INNOVATIVE INDUSTRIAL PROPERTIES INC

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The charts below illustrate the mix between compensation elements provided to our named executive officers in 2023:

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80% of our chief executive officer’s and, on average, 80% of our other named executive officers’ total target direct compensation was variable (or “at-risk”). “At-risk” pay is determined based on the achievement of corporate and individual performance objectives or stock price performance, comprising time-vesting equity awards vesting over three-year periods and bonuses.

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50% of our chief executive officer’s and, on average, 49% of our other named executive officers’ total target direct compensation (restricted stock/RSUs), on average, was tied directly to stock price performance.

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The amounts shown above reflect total direct compensation for 2023, calculated as the sum of 2023 annual base salaries, actual annual bonuses for the 2023 performance year, and the fair-values of the long-term equity incentive awards granted in January 2023 (and in March 2023 with respect to Mr. Smith). The actual value realized from the long-term equity incentive awards, however, will depend directly on the performance of the Company’s share price over the service period during which the long-term equity incentive awards vest.

Previous Years’ Say-on-Pay Votes

We provide our stockholders with an annual advisory “say-on-pay” vote on the compensation of named executive officers. We conducted our first advisory say-on-pay vote in 2020. In each of the past four years, our stockholders expressed substantial support for the compensation of our named executive officers, where we received (on average) more than 93% of votes cast “FOR” our executive compensation program. We believe this support of our compensation program, as described below, reflects a strong alignment with the Company’s performance and long-term value creation for our stockholders. Accordingly, we did not make any significant changes to our compensation program in response to these votes in 2023. However, in an effort to further improve pay-for-performance alignment, we established a new annual cash bonus plan for 2024 and continue to explore ways to make our long-term incentive program more performance-based, each as described under the heading “Overview of Executive Compensation Program Changes for 2024 and Future Considerations.”

Compensation Process

Roles of the Compensation Committee, Consultants and Management

The Board established the compensation committee to carry out the Board’s responsibilities to administer our compensation programs. The compensation committee has the final decision-making authority for the compensation of our executive officers. The compensation committee operates under a written charter adopted by the compensation committee and approved by the Board. The charter is available in the “Investors” section of our website (www.innovativeindustrialproperties.com). Information that is presented or hyperlinked on our website is not incorporated by reference into this proxy statement.

Our compensation committee has independent authority to engage outside consultants and obtain input from external advisers as well as our management team or other employees.

The compensation committee may retain any independent counsel, compensation consultant or other experts or advisors that it believes to be desirable and appropriate. The compensation committee may also use the services of the Company’s regular legal counsel or other advisors to the Company. The compensation committee undertakes an independent assessment prior to retaining or otherwise selecting any independent counsel, compensation consultant, search firm, expert or other advisor that will provide advice to it, taking such factors into account and as otherwise may be required by the NYSE from time to time. On at least an annual basis, the compensation committee evaluates whether any work by any compensation consultant it has engaged raised any conflict of interest.

The compensation committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”) in January 2021 for the development of a PSU program that was introduced in January 2021, in January 2023 for a review of target executive compensation for certain of our Company’s officers, including our named executive officers, and in January 2024 for the structuring of the Company’s new annual cash bonus program beginning in 2024, as described under the heading “Overview of Executive Compensation Program Changes for 2024 and Future Considerations”. In connection with the engagement of FW Cook to provide advice on these executive compensation program matters, the compensation committee evaluated the independence of FW Cook in light of the rules regarding compensation committee advisor independence mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The compensation committee reviewed factors, facts and circumstances regarding compensation consultant independence, including a letter from FW Cook addressing FW Cook’s and their consulting team’s independent status with respect to the following factors: (1) other services provided to us by FW Cook; (2) fees we pay to FW Cook as a percentage of their total revenues; (3) FW Cook’s policies and procedures that are designed to prevent conflicts of interest; (4) any business or personal relationship between FW Cook or members of their consulting team that serves the compensation committee and a member of the compensation committee; (5) any shares of our stock owned by FW Cook or members of their consulting team that serves the compensation committee; and (6) any business or personal relationships between our executive officers and FW Cook or members of their consulting team that serves the compensation committee. After discussing these factors, facts and circumstances, the compensation committee affirmed the independent status of FW Cook and concluded that there are no conflicts of interest with respect to FW Cook.

Our executive chairman and chief executive officer typically attend compensation committee meetings, except for executive sessions (unless specifically requested by the compensation committee to be present). Each of our executive chairman and chief executive officer may provide recommendations with respect to compensation for the executive officers. The compensation committee considers these recommendations, but may approve, reject or adjust them as it deems appropriate.

Regulated Cannabis Industry Considerations

The experience and commitment of our named executive officers (four out of the five named executive officers have been with the Company since our first year of operations; Mr. Smith joined the Company in 2023, and brings decades of experience with public and private REITs, including companies focused on real estate for the regulated cannabis industry) provide the Company with unique skillsets in the business of acquiring, owning, leasing and managing highly specialized, mission-critical real estate for regulated cannabis operations. This team combines decades of proven institutional REIT management with an in depth understanding of the regulatory and operational nuances of the regulated cannabis industry, which we believe have been critical to our past achievements and remain critical to the continued execution on our Company’s long-term strategy.

The regulated cannabis industry is subject to risks and uncertainties that are highly unique in comparison to traditional industries, which also impact our Company and our management team. In particular, notwithstanding the proliferation of state-level medical-use and adult-use cannabis programs across the