exercisable on January 1, 1998.
(3) Mr. Lewis' total includes 1,600 shares subject to options that
became exercisable on January 1, 1997 and 6,567 shares subject to
options that became exercisable on January 1, 1998.
(4) Mr. Malino's total includes 206 shares owned of record by his
wife, as to which he disclaims beneficial ownership, and 1,043
shares owned of record jointly with his wife, as to which he
shares voting and disposition power with his wife. Mr. Malino's
total includes 1,400 shares subject to options that became
exercisable on January 1, 1997 and 5,200 shares that became
exercisable on January 1, 1998.
(5) Mr. Cameron's total includes 9,400 shares owned of record by the
Cameron, Murphy and Spangler, Inc. Amended and Restated Pension
Trust dated April 1, 1984, of which he is the trustee. Of the
9,400 shares, 9,000 shares are in the account of Mr. Cameron, 200
shares in the account of Lachlan Cameron, and 200 shares in the
account of Elsie Bergquist. Mr. Cameron's total also includes
142 shares owned of record by his wife, and 749 shares owned of
record by his son, Donald Cameron. Mr. Cameron disclaims
beneficial ownership of the 142 shares owned by his wife, 749
shares owned by his son and the 400 shares owned by the Cameron,
Murphy and Spangler, Inc. Amended and Restated Pension Trust in
the accounts of Lachlan Cameron and Elsie Bergquist.
Page 20
<PAGE>
(6) For each of Messrs. Cameron, McKee and Kuppinger the total
includes 7,500 shares subject to options, 2,500 that became
exercisable on each of August 24, 1995, August 24, 1996 and
August 24, 1997.
(7) Mr. Kuppinger's total includes 950 shares owned of record jointly
with his wife, as to which he shares voting and disposition power
with his wife.
(8) Mr. Pfeiffer's total includes 733 shares subject to options that
became exercisable on January 1, 1997 and 3,001 shares subject to
options that became exercisable on January 1, 1998.
(9) Mr. Smith's total includes 2,500 shares subject to options that
became exercisable on August 19, 1997.
(10) See notes (1) through (9).
AUDITORS
Subject to its discretion to appoint alternative auditors if it
deems such action appropriate, the Board of Directors has retained
KPMG Peat Marwick LLP as the Company's auditors for the current fiscal
year. The Board of Directors has been advised that KPMG Peat Marwick
LLP is independent with respect to the Company and its subsidiaries
within the meaning of the Securities Act and the applicable published
rules and regulations thereunder. Representatives of KPMG Peat
Marwick LLP are expected to be present at the Annual Meeting and will
have the opportunity to make statements if they desire and to respond
to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The Bylaws of the Corporation provide that in order for a
stockholder to nominate a candidate for election as a Director at an
annual meeting of stockholders or propose business for consideration
at such meeting, notice generally must be given to the Secretary of
the Corporation no more than 90 days nor less than 60 days prior to
the first anniversary of the preceding year's annual meeting. The
fact that the Corporation may not insist upon compliance with these
requirements should not be construed as a waiver by the Corporation of
its rights to do so at any time in the future.
YOUR PROXY IS IMPORTANT
WHETHER YOU OWN FEW OR MANY SHARES
Please date, sign and mail the enclosed Proxy Card today.
Page 21
<PAGE>
REALTY INCOME CORPORATION
ANNUAL MEETING OF STOCKHOLDERS-MAY 5, 1998
Please mark your [ X ]
votes as indicated
in this example
YOUR VOTE IS IMPORTANT TO THE COMPANY WHETHER YOU OWN FEW OR MANY
SHARES! Please complete, date and sign the enclosed proxy card and
return it in the accompanying postage paid envelope, even if you plan
to attend the Annual Meeting. If you attend the Annual Meeting, you
may, if you wish, withdraw your proxy and vote in person.
The undersigned stockholder of Realty Income Corporation, a
Maryland corporation (the "Company"), hereby appoints Richard J.
VanDerhoff and Michael R. Pfeiffer, and each of them, as proxies for
the undersigned, with full power of substitution in each of them, to
attend the Annual Meeting of the Stockholders of the Company to be
held on May 5, 1998 at 9:00 a.m. Local Time, and any adjournment or
postponement thereof, to cast on behalf of the undersigned all votes
that the undersigned is entitled to cast at such meeting and otherwise
to represent the undersigned at the meeting with all powers possessed
by the undersigned if personally present at the meeting. The
undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and of the accompanying Proxy Statement and
revokes any proxy heretofore given with respect to such meeting.
The votes entitled to be cast by the undersigned will be cast as
instructed below. If this proxy is executed but no instruction is
given, the votes entitled to be cast by the undersigned will be cast
"for" the following proposals:
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
All other proxies heretofore given by the undersigned to vote shares
of stock of the Company, which the undersigned would be entitled to
vote if personally present at the Annual Meeting or any adjournment or
postponement thereof, are hereby expressly revoked.
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<PAGE>
Proposal 1.- Election of Directors
The Board of Directors recommends a vote FOR Election of Directors.
Nominees:
FOR all nominees WITHHOLD AUTHORITY to vote
listed below for all nominees listed below * EXCEPTIONS
[ ] [ ] [ ]
Nominees: Roger P. Kuppinger and Michael D. McKee
(INSTRUCTION: To withhold authority to vote for any individual
nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below)
* Exceptions ______________________________________________________
Proposal 2.- In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
Annual Meeting or any adjournment or postponement
thereof.
Please date this proxy and sign it exactly as your name or names
appear below. When shares are held by joint tenants, both should
sign. When signing as an attorney, executor, administrator, trustee
or guardian, please give full title as such. If shares are held by a
corporation, please sign in full corporate name by the president or
other authorized officer. If shares are held by a partnership, please
sign in partnership name by an authorized person.
Dated: _________________, 1998
Signature(s) _________________________________________________________
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD USING THE
ENCLOSED ENVELOPE. IF YOUR ADDRESS IS INCORRECTLY SHOWN, PLEASE PRINT
CHANGES.
Page 23
<PAGE>
