SEC Form DEF 14A filed by Kilroy Realty Corporation

KILROY REALTY CORPORATION

12200 W. Olympic Boulevard, Suite 200

Los Angeles, California 90064

April 12, 2024

To Our Stockholders:

I was honored to step into my new role as Kilroy’s chief executive officer in January of this year and am excited to be a part of a platform defined by its premier portfolio, strategic capital allocation, sustainability leadership, and strong balance sheet. Kilroy has been a leader in the real estate industry for over 75 years and has proven to be both resilient and opportunistic throughout many macroeconomic and real estate cycles. I look forward to building on the success that the Company has had under the leadership of my predecessor, John Kilroy, to capture outsized growth opportunities and create sustainable long-term value for our stockholders.

This past year brought positive trends for our sector, with an increase in employees returning to the physical office, as well as an uptick in foot traffic, public transit usage, and domestic travel and tourism. During 2023, Kilroy successfully leased over 1.3 million square feet, our highest annual leasing volume since 2019, and we are excited to continue to capitalize on recent momentum as we work closely with our tenants to respond to the evolving ways that people gather, work, and live in each of our markets.

Kilroy’s longstanding commitment to sustainability continues to differentiate this platform, particularly with our high-quality tenant base, that is focused on many of the same ambitious sustainability goals that we are. We have maintained carbon-neutral operations across our portfolio since 2020, and in 2023, we were awarded the ENERGY STAR Partner of the Year Sustained Excellence Award for the eighth consecutive year. We were also proud to be named the GRESB Regional Sector Leader in the Americas for Development, earning the highly competitive GRESB 5 Star designation, and were included for the fourth year in a row in Bloomberg’s Gender Equality Index.

While our sector continues to face challenges, we believe that Kilroy is exceptionally well-positioned for continued success and industry leadership in the years to come. We have a tremendous Class A portfolio – one of the youngest in the space – that has been built over many years of prudent and thoughtful capital allocation, and an incredible, performance-oriented team across every discipline within our organization. As we navigate challenging market conditions, we will remain focused on the core values that have consistently guided Kilroy’s strategy, and seek to stay ahead of creeping functional obsolescence in our space as we also take advantage of growth opportunities as they present themselves. I look forward to working as part of the Kilroy team as we take a fresh look at every facet of our business, while maintaining the Company’s commitment to innovation, wellness and sustainability, and financial discipline.

Thank you for your investment in Kilroy and your trust in our management team, our Board of Directors, and our mission.

Sincerely,

Angela M. Aman

Chief Executive Officer

KILROY REALTY CORPORATION

12200 W. Olympic Boulevard, Suite 200

Los Angeles, California 90064

April 12, 2024

To Our Fellow Stockholders:

On behalf of the entire Board of Directors, I would like to thank you for your continued investment in and commitment to Kilroy. In 2023, we continued our pursuit of excellence to deliver and maintain a premier real estate portfolio in the most dynamic, innovation-driven markets in the country, while making a positive community impact.

As a result of the chief executive officer succession process announced last year, in January 2024, we welcomed Angela Aman as our new chief executive officer and a director on our Board. Angela is an accomplished real estate executive with a proven, 22-year track record in commercial real estate, financial acumen, and operational expertise. We are confident that her extensive experience, including her experience navigating challenging environments in the retail sector, will assist Kilroy in identifying new avenues for stockholder value creation as we continue to focus on maintaining the quality of our portfolio and strategically allocating capital.

We are grateful to John Kilroy for leading the Company over the last 30+ years and building an impressive portfolio of high-quality assets that position the Company exceptionally well for the future.

As part of the Board’s ongoing refreshment effort, we expressed our commitment to appointing a new director and are excited to announce Daryl Carter, a seasoned real estate executive, as a director nominee at this year’s annual meeting. Mr. Carter was identified through an extensive search by Korn Ferry, a nationally recognized executive search firm, and we are confident that his significant real estate experience through multiple market cycles will bring a valuable perspective to our Board. Additionally, the Board will continue to focus on its refreshment efforts over the next year.

We believe that stockholder feedback is critical for the Board’s governance considerations and are committed to ongoing stockholder engagement. After last year’s annual meeting, we continued to engage with our stockholders on executive compensation, among other key governance topics. In response to our stockholders’ feedback related to legacy chief executive officer compensation and severance arrangements, the Board approved a compensation package for Ms. Aman that reflects our prior commitment to align severance provisions with peer practices and follows market-aligned pay levels.

To reflect the evolving expectations of our tenants and other stakeholders, the Board continues to focus on ensuring that our sustainability strategy and initiatives are effective and closely align with our growth priorities. We continue to advance our energy efficiency programs to support our tenants’ progress toward their carbon emission reduction goals, and to focus on recruiting and developing a diverse workforce to drive our innovation efforts and represent the diverse communities in which we operate.

We look forward to this new chapter of Kilroy’s leadership and growth, and are confident in our uniquely positioned portfolio and high-caliber executive leadership team to continue delivering value to our stakeholders in 2024.

On behalf of all of us at Kilroy, I want to thank all of our stockholders for your continued support and confidence in our future.

Sincerely,

CONTENTS

CONTENTS

This Proxy Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are generally identified through the inclusion of words such as “believe,” “expect,” “goals,” and “target,” or similar statements or variations of such terms and other similar expressions. Numerous factors could cause actual future performance, results, and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions, including periods of heightened inflation, and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California, Texas, and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses; our ability to re-lease property at or above current market rates; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed, and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, governmental permits, and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement, and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations, or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition, and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; risks associated with climate change and our sustainability strategies, and our ability to achieve our sustainability goals; our ability to maintain our status as a REIT. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors included under the caption “Risk Factors” in our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. All forward-looking statements are based on currently available information, and speak only as of the dates on which they are made. We assume no obligation to update any forward-looking statement that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

References to our website throughout this Proxy Statement are provided for convenience only and the content on our website does not constitute a part of, and shall not be deemed incorporated by reference into, this Proxy Statement.

NOTICE OF ANNUAL MEETING

OF STOCKHOLDERS

PROXY SUMMARY

This section highlights information about Kilroy Realty Corporation (“we,” “our,” “us” or the “Company”) and our Board of Directors (the “Board”). This section does not contain all of the information that you should consider and you should read the entire Proxy Statement before voting.

BUSINESS HIGHLIGHTS

Despite a challenging economic backdrop in 2023, we continued to execute on our initiatives, while maintaining significant financial flexibility and liquidity to support our long-term balanced business plan. This was demonstrated by our healthy same store NOI growth, a post-pandemic leasing volume record, and strong development deliveries. Our highly experienced leadership team continued to effectively manage our premier portfolio, while navigating a rapidly evolving business environment.

Over the course of 2023, we executed approximately 1,350,000 square feet of leases, our highest annual leasing volume since 2019, with average rental rates that were up 14.8% on a GAAP basis as compared to the prior leases.⁽¹⁾ We added more than $750 million of new developments to our stabilized portfolio, including Indeed Tower, a $690 million, ~760,000 square foot development project located in the Austin CBD, and ended the year with approximately $1.9 billion of liquidity.

More information on the Company’s 2023 performance is detailed on pages 50-52.

COMPENSATION HIGHLIGHTS

The Executive Compensation Committee of the Board (the “Compensation Committee”) approved the 2023 compensation arrangements for each of the named executive officers identified on page 47 (our “NEOs”). Below are highlights of our 2023 compensation arrangements for our NEOs from the Compensation Discussion and Analysis (the “CD&A”) section of this Proxy Statement.

Angela Aman joined the Company as our Chief Executive Officer (“CEO”) in January 2024 and, in December 2023, the Compensation Committee approved an employment agreement and compensation arrangements for Ms. Aman. The terms of Ms. Aman’s employment with us are discussed in the “Employment Agreement with Angela M. Aman” section of the “Compensation Discussion and Analysis” below. In addition, please see the discussion in the “Extensive Stockholder Engagement and Response to 2023 Vote” section of the “Compensation Discussion and Analysis” below.

Continued Emphasis on Long-Term Incentive Awards and Performance-Based Compensation

2023 Target

Total Direct Compensation

CORPORATE GOVERNANCE HIGHLIGHTS

The Company is committed to good corporate governance, which promotes the long-term interests of stockholders, reinforces accountability of the Board, and helps build public trust in the Company. Highlights include the following:

CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY

The Company and its Board maintain a focus on corporate social responsibility and sustainability. We continuously look for new and better ways to foster a diverse and inclusive work environment, improve employee health and safety, engage with our surrounding communities, and minimize our environmental impact, all while creating value for our stockholders. These efforts are overseen by the Corporate Social Responsibility and Sustainability Committee (the “CSR&S Committee”) of our Board. Below are some recent highlights of our human capital, diversity, and sustainability initiatives. (References to our employees in this Proxy Statement include individuals employed through our operating partnership, Kilroy Realty, L.P. (the “Operating Partnership”), as well as through Kilroy Realty TRS, Inc. (the “TRS”).)

Human Capital Development

The Company is committed to enhancing employee development, satisfaction, and wellness while maintaining a diverse, inclusive, and thriving culture. Our human capital development initiatives in 2023 included the following:

Training and Education. We support the continual growth and development of our employees through various training and education programs throughout their tenure at the Company, from initial onboarding to continued skill building to leadership development. During 2023, across all teams and regions, employees participated in various training and developmental opportunities, including virtual workshops, in-person sessions, “lunch and learns”, online webinars, and conferences. We also conduct annual performance and career development reviews for all employees.

Diversity and Inclusion. We are committed to cultivating a culture of inclusion. To emphasize this commitment, we have developed programs to promote workplace diversity and inclusion, and we continue to require mandatory unconscious bias training for all employees. For the fourth year in a row, the Company has been named to Bloomberg’s Gender Equality Index, and we are proud that 56% of our workforce is female and 42% is racially/ethnically diverse. As of December 31, 2023, two of our seven directors (or approximately 29%) were female. In December 2023, we announced the appointment of Angela Aman as our new CEO and a director on our Board, effective January 22, 2024. Following her appointment, women comprise 38% of our directors.

Employee Health and Wellness. The physical and mental health and wellness of our employees is of central importance to our culture. We evaluate our group health and ancillary benefits annually to ensure that our benefits package is robust and competitive. We are proud to offer several comprehensive medical, dental, and vision benefit programs to our employees and their families, with over 90% of the premiums absorbed by the Company. We periodically conduct wellness surveys to help us better tailor our employee health and wellness programs. In 2023, we selected a new Employee Assistance Program and continued our focus and support of mental health and wellness by providing our employees education on self-care and offering an increased variety of programs. In addition to offering a 401(k) plan with matching contributions, in 2023, we put a focus on employee financial wellness by offering a variety of educational events, web-based workshops, and financial tips, all aimed at helping our employees improve their overall financial well-being.

Competitive Benefits and Compensation. While many companies leverage a mix of competitive salaries and ancillary benefits to attract and retain their employees, we have gone beyond traditional structures and placed more emphasis on offering an expanded comprehensive benefits program as noted above, as well as offering other benefits, including fully-funded life and disability insurance, enhanced paid pregnancy and parental leave benefits, parental leave coaching, well-being programs, and other activities coordinated by the Company that align with our core values of belonging, connection, and progress.

Strong Communities and Healthy Planet. We recognize that our buildings are part of the larger community and that we thrive when the communities around us thrive. We are proud to make these communities better places to live and work through our volunteerism and philanthropy initiatives. In response to requests from our employees for increased service opportunities, in the fourth quarter of 2023, we expanded our annual tradition of “Week of Service” into “Month of Service”, transforming it into a more robust effort dedicated to giving back to the communities in which we operate. The Company-wide initiative gave our team enhanced opportunities to connect with local organizations and meaningful causes in the spirit of community enrichment and employee volunteerism. Over 165 employees assisted 18 organizations, dedicating more than 1,000 hours, almost triple the number of volunteer hours provided in 2022.

Diversity and Inclusion at the Company

We strive to create and maintain a workforce that reflects the diversity of our communities. We believe that racial, ethnic and gender diversity within our employee base has been bolstered by our proactive efforts over many years to create an inclusive culture.

GENDER DIVERSITY

RACIAL AND ETHNIC DIVERSITY

Diversity on the Board

Sustainability

Our longstanding leadership in sustainability in real estate is globally recognized, and our commitment to advancing progress toward our sustainability ambitions remains strong. Our vision is a resilient portfolio that minimizes the environmental impact of our buildings while maximizing the health and productivity of our tenants, employees, and communities, while also delivering compelling returns to stockholders.

Building Certifications. Building certifications like LEED, ENERGY STAR, Fitwel, and the WELL Health-Safety Rating are visible signs at our properties of our commitment to sustainability. We continue to pursue LEED Platinum or LEED Gold certification for all new office and life science development projects and have also achieved LEED certification at many of our existing buildings. As of December 31, 2023, 70% of our total portfolio was LEED certified, with 94% of those certifications at the highest Gold and Platinum levels.

Commitment to Sustainability. We have a longstanding commitment to reduce the energy, greenhouse gas emissions, water consumption, and waste to landfill impacts of our portfolio. We are proud to have achieved carbon-neutral operations since 2020 (see our annual Sustainability Report for more details). In 2023, carbon neutral operations was achieved through the five strategies outlined in the graphic below and the scope of our commitment included all Scope 1, 2, and 3 (downstream leased assets) emissions. We continue to pursue LEED Platinum or LEED Gold certification for all new office and life science development projects, and have also achieved LEED certification at many of our existing buildings, with 73% of our total portfolio LEED certified as of December 31, 2023.

Our carbon-neutral operations claim and associated data is reviewed by an independent third-party in-line with the PAS 2060 Standard. An Independent Limited Assurance Report can be found in the appendix of our annual Sustainability Report.

Climate Change & Resilience. We identify climate change as a risk to our business, an opportunity for long-term value creation, and a key driver of long-term strategic business decisions. Climate-related risks and opportunities are overseen by the Board through the CSR&S Committee, and the management team charged with driving progress includes representatives from sustainability, risk management, security, asset management, and engineering. We became a supporter of the Task Force for Climate-Related Financial Disclosures (“TCFD”) in 2018, and our discussion of our climate change risks and opportunities follows that framework. We utilize the S&P Global Climanomics^® software platform to assess physical and transition risks related to climate change and to inform asset and portfolio level decision-making. In connection with these analyses, we have updated various Company policies and procedures, including those related to our operations and acquisitions, to manage risks and opportunities. In addition, we have incorporated these analyses into our development strategy. We intend to continue to be proactive in managing climate-related risks, which positions us to capitalize on opportunities available in the transition to a low-carbon economy. More information about our climate change strategy, including our climate change scenario analysis, can be found in our annual Sustainability Report on our website located at https://kilroyrealty.com/sustainability.

Industry Leading Sustainability Practices. We continue to be recognized for our industry-leading sustainability practices.

•   As discussed above, we have made a commitment to and achieved carbon-neutral operations across our portfolio since 2020 through energy efficiency, onsite renewables, offsite renewables, renewable energy certificates, and verified carbon offsets
•   Named Regional Sector Leader in the Americas for sustainability performance of our Development (Diversified) portfolio in 2023
•   Earned the highly competitive GRESB “5 Star” designation for our Development (Diversified) portfolio, ranking in the top 20% of developers worldwide in sustainability performance in 2023
•   Recipient of the US EPA’s ENERGY STAR Partner of the Year Sustained Excellence Award for each of the last eight years (2016 - 2023)
•   Named #1 Most Sustainable US REIT by Calvert Research & Management in 2020 - 2023   •   Ongoing commitment to LEED certification at new and existing properties, resulting in 70% of the stabilized portfolio being LEED certified at year-end 2023   •   Earned ENERGY STAR certifications for 72% of the eligible stabilized portfolio in 2023   •   Achieved Fitwel certification, a measure of how well workplaces support the health and wellness of occupants, for 44% of our stabilized portfolio

Sustainability Reporting. We are committed to providing our stockholders with transparency around our ESG sustainability indicators. We publish an annual Sustainability Report that references the Global Reporting Initiative (“GRI”) reporting framework and TCFD recommendations. Our annual Sustainability Report includes comprehensive energy, carbon, water, and waste data and updates on our performance toward our voluntary goals. A third-party assurance provider reviews our sustainability data each year.

To learn more about our ESG efforts, please view our annual Sustainability Report on our website located at https://kilroyrealty.com/sustainability.

Commitment to Communities. The Company is committed to building communities to connect perspectives, cultures, and individuals from around the world. We know that healthy, thriving communities are our most powerful asset. As a developer, we have a unique opportunity to engage with our cities, schools, neighborhoods, and workplaces to help our communities flourish. With community connectivity being one of our core values, we believe that our built environment should support our commitment to cultivating a Company culture that makes a positive difference in our employees’ lives by supporting the whole person, celebrating our differences and unique backgrounds, promoting employee health and wellness, and dedicating ourselves to being a responsible corporate citizen with our community service and philanthropic efforts.

VOTING INFORMATION

VOTING MATTERS AND BOARD RECOMMENDATIONS

Our Board is soliciting your proxy to vote on the following matters at our Annual Meeting to be held at 8:00 a.m. local (Pacific) time on May 22, 2024 at our principal executive offices located at 12200 West Olympic Boulevard, Suite 200, Los Angeles, California 90064, and any potential adjournments or postponements of the Annual Meeting:

HOW TO CAST YOUR VOTE

PROPOSAL 1 –

ELECTION OF DIRECTORS

The Board presently consists of eight directors. Each director is serving a term that continues until the Annual Meeting and until his or her successor is duly elected and qualified. As further described below, our Board has selected seven incumbent director nominees, including Angela Aman, who was appointed to the Board in January 2024, and one new director nominee, Daryl Carter, for election at the Annual Meeting. John Kilroy, our previous CEO and Chair of the Board, is retiring from his position on our Board on the date of the Annual Meeting.

NOMINEES FOR DIRECTOR

BOARD COMPOSITION

Board Snapshot*

Director Nominee Skills, Experience, and Background

We believe each of the eight director nominees possesses the professional and personal qualifications necessary for effective service as a director. In addition to each nominee’s specific experience, qualifications, and skills, we believe that each nominee has a reputation for integrity, honesty, and adherence to high ethical standards and has demonstrated business acumen and an ability to exercise sound business judgment and that all nominees are committed to driving sustainable, long-term stockholder value. The following chart provides a summary of the director nominees’ skills and core competencies:

DIRECTOR NOMINEE

DIRECTOR NOMINEE

DIRECTOR NOMINEE

DIRECTOR NOMINEE

DIRECTOR NOMINEE

DIRECTOR NOMINEE

DIRECTOR NOMINEE

DIRECTOR NOMINEE

VOTE REQUIRED

Each director nominee will be elected at the Annual Meeting if he or she receives a majority of the votes cast with respect to his or her election (that is, the number of votes cast “FOR” the nominee must exceed the number of votes cast “AGAINST” the nominee). The majority voting standard does not apply, however, in a contested election where the number of director nominees exceeds the number of directors to be elected at an annual meeting of stockholders. In such circumstances, directors will instead be elected by a plurality of all the votes cast in the election of directors at the annual meeting at which a quorum is present. The election of directors at the Annual Meeting is not contested.

Under Maryland law, if an incumbent director is not re-elected at a meeting of stockholders at which he or she stands for re-election, then the incumbent director continues to serve in office as a holdover director until his or her successor is elected. To address this “holdover” issue, our Bylaws provide that if an incumbent director is not re-elected due to his or her failure to receive a majority of the votes cast in an uncontested election, the director will promptly tender his or her resignation as a director, subject to acceptance by the Board. The Governance Committee will then make a recommendation to our Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. Our Board will act on the Governance Committee’s recommendation and publicly disclose its decision, along with its rationale, within 90 days after the date of the certification of the election results.

RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.

PROPOSAL 2 –

ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION

We are asking our stockholders to approve the compensation of our NEOs (as identified in the CD&A) as disclosed pursuant to the US Securities and Exchange Commission (the “SEC”) executive compensation disclosure rules and as set forth in this Proxy Statement (including in the compensation tables, the narratives accompanying those tables, and the CD&A). This is commonly referred to as a “Say-on-Pay” vote.

Our executive compensation philosophy is designed to achieve the following objectives:

Below are highlights of the 2023 compensation arrangements for our NEOs as approved by the Compensation Committee. Angela Aman joined the Company as our CEO in January 2024 and, in December 2023, the Compensation Committee approved an employment agreement and compensation arrangements for Ms. Aman. Based on peer company data, input received from certain stockholders in recent years, and the advice of its independent compensation consultant, the Compensation Committee set Ms. Aman’s compensation and potential severance at levels significantly less than had been provided to our former CEO, John Kilroy. The terms of Ms. Aman’s employment with us are discussed in the “Employment Agreement with Angela M. Aman” section of the “Compensation Discussion and Analysis” below. Also see the discussion in the “Extensive Stockholder Engagement and Response to 2023 Vote” section of the “Compensation Discussion and Analysis” below.

We also maintain a range of executive compensation and governance-related policies, which are listed on page 4, that we believe reflect current best practices.

In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the related rules of the SEC, our Board requests your advisory Say-on-Pay vote to approve the following resolution at our Annual Meeting:

RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed in this Proxy Statement pursuant to the Securities and Exchange Commission’s executive compensation disclosure rules (which disclosure includes the “Compensation Discussion and Analysis” section, the compensation tables, and the narrative discussion that accompanies the compensation tables), is hereby approved.

This vote is an advisory vote only and will not be binding on the Company, the Board, or the Compensation Committee, and will not be construed as overruling a decision by, or creating or implying any additional fiduciary duty for, the Company, the Board, or the Compensation Committee. However, the Compensation Committee, which is responsible for designing and administering our executive compensation program, values input from the Company’s stockholders, and will consider the outcome of this vote when making future compensation decisions for our NEOs.

The Company’s current policy is to provide our stockholders with an advisory Say-on-Pay vote to approve the compensation of our NEOs each year at the annual meeting of stockholders. Accordingly, it is expected that the next advisory Say-on-Pay vote will be held at the 2025 annual meeting of stockholders.

VOTE REQUIRED

The compensation of our NEOs will be approved, on an advisory basis, if a majority of the votes cast at the Annual Meeting are cast in favor of the above proposal.

RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RESOLUTION TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF THE COMPANY’S NEOs.

PROPOSAL 3 –

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR

We are seeking stockholder ratification of our appointment of Deloitte & Touche LLP (“Deloitte”), an independent registered public accounting firm, as our independent auditor for the fiscal year ending December 31, 2024. Deloitte has served as our independent auditor since 1995 when the Company was privately held and has continued to serve as such since the Company’s initial public offering in January 1997 and, prior to the Annual Meeting, the Audit Committee is expected to re-appoint Deloitte as our independent auditor for the year ending December 31, 2024. The Audit Committee believes the appointment of Deloitte is in the best interests of the Company and our stockholders.

In considering whether to reappoint Deloitte, the Audit Committee has evaluated Deloitte’s performance and independence. In the course of its review, the Audit Committee considers various factors, including but not limited to: (i) Deloitte’s independence from management, including whether there are any non-audit services provided by Deloitte that are not compatible with Deloitte’s independence; (ii) Deloitte’s qualifications and capabilities, including its experience in the REIT industry; (iii) the experience, qualifications and performance of the existing audit engagement team; (iv) the quality, timeliness and candor of Deloitte’s communications with the Audit Committee and management; (v) the appropriateness of Deloitte’s fees; (vi) Deloitte’s tenure as our independent auditor; (vii) the controls and processes in place that help ensure Deloitte’s continued independence; (viii) any Public Company Accounting Oversight Board’s firm inspection reports; and (ix) the potential impact of appointing a new independent auditor.

The Audit Committee maintains oversight over Deloitte by holding regular executive sessions with Deloitte, performing annual evaluations, and being directly involved in the selection of new lead audit partners pursuant to SEC rules requiring that a new lead audit partner be designated in the normal course every five years to bring a fresh perspective to the audit engagement.

Additional information about Deloitte, including the fees we paid to Deloitte in fiscal years 2023 and 2022, can be found in this Proxy Statement under the caption “Audit and Non-Audit Fees.” The report of the Audit Committee included in this Proxy Statement under the caption “Audit Committee Report” also contains information about the role of Deloitte with respect to the audit of the Company’s annual financial statements.

A representative of Deloitte is expected to be present at our Annual Meeting, be available to respond to appropriate questions, and will have the opportunity to make a statement, if desired.

Stockholder ratification of the appointment of Deloitte as our independent auditor is not required by our Bylaws or otherwise. However, the Board is submitting the appointment of Deloitte to the stockholders for ratification as a matter of good corporate governance. If the stockholders fail to ratify the appointment, the Audit Committee may reconsider whether or not to retain Deloitte. Even if the appointment is ratified, the Audit Committee, in its discretion, may appoint a different independent auditor at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and our stockholders.

VOTE REQUIRED

Ratification of the appointment of Deloitte as our independent auditor will be approved if a majority of the votes cast at the Annual Meeting are cast in favor of the above proposal.

RECOMMENDATION

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AS OUR INDEPENDENT AUDITOR FOR FISCAL 2024.

CORPORATE GOVERNANCE

The Company is committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens accountability of the Board, and helps strengthen public trust in the Company. Highlights include the following:

BOARD COMPOSITION AND GOVERNANCE

Director Attendance

The Board held nine meetings during 2023. All directors who served on the Board during 2023 attended at least 75% of the total number of meetings of the Board and meetings of the Board committees on which each director served that were held during the period of the director’s service during the year. Directors are encouraged to attend the annual meeting of stockholders of the Company. All current directors, other than Ms. Aman, attended the 2023 annual meeting of stockholders.

Independent Directors

Under the corporate governance rules of the New York Stock Exchange (the “NYSE”), a majority of the members of the Board must satisfy the NYSE criteria for “independence.” No director qualifies as independent unless the Board affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company). The Board has determined that each of Dr. Brennan, Mses. Hunt, and Ritter and Messrs. Carter, Ingraham, Stevenson, and Stoneberg is independent under the current listing standards of the NYSE. In addition, pursuant to our Bylaws, each of Dr. Brennan, Mses. Hunt, and Ritter and Messrs. Ingraham, Stevenson, and Stoneberg, comprising a majority of the members of the Board, and director nominee Mr. Carter, is not an employee, officer, or affiliate of the Company or any of its subsidiaries or divisions, or a relative of a principal executive officer, and is not an individual member of an organization acting as an advisor, consultant, or legal counsel receiving compensation from the Company in addition to director’s fees. In this Proxy Statement, we refer to each of Dr. Brennan, Mses. Hunt and Ritter, Messrs. Ingraham, Stevenson, and Stoneberg, and Mr. Carter if he is elected to the Board at the Annual Meeting, as our “Independent Directors.”

Independent Director Meetings

The Independent Directors meet regularly in executive session without the presence of management. These meetings are generally held on the date of each regularly scheduled Board meeting and on an as-needed basis. Dr. Brennan, our Lead Independent Director, presides over these meetings.

Overboarding Policy

Our Independent Directors are limited to serving on the boards of directors of not more than four other public companies, and our CEO is limited to serving on the board of directors of one other public company. Additionally, members of our Audit Committee may not serve on the audit committees of the boards of directors of more than two other companies. Each member of our Board is currently in compliance with our overboarding policy. Our Governance Committee has the authority to waive these limitations on a case-by-case basis. Our Governance Committee reviews this policy annually as part of its annual review of our Corporate Governance Guidelines.

Board Leadership Structure

Our Corporate Governance Guidelines and our Bylaws permit the roles of Chair and CEO to be filled by the same or different individuals. Our Board believes it is important to select our Chair and our CEO in the manner it considers in the best interests of the Company and our stockholders at any given point in time. The Independent Directors on our Board assess the role of Chair and CEO annually to ensure that the Company’s leadership structure best fits the Company’s specific circumstances and short and long-term challenges.

Our Board believes that the Company and our stockholders were best served during Mr. Kilroy’s tenure as CEO by having our Chair and CEO roles combined, and that it was in the best interests of the Company and our stockholders for Mr. Kilroy to serve as a non-independent Chair following his retirement as our CEO to ensure continuity and support during Ms. Aman’s leadership transition.

Our Corporate Governance Guidelines provide that if the Chair is also our CEO, or if the Chair is not otherwise an Independent Director, the Independent Directors will appoint annually from amongst themselves a Lead Independent Director. Notwithstanding the separation of our CEO and Chair positions, Dr. Brennan has continued to serve as our Lead Independent Director because Mr. Kilroy is not an Independent Director. Dr. Brennan brings considerable skills and experience, as described above in “Proposal 1 — Election of Directors.” The role of our Lead Independent Director has been designed to further promote the independence of our Board and appropriate oversight of management and to facilitate free and open discussion and communication among the Independent Directors.

The responsibilities of our Lead Independent Director are clearly delineated in our Corporate Governance Guidelines and include:

In connection with Mr. Kilroy’s retirement as Chair at the Annual Meeting, our Board has determined it is in the best interests of the Company and our stockholders to separate the positions of CEO and Chair of the Board, and expects to appoint an Independent Director, Dr. Brennan, to serve as Chair following Mr. Kilroy’s retirement. The Board believes that having a separate CEO and an independent Board Chair at this time will continue to facilitate the CEO transition process, allowing Ms. Aman to focus on the operations of our business while the Chair of the Board can focus on leading the Board in its responsibilities. In connection with Dr. Brennan’s appointment as our independent Board Chair, our Independent Directors are not expected to designate a separate Lead Independent Director following the Annual Meeting.

While the Board as a whole works together to oversee management’s execution of our operations, our risk exposure and risk management plans, and our overall strategic direction, Dr. Brennan will work closely with our CEO, and take action as determined necessary or appropriate, to ensure there is critical independent oversight over these key areas of focus. We believe our leadership structure —both currently and as planned following Mr. Kilroy’s retirement—enhances our Board’s ability to provide insight and direction on important strategic initiatives and, at the same time, promotes effective and independent oversight of management and our business.

Board Oversight of Risk

Both our Board and management have key responsibilities in managing risk throughout the Company, as shown below. Board oversight of risks inherent in its areas of responsibility is delegated to the various Board committees, with each committee generally reporting to our Board at each regular Board meeting. Our Board believes that this structure is conducive to its risk oversight process.

Our Board believes that the process it has established to administer the Board’s risk oversight function would be effective under a variety of leadership frameworks and, therefore, does not have a material effect on our choice of the Board’s leadership structure described above under “Board Leadership Structure.”

Code of Business Conduct and Ethics

Our Board has adopted a Code of Business Conduct and Ethics that applies to our directors, officers (including our CEO, President, Chief Financial Officer, Chief Accounting Officer and Controller, and other members of senior financial management), employees, agents, and consultants. This Code of Business Conduct and Ethics satisfies the requirements of a “code of business conduct and ethics” under the NYSE listing standards and a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and applicable SEC rules. This Code of Business Conduct and Ethics is available in the Investors — Overview — Governance Documents section of our website at https://www.kilroyrealty.com. Amendments to, or waivers from, any provision of this Code of Business Conduct and Ethics that apply to the Company’s directors or executive officers, including our CEO, President, Chief Financial Officer, Chief Accounting Officer and Controller, and other members of senior financial management, may be made only by the Board or a Board committee and will be promptly posted on our website to the extent required by applicable SEC rules and NYSE listing standards.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines, which provide the framework for the governance of our Company and represent the Board’s current views with respect to selected corporate governance issues considered to be of significance to our stockholders. The Corporate Governance Guidelines direct our Board’s actions with respect to, among other things, Board composition and director qualifications, selection of the Chair of the Board and the Lead Independent Director, establishment of the Board’s standing committees, director stock ownership guidelines, succession planning, and the Board’s annual performance evaluation. A current copy of the Corporate Governance Guidelines is available in the Investors — Overview — Governance Documents section of our website at https://www.kilroyrealty.com.

Succession Planning

Pursuant to our Corporate Governance Guidelines, our Board and our CEO review succession planning, management performance, and management development on a regular basis. To facilitate this succession planning oversight by the Board, the Board has established a Succession Planning Committee of the Board that is responsible for reviewing the Company’s succession planning and management performance and development. The members of the Succession Planning Committee are Messrs. Stevenson and Kilroy and Dr. Brennan, with Mr. Stevenson serving as its Chair. The Succession Planning Committee reviews potential succession candidates, including the qualifications, experience, and career development priorities for these individuals, and provides recommendations to our Board regarding CEO and management personnel successors. In addition to the Committee’s assessments, directors also engage with potential CEO and key management personnel successors at Board and committee meetings and in less formal settings to allow directors to personally assess potential successor candidates.

Our Board also maintains an emergency CEO succession plan. The plan will become effective in the event our CEO becomes unable to perform his or her duties in order to minimize potential disruption or loss of continuity to the Company’s business and operations. The Succession Planning Committee reviews the emergency succession plan periodically and makes recommendations to the Board regarding any changes or updates to the emergency succession plan.

Corporate Social Responsibility and Sustainability Oversight

We are committed to operating in a responsible and sustainable manner. Our Board and management take seriously their responsibility to oversee and advance the Company’s CSR&S initiatives and recognize that community engagement and sustainable operations benefit all of our constituencies and are key to preserving our Company’s value and credibility. Our CSR&S initiatives have yielded results that we believe stand out in our industry and create long-term value for our stockholders. For information regarding our programs and achievements, see “Corporate Social Responsibility and Sustainability” on page 5 and our website at https://kilroyrealty.com/sustainability.

Philanthropy. The Company provides financial support to charitable organizations focused on strong communities and a healthy planet. Our philanthropic philosophy is to provide unrestricted grants to allow the organizations we support to execute their programs most efficiently. Additionally, we continued our Matching Gifts Program through which the Company matches employee donations made to qualified organizations with the opportunity for employees to earn up to a $500 match. To learn more about our efforts, please view our annual Sustainability Report on our website located at https://kilroyrealty.com/sustainability.

BOARD COMMITTEES

Our Board has five (5) standing committees: (i) the Audit Committee, (ii) the Compensation Committee, (iii) the Governance Committee, (iv) the CSR&S Committee, and (v) the Succession Planning Committee.

All members of the Audit Committee, Compensation Committee, and Governance Committee are Independent Directors. Our Audit Committee, Compensation Committee, Governance Committee, CSR&S Committee, and Succession Planning Committee each operate under a written charter adopted by our Board, which is available in the Investors — Overview — Governance Documents section of our website at https://www.kilroyrealty.com.

LID Lead Independent Director    ✓ Committee Member     F Financial Expert     C Committee Chair

In fulfilling its responsibilities, the Compensation Committee may delegate any or all of its responsibilities to a separate committee of the Board or a subcommittee of the Compensation Committee. The Compensation Committee has not delegated any of its responsibilities or authority. In 2023, the Compensation Committee retained Mercer (US) Inc. (“Mercer”) to assist it in reviewing our 2023 compensation programs and retained Korn Ferry to assist it in reviewing performance-based vesting and incentive payment determinations for 2023, reviewing our 2024 compensation programs, and to advise on the terms of Ms. Aman’s employment and compensation. As discussed under “Compensation Discussion and Analysis — How We Make Compensation Decisions — Role of Independent Compensation Consultant” below, the Compensation Committee assessed the independence of Mercer and Korn Ferry and has concluded that its engagement of each of them did not raise any conflict of interest with the Company and that each of them is independent. The services provided by Mercer and Korn Ferry in 2023 are also discussed in that section.

At the request of the Compensation Committee, certain of our executive officers aid the Compensation Committee in reviewing and analyzing our executive compensation program. These services are discussed under “Compensation Discussion and Analysis — How We Make Compensation Decisions — Role of Management in Executive Compensation Planning” below.

Additionally, the Governance Committee has the authority to engage any independent counsel or other outside experts or advisors it deems desirable or appropriate.

DIRECTOR SELECTION, EVALUATION, AND COMMUNICATIONS

Qualifications of Director Nominees

The Board is committed to having a membership comprised of individuals who by occupation, background, and experience are in a position to make strong, positive contributions to the Company and our stockholders, and will include women and individuals from minority groups in the qualified pool from which director candidates are selected. In considering candidates for nomination or appointment to the Board, the Governance Committee and the Board seek director candidates who, both individually and collectively, have such knowledge, experience, and education, based on criteria determined by the Governance Committee, to further the objectives of the Company at a given point in time and to provide balance to the Board’s knowledge, perspective, experience, and expertise. The Governance Committee has established board membership criteria (the “Board Membership Criteria”), which it uses as a guideline in considering nominations to the Company’s Board. The criteria include, but are not limited to:

In addition, the Company’s Bylaws and listing standards of the NYSE require the Board to be composed of a majority of directors who qualify as “Independent Directors” as defined therein. In considering director candidates, the Governance Committee and Board do not discriminate based on race, ethnicity, national origin, gender, religion, or disability.

The Board Membership Criteria established by the Governance Committee are not exhaustive and the Governance Committee and the Board may consider other qualifications and attributes that they believe are appropriate in evaluating the ability of an individual to serve as a member of the Board. The Governance Committee reviews and assesses the Board Membership Criteria annually.

Process for Identifying Nominees for Director

At any appropriate time prior to each annual meeting of stockholders at which directors are to be elected, and whenever there is otherwise a vacancy on the Board, the Governance Committee will assess the qualifications and effectiveness of the current Board members and, to the extent there is a need, will seek other individuals qualified and available to serve as potential Board members. The Governance Committee will review each potential candidate’s qualifications against the Board Membership Criteria described above. In reviewing each potential candidate, the Governance Committee also considers the results of the annual Board and individual director evaluations for purposes of assessing the suitability of each Board member for continued service on the Board. See “Annual Board Evaluations” below for additional information regarding the annual Board evaluation process. The Governance Committee will select the candidate or candidates it believes are the most qualified to recommend to the Board for selection as director nominees.

Stockholder-Recommended Director Candidates

The Governance Committee will consider director candidates recommended by stockholders of the Company. Candidates recommended by a stockholder are evaluated in the same manner as candidates identified by the Governance Committee. The Company’s Policies and Procedures Concerning Consideration of Director Candidates can be found in the Governance Documents section of our website at https://www.kilroyrealty.com. All recommendations must be directed to the Governance Committee c/o Secretary at 12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064. Recommendations for director nominees to be considered at the 2025 annual meeting of stockholders must be received in writing not later than November 30, 2024.

Each stockholder recommending a person as a director candidate must provide the Company with the following information for the Governance Committee to determine whether the recommended director candidate is independent from the stockholder, or each member of the stockholder group, that has recommended the director candidate:

The recommending stockholder must also provide supplemental information that the Governance Committee may request to determine whether the recommended director candidate (i) meets the standards of independence established by the NYSE; (ii) satisfies the Board Membership Criteria described above; and (iii) is qualified to serve on the Audit Committee. In addition, the recommending stockholder must include the consent of the recommended director candidate and the recommended director candidate must make himself or herself reasonably available to be interviewed by the Governance Committee. The Governance Committee will consider all recommended director candidates submitted to it in accordance with these established procedures, although it will only recommend to the Board as potential nominees those candidates it believes are most qualified. The Governance Committee will not consider any director candidate if his or her candidacy or, if elected, Board membership, would violate controlling state or federal law.

Annual Board Evaluations

Pursuant to our Corporate Governance Guidelines and the charter of the Governance Committee, the Governance Committee oversees an annual evaluation of the performance of the Board. Each standing committee also conducts a separate evaluation of its own performance and of the adequacy of its charter and reports to the Board on the results of this evaluation. The evaluation process is designed to assess the overall effectiveness of the Board and its committees and to identify opportunities for improving Board and Board committee operations and procedures. The Governance Committee also reviews the qualifications and effectiveness of individual directors each year when the directors stand for re-nomination. The review of individual directors includes an assessment of each director’s skills and experience in relationship to the Board Membership Criteria and that director’s commitment to the Board as evidenced by preparation for, understanding of, and attendance at, Board meetings. The results of the individual director evaluations and the Governance Committee’s recommendations regarding director nominations are reported to the Board. The annual evaluations are generally conducted in the fourth quarter of each year or in the first quarter of the following year.

Communications with the Board

Stockholders or other interested parties who wish to contact the Board, the Board Chair or the Lead Independent Director, any Board committee, or our Independent Directors as a group may send written correspondence c/o Board of Directors at 12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064. The name of any specific intended Board recipients should be clearly noted in the communication. All communications will be received, processed, and forwarded to the appropriate member(s) of our Board, except that, certain items unrelated to the Board’s duties and responsibilities, such as spam, junk mail, mass mailings, solicitations, resumes, and employment inquiries and similar items will not be forwarded. Board members receiving communications will respond as such directors deem appropriate, including the possibility of referring the matter to management of our Company, to the full Board or to an appropriate committee of the Board. In addition, if requested by stockholders, when appropriate, the Board Chair or the Lead Independent Director will also be available for consultation and direct communication with stockholders.

AUDIT AND NON-AUDIT FEES

Deloitte has served as the Company’s independent auditor since 1995 when the Company was privately held and has continued to serve as such since the Company’s initial public offering in January 1997. Deloitte is expected to be reappointed by the Audit Committee for the current fiscal year at its meeting to be held during the second quarter, which will precede the Annual Meeting.

The Audit Committee of the Board has determined that Deloitte is independent with regard to the Company within the meaning of the Exchange Act and the applicable published rules and regulations thereunder and by the Public Company Accounting Oversight Board (the “PCAOB”). The Audit Committee annually reviews and pre-approves certain audit and non-audit services that may be provided by Deloitte and establishes a pre-approved aggregate fee level for these services. Any proposed services not included within the list of pre-approved services or any proposed services that will cause the Company to exceed the pre-approved aggregate amount requires specific pre-approval by the Audit Committee. Additionally, the Audit Committee may delegate to one or more designated members of the Audit Committee the authority to grant pre-approvals, provided such pre-approvals are presented to the Audit Committee at a subsequent meeting. The Audit Committee has delegated this pre-approval authority to Mr. Ingraham, the Chair of the Audit Committee, although such delegation does not limit the authority of the Audit Committee to pre-approve in its discretion any specific services to be provided by Deloitte.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed to the Company by Deloitte for professional services rendered in fiscal years 2023 and 2022 are as follows:

AUDIT COMMITTEE REPORT

The Audit Committee of the Company’s Board is composed of Independent Directors who satisfy the requirements of Section 10A(m)(3) of the Exchange Act and Rule 10A-3(b)(1)(i) thereunder, and the current listing standards of the NYSE. The Audit Committee operates pursuant to a written charter.

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. In fulfilling its oversight responsibilities, the Audit Committee appoints the Company’s independent auditor and reviews and discusses the audited financial statements included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K with management, including the reasonableness of significant judgments and the clarity of disclosures in the financial statements. Management has primary responsibility for the financial statements and the reporting process, including the Company’s internal control over financial reporting.

Deloitte & Touche LLP, the Company’s independent auditor, is responsible for performing an audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those audited consolidated financial statements with generally accepted accounting principles. The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 2023 with management and Deloitte. The Audit Committee discussed with Deloitte its judgments as to the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee by the applicable requirements of the PCAOB and the SEC. In addition, the Audit Committee received the written disclosures and the letter from Deloitte required by applicable requirements of the PCAOB regarding Deloitte’s communications with the Audit Committee concerning independence, and has discussed with Deloitte its independence from the Company. The Audit Committee also considered the compatibility of Deloitte’s provision of audit and any tax and non-audit services with Deloitte’s independence.

The Audit Committee discussed with Deloitte the overall scope of its respective audits. The Audit Committee meets with Deloitte, with and without management present, to discuss the results of its examinations, evaluations of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting. In the performance of their oversight function, the members of the Audit Committee relied upon the information, opinions, reports, and statements presented to them by the Company’s management and by Deloitte. The Audit Committee held seven meetings during 2023.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements as of and for the year ended December 31, 2023 be included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 9, 2024.

Audit Committee

Scott S. Ingraham, Chair

Louisa G. Ritter

Peter B. Stoneberg

The foregoing report of the Audit Committee is not soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date of this Proxy Statement and irrespective of any general incorporation language in such filing.

OUR EXECUTIVE OFFICERS

COMPENSATION DISCUSSION

AND ANALYSIS

INTRODUCTION

This CD&A describes the material elements of our executive compensation program, the compensation decisions made under the program, and the factors considered in making those decisions for the NEOs listed below for 2023. Ms. Aman, our CEO, is not an NEO for 2023 because she did not commence employment with the Company until January 2024.

Our Business

We are a self-administered REIT that is active in premier markets on the West Coast of the United States and in Austin, Texas. With more than 70 years of history, we have built deep experience in the regions we operate in through multiple macroeconomic and real estate cycles. In 1997, we became a publicly traded REIT and in 2013, we were added to the S&P MidCap 400 Index. We believe the following aspects of our business make us one of the leading office and life science REITs in the United States:

EXTENSIVE STOCKHOLDER ENGAGEMENT AND RESPONSE TO 2023 VOTE

The Compensation Committee values input from the Company’s stockholders. In 2023, we reached out to the holders of more than 75% of our shares of common stock and requested meetings to solicit their input on a variety of topics, including market conditions, executive compensation, corporate strategy, and corporate governance practices. We met with each of the stockholders who accepted such request, which included holders of more than 60% of our shares of common stock. Our Lead Independent Director and Chair of the Compensation Committee personally led all of these meetings.

The Compensation Committee recognizes that the results of the 2023 Say-On-Pay vote demonstrated that some stockholders had certain specific concerns about the compensation provided to our NEOs. The feedback we received was generally that stockholders supported our performance-based executive compensation program, but that most who had voted against our 2023 Say-On-Pay vote and our 2022 Say-On-Pay vote had done so because of the severance arrangements in place under Mr. Kilroy’s employment agreement and the severance arrangements that had been in place with our former Executive Vice President and Chief Operating Officer, Jeffrey Hawken. The following chart summarizes the feedback we received and the actions taken in response to that feedback.

When making future compensation decisions for our NEOs, the Compensation Committee will continue to consider the views that stockholders express through the annual Say-on-Pay votes and through direct communication between stockholders and our Lead Independent Director, our Board, and management.

2023 COMPANY PERFORMANCE

During 2023, the Company achieved strong financial and operational results and further positioned itself for continued long-term growth. Below is a summary of our key achievements:

Despite the challenging economic backdrop, we continued to execute on our strategic initiatives in 2023, while managing our comprehensive risk profile, and generating solid year-over-year financial and operational results, which included the following:

Solid 2023 Operational Performance.

Another Strong Year of Development Deliveries. We continued to create significant value for our stockholders through our development program.

In 2023, we completed construction on over $750 million of office space. These projects included:

Over the past ten years, we have delivered projects, at a cost of $5.6 billion, encompassing ~6.9 million square feet of office space, 198,000 square feet of retail and production, distribution and repair space, and 1,001 residential units. The office projects were approximately 94% leased upon stabilization and generated a stabilized cash return on cost that averaged between 7.0% and 8.0%.

Prudent Balance Sheet Management. During 2023, we took proactive measures to maintain our financial flexibility and liquidity and strengthen our balance sheet. Below is a list of these actions and key achievements:

Business Values Take into Account Non-Financial Objectives. We are committed to pursuing corporate responsibility objectives, including sustainability, diversity and inclusion, philanthropy and community involvement, good corporate citizenship, health and wellness, and other non-financial issues that are of significance to the Company, our tenants, and our stockholders, as further described under “Corporate Social Responsibility and Sustainability” beginning on page 5.

Maintained Leadership Position in Sustainability. We continue to be recognized for our industry-leading sustainability practices. For a list of accomplishments, see “Corporate Social Responsibility and Sustainability — Industry Leading Sustainability Practices” on page 9.

Strong Company Leadership. The Company’s leadership team is comprised of individuals that have extensive real estate experience. On February 1, 2023, Eliott Trencher was promoted to Chief Financial Officer (CFO), no longer serving as CFO on an interim capacity. In addition, Mr. Kilroy retired as our Chief Executive Officer (CEO) after 30 years on January 21, 2024 and on January 22, 2024, we welcomed Angela Aman as our new CEO.

COMPENSATION PHILOSOPHY AND OBJECTIVES

Our executive compensation philosophy is designed to achieve the following objectives:

WHAT WE PAY AND WHY: EXECUTIVE COMPENSATION ELEMENTS

The following table sets forth the key elements of our executive compensation program, along with the primary objective and key features associated with each element of compensation.

DESIGN FEATURES OF THE 2023 EXECUTIVE COMPENSATION PROGRAM

We believe that our executive compensation program strikes an appropriate balance between attracting and retaining executives with the expertise and talent required to execute on our active portfolio management strategy, and linking compensation with the performance of the Company. Below is a summary of some of the key design features of our 2023 executive compensation program.

2023 NAMED EXECUTIVE OFFICER COMPENSATION

The Compensation Committee reviews and authorizes each NEO’s compensation on an annual basis. Executive compensation is not established at any specific percentile against our peer group. Rather, the Compensation Committee considers the following factors:

Base Salary

General Description

As noted above, we provide base salaries as a regular source of income so employees can focus on day-to-day responsibilities and to recognize ongoing performance of job responsibilities.

Decisions for 2023

In February 2023, the Compensation Committee determined that the NEOs’ respective 2023 annual base salary levels would increase by approximately 9% for Mr. Smart and 11% for Mr. Trencher, and would otherwise remain at the same level as in effect at the end of 2022 for the other NEOs. The 2023 annual base salary for each of our NEOs was as follows: $1,225,000 for Mr. Kilroy, $600,000 for Mr. Smart (increased from $550,000), $500,000 for Mr. Trencher (increased from $450,000), $550,000 for Mr. Paratte, and $525,000 for Ms. Roth.

The increases for Mr. Smart and Mr. Trencher were based on the Compensation Committee’s assessment of the factors noted on pages 53-54. The increases for each were specifically in connection with their taking on added responsibilities with the Company.

Short-Term Incentives

General Description

Our short-term incentives (annual cash bonuses) are based on the annual performance of our Company.

During the first quarter of the year, the Compensation Committee approves a performance measurement framework for that year and establishes a target short-term incentive amount for each NEO. This process typically begins prior to year-end, takes place over several months, and involves an on-going dialogue between the Chair of the Compensation Committee and our management team regarding the plan and outlook for the year. In establishing the performance measurement framework, the Compensation Committee considers the Company’s business plan for the year, the Company’s bonus goals and actual performance for the completed year, feedback received from stockholders, and the discussions between the Chair of the Compensation Committee and our management team regarding the plan and outlook for the year. The Compensation Committee also receives input from management regarding the Company’s business plan and the business environment generally and from its independent compensation consultant. The independent compensation consultant is involved throughout the process in advising the Compensation Committee on the general structure of the program, as well as the specific metrics and goals under consideration.

The Compensation Committee selects the performance categories, metrics, and goals that it believes will accurately assess the annual performance of the Company and its strategic goals. The Compensation Committee assigns a weight to each of the performance categories. That weighting further reduces the degree of qualitative judgment applied in determining final payouts.

Following the performance year, the Compensation Committee compares the Company’s actual performance results to the pre-established goals. The Compensation Committee then rates the Company’s performance in each category based on actual operating results against the goals in that category as follows:

The Compensation Committee then applies the weighting for each performance category to determine the Company’s overall achievement and potential bonus payout percentages. The Compensation Committee’s determination on the actual short-term incentive amount paid for each NEO is based on a holistic assessment of results achieved and the business environment for the year (which may take into account the Company’s TSR for the year), and individual awards may vary based on the Compensation Committee’s assessment of each NEO’s contributions and achievements. The Compensation Committee engages in discussions with management regarding the Company’s business plan for the year, the goals that had been established for the performance measurement framework, actual performance results for the year and the general business environment for the year. The Compensation Committee also receives input from its independent compensation consultant regarding these matters and our CEO provides the Compensation Committee with input regarding the performance of the NEOs (other than the CEO’s performance). The maximum amount that may be awarded to an NEO is 150% of the NEO’s target short-term incentive amount.

Since our business strategy requires us to actively manage our portfolio, the Compensation Committee believes that a rigid short-term incentive formula could undermine opportunistic decisions that have a negative impact on short-term gains but create long-term stockholder value (e.g., midyear changes in our strategy or portfolio due to a shift in market conditions or unanticipated opportunities can significantly alter specific objective goals that are set early in the year). The Compensation Committee believes its approach in determining each NEO’s short-term incentive payout reflects an appropriate balance between applying objective criteria and preserving flexibility to keep each NEO focused on strategic decisions that are in the best long-term interests of our stockholders.

Decisions for 2023; 2023 Key Operating and Financial Goal Setting and Performance

The Compensation Committee determined that the NEOs’ 2023 target short-term incentive amounts (as a percentage of base salary) would remain at the same level as in effect for 2022 (other than for Mr. Smart, as noted below). The 2023 target short-term incentive amount for each of our NEOs was as follows: $3,000,000 for Mr. Kilroy, $900,000 for Mr. Smart, $500,000 for Mr. Trencher, $550,000 for Mr. Paratte, and $525,000 for Ms. Roth. Mr. Smart’s 2023 target short-term incentive amount was increased from $550,000 (the amount in effect for 2022) in connection with his promotion to President and based on the Compensation Committee’s assessment of the factors noted on pages 53-54 and, in particular, its assessment of the target incentive opportunities for executives holding similar positions at our peer group of companies. The 2023 target short-term incentive level for Mr. Kilroy was the minimum target amount required pursuant to his employment agreement. Mr. Rose was not eligible for a short-term incentive for 2023 as he separated from employment with us on March 1, 2023.

In developing the performance measurement framework and goals for 2023, the Compensation Committee selected performance measures that it considers to be common measures of REIT performance and the Company prepared a bottoms-up, property-by-property budget that incorporated property specific assumptions for the Company’s stabilized portfolio. The Company then integrated those assumptions with the Company’s development and funding strategies, against a backdrop of existing real estate conditions. As a result, the Company created financial and operational goals that were directly tied to the Company’s existing portfolio and the broader business objectives for 2023.

The Compensation Committee then reviewed and approved the Company’s proposed 2023 financial and operational goals for inclusion in the performance measurement framework, each as described below. Historically, goals have generally been set at levels that were higher than the performance levels achieved in the prior year. However, since the composition of the Company’s portfolio changes from year to year (for example, the Company sold no properties in 2023 as compared to $1.1 billion in 2021), the performance level in the prior year may not accurately reflect the difficulty of achieving the specified level of performance in the current year (for example, because of occupancy levels, scheduled lease expirations, capital expenditure budgets, development activity, product mix, or disposition timing). In these cases, the Compensation Committee may set performance goals at levels that are the same or lower than the performance results achieved in the prior year but at levels that, after considering the composition of the Company’s portfolio at the start of each year, the Compensation Committee believes are comparatively as, or more, rigorous. Specifically, the goals established for 2023 took into account the potential impact of five large tenant move-outs that were known or suspected at the time the Compensation Committee set the goals. Furthermore, significant uncertainties regarding the full, extended impact of the COVID-19 pandemic on the commercial real estate market continued to exist at the time the Compensation Committee set the 2023 performance goals. The Compensation Committee established goals that it believed, when setting the goals, were challenging.

The design of the 2023 performance measurement framework is mainly consistent with the design of the 2022 performance measurement framework, except that the Company believed that dispositions may be less central to its strategy in 2023 and included dispositions under the category of Balance Sheet Management (whereas it had been a separate category in the 2022 framework). The following table shows the 2023 performance measurement framework and 2023 goals approved by the Compensation Committee in early 2023, as well as the Company’s actual 2023 performance.

2023 Performance Measurement Framework