Net Lease Office Properties

Item 11. Executive and Trustee Compensation.

2023 Compensation of Named Executive Officers

We have no employees to whom we pay salaries. We do not intend to pay any annual compensation to our named executive officers for their services as officers; however, we will reimburse our Advisor a base administrative amount of approximately $4.0 million annually, for certain administrative services, including for the services of its personnel, including those who serve as our officers, pursuant to the Advisory Agreement.

2023 Independent Trustee Compensation Table

The following table sets forth information concerning the total compensation of the individuals who served as non-employee trustees during 2023, including service on all committees of the Board of Trustees, as described above:

1. Amounts reflect the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) with respect to awards of 9,551 restricted stock units received on November 2, 2023. There were no option awards, non-equity incentive compensation, or non-qualified deferred compensation granted to the non-employee trustees during 2023. The grant date fair value per share of these restricted stock units, computed in accordance with FASB ASC Topic 718, was $10.47. The assumptions on which these valuations are based are set forth in Note 14 of this Report. The restricted stock units vest in full on the first anniversary of the grant date.

2. Mr. Hansing became a trustee in November 2023 and received a pro-rated cash payment of $50,000 as a quarterly retainer and a pro-rated cash payment of $2,500 for his role as Compensation Committee Chair.

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3. Ms. Hoysradt became a trustee in November 2023 and received a pro-rated cash payment of $50,000 as a quarterly retainer and a pro-rated cash payment of $2,500 for her role as Nominating and Corporate Governance Chair.

4. Mr. Pinola became a trustee in November 2023 and received a pro-rated cash payment of $50,000 as a quarterly retainer, a pro-rated cash payment of $3,750 for his role as Audit Committee Chair and a pro-rated cash payment of $5,000 for his role as Lead Trustee.

2023 Incentive Award Plan

We adopted the Net Lease Office Properties and NLO OP LLC 2023 Incentive Award Plan (the “2023 Incentive Award Plan”), under which we may grant cash and equity incentive awards to eligible service providers to attract, motivate and retain the talent for which we compete.

Administration

Our Board of Trustees administers the 2023 Incentive Award Plan for non-employee trustees’ awards and by the Compensation Committee with respect to other participants, each of which may delegate its duties and responsibilities to committees of our trustees and/or officers (our Board of Trustees and such committees, referred to collectively as the “plan administrator”), subject to certain limitations that may be imposed under Section 16 of the Exchange Act and/or stock exchange rules, as applicable. The plan administrator will have the authority to administer the 2023 Incentive Award Plan, including the authority to select award recipients, determine the nature and amount of each award, and determine the terms and conditions of each award. The plan administrator will also have the authority to make all determinations and interpretations, prescribe all forms for use, and adopt rules for administering the 2023 Incentive Award Plan subject to its express terms and conditions.

Eligibility

Any employee or consultant of NLOP, NLO OP LLC or any subsidiary and any non-employee trustee of NLOP is eligible to participate in the 2023 Incentive Award Plan as selected by the plan administrator in its discretion.

Share Authorization

The 2023 Incentive Award Plan provides that the maximum aggregate number of our common shares that may be issued under the 2023 Incentive Award Plan will be 750,000 common shares. The maximum number of common shares that may be issued in connection with awards of incentive stock options (“ISOs”) under the 2023 Incentive Award Plan is 1,500,000 common shares. Each LTIP unit of NLO OP LLC subject to an award will count as one common share for purposes of calculating the aggregate number of common shares available for issuance under the 2023 Incentive Award Plan and for purposes of calculating the individual award limits under the 2023 Incentive Award Plan.

If any common shares subject to an award under the 2023 Incentive Award Plan are forfeited, expire or are settled for cash, any common shares subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants under the 2023 Incentive Award Plan. However, the following common shares may not be used again for grant under the 2023 Incentive Award Plan: (1) common shares tendered or withheld to satisfy grant or exercise price or tax withholding obligations associated with an award; (2) common shares subject to a stock appreciation right (“SAR”) that are not issued in connection with the stock settlement of the SAR on its exercise; and (3) common shares purchased on the open market with the cash proceeds from the exercise of options.

To the extent permitted under applicable securities exchange rules without shareholder approval, awards granted under the 2023 Incentive Award Plan in connection with the assumption, replacement, conversion or adjustment of outstanding equity awards in the context of a corporate acquisition or merger will not reduce the common shares authorized for grant under the 2023 Incentive Award Plan.

The maximum number of common shares that may be subject to one or more awards granted to any one participant pursuant to the 2023 Incentive Award Plan during any calendar year is 850,000 common shares, and the maximum amount that may be paid under a cash award per the 2023 Incentive Award Plan to any one participant during any calendar year period is $10,000,000. The sum of any cash compensation and the value (determined as of the date of grant under applicable accounting standards) of awards granted to any non-employee trustee during any calendar year may not exceed $1,000,000.

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Awards

The 2023 Incentive Award Plan provides for the grant of stock options, including ISOs and nonqualified stock options (“NSOs”), restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), other incentive awards, LTIP units and SARs. All awards under the 2023 Incentive Award Plan are set forth in award agreements, which will detail all terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise limitations. In the case of a participant’s death, disability, retirement, involuntary termination, or connection with a change in control, the plan administrator may at any time provide that an award will become immediately vested and fully or partially exercisable. Awards will be settled in our common shares or cash, as determined by the plan administrator.

•Restricted Stock Units. Restricted stock units (“RSUs”) are contractual promises to deliver our common shares (or the fair market value of such common shares in cash) in the future, which may also remain forfeitable unless and until specified vesting conditions are met. RSUs generally may not be sold or transferred until vesting conditions are removed or expired. The common shares underlying RSUs will not be issued until the RSUs have vested, and recipients of RSUs generally will have no voting or dividend rights prior to the time the RSUs are settled in common shares unless the RSU includes a dividend equivalent right (in which case the holder may be entitled to dividend equivalent payments under certain circumstances, provided that such dividend equivalents remain forfeitable unless and until the underlying RSUs have vested). Delivery of the common shares underlying the RSUs may be deferred under the terms of the award or at the participant’s election if the plan administrator permits such a deferral. On the settlement date or dates, we will issue one unrestricted, fully transferable common share (or the fair market value of one such common share in cash) to the participant for each vested and nonforfeited RSU.

•Stock Options. Stock options provide for the purchase of our common shares in the future at an exercise price set on the grant date. The exercise price of a stock option may not be less than 100% of the fair market value of the underlying common share on the date of grant (or 110% in the case of ISOs granted to certain significant shareholders), except with respect to certain substitute options granted in connection with a corporate transaction. The term of a stock option may not be longer than ten years (or five years in the case of ISOs granted to certain significant shareholders). Vesting conditions determined by the plan administrator may apply to stock options, including continued service, performance and/or other conditions.

•Restricted Stock. Restricted stock is an award of nontransferable common shares that remain forfeitable unless and until specified vesting conditions are met, including any dividends payable on the underlying common shares. Vesting conditions applicable to restricted stock may be based on continuing service, the attainment of performance goals and/or such other conditions as the plan administrator may determine. In general, restricted stock may not be sold or otherwise transferred until all restrictions are removed or expired.

•SARs. SARs entitle their holder, upon exercise, to receive an amount equal to the appreciation of the common shares subject to the award between the grant date and the exercise date. The exercise price of a SAR may not be less than 100% of the fair market value of the underlying common share on the date of grant (except with respect to certain substitute SARs granted in connection with a corporate transaction), and the term of a SAR may not be longer than ten years. Vesting conditions determined by the plan administrator may apply to SARs, including continued service, performance and/or other conditions. SARs under the 2023 Incentive Award Plan will be settled in cash, common shares, or a combination of both, as determined by the administrator.

•Stock Payments. Stock payments are awards of fully vested common shares that may, but need not, be made in place of base salary, bonus, fees or other cash compensation otherwise payable to any individual who is eligible to receive awards.

•Other Incentive Awards. Other incentive awards are awards of cash or common shares or any other award valued wholly or partially by referring to, or otherwise based on, common shares or other property. Other incentive awards may vest based on or be linked to any performance criteria determined by the plan administrator.

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•Dividend Equivalents. Dividend equivalents represent the right to receive the equivalent value of dividends paid on our common shares and may be granted alone or in tandem with awards other than stock options or SARs. Dividend equivalents are credited as of dividend payment dates during the period between a specified date and the date such award terminates or expires, as determined by the plan administrator. In addition, dividend equivalents with respect to an award that are based on dividends paid prior to the vesting of such award shall only be paid to the extent that the vesting conditions are subsequently satisfied and the underlying award vests.

•LTIP Units. LTIP units are awards of units of NLO OP LLC intended to constitute “profits interests” within the meaning of the relevant IRS Revenue Procedure guidance. LTIP Units may be granted under the 2023 Incentive Award Plan to the extent authorized under the operating agreement of NLO OP LLC.

Minimum Vesting Requirement

Awards granted under the 2023 Incentive Award Plan may not vest earlier than the first anniversary of such award’s date of grant, provided that awards that result in the issuance of an aggregate of up to 5% of the common share reserve under the 2023 Incentive Award Plan may be granted to any one or more participants without regard to such minimum vesting requirement. For purposes of awards granted to non-employee trustees, a vesting period will be deemed to be one year if it runs from the date of one annual meeting of our shareholders to the next annual meeting of our shareholders that occurs at least fifty weeks following the date of such first annual meeting. Such minimum vesting requirement will not preclude or limit any award or other arrangement (or any action by the plan administrator) from providing for accelerated vesting of such award in connection with or following a participant’s death, disability, retirement or involuntary termination or in connection with the occurrence of a change in control of our Company.

Certain Transactions

The plan administrator has broad discretion to take action under the 2023 Incentive Award Plan, as well as make adjustments to the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our common shares, such as share dividends, share splits, mergers, acquisitions, consolidations and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our shareholders, known as “equity restructurings,” the plan administrator will make equitable adjustments to the 2023 Incentive Award Plan and outstanding awards.

In the event of a “change in control” of our Company (as defined in the 2023 Incentive Award Plan), to the extent that the surviving entity declines to assume or substitute outstanding awards or it is otherwise determined that awards will not be assumed or substituted, all outstanding and unvested awards will become fully vested and exercisable in connection with the transaction (with performance-vesting awards vesting based on actual performance as of the date of such “change in control” with goals adjusted if the plan administrator determines, in its discretion, that adjustment is necessary or appropriate to reflect the shortened performance period, unless otherwise specified in an applicable award agreement).

Foreign Participants, Claw-Back Provisions, Transferability, and Participant Payments

The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the common share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States. All awards will be subject to the provisions of any claw-back policy implemented by our Company to the extent set forth in such claw-back policy and/or in the applicable award agreement. With limited exceptions for estate planning, domestic relations orders, certain beneficiary designations and the laws of descent and distribution, awards under the 2023 Incentive Award Plan are generally non-transferable prior to vesting. They are exercisable only by the participant unless otherwise provided by the plan administrator. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2023 Incentive Award Plan, the plan administrator may, at its discretion, accept cash or check, our common shares that meet specified conditions, a “market sell order” or other consideration as it deems suitable.

Plan Amendment and Termination

Our Board of Trustees may amend or terminate the 2023 Incentive Award Plan at any time; however, except in connection with certain changes in our capital structure, shareholder approval will be required for any amendment that increases the aggregate number of common shares available under the 2023 Incentive Award Plan or any individual award limit under the 2023

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Incentive Award Plan, “reprices” any stock option or SAR, or cancels any stock option or SAR in exchange for cash or another award when the option or SAR price per common share exceeds the fair market value of the underlying common shares. In addition, no amendment, suspension or termination of the 2023 Incentive Award Plan may, without the consent of the affected participant, impair any rights or obligations under any previously granted award, unless the award itself otherwise expressly so provides. No ISO may be granted pursuant to the 2023 Incentive Award Plan after the tenth anniversary of the date on which our Board of Trustees adopts the 2023 Incentive Award Plan.

Additional REIT Restrictions

The 2023 Incentive Award Plan provides that no participant will be granted, become vested in the right to receive or acquire or be permitted to acquire, or will have any right to acquire, common shares under an award if such acquisition would be prohibited by the restrictions on ownership and transfer of our common shares contained in our declaration of trust or would impair our status as a REIT.

Clawback Policy

Our Board of Trustees adopted a clawback policy which requires the clawback of erroneously awarded incentive-based compensation of past or current executive officers awarded during the three full fiscal years preceding the date on which the issuer is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the federal securities laws. There is no fault or misconduct required to trigger a clawback.

The Compensation Committee shall determine, in its sole discretion, the timing and method for promptly recouping such erroneously awarded compensation.

A copy of this policy has been filed as an exhibit to this Annual Report.

Share Ownership Guidelines

Our Board of Trustees has adopted the Net Lease Office Properties Share Ownership Guidelines. The Share Ownership Guidelines require the independent trustees to hold their initial grant of 9,551 restricted stock units, awarded pursuant to the Company’s 2023 Incentive Award Plan, until separation of service.

Compensation Committee Report

As noted above, we have no employees. The Compensation Committee has reviewed and discussed the Compensation of trustees with management. Based on such review and discussions, the Compensation Committee recommended to the Board, and the Board approved, that Trustee Compensation be included in this Annual Report for the year ended December 31, 2023.

COMPENSATION COMMITTEE

Axel K.A. Hansing, Chair

Jean Hoysradt

Richard J. Pinola

Compensation Committee Interlocks and Insider Participation

Each of the Compensation Committee members whose names appear under the heading Compensation Committee Report has been a Compensation Committee member since November 2023 when the Separation and Distribution of Net Lease Office Properties was completed. No member of the Compensation Committee during 2023 is or has been an executive officer of the Company, and no member of the Compensation Committee had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related-party transactions. None of the Company’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a trustee of the Company or member of the Compensation Committee during 2023.

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