Terreno Realty Corp

We have designed our executive compensation programs to include three principal elements: base salary, annual cash incentive bonus (for our executive vice presidents), and long-term equity incentives.

while important, such business objectives, even if achieved, may not by themselves produce superior long-term stockholder value. Accordingly, we do not have an annual cash incentive bonus plan for Messrs. Baird and Coke, which we believe allows them to construct and evaluate our short-term objectives while more effectively thinking of longer-term stockholder value-creation. Our executive vice presidents, Messrs. Cannon and Meyer, are eligible to earn annual cash incentive bonuses based upon their individual performance, as further described below.

Each year the compensation committee identifies a group of peer companies, which are companies engaged in the industrial real estate industry or are of comparable size and scope, to benchmark executive compensation. For 2024, our primary industrial peers used in our benchmarking remained the same as in 2023. We revised thesize-based peer group by increasing the number of oursize-based peer companies and separating those peer companies into two categories: peers of similar equity capitalization and peers of similar enterprise value. In 2024, the compensation committee used the following peer companies in benchmarking executive compensation:

Primary Industrial Peers:

EastGroup Properties, Inc.

First Industrial Trust, Inc.

Innovative Industrial Properties, Inc.

LXP Industrial Trust

Rexford Industrial Realty, Inc.

STAG Industrial, Inc.

Equity Capitalization Based Peers:

Agree Realty Corporation

Apartment Income REIT Corp.

Brixmor Property Group Inc.

Federal Realty Investment Trust

Healthcare Realty Trust Incorporated

National Storage Affiliates Trust

NNN REIT, Inc.

Omega Healthcare Investors, Inc.

Ryman Hospitality Properties, Inc.

Vornado Realty Trust

Enterprise Value Based Peers:

Douglas Emmett, Inc.

EPR Properties

Essential Properties Realty Trust, Inc.

Global Net Lease, Inc.

Kite Realty Group Trust

OUTFRONT Media Inc.

Park Hotels & Resorts Inc.

Phillips Edison & Company, Inc.

Service Properties Trust

Uniti Group Inc.

Base Salaries. In order to attract and retain the most talented and experienced executives in our industry, we set the base salaries of executive officers at levels that are competitive with our peer companies that compete with us for executive talent. Base salaries are established in part based on the individual experience, skills, and expected contributions during the coming year and the executive’s performance during the prior year.

Increases in base salary are left to the discretion of the compensation committee. Effective August 16, 2024, the compensation committee increased the base salaries of each of Messrs. Cannon and Meyer from $400,000 to $420,000 to more closely align with similarly positioned and tenured executives at our peer companies and in the market generally. During 2024, no changes were made to Mr. Baird’s or Mr. Coke’s base salary.

Annual Cash Incentive Bonus. In order to more fully align compensation with long-term stockholder value creation as stated above, and to increase the overall equity component in their pay mix, we do not have, nor are we currently planning to adopt, an annual cash incentive bonus plan for Messrs. Baird or Coke, although we reserve our right to do so in the future. At the end of each calendar year, our President and CEO, review the performance and provide a discretionary recommendation to the compensation committee pertaining to the compensation of our executive vice presidents, Messrs. Cannon and Meyer, who received an annual cash incentive bonus primarily based upon the achievement of individual performance objectives, which, for 2024, included capital deployment, ESG initiatives, operational targets and raising equity capital (all in accordance with the Company’s annual business plan) and long-term strategic goals.

Time-Vesting Restricted Stock Awards. We believe that providing our executives with equity incentives will create longer-term alignment with stockholders and further the Company’s objective of meaningful equity ownership in the Company among the Company’s executives, while providing a meaningful retention incentive. As such, our executives are eligible to receive grants of restricted stock under our 2019 Equity Incentive Plan. On August 6, 2024, the compensation committee granted 24,228 shares of restricted stock with a grant date fair value of $1,600,017 (based on the closing trading price of $66.04 on such date) to each of Messrs. Baird and Coke and 11,357 shares of restricted stock with a grant date fair value of $750,016 (based on the closing trading price of $66.04 on such date) to each of Messrs. Cannon and Meyer, in each case in recognition of their cumulative accomplishments and progress on our long-term strategic plan adopted in 2020, to provide competitive compensation with our peer companies, and to retain our key executives and align their long-term interests with those of our stockholders. The shares of restricted stock vest with respect to 100% of the shares on the fifth anniversary of the date of grant, subject to the executive’s continued employment with the Company or its subsidiaries through the vesting date. Realized value for such awards increases or decreases based on the increase or decrease in the value of our common stock over the vesting period, further aligning the incentive with stockholder value creation.

Long-Term Incentive Plan. In order to directly align the long-term incentive compensation of our executives with the achievement of superior total returns for our stockholders, and to provide executives with the potential to earn equity awards subject to the long-term performance of our common stock, the compensation committee administers the Company’s Long-Term Incentive Plan, or the Long-Term Incentive Plan. Under the Long-Term Incentive Plan, our executives are granted performance share awards. The targets for the performance share awards are expressed as number of shares of common stock, and the actual award earned is settled in a number of shares of common stock. The actual award that each executive will earn depends on the achievement of the applicable performance criteria over the performance measurement period, as specified below. Generally, performance measurement periods under the Long-Term Incentive Plan run for three calendar years and begin on January 1 of the grant year. These performance-based awards are variable incentive, at-risk awards. The performance goals to achieve any payout are high-reach and formulaic rather than qualitative. No dividends are paid to our executives in respect of these awards during the performance measurement periods.

The actual number of shares of common stock earned under our Long-Term Incentive Plan for any performance measurement period is determined by our success in attaining or exceeding performance goals linked to each of the following two metrics during the performance measurement period:

The two main performance goals were established to focus our named executive officers on generating superior total stockholder return over time. Our compensation committee believes that achievement of the “target” level of performance of the two main performance goals, i.e., exceeding both applicable indices will require significant effort and substantial progress toward the goals of our strategic plan. If one of the performance goals is achieved at target level, each participating executive will receive an award equal to 50% of their target award attributable to such performance goal for the performance period, with no payout made with respect to the performance goal that did not achieve target level for the performance period. If we achieve the target level for both performance goals, each participating executive will receive an award equal to 100% of their total target award for the performance period and if we do not achieve the target level for both performance goals, no awards will be earned for the performance period. To the extent that our performance exceeds either performance goal by at least 100 basis points per year, each participating executive will receive an award equal to 150% of their target award and, if our performance exceeds both performance goals by at least 100 basis points per year, each participating executive will receive an award equal to 300% of their total target award. If our total stockholder return for the performance measurement period exceeds the compound, annualized percentage return of one of the applicable indices for such period but the excess is less than 100 basis points per annum, the size of awards earned by participants with respect to such index will be determined by linear interpolation. By way of illustration only, if our total stockholder return is 50 basis points per annum in excess of the applicable index, participants will receive an award equal to 150% of the target award attributable to such index. We believe achieving this maximum payout is difficult. In the event that our total stockholder return is negative for any performance period, even if we have outperformed the applicable indices, any incentive compensation earned for that performance period will be reduced by 50%, further aligning pay with stockholder returns.

The total stockholder return of Terreno Realty Corporation, the FTSE Nareit Equity Industrial Index, and the MSCI U.S. REIT Index (RMS) are listed below. Our compensation committee determined, based on the methodology described above, that the awards associated with the performance measurement periods specified below were earned as follows:

At-Risk Compensation. For 2024, approximately 85% of Messrs. Baird and Coke’s direct compensation wasat-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.