PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION—DATED MARCH 27, 2023

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.  )

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

Notice of Annual Meeting of Stockholders

DATE Thursday, May 11, 2023

TIME 8:30 a.m. Central Time

LOCATION 212 Lavaca Street Suite 390 Austin, TX 78701

RECORD DATE March 27, 2023

Items of Business

Board Recommendation

1

To elect three Class I directors

FOR each nominee

2

To approve, on an advisory basis, the compensation of our named executive officers

FOR

3

To ratify, on an advisory basis, the appointment of our independent registered public accounting firm

FOR

4

To approve the amendment to our certificate of incorporation to add officer exculpation

FOR

Notice is hereby given that the 2023 annual meeting of stockholders (including any adjournment or postponement thereof, the “2023 Annual Meeting”) of Stratus Properties Inc., a Delaware corporation, (including, as the context requires, its consolidated subsidiaries, the “Company,” “Stratus,” “we,” “us” and “our”) will be held on Thursday, May 11, 2023 at 8:30 a.m. Central Time, at 212 Lavaca Street, Suite 390, Austin, Texas 78701 for the purposes set forth above. Stockholders will also transact such other business as may properly come before the 2023 Annual Meeting. Only stockholders of record at the close of business on March 27, 2023 (the “record date”) are entitled to vote at the 2023 Annual Meeting. The accompanying proxy statement provides detailed information about the matters to be considered at the 2023 Annual Meeting. Please read it carefully.

YOUR VOTE IS IMPORTANT. To assure that your shares are represented at the 2023 Annual Meeting, please promptly mark, sign, date and return the enclosed proxy card in the postage-paid envelope provided, or vote by telephone or the Internet as instructed on the proxy card, whether or not you plan to attend the 2023 Annual Meeting. Please refer to “Information About the 2023 Annual Meeting” on page 55 of the attached proxy statement and the instructions on the proxy card. The Notice of 2023 Annual Meeting of Stockholders and Proxy Statement are first being made available to stockholders on or about April 7, 2023.

Thank you for your continued support of our Company.

If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Stockholders may call toll-free: (877) 456-3442

Banks and Brokers may call collect: (212) 750-5833

Proxy Statement

This proxy statement (this “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”) of Stratus Properties Inc., a Delaware corporation, for use at our 2023 annual meeting of stockholders (including any adjournment or postponement thereof, the “2023 Annual Meeting”). This Proxy Statement, along with a proxy card or voting instruction form, Notice of Annual Meeting of Stockholders and our Annual Report to Stockholders for the fiscal year ended December 31, 2022 (“2022 annual report”) are first being mailed to our stockholders of record on or about April 7, 2023. References in this Proxy Statement to “Stratus,” the “Company,” “we,” “us,” “our” and similar terms refer to Stratus Properties Inc. and, as the context requires, its consolidated subsidiaries.

Table of Contents

We include website addresses throughout this Proxy Statement for reference only. The information contained or referenced on our website and other websites mentioned in this Proxy Statement are not a part of this Proxy Statement and are not deemed incorporated by reference into this Proxy Statement or any other public filing made with the Securities and Exchange Commission (“SEC”). Printed versions of these materials are available, free of charge, to any stockholder who requests them from our corporate secretary.

Stratus Properties Inc.

212 Lavaca Street

Suite 300

Austin, Texas 78701

Proxy Summary

This summary highlights selected information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. For more information regarding our 2022 performance, please review our 2022 annual report.

2023 Annual Meeting of Stockholders

Agenda and Voting Recommendations

1

Director Nominees

Our Board is currently comprised of seven directors, who are divided into three director classes.

You are being asked to elect three Class I directors to serve on the Board until the 2026 annual meeting of stockholders, until their respective successors are duly elected and qualified or until their earlier resignation or removal. For more information about the background and qualifications of the director nominees and the entire Board, please see “Proposal No. 1: Election of Directors” on page 21 of this Proxy Statement and “Information About Nominees and Continuing Directors” on page 22 of this Proxy Statement. The Board’s nominees for Class I directors are:

2

Board Composition Highlights

3

Board Skills, Experience and Background

The following tables illustrate the diverse mix of skills, experiences and backgrounds that qualify our directors for service on our Board and that contribute to our ability to create value for our stockholders. The table below is intended to highlight each director’s particular strengths, and an individual director may have other skills, experiences and personal attributes not highlighted in the table. Additional information about each director can be found under the heading “Information About Nominees and Continuing Directors” on page 22 of this Proxy Statement.

Skills and Experience

CEO / Executive Management Experience

✓

✓

✓

✓

✓

✓

6 out of 7

Real Estate Industry Experience

✓

✓

✓

✓

✓

5 out of 7

Other Public Company Board Experience

✓

✓

✓

3 out of 7

Risk Management / Strategic Planning Experience

✓

✓

✓

✓

✓

✓

✓

7 out of 7

Public and Private Investment Experience

✓

✓

✓

✓

4 out of 7

Banking / Finance Experience

✓

✓

✓

✓

✓

✓

6 out of 7

Accounting and Financial Reporting Experience

✓

✓

✓

✓

✓

✓

✓

7 out of 7

Background

Average

Tenure (Years)

1

2

7

30

11

2

24

11.0

Age (Years)

62

49

62

74

71

52

58

61.1

4

Director and Executive Officer Gender and Race/Ethnic Diversity

We are committed to Board diversity and Board refreshment and we believe the Company’s policies and practices help to ensure a diversity of skills, experience, and tenure on the Board. In the past two years, we have added three new, diverse independent directors to our Board: Neville L. Rhone, Jr., Kate B. Henriksen and Laurie L. Dotter. The following tables illustrate the diversity of our directors and executive officers based on self-identified characteristics on an individual and aggregate basis.

Board Diversity Matrix (as of March 27, 2023)

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Governance Highlights

We are committed to strong and effective governance practices that are responsive to our stockholders. Our commitment to good corporate governance, including best practices that are part of our executive compensation program, is illustrated by the following practices:

6

Corporate Responsibility Highlights

As a real estate development company centered in Austin, Texas, we have been on a sustainability journey for more than 20 years. We understand intuitively the intrinsic value that a healthy environment and healthy people bring to our real estate development projects, our company and our stakeholders.

During 2022, with the guidance of our nominating and corporate governance committee, we added a corporate responsibility section to our website in order to share more information about our corporate responsibility and sustainability history and achievements as we continue to strive to be a leader in sustainable real estate development. Please visit our website at stratusproperties.com/esg/corporate _responsibility/ for more information.

Sustainable Development

We emphasize sustainable design, construction, and operations as essential company goals in developing and operating our properties

		•  Block 21 received the U.S. Green Building Council’s LEED Silver certification - at the time, the first mixed use development of its kind in the world to achieve this rating
		•  Holden Hills, our 475-residence development under construction in Barton Creek in Austin, Texas, focuses on health, wellness and a connection to nature
		•  Our Chairman, President and CEO, William H. Armstrong III serves as secretary-treasurer of Green Business Certification Inc.

People

We value innovation, integrity and initiative. We are committed to supporting diversity in the workplace and encouraging the health and well-being of our employees

		•  As of December 31, 2022, of our 31 employees, all of whom are full-time, 61% are female and 26% are ethnically diverse   •  Women represent 80% of our executive and senior management positions. 43% of our directors are gender or ethnically diverse   •  We provide our employees with a robust benefits program

Policies

During 2022 we adopted new policies, available on our website, to capture our expectations regarding key areas of corporate responsibility

		•  Environmental Policy   •  Vendor Code of Conduct   •  Labor and Human Rights Policy

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Performance Highlights

8

Corporate Governance

Corporate Governance Guidelines; Ethics and Business Conduct Policy

We are committed to strong and effective governance practices that are responsive to our stockholders. Our corporate governance guidelines, along with our Amended and Restated Certificate of Incorporation, as amended (our “Charter”), our amended and restated by-laws (our “By-Laws”) and the charters of the standing committees of our Board, provide the framework for the governance of the Company and reflect the Board’s commitment to monitor the effectiveness of policy and decision making at both the Board and management levels. Our Charter, By-Laws, committee charters and corporate governance guidelines are available at stratusproperties.com under Investors–Corporate Governance. In addition, our ethics and business conduct policy is available at stratusproperties.com under Investors–Ethics and Business Conduct. Amendments to or waivers of our ethics and business conduct policy granted to any of our directors or executive officers will be published promptly on our website.

Board Composition, Independence and Leadership Structure

Our Board has primary responsibility for overseeing the management of our business and affairs. As of the date of this Proxy Statement, our Board consists of seven members, six of whom have been determined by our Board to be independent. On the basis of information solicited from each director, and upon the advice and recommendation of the nominating and corporate governance committee, our Board has affirmatively determined that none of Mses. Dotter and Henriksen and Messrs. Joseph, Madden, Porter and Rhone has any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and each is independent as defined in the director independence standards of NASDAQ, as currently in effect. Our Board previously determined that James C. Leslie was an independent director as defined in the director independence standards of NASDAQ while he was a director in 2022. Mr. Leslie retired effective November 4, 2022. In making these determinations, our Board, with assistance from the Company’s legal counsel, evaluated responses to a questionnaire completed annually by each director regarding relationships and possible conflicts of interest between each director, the Company and management. In its review of director independence, our Board and legal counsel considered all commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships any director may have with the Company or management, including the relationships described in “Designated Director” on page 10 of this Proxy Statement and in “Certain Transactions” on page 53 of this Proxy Statement. Mr. Armstrong, the chairman of our Board, is not considered an independent director because he is also our president and chief executive officer and receives compensation for his services to the Company as a member of our management team. Our Board believes that the independent directors provide effective oversight of management.

Our Board believes that Mr. Armstrong’s service as both chairman of our Board and as president and chief executive officer is in the best interest of the Company and our stockholders at this time. With over 27 years of leadership experience with the Company, Mr. Armstrong possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its businesses. His experience and relationships in the Austin area and other select Texas markets have been central to the Company’s ability to secure and maintain entitlements and successfully develop and sell its properties. He is thus best positioned to develop agendas that ensure that our Board’s time and attention are focused on the most critical challenges and opportunities facing the Company. His combined role enables decisive leadership, ensures clear accountability, facilitates an efficient board process, and enhances our ability to communicate the Company’s message and strategy clearly and consistently to our stockholders, employees and customers.

Our Board recognizes the importance of having a strong independent board leadership structure to ensure accountability and to facilitate the effective performance of the Board in its role of providing effective oversight of management. In 2013, our Board established the position of lead independent director. The role of our lead independent director is described in our corporate governance guidelines. On April 1, 2022, Mr. Joseph was appointed to serve a three-year term as lead independent director, which expires on April 1, 2025. The lead independent director serves as a liaison between Mr. Armstrong and the independent directors, works with Mr. Armstrong in setting the agendas for Board meetings and, in Mr. Armstrong’s absence, chairs regular sessions of the Board. The lead independent director also sets the agenda and presides at all executive sessions of the independent directors. The lead independent

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director may be removed or replaced at any time with or without cause by a majority vote of our independent directors. In addition, our three standing committees are composed entirely of independent directors, and have the power and authority to engage legal, financial and other advisors as they may deem necessary, without consulting or obtaining the approval of the full Board or management.

Designated Director

Pursuant to an Investor Rights Agreement with Moffett Holdings, L.L.C. (“MHLLC”) dated March 15, 2012 (the “Investor Rights Agreement”), and subsequently assigned to LCHM Holdings, LLC (“LCHM Holdings”), Mr. Porter was appointed to our Board as the designated director of MHLLC and subsequently, LCHM Holdings. Mr. Porter continues to serve as the designated director of LCHM Holdings pursuant to the Investor Rights Agreement. Effective March 23, 2023, upon the recommendation of the nominating and corporate governance committee, the Board reclassified Mr. Porter from a Class III director with a term expiring at the 2025 annual meeting to a Class II director with a term expiring at the 2024 annual meeting, or until his successor is elected and qualified or his earlier death, resignation, removal or retirement. Mr. Porter was reclassified as a Class II director in order to fill the vacancy resulting from Mr. Leslie’s retirement and to rebalance the class sizes to be as nearly equal in number as possible as required by the Company’s Charter. For more information, see “Certain Transactions” on page 53 of this Proxy Statement.

Director Attendance and Meetings

Our Board held a total of 11 meetings during 2022. During 2022, each director attended over 95% of the aggregate of the total number of meetings of the Board and all committees of the Board on which he or she served during the periods of his or her Board membership and committee service. Directors are invited but not required to attend annual meetings of our stockholders. Mr. Armstrong attended our 2022 annual meeting of stockholders.

Board Committees

To provide for effective direction and management of our business, our Board has established three standing committees: the audit committee, the compensation committee and the nominating and corporate governance committee. Each committee is composed entirely of independent directors.

During 2021 we refreshed the composition of our three standing committees and rotated all chair positions. Neville L. Rhone, Jr., a member of the audit committee, became chair; James E. Joseph, a member of the compensation committee, became chair; and Kate B. Henriksen, a member of the nominating and corporate governance committee, became chair. We also decreased the size of the committees to promote efficiencies and better align with peer company practices. The following table identifies the current committee members, including each committee chair.

* Mr. Leslie served on our Audit Committee during 2022 until his retirement from the Board on November 4, 2022.

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Each committee operates under a written charter adopted by our Board. All of the committee charters are available on our website at stratusproperties.com under Investors–Corporate Governance. The following charts summarize the primary responsibilities of each of the committees.

11

Compensation Committee Procedures

The compensation committee has the sole authority to set annual compensation amounts and annual incentive program criteria for our executive officers, evaluate the performance of our executive officers, and make awards to our executive officers under our cash-based and equity-based incentive programs. The compensation committee also reviews, approves and recommends to our Board any proposed plan or arrangement providing for incentive, retirement or other compensation to our executive officers, as well as any proposed contract under which compensation is awarded to one of our executive officers.

The compensation committee also has oversight of director compensation, including the authority to grant cash-based and equity-based awards. The compensation committee reviews the form and amount of all director compensation, including cash, equity-based awards and other forms of director compensation, paid to our non-employee directors under our director compensation program.

The compensation committee oversees our assessment of whether our compensation policies and practices are likely to expose the Company to material risks. The compensation committee may form subcommittees and delegate responsibilities and authority to such subcommittees in its sole discretion, to the extent consistent with the compensation committee’s charter, our Charter or By-Laws, and applicable law.

If equity awards are granted in a given year, in accordance with the compensation committee’s written policies, such awards are generally granted at a compensation committee meeting in the first fiscal quarter of the year. To the extent the compensation committee approves any special awards at other times during the year, such awards will be made during an open window period when our executive officers and directors are permitted to trade in our securities.

The terms of our stock incentive plans permit the compensation committee to delegate to one or more officers of the Company its authority to make awards to employees other than those subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The compensation committee has delegated authority to the chairman of our Board to grant or modify awards to such employees, subject to the following conditions:

12

The compensation committee engages an independent compensation consultant to advise it on matters related to both executive and director compensation. Please refer to the section titled “Executive Officer Compensation—Compensation Discussion and Analysis” on page 28 of this Proxy Statement for more information related to the independent compensation consultant.

Succession Planning for Senior Executives

The compensation committee periodically reviews the Company’s successions plans relating to senior executive officer positions and makes recommendations to the Board with respect to succession planning. This process includes issues associated with preparedness for the possibility of an unexpected or emergency situation involving senior management and the long-term growth and development of the senior management team.

Board Evaluation Process

The nominating and corporate governance committee is responsible for overseeing the annual performance evaluation of our Board and its committees, which is a multi-step process designed to evaluate the performance of our Board and each of its committees, as follows:

13

Board’s Role in Oversight of Risk Management

Our Board as a whole is responsible for risk oversight, with reviews of certain areas being conducted by the relevant Board committees that report to the full Board. The chart below provides an overview of the areas overseen by each committee.

In its risk oversight role, our Board reviews, evaluates and discusses with appropriate members of management whether the risk management processes designed and implemented by management are adequate in identifying, assessing, managing and mitigating material risks facing the Company, including financial and operational risks. Our Board believes that full and open communication between senior management and our Board is essential to effective risk oversight. Our lead independent director regularly meets with our chairman, president and chief executive officer to discuss a variety of matters, including business strategies, opportunities, key challenges and risks facing the Company, as well as management’s risk mitigation strategies. Senior management attends all regularly scheduled Board meetings where they make presentations to our Board on various strategic matters involving our operations and are available to address any questions or concerns raised by our Board on risk management or any other matters. Our Board oversees the strategic direction of the Company, and in doing so considers the potential rewards and risks of the Company’s business opportunities and challenges, and monitors the development and management of risks that impact our strategic goals.

14

Limitation on Additional Board and Committee Service

It is the expectation of the Board that every member devote the significant time and attention necessary to fulfill their duties as a director. Our corporate governance guidelines establish the following limits on our directors serving on public company boards and audit committees to ensure that our directors are not over-committed:

The nominating and corporate governance committee will take into account the nature of and time involved in a director’s service on other boards in evaluating the suitability of individual directors and making its recommendations to the Board. Service on boards or committees of other organizations should be consistent with the Company’s conflict of interest standards. Directors are expected to advise the chairman of the Board, the lead independent director and the chair of the nominating and corporate governance committee promptly upon accepting any other public company directorship or any assignment to the audit committee or compensation committee of the board of directors of any public company of which such director is a member.

Director and Executive Officer Stock Ownership Guidelines

Our Board adopted stock ownership guidelines applicable to our non-employee directors and our executive officers. The guidelines are administered by the compensation committee. The guidelines for our non-employee directors and executive officers are as follows:

The value of the stock ownership is calculated based on the three-year trailing average monthly stock price. Shares of our Common Stock currently owned, but not pledged, and shares issuable upon the vesting of outstanding restricted stock units (“RSUs”) count as stock owned for purposes of the stock ownership guidelines. Performance-based equity awards and shares owned on behalf a spouse or children do not count toward the target level. Finally, shares held in trust may also be included; however, due to the complexities of the trust laws, the decision to include the shares will be made on a case-by-case basis after reviewing the nature of the specific trust involved and considering whether the executive has maintained a pecuniary interest in the shares. Compliance with the guidelines is reported to the compensation committee as of December 31 of each year and each of our non-employee directors have five years from their initial appointment to achieve their target ownership level. As of March 27, 2023, both of our executive officers and each of our non-employee directors were either in compliance with, or within the five-year grace period for compliance under, the guidelines.

Anti-Hedging and Anti-Pledging Policies

Under our Insider Trading Policy, our directors and officers (defined as “insiders”) are prohibited from engaging in hedging transactions related to the Company’s securities. Specifically, our anti-hedging policy reads as follows:

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Transactions in publicly traded options are generally short-term in nature and may give the public the perception that insiders are not focused on the long-term performance of the Company. Certain forms of hedging transactions are complex, may be perceived negatively by the public and can present unique insider trading risks. Accordingly, insiders are prohibited from engaging in such transactions.

In addition, effective March 2, 2016, the Insider Trading Policy prohibits insiders from entering into new pledges of the Company’s securities.

Director Nomination Process, Board Refreshment and Board Diversity Policy

Process

At least annually, the nominating and corporate governance committee reviews the composition and size of the Board. In carrying out this responsibility, the nominating and corporate governance committee considers the Company’s business strategies, director independence requirements, the collective knowledge, experience, expertise and diversity of the Board, the specific experience, qualifications, attributes and skills of each director, any recent or anticipated changes in Board composition, any skills, experiences and backgrounds that may be helpful in maintaining or improving alignment between our Board’s composition, our business strategies, and the long-term interests of our stockholders, and any other criteria the nominating and corporate governance committee deems relevant.

The nominating and corporate governance committee also seeks to have a Board that represents a diverse range of perspectives and experiences relevant to the Company, and takes into account Board tenure, age, gender and ethnic/racial diversity. The Board recognizes and embraces diversity and is actively committed to inclusion and diversity in the boardroom. Our board diversity policy is set forth in our corporate governance guidelines. When evaluating the diversity of potential director nominees, the nominating and corporate governance committee will consider a broad range of diversity, including, but not limited to, diversity in terms of professional experience, skills and background, gender, race, ethnicity, sexual orientation and disability, and the nominee’s status as a diverse director under any NASDAQ listing requirements with respect to board diversity or any other applicable legal or regulatory requirements. Further, as set forth in our corporate governance guidelines, when conducting searches for new directors, the nominating and corporate governance committee is committed to actively seeking to include in the pool of candidates qualified female and racially and/or ethnically diverse individuals.

In evaluating the suitability of potential Board nominees, the nominating and corporate governance committee will take into account many factors, including the following:

The nominating and corporate governance committee evaluates each individual in the context of the Board as a whole, with the objective of recommending nominees who can best advance the success of the business, be an effective director in conjunction with the full Board, and represent stockholder interests through the exercise of sound judgment using his or her diversity of experience in these various areas. In determining whether to recommend a director for re-election, the nominating and corporate governance committee will also consider the director’s past attendance at meetings and participation in and contributions to the activities of the Board. Candidates may come to the nominating and corporate governance committee’s attention through professional search firms, directors, stockholders, financial advisors, legal advisors or other persons. The nominating and corporate governance committee evaluates candidates proposed for nomination by the Company’s stockholders using the same criteria by which it evaluates other nominees.

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Board and Board Committee Refreshment

Three new diverse independent directors have joined our seven-member Board in the last two years. After a comprehensive board refreshment process, the nominating and corporate governance committee recommended, and the Board appointed, Mr. Rhone as a new director in December 2020 and Ms. Henriksen as a new director in January 2021. Mr. Rhone was elected to a three-year term by stockholders in June 2021 and Ms. Henriksen was elected to a three-year term by stockholders in May 2022. In August 2021, the Board appointed Ms. Dotter as a new director, fulfilling the Company’s commitment to increase the size of the Board and to appoint Ms. Dotter as a new director after stockholders approved the related Board-recommended advisory stockholder proposal at the Company’s 2021 annual meeting of stockholders. In connection with the 2023 Annual Meeting, the Board has nominated Ms. Dotter to serve a three-year term. The nominating and corporate governance committee believes that Mr. Rhone and Mses. Dotter and Henriksen bring relevant skills and extensive experience to our Board, racial/ethnic and gender diversity and fresh perspectives. The nominating and corporate governance committee also believes that the Company benefits from having seasoned directors who are deeply knowledgeable about our Company’s operations, markets, financial condition, opportunities and challenges.

During 2021 we refreshed the composition of our three standing committees and rotated all chair positions. Neville L. Rhone, Jr., a member of the audit committee, became chair; James E. Joseph, a member of the compensation committee, became chair; and Kate B. Henriksen, a member of the nominating and corporate governance committee, became chair. We also decreased the size of the committees to promote efficiencies and better align with peer company practices.

In November 2022, James C. Leslie, a director of the Company since 1996, retired from our Board and from all Board committees on which he served. Effective March 23, 2023, upon the recommendation of the nominating and corporate governance committee, the Board reclassified Mr. Porter as a Class II director to fill the vacancy resulting from Mr. Leslie’s retirement and decreased the size of the board of directors from eight directors to seven directors. In making this recommendation to the Board, the nominating and corporate governance committee considered board sizes of comparable companies, results of the annual performance evaluation of the Board and its committees, the mix of skills, experiences and backgrounds of our directors, the diversity, ages and tenures of our directors, the costs associated with director compensation, our Board committee composition and the requirements of NASDAQ and the SEC.

Stockholder Nominations

The nominating and corporate governance committee will consider candidates proposed for nomination by our stockholders. Stockholders may propose candidates for consideration by the nominating and corporate governance committee by submitting the names and supporting information to our Corporate Secretary, Stratus Properties Inc., 212 Lavaca Street, Suite 300, Austin, Texas 78701. Supporting information should include (a) the name and address of each of the candidate and proposing stockholder; (b) a comprehensive biography of the candidate and an explanation of why the candidate is qualified to serve as a director, taking into account the criteria identified in our corporate governance guidelines; (c) proof of ownership, the class and number of shares, and the length of time that the shares of our Common Stock have been beneficially owned by each of the candidate and the proposing stockholder; and (d) a letter in writing from the candidate stating his or her willingness to serve, if elected as a director.

In addition, our By-Laws permit stockholders to nominate candidates directly for consideration at next year’s annual meeting of stockholders. Any nomination must be in writing and received by our corporate secretary at our principal executive offices no later than the close of business on January 12, 2024 and no earlier than the close of business on October 14, 2023. If the date of next year’s annual meeting is moved to a date more than 30 days before or 90 days after the anniversary of this year’s annual meeting, the nomination must be received no earlier than the close of business on the 120th day

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prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Any stockholder submitting a nomination under our By-Laws must include (a) all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act (including such nominee’s written consent to being named in the Proxy Statement as a nominee and to serve as a director if elected), and (b) the name and address (as they appear on the Company’s books) of the nominating stockholder and the class and number of shares beneficially owned by such stockholder. Nominations should be addressed to our Corporate Secretary, Stratus Properties Inc., 212 Lavaca Street, Suite 300, Austin, Texas 78701. Candidates nominated by stockholders will be evaluated under the same criteria as other director nominees. Please see our By-Laws for detailed information regarding the process by which a stockholder may nominate a director at meetings of our stockholders.

In addition to satisfying the foregoing requirements under our By-Laws, including the notice deadline set forth above, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must comply with the additional requirements of Rule 14a-19(b) under the Exchange Act.

Stockholder Engagement

We engage in discussions with our stockholders and stockholders’ representatives throughout the year. Participants in our various engagements typically include our chairman, president and chief executive officer and our lead independent director. Our board and management have a history of engaging with stockholders and incorporating feedback into their decision-making processes. During 2022, we engaged in dialogue with stockholders and stockholders’ representatives representing nearly [●]% of our outstanding Common Stock, including a stockholder representing [●]% of our outstanding Common Stock who has a director designee on our Board. Our engagements covered a variety of topics that are of interest to the Company and our stockholders, including those listed in the chart below.

Stockholders or other interested parties may communicate directly with one or more members of our Board, or the non-employee directors as a group, by writing to the director or directors at the following address: Stratus Properties Inc., Attn: Board of Directors or the name of the individual director or directors, 212 Lavaca Street, Suite 300, Austin, Texas 78701. The communication will be forwarded to the appropriate director or directors.

Director Compensation

We use a combination of cash and equity-based compensation to compensate our non-employee directors. In setting director compensation, we consider the significant amount of time directors dedicate in fulfilling their duties as directors, as well as the skill-level required to be an effective member of our Board. We also seek to align the directors’ compensation with our stockholders’ interest by delivering a portion of that compensation in the form of equity.

The compensation committee reviews the form and amount of director compensation and makes recommendations to the full Board. Until 2022, our director compensation program had not been revised since 2017, when it was revised upon the recommendation of the Board’s independent compensation consultant. In early 2022, the compensation committee once again engaged its prior consultant, now with FTI Consulting, Inc. (“FTI”), to review our non-employee director compensation program in light of prevailing market practices. In April 2022, FTI provided the compensation committee with a market review of non-employee director remuneration practices and evaluated the Company’s program in light of the

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review. Following this review, the compensation committee and the Board agreed that no changes to the compensation levels were necessary at this time, but made the following changes to the structure of the equity-based component of the program in order to maintain the program’s competitiveness: (1) beginning in 2023, the annual RSU grants will be made coincident with the Company’s annual meeting of stockholders, instead of on September 1st, and (2) beginning with the 2022 grant, the awards will vest in one installment after one year, instead of over four years.

In addition, in August 2022, in accordance with the recommendation of the compensation committee, the Board approved the ability of the Company’s non-employee directors to elect to have all or part of their annual retainer paid in shares of our Common Stock, in lieu of cash, in accordance with certain guidelines and procedures.

2022 Cash Compensation

During 2022, each non-employee director serving the duration of the year received an annual fee consisting of, as applicable:

In addition, each director received reimbursement for reasonable out of pocket expenses incurred in attending Board and committee meetings. Directors do not receive meeting attendance fees.

2022 Equity-Based Compensation

In 2022 our non-employee directors received annual equity awards payable in RSUs, with the number of RSUs granted determined by dividing $45,000 by the closing sale price of our Common Stock on September 1st, the grant date, or the previous trading day if no sales occur on that date, and rounding to the nearest whole number. The awards will fully vest on the first anniversary of the grant date, with vesting accelerating in the event the non-employee director dies, incurs a disability, retires (as determined by the Board) or as a result of termination of the director’s term due to the director not being re-nominated by the Board. Each RSU entitles the director to receive one share of our Common Stock upon vesting. In addition, in connection with an initial appointment to the Board other than at an annual meeting, a director may receive a pro rata equity grant. On September 1, 2022, each non-employee director serving on that date was granted 1,279 RSUs. See “Executive Officer Compensation—Potential Payments upon Termination or Change in Control” on page 42 of this Proxy Statement for definitions of “disability” and “change of control” used for purposes of the RSU acceleration provisions.

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2022 Director Compensation

The table below summarizes the total compensation paid to or earned by our non-employee directors during 2022. The amount included in the “Stock Awards” column reflects the aggregate grant date fair value of the RSUs, and does not necessarily equate to the income that will ultimately be realized by the director for these stock awards. Mr. Armstrong’s compensation is reflected in the 2022 Summary Compensation Table in the section titled “Executive Officer Compensation” on page 28 of this Proxy Statement.

Director Compensation

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Proposal No. 1: Election of Directors

Our Charter currently provides that directors are elected for three-year terms, with one-third of the Board elected at each annual meeting of stockholders. Each director holds office until that director’s successor is duly elected and qualified, or until his or her earlier death, resignation, removal or retirement. In accordance with our By-Laws, our Board has fixed the current number of directors at seven. Our directors are currently classified into the following three classes:

For more information about the background and qualifications of the director nominees and the entire Board of Directors, please see below and “Information About Nominees and Continuing Directors” on page 22 of this Proxy Statement.

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Upon the recommendation of our nominating and corporate governance committee, our Board has nominated Laurie L. Dotter, James E. Joseph and Michael D. Madden for election at our 2023 Annual Meeting to serve as Class I directors, each for a three-year term. Messrs. Joseph and Madden and Ms. Dotter have each consented to being named as a nominee in this Proxy Statement and to serve as a director if elected. The persons named as proxies on the enclosed proxy card intend to vote your shares of our Common Stock for the election of each of the three Class I director nominees recommended by our Board, unless otherwise directed. If, contrary to our present expectations, any of the nominees is unable to serve or for good cause will not serve, your proxy will be voted for a substitute nominee designated by our Board, unless otherwise directed.

Vote Required to Elect Director Nominees

Under our By-Laws, our directors are elected by a plurality vote. For more information on the voting requirements, see “Information About the 2023 Annual Meeting” on page 55 of this Proxy Statement.

Recommendation of our Board of Directors

OUR BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” OUR THREE CLASS I DIRECTOR NOMINEES, MESSRS. JOSEPH AND MADDEN AND MS. DOTTER.

Information About Nominees and Continuing Directors

The table below provides certain information as of March 27, 2023 with respect to the director nominees, James E. Joseph, Michael D. Madden and Laurie L. Dotter, and each other director whose term will continue after the 2023 Annual Meeting. The biography of each of the directors contains information regarding the person’s business experience, director positions with other public companies held currently or at any time during at least the last five years, and the experiences, qualifications, attributes or skills that led our nominating and corporate governance committee and our Board to determine that the person should be nominated to serve as a director of the Company. Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years.

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Stock Ownership of Directors, Director Nominees and Executive Officers

We believe that it is important for our directors and executive officers to align their interests with the long-term interests of our stockholders. We encourage stock accumulation through the grant of equity incentives to our directors and executive officers and through our stock ownership guidelines applicable to our directors and executive officers.

The table below shows the amount of our Common Stock beneficially owned as of March 27, 2023, by each of our directors, our director nominees and our president and chief executive officer and chief financial officer (such officers together being our named executive officers). Unless otherwise indicated, all shares shown are held with sole voting and investment power.

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Stock Ownership of Certain Beneficial Owners

Based on filings with the SEC, the table below shows the beneficial owners of more than five percent of our outstanding Common Stock other than Mr. Armstrong, whose beneficial ownership is reflected in the table in the section above titled “Stock Ownership of Directors, Director Nominees and Executive Officers” on page 22 of this Proxy Statement. Unless otherwise indicated, all information is presented as of March 27, 2023, and all shares beneficially owned are held with sole voting and investment power.

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Executive Officer Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis, or CD&A, describes and analyzes our executive compensation philosophy and the material elements of our executive compensation program in the context of the compensation paid during the last fiscal year to our president and chief executive officer and our chief financial officer (our only executive officers, referred to as our named executive officers or NEOs). Our named executive officers for 2022 are:

Executive Summary

We are a diversified real estate company with headquarters in Austin, Texas. We are engaged primarily in the acquisition, entitlement, development, management, leasing and sale of multi-family and single-family residential real estate properties and commercial properties in the Austin, Texas area and other select, fast-growing markets in Texas.

2022 Performance Highlights and Company Evolution

In considering executive compensation for 2022, the compensation committee took note of the outstanding achievements of the Company in recent periods. In 2022, we produced net income attributable to common stockholders of $[●] million. Our total stockholders’ equity was $98.9 million at December 31, 2020 and $[●] million at December 31, 2022. In 2022, we sold Block 21, our mixed-use property in downtown Austin with hotel, entertainment and commercial space, and recognized a pre-tax gain of $119.7 million. In 2021, we sold two multi-family properties in Austin, The Saint Mary and The Santal, recording pre-tax gains of $16.2 million (net of noncontrolling interests) and $83.0 million, respectively. Our team attracted third-party equity capital totaling $[●] million in 2021 and 2022.

In the fall of 2022, our Board completed a strategic planning process, considering our recent successful property sales and the elimination of our Hotel and Entertainment segments that resulted from the sale of Block 21. Our Board decided to continue our successful development program, with our proven team focusing on pure residential and residential-centric mixed-use projects in Austin and other select markets in Texas. Reflecting confidence in our achievements and strategy, in September 2022, our Board declared a special cash dividend totaling $40 million ($4.67 per share) and approved a new $10 million share repurchase program; as of March 27, 2023, $[●] million of our common stock had been repurchased under the program.

Our development team continues to progress many promising projects in our development pipeline and to find new opportunities for our Company and stockholders. In first-quarter 2023, we obtained third-party equity and debt financing for and commenced construction on Holden Hills, designed to feature 475 unique residences within the Barton Creek community in Austin; the Holden Hills limited partnership distributed $35.8 million in cash to Stratus in connection with these transactions.

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Please refer to “Performance Highlights” on page 8 of this Proxy Statement for additional information regarding our significant accomplishments during 2022.

Changes to Our Executive Compensation Program Beginning in 2023

Our executive compensation program has historically had three primary components: base salary, annual cash incentive awards and long-term incentive awards, which have consisted of annual RSU awards and awards under our Profit Participation Incentive Plan (the “Profit Plan”), under which our executives can receive cash and RSUs based on the success of development projects. During 2022, the compensation committee engaged an independent compensation consultant, FTI Consulting, Inc. (“FTI”), to conduct a holistic review of our executive compensation program. In early 2023, the compensation committee approved changes to our executive compensation program, effective beginning with 2023 compensation, designed to ensure that the different components of the program work together to further align the program with Company performance and stockholder interests, while also ensuring that we continue to provide an appropriate level of compensation to effectively reward and retain our senior leadership team.

Highlights of new Executive Compensation Program:

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Compensation Governance and Stockholder Engagement

Our executive compensation program is designed and managed by the compensation committee, which is comprised entirely of independent directors. The compensation committee values stockholder perspectives as an element of the review process. The compensation committee ensures it is aware of our stockholders’ views both through direct conversations with stockholders, including one large stockholder with a representative on our Board, and through the broad feedback mechanism of our annual say-on-pay advisory vote on executive compensation. Members of our compensation committee also engaged directly with stockholders during our 2022 proxy season and 2021 proxy contest, which we won.

We hold a say-on-pay advisory vote on executive compensation annually. At our 2020 annual meeting, more than 97% of the votes cast voted in support of our say-on-pay proposal. At our 2021 annual meeting, 55% of the votes cast voted in support of our say-on-pay proposal and we believe this low approval level was largely related to the proxy contest that year. At our 2022 annual meeting, 78% of the votes cast voted in support of our say-on-pay proposal. There were no changes in the structure of our executive compensation program over these time periods.

While we were pleased to see the increased support in 2022 compared to the prior year, our conversations with stockholders, and our experience with the outcomes of the Profit Plan and its interaction with the other components of our executive compensation program, confirmed our developing view that there were aspects of our program that could be revised to further align with stockholder interests. Our engagement and experience led us to be particularly interested in developing a more formulaic annual incentive program with pre-established performance goals and in adding features to the Profit Plan that would strengthen the connection between the payouts under the plan, which are related to specific development projects, and our overall performance. Accordingly, the compensation committee retained FTI, its independent compensation consultant, during 2022 to conduct a holistic review of our executive compensation program. As noted above under “Changes to Our Executive Compensation Program Beginning in 2023,” following this review, in early 2023 the compensation committee approved significant changes to our executive compensation program.

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Compensation Best Practices

The compensation committee strives to incorporate compensation “best practices” into our program design, some of which are highlighted below and discussed elsewhere in this CD&A.

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Objectives of Our Compensation Program

The compensation committee is responsible for designing, implementing, and administering our executive compensation program. The compensation committee seeks to increase stockholder value by:

As a result of our implementation of these objectives, the majority of our CEO’s total compensation paid during the three-year period ended December 31, 2022 consisted of variable, at risk forms of pay that were dependent on our performance, as reflected in the chart below.

Allocation of CEO Compensation – 2020-2022

Total Fixed Pay = 14% Total Variable, At-Risk Pay = 86%

Components of Executive Compensation for 2022

For 2022, our executive compensation program included three primary components: (1) base salary, (2) an opportunity for an annual cash incentive award, and (3) long-term incentive awards in the form of RSUs and participation interests in the Profit Plan.

After reviewing these components of our compensation program, the compensation committee believes that the risks arising from our compensation policies and practices for our employees, including our executive officers, are not reasonably likely to have a material adverse effect on the Company. The compensation committee believes the mix of short-term compensation (in the form of salary and annual incentive awards, if any), and long-term compensation (in the form of Profit Plan awards and RSU awards) also prevents undue focus on short-term results and helps align the interests of our executive officers with the interests of our stockholders.

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Base Salaries.

Our philosophy is that base salaries, which provide fixed compensation, should meet the objective of attracting and retaining the executive officers needed to manage our business successfully. Base salaries are reviewed and determined by the compensation committee annually. With regard to our CEO, our goal is to allocate more compensation to the variable, performance-dependent elements of the total compensation package.

Until 2023, the compensation committee had not increased our executive officers’ base salaries since 2018. In connection with the restructure of our executive compensation program, each of our executive officers received an increase in base salary effective March 1, 2023: Mr. Armstrong to $750,000 and Ms. Pickens to $400,000.

Annual Incentive Awards.

Annual cash incentives are a variable “at-risk” component of compensation designed to reward our executive officers for maximizing annual operating and financial performance. Since the adoption of our Profit Plan in 2018, annual cash incentives have rewarded our executives for performance outside the Profit Plan based on the compensation committee’s review of overall performance for the prior year. As noted above, beginning in 2023, annual incentive awards will be determined under our new AIP, which provides for awards based on pre-established performance goals. In addition, under the new program, each calendar year our NEOs will receive the greater of the AIP payout or the payout of awards granted under the new LTIP, and will not receive payments under both.

In February 2023, the compensation committee considered the Company’s strong financial performance and significant accomplishments during 2022 outside the Profit Plan, which are summarized under the headings “Executive Summary—2022 Performance Highlights and Company Evolution” on page 28 of this Proxy Statement and “Performance Highlights” on page 8 of this Proxy Statement. The committee also considered each executive officer’s overall compensation and contributions to the Company’s success. The committee particularly took note of the successful sale of Block 21, which is not included in the Profit Plan, and noted that no events occurred during 2022 that require a payout under the Profit Plan in 2023. Based on this evaluation, the compensation committee approved the following cash awards for each executive for 2022—$2,000,000 for Mr. Armstrong and $500,000 for Ms. Pickens.

Long-Term Incentive Awards.

From 2018 and until modified in 2023 as described in this Proxy Statement, our long-term incentive program has consisted of the following two incentives:

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Description of the Profit Plan. The Profit Plan is modeled after a “promote” arrangement that is a common compensation structure used by our private company peers. The plan aligns with our business strategy by tying a significant element of our NEOs’ compensation to the success of our development projects. It also creates an ownership mentality among participants with respect to the projects, encouraging high performance and strengthening the team mentality of key members of our project teams. Payouts under the Profit Plan are made in cash and RSU awards in the year following the year in which a payout event occurs, and are determined as follows:

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Profit Plan 2021 Payment Events and Impact on 2022 Reported Compensation

The Profit Plan was implemented in 2018, and to date the compensation committee has granted participation interests in nine development projects to our executive officers and other key personnel, including the following three projects that reached payment events under the Profit Plan in 2021:

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2021 Capital Transaction Events: The following table summarizes each NEO’s payouts as determined by the compensation committee in 2022 under the Profit Plan with respect to the capital transactions that occurred in 2021 for The Saint Mary and Santal Phase II. The total payments due Mr. Armstrong exceeded his annual cash limit under the Profit Plan ($2 million at the time); therefore, $1,583,107 of the amount due him was paid with a grant of 51,973 RSUs, with the number of RSUs granted based on the 12-month trailing average price of our Common Stock during 2021. Due to SEC rules, the cash payment is reported as 2021 compensation and the RSU award is reported as 2022 compensation in the Summary Compensation Table on page 40.

2021 Valuation Date Event: The following table summarizes each NEO’s payouts as determined by the compensation committee in 2022 under the Profit Plan with respect to Lantana Place, which reached its valuation date during 2021. The committee approved the awards of stock-settled RSUs reflected in the table below, with the number of RSUs based on the 12-month trailing average price of our Common Stock during 2021. Due to SEC rules, these RSU awards are reported as 2022 compensation in the Summary Compensation Table on page 40.

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Outstanding Development Projects under the Profit Plan

The following table sets forth the outstanding approved development projects under the Profit Plan, the participation interest in each granted to our NEOs and the valuation date for each project that is substantially complete:

Limited Executive Perquisites and No Special Retirement Benefits

We provide limited perquisites to our executive officers. Please see the 2022 Summary Compensation Table on page 40 of this Proxy Statement for a description of the limited perquisites provided in 2022.

We provide our executive officers with the same retirement benefits that are generally available to our other full-time employees. Specifically, we maintain a 401(k) plan, which is a tax-qualified defined contribution retirement plan. Our 401(k) plan provides a 5% employer match, a 3% safe harbor contribution and a discretionary match of up to 10% of employee eligible compensation. We do not maintain any excess benefit plans, defined benefit or pension plans, or any deferred compensation plans. We provide life insurance to all full-time Company employees.

Change of Control and Severance Benefits

We provide our executive officers with certain contractual protections in the event of an involuntary separation either prior to or in connection with a change of control of the Company. Effective April 1, 2022, each of Mr. Armstrong and Ms. Pickens entered into a severance and change of control agreement with the Company, with each agreement having a three-year term and with terms consistent with their previous agreements. We believe that severance protections can play a valuable role in attracting and retaining key executive officers, and that these benefits also serve our stockholders’ interests by promoting a continuity of management in the context of an actual or threatened change of control transaction.

We also believe that the occurrence, or potential occurrence, of a change of control transaction will create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change of control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage our executive officers to remain employed with the Company during the important time when their prospects for continued employment following a transaction are often uncertain, we provide them with enhanced severance benefits if their employment is terminated by the Company without cause or by the executive with good reason in connection with a change of control. We do not provide excise tax gross-up protections under any change of control arrangements with our executive officers.

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The payment of cash severance benefits following a change of control transaction is only triggered by an actual or constructive termination of employment following the change of control (i.e., a “double trigger”). In addition, our long-term incentive awards also provide for a double trigger. Under the terms of these awards, RSUs will accelerate upon a qualifying termination occurring within two years following the change of control.

The potential severance and change of control benefits payable under these agreements as of December 31, 2022 are more fully described in “Potential Payments upon Termination or Change in Control” on page 42 of this Proxy Statement.

Compensation Processes and Policies

Role of Advisors.

To assist in evaluating our compensation practices and the level of compensation provided to our executives, the compensation committee has engaged an independent compensation consultant from time to time. Consistent with the compensation committee’s longstanding policy, any such consultant will not provide, and has not provided, any services to the Company’s management. As noted above, the compensation committee engaged FTI in 2022 to conduct a holistic review of the Company’s executive compensation program. FTI (1) provided certain background information on market practices relating to how development-focused companies compensate their key executive officers, (2) compared the Company’s executive and director compensation programs to a group of peer companies, and (3) recommended the structure of a new annual incentive plan with pre-determined performance goals and changes to the Profit Plan to further align with Company performance and stockholder interests.

Market Data and Peer Group.

In connection with its review during 2022, FTI recommended a group of comparable public real estate investment trusts (“REITs”) and real estate management companies that it believed represents an appropriate peer group based on asset focus and size. The resulting peer group selected by the compensation committee consisted of the 13 public real estate companies listed below (the “peer group”):

FTI used this peer group to prepare its executive compensation study, which compared our NEOs’ base salaries, annual incentive awards, long-term incentive awards and total remuneration to their counterparts in the peer group. FTI also reviewed the structure of the short-term and long-term incentive programs of the peer group in its evaluation of the Company’s executive compensation program structure. The compensation committee used FTI’s report to assess competitive compensation, industry trends and best practices regarding executive compensation.

Role of Executive Officers.

Our CEO makes recommendations to the compensation committee regarding the compensation for our CFO, based on his qualitative judgment regarding her individual performance, although the compensation committee makes all final compensation decisions regarding our executive officers. Neither of our executive officers is present when the compensation committee discusses or determines any aspect of their compensation.

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Clawback Policy.

The awards under the Profit Plan and our stock incentive plans are subject to a clawback provision that enables the Company to clawback all or a portion of incentive compensation paid under the respective award in the event an executive’s misconduct causes the Company to issue a restatement of its financial statements. The awards also provide that they will be subject to any clawback policy adopted by the Company in accordance with the SEC’s final rules regarding compensation clawbacks mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. We are currently working to update our clawback policy to incorporate these additional requirements, which will be reflected in new Nasdaq listing standards that will become effective later in 2023.

Stock Ownership Guidelines.

We require stock accumulation because we believe that it is important for our executive officers to align their interests with the long-term interests of our stockholders. Accordingly, our Board adopted stock ownership guidelines applicable to our executive officers. The guidelines are administered by the compensation committee. Under the guidelines, Mr. Armstrong and Ms. Pickens are expected to maintain ownership of shares of our Common Stock valued at three times and one time, respectively, his or her base salary, determined by reference to the three-year trailing average monthly stock price. Shares of our Common Stock currently owned but not pledged and shares issuable upon the vesting of outstanding time-vested RSUs are counted for purposes of the stock ownership guidelines. Shares pledged under our grandfathered pledge policy, shares issuable under any performance-based equity awards and shares owned on behalf of a spouse or children are not counted for purposes of the stock ownership guidelines. Finally, shares held in trust may also be included; however, due to the complexities of the trust laws, the decision to include the shares will be made on a case-by-case basis after reviewing the nature of the specific trust involved and considering whether the executive has maintained a pecuniary interest in the shares. Mr. Armstrong and Ms. Pickens both currently exceed their target ownership levels, as applicable.

Accounting and Tax Considerations.

The accounting and tax treatment of compensation generally has not been a factor in determining the amounts of compensation awarded to our executive officers.

Compensation Committee Report

The compensation committee of the Board has reviewed and discussed with management the Compensation Discussion and Analysis, and based on such review and discussion, the compensation committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by the compensation committee on March 23, 2023:

James E. Joseph, Chair

Laurie L. Dotter

Kate B. Henriksen

Michael D. Madden

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Executive Compensation Tables

The table below summarizes the total compensation paid to or earned by our NEOs for the fiscal years ended December 31, 2022, 2021 and 2020. Mr. Armstrong and Ms. Pickens were our only executive officers during such fiscal years.

2022 Summary Compensation Table

For 2022, the “Stock Awards” also reflects a grant of RSUs in 2022 under our long-term incentive program. The NEOs did not receive an annual cash incentive award for 2021 in light of the significant payouts generated in 2021 under the Profit Plan for Lantana Place, The Saint Mary and The Santal Phase II; however, the award of RSUs was made in 2022 in recognition of the NEOs’ accomplishments during 2021 outside the Profit Plan. See the “Grants of Plan-Based Awards” table below for more information on the 2022 RSU awards.

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Grants of Plan-Based Awards

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transaction or valuation date occur, whereas for SEC reporting purposes, the accounting fair value as of the date of grant is used to value the RSUs. For the 2021 payment events under the Profit Plan that resulted in RSU payments in 2022, the applicable 12-month trailing average price was $30.46, whereas under ASC Topic 718, the fair value of the RSUs is determined based on the price of our Common Stock on the date of grant, which was $42.35, thus resulting in the higher accounting value reflected in the table.

For additional information regarding the compensation paid to our NEOs and the Profit Plan, see “Compensation Discussion and Analysis” on page 28.

Outstanding Equity Awards at December 31, 2022

Potential Payments upon Termination or Change in Control

Severance and Change of Control Agreements.

As of December 31, 2021, our named executive officers were each a party to severance and change of control agreement with the Company entered into effective April 1, 2019 and expiring March 31, 2022 (the “COC Agreements”). Effective April 1, 2022, the Company and the executives renewed the COC Agreements for another three-year term, with terms substantially similar to the 2019 agreements. The COC Agreements entitle each executive to receive additional benefits in the event of the termination of his or her employment under certain circumstances.

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Termination without Cause or with Good Reason.

Each agreement provides that if the executive officer’s employment is terminated by the Company without cause or by the executive with good reason, the executive will receive from the Company:

Termination after Change of Control as a Result of Death, Disability or Retirement.

Each COC Agreement provides that if, during the three-year period following a change of control, the executive’s employment with the Company or its successor is terminated as a result of death, disability or retirement, the executive or his or her legal representatives will receive from the Company or its successor any accrued but unpaid salary and a pro-rata bonus for the year in which he or she was terminated.

Termination after Change of Control for Cause or Voluntary Termination without Good Reason.

Each COC Agreement provides that if, following a change of control, the executive’s employment with the Company or its successor is terminated for cause (as defined below) or by the executive for other than good reason (as defined below), the executive will receive from the Company or its successor any accrued but unpaid salary.

Termination after Change of Control without Cause or with Good Reason.

Each COC Agreement provides that if, during the three-year period following a change of control, the Company or its successor terminates the executive without cause, or the executive voluntarily terminates his or her employment for good reason, the executive will receive from the Company or its successor:

If any part of the payments or benefits received by the executive in connection with a termination following a change of control constitutes an excess parachute payment under Section 4999 of the Internal Revenue Code, the executive will receive the greater of (1) the amount of such payments and benefits reduced so that none of the amount constitutes an excess parachute payment, net of income taxes, or (2) the amount of such payments and benefits, net of income taxes and net of excise taxes under Section 4999 of the Internal Revenue Code.

As a condition to receipt of these benefits, Mr. Armstrong and Ms. Pickens must retain in confidence all confidential information known to him or her concerning our business. Such obligations continue to apply after a change of control. Notwithstanding the timing of benefits noted above, in the event that Mr. Armstrong or Ms. Pickens are considered to be “specified employees” under Section 409A of the Internal Revenue Code at the time of their termination of employment, they may not receive certain severance benefits until the expiration of a six month period following their respective terminations of employment.

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Equity-Based Awards – Impact of Termination of Employment or Change of Control.

Pursuant to the terms of all outstanding RSU agreements, upon termination of employment as a result of death, disability or retirement, the executive officer’s outstanding RSUs will vest. In addition, for the RSUs granted in connection with our Profit Plan, the termination of the recipient’s employment by the Company without cause or by the recipient for good reason will result in vesting of the RSUs. In connection with a change of control, outstanding RSUs will vest only upon the termination of the recipient’s employment by the Company without cause or by the recipient for good reason within two years following the change of control.

Profit Participation Incentive Plan – Impact of Termination of Employment or Change of Control.

Pursuant to the terms of the Profit Plan, except as noted below, upon termination of employment prior to completion of a capital transaction with respect to an approved project or the grant of RSUs in connection with a valuation event, an executive officer will forfeit his or her awards relating to approved projects under the Profit Plan. If the termination is by the Company without cause or by the executive officer with good reason, then outstanding unvested awards will not be forfeited, and will remain outstanding and be paid out in accordance with the Profit Plan; provided, that any payment of any total valuation bonus will be made in a lump sum cash payment prior to March 15^th of the following year.

The following table quantifies the potential payments to our NEOs that would be due or accelerated under the contracts, arrangements, plans and scenarios discussed above, assuming a December 31, 2022 termination date, and where applicable, using the closing price of our Common Stock of $19.29 (as reported on the NASDAQ on December 30, 2022). The table does not include amounts that may be payable under our 401(k) plan. All amounts below include certain estimates and assumptions that exist as of December 31, 2022, and actual amounts or benefits that could be payable to any NEO upon a termination of employment or a change of control cannot be known with certainty until the actual event occurs.

Potential Payments Upon Termination or Change in Control

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Definition of Cause.

For purposes of the COC agreements, “cause” generally means:

For purposes of the RSU agreements, “cause” generally means:

Definition of Change of Control.

For purposes of the COC agreements and the RSU agreements, a qualifying “change of control” will generally have occurred upon:

Definition of Good Reason.

For purposes of the COC agreements, “good reason” generally means:

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Pay Versus Performance

We are providing the following information in the format required by the SEC regarding compensation for our CEO (also referred to as our principal executive officer or “PEO”) and our CFO, who are our only named executive officers, or NEOs, included in our Summary Compensation Table (or “SCT”) for fiscal years 2021 and 2022, along with our “total shareholder return” (or “TSR”) as defined by the SEC and our reported net income attributable to common stockholders for those years. For further information concerning our pay-for-performance philosophy and how we align executive compensation with our performance, refer to “Executive Officer Compensation – Compensation Discussion and Analysis” on page 28.