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April 1, 2016

Dear Stockholder:

You are cordially invited to attend our 2016 Annual Meeting of Stockholders (the Annual Meeting) to be held at 9:00 a.m., Pacific Time on May 17, 2016 at the San Diego Marriott Del Mar, 11966 El Camino Real, San Diego, California 92130.

The business that will be conducted at the Annual Meeting is described in the Notice of the 2016 Annual Meeting of Stockholders and Proxy Statement.

We are very pleased with the company’s performance in 2015 with strong earnings growth and stockholder returns. We acquired $1.26 billion of high-quality real estate, funded the acquisitions with attractively priced capital, and maintained a high level of occupancy in the portfolio. As The Monthly Dividend Company®, we remain committed to our mission of providing our stockholders with monthly dividends that increase over time. During 2015, we paid twelve monthly dividends and increased the dividend per share by 3.6% over 2014. I would like to thank our team members for their continued hard work and dedication in achieving our mission.

Our track record of dividend performance was recognized in January 2015 with our addition to the S&P High-Yield Dividend Aristocrats® index which includes companies that have followed a policy of consistently increasing dividends every year for at least 20 years. In April 2015, we were added to the S&P 500 index, a significant milestone representing the growth and achievement of our company. We remain focused on continuing our positive momentum into 2016 and beyond.

We encourage you to review the information contained in the Proxy Statement. It is meant to provide an overview of the company’s achievements during the year, including further improvements to the company’s compensation program and enhancements to our corporate governance practices. After your review, we hope that you will vote at the meeting (either in person or by proxy) in accordance with the Board of Directors’ recommendations.

Your vote is important to us and we appreciate your continued support of our company.

Sincerely,

John P. Case

Chief Executive Officer

Director, Board of Directors

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Notice of the 2016
Annual Meeting of Stockholders

NOTICE IS HEREBY GIVEN that the 2016 Annual Meeting of Stockholders (the Annual Meeting) of Realty Income Corporation, a Maryland Corporation (the company), will be held as follows:

RECORD DATE: You may vote if you were a holder of record of our common stock at the close of business on March 15, 2016.

ITEMS OF BUSINESS:

The Proxy Statement following this Notice describes these matters in detail. We have not received notice of any other proposals to be presented at the Annual Meeting. At the Annual Meeting, management will report on the current activities of the company and comment on its future plans. A discussion period is planned so that stockholders will have an opportunity to ask questions and make appropriate comments. All presentation materials shared at the Annual Meeting will be made available on the company’s website at www.realtyincome.com.

PROXY VOTING: Your vote is important. Whether or not you plan to attend our Annual Meeting, we urge you to submit your proxy as soon as possible to ensure your shares are represented and voted at our Annual Meeting. You may authorize a proxy to vote your shares by telephone, via the Internet, or—if you have received and/or requested paper copies of our proxy materials by mail—by signing, dating and returning the proxy card in the envelope provided. If you attend the Annual Meeting, you may, if you wish, withdraw your proxy and vote in person.

No person is authorized to make any representation with respect to the matters described in this Proxy Statement other than those contained herein and, if given or made, such information or representation must not be relied upon as having been authorized by us or any other person.

You are encouraged to read this Proxy Statement in its entirety before voting.

By Order of the Board of Directors,

Michael R. Pfeiffer

Executive Vice President, General Counsel and Secretary

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How to Vote

On or about April 7, 2016, we will mail or e-mail a copy of our Proxy Statement, proxy card, and 2015 Annual Report (collectively Proxy Materials) to our stockholders according to their previously indicated preference. Some of our stockholders will be mailed a Notice of Availability of Proxy Materials which contains instructions on how to request and receive a paper or e-mailed copy of our Proxy Statement and 2015 Annual Report, and how to view these materials online. All methods of correspondence will provide stockholders with instructions on how to vote or authorize a proxy to vote using any of the following methods:

Beneficial Stockholders: If your shares of common stock are held by a bank, broker or other holder of record, please follow the instructions you receive from your bank, broker or other nominee on how to vote your shares of common stock at our Annual Meeting.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on May 17, 2016: This Proxy Statement and our 2015 Annual Report are available on our website at http://investors.realtyincome.com/annual-reports-meetings. You can also view these materials at www.proxyvote.com by using the control number that is provided to you either on your proxy card, in your e-mailed Proxy Materials, or on your Notice of Availability of Proxy Materials. You are encouraged to access and review all of the information contained in the Proxy Materials before voting.

Proposal Guide

2016 PROXY STATEMENT 1

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2015 Performance Highlights

The company achieved excellent performance results in 2015, including the following key highlights:

(1)         For a calculation of Adjusted Funds from Operations (AFFO) per share, see page 47 of our Annual Report on Form 10K filed with the SEC on February 11, 2016, which also includes a GAAP reconciliation of this non-GAAP measure.

In addition to our performance, we achieved two very distinct milestones in 2015. In January 2015, our track record of dividend growth was recognized with our addition to the S&P High-Yield Dividend Aristocrats® index which includes companies that have followed a policy of consistently increasing dividends every year for at least 20 years. In April 2015, we were added to the S&P 500 index. We are pleased to be one of 26 real estate investment trusts (REITs) and the only net lease REIT to be an S&P 500 company as of the date of this Proxy Statement.

Our performance results contributed to a one-year total stockholder return (TSR) of 13.0%, outperforming the NAREIT Freestanding Index, the MSCI US REIT Index, the S&P 500 Index, and our peer group mean.

Total 2015 Stockholder Return Comparison (1)

(1)         Realty Income TSR does not include reinvestment of dividends. Our TSR would be 13.4% assuming the compounded reinvestment of dividends on the ex-dividend date. Data sourced by FactSet as of December 31, 2015.

2 2016 PROXY STATEMENT

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Executive Compensation Highlights

We believe our performance demonstrates the effectiveness, over time, of the execution of our strategic business plan, and the alignment of our compensation program with our philosophy to reward executives for enhancing long-term stockholder value. In structuring executive compensation, the Compensation Committee, in consultation with its independent compensation consultant, considers how each component of compensation motivates performance and allows us to attract and retain highly qualified named executive officers. Our compensation program focuses on pay for performance principles that are linked to short-term and long-term financial and operational metrics, including relative total stockholder return. The following are some key highlights of the 2015 plan:

We believe our compensation program effectively links the compensation awarded to our executives to the achievement of the company’s financial and strategic goals thus creating alignment with the interests of our stockholders.

Corporate Governance Highlights

We remain committed to managing the company for the benefit of our stockholders and maintaining good corporate governance practices. In 2015, we further enhanced our corporate governance practices by altering our change in control provision in our agreements for new restricted stock and restricted stock unit awards for our named executive officers. We removed the single-trigger vesting feature so that both a change in control and a Qualifying Termination (as defined in “Potential Payments Upon Termination or Change in Control” section on page 41) need to occur (double-trigger) in order for the vesting of outstanding shares to accelerate.

In addition to this enhancement, we continue to uphold the following features of our corporate governance practices to maintain the company’s reputation for integrity and serving its stockholders responsibly:

2016 PROXY STATEMENT 3

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Proposals

Proposal 1 - Election of Directors

Our Board of Directors currently consists of eight directors who contribute their breadth of knowledge and experience necessary for the advancement of our business strategies and objectives. Based on the recommendation of our Nominating/Corporate Governance Committee, our Board of Directors has nominated the following current eight directors for re-election at the Annual Meeting to serve for a one-year term expiring at our annual meeting of stockholders in 2017, and until their respective successors have been duly elected and qualify:

For more information regarding our nominees, please see the “Board of Directors and Corporate Governance” section of this Proxy Statement beginning on page 6.

The Audit Committee of our Board of Directors has appointed KPMG LLP as the independent registered public accounting firm to audit our consolidated financial statements and internal control over financial reporting for the year ending December 31, 2016. Representatives of KPMG LLP are expected to be present at the Annual Meeting and will be provided an opportunity to make a statement if the representatives desire to do so. The representatives are also expected to be available to respond to appropriate questions.

Although ratification by our stockholders is not a prerequisite to the power of the Audit Committee to appoint KPMG LLP as our independent registered public accounting firm, our Board and the Audit Committee believes such ratification to be advisable and in the best interests of the company. Accordingly, stockholders are being requested to ratify, confirm and approve the appointment of KPMG LLP as our independent registered public accounting firm to conduct the annual audit of our consolidated financial statements and internal control over financial reporting for the year ending December 31, 2016. If the stockholders do not ratify the appointment of KPMG LLP, the appointment of an independent registered public accounting firm will be reconsidered by the Audit Committee; however, the Audit Committee has appointed KPMG LLP notwithstanding any failure of the stockholders to ratify its appointment. If the appointment of KPMG LLP is ratified, the Audit Committee will continue to conduct an ongoing review of KPMG LLP’s scope of engagement, pricing and work quality, among other factors, and will retain the right to replace KPMG LLP at any time.

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Proposal 3 - Advisory Vote to Approve the Compensation of Our Named Executive Officers

Our Board of Directors has adopted a policy of providing for annual “say-on-pay” advisory votes. In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (Exchange Act), and as a matter of good corporate governance, we are asking our stockholders to vote on a non-binding, advisory basis to approve the compensation paid to our named executive officers, as disclosed in this Proxy Statement.

In an effort to align the interests of management with those of our stockholders, our compensation program focuses on pay for performance principles that are linked to short-term and long-term financial and operational metrics, including relative total stockholder return. Our compensation mix rewards for the continued performance of the company, encourages a disciplined approach to management, and maintains focus on the creation of long-term value for our stockholders. We believe this structure is competitive and allows us to attract, motivate, and retain highly qualified executive officers.

In connection with reviewing our compensation program and the 2015 compensation paid to our named executive officers, it is important to consider the company’s excellent performance results achieved in 2015. We invested $1.26 billion in high-quality real estate and funded the acquisitions by raising approximately $1.2 billion in attractively priced equity capital. We remain committed to a conservative capital structure. Currently, over two-thirds of our balance sheet is represented by common equity. We maintained high portfolio occupancy despite managing our most active year ever for lease expiration activity. Our proactive approach to managing our portfolio continues to enhance the stability of the cash flow generated from our properties. These factors contributed to AFFO per share growth of 6.6% to $2.74, which allowed us to increase our dividend per share in 2015 by 3.6% over 2014 (see page 47 of our Annual Report on Form 10-K filed with the SEC on February 11, 2016 for a GAAP reconciliation of this non-GAAP measure). We achieved a 13.0% TSR, surpassing the mean of our peer group, the MSCI US REIT Index, the NAREIT Freestanding Index, and S&P 500 index.

Based on the company’s performance in 2015, our named executive officers were awarded compensation in accordance with our STIP and LTIP, in addition to a fixed compensation component. All of the compensation awarded under the STIP and LTIP is based on the following performance goals and is at-risk, and not guaranteed:

The performance hurdles and weightings for each program are determined by the Compensation Committee, in consultation with its independent compensation consultant, to establish goals for our named executive officers.  This structure effectively links the compensation awarded to our executives to the achievement of the company’s financial and strategic goals. The independent members of our Board of Directors believe that the performance-based structure of our compensation program as summarized above and detailed in the “Executive Compensation” section on page 22 allows the company to attract and retain talented executives while appropriately aligning their interests with the interests of our stockholders to support long-term value creation.

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Director Nominees

The Board of Directors has nominated our eight current directors, identified below, for re-election at the Annual Meeting to serve for a one-year term expiring at our annual meeting of stockholders in 2017, and until their respective successors are duly elected and qualify. The information presented below highlights each director nominee’s specific experience, qualifications, attributes and skills that led our Board of Directors to the conclusion that he/she should serve as a director. We believe that all of our director nominees have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Realty Income and our Board of Directors. We also value the additional perspective that comes from the experience of serving on other companies’ boards of directors and board committees.

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Committees of the Board

Our Board of Directors has three standing committees that perform certain delegated functions of the Board: the Audit Committee; the Compensation Committee; and the Nominating/Corporate Governance Committee. The Board also has one special purpose committee, the Technology Risk Committee, which performs certain delegated functions of the Board. Each committee is composed entirely of independent directors within the meaning of our director independence standards, which reflect the NYSE director independence standards and the audit committee requirements of the SEC.

During 2015, the Board disbanded the Strategic Planning Committee and adopted the Technology Risk Committee. Strategic planning was largely being conducted at the general board meetings in addition to the committee-level sessions. The Board believed that it was most efficient and effective to disband the Strategic Planning Committee and continue to incorporate such strategic planning discussions into their general board meetings. Certain board meetings include a review and discussion of the company’s long-term strategic plan. The Technology Risk Committee was adopted by the Board to provide governance and oversight of the possible risks associated with the company’s technology and information systems. The Board believes it is prudent at this time to add focus to this area via a committee to ensure potential risks are identified and mitigated as needed.

Each committee operates under a written charter, all of which were reviewed by their respective committees during 2015. Our Audit, Compensation and Nominating/Corporate Governance Committees updated their charters in 2016. The Technology Risk Committee established its charter in connection with its formation in May 2015. Our Board of Directors may, from time to time, establish certain other committees to facilitate oversight over the management of the company. The charters of each of our standing committees are available on our company’s website at www.realtyincome.com.

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Corporate Governance

We believe a company’s reputation for integrity and serving its stockholders responsibly is of critical importance. We are committed to managing the company for the benefit of our stockholders and are focused on maintaining good corporate governance.

Corporate Governance Guidelines

Our company has adopted Corporate Governance Guidelines that promote the functioning of the Board of Directors and its committees and sets forth expectations as to how the Board of Directors should operate. The guidelines include information about the composition of the Board of Directors, orientation and continuing education, director compensation, Board of Director meetings, Board of Director committees, management succession, evaluation and compensation of named executive officers, expectations of directors, and information regarding the annual performance evaluation of the Board of Directors. A current copy is available on our company’s website at www.realtyincome.com.

Code of Business Ethics

Anti-Hedging and Anti-Pledging Policy

To ensure proper alignment with our stockholders, we have established policies that prohibit our directors, officers, other employees and their family members from engaging in any transaction that might allow them to realize gains from declines in our securities. Specifically, we prohibit our officers, directors, other employees and their family members from engaging in transactions using derivative securities, short selling our securities, trading in any puts, calls or covered calls, writing purchase or call options and short sales, or otherwise participating in hedging, “stop loss,” or other speculative transactions involving our securities. In addition, margin purchases of our securities and pledging any of our securities as collateral to secure loans is prohibited. This prohibition means that directors, officers, other employees and their family members cannot hold our securities in a “margin account” nor can they pledge any of our securities for any loans or indebtedness.

Clawback Policy

In accordance with the Dodd-Frank Act, our Board of Directors has voluntarily adopted a formal clawback policy which applies to outstanding awards and will apply to future awards. Our clawback policy provides that the company may recover certain cash or equity-based incentive compensation paid or granted to a named executive officer during the three-year period preceding a “triggering event.” A “triggering event” includes:

(i)             a decision by the Audit Committee to effect an accounting restatement of previously published financial statements caused by material non-compliance by the company with any financial reporting requirement under the federal securities laws due to fraud, misconduct, negligence, or lack of sufficient oversight on the part of any named executive officer, and

(ii)         a decision by the Compensation Committee that one or more performance metrics used for determining previously paid compensation was incorrectly calculated and, if calculated correctly, would have resulted in a lower payment to one or more named executive officers.

The requirement to repay the incentive compensation that is recoverable under this policy shall only exist if the Board of Directors has actively taken steps to evaluate restating the financials or operating results or recalculating other associated metrics prior to the end of the fifth year following the year in question. The company will not be bound by the three-year recoupment period or this five-year limitation in cases involving fraud or intentional misconduct. As applicable SEC regulations are adopted, we will reassess our clawback policy and implement appropriate changes to ensure that our policy is fully compliant with SEC regulations.

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Social Responsibility and Ethical Standards

An extension of our mission is our commitment to being socially responsible and conducting our business according to the highest ethical standards. Our employees are awarded compensation that is in line with those of our peers and competitors, including generous healthcare benefits for employees and their families, participation in a 401(k) plan with a matching contribution by the company, competitive paid time-off benefits, and an infant-at-work program for new parents. We also have a longstanding commitment to equal employment opportunity and adhere to all Equal Employer Opportunity Policy Guidelines. We apply the principles of full and fair disclosure in all of our business dealings, as outlined in our Code of Business Ethics. We are also committed to dealing fairly with all of our customers, suppliers, and competitors.

As part of being responsible corporate citizens, the company and our employees have taken an active role in supporting our community through civic involvement with charitable organizations and corporate donations. Focusing our impact on social and environmentally sustainable areas, our non-profit partnerships have resulted in 600 employee volunteer hours, employee and corporate donations to fund local affordable housing, education services to at-risk youth, local foodbank support, and toys for under-served children. Our dedication to be a responsible corporate citizen has a direct and positive impact in the communities in which we operate and contributes to the strength of our reputation and our financial performance.

Environmental Practices

Our focus on conservationism is demonstrated by how we manage our day-to-day activities at our corporate headquarters. At our headquarters, we promote energy efficiency and encourage practices such as powering down office equipment at the end of the day, implementing file-sharing technology and automatic “duplex mode” to limit paper use, adopting an electronic approval system, and carpooling to our headquarters. With respect to recycling and reuse practices, we encourage the use of recycled products and the recycling of materials during our operations. Cell phones, wireless devices and office equipment are recycled or donated whenever possible.

In addition, our headquarters were constructed according to the State of California energy efficiency standards (specifically following California Green Building Standards Code and Title 24 of the California Code of Regulations) with features such as an automatic lighting control system with light harvesting technology, a Building Management System that monitors and controls energy use, an energy efficiency PVC roof and heating and cooling system, and drought-tolerant landscaping with recycled materials.

The properties in our portfolio are net leased to our tenants who are responsible for maintaining the buildings and are in control of their energy usage and environmental sustainability practices. We remain active in working with our tenants to promote environmental responsibility at the properties we own.

More information on our corporate responsibility efforts can be found on our company’s website at http://www.realtyincome.com/about/corporate-responsibility/.

Director Selection Process

Director Qualifications

Director qualifications are determined by what the Nominating/Corporate Governance Committee believes to be the essential competencies required to effectively serve on the Board of Directors. The Nominating/Corporate Governance Committee seeks to include on our Board of Directors a complimentary mix of professionals with the following qualities, skills and attributes:

·       Personal and professional integrity, ethics, values and absence of conflicts of interest;

·       Experience in corporate governance, for example as an officer or former officer of a public company;

·       Experience in our industry and a general business understanding of major issues facing public companies;

·       Experience as a member of the board of directors of another publicly-held company;

·       Ability to fairly and equally represent all stockholders of the company and time to devote to being a director;

·       Practical and mature business judgment, including the ability to make independent analytical inquiries and function effectively in an oversight role;

·       Academic expertise in an area of our operations and achievement in one or more applicable fields;

·       Background in financial capital markets and accounting matters; and

·       Diversity in terms of background, expertise, perspective, age, gender and ethnicity.

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Identifying and Evaluating Nominees for Directors

Our Corporate Governance Guidelines set forth the process by which our Nominating/Corporate Governance Committee identifies and evaluates nominees for our Board of Directors. The Nominating/Corporate Governance Committee first evaluates the current members of our Board of Directors to identify nominees for directors. Current members who are willing to continue service and who have qualifications and skills that are consistent with the Nominating/Corporate Governance Committee’s criteria for Board of Directors service are re-nominated.

As to new candidates, the Nominating/Corporate Governance Committee will generally poll members of our Board of Directors and members of executive management for their recommendations. The Nominating/Corporate Governance Committee has at times in the past retained a search firm to assist with identifying new candidates for membership on our Board of Directors, and in the future may hire a search firm if deemed appropriate. An initial slate of candidates will be presented to the Chair of the Nominating/Corporate Governance Committee, who will then make an initial determination as to the qualification and fit of each candidate. Final candidates will be interviewed by one or more members of the Nominating/Corporate Governance Committee and other directors. The Nominating/Corporate Governance Committee will then approve final director candidates and, after review and deliberation of all feedback and data, will make its recommendation to our Board of Directors. Recommendations received from stockholders are subject to the same criteria as are candidates nominated by the Nominating/Corporate Governance Committee and will be considered and processed accordingly.

Stockholder Recommendations

The Nominating/Corporate Governance Committee’s policy is to consider candidates recommended by our stockholders. The stockholder must submit proof of Realty Income stock ownership along with a detailed resume of the candidate and an explanation of the reasons why the stockholder believes the candidate is qualified for service on our Board of Directors. The stockholder must also demonstrate how the candidate satisfies our Board of Directors’ criteria and provide such other information about the candidate as would be required by the SEC rules to be included in a proxy statement, as well as our bylaws. The consent of the candidate must be included along with a description of any arrangements or undertakings between the stockholder and the candidate regarding the recommendation. All communications are to be directed to the Chair of the Nominating/Corporate Governance Committee and sent to the address noted under “Communications with the Board” in this Proxy Statement on page 17.

Recommendations received before November 8, 2016 or after December 8, 2016 (more than 150 days or less than 120 days prior to the first anniversary of the date the company’s Proxy Statement is released to stockholders for the previous year’s annual meeting of stockholders) will not be considered timely for consideration at next year’s annual meeting of stockholders. See “Stockholder Proposals for 2017 Annual Meeting” in this Proxy Statement on page 56. Properly submitted stockholder recommendations will be evaluated by the Nominating/Corporate Governance Committee using the same criteria used to evaluate other director candidates.

Board Independence

Our Board of Directors has determined that each of our current directors, except for Mr. Case, has no material relationship with us (either directly or indirectly through an immediate family member or as a partner, stockholder or officer of an organization that has a relationship with us) and is “independent” within the meaning of our director independence standards and NYSE director independence standards. Our Board of Directors established and employed categorical standards in determining whether a relationship is material and thus would disqualify such director from being independent. Our categorical standards of independence mirror NYSE independence requirements, except that our categorical standards additionally consider a director to be not independent if:

·       The director (or an immediate family member of the director) received more than $100,000 per year in direct compensation from the company or any of its subsidiaries, other than director and committee fees, pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);

·       The director (or an immediate family member of the director) was, within the last three years, an affiliate or named executive officer of another company which was indebted to us, or to which we were indebted, where the total amount of either company’s indebtedness to the other was five percent (5%) or more of our total consolidated assets or the total consolidated assets of such other company; and

·       The director (or an immediate family member of the director) was, within the last three years, an officer, director or trustee of a charitable organization where our (or an affiliated charitable foundation’s) annual discretionary charitable contributions to the charitable organization exceeded the greater of $1 million, or five percent (5%) of that organization’s consolidated gross revenues. For the purposes of independence, we consider an “Affiliate” any person beneficially owing in excess of ten percent (10%) of the voting power of, or a general partner or managing member of, a company.

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Independent Chairman of the Board

The Nominating/Corporate Governance Committee also evaluates the Board of Directors leadership structure. Since 1997, the positions of Chairman of the Board of Directors and CEO have been separate in recognition of the differences between the two roles. Mr. McKee serves as our Chairman of the Board of Directors and presides as lead Independent Director, while Mr. Case serves as our CEO. The Board of Directors believes this is the most appropriate structure at this time because it enables the independent directors to participate meaningfully in the leadership of our Board of Directors while utilizing most efficiently the leadership skills of both Mr. McKee and Mr. Case. In addition, separating the roles of Chairman and CEO allows our Chairman to serve as a liaison between the Board of Directors and executive management, while providing our CEO with the flexibility and focus needed to oversee our operations.

Board Risk Oversight

Our Board of Directors has overall responsibility for risk oversight with a focus on the more significant risks facing our company. The Board of Directors reviews and oversees our enterprise risk management (ERM) program, which is a company-wide program designed to effectively and efficiently identify and assess management’s visibility into critical company risks and to facilitate the incorporation of risk considerations into decision making. The ERM program does this by clearly defining risks facing the company and bringing together executive management to discuss these risks. This promotes visibility and constructive dialogue around risk at the executive management and Board of Director levels, and facilitates appropriate risk response strategies. Throughout the year, as part of the ERM program, management and the Board of Directors jointly discuss major risks that face our business.

In addition to the overall risk oversight that our Board of Directors provides, each of our committees exercises its own oversight related to the risks associated with the responsibilities of that committee:

·  The Audit Committee oversees our risk policies and processes relating to the financial statements and financial reporting procedures, as well as key credit risks, liquidity risks, market risks and compliance, and the guidelines, internal controls, policies and procedures for monitoring and mitigating those risks;

·  The Compensation Committee monitors the risks associated with management resources and structure, including evaluating the effect the compensation structure may have on risk decisions;

·  The Nominating/Corporate Governance Committee oversees the risk related to our governance structure and processes and risks arising from related party transactions; and

·  The Technology Risk Committee monitors the risks associated with the company’s technology and information systems.

By dividing responsibilities as such, the Board of Directors believes it can more effectively identify and address risk. Throughout the year, the Board of Directors, and the committees to which it has delegated responsibility, dedicates a portion of their meetings to review and discuss specific risk topics in greater detail.

Compensation Risk Assessment

The Compensation Committee reviews our company-wide incentive programs to assess whether the incentive programs for all employees, including our named executive officers, encourage desirable behavior as it relates to our long-term growth, and reflect our risk management philosophies, policies and processes.

Named Executive Officers.  The total compensation is established after the Compensation Committee determines the appropriate performance metrics to best align the interests of management with those of our stockholders. The short-term incentive program metrics are based on financial, operational, and individual goals. The long-term incentive program metrics are primarily based on our TSR performance relative to our peers, a value creation goal, and secondarily based on financial and operational goals. In addition, as previously discussed, we have adopted a clawback policy that enables us to recover incentive compensation awards in the event of negligence or misconduct directly related to a material restatement of our financial results, or miscalculated performance metrics that, if calculated correctly, would have resulted in a lower payment.

All Other Employees.  Non-named executive officer employee compensation awards are unlikely to encourage the taking of unnecessary or excessive risks that could threaten long-term value creation. Management monitors the cash and equity incentive awards made to our employees and reviews those awards in light of the potential risks relative to the control environment, each respective employee’s responsibilities, and the general policies and procedures of our company. The Compensation Committee has sought to align the interests of our employees with that of our stockholders through grants of restricted stock awards, thereby giving employees additional incentives to protect and align with long-term value creation. Based on its evaluation, the Compensation Committee does not believe that the compensation programs give rise to any risks that are reasonably likely to have a material adverse effect on our company.

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Meetings and Attendance

Our Board of Directors met 17 times during 2015. All directors attended at least 75% of the aggregate of (i) the total number of meetings of our Board of Directors while they were on our Board of Directors, and (ii) the total number of meetings of the committees of our Board of Directors on which such directors served. Although we have no policy with regard to Board of Director members’ attendance at our annual meeting of stockholders, it is customary for, and we expect, all Board of Director members to attend. All of our Board of Directors members attended our 2015 annual meeting of stockholders.

To ensure free and open discussion among the independent directors, only independent directors attend executive sessions of our Board of Directors and Committee meetings. As the non-executive Independent Chairman of our Board of Directors, Mr. McKee presided at each of the six executive sessions held during 2015.

Communications with the Board

Stockholders and other interested parties may communicate with the Chairman of our Board of Directors or with the non-employee directors, as a group, by either of the following methods:

All appropriate correspondence will be promptly forwarded by the Corporate Secretary to the Chairman of our Board of Directors.

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Compensation for the independent directors of our Board of Directors during 2015 consisted of an annual retainer and an additional retainer for acting as a chair of one of the committees of our Board of Directors as set forth below. In addition, each independent director receives an annual equity award and Board of Director and Committee meeting fees of $1,000 per meeting attended in person and $500 for telephonic attendance.

Our directors received the following aggregate amounts of compensation for the year ended December 31, 2015:

(1)          On May 12, 2015, the date of our 2015 Annual Meeting of Stockholders, each non-employee director received 4,000 shares of restricted stock with a grant date fair value of $187,520, which is calculated by multiplying the 4,000 shares by the closing market price of our common stock on May 12, 2015 of $46.88, as prescribed by Accounting Standards Codification Topic 718. All of these stock grants vest according to the vesting schedule described below under “Stock Awards for Directors” and all shares, including shares of restricted stock, include dividends paid from the date of grant.

(2)          Amount represents the annual retainer of $10,000 for serving as the director of Crest Net Lease, Inc. (Crest), a wholly owned subsidiary of Realty Income.

(3)          As of December 31, 2015, the non-employee directors did not hold any stock options, but held the following number of shares of unvested restricted stock:

(4)          Mr. Case, our Chief Executive Officer and Director, did not receive any compensation for his services on our Board of Directors or as a director of Crest during 2015. His compensation is reflected as part of the “Summary Compensation Table” on page 37.

18 2016 PROXY STATEMENT

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Stock Awards for Directors

The 2012 Incentive Award Plan provides that upon the initial election to our Board of Directors, and at each annual meeting of stockholders thereafter, if the director continues to serve as a director after the meeting, each non-employee director is automatically granted 4,000 shares of restricted stock. These awards have been approved by our stockholders. The vesting schedule for restricted shares granted to non-employee directors is as follows:

Other Payments for Directors

The members of our Board of Directors are also entitled to reimbursement of their travel expenses incurred in connection with attendance at Board of Director and Committee meetings and conferences. Additionally, the members of our Board of Director are reimbursed for expenses incurred in connection with attending continuing education programs to assist them in remaining abreast of developments in corporate governance and other critical issues relating to the operation of public company boards.

Director Stock Ownership Guidelines

Our non-employee directors are subject to stock ownership guidelines. Under these guidelines, each non-employee director will be required, within five years of January 1, 2013, to hold stock valued at no less than five times the amount of the annual cash retainer paid to such director for service as a member of the Board of Directors, without reference to committee service. The current stock ownership goal for each of our non-employee directors is five times their annual cash retainers as of January 1, 2016 of $15,000, or $75,000, divided by the closing price of our common stock as of December 31, 2015 of $51.63, which equals a minimum share ownership requirement of 1,453 shares.

All vested and unvested restricted stock awards qualify towards satisfaction of the requirement. For any new director, compliance with the guidelines will be required within five years after being elected to the Board of Directors. As of December 31, 2015 each director subject to the guidelines met or exceeded the stock ownership requirements.

2016 PROXY STATEMENT 19

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The following table sets forth certain information as of the record date of March 15, 2016 concerning our executive officers:

20 2016 PROXY STATEMENT

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2016 PROXY STATEMENT 21

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis section discusses the compensation policies and programs for the following executive officers of the company (the named executive officers or NEOs):

(1) Mr. Collins served as Executive Vice President, Portfolio Management through December 31, 2015, at which point he departed from the company.

Executive Summary

The primary objectives of our compensation program are to:

ü           Align the interests of management with those of the stockholders;

ü           Link executive compensation to the company’s short-term and long-term performance; and

ü           Attract, motivate and retain highly qualified executive officers through competitive compensation arrangements.

We continue to adhere to best in class compensation and corporate governance practices as set forth in the following table:

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2015 Accomplishments

Prior to reviewing the compensation program and earned amounts for our named executive officers, it is important to review and acknowledge the company’s accomplishments for the year. The company achieved solid growth and excellent operating and financial performance in 2015. Here are some key highlights:

(1)          For a calculation of Adjusted Funds from Operations (AFFO) per share, see page 47 of our Annual Report on Form 10K filed with the SEC on February 11, 2016, which also includes a GAAP reconciliation of this non-GAAP measure.

The company’s performance results are a significant contributor in determining the compensation awarded to our executives. Our compensation program is structured to effectively link compensation to the achievement of certain company performance metrics in order to create alignment with the interests of our stockholders. We believe our performance in 2015 demonstrates the effectiveness, over time, of the execution of our strategic business plan, and the alignment of our compensation program with our philosophy to reward executives for enhancing long-term stockholder value.

Favorable Say-on-Pay Vote and Stockholder Engagement

We provide our stockholders with an annual advisory “say-on-pay” vote on the compensation of named executive officers. At our 2015 Annual Meeting of Stockholders, our stockholders expressed substantial support for the compensation of named executive officers, with approximately 96% of the votes cast approving the advisory say-on-pay vote. This continued support of our compensation program as demonstrated below reflects a strong alignment with the company’s performance and long-term value creation for our stockholders.

Approval Percentage

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During 2015, we continued to engage with stockholders through various means of communication including in-person meetings and conference calls. Throughout the year, our management team interacted with approximately 85% of our top 20 active stockholders.

In addition to the say-on-pay results and feedback from stockholders (as provided), the Compensation Committee considered other factors in evaluating our executive compensation programs, including but not limited to:

ü          The Compensation Committee’s assessment of the interaction of our compensation program with our financial and operational objectives;

ü              Recommendations provided by its independent consultant; and

ü              A review of peer data.

Each factor is evaluated in the context of the Compensation Committee’s responsibility to act in the company and its stockholders’ best interests. The Compensation Committee reviewed the change in control provision in the company’s agreements for restricted stock and restricted stock unit awards and revised them to be more in line with market. The revised agreements provide for “double-trigger” rather than “single-trigger” acceleration in the event of a change in control, requiring a qualifying termination prior to any acceleration of awards. Additionally, the employment agreements for certain of the named executive officers, other than the CEO, were amended to increase the cash severance payable upon a qualifying termination of employment following a change in control. Each of these changes is further outlined in the section “Potential Payments Upon Termination or Change in Control” beginning on page 41. While these changes, among others, were made to our compensation program in 2015 to better align with market practices, the changes were not in direct response to the advisory say-on-pay vote in 2015. The Compensation Committee will continue to consider the outcome of say-on-pay proposals and stockholder input when making future compensation decisions for the named executive officers.

Elements of Compensation

In structuring executive compensation, the Compensation Committee considers how each component of compensation motivates performance, promotes retention and creates long-term stockholder value. Base salaries are primarily intended to attract and retain highly qualified executives and to reward them for their continued service. Annual incentive cash payments, equity awards, and long-term performance shares are designed to (i) directly reward performance, (ii) achieve specific strategic and operating objectives, and (iii) provide incentives to create long-term stockholder value. All of our equity incentives are primarily intended to align named executive officers’ long-term interests with stockholders’ long-term interests, although we believe they also play a role in helping us reward performance and to attract and retain top executives. The following outlines the primary elements of our executive compensation program:

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Total Target Direct Compensation

The Compensation Committee worked with FPL Associates, L.P. (FPL), the Compensation Committee’s independent consultant, to determine the appropriate levels of total target direct compensation to achieve the appropriate balance between (i) cash and equity compensation, (ii) long-term and short-term compensation, (iii) performance-based and time-based equity, and (iv) fixed and variable compensation. The Compensation Committee reviewed the median and aggregate total target direct compensation within our peer group, based on market data provided in November 2014 by FPL, to assess the structure of the program and compensation levels. While the Compensation Committee sought to achieve aggregate total target direct compensation for our named executive officers at or near the estimated median of our peer group, they also gave consideration and special emphasis to individuals’ personal contributions to the organization, as well as skill sets, qualifications and experience. Other factors considered were historical pay and the recent trajectory of individual’s pay. After review and consideration, the Compensation Committee approved the following total target direct compensation and structure for 2015 compensation. Total target direct compensation is composed of (i) base salary, (ii) annual short-term incentive opportunity (two-thirds cash and one-third equity), (iii) performance shares, and (iv) an annual grant of restricted shares. In aggregate, the 2015 total target direct compensation established for the named executive officers approximated the estimated peer group median.

Structure. For our CEO, the Compensation Committee used the following structure for determining the various elements of direct compensation payable for 2015:

Set forth below is a table that illustrates the application of the structure for 2015 compensation decisions for our CEO.

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CEO Total Target Direct Compensation

The Compensation Committee believes that a significant portion of executive compensation should be at-risk and tied to our performance in order to best align management’s interests with those of our stockholders. In 2015, approximately 69% of our CEO’s total target direct compensation consisted of compensation that is at-risk based on achievement of certain objective performance metrics.

Similar guiding principles were used for our other named executive officers, resulting in a comparable percentage of at-risk compensation.

General Note to Discussion of Pay Components

Some of the components of 2015 compensation disclosed in the following sections of this “Compensation Discussion and Analysis” section differ from the Summary Compensation Table on page 37. SEC rules require that the Summary Compensation Table include equity compensation in the year granted, while in our case, the Compensation Committee awards equity compensation after the performance year with respect to the performance year. Therefore, equity-based awards granted in January 2015 for the 2014 performance year are shown in the Summary Compensation Table as 2015 compensation. However, the equity-based awards discussed in the following sections for all named executive officers excluding Mr. Collins, will be included in the Summary Compensation Table in next year’s proxy statement.

Base Salaries

In connection with its review of fiscal 2014 performance and in consideration of the increased responsibilities that come with the continued growth of the company, the Compensation Committee decided to increase the base salaries paid to all of our named executive officers commencing on January 1, 2015. The Compensation Committee also considered the target compensation relative to peer group compensation data, historical pay and the trajectory of compensation increases when making its decision to increase 2015 salaries. The 2015 base salaries are reflected in the table below, as well as the salary increases approved for 2016. Messrs. Case and Roy each received $50,000 salary increases for 2016. Mr. Roy’s 2015 and 2016 base salary increases were attributable to his increased responsibilities upon his promotion to Chief Operating Officer at the end of 2014, and President at the end of 2015.

(1) Mr. Collins departed from the company on December 31, 2015.

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Short-Term Incentive Program (STIP)

During February 2015, the Compensation Committee approved the 2015 STIP, which is structured so that the named executive officers’ annual incentive awards closely align with the company’s operating and financial performance. The components of the STIP are as follows:

Objective Performance Criteria—70%

The performance criteria, weightings and amounts that can be earned under our STIP, in addition to our actual performance and amounts earned for 2015 performance, are set forth in the table below.

(1)          AFFO per share is defined as Funds from Operations adjusted for unique revenue and expense items, which we believe are not as pertinent to the measurement of our ongoing operating performance, and is consistent with the presentation of AFFO in our public SEC filings. Refer to the company’s most recently filed 10-K for a reconciliation of AFFO to net income.

(2)          The Compensation Committee used interpolation for results between threshold and maximum criteria. Performance in excess of maximum goals is capped at 150% of target payout for that measure.

(3)          With respect to Mr. Collins, the threshold, target, and maximum levels were established at 70%, 100%, and 130%, respectively. Accordingly, the weighted payout percentage used for Mr. Collins for the objective performance criteria was 128%.

The Compensation Committee believes these annual targeted operating and financial goals align with our strategy to attain long-term financial stability that will support sustained cash flows beneficial to our stockholders.

Individual Performance – 30%

As a component of the STIP, individual performance is used by the Compensation Committee to award for individual goals achieved. The Compensation Committee used the following process to establish individual performance goals and assess individual performance at the end of the performance year.

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The Compensation Committee adopted the recommendations provided by the CEO for the individual performance percentages for the named executive officers other than himself. The percentages earned under the individual performance metric and the material factors considered are set forth below.

John P. Case—150%

Mr. Case successfully executed our business plan, leading the company to strong financial and operating results. Under his leadership, AFFO per share increased 6.6% which allowed us to increase our dividend paid per common share by 3.6% in 2015. These results contributed to a TSR of 13.0% in 2015, which surpassed our peer group mean, the MSCI US REIT Index, the NAREIT Freestanding Index, and the S&P 500 Index. Additionally, he effectively led the senior management team in the achievement of their objectives. Throughout the year, Mr. Case actively engaged with stockholders and other constituencies to communicate our results and strategic vision. He continues to ensure the appropriate resources and structure are in place to effectively position the company for its continued growth. The Compensation Committee determined that his performance exceeded his objectives.

Sumit Roy—150%

Mr. Roy executed our successful investment strategy during the year while ensuring operational efficiencies throughout the organization. In 2015, we invested $1.26 billion in high-quality real estate properties at attractive yields, which made 2015 our third most active year for acquisitions in the company’s history. We achieved this level of acquisitions while remaining selective and disciplined with our investment strategy, acquiring just 4% of the $32 billion of acquisition opportunities sourced. Recognizing Mr. Roy’s contributions, he was promoted to President and effectively transitioned his role as Chief Investment Officer to his successor. The Compensation Committee determined that his performance exceeded his objectives.

Paul M. Meurer—100%

Mr. Meurer was instrumental in accessing the capital markets in 2015, raising approximately $1.2 billion in equity capital at attractive pricing to fund our acquisitions activity. Our balance sheet was well-positioned as we entered 2016 with the lowest leverage levels in over ten years, as measured by debt to total market capitalization. He helped lead the company’s efforts to successfully recast the company’s credit facility, realizing improvements in size, covenants and costs, and established an at-the-market equity distribution program as an additional source of funding for the company. The Compensation Committee determined that his performance was in alignment with his objectives.

Michael R. Pfeiffer—100%

Mr. Pfeiffer successfully provided oversight and legal expertise for the approximate $1.26 billion of acquisitions closed during the year, the $1.2 billion of equity capital raised, and the recast and expansion of the company’s credit facility. He also continued to enhance the company’s risk management expertise and streamline the internal legal processes with a focus on cost savings. The Compensation Committee determined that his performance was in alignment with his objectives.

Richard G. Collins—130%

Mr. Collins oversaw our existing portfolio which continued to perform well during the year. He helped lead our efforts in achieving high occupancy and re-leasing rates while managing our most active year ever for lease expiration activity. We ended the year with high portfolio occupancy at 98.4%, one of the highest levels in the company’s recent history. The Compensation Committee determined that his performance exceeded his objectives.

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The incentive opportunities and the total actual incentive award earned by each named executive officer for 2015 under the STIP are set forth in the table below. Our CEO’s 2015 target incentive opportunity was established based on the total target director compensation structure outlined on page 25. For our other named executive officers, the target incentive opportunities were intended to be between 34% and 51% of each individual’s 2015 total direct compensation level. Two-thirds of the earned incentive award was paid in cash in January 2016, while the remaining one-third was awarded in restricted shares that vest evenly over five years commencing on January 1 of the year following the grant, except for Mr. Collins’ award that was fully vested at grant. The restricted shares for all NEOs, excluding Mr. Collins, were granted effective as of January 14, 2016, based on the dollar value of the earned incentive award allocated to restricted shares and our closing stock price of $52.25 on January 14, 2016. Mr. Collins’ restricted shares were granted as of December 31, 2015 based on the dollar value of the earned incentive award allocated to restricted shares and our closing stock price of $51.63 on December 31, 2015.

2015 Incentive Opportunities and Earned Incentive Compensation under the STIP

(1)     The maximum annual incentive is equal to 150% of target, and threshold annual incentive is equal to 50% of target except for Mr. Collins, whose maximum is equal to 130% of target, and threshold is equal to 70% of target. No compensation is awarded for below-threshold performance.

(2)     Given that Mr. Pfeiffer is retirement eligible prior to the final vesting date of shares granted, he was granted restricted share units (RSUs) instead of restricted shares in order to preserve the deferral of his income taxation until the issuance of the shares to him upon vesting.

Long-Term Incentive Program (LTIP)

During February 2015, the Compensation Committee approved the grant of 2015-2017 performance shares to each named executive officer. The following is a summary of the key metrics criteria and terms:

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Specifically, the performance measures and weightings for the 2015-2017 performance shares are based on the following objective performance measures, each of which are measured over the three-year performance period.

(1)  The maximum amount of performance shares earned is equal to 150% of target, and threshold annual incentive is equal to 50% of target, with linear interpolation between threshold and maximum. No shares are earned for below-threshold performance.

(2)  TSR is calculated by comparing the trailing 20-trade-day average stock price at the end of the performance period, assuming contemporaneous reinvestment of dividends, to the closing stock price on December 31, 2014.

We are a member of the MSCI US REIT Index, which is a broad REIT index, and the NAREIT Freestanding Index, which is a net lease focused REIT index. Both indices are widely used to measure performance between REITs within and across the sub sectors. There are many ways to compare our performance to each of these indices. The Compensation Committee analyzed the various methods and determined that comparisons on a percentile basis and based on a spread, were both widely used in the marketplace and appropriate for evaluating our performance during the 2015-2017 performance period.

The long-term performance shares granted in February 2015 are as follows:

(1)  The number of performance shares granted at target value, reflect the grant date fair value of $48.63 per share, using a multifactor Monte Carlo simulation model for the market conditions associated with the TSR performance goals, valued at $30.72 per share, plus $17.91 per share for the two performance conditions of debt-to-EBITDA ratio and dividend growth rate.

Time-Based Restricted Shares

The Compensation Committee grants restricted share awards on an annual basis, which are designed to: (i) increase the named executive officers’ common stock ownership, (ii) motivate our named executive officers to improve long-term common stock price performance, (iii) align the named executive officers’ interests with the interests of stockholders, and (iv) operate as a retention mechanism for key members of management.

In connection with the determination of the 2015 compensation program, the Compensation Committee proposed initial 2015 annual restricted share award values to be granted in January 2016. The proposed annual award values for all NEOs, excluding Mr. Collins, were reviewed and approved on January 14, 2016 and vest evenly over five years commencing on January 1 of the year following the grant. Mr. Collins’ award was granted on December 31, 2015 and became fully vested at grant.

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The time-based restricted shares granted are as follows:

(1)     Annual restricted shares reflect the actual number of shares that were granted by the Compensation Committee on January 14, 2016 for Mr. Case, Mr. Roy, Mr. Meurer and Mr. Pfeiffer, and December 31, 2015 for Mr. Collins. The number of annual restricted shares was calculated by dividing the dollar value authorized by the Compensation Committee by the close price of our common stock on the date of grant, January 14, 2016, of $52.25, or December 31, 2015 of $51.63 and rounded down to the nearest whole number.

Promotional Grant for Mr. Roy

In connection with Mr. Roy’s promotion to President effective November 30, 2015, the Compensation Committee awarded Mr. Roy with an additional one-time, time-based restricted share award valued at $1,000,000 or 19,139 shares, which was granted on January 14, 2016. The award vests evenly over five years commencing on January 1 of the year following the grant. This amount was determined by the Compensation Committee as compensation for the additional duties and responsibilities that he assumed with the role of President while continuing in his role as the Chief Operating Officer.

Outstanding 2013 Performance Award Granted in Connection with Promotion of our CEO

In connection with Mr. Case’s promotion to Chief Executive Officer in September 2013, the Compensation Committee determined that it was appropriate and in our stockholders’ best interests to include, as part of his promotional equity compensation, a one-time equity grant which vests subject to the meeting of seven annual performance metrics including; (i) AFFO per share growth, (ii) dividend per share growth, (iii) interest coverage ratio, (iv) fixed charge coverage ratio, (v) debt-to-EBITDA, (vi) portfolio occupancy rate and (vii) acquisitions. The Compensation Committee believes that this grant promoted retention amidst a very competitive environment amongst REITs, further aligned Mr. Case’s interests with those of our stockholders, and continually motivates him to focus on a variety of key performance metrics.

In September 2013, Mr. Case was granted 51,454 shares of restricted common stock (the 2013 Performance Award) that were scheduled to vest on December 31 of 2013, 2014, 2015 and 2016 based on seven annual performance metrics, with a maximum of 12,864 shares that can vest at each date. The vesting of these shares is based on our performance results relative to certain performance metrics, with a range of zero shares vesting for a “poor” rating to 3,676 shares vesting for an “outstanding” rating per metric. If we achieve at or below the “poor” threshold with respect to a performance metric, then none of the shares subject to that performance metric’s tranche would vest.  If we achieve “average,” “good,” “excellent” or “outstanding” rating for the applicable calendar year with respect to an applicable performance metric, then 75%, 125%, 150% or 200%, respectively, of a targeted 1,838 shares for each performance metric’s tranche would vest.  However, in no event will more than an aggregate of 12,864 shares vest with respect to any calendar year, and no more than 51,454 shares will vest, in the aggregate, pursuant to the 2013 Performance Award.

During 2015, based on our strong operating and financial performance under these metrics, each of the metrics were achieved at the outstanding level and 12,864 shares of the 2013 Performance Award vested on December 31, 2015, representing the maximum number that may vest per year. As a result of similar strong performance under these metrics during 2013 and 2014, 12,864 shares of the 2013 Performance Award also vested on December 31, 2013 and December 31, 2014.

Restricted Shares Granted in January 2015 for 2014 Performance

Our restricted share awards are typically granted after fiscal year-end in recognition of the company’s prior year performance under the performance metrics for that year, as well as each named executive officer’s individual performance for the prior fiscal year. For a discussion of restricted share awards that were granted in January 2015 under our 2014 STIP and restricted share awards granted in January 2015, which were intended to be compensation for 2014, see pages 28 to 31 of the company’s 2015 Proxy Statement filed with the SEC on March 27, 2015.

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Restricted Share Vesting

Historically, our restricted shares vested 20% per year for employees less than 55 years of age, with increased vesting over shorter periods for persons between 55 and 60 years of age, and immediate vesting for persons 60 years of age or older. Commencing with the awards granted in 2015, restricted shares granted vest 20% per year on January 1, but are subject to accelerated vesting in the event of retirement, which is defined as persons of at least 60 years of age who have provided at least ten years of service to the company. The Compensation Committee believes that this vesting approach is (i) consistent with market practices, (ii) easier to administer, and (iii) preserves the benefit of acceleration, which occurs only upon actual retirement.

Given that Mr. Pfeiffer is eligible for retirement prior to the end of the vesting period, he was granted restricted share units (RSUs) in January 2016 instead of restricted shares in order to preserve the deferral of his income taxation until the issuance of the shares upon vesting. The RSUs have dividend equivalents that pay out concurrently on the payment date of the dividend, regardless of the vested status of the RSUs. This provides the RSUs with the same economic rights as shares of restricted stock, which are entitled to cash dividends on the dividend payment date.

Changes to 2016 Incentive Programs

In December 2015, the Compensation Committee adopted the 2016 STIP with the same performance goal categories and weightings used in the 2015 program. Below is the 2016 target incentive opportunity established by the Compensation Committee in January 2016:

(1)     We anticipate Mr. Abraham, Executive Vice President, Chief Investment Officer, will be deemed a named executive officer for the 2017 proxy.

Additionally, the Compensation Committee adopted the 2016 LTIP and granted performance shares in January 2016 based on the same performance goals, criteria and weightings used in the 2015 LTIP measured over the performance period from January 1, 2016 through December 31, 2018.

Severance and Change in Control Arrangements

Each of the named executive officers has the right to receive severance compensation upon the occurrence of certain events as specified in their employment agreements. In addition, our award agreements provide certain rights in connection with a change of control and certain termination of employments. Below is a list of the scenarios under which the named executive officers have rights to receive severance compensation.

ü           Qualifying Termination

ü           Change in Control Termination

ü           Death

ü           Disability

ü           For our CEO, a non-renewal of his employment agreement

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Further detail surrounding the payments and benefits upon the occurrence of each scenario can be found in the section titled “Potential Payments Upon Termination or Change in Control” on page 41. During December 2015, our Compensation Committee amended the award agreements, removing rights to accelerated vesting of outstanding restricted stock awards in the event of a change in control without a qualifying termination. In conjunction with the amended award agreements, the employment agreements for certain NEOs, other than the CEO, were amended to increase the cash severance payable to each executive upon a qualifying termination of employment following a change in control. These amendments better align our severance and change in control benefits with market practices and the Compensation Committee believes these benefits are reasonable. The payments and benefit levels under the employment agreements did not influence and were not influenced by other elements of compensation.  The agreements were designed to help (i) attract and retain key employees, (ii) preserve key employee’s morale and productivity, (iii) align with best-practices and (iv) promote continuity of management in the event of an actual or threatened change in control. These change in control benefits allow executives to assess takeover bids objectively without regard to the potential impact on their individual job security.

Mr. Collins’ employment terminated effective as of December 31, 2015. Mr. Collins’ termination was without cause and was deemed to qualify for severance benefits under the Qualified Termination provisions of his employment agreement. Refer to “Termination and Change in Control Scenario Table” on page 45 for the severance and other benefits that became payable to Mr. Collins.

Other Benefits and Policies

We provide medical and other benefits to our named executive officers that are similar to those benefits offered to all of our full-time employees, including a 401(k) plan with a matching contribution by the company and coverage under a health and disability insurance program.

Executive Stock Ownership Requirements

Effective January 1, 2013, the Board of Directors implemented stock ownership requirements for the company’s CEO and the other named executive officers to closely align the interests of these individuals with the interests of our stockholders. The minimum share requirement is five times base salary for our CEO, four times base salary for our President, and three times base salary for the other named executive officers using their salary on January 1, 2013 or the date they became subject to the guidelines. Each executive has five years from the later of the date of adoption or date of appointment to an executive-level position to achieve the requirement.

All vested and unvested restricted share awards qualify towards satisfaction of the requirement. Performance shares do not qualify towards the requirement. Compliance is evaluated on an annual basis, as of December 31 of each year. The following table sets forth the requirements for each of our named executive officers:

(1)          The requirement for each person was determined first in dollars as a multiple of the executive’s annual base salary as of the date they become subject to this requirement, and then by converting such amount to a fixed number of shares based on the company’s average closing common stock price for the 60 trading days prior to such date. An executive’s stock ownership requirement will only be re-established upon a change to a different executive position.

As of December 31, 2015, all of our named executive officers satisfied their ownership requirements.

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Compensation Process

Compensation Consultant

In 2015, the Compensation Committee retained FPL, a nationally-known independent executive compensation and benefits consulting firm specializing in real estate companies, to provide general executive compensation consulting services. In addition, the consultant performs special executive compensation projects and consulting services, as directed by the Compensation Committee. The consulting services provided by FPL include:

ü              Evaluating the current compensation program design and guidelines for the named executive officers and assisting in structuring a compensation program that meets the objectives outlined by the Compensation Committee;

ü              Providing peer information to assist the Compensation Committee in selecting the appropriate peer group;

ü              Benchmarking the compensation for the named executive officers against the appropriate peer group;

ü              Identifying the appropriate mix between compensation components, including base salary, annual incentives, short-term and long-term incentive compensation to ensure proper incentive alignment;

ü              Discussing market-based incentive programs, including performance metrics and target, within the peer group companies, and providing guidance and recommendations for modifications to program elements to ensure competitiveness;

ü              Reviewing an overview of industry trends as it relates to human capital across the entire real estate industry; and

ü              Providing their views on the revised change in control provisions.

FPL reports to the Compensation Committee and works with management as directed by the Compensation Committee. The Compensation Committee retains the right to terminate or replace the consultant at any time. Pursuant to the Compensation Committee’s charter, the Compensation Committee has the power to engage such consultants and other advisors as it deems necessary.

Through a review and consultation with FPL, the Compensation Committee assessed the independence of FPL in light of, among other factors, the independence factors established by the NYSE. As a result of this assessment, the Compensation Committee has determined that FPL’s work raised no conflict of interest currently or during the year ended December 31, 2015. Additionally, during 2015, advisory services were obtained from Latham & Watkins LLP. Through a review of the services to be performed and consultation with this law firm, the Compensation Committee assessed the independence of this firm in light of, among other factors, the independence factors established by the NYSE. As a result of this assessment, the Compensation Committee determined to continue to directly or indirectly receive advice from this firm as their work raised no conflict of interest.

Peer Group Data

The Compensation Committee uses comparison data from various companies it considers peers as a guide in its review and determination of base salaries, cash payments, equity awards, and long-term performance awards. Throughout 2015, the Compensation Committee reviewed peer group data to assist in its determination of total target direct compensation (on an aggregate and individual basis), as well as the appropriate mix of equity vs. cash, long-term vs. short-term, and performance-based vs. time-based awards to be paid or granted for 2015 performance. The Compensation Committee evaluates whether the compensation elements and levels that are provided to our named executive officers are generally appropriate relative to the compensation elements and levels provided to their counterparts at our peer companies, in light of our performance relative to our peers and in light of each named executive officer’s contribution to our performance. This approach allows us to respond to competitive dynamics in the market and provides us with the flexibility needed to maintain and enhance our named executive officers’ engagement, focus, and motivation for the future.

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2015 Peer Group for 2015 Compensation Decisions

The Compensation Committee, with the help of FPL, periodically reviews the composition of our peer group and the criteria and data used in compiling our peer group to ensure that their sizes and operations remain comparable to ours. In February 2015, the Compensation Committee reviewed data provided by FPL regarding the appropriate companies to include in the peer group. The peer group recommended by FPL and used by the Compensation Committee for 2015 compensation decisions is consistent with the group used for 2014 compensation decisions, with the addition of one company, Spirit Realty Capital, Inc., which was added to the peer group used for 2015 compensation decisions to broaden the representation of net lease companies within the peer group. Our peer group consists of the following 17 public real estate companies:

The companies in our 2015 Peer Group focus on a variety of asset classes, including those having a net lease component to the extent available, and those that are similar in size to us in terms of equity market capitalization and total market capitalization (common and preferred stock, partnership units convertible into stock and long-term debt). The companies were selected so that our equity and total market capitalization remained relatively close to the median of the peer group:

2015 Peer Group Comparison(1)

(in billions)

(1)     As of February 2, 2015, the 2015 Peer Group had total market capitalization ranging from approximately $8.0 billion to $38.1 billion, placing us in the 65th percentile of our peer group. In terms of equity market capitalization, we were in the 65th percentile of our peer group.

Updates to Peer Group

The Compensation Committee reviews our peer group and makes updates from time to time. Subsequent to 2015 and consistent with our standard practices, the Compensation Committee, with the help of FPL, reviewed the composition of our 2015 Peer Group to ensure that their sizes and operations remained comparable to ours for 2016. Given our company’s substantial growth in size and addition to the S&P 500 index during 2015, the Compensation Committee determined that substitutions were warranted to ensure, among other factors, that our equity and total market capitalization remained relatively close to the median of the peer group for 2016. The Compensation Committee met in January 2016 to review the peer group and decided to make the following modifications to the 2015 Peer Group, as recommended by FPL:

+                                     Add: Equinix Inc., Essex Property Trust Inc., and VEREIT Inc.

–                                       Remove: Aimco, CBL & Associates Properties Inc., and Duke Realty Corporation

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Equinix Inc. and Essex Property Trust, Inc. were added to incorporate additional S&P 500 REITs based in California, and are slightly larger in size in terms of both equity and total market capitalization. VEREIT Inc. was added to continue to increase the representation of net lease companies in the peer group. Aimco, CBL & Associates Properties Inc., and Duke Realty Corporation were removed as they were generally the least comparable in terms of size (exclusive of our net lease peers) at the time of consideration. These substitutions resulted in a zero net change to the number of peers and positions us at the 58th percentile in terms of total market capitalization, and at the 66th percentile in terms of equity market capitalization relative to this updated peer group.

The Compensation Committee evaluates our peer group periodically and may make adjustments to this peer group to reflect changes in the size or operations of the company or our peers.

Management Involvement

In setting compensation for named executive officers, the Compensation Committee solicits appropriate input from the CEO concerning each of the other named executive officers other than himself. In addition, from time to time, the Compensation Committee will direct management to work with the Compensation Committee’s consultant in providing proposals, program design, and compensation recommendations. Each year, the CEO provides the Compensation Committee with a report of the company’s operating and financial results for the past fiscal year relative to the company’s performance metrics. He also discusses his personal assessment of individual performance of each of the other named executive officers. In addition, at the request of the Compensation Committee, the CEO makes recommendations regarding salary and incentive compensation awards for each named executive officer other than himself. The Compensation Committee considers these recommendations and other factors as discussed above in making the final determinations.

Tax Considerations

Section 162(m) of the Code limits the deductibility of compensation paid to our CEO, and our three other most highly compensated named executive officers, other than the Chief Financial Officer. To qualify for deductibility under Section 162(m), compensation (including base salary, cash bonus, compensation attributable to vesting of stock grants and nonqualified benefits) in excess of $1,000,000 per year, paid to each of these named executive officers, generally must be “performance-based” compensation as determined under Section 162(m). While the Compensation Committee considers whether to structure compensation so that it satisfies the “performance-based” compensation requirements under Section 162(m), the Compensation Committee balances the costs and burdens involved in doing so against the value to us, and our stockholders, of the potential tax benefits. The tax deductibility of our compensation is just one of a multitude of factors that the Compensation Committee considers when making its compensation decisions.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the review and discussions, the Compensation Committee recommended to the Board of Directors of Realty Income Corporation, a Maryland corporation, or Realty Income, that the Compensation Discussion and Analysis be included in this Proxy Statement for the 2016 Annual Meeting of stockholders and in Realty Income’s 2015 Annual Report on Form 10-K.

Submitted on March 21, 2016 by the members of the Compensation Committee of Realty Income’s Board of Directors.

Priya Cherian Huskins, Chair

Michael D. McKee

Gregory T. McLaughlin

Stephen E. Sterrett

The above report of the Compensation Committee will not be deemed to be incorporated by reference into any filing by the company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the company specifically incorporates the same by reference.

36 2016 PROXY STATEMENT

Table of Contents

Summary Compensation Table

The following table sets forth information concerning the compensation of our Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers (collectively, the named executive officers), for the fiscal years ended December 31, 2015, 2014 and 2013. In general, bonus and non-equity incentive plan compensation align with the performance year noted; however, stock awards are included in the year of grant which may not align with the performance year to which they relate.