STRATUS
PROPERTIES INC.


PERFORMANCE
INCENTIVE AWARDS PROGRAM








1.           Purpose.  The
purpose of the Performance Incentive Awards Program (the “Plan”) of Stratus
Properties Inc. (the “Company”) is to provide greater incentives for certain key
management, professional and technical employees whose performance in fulfilling
the responsibilities of their positions can significantly affect the performance
of the Company.  The Plan provides an opportunity to earn additional
compensation in the form of cash incentive payments based on the employee’s
individual performance and on the results achieved by the Company and by the
staff unit for which the employee performs services.





2.           Administration.  The
Plan shall be administered by the Chairman of the Board of the Company who shall
have full authority to interpret the Plan and from time to time adopt rules and
regulations for carrying out the Plan, subject to such directions as the
Company’s Board of Directors may give, either as guidelines or in particular
cases.





3.           Eligibility for
Participation.  Each year the Chairman of the Board shall
select the key managerial, professional or technical employees of the Company or
of any of its subsidiaries who shall be eligible for participation in the Plan
during that year.  The Chairman of the Board may in his discretion
make such selection, in whole or in part, on the basis of minimum salary levels,
or position-point levels.





The selection of an employee for
eligibility in a particular year shall not constitute entitlement either to an
incentive payment under the Plan for that year or to selection for eligibility
in any subsequent year.  Selection of employees for eligibility in a
particular year will ordinarily be made in January of that year, but selection
of any employee or employees may be made at any subsequent time or times in such
year.





4.           Determination of Target
Incentives.  At the time each employee is selected for
eligibility in the Plan for a particular year, the Chairman of the Board shall
determine a target incentive or a target incentive range for the employee with
respect to that year.  Such incentive or range shall be indicative of
the incentive payment which the employee might expect to receive on the basis of
strong performance by such employee, by the Company and by such employee’s staff
unit, having regard to such performance standards and objectives as may be
established with respect to that year.





5.           Cash Incentive
Payments.  After the end of each year the Chairman of the Board
shall evaluate, or cause to be evaluated, the performance of each employee
selected for eligibility under the Plan for that year, as well as the
performance of the Company and the employee’s staff unit.  Based on
such evaluation, the Chairman of the Board shall determine whether a cash
incentive payment shall be made to such employee for that year and, if so, the
amount of such payment.  Each such payment (less applicable
withholding and other taxes) shall be made at such time established by the
Chairman of the Board, which shall in no event be later than February 28 of the
year following the year for which the incentive payments are made.  An
individual who has been awarded an incentive payment for a particular year need
not be employed by the









Company
or any of its subsidiaries at the time of payment thereof to be eligible to
receive such payment.  Notwithstanding any of the foregoing to the
contrary, if an individual selected for eligibility under the Plan for a
particular year should cease to be employed by the Company and its subsidiaries
for any reason prior to the end of such year, the Chairman of the Board shall
evaluate, or cause to be evaluated, the performance of such employee and the
employee’s staff unit for the portion of such year prior to such cessation of
employment.  Based on such evaluation, the Chairman of the Board shall
determine whether a cash incentive payment shall be made to such employee for
that year and, if so, the amount of such payment.  Each such payment
(less applicable withholding and other taxes) shall be made at such time
established by the Chairman of the Board, which may be made at any time during
the year for which such incentive payments are made but shall in no event be
later than February 28 of the year following.





6.           General
Provisions.  The selection of an employee for participation in
the Plan shall not give such employee any right to be retained in the employ of
the Company or any of its subsidiaries, and the right of the Company and of such
subsidiary to dismiss or discharge any such employee is specifically reserved.
The benefits provided for employees under the Plan shall be in addition to, and
in no way preclude, other forms of compensation to or in respect of such
employee.





7.           Amendment or
Termination.  The Board of Directors of the Company may from
time to time amend or at any time terminate the Plan, provided that any such
amendment or termination shall comply with the requirements of Internal Revenue
Code Section 409A to the extent that it governs this Plan.