Company: CIO
Filing Date: 2025-03-12
Form Type: DEF 14A
Source: 0001193125-25-052437
Chunk: 78

Company: City Office REIT, Inc.
Filing Date: 2025-03-12
Form: DEF 14A
Chunk 78
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 162(m), which generally limits the deductibility of compensation paid to certain “covered employees” of a publicly held corporation to $1 million per year. Before the Tax Cuts and Jobs Act (the “Act”) was implemented, payments of qualified performance-based compensation made to covered employees were exempt from the $1 million annual limitation. The Act eliminated the exemption for qualified performance-based compensation. The Third Amendment deletes the limitations on the maximum numbers of certain types of awards that were intended to be eligible for the Section 162(m) performance-based compensation exemption and that could be granted to any employee in any calendar year. These limitations applied to all stock options and stock appreciation rights granted to employees, as well as stock awards and other stock-based awards and cash awards that were intended to qualify for the performance-based compensation exemption. The Third Amendment retains general provisions that provide the ability to grant awards based on performance conditions.

The Board of Directors believes that deleting the existing EIP’s limitations on equity-based grants allows our Board greater flexibility in granting equity awards to new hires and for annual grants to employees, which may help attract and retain talent. The limits had previously been included in the 2016 Plan to ensure availability of the former exemption under Section 162(m) for qualified performance-based compensation, which is no longer available for future awards. If the individual limits remained in the plan, it would unduly restrict the Board’s flexibility in determining the appropriate mix of equity compensation, but not other types of awards or all awards in the aggregate. The Board of Directors also notes that the Annual Limitation was not updated in connection with the First Amendment or the Second Amendment.

Term of the EIP

The original term of the EIP was for a ten year period from the effective date ending in 2024, and the Second Amendment extended the term of the EIP until January 1, 2032. The Third Amendment extends the term of the EIP until January 1, 2035.

Summary of the EIP, as Amended by the Third Amendment

The summary of the EIP appearing below is qualified in its entirety by the actual terms of the EIP, as amended by the Second Amendment. As used in this summary, the term “Grant” means the issuance of an Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, Restricted Stock Units, Phantom Share,**

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**DER, or other equity-based grant as contemplated herein or any combination thereof as applicable to an eligible person. All capitalized