Texas Pacific Land Corp

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Business and Financial Performance 2023 Highlights(1)

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(1)

All share and share price amounts reflect the three-for-one stock split effected on March 26, 2024.

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(2)

Adjusted EBITDA and free cash flow are non-GAAP financial measures. Reconciliations of non-GAAP measures are provided in Appendix A attached hereto.

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Key Aspects of 2023 Design

Following a substantial redesign of our compensation programs in 2022, the Compensation Committee generally maintained the overall program structure in 2023. This program design is based on typical practices among our Reference Group (see below) while reflecting the unique aspects of TPL. The compensation program design is intended to meet the following objectives:

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Align executives’ financial interests more closely with stockholders;

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Tie a substantial portion of executive compensation with the Company’s performance (both stock price and financial performance) to incorporate risk into the awards, while relying heavily on formulaic incentive compensation;

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Incorporate long-term vesting periods for a substantial portion of executive compensation to help ensure continuity of the management team;

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Ensure transparency for participants and stockholders about how outcomes are determined with an appropriate and competitive level of pay at risk;

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Meet common governance standards for public companies, and assess and control the program to avoid creating undue risk or encouraging excessive risk-tasking by executives; and

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Ensure a competitive compensation program.

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We believe that our program, including awards under the Texas Pacific Land Corporation 2021 Incentive Plan (the “2021 Plan”), has an appropriate balance of risk and reward in relation to our overall business strategy and that the balance of compensation elements discourages excessive risk-taking.

We have maintained the key aspects of our compensation program for 2024.

Decision-Making Process

Compensation Philosophy and Approach

TPL’s 2023 executive compensation program design is intended to recruit and retain an executive team and to reward performance in achieving TPL’s goal of creating stockholder value. The 2023 executive compensation program consists principally of a salary, an annual cash bonus (sometimes referred to as awards under a non-equity incentive plan commencing in 2022), and share-based compensation. Base salaries provide our Named Executive Officers with a steady income stream that is not contingent on TPL’s performance. Differences in salary for the Named Executive Officers may reflect the differing responsibilities of their respective positions, the differing levels of experience and qualifications of the individuals, internal pay-equity considerations and individual performance. The annual cash bonus allows the Compensation Committee flexibility to recognize and reward each Named Executive Officer’s contributions to TPL’s performance in any given year. Salaries are reviewed annually, and salary adjustments and the amounts of annual cash

bonuses are determined by the Compensation Committee and the Board, as applicable, based upon an evaluation of the Named Executive Officer’s performance and contributions, as well as overall performance of the Company, against the goals and objectives of TPL in accordance with the relevant employment agreements in effect, as applicable. Share-based compensation awards link pay to performance and align Named Executive Officers’ interests with those of the Company and its stockholders over the long term.

As part of its compensation program, TPL also maintains both a qualified defined benefit pension plan and a qualified defined contribution plan, both of which are available to employees generally, including the Named Executive Officers. These plans are designed to assist employees in planning for their retirement.

Stockholder Engagement; Consideration of 2023 Say on Pay Vote

Prior to the 2023 annual meeting of stockholders, at the direction of our Compensation Committee, TPL management reached out to 10 of our largest stockholders, representing more than 20% of our outstanding shares of Common Stock (measured as of September 12, 2023), to discuss our executive compensation program along with other topics of importance to them, including governance, sustainability and strategy. Four stockholders representing approximately 10% of our outstanding shares of Common Stock (measured as of September 12, 2023) accepted our invitation to share feedback, and members of management and of the Board engaged at length with them. The remaining six stockholders we contacted either did not respond or confirmed that they did not have any concerns with our executive compensation program and therefore no engagement was necessary.

Independent members of our Board participated in and led each of these meetings with stockholders. Each meeting included some combination of our Compensation Committee chair and at least one other member of the Board. They were joined in these meetings by most or all of the Company’s Chief Executive Officer, Chief Financial Officer, Senior Vice President, Secretary and General Counsel, and Vice President of Finance and Investor Relations.

Following these meetings, the Compensation Committee met with senior management to discuss what we learned during this comprehensive outreach process. In general, we learned that stockholders were not seeking significant changes to our compensation program. Many expressed support for our overall compensation philosophy and instead suggested modest changes, including enhancing our proxy statement disclosures and increasing the proportion of performance-based equity over time.

At our 2023 annual meeting of stockholders, the majority of our stockholders voted to approve our executive compensation program, with approximately 81% approval among votes cast. The Compensation Committee viewed this as support of its approach and philosophy and as a basis for continuing with the program described in this CD&A for 2023.

See “Stockholder Engagement and Communications with Directors” on page 34 above for a detailed discussion of the Company’s stockholder engagement efforts, including stockholder engagement regarding executive compensation, and how feedback from stockholders impacted decisions made with respect to our 2024 executive compensation program.

Role of the Compensation Committee

The Compensation Committee has the sole authority to determine the compensation of the Named Executive Officers other than the Chief Executive Officer and to make recommendations to the Board, which has the authority to make final decisions with respect to the compensation of the Chief Executive Officer. The Compensation Committee is also responsible for developing and overseeing an equity compensation program for the Company’s other employees, and for making recommendations to the Board with respect to compensation for non-employee directors, with assistance from the Compensation Committee’s independent compensation consultant.

In establishing the Named Executive Officers’ compensation for 2023, the Compensation Committee chair and the full Compensation Committee met multiple times, including with management and/or the Compensation Committee’s independent compensation consultant, to review market practices, evaluate potential alternatives, determine appropriate metrics and goals, and review strategic goals and performance.