Terreno Realty Corp

The following information depicts the relationship between “compensation actually paid” to our named executive officers and certain financial performance measures, in each case, for our five most recently completed fiscal years. For further information concerning the Company’s variable

philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.”

We do not provide pension benefits to our PEO or our other NEOs, therefore, no adjustments to the

S

ummary Compensation Table totals for changes in pensions values are necessary. The valuation assumptions used to calculate the equity award fair values were updated as of each measurement date and will differ from those disclosed as of the grant date. For the restricted stock awards, the updated valuation assumptions reflect the price of our common stock as of the measurement date, and for the performance share awards, the updated valuation assumptions reflect our relative total shareholder return performance and the price of our common stock, in either case, as of the measurement date.

John T. Meyer. Andrew Burke served as our executive vice president and was considered a NEO in 2022, 2021, and 2020. Mr. Burke resigned on April 15, 2022.

Financial Performance Measures

As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable

philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on, among other things, an objective of providing appropriate incentives to our NEOs to create long-term value for our stockholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:

Analysis of the Information Presented in the Pay versus Performance Table

As described in more detail in the section above titled, “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable

philosophy. While the Company uses several performance measures (including TSR as compared to the MSCI U.S. REIT Index and the FTS Nareit Equity Industrial Index) to align executive compensation with Company performance, not all of those Company measures are presented in the Pay versus Performance table. Further, the relative TSR as compared to the MSCI U.S. REIT Index and FTSE Nareit Equity Industrial Index component of our Long-Term Incentive Plan is measured over a three-year period, rather than the

one-year

period measured in the Pay versus Performance table. Moreover, the Company generally seeks to provide incentives to achieve long-term performance and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation

S-K)

for a particular year. The information presented in the Pay versus Performance table and the outcome of the analysis below are not necessarily reflective of our executive compensation program or our

philosophy.

Compensation Actually Paid and TSR

The amount of compensation actually paid to Messrs. Baird and Coke and the average amount of compensation actually paid to the Company’s other NEOs as a group is aligned with the Company’s Total Stockholder Return over the three years presented in the table. The alignment of compensation actually paid with the Company’s TSR over the period presented is because a significant portion of the compensation actually paid to Messrs. Baird and Coke and to the other NEOs is comprised of equity awards. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” approximately 85% of Messrs. Baird and Coke’s direct compensation was

at-risk

equity, of which approximately 55% was variable incentive equity based solely on three-year total stockholder return outperformance under the Long-Term Incentive Plan and approximately 30% was variable incentive equity based on changes in stock price during the restricted stock vesting period.

Compensation Actually Paid and Net Income (Loss)

The Company does not use net income (loss) as a performance measure in its executive compensation program because it is neither a reliable indication of our Company’s performance nor an effective measure of long-term value-creation for our Company. The measure of net income (loss) is, however, a contributor to the Company’s TSR, the amount of compensation actually paid to Messrs. Baird and Coke, and the average amount of compensation actually paid to the Company’s other NEOs as a group is generally aligned with the Company’s net income (loss) over the five years presented in the Pay versus Performance table.

Compensation Actually Paid and Relative TSR

The amount of compensation actually paid to Messrs. Baird and Coke and the average amount of compensation actually paid to the Company’s other NEOs as a group is aligned with the percentile ranking of the Company’s relative TSR as compared to the FTSE Naerit Equity Industrial Index over the five years as presented in the Pay versus Performance table. The Company has determined that relative TSR as compared to the FTSE Nareit Equity Industrial Index is the most important performance measure (that is not otherwise required to be disclosed in the Pay versus Performance table) used by the Company to link compensation actually paid to the NEOs, for the most recently completed fiscal year, to the Company’s performance because the Company utilizes TSR as compared to Nareit Equity Industrial Index as one of the two performance-based vesting conditions under its Long-Term Incentive Plan. The Company’s relative TSR has outperformed the FTSE Nareit Equity Industrial Index three of the five ye

a

rs presented in the

pay-versus-performance

period.