Form 4: Kilroy Realty Executive A. Robert Paratte Increases Holdings Through Dividend Equivalent Rights

Kilroy Realty Corporation's Executive Vice President, Chief Leasing Officer, A. Robert Paratte, increased his beneficial ownership of common stock and restricted stock units through the crediting of dividend equivalent rights.

Summary

• A. Robert Paratte, Executive Vice President and Chief Leasing Officer, acquired 384.0617 shares of common stock on July 9, 2025, as dividend equivalent rights related to previously reported restricted stock unit awards.
• He also acquired 447.6106 restricted stock units (RSUs) on July 9, 2025, as dividend equivalent rights related to performance units awarded in 2023.
• Additionally, he acquired 423.759 restricted stock units (RSUs) on July 9, 2025, as dividend equivalent rights related to performance units awarded in 2024.
• All acquisitions were at a price of $0, reflecting their nature as grants for dividend equivalents under the Kilroy Realty 2006 Incentive Award Plan.
• Following these transactions, Paratte beneficially owns 87,560.8592 shares of common stock, 57,667.5507 RSUs from 2023 performance units, and 58,091.3097 RSUs from 2024 performance units.
• The performance units remain subject to additional time-based vesting requirements.

Sentiment

Score: 6

Explanation: Slightly positive as it indicates increased alignment of executive interests with shareholders through additional equity holdings, even though it's a routine grant rather than a cash purchase.

Positives

• Increased alignment of executive interests with shareholders through additional equity holdings.
• The grants are part of a pre-existing incentive plan (Kilroy Realty 2006 Incentive Award Plan), indicating structured compensation.

Negatives

• The acquisitions were grants of dividend equivalent rights, not open-market purchases, which would signal stronger personal conviction through cash investment.

Risks

• The acquired restricted stock units and performance units are subject to time-based vesting requirements, meaning they are not immediately liquid.
• The value of these equity holdings is tied to the future performance of Kilroy Realty's stock price.

Future Outlook

The acquired performance units from 2023 and 2024 are subject to additional time-based vesting requirements, with performance periods ending December 31, 2025, and December 31, 2026, respectively.

Management Comments

• The reporting person was awarded performance units in 2023 covering a three-year performance period ending December 31, 2025.
• The reporting person was awarded performance units in 2024 covering a three-year performance period ending December 31, 2026.
• The number of units reported reflects the additional minimum number of units eligible to vest as a result of the crediting of restricted stock units in respect of dividend equivalent rights.
• The units remain subject to additional time-based vesting requirements.

Industry Context

The crediting of dividend equivalent rights on unvested equity awards is a common practice in executive compensation across various industries, including real estate, to ensure executives receive the full economic benefit of their awards as if they were already shareholders. This aligns executive incentives with long-term shareholder returns.

Comparison to Industry Standards

• This type of equity grant, specifically dividend equivalent rights on unvested RSUs and performance units, is a standard component of executive compensation packages in the REIT sector and broader public companies.
• It ensures that executives holding unvested equity awards receive the same dividend benefits as common shareholders, thereby maintaining the full value of their incentive compensation.
• Companies like Prologis (PLD), Simon Property Group (SPG), and Equity Residential (EQIX) also utilize similar equity-based incentive plans that often include dividend equivalent features to align management interests with shareholder returns.

Related Party Transactions

• Acquisition of common stock and restricted stock units by A. Robert Paratte, an executive officer, as dividend equivalent rights on previously granted equity awards. These transactions are part of the company's executive compensation plan (Kilroy Realty 2006 Incentive Award Plan).

Stakeholder Impact

• Shareholders: Increased alignment of executive interests with long-term shareholder value through additional equity holdings.

Next Steps

• Continued time-based vesting of the performance units awarded in 2023 and 2024.
• Future reporting of any changes in beneficial ownership by A. Robert Paratte.

Key Dates

Recommendation

Keywords

Kilroy Realty, KRC, Form 4, insider transaction, A. Robert Paratte, restricted stock units, RSUs, dividend equivalent rights, executive compensation, beneficial ownership, NYSE