VORNADO REALTY TRUST

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U.S. federal income tax treatment under current law. We believe that the use of restricted units has (i) enhanced our equity-based compensation package overall, (ii) advanced the goal of promoting long-term equity ownership by our management, (iii) not adversely impacted dilution as compared to restricted shares, (iv) enhanced retention and (v) further aligned the interests of our management with the interests of our shareholders.

Other Plans:

Development Fee Pool

Background Factors

Our team continues to pursue major projects that will enhance the long-term value of our portfolio. They are also evolving our business model to enable us to compete and succeed better in today’s environment by spreading risk and partnering with like-minded entities on development projects. These projects require a particular set of expertise and skills, and the Compensation Committee sought to design a component of compensation specifically to retain and incentivize our team.

In doing so, the Compensation Committee considered several factors:

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Large development projects in New York City are extraordinarily complex and require a long, intensive period of time to complete, often taking 7-10 years from conception to stabilization (e.g., 220 Central Park South), and require highly specialized knowledge of the NYC zoning process, building regulations and construction expertise, as well as financing and leasing expertise.

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These development projects, while potentially very profitable, are also extraordinarily capital intensive and generally entail significant risk. In order for us to undertake large development projects that may last close to a decade, the Company must maintain a best-in-class development team and be confident that it will be able to retain that strong team throughout the development process.

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Maintaining a world-class development team in-house, rather than outsourcing development projects to third parties, provides key advantages including allowing for seamless communication among our development, leasing, financing and senior management teams, and provides us with greater control. This results in higher quality projects at better yields and significantly lower costs and risk to shareholders.

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It often may be beneficial to the Company to enter into joint ventures with third-party investors that can provide capital for developments and enable the Company to leverage its skills, enhance its economics and diversify its risk.

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The Compensation Committee believes that it is important for the Company to have a compensation tool it can use to retain and reward employees for these large, long-term development projects where the potential reward is clear to employees and such reward is not dependent on our Share price, which is generally outside of our control, and certainly outside the control of the development team. In addition, we are often competing for talent with private developers that can offer profit-sharing opportunities and the ability for employees to participate in fees. Thus, in order to incentivize joint ventures with third-parties, reward employees’ dedication to these large development projects, and encourage retention of our team members, in December 2023, the Compensation Committee established a new compensation pool (the “Development Fee Pool”).

Development Fee Pool Structure

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Comprised of not more than forty percent (40%) of all net development fees received by the Company and its affiliates from third parties with respect to the 350 Park Avenue development (the “350 Park Avenue Project”) and from future development projects.

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The Development Fee Pool only applies to fees paid by joint-venture partners or other third parties but does not apply to wholly-owned Company developments. “Net development fees” excludes any amounts attributable to the Company’s share of a payment made by a joint venture.

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Upon the closing of the 350 Park Avenue transaction in the first quarter of 2023, the Company received an initial $25 million installment of development fees for the 350 Park Avenue Project. Based on the Company’s anticipated 36% interest in the 350 Park Avenue Project joint venture which, if formed, will bear the cost of the development fee, $16 million of such development fee is attributable to third parties. Accordingly, $6.4 million (representing 40% of $16 million) was available in the Development Fee Pool and, on December 15, 2023,

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