STRS Stratus Properties Inc

Proxy Statement

This proxy statement (this “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”) of Stratus Properties Inc., a Delaware corporation, for use at our 2021 annual meeting of stockholders (including any postponements, adjournments or continuations thereof, the “2021 Annual Meeting”). This Proxy Statement, the accompanying Letter to Stockholders, Notice of Annual Meeting of Stockholders, the enclosed WHITE proxy card and our Annual Report to Stockholders for the fiscal year ended December 31, 2020 are first being mailed to our stockholders of record on or about April 9, 2021. References in this Proxy Statement to “Stratus,” the “Company,” “we,” “us,” “our” and similar terms refer to Stratus Properties Inc. and, as the context requires, its consolidated subsidiaries.

Table of Contents

Stratus Properties Inc.

212 Lavaca Street, Suite 300

Austin, TX 78701

Proxy Summary

This summary highlights selected information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. For more information regarding our 2020 performance, please review our 2020 annual report to stockholders (“2020 annual report”).

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the 2021 Annual Meeting, we hope you will vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the enclosed, postage-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote by the Internet or telephone. Returning your WHITE proxy card will not prevent you from voting in person, but will ensure that your vote is counted if you are unable to attend.

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Agenda and Voting Recommendations

Director Nominees

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

You are being asked to elect two Class II directors to serve on the Board until the 2024 annual meeting of stockholders, until their respective successors are duly elected and qualified or until their earlier resignation or removal. For more information about the background and qualifications of the director nominees and the entire Board, please see “Proposal 1 – Election of Directors” on page 30 of this Proxy Statement and “Information about Nominees and Continuing Directors” on page 32 of this Proxy Statement. The Board’s nominees for Class II directors are:

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Board Composition Highlights

Board Skills, Experience and Background

The following tables illustrate the diverse mix of skills, experiences and backgrounds that qualify our directors for service on our Board and that contribute to our ability to create value for our stockholders. The table below is intended to highlight each director’s particular strengths, and an individual director may have other skills, experiences and personal attributes not highlighted in the

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table. Additional information about each director can be found under the heading “Information About Nominees and Continuing Directors” on page 32 of this Proxy Statement.

Director and Executive Officer Gender and Race/Ethnic Diversity

The following table illustrates the diversity of our directors and executive officers based on self-identified characteristics.

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Corporate Governance Highlights

We are committed to strong and effective governance practices that are responsive to our stockholders. Our commitment to good corporate governance is illustrated by the following practices:

Information about the 2021 Annual Meeting

Why am I receiving these proxy materials?

Our Board is soliciting your proxy to vote at our 2021 Annual Meeting because you owned shares of our Common Stock at the close of business on April 8, 2021, the record date for the 2021 Annual Meeting, and, therefore, are entitled to vote at the 2021 Annual Meeting. This Proxy Statement, along with a WHITE proxy card or voting instruction form and the 2020 annual report, is being mailed to stockholders on or about April 9, 2021. We have made the Proxy Statement and 2020 annual report available to you on the Internet and we have delivered printed proxy materials to you. This Proxy Statement summarizes the information that you need to know in order to cast your vote at the 2021 Annual Meeting. You do not need to attend the 2021 Annual Meeting in person to vote your shares of our Common Stock.

What is a proxy?

A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. We have designated two of our officers as the Company’s proxies for the 2021 Annual Meeting. These officers are William H. Armstrong III and Kenneth N. Jones.

When and where will the 2021 Annual Meeting be held?

The 2021 Annual Meeting will be held on Friday, June 4, 2021 at 8:30 a.m. Central Standard Time, at the W Austin Hotel located at 200 Lavaca Street, Austin, Texas 78701. You can obtain directions to the 2021 Annual Meeting at https://www.marriott.com/hotels/maps/travel/auswh-w-austin.

Although we are currently planning to hold the 2021 Annual Meeting in person, we are monitoring the public health and travel concerns relating to COVID-19 and the related recommendations and protocols issued by federal, state and local governments. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described in this Proxy Statement) or in the event that it is not possible or advisable to hold our 2021 Annual Meeting in person as originally planned, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. We will announce any such changes, including details on how to participate, in advance in a press release, a copy of which will be filed with the Securities and Exchange Commission (“SEC”) as additional proxy solicitation materials and posted on our website at stratusproperties.com. Accordingly, if you are planning to attend our 2021 Annual Meeting, please monitor our website prior to the meeting date.

What should I bring if I plan to attend the 2021 Annual Meeting in person?

If you plan to attend the 2021 Annual Meeting in person, please bring a government-issued picture identification and, if your shares of our Common Stock are held in “street name,” meaning a bank, broker, trustee or other nominee is the stockholder of record of your shares, please bring acceptable proof of ownership, which is either an account statement or a letter from your bank, broker, trustee or other nominee confirming that you beneficially owned shares of Stratus Properties Inc. Common Stock on the record date. If public health developments regarding COVID-19 warrant a change in location of the 2021 Annual Meeting, please see the question above titled “When and where will the 2021 Annual Meeting be held?”

Who is soliciting my proxy?

Our Board, on behalf of the Company, is soliciting your proxy to vote your shares of our Common Stock on all matters scheduled to come before the 2021 Annual Meeting, whether or not you attend in person. By completing, signing, dating and returning the proxy card or voting instruction form, or by submitting your proxy and voting instructions via the Internet or phone, you are authorizing the proxy holders to vote your shares of our Common Stock at the 2021 Annual Meeting as you have instructed.

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Under applicable SEC rules and regulations, members of the Board, the Board’s nominees and certain officers of the Company are “participants” with respect to the Company’s solicitation of proxies in connection with the 2021 Annual Meeting (each such person, a “Participant”).

For more information on the Participants in the Board’s solicitation, please see “Participants in the Solicitation” on page 68 of this Proxy Statement.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF THE BOARD’S NOMINEES UNDER PROPOSAL 1 AND “FOR” PROPOSALS 2 THROUGH 5 USING THE ENCLOSED WHITE PROXY CARD.

Who is Oasis?

A Stratus stockholder named Oasis Investments II Master Fund Ltd., a company incorporated and headquartered in the Cayman Islands and an affiliate of Oasis Management (Hong Kong) LLC (collectively with certain of its affiliates, “Oasis”), has notified the Company of its intent to nominate two directors for election to the Board and present a non-binding advisory proposal (the “Stockholder Proposal”) at the 2021 Annual Meeting. You may receive proxy solicitation materials from Oasis. The Company is not responsible for the accuracy of any information provided by or relating to Oasis or its nominees contained in solicitation materials filed or disseminated by or on behalf of Oasis or any other statements that Oasis may make.

The Board does not endorse any of Oasis’ nominees and unanimously recommends that you vote “FOR” the election of each of the Board’s nominees and “FOR” Proposals 2 through 5 on the enclosed WHITE proxy card. The Board urges you to disregard any materials sent to you by or on behalf of Oasis, and NOT to sign, return or vote on any GOLD proxy card sent to you by or on behalf of Oasis. Voting to “withhold” with respect to any of Oasis’ nominees on a proxy card sent to you by Oasis is not the same as voting for the Board’s nominees, because a vote to “withhold” with respect to any of Oasis’ nominees on Oasis’ proxy card will revoke any WHITE proxy you may have previously submitted. To support the Board’s nominees, you should vote “FOR” the Board’s nominees on the enclosed WHITE proxy card. If you have already signed any proxy card provided by or on behalf of Oasis, you have every legal right to change your vote by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage-paid envelope provided or to change your vote using the Internet or telephone by following the instructions on the WHITE proxy card or by voting in person at the 2021 Annual Meeting. Only your latest-dated validly executed proxy will count.

On what matters will I be voting? How does the Board recommend that I cast my vote?

At the 2021 Annual Meeting, you will be asked to (1) elect two Class II director nominees; (2) approve, on an advisory basis, the compensation of our named executive officers; (3) ratify, on an advisory basis, the appointment of our independent registered public accounting firm for 2021; (4) ratify, on an advisory basis, the Rights Agreement; (5) if properly presented at the 2021 Annual Meeting, vote, on an advisory basis, on the Stockholder Proposal and (6) consider any other matter that properly comes before the 2021 Annual Meeting.

Our Board unanimously recommends that you vote:

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We do not expect any matters to be presented for action at the 2021 Annual Meeting other than the matters described in this Proxy Statement. However, by signing, dating and returning your WHITE proxy card or by following the instructions on your WHITE proxy card to submit your proxy and voting instructions via the Internet or phone, you will give to the persons named as proxies discretionary voting authority with respect to any matter that may properly come before the 2021 Annual Meeting about which we did not have notice at least 45 days before the anniversary date on which we first sent our proxy materials for the prior year’s annual meeting of stockholders or by February 17, 2021. The proxies will vote on any such matter in accordance with their best judgment.

How many votes may I cast?

You may cast one vote for every share of our Common Stock that you owned on April 8, 2021, the record date for the 2021 Annual Meeting.

How many shares of Common Stock are eligible to be voted?

As of April 8, 2021, record date, we had 8,234,828 shares of Common Stock outstanding. Each share of Common Stock outstanding as of the record date will entitle the holder to one vote.

How many shares of Common Stock must be present to hold the 2021 Annual Meeting?

Under Delaware law and our by-laws (our “By-Laws”), the holders of a majority of our Common Stock issued and outstanding and entitled to vote, present in person or represented by proxy, will constitute a quorum at the 2021 Annual Meeting. The inspector of election will determine whether a quorum is present at the 2021 Annual Meeting. If you are a beneficial owner (as defined below) of shares of our Common Stock and you do not instruct your bank, broker, trustee or other nominee how to vote your shares on any of the proposals, and your bank, broker, trustee or nominee submits a proxy with respect to your shares on a matter with respect to which discretionary voting is permitted, your shares will be counted as present at the 2021 Annual Meeting for purposes of determining whether a quorum exists. In addition, stockholders of record who are present at the 2021 Annual Meeting in person or by proxy will be counted as present at the 2021 Annual Meeting for purposes of determining whether a quorum exists, whether or not such holder abstains from voting on any or all of the proposals.

How do I vote?

Stockholders of Record

If your shares of our Common Stock are registered directly in your name with our transfer agent, Computershare Inc., you are the stockholder of record of those shares and these proxy materials have been mailed to you by us. You may submit your proxy and voting instructions via the Internet or phone, or by mail as further described below. Your proxy, whether submitted via the Internet, phone or by mail, authorizes each of William H. Armstrong III and Kenneth N. Jones to act as your proxy at the 2021 Annual Meeting, each with the power to appoint his substitute, to represent and vote your shares of our Common Stock as you directed, if applicable.

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If you submit your proxy and voting instructions via the Internet or by phone, you do not need to mail your proxy card. The proxies will vote your shares of our Common Stock at the 2021 Annual Meeting as instructed by the latest-dated validly executed proxy received from you, whether submitted via the Internet, phone or by mail. You may also vote in person at the 2021 Annual Meeting.

For a discussion of the treatment of a properly completed, signed and dated proxy card without voting instructions on any or all of the proposals, please see the question below titled “What happens if I do not submit voting instructions for a proposal? What is discretionary voting? What is a broker non-vote?”

Beneficial Owners

If your shares of our Common Stock are held in a stock brokerage account by a bank, broker, trustee or other nominee, you are considered the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your bank, broker, trustee or other nominee that is considered the stockholder of record of those shares. As the beneficial owner, you have the right to direct your bank, broker, trustee or other nominee on how to vote your shares of our Common Stock via the Internet or by telephone, if the bank, broker, trustee or other nominee offers these options, or by completing, signing, dating and returning a voting instruction form. Your bank, broker, trustee or other nominee will send you instructions on how to submit your voting instructions for your shares of our Common Stock. For a discussion of the rules regarding the voting of shares of our Common Stock held by beneficial owners, please see the question below titled “What happens if I do not submit voting instructions for a proposal? What is discretionary voting? What is a broker non-vote?”

What happens if I do not submit voting instructions for a proposal? What is discretionary voting? What is a broker non-vote?

If you properly complete, sign, date and return a proxy card or voting instruction form, your shares of our Common Stock will be voted as you specify. If you are a stockholder of record and you make no specifications on your proxy card, your shares of our Common Stock will be voted in accordance with the recommendations of our Board, as provided above. If you are a beneficial owner and you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares of our Common Stock for you, your shares of our Common Stock will not be voted with respect to any proposal for which the stockholder of record does not have discretionary authority to vote. Rules of the New York Stock Exchange (“NYSE”) determine whether proposals presented at stockholder meetings are “discretionary” or “non-discretionary.” If a proposal is determined to be discretionary, your bank, broker, trustee or other nominee is permitted under NYSE rules to vote on the proposal without receiving voting instructions from you. If a proposal is determined to be non-discretionary, NYSE rules prohibit your bank, broker, trustee or other nominee to vote on the proposal without receiving voting instructions from you. Pursuant to NYSE rules applicable to brokers, if a broker receives competing proxy materials from Oasis (in addition to the Company’s proxy materials), the broker will be prohibited

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from exercising discretionary authority with respect to any of the proposals to be voted on if the broker did not receive voting instructions from the beneficial owner. This is referred to as a “broker non-vote.” In these cases, those shares will not be counted for the purpose of determining whether a quorum is present and will not be considered votes cast on the proposals to be considered at the 2021 Annual Meeting.

Under the NYSE rules, the proposal relating to the ratification, on an advisory basis, of the appointment of our independent registered public accounting firm is a discretionary proposal. If you are a beneficial owner and you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares for you, your shares may be voted with respect to the ratification, on an advisory basis, of the appointment of our independent registered public accounting firm.

Under the NYSE rules, the proposals relating to the election of directors, the compensation of our named executive officers, the Rights Agreement and the Stockholder Proposal are non-discretionary proposals. Accordingly, if you are a beneficial owner and you do not provide voting instructions to your bank, broker, trustee or other nominee holding shares for you, your shares will not be voted with respect to these proposals. Without your voting instructions, a broker non-vote will occur with respect to your shares on each non-discretionary proposal for which you have not provided voting instructions.

Will my shares be voted if I do nothing?

If your shares are registered in your name, you must sign and return a proxy card in order for your shares to be voted, unless you vote via telephone or the Internet or vote in person at the 2021 Annual Meeting.

If your shares are held in “street name” (that is, held for your account by a broker, bank or other nominee) and you do not instruct your bank, broker, trustee or other nominee how to vote your shares, then, because all of the proposals, except the proposal relating to the ratification, on an advisory basis, of the appointment of our independent registered public accounting firm, for the 2021 Annual Meeting may be considered “non-routine matters,” your bank, broker, trustee or other nominee may not have discretionary authority to vote your shares on those proposals. We strongly encourage you to authorize your bank, broker, trustee or other nominee to vote your shares by following the instructions provided on the voting instruction form.

YOUR VOTE IS VERY IMPORTANT. To assure that your shares are represented at the 2021 Annual Meeting, we urge you to date, sign and return the enclosed WHITE proxy card in the postage-paid envelope provided, or vote by telephone or the Internet as instructed on the WHITE proxy card, whether or not you plan to attend the 2021 Annual Meeting. You can revoke your proxy at any time before the proxies you appointed cast your votes. If your bank, broker, trustee or other nominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from such holder of record. You must follow those instructions in order for your shares to be voted. Your broker is required to vote those shares in accordance with your instructions. Because of the contested nature of the proposals, if you do not give instructions to your broker, your broker may not be able to vote your shares with respect to the election of directors or any of the other proposals. We urge you to instruct your broker or other nominee, by following the instructions on the enclosed WHITE proxy card or voting instruction form, to vote your shares in line with the Board’s recommendations on the WHITE proxy card or voting instruction form.

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What vote is required, and how will my votes be counted, to elect the director nominees and to approve each of the other proposals discussed in this Proxy Statement?

Our directors are elected by a plurality of shares of our Common Stock voted. This means that the candidates receiving the highest number of “FOR” votes will be elected. A properly executed card marked “WITHHOLD” with respect to the election of a director nominee will be counted for purposes of determining whether there is a quorum at the 2021 Annual Meeting, but will not be considered to have been voted for the director nominee. Under our By-Laws, all other matters require the affirmative vote of the holders of a majority of the shares of our Common Stock present in person or by proxy and entitled to vote, except as otherwise provided by statute, our Certificate of Incorporation, as amended (our “Charter”) or our By-Laws.

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How will shares be voted by the WHITE proxy card?

The shares represented by any proxy card which is properly executed and received by the Company prior to or at the 2021 Annual Meeting will be voted in accordance with the specifications made thereon. Where a choice has been specified on the WHITE proxy card with respect to the proposals, the shares represented by the WHITE proxy card will be voted in accordance with the specifications. If you return a validly executed WHITE proxy card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted: “FOR” the election of both Class II director nominees recommended by the Board as set forth on the WHITE proxy card (Proposal 1); “FOR” the approval, on an advisory basis, of the compensation of our named executive officers (each, a “NEO”) (Proposal 2); “FOR” the ratification, on an advisory basis, of the appointment of our independent registered public accounting firm (Proposal 3); “FOR” the ratification, on an advisory basis, of the Rights Agreement (Proposal 4); and “FOR,” on an advisory basis, the Stockholder Proposal (Proposal 5).

The Board is not aware of any matters that are expected to come before the 2021 Annual Meeting other than those described in this Proxy Statement. If any other matter should be presented at the 2021 Annual Meeting upon which a vote may be properly taken, shares represented by all WHITE proxy cards received by the Company will be voted with respect thereto at the discretion of the persons named as proxies in the enclosed WHITE proxy card.

What if I receive more than one WHITE proxy card or set of proxy materials from the Company?

If your shares are held in more than one account, you will receive more than one WHITE proxy card, and in that case, you can and are urged to vote all of your shares by signing, dating and returning all WHITE proxy cards you receive from the Company in the postage-paid envelope provided. If you choose to vote by phone or via the Internet, please vote once for each WHITE proxy card you receive to ensure that all of your shares are voted. Only your latest-dated validly executed proxy for each account will count.

If Oasis proceeds with its previously announced alternative nominations, the Company will likely conduct multiple mailings prior to the 2021 Annual Meeting date to ensure stockholders have the Company’s latest proxy information and materials to vote. The Company will send you a new WHITE proxy card with each mailing, regardless of whether you have previously voted. We encourage you to vote every WHITE proxy card you receive. The latest-dated validly executed proxy you submit will be counted, and, if you wish to vote as recommended by the Board, then you should only submit a WHITE proxy card.

What should I do if I receive a GOLD proxy card or other proxy materials from Oasis?

Oasis has notified the Company of its intent to nominate two directors for election to the Board and present the Stockholder Proposal at the 2021 Annual Meeting. You may receive proxy solicitation materials from Oasis. The Company is not responsible for the accuracy of any information provided by or relating to Oasis or its nominees contained in solicitation materials filed or disseminated by or on behalf of Oasis or any other statements that Oasis may make.

The Board does not endorse any of Oasis’ nominees and unanimously recommends that you vote “FOR” the election of each of the Board’s nominees and “FOR” Proposals 2 through 5 on the enclosed WHITE proxy card. The Board strongly urges you not to sign or return any GOLD proxy card sent to you by Oasis. Voting to “withhold” with respect to any of Oasis’ nominees on a GOLD proxy card sent to you by Oasis is not the same as voting for the Board’s nominees because a vote to “withhold” with respect to any of Oasis’ nominees on its GOLD proxy card will revoke any WHITE proxy card you may have previously submitted. To support the Board’s nominees, you

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should vote “FOR” the Board’s nominees on the WHITE proxy card and disregard, and not return, any GOLD proxy card sent to you by Oasis. If you have previously voted using a proxy card sent to you by Oasis, you can subsequently revoke that vote by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided, or by following the instructions on the WHITE proxy card to vote by telephone or by Internet. Only your latest-dated validly executed proxy will count. Any proxy may be revoked at any time prior to its exercise at the 2021 Annual Meeting as described in this Proxy Statement.

If you have any questions or need assistance voting, please contact Innisfree M&A Incorporated (“Innisfree”), our proxy solicitor assisting us in connection with the 2021 Annual Meeting. Stockholders may call toll free at (877) 456-3442. Banks and brokers may call collect at (212) 750-5833.

Can I revoke or change my voting instructions after I deliver my proxy?

Yes. If you own your shares of Common Stock in record name, your proxy can be revoked or changed at any time before it is used to vote your shares of our Common Stock if you: (1) provide notice in writing to our corporate secretary before the 2021 Annual Meeting; (2) timely provide to us another proxy with a later date; or (3) are present at the 2021 Annual Meeting and either vote in person or notify the corporate secretary in writing at the 2021 Annual Meeting of your wish to revoke your proxy. Your attendance alone at the 2021 Annual Meeting will not be enough to revoke your proxy.

If you own your shares of Common Stock in “street name”, your proxy can be revoked or changed at any time before it is used to vote your shares of our Common Stock if you: (1) in accordance with the voting instructions from your bank, broker, trustee or other nominee, timely provide to your bank, broker, trustee or other nominee another proxy with a later date or (2) are present at the 2021 Annual Meeting and either vote in person or notify the corporate secretary in writing at the 2021 Annual Meeting of your wish to revoke your proxy. Your attendance alone at the 2021 Annual Meeting will not be enough to revoke your proxy. If you hold your shares in “street name” and wish to attend the 2021 Annual Meeting and vote in person, you must provide a “legal proxy” from your bank, broker, trustee or other nominee and proof of ownership on the record date (such as a recent brokerage statement) or the voting instruction form mailed to you by your bank, broker, trustee or other nominee.

How will we solicit proxies and who pays for soliciting proxies?

U.S. federal securities laws require us to send you this Proxy Statement and any amendments or supplements thereto, and to specify the information required to be contained in it. The Company will bear the expenses of calling and holding the 2021 Annual Meeting and the solicitation of proxies therefor. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owners’ voting instructions. Solicitation of proxies by mail may be supplemented by telephone, email and other electronic means, advertisements and personal solicitation by our directors, officers or employees. No additional compensation will be paid to directors, officers or employees for such solicitation efforts.

As a result of the proxy solicitation by Oasis, we may incur additional costs in connection with our solicitation of proxies. We have retained Innisfree to solicit proxies in connection with the 2021 Annual Meeting. Under our agreement with Innisfree, Innisfree will receive up to $250,000 plus expenses. Innisfree expects that approximately 40 of its employees will assist in the solicitation. Innisfree will solicit proxies in person, by mail, telephone, facsimile or email. The Company’s aggregate expenses, including those of Innisfree, related to this solicitation and in excess of expenses normally spent for an 2021 Annual Meeting in which there is not a proxy contest and salaries and wages of regular employees and officers, are currently estimated to be approximately $2.2 million, of which

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approximately $0.5 million has been incurred as of the date of this Proxy Statement. The Company also agreed to indemnify Innisfree against certain liabilities relating to, or arising out of, its retention.

Could other matters be considered and voted upon at the 2021 Annual Meeting?

Our Board does not expect to bring any other matter, other than the matters described in this Proxy Statement, before the 2021 Annual Meeting, and it is not aware of any other matter that may be considered at the 2021 Annual Meeting. In addition, pursuant to our By-Laws, the time has elapsed for any stockholder to properly bring a matter before the 2021 Annual Meeting. However, if any other matter does properly come before the 2021 Annual Meeting, each of the proxy holders will vote any shares of our Common Stock, for which he holds a proxy to vote at the 2021 Annual Meeting, in his discretion.

What happens if the 2021 Annual Meeting is postponed or adjourned?

Unless a new record date is fixed, your proxy will still be valid and may be used to vote shares of our Common Stock at the postponed or adjourned 2021 Annual Meeting. You will still be able to change or revoke your proxy until it is used to vote your shares.

Where can I find the voting results of the 2021 Annual Meeting?

We will report the voting results of the 2021 Annual Meeting in a Current Report on Form 8-K filed with the SEC within four business days of our 2021 Annual Meeting, a copy of which will also be available on our website at stratusproperties.com under Investors – SEC Filings.

Background to the Solicitation

On September 12, 2016, Oasis filed its initial Schedule 13D reporting beneficial ownership of 13.3% of the Company’s Common Stock. On January 11, 2017, the Company and Oasis entered into a board representation and standstill agreement (the “Board Representation and Standstill Agreement”) pursuant to which Ella Benson was appointed to the Board as Oasis’ director designee.

During 2018 and 2019, an Oasis principal advised Messrs. Madden and Armstrong at various times that Oasis, or a consortium of investors that included an Oasis principal, was interested in buying a controlling interest in, but less than all of, the Company. The Board was informed of these proposals, reviewed their terms, and rejected the proposals and terms as being inadequate and not in the best interests of the Company and its stockholders. On October 22, 2019, a consortium that included an Oasis principal made an offer to buy all of the Company’s Common Stock at an 8% premium to the Company’s share price at the time, conditioned on reaching a satisfactory employment agreement with Mr. Armstrong. The Board considered the offer and determined that the offer was not in stockholders’ best interests. Among other things, the Board considered the fact that, at the time, the Company’s management was in active negotiations to sell the Company’s Block 21 property at an attractive price.

On December 9, 2019, a little over a month after the consortium’s last offer, the Company publicly announced an agreement to sell its Block 21 property for $275 million, and the Company’s stock price immediately increased 10%. This trading price was above what the consortium had offered – effectively making the consortium’s offer represent a discount to the Company’s share price.

On February 15, 2020, John C. Schweitzer, a Company director who had joined the Board in 2016, unexpectedly passed away. After Mr. Schweitzer’s death, the Board’s size was decreased from seven to six. The Company’s Charter requires that the Board be classified into three classes, as nearly equal in number as possible. Upon Mr. Schweitzer’s passing, the Board consisted of two Class I directors, one Class II director and three Class III directors. On March 12, 2020, following the recommendation of the nominating and corporate governance committee, the Board decided to reclassify Mr. Porter to rebalance the classes. To that end, Mr. Porter tendered his resignation as a Class III director, and the Board appointed him as a Class II director promptly thereafter.

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On March 11, 2020, COVID-19 was declared a pandemic by the World Health Organization.

On May 22, 2020, the Company announced that the transaction to sell Block 21 for $275 million had been terminated by the buyer. The buyer stated that its decision was a result of the capital markets and economic environment caused by the COVID-19 pandemic. The Company collected $15 million from the buyer in earnest money.

On June 24, 2020, at a Board meeting, the Board discussed a potential conversion of the Company from a C-corporation into a real estate investment trust (a “REIT”). As part of this discussion, Ms. Benson expressed concern about this potential conversion, noting that she believed that a REIT conversion could impose negative tax consequences for offshore investors like Oasis. Following this discussion, the Board instructed BKM, the Company’s public accounting firm, to expand its analysis of a conversion to a REIT and present further information to the Board at the Board’s August meeting.

On August 6, 2020, at a Board meeting, Mr. Armstrong noted the concerns expressed by Ms. Benson during the discussion of a potential REIT conversion at the previous Board meeting and advised the directors that management’s analysis of a potential conversion was in the early stages. He stated that a detailed memorandum regarding a potential REIT conversion would be provided to the directors.

On the same date, the nominating and corporate governance committee met and considered, among other things, the Board’s size relative to peer companies and survey data, particularly in light of the unexpected death earlier in the year of Mr. Schweitzer. The nominating and corporate governance committee determined that it would not recommend any immediate changes at the time but that it would continue to review the Board’s composition and consider increasing the Board’s size.

On September 2, 2020, Ms. Benson on behalf of Oasis sent a letter to Mr. Armstrong requesting changes in the composition of the Board. The letter stated, in part, “We believe that the Company and its stockholders would benefit from a refreshed Board that would see overly-long-tenured directors – Jim Leslie and Michael Madden-as well as Jim Joseph retire from the Board….we think you should work expeditiously to obtain commitments to resign from Madden, Leslie, and Joseph upon the identification of their replacements and to start this search process by September 14, 2020.” At the time, Jim Joseph had been on the Company’s Board less than five years.

On September 14, 2020, Dionne Rousseau, a partner at Jones Walker LLP, outside legal counsel to the Company, spoke with Ms. Benson and advised her that the Company would be calling a special meeting of the Board for later in the week to consider the current status of the REIT conversion analysis and to address her September 2, 2020 letter. She also advised Ms. Benson that the directors planned to form a special committee (the “Special Committee”) to consider a response to her letter, which Special Committee would include all of the directors except Ms. Benson. Ms. Rousseau explained that the Special Committee may wish to consider, among other things, the Company’s options with respect to the Board Representation and Standstill Agreement between the Company and Oasis.

On September 18, 2020, the Board met for the purposes of considering whether to proceed with further exploring conversion of the Company to a REIT and considering the formation of a Special Committee to address the September 2, 2020 letter from Ms. Benson. At the meeting, the Board voted to further explore conversion of the Company to a REIT and to form the Special Committee. Ms. Benson abstained from both votes.

Later that day, Ms. Benson resigned from the Board “[a]s a result of disagreements regarding the strategic direction of Stratus Properties Inc. and its Board . . .”, and Oasis delivered a notice to the

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Board that the Board Representation and Standstill Agreement would be terminated effective as of the close of business on September 25, 2020.

On September 21, 2020, the Company announced that its Board approved the initiation of an in-depth exploration of a conversion to a REIT. The Company also announced that the Board would conduct a comprehensive review of governance practices and Board composition.

On September 22, 2020, the Board adopted, and the Company announced the adoption of, the Rights Agreement to protect stockholder interests during the REIT conversion exploration.

On October 6, 2020, Oasis issued a letter to the stockholders of the Company, criticizing the Board and the Board’s consideration of exploring a REIT conversion.

On October 7, 2020, in response to Oasis’ October 6, 2020 letter, the Company issued a press release, noting that the Board’s preliminary analysis indicated that conversion of the Company to a REIT may yield substantial benefits for the majority of stockholders, including significant tax benefits for the Company and its stockholders, regular distributions to stockholders and increased access to a financial community focused on investment in REITs, which may improve the liquidity of the Company’s stock, broaden the Company’s stockholder base and improve the Company’s ability to raise capital. In this press release, the Company noted that the Board believes that Oasis opposes the REIT conversion because (1) Oasis is a Hong-Kong based investment manager, and as a foreign investor, Oasis may be taxed differently than the substantial majority of the Company’s stockholders, which are domestic and may benefit significantly from a conversion, and (2) an Oasis principal has previously expressed interest in buying the Company, and therefore Oasis would not want the Company to explore opportunities that could create significant value and consequently raise the price of a potential buyout. The Company noted that should the Board ultimately determine that a REIT conversion is in the best interest of stockholders, such conversion would be submitted to a stockholder vote. The Company’s press release also pointed out that, prior to Ms. Benson’s September 2, 2020 letter, Oasis and Ms. Benson never once raised issues of Board composition nor suggested names for nomination to the Board.

In light of Ms. Benson’s resignation and the earlier death of Mr. Schweitzer, on October 13, 2020, the nominating and corporate governance committee met and considered, among other things, the composition and size of the Board. The nominating and corporate governance committee discussed (1) increasing the size of the Board, (2) the background, skills and traits of potential candidates desired to enhance Board effectiveness and (3) the timing and process of identifying potential director candidates. After discussion, the committee agreed that its goals would be to add two new directors to the Board by year-end and to begin the search process immediately.

On November 5, 2020, the nominating and corporate governance committee met and considered the progress on the director search process, narrowing the list of 45 candidates that it had compiled down to a smaller number based on skills, experience and traits the committee considered important. The committee decided it would interview candidates and compile additional background data before recommending any candidate to the Board. The committee proceeded to interview candidates.

On November 16, 2020, Oasis sent a letter to the Board asking the Board to confirm the following regarding the Rights Agreement, which it refers to colloquially as “the Poison Pill”:

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Further, in its November 16, 2020 letter, Oasis stated its belief that if the Company was not able to confirm each of these points it would be “clear the adoption of the Poison Pill was in breach of [the Board’s] fiduciary duties under Delaware law as an improper entrenchment device, and the Pill itself is illegal and unenforceable.” Oasis further noted that, absent confirmation, it intended to commence litigation promptly.

On November 23, 2020, the Company responded by letter to Oasis’ questions regarding the Rights Agreement and making clarifications in response to Oasis’ letter. In its response, the Company noted, “the Board’s adoption of the Rights Agreement was a necessary, reasonable, and proportionate response to a threat to the Company’s ability to develop and execute on a long-term strategic plan to maximize value for its stockholders. Specifically, the Rights Agreement preserves the Company’s ability to potentially convert from a C-corporation to a REIT.” Further, the Company noted that the Rights Agreement specifically permits stockholders to engage in communications relating to a proxy contest. In response to Oasis’ questions, the Company stated, “As long as Oasis (and any of its Related Persons) does not otherwise engage in (or have not otherwise engaged in) conduct that would otherwise result in Oasis becoming an Acquiring Person and such conduct is in accordance with Section 14(a) of the Exchange Act, the Company’s bylaws, the Company’s certificate of incorporation and Delaware law, the Plan will not be triggered by any of the following activities in connection with a proxy contest: (1) ‘discussing with other shareholders – digitally, telephonically or otherwise’; (2) ‘ordinary course activities and communications with other shareholders in a proxy solicitation, including seeking proxies’; (3) ’meeting and communicating with other shareholders to share [Oasis’] concerns about the Company;’ or (4) ‘purchases of stock in the market by shareholders we solicit, who have no understanding or agreement to act with [Oasis].’ To the extent Oasis continues to question the proper interpretation of the Rights Agreement, the Company hereby further commits to wield any discretion it has under the Rights Agreement during the pendency of any proxy contest consistent with these statements.”

On December 17, 2020, the Company announced the appointment of Neville L. Rhone, Jr. to serve as a Class II director of the Board. Additionally, the Company announced that Mr. Porter resigned as a Class II director and was immediately reappointed as a Class III director, the Class to which he was originally appointed upon first joining the Board in 2012 (and the Class to which he was elected by the stockholders in 2013, 2016, and 2019).

On December 31, 2020, Oasis sent the Board a notice (the “Oasis Notice”) of its intent to nominate two individuals, Ms. Benson and Jaime Eugenio De La Garza Diaz, for election to the Board as Class II directors at the 2021 Annual Meeting. The Oasis Notice also included the Stockholder Proposal to increase the size of the Board by one director and appoint Laurie L. Dotter to fill the newly created vacancy. On January 5, 2021, Oasis filed an amendment to its Schedule 13D, disclosing the Oasis Notice.

On January 13, 2021, the Board held a special meeting to discuss the Oasis Notice. At the meeting, the Board decided, among other things, to invite Mr. De La Garza Diaz and Ms. Dotter to interview with the nominating and corporate governance committee.

On January 15, 2021, Mr. De La Garza Diaz met with the nominating and corporate governance committee to discuss his candidacy for a position on the Board.

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On January 18, 2021, Ms. Dotter met with the nominating and corporate governance committee to discuss a potential position on the Board.

On January 18, 2021, Schulte Roth & Zabel LLP (“Schulte”), legal counsel to Oasis, sent to Sidley Austin LLP (“Sidley”), outside legal counsel to the Company, on behalf of Oasis, a letter (the “220 Demand”) and proposed confidentiality agreement to the Company demanding to examine the Company’s books and records pursuant to Delaware law.

After discussions among Board members and Sidley, the Board decided to offer Oasis a settlement agreement including one Board seat for Ms. Dotter and one Board seat for a new female director chosen by the Company, subject to the completion of a director questionnaire and the passing of a background check, and subject to Oasis’ and the Company’s execution of a settlement agreement with customary terms.

On January 20, 2021, Sidley sent on behalf of the Company a term sheet with the proposed settlement terms to Schulte.

On January 25, 2021, Schulte sent to Sidley on behalf of Oasis a revised term sheet with proposed settlement terms that did not include the appointment of Ms. Dotter, a candidate for the Board initially proposed by Oasis in the Oasis Notice. Instead, Oasis’ revised term sheet contemplated, among other things, replacing as a director James C. Leslie with Mr. De La Garza Diaz and replacing as a director Michael D. Madden with Ms. Benson.

On January 26, 2021, Sidley sent to Schulte on behalf of the Company a response to the 220 Demand and a revised proposed confidentiality agreement related to the 220 Demand.

On January 27, 2021, the Company announced the appointment of Kate B. Henriksen to serve as a Class III director of the Board, increasing the Board size to seven.

On February 2, 2021, the Company and Oasis executed the confidentiality agreement related to the 220 Demand.

On February 2, 2021, Sidley sent on behalf of the Company a letter to Ms. Benson, in care of Schulte, reminding Ms. Benson of her continuing obligations to preserve as confidential all confidential information concerning the Company that she had obtained while serving as a member of the Board. On February 3, 2021, Schulte sent on behalf of Ms. Benson and Oasis a letter to the Company, in care of Sidley, acknowledging Ms. Benson’s continuing obligations to preserve as confidential all confidential information concerning the Company that she had obtained while serving as a member of the Board. Oasis confirmed that while Oasis reserves the right to continue to criticize the Company, Oasis will not use any confidential information obtained by Ms. Benson during her service on the Board to do so.

On February 9, 2021, Oasis provided to the Company the payment required for the Company to provide the material requested by Oasis in the 220 Demand, and on February 10, 2021, Innisfree on behalf of the Company provided to Oasis the material requested by Oasis in the 220 Demand.

On March 1, 2021, Oasis released an investor presentation, recommending changes at the Company.

On March 12, 2021, following a new decision of the Delaware Chancery Court in The Williams Companies Stockholder Litigation, the Company amended the Rights Agreement to remove the “acting in concert” concept from the Rights Agreement. The Company disclosed the amendment in a Current Report on Form 8-K filed on March 15, 2021.

On March 26, 2021, the Company filed a preliminary proxy statement.

On March 29, 2021, Oasis filed a preliminary proxy statement.

On April 9, 2021, the Company filed this definitive proxy statement.

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Corporate Governance

Corporate Governance Guidelines; Ethics and Business Conduct Policy

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

Board Composition and Leadership Structure

Our Board has primary responsibility for overseeing the management of our business and affairs. As of the date of this Proxy Statement, our Board consists of seven members, six of whom have been determined by our Board to be independent, as discussed below. Mr. Armstrong, the chairman of our Board, is not considered an independent director because he is also our president and chief executive officer and receives compensation for his services to the Company as a member of our management team. Each of the directors other than Mr. Armstrong is independent, and our Board believes that the independent directors provide effective oversight of management.

Our Board believes that Mr. Armstrong’s service as both chairman of our Board and as president and chief executive officer is in the best interest of the Company and our stockholders at this time. With over 25 years of leadership experience with the Company, Mr. Armstrong possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its businesses. His experience and relationships in the Austin area and other select Texas markets have been central to the Company’s ability to secure and maintain entitlements and successfully develop and sell its properties. He is thus best positioned to develop agendas that ensure that our Board’s time and attention are focused on the most critical challenges and opportunities facing the Company. His combined role enables decisive leadership, ensures clear accountability, facilitates an efficient board process, and enhances our ability to communicate the Company’s message and strategy clearly and consistently to our stockholders, employees and customers.

Our Board recognizes the importance of having a strong independent board leadership structure to ensure accountability and to facilitate the effective performance of the Board in its role of providing effective oversight of management. In 2013, our Board established the position of lead independent director. Mr. Madden has served as lead independent director since 2013. On April 1, 2019, he was appointed to serve a third three-year term as lead independent director, which expires April 1, 2022. The lead independent director serves as a liaison between Mr. Armstrong and the independent directors, works with Mr. Armstrong in setting the agendas for Board meetings and, in Mr. Armstrong’s absence, chairs regular sessions of the Board. The lead independent director also sets the agenda and presides at all executive sessions of the independent directors. The lead independent director may be removed or replaced at any time with or without cause by a majority vote of our independent directors. In addition, our three standing committees are composed entirely of independent directors, and have the power and authority to engage legal, financial and other advisors as they may deem necessary, without consulting or obtaining the approval of the full Board or management.

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Board and Committee Meeting Attendance

Our Board held a total of six meetings during 2020. During 2020, each director attended 100% of the aggregate of the total number of meetings of the Board and all committees of the Board on which he or she served, except for Mr. Rhone who was not present for one special meeting of the nominating and corporate governance committee on December 21, 2020, which was scheduled prior to his appointment as a director on December 17, 2020. Directors are invited but not required to attend annual meetings of our stockholders. Messrs. Armstrong, Leslie and Porter attended our 2020 annual meeting of stockholders.

Board Committees

To provide for effective direction and management of our business, our Board has established three standing committees: an audit committee (the “audit committee”), the compensation committee and the nominating and corporate governance committee. Each committee is composed entirely of independent directors. Each committee operates under a written charter adopted by our Board. All of the committee charters are available on our website at stratusproperties.com under Investors–Corporate Governance. The following table identifies the current committee members, including each committee chair.

Audit Committee. The audit committee assists the Board in fulfilling its oversight responsibilities related to (1) the effectiveness of the Company’s internal control over financial reporting; (2) the integrity of the Company’s financial statements; (3) the Company’s compliance with legal and regulatory requirements; (4) the qualifications and independence of the Company’s independent registered public accounting firm; (5) the performance of the Company’s independent registered public accounting firm and internal audit firm; and (6) review and approval or ratification of any transaction that would require disclosure under Item 404 of Regulation S-K of the Securities Exchange Act of 1934 (the “Exchange Act”). Please refer to the “Audit Committee Report” on page 58 of this Proxy Statement for more information. The audit committee held three regular meetings and one special meeting in 2020.

Compensation Committee. The compensation committee assists the Board in fulfilling its oversight responsibilities by (1) discharging the Board’s responsibilities relating to the compensation of our executive officers; and (2) administering our cash-based and equity-based incentive compensation programs. Please refer to “Compensation Committee Procedures” on page 21 of this Proxy Statement for more information. The compensation committee held one meeting in 2020.

Nominating and Corporate Governance Committee. The nominating and corporate governance committee assists the Board in fulfilling its oversight responsibilities by (1) identifying, considering and

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recommending to the Board candidates to be nominated for election or re-election to the Board at each annual meeting of our stockholders or as necessary to fill vacancies and newly created directorships; (2) monitoring the composition of the Board and its committees and making recommendations to the Board on the membership of the committees and on the types and sizes of the Board committees; (3) overseeing the Company’s corporate governance practices and procedures, including maintaining our corporate governance guidelines and recommending to the Board any desirable changes; (4) reviewing and, as necessary, making recommendations to the Board with respect to stockholder proposals; (5) evaluating the effectiveness of the Board and its committees; (6) overseeing the form and amount of director compensation; and (7) addressing any related matters required by the federal securities laws or The NASDAQ Stock Market, LLC (“NASDAQ”). The nominating and corporate governance committee held two regular meetings and six special meetings in 2020.

Board and Committee Independence

On the basis of information solicited from each director, and upon the advice and recommendation of the nominating and corporate governance committee, our Board has affirmatively determined that none of Ms. Henriksen and Messrs. Joseph, Leslie, Madden, Porter and Rhone has any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and each is independent as defined in the director independence standards of NASDAQ, as currently in effect. In making these determinations, our Board, with assistance from the Company’s legal counsel, evaluated responses to a questionnaire completed annually by each director regarding relationships and possible conflicts of interest between each director, the Company and management. In its review of director independence, our Board and legal counsel considered all commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships any director may have with the Company or management, including the relationships described in “Designated Director” on page 27 of this Proxy Statement and in “Certain Transactions” on page 67 of this Proxy Statement. As described further under “Certain Transactions,” the Board has determined that Mr. Porter, who is the designated director of LCHM Holdings, LLC (“LCHM Holdings”), does not receive a personal benefit from LCHM Holdings’ participation in two development projects and is independent.

Our Board has determined that each of the members of the audit, compensation and nominating and corporate governance committees has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and satisfies the independence criteria (including the enhanced criteria with respect to members of the audit and compensation committees) set forth in the applicable NASDAQ listing standards and SEC rules. In addition, our Board has determined that each of Messrs. Joseph, Leslie, Madden, Porter and Rhone qualifies as an “audit committee financial expert,” as such term is defined by SEC rules.

Compensation Committee Procedures

The compensation committee has the sole authority to set annual compensation amounts and annual incentive program criteria for our executive officers, evaluate the performance of our executive officers, and make awards to our executive officers under our cash-based and equity-based incentive programs. The compensation committee also reviews, approves and recommends to our Board any proposed plan or arrangement providing for incentive, retirement or other compensation to our executive officers, as well as any proposed contract under which compensation is awarded to one of our executive officers. The compensation committee oversees our assessment of whether our compensation policies and practices are likely to expose the Company to material risks. The compensation committee may form subcommittees and delegate responsibilities and authority to such subcommittees in its sole discretion, to the extent consistent with the compensation committee’s charter, our Charter or By-Laws, and applicable law.

If equity awards are granted in a given year, in accordance with the compensation committee’s written policies, such awards are generally granted at a compensation committee meeting in the first

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fiscal quarter of the year. To the extent the compensation committee approves any special awards at other times during the year, such awards will be made during an open window period when our executive officers and directors are permitted to trade in our securities.

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

The compensation committee has in the past engaged an independent executive compensation consultant to advise the compensation committee on matters related to executive compensation, and will engage such consultants in the future, as the compensation committee determines to be advisable. Please refer to the section titled “Executive Officer Compensation—Compensation Discussion and Analysis” on page 38 of this Proxy Statement for more information related to the independent executive compensation consultant.

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Board’s Role in Oversight of Risk Management

Our Board as a whole is responsible for risk oversight, with reviews of certain areas being conducted by the relevant Board committees that report to the full Board. In its risk oversight role, our Board reviews, evaluates and discusses with appropriate members of management whether the risk management processes designed and implemented by management are adequate in identifying, assessing, managing and mitigating material risks facing the Company, including financial and operational risks.

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

While our Board is ultimately responsible for risk oversight, its committees assist the Board in fulfilling its oversight responsibilities with respect to certain areas of risk. As set forth in its charter, the audit committee is responsible for reviewing and discussing with management, the internal audit firm and our independent registered public accounting firm any guidelines and policies relating to risk assessment and risk management, and the steps management has taken to monitor, control and minimize the Company’s major financial risk exposures, if any. The audit committee also discusses with the internal audit firm and our independent registered public accounting firm the results of their processes to assess risk in the context of their respective audit engagements. The audit committee also assists our Board in fulfilling its oversight responsibilities by monitoring the effectiveness of the Company’s internal control over financial reporting and legal and regulatory compliance. Our internal audit firm and independent registered public accounting firm meet periodically in executive session with the audit committee. The audit committee regularly reports on these matters to the full Board. As set forth in its charter, the compensation committee is responsible for overseeing the Company’s assessment of whether its compensation policies and practices are likely to expose the Company to material risks and, in consultation with management, is responsible for overseeing the Company’s compliance with regulations governing executive compensation. The nominating and corporate governance committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with our Board leadership structure and corporate governance matters.

Director and Executive Officer Stock Ownership Guidelines

Our Board adopted stock ownership guidelines applicable to our non-employee directors and our executive officers. The guidelines for non-employee directors are administered by the nominating and corporate governance committee and the guidelines for our executives are administered by the compensation committee.

Under the guidelines, each non-employee director is expected to maintain ownership of Company stock valued at three times his or her annual retainer, which is currently $35,000. See “Director Compensation” on page 27 of this Proxy Statement. Our president and chief executive officer, Mr. Armstrong, is expected to maintain ownership of Company stock valued at three times his base salary and our chief financial officer, Erin D. Pickens, is expected to maintain ownership of Company stock valued at her base salary. The value of the stock ownership is calculated based on the three-

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year trailing average monthly stock price. Shares of our Common Stock currently owned, but not pledged, and shares issuable upon the vesting of outstanding restricted stock units (“RSUs”) count as stock owned for purposes of the stock ownership guidelines. Performance-based equity awards and shares owned on behalf a spouse or children do not count toward the target level. Finally, shares held in trust may also be included; however, due to the complexities of the trust laws, the decision to include the shares will be made on a case-by-case basis after reviewing the nature of the specific trust involved and considering whether the executive has maintained a pecuniary interest in the shares. Both of our executive officers and each of our current non-employee directors, except for Mr. Rhone and Ms. Henriksen, exceed their target stock ownership levels, as applicable. Under the stock ownership guidelines, directors have five years from their initial appointment to achieve their target ownership level. Accordingly, Mr. Rhone has until December 17, 2025 and Ms. Henriksen has until January 26, 2026.

Anti-Hedging and Anti-Pledging Policies

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

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

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

Director Nomination Process and Board Refreshment

Process

At least annually, the nominating and corporate governance committee reviews the composition and size of the Board. In carrying out this responsibility, the committee considers the Company’s business strategies, director independence requirements, the collective knowledge, experience, expertise and diversity of the Board, the specific experience, qualifications, attributes and skills of each director, any recent or anticipated changes in Board composition, any skills, experiences and backgrounds that may be helpful in maintaining or improving alignment between our Board’s composition, our business strategies, and the long-term interests of our stockholders, and any other criteria the committee deems relevant. The committee also seeks to have a Board that represents a diverse range of perspectives and experiences relevant to the Company, and takes into account Board tenure, age, gender and ethnic/racial diversity. In evaluating the suitability of potential Board nominees, the committee considers the Board member criteria in our corporate governance guidelines and other factors, including personal and professional integrity, independence, a general understanding of the industries in which the Company operates, executive management and public company board experience, risk management and strategic planning experience, public and private investment experience, banking, finance, accounting, and financial reporting experience and other experiences relevant to the successful oversight of the management of a publicly-traded company, educational and professional background, and diversity. The committee also considers the potential nominee’s ability and willingness to work cooperatively with other members of the Board and with senior management of the Company and to devote adequate time to duties of the Board. The committee also evaluates each individual in the context of the Board as a whole, with the objective of recommending nominees who can best advance the success of the business, be an effective director in conjunction with the full Board, and represent stockholder interests through the exercise of sound judgment using his or her

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diversity of experience in these various areas. In determining whether to recommend a director for re-election, the committee will also consider the director’s past attendance at meetings and participation in and contributions to the activities of the Board. Candidates may come to the committee’s attention through professional search firms, directors, stockholders, financial advisors, legal advisors or other persons. The committee evaluates candidates proposed for nomination by the Company’s stockholders using the same criteria by which it evaluates other nominees.

Board Refreshment

As a result of our nominating and corporate governance committee’s efforts, several new directors have joined our Board in recent years. Mr. Joseph joined the Board in 2015. Mr. Schweitzer joined the Board in March 2016 and served on the Board until his unexpected death in February 2020. Ms. Benson, Oasis’ designee, served on the Board from January 2017 until her voluntary resignation in September 2020. In addition, as discussed further below, in December 2020, the Board appointed Mr. Rhone as a new director, and in January 2021, the Board appointed Ms. Henriksen as a new director. The nominating and corporate governance committee believes that Mr. Rhone and Ms. Henriksen bring relevant skills and extensive experience to our Board, racial/ethnic and gender diversity and fresh perspectives. The committee also believes that the Company benefits from having seasoned directors who are deeply knowledgeable about our Company’s operations, markets, financial condition, opportunities and challenges.

After Mr. Schweitzer’s death in February 2020, upon the recommendation of the nominating and corporate governance committee, the Board reclassified Mr. Porter as a Class II director to fill the vacancy and to rebalance the class sizes as required by the Company’s Charter. The Board size was reduced to six. On August 6, 2020, the committee met and considered, among other things, the Board’s size relative to peer companies and survey data, particularly in light of the unexpected death earlier in the year of Mr. Schweitzer. The committee determined that it would not recommend any immediate changes at the time but that it would continue to review the Board’s composition and consider increasing the Board’s size.

On September 18, 2020, the Board voted to approve the initiation of an in-depth exploration of a conversion of the Company from a C-Corporation to a REIT, and later that day, Ms. Benson resigned from the Board. The Board also decided to conduct a comprehensive review of governance practices and Board composition.

On October 13, 2020, the nominating and corporate governance committee met and considered, among other things, the composition and size of the Board, including the vacancy created by the resignation of Ms. Benson and the earlier decrease in the size of the Board after the death of Mr. Schweitzer. The nominating and corporate governance committee discussed (1) increasing the size of the Board, (2) the background, skills and traits of potential candidates desired to enhance Board effectiveness and (3) the timing and process of identifying potential director candidates. After discussion, the committee agreed that its goals would be to add two new directors to the Board by year-end and to begin the search process immediately.

On November 5, 2020, the nominating and corporate governance committee met and considered the progress on the director search process, narrowing down the list of 45 candidates that it had compiled based on suggestions and recommendations from directors, directors’ contacts, and financial and legal advisors to the Company, to a smaller number based on skills, experience and traits the committee considered important. The committee decided it would interview candidates and compile additional background data, with the assistance of outside advisors, before recommending any candidate to the Board. The committee proceeded to interview candidates.

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On December 17, 2020, the Company announced the appointment of Neville L. Rhone, Jr. to serve as a Class II director of the Board. Mr. Rhone was appointed by the Board upon the recommendation of the nominating and corporate governance committee. He was suggested as a candidate to the committee by Mr. Armstrong, our Chairman, President and Chief Executive Officer, who knew Mr. Rhone from working with him when Mr. Rhone served as a senior member of the investment team of the Canyon-Johnson Urban Fund that partnered with the Company in 2007 to provide the equity for the Company’s Block 21 project. Upon the recommendation of the committee, Mr. Rhone was appointed to the nominating and corporate governance committee and the audit committee. Additionally, the Company announced that Mr. Porter resigned as a Class II director and was immediately reappointed as a Class III director, the Class to which he was originally appointed upon first joining the Board in 2012 (and the Class to which he was elected by the stockholders in 2013, 2016, and 2019).

In light of the Oasis Notice, the nominating and corporate governance committee, with the assistance of outside advisors, assembled and reviewed background information regarding Mr. De La Garza Diaz and Ms. Dotter and interviewed them on January 15, 2021 and January 18, 2021, respectively. On January 20, 2021, the Company proposed a settlement wherein the Board would add Ms. Dotter and a new female director chosen by the Company, subject to the completion of a director questionnaire and the passing of a background check, and subject to Oasis’ and the Company’s execution of a settlement agreement with customary terms. On January 25, 2021, Oasis proposed settlement terms that did not include the appointment of Ms. Dotter, a candidate for the Board initially proposed by Oasis in the Oasis Notice, but instead contemplated, among other things, replacing as a director Mr. Leslie with Mr. De La Garza Diaz and replacing as a director Mr. Madden with Ms. Benson.

On January 27, 2021, the Company announced the appointment of Kate B. Henriksen to serve as a Class III director of the Board, increasing the Board size to seven. Ms. Henriksen was appointed by the Board upon the recommendation of the nominating and corporate governance committee. She was suggested as a candidate to the committee by the committee’s Chair, Mr. Joseph. Upon the recommendation of the committee, Ms. Henriksen was appointed to the nominating and corporate governance committee and the compensation committee.

Stockholder Nominations

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

In addition, our By-Laws permit stockholders to nominate candidates directly for consideration at next year’s annual meeting of stockholders. Any nomination must be in writing and received by our corporate secretary at our principal executive offices no later than the close of business on February 4, 2022. If the date of next year’s annual meeting is moved to a date more than 30 days before or 90 days after the anniversary of this year’s annual meeting, the nomination must be received no later than 90 days prior to the date of the 2022 annual meeting of stockholders or 10 days following the public announcement of the date of the 2022 annual meeting of stockholders. Any stockholder submitting a

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nomination under our By-Laws must include (a) all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act (including such nominee’s written consent to being named in the Proxy Statement as a nominee and to serve as a director if elected), and (b) the name and address (as they appear on the Company’s books) of the nominating stockholder and the class and number of shares beneficially owned by such stockholder. Nominations should be addressed to our Corporate Secretary, Stratus Properties Inc., 212 Lavaca Street, Suite 300, Austin, Texas 78701. Candidates nominated by stockholders will be evaluated under the same criteria as other director nominees. Please see our By-Laws for detailed information regarding the process by which a stockholder may nominate a director at meetings of our stockholders.

Designated Director

Pursuant to an Investor Rights Agreement with Moffett Holdings, L.L.C. (“MHLLC”) dated March 15, 2012 (the “Investor Rights Agreement”), and subsequently assigned to LCHM Holdings, Mr. Porter was appointed to our Board as the designated director of MHLLC and subsequently, LCHM Holdings. Mr. Porter continues to serve as the designated director of LCHM Holdings pursuant to the Investor Rights Agreement. As previously reported, in connection with Mr. Rhone’s appointment, Mr. Porter resigned as a Class II director and was immediately reappointed as a Class III director, the Class to which he was originally appointed upon first joining the Board in 2012 (and the Class to which he was elected by the stockholders in 2013, 2016, and 2019). Mr. Porter’s reappointment to Class III filled the vacancy in Class III created by the resignation of Ms. Benson in September 2020, and Mr. Rhone filled the vacancy created by Mr. Porter’s resignation and reappointment. As previously disclosed, on March 12, 2020, Mr. Porter had resigned as a Class III director and was immediately reappointed as a Class II director solely for the purpose of filling the vacancy in Class II created by the death of former director John C. Schweitzer and in order to rebalance the three classes so that they would be as nearly equal in number as is possible, as required by our Charter. Mr. Porter’s current term as a Class III director expires at the 2022 annual meeting of stockholders. For more information, see “Certain Transactions” on page 67 of this Proxy Statement.

Communications with the Board

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

We engage in regular dialogue with stockholders and stockholders’ representatives representing over 40% of our outstanding Common Stock, including stockholders representing 7.6% of our outstanding Common Stock who have director designees on our Board.

independent compensation consultant, FPL Associates L.P. (“FPL”). FPL reviewed our non-employee director compensation program in light of prevailing market practices and recommended certain changes to our director compensation program, which have been in effect since January 1, 2018.

2020 Cash Compensation

During 2020, each non-employee director serving the duration of the year received an annual fee consisting of, as applicable:

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

2020 Equity-Based Compensation

Under the equity-based component of our program, our non-employee directors receive annual equity awards payable in RSUs, with the number of RSUs granted determined by dividing $45,000 by the closing sale price of our Common Stock on September 1st, the grant date, or the previous trading day if no sales occur on that date, and rounding down to the nearest hundred shares. The RSUs vest ratably over the first four anniversaries of the grant date, with pro-rata vesting acceleration in the event that the non-employee director dies, incurs a disability or retires, and full vesting acceleration in the event that we incur a qualifying change of control. Each RSU entitles the director to receive one share of our Common Stock upon vesting. In addition, in connection with an initial appointment to the Board other than at an annual meeting, a director may receive a pro rata equity grant. On September 1, 2020, each non-employee director serving on that date was granted 2,200 RSUs and on December 17, 2020, Mr. Rhone was granted 1,200 RSUs upon joining the Board. See “Executive Officer Compensation—Potential Payments upon Termination or Change in Control” on page 52 of this Proxy Statement for definitions of “disability” and “change of control” used for purposes of the RSU acceleration provisions.

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2020 Director Compensation

The table below summarizes the total compensation paid to or earned by our non-employee directors during 2020. The amount included in the “Stock Awards” column reflects the aggregate grant date fair value of the RSUs, and does not necessarily equate to the income that will ultimately be realized by the director for these stock awards. Mr. Armstrong’s compensation is reflected in the 2020 Summary Compensation Table in the section titled “Executive Officer Compensation” on page 38 of this Proxy Statement.

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Proposal No. 1: Election of Directors

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

For more information about the background and qualifications of the director nominees and the entire Board of Directors, please see below and “Information About Nominees and Continuing Directors” on page 32 of this Proxy Statement.

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In accordance with our By-Laws, our Board has fixed the current number of directors at seven. The table below shows the current members of the different classes of our Board and the expiration of their current terms.

Upon the recommendation of our nominating and corporate governance committee, our Board has nominated James C. Leslie and Neville L. Rhone, Jr. for election at our 2021 Annual Meeting to serve as Class II directors, each for a three-year term. Messrs. Leslie and Rhone have each consented to being named as a nominee in this Proxy Statement and to serve as a director if elected. The persons named as proxies on the enclosed WHITE proxy card intend to vote your shares of our Common Stock for the election of each of the two Class II director nominees recommended by our Board, unless otherwise directed. If, contrary to our present expectations, either of the nominees is unable to serve or for good cause will not serve, your proxy will be voted for a substitute nominee designated by our Board, unless otherwise directed.

Vote Required to Elect Director Nominees

Under our By-Laws, our directors are elected by a plurality vote. For more information on the voting requirements, see “Information about the 2021 Annual Meeting” on page 6 of this Proxy Statement.

Recommendation of our Board of Directors

OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” OUR TWO CLASS II DIRECTOR NOMINEES, MESSRS. LESLIE AND RHONE.

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Information About Nominees and Continuing Directors

The table below provides certain information as of April 8, 2021, with respect to the director nominees, James C. Leslie and Neville L. Rhone, Jr., and each other director whose term will continue after the 2021 Annual Meeting. The biography of each of the directors contains information regarding the person’s business experience, director positions with other public companies held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that led our nominating and corporate governance committee and our Board to determine that the person should be nominated to serve as a director of the Company. Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years.

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Stock Ownership of Directors, Director Nominees and Executive Officers

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

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The table below shows the amount of our Common Stock beneficially owned as of March 22, 2021, by each of our directors, our director nominees and our president and chief executive officer and chief financial officer (such officers together being our named executive officers). Unless otherwise indicated, all shares shown are held with sole voting and investment power.

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Stock Ownership of Certain Beneficial Owners

Based on filings with the SEC, the table below shows the beneficial owners of more than five percent of our outstanding Common Stock other than Mr. Armstrong, whose beneficial ownership is reflected in the table in the section above titled “Stock Ownership of Directors, Director Nominees and Executive Officers” on page 35 of this Proxy Statement. Unless otherwise indicated, all information is presented as of March 22, 2021, and all shares beneficially owned are held with sole voting and investment power.

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Executive Officer Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis, or CD&A, describes and analyzes our executive compensation philosophy and program in the context of the compensation paid during the last fiscal year to our president and chief executive officer and our chief financial officer (our only executive officers, referred to as our named executive officers or NEOs). Our named executive officers for 2020 are:

Executive Summary

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

2020 Performance Highlights.

During 2020, the Company:

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Executive Compensation Program at a Glance

Our executive compensation program has three primary elements: base salary, annual incentive awards and long-term incentive awards, currently consisting of RSU awards and awards under our Profit Participation Incentive Plan (the “Profit Plan”). Each of these compensation elements serves a specific purpose in our compensation strategy. Base salary is an essential component to any market-competitive compensation program and is intended to provide a minimum fixed level of cash compensation. Annual incentives are designed to reward the achievement of short-term financial and operational goals that support our business and strategy, and to enable us to attract, retain and motivate our NEOs in the near-term. Long-term incentives drive our NEOs to focus on stockholder value creation over the long term and align the interests of our NEOs with those of our stockholders.

Based on our performance and consistent with the design of our program, the compensation committee of our Board made the executive compensation payout decisions for 2020 noted in the table below. These payouts are aligned with the Company’s business performance in 2020. The compensation committee believes that the design and structure of the Company’s incentive programs provide a direct link between Company performance and pay outcomes for the executives, as described in later in this CD&A.

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Compensation Governance and Stockholder Engagement.

Our executive compensation program is designed and managed by the compensation committee, which is comprised entirely of independent directors. Structuring a compensation program is a complex process that includes weighing various possible incentives and associated risks, assessing the competitive environment for executive talent, and understanding various constituencies. The compensation committee values stockholder perspectives as an element of the review process. The

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compensation committee ensures it is aware of our stockholders’ views both through direct conversations with stockholders, including one large investor with a representative on our Board, and through the broad feedback mechanism of our annual say-on-pay vote on executive compensation (which garnered the support of more than 97% of the voting power of the outstanding shares of our Common Stock present and entitled to vote at our 2020 annual meeting). The compensation committee also seeks input from its independent compensation consultant from time to time and strives to incorporate compensation “best practices” into our program design, some of which are highlighted below and discussed elsewhere in this CD&A.

Objectives of Our Compensation Program

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

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The compensation committee believes compensation should reward achievement of business performance goals, recognize individual initiative and leadership and link the interests of the executive officers and our stockholders. As a result, as reflected in the graph below, the majority of our president and chief executive officer’s total compensation paid during the three-year period ended December 31, 2020 consisted of variable, at risk forms of pay that were dependent on our performance and the price of our Common Stock. The graph does not reflect the participation interests granted under the Profit Plan, as these long-term awards are not reflected in the Summary Compensation Table until payout. As of December 31, 2020, none of the participation interests held by Mr. Armstrong and Ms. Pickens had paid out, although there was a payout of RSUs in 2021 resulting from a valuation date in 2020, as noted on page 46.

Components of Executive Compensation

During 2020, our executive compensation program included four primary components: base salary, annual incentive awards, long-term incentive awards in the form of RSUs and participation interests in the Profit Plan. Participation interests in the Profit Plan are only reflected in the Summary Compensation Table in the years in which executive officers earn a cash payment or receive a grant of RSUs under the Profit Plan.

After reviewing these components of our compensation program, the compensation committee believes that the risks arising from our compensation policies and practices for our employees, including our executive officers, are not reasonably likely to have a material adverse effect on the Company.

Base Salaries.

Our philosophy is that base salaries, which provide fixed compensation, should meet the objective of attracting and retaining the executive officers needed to manage our business successfully. Actual individual salary amounts reflect the compensation committee’s judgment with respect to each

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executive officer’s responsibilities, performance, work experience and the individual’s historical salary level. With regard to our president and chief executive officer, our goal is to allocate more compensation to the variable, performance-dependent elements of the total compensation package. The compensation committee did not increase our executive officers’ base salaries during 2020.

Annual Incentive Awards.

Under our annual incentive program for 2020, the annual incentive award was determined by the compensation committee following the end of the year based on the participant’s level of responsibility for the Company’s performance during the year after reviewing overall market conditions. As noted above, we have only two executive officers, and the compensation committee’s decisions regarding annual incentive awards reflect its views as to the broad scope of responsibilities of each executive officer and its determination of each executive officer’s significant impact on the Company’s overall success.

For 2020, annual cash incentives were a variable component of compensation designed to reward our executive officers for maximizing annual operating and financial performance. Given the adoption of the Profit Plan in 2018, which provides our executive officers with an interest in the profit resulting from our approved development projects, the compensation committee does not consider efforts or accomplishments in connection with the approved development projects when awarding annual cash incentives.

In February 2021, the compensation committee evaluated the Company’s accomplishments and performance during 2020, both independently and as compared to our peers, and each executive officer’s overall compensation. Despite the unique challenges faced by the Company as a result of the COVID-19 pandemic, the compensation committee noted that the Company was able to successfully manage liquidity and costs, maintain all of its properties in a first-class manner, enhance entitlements and pursue development permits, advance many new opportunities and keep our colleagues employed, productive and healthy, knowing that they are critical to our long-term success. The compensation committee specifically recognized the key roles of each of Mr. Armstrong and Ms. Pickens in these accomplishments and in the following significant financial achievements during 2020:

Based on these determinations, the compensation committee approved cash awards for each executive consistent with the cash awards made for 2019—$700,000 for Mr. Armstrong and $160,000 for Ms. Pickens.

Long-Term Incentive Awards.

The long-term incentives granted to our NEOs are based upon the position of each executive officer and the compensation committee’s subjective assessment of corporate and individual

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performance for the prior year. Since 2018, our long-term incentive program has consisted of the following two incentives:

As reported in our proxy statement for our 2020 Annual Meeting, although the compensation committee determined that our accomplishments during 2019 warranted payout of annual cash incentive awards for our executive officers, given the evolving COVID-19 pandemic in March 2020 and its significant impact on the hotel and entertainment industries, the compensation committee decided to decrease these awards payable to our executives for 2019 by approximately 20% as compared to such awards received for 2018. The compensation committee also elected to increase the annual RSU grant for our executive officers for 2020, thereby shifting a portion of the reduced 2019 annual cash incentive award to a long-term award, the value of which is dependent on our stock price. As a result, in March 2020, Mr. Armstrong received an award of 25,000 RSUs and Ms. Pickens received an award of 4,000 RSUs, compared to 12,000 RSUs and 2,000 RSUs, respectively, received by each in prior years.

Description of the Profit Plan. The Profit Plan is modeled after a “promote” arrangement that is a common compensation structure used by the Company’s private company peers. Highlights of the Profit Plan include:

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

2020 Valuation Date under the Profit Plan: The third anniversary of the substantial completion of the West Killeen Market approved development project occurred on October 17, 2020 (the valuation date). As this property has not yet been sold, the terms of the Profit Plan provide that in lieu of a cash payment, in the year following the valuation date the participants will receive an award of an equivalent number of stock-settled RSUs if any net company profits would have been generated based on the appraised value as of such date. On February 11, 2021, the compensation committee reviewed the third-party appraisal of West Killeen Market and determined that net company profits would have been generated based on the appraised value after the Company received (1) a return of its costs and any capital contributions, and (2) a preferred return of 10% per annum. Accordingly, on March 11, 2021 the compensation committee granted each participant an award of stock-settled RSUs equivalent to his or her participation interest based on the 12-month trailing average price of our Common Stock during 2020, with Mr. Armstrong receiving 17,991 RSUs and Ms. Pickens receiving 4,498 RSUs. The RSUs will vest in annual installments over a three-year period, provided that the participant satisfies the applicable service conditions.

Limited Executive Perquisites and No Special Retirement Benefits

We seek to maintain a cost-conscious culture. As a result, we provide limited perquisites to our executive officers. Please see “Executive Compensation Tables—2020 Summary Compensation Table” on page 50 of this Proxy Statement for a description of the limited perquisites provided in 2020.

Retirement benefits fulfill an important role within our overall executive compensation objectives by providing a financial security component, which in turn promotes retention. We provide our executive officers with the same retirement benefits that are generally available to our other full-time employees.

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

Change of Control and Severance Benefits

We provide our executive officers with certain contractual protections in the event of an involuntary separation either prior to or in connection with a change of control of the Company. Effective April 1, 2019, each of Mr. Armstrong and Ms. Pickens entered into a severance and change of control agreement with the Company, with each agreement having a three-year term and with terms consistent with the previous agreements. We believe that severance protections, including reduced levels of protection triggered in connection with a qualifying termination without a change of control, can play a valuable role in attracting and retaining key executive officers by providing protections commonly provided in the real estate industry. In addition, we believe these benefits also serve our stockholders’ interest by promoting a continuity of management in the context of an actual or threatened change of control transaction. The existence of these arrangements does not impact our decisions regarding other components of our executive compensation program, although we consider these severance protections to be an important part of our executive officers’ compensation packages.

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

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

The potential severance and change of control benefits payable under these agreements as of December 31, 2020, are more fully described in “Potential Payments upon Termination or Change in Control” on page 52 of this Proxy Statement.

Compensation Processes and Policies

Role of Advisors.

To assist in evaluating our compensation practices and the level of compensation provided to our executives, the compensation committee has engaged FPL from time to time as its independent compensation consultant. Consistent with the compensation committee’s longstanding policy, FPL will not provide, and has not provided, any services to the Company’s management. As required by SEC rules, prior to any engagement the compensation committee assesses the independence of FPL. FPL’s most recent engagement with respect to our executive compensation program was during 2018, when it (1) provided certain background information on market practices relating to how development-

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focused companies compensate their key executive officers, and (2) assessed the general economic terms of the Profit Plan and otherwise assisted the compensation committee in its formulation of the Profit Plan.

Market Data and Peer Group.

With input from the compensation committee, during 2017 FPL recommended a group of comparable public REITs and real estate management companies that it believed represents an appropriate peer group based on asset focus and size, as well as geographic location to a lesser degree. The resulting peer group selected by the compensation committee consisted of the 14 public real estate companies listed below (the “peer group”), with the 2016 median total capitalization of the peer group companies being approximately $642 million, compared to our 2016 median total capitalization of approximately $559 million (putting the Company in the 44^th percentile) at the time:

FPL used this peer group to prepare its executive compensation study, which compared our NEOs’ base salaries, annual incentive awards, long-term incentive awards and total remuneration to their counterparts in the peer group. The compensation committee used FPL’s report to assess competitive compensation, industry trends and best practices regarding executive compensation, primarily in setting 2018 base salaries of our executive officers, which was not changed during 2020.

Role of Executive Officers.

Our chief executive officer makes recommendations to the compensation committee regarding the base salary, annual incentive award and long-term incentive awards for our chief financial officer, based on his qualitative judgment regarding her individual performance, although the compensation committee makes all final compensation decisions regarding our executive officers. Neither of our executive officers is present when the compensation committee discusses or determines any aspect of their compensation.

Clawback Policy.

The awards under the Profit Plan are subject to a clawback provision that enables the Company to clawback all or a portion of incentive compensation paid under the respective award in the event an executive’s misconduct causes the Company to issue a restatement of its financial statements. The awards also provide that they will be subject to any clawback policy adopted by the Company in accordance with the SEC’s final rules regarding compensation clawbacks mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).

Stock Ownership Guidelines.

We require stock accumulation because we believe that it is important for our executive officers to align their interests with the long-term interests of our stockholders. Accordingly, our Board adopted stock ownership guidelines applicable to our executive officers. The guidelines are administered by the compensation committee. Under the guidelines, Mr. Armstrong and Ms. Pickens are expected to maintain ownership of shares of our Common Stock valued at three times and one time, respectively, his or her

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base salary, determined by reference to the three-year trailing average monthly stock price. Shares of our Common Stock currently owned but not pledged and shares issuable upon the vesting of outstanding time-vested RSUs are counted for purposes of the stock ownership guidelines. Shares pledged under our grandfathered pledge policy, shares issuable under performance-based equity awards and shares owned on behalf of a spouse or children are not counted for purposes of the stock ownership guidelines. Finally, shares held in trust may also be included; however, due to the complexities of the trust laws, the decision to include the shares will be made on a case-by-case basis after reviewing the nature of the specific trust involved and considering whether the executive has maintained a pecuniary interest in the shares. Mr. Armstrong and Ms. Pickens both currently exceed their target ownership levels, as applicable.

Accounting and Tax Considerations.

The accounting and tax treatment of compensation generally has not been a factor in determining the amounts of compensation awarded to our executive officers. However, the compensation committee and management have considered the accounting and tax impact of various program designs to balance the potential cost to the Company with the benefit or value to the executive officer.

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over $1 million paid to certain named executive officers. The compensation committee does not have a policy requiring executive compensation to qualify as deductible under Section 162(m), and has retained discretion to compensate executive officers in a manner commensurate with performance and the competitive landscape for executive talent.

Executive Compensation Tables

The table below summarizes the total compensation paid to or earned by our named executive officers for the fiscal years ended December 31, 2020, 2019 and 2018. Mr. Armstrong and Ms.  Pickens were our only executive officers during such fiscal years.