Types of Awards Granted Under the Plan. As described more fully inCompensation Discussion and Analysis, the Incentive Plan allows the Company to enter into any type of arrangement with any eligible grantee that involves or might involve the issuance of shares of Common Stock of the Company. To preserve flexibility,

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the Incentive Plan permits the grant of sales or bonuses of stock, restricted stock, restricted stock units, stock options, other rights to acquire stock, securities convertible into or redeemable for stock, stock appreciation rights, phantom stock, dividend equivalents, performance units or performance shares, and an award may consist of one such security or benefit, or two or more of them in tandem or in the alternative. The types of securities that may be issued under the Incentive Plan are described below. Notwithstanding the foregoing, under the Incentive Plan, in no event shall any awards be granted to any one person in any one calendar year with respect to more than 500,000 common shares.

Stock Options.Stock options granted under the Incentive Plan awards may be either non-qualified stock options or incentive stock options under Section 422 of the Internal Revenue Code of 1986 (the “Code”). Only persons who are employees of the Company may be granted incentive stock options. The exercise price of any stock option granted may not be less than the fair market value of the shares on the date of grant, and any person who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company may not be granted an incentive stock option at an exercise price less than 110% of the fair market value of the stock on the date of grant. The Board or a committee of directors has the power to determine the terms of each option granted, including the expiration, vesting and exercise dates and whether the exercise price will be paid in cash, by tender of outstanding shares of Common Stock, by surrendering option rights with respect to existing unexercised stock options, by any combination of the foregoing or by any other means approved by the Board or the committee. The term of options may not be greater than 10 years (5 years for 10% stockholders), the options must not be transferable other than by the laws of descent and distribution, and they must be exercisable only by the holder during the life of the holder. If the aggregate fair market value of all shares of stock with respect to which incentive stock options granted to an individual first become exercisable during any calendar year exceeds $100,000, the options will not qualify as incentive options to the extent of the excess.

Stock Appreciation Rights.Stock appreciation rights (“SARs”) entitle the grantee exercising the SAR to receive payment in an amount equal to the difference between the fair market value of a share of stock on the date of exercise and the exercise price of the SAR multiplied by the number of shares as to which the SAR is exercised. The SAR can be settled in cash, shares of stock or a combination of both. It is also possible to grant SARs in tandem with stock options that are not eligible for the federal income tax treatment afforded incentive stock options (see “Certain Federal Income Tax Consequences of Options and Other Awards”) in order to provide the grantee with cash to pay the income taxes that are payable upon exercise of such an option.

Restricted Stock.Awards can be granted in the form of shares of stock which are restricted by agreements having terms and provisions determined by the Board or a committee thereof, which may include forfeiture provisions or restrictions on transferability that expire over time or upon the satisfaction of certain performance or other requirements. Grantees receiving restricted stock typically are entitled to dividends and voting rights on the shares prior to the lapsing of the restrictions. Restricted stock generally vests pursuant to the achievement of specific goals and objectives. No later than 30 days after a grantee receives the restricted stock, the grantee may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the grantee will not recognize any additional income. If the grantee forfeits the shares to the Company (e.g., upon the grantee’s termination prior to expiration of the restriction period), the grantee may not claim a deduction with respect to the income recognized as a result of the election.

Performance Shares.The Incentive Plan permits the Board or a committee of the Board to grant performance share awards involving the issuance of unrestricted shares of Common Stock based upon the appreciation in the market value, book value or other measure of value of the Common Stock, the performance of the Company based on earnings or cash flow and/or such other factors as the Board or the Committee may determine to be important to increasing stockholder value. Generally, the granting of performance shares is tied to the achievement of a rolling three-year cash flow metric.

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Other Awards. Awards may be granted to employees under the Incentive Plan that do not fall clearly into the categories described above.

Administration. The Incentive Plan provides that it is to be administered by the Board or a committee, which must consist of two or more directors (the “Committee”). The 2013 Restatement gives the Board or the Committee broad authority to do all things necessary and desirable in connection with the administration of the Amended Incentive Plan, including, without limitation, the following: (a) adopt, amend and rescind rules and regulations relating to the Amended Incentive Plan; (b) determine which persons meet the eligibility requirements of the Amended Incentive Plan and to which of such eligible persons, if any, awards will be granted; (c) grant awards to eligible persons and determine the terms and conditions thereof, including the number of Common Shares issuable pursuant thereof; (d) determine whether and the extent to which adjustments are required to be made under the Amended Incentive Plan and under outstanding awards in the event of events such as stock splits, reverse stock splits, stock dividends, other dividends or distributions (except cash dividends paid out of earned surplus) or a merger, recapitalization or certain other significant events; and (e) interpret and construe the Amended Incentive Plan and the terms and conditions of any award granted thereunder.

Section 162(m) of the Code. The Board continues to believe that it is in the best interests of the Company and its stockholders to continue to provide for an equity incentive plan under which stock-based compensation awards made to the Company’s executive officers can qualify for deductibility by the Company for federal income tax purposes. Accordingly, the Incentive Plan has been (and with the 2013 Restatement remains) structured in a manner such that awards under it can satisfy the requirements for “performance-based” compensation within the meaning of Section 162(m). However, there can be no guarantee that amounts payable under the Amended Incentive Plan will be treated as qualified “performance-based” compensation under Section 162(m). In general, under Section 162(m), in order for the Company to be able to deduct compensation in excess of $1 million paid in any one year to the Company’s Chief Executive Officer or any of the Company’s three other most highly compensated executive officers (other than the Company’s Chief Financial Officer), such compensation must qualify as “performance-based.” One of the requirements of “performance-based” compensation for purposes of Section 162(m) is that the material terms of the performance goals under which compensation may be paid be disclosed to and approved by the Company’s stockholders. For purposes of Section 162(m), the material terms include (i) the employees eligible to receive compensation, (ii) a description of the business criteria on which the performance goal is based and (iii) the maximum amount of compensation that can be paid to an employee under the performance goal. With respect to awards of restricted stock, stock units, performance shares, performance units and other awards under the Incentive Plan, each of these aspects is discussed below, and stockholder approval of the Incentive Plan Amendment will be deemed to constitute re-approval of each of these aspects of the Incentive Plan for purposes of the approval requirements of Section 162(m).

Duration, Termination and Amendment of Plan. The current Incentive Plan provides that awards cannot be granted under the Plan after January 25, 2018, which is the expiration of ten years after the Second Amendment of the Incentive Plan was approved by stockholders in 2008. Under the current Incentive Plan, shares of Common Stock can be issued until January 25, 2028 pursuant to awards granted on or prior to January 25, 2018. If the proposed 2013 Restatement is approved, these dates will be extended to January 25, 2023 and January 25, 2033, respectively. The Board can amend or terminate the Incentive Plan at any time in any manner, but any such amendment is subject to the approval of the Company’s stockholder’s to the extent required by law or by any applicable listing standard of the NYSE. In addition, without approval of the stockholders of the Company, no amendment may: (a) materially increase the maximum number of shares of common stock for which awards may be granted under the Amended Incentive Plan; (b) reduce the exercise price of outstanding stock options and stock appreciation rights; (c) extend the term of the Amended Incentive Plan; or (d) change the class of persons eligible to be participants. Further, no such amendment or termination shall deprive the recipient of any award granted under the Amended Incentive Plan, without the consent of such recipient, of any of his or her right thereunder or with respect thereto.

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Awards Granted Under the Incentive Plan. On March 27, 2013, (i) 741,368 shares were subject to unvested awards of restricted stock and performance share awards granted under the Incentive Plan; and (ii) 257,459 shares remained available to support additional awards of stock options and stock grant awards. The closing price of the common stock, as reported on the NYSE on March 27, 2013 was $30.22 per share.

Information about restricted stock and performance share awards granted in 2012 under the Incentive Plan to the Chief Executive Officer, Chief Financial Officer and the other most highly compensated executive officers can be found in the table under the heading “Grants of Plan-Based Awards in 2012” on page 38 of this Proxy Statement.

Additional information about the Incentive Plan and other plans pursuant to which awards in the form of shares of the Company’s common stock may be made to directors and employees in exchange for goods or services, including plans that were not required to be approved by stockholders but excluding plans assumed in mergers, is provided under “Equity Compensation Plans Information” on page 31 of this Proxy Statement.

No information can be provided with respect to options or awards that may be granted in the future under the Incentive Plan. Such awards are within the discretion of the Board and the Compensation Committee, and neither has determined future awards or who might receive them.

Performance-Based Compensation Under Section 162(m). The Board or Compensation Committee may establish performance criteria and levels of achievement versus such criteria that shall determine the number of shares of common stock to be granted, retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an award, which criteria may be based on “Qualifying Performance Criteria” (as described below) or other standards of financial performance and/or personal performance evaluations. In addition, the Board or Compensation Committee may specify that an award or portion of an award is intended to satisfy the requirements for “performance-based” compensation under Section 162(m), provided that the performance criteria for any portion of an award that is intended by the Board or Compensation Committee to satisfy the requirements for “performance-based” compensation under Section 162(m) shall be a measure based on one or more Qualifying Performance Criteria selected by the Board and specified at the time the award is granted.

Qualifying Performance Criteria will be any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or related company, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group, in each case as specified by the Board or Compensation Committee in the award: (i) internal rate of return; (ii) net cash flow (net cash from operations and cash used for capital investment); (iii) timing of the receipt of entitlements; (iv) number of units entitled; (v) number of acres absorbed; (vi) return on average common stockholders’ equity; (vii) return on average equity; (viii) return on tangible equity; (ix) total stockholder return; (x) stock price appreciation; (xi) earnings per diluted share of common stock; (xii) operating earnings (including earnings before transaction-related expense) per diluted share of common stock; (xiii) net operating earnings (including earnings less transaction-related expense) per diluted share of common stock; (xiv) return on average assets; and (xv) EBITDA. To the extent consistent with Section 162(m) of the Code, the Board or the Compensation Committee, as applicable, (A) may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to eliminate the effects of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the disposal of a segment of a business or related to a change in accounting principle all as determined in accordance with standards established in Accounting Standards Codification 250 Accounting Changes, or other applicable or successor accounting provisions, as well as the cumulative effect of accounting changes, in each case as determined in accordance with generally accepted accounting principles or identified in the Company’s financial statements or notes to the financial statements, and (B) may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (1) asset write-downs, (2) litigation, claims,

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judgments or settlements, (3) the effect of changes in tax law or other such laws or provisions affecting reported results, (4) accruals for reorganization and restructuring programs and (5) accruals of any amounts for payment under this Plan or any other compensation arrangement maintained by the Company.

Certain Federal Income Tax Consequences of Options and Other Awards. The following is a brief description of the federal income tax treatment that will generally apply to awards granted under the Incentive Plan based on federal income tax laws in effect on the date of this Proxy Statement. The exact federal income tax treatment of awards will depend on the specific nature of the award. This summary does not constitute tax advice, is not intended to be exhaustive and, among other things, does not describe any state, local or foreign tax consequences.

Incentive Stock Options. An employee recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. However, the excess of the fair market value of the shares acquired over the option price is an item of adjustment in computing the alternative minimum taxable income of the optionee. If the optionee holds the stock received upon exercise of the incentive stock option for at least two years following the date the option was granted one year following the exercise of the option, the optionee will normally recognize a long term capital gain or loss equal to the difference, if any, between the sale price and the purchase price of the shares. If an optionee satisfies such holding periods upon a sale of the shares, the Company will not be entitled to any deduction for federal income tax purposes. However, if an optionee disposes of the shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), then the optionee will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares, upon exercise of the option over the option price (or, if less, the excess of the amount realized upon disposition of the option price). The excess, if any, of the sale price over the fair market value on the date of exercise will be a short-term capital gain. In such case, the Company will be entitled to a deduction, in the year of such a disposition, for the amount includible in the optionee’s income as compensation. The optionee’s basis in the shares acquired upon exercise of an incentive stock option is equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.

Non-Qualified Stock Options. Although the grant of non-qualified stock options under the Incentive Plan results in no taxable income to the optionee or deduction to the Company, when the optionee exercises the option, he or she will be taxed at ordinary income rates on the excess of the fair market value of the stock received over the option exercise price and, subject to the applicable provisions of the Code, the Company will generally be entitled to a tax deduction in the same amount. The amount paid by the optionee on exercise plus the amount included in an optionee’s income as a result of the exercise of a non-qualified stock option will be treated as his or her basis in the shares acquired, and any gain or loss on the subsequent sale of the shares will be treated as long-term or short-term capital gain or loss, as the case may be.

Stock Appreciation Rights. The grant of a SAR is generally not a taxable event for the grantee. Upon exercise of the SAR, the grantee will recognize ordinary income in an amount equal to the amount of cash received upon such exercise, and the Company will generally be entitled to a deduction equal to the same amount.

Restricted Stock. There are no immediate tax consequences of receiving an award of restricted stock units. A participant who is awarded restricted stock generally will recognize ordinary income in an amount equal to the fair market value of the shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the administrator or a participant. Any additional gain or loss recognized upon any later disposition of any shares received would be capital gain or loss. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code (including Section 162(m)).

Performance Shares. A participant will generally recognize no income upon the grant of a performance share. Upon the settlement of such award, participants normally will recognize ordinary income in the year of

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receipt in an amount equal to the fair market value of any nonrestricted shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code (including Section 162(m)).

Other Awards. Awards may be granted to employees under the Incentive Plan that do not fall clearly into the categories described above. The federal income tax treatment of these awards will depend upon their specific terms.

Excess Parachute Payments. The terms of the agreements pursuant to which awards are made under the Incentive Plan may provide for accelerated vesting or payment of an award in connection with a change in ownership or control of the Company. All of the options, performance shares and restricted shares granted to date include such provisions. In that event and depending upon the individual circumstances of the recipient employee, certain amounts with respect to such awards may constitute “excess parachute payments” under the golden parachute provisions of the Internal Revenue Code. Pursuant to those provisions, an employee will be subject to a 20% excise tax on any “excess parachute payment.”

Section 409A. It is the intention of the Company that awards will comply with Section 409A of the Code regarding nonqualified deferred compensation arrangements or will satisfy the conditions of applicable exemptions. However, if an award is subject to and fails to comply with the requirements of Section 409A, the participant may recognize ordinary income on the amounts deferred under the award, to the extent vested, prior to the time when the compensation is received. In addition, Section 409A imposes a 20% penalty tax, as well as interest, on the participant with respect to such amounts.

Withholding Taxes. The Company will generally be required to withhold applicable taxes with respect to any ordinary income recognized by a grantee in connection with awards under the Incentive Plan.

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS ATHAT YOU VOTE “FOR” APPROVAL OF THE AMENDMENT AND RESTATEMENTCOMPENSATION OF THE 1998 STOCK INCENTIVE PLAN.COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED ON PAGES 18 TO 47 IN THE PROXY STATEMENT.

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PROPOSAL 4

AMENDMENT AND RESTATEMENT OF THE NON-EMPLOYEE DIRECTOR STOCK INVENTIVE PLAN

At the 2013 Annual Meeting, the stockholders of the Company will also be asked to vote upon the approval of and amendment and restatement of the Company’s Non-Employee Director Stock Incentive Plan (the “Director Plan”) in order to in order to (1) increase the maximum number of shares of Common Stock the Company may issue under the Incentive Plan by 200,000 shares, from 200,000 to 400,000 shares, (2) extend the date through which awards may be granted under the Director Plan from December 31, 2012 to December 31, 2022, and the date that Common Shares can be issued under the Director Plan from December 31, 2022 to December 31, 2032, and (3) make certain other ministerial changes to the Incentive Plan (the “Director Plan Amendments”).

The purpose of the Director Plan Amendments is to secure adequate shares to fund expected awards under the Company’s director compensation program. The Board believes that 200,000 shares, which is equivalent to approximately 1% of our common shares outstanding, represent a reasonable amount of potential equity dilution and allows the Company to continue awarding equity-based compensation, which is an important component of its overall director compensation program. The Board intends that the 200,000 shares will fund the Company’s director compensation requirements for the next 9 years. The purpose of the Director Plan is to attract, retain and motivate directors who are not full-time employees by providing for or increasing their proprietary interests in the Company.

The Board unanimously adopted the Director Plan Amendments on December 12, 2012. A copy of the Director Plan, as amended and restated to reflect the Director Plan Amendments, is attached asAppendix C to this Proxy Statement. The Company’s non-employee directors have an interest in the Director Plan Amendments because they are eligible for awards under the Director Plan.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE DIRECTOR PLAN AMENDMENTS

Purpose. The purpose of the Director Plan is to attract, retain and motivate directors who are not full-time employees by providing for or increasing their proprietary interests in the Company. As described more fully inCompensation Discussion and Analysis, the Board believes equity incentives are an important part of its overall compensation policy because they align the interests of directors with those of the stockholders.

Eligibility. All of the Company’s directors who are not employees of the Company or any of its wholly-owned or majority owned subsidiaries on a full-time basis are eligible to receive grants under the Director Plan, except that directors who are temporarily employees of the Company or a subsidiary on a full-time basis are also eligible to receive awards under the Director Plan.

Number of Shares Available Under the Plan. The number of shares available for awards under the Director Plan after giving effect to the Director Plan Amendments is 400,000. Shares subject to awards under the Director Plan that lapse, expire, terminate or are canceled prior to issuance will again be available for issuance under the Director Plan. In addition, shares subject to awards under the Director Plan that are not issued upon the net settlement or net exercise of options or stock appreciation rights, and shares that are delivered to or retained by the Company to pay the exercise price or withholding taxes related to awards , will be added back to the number of shares available for additional grants under the Director Plan. The number of shares that may be issued is subject to adjustment in the event of a stock split, reverse stock split, merger, and certain other significant events. The closing price of the Company’s Common Stock on the NYSE on March 27, 2013 was $30.22.

The total shares available for future awards are 36,500 at March 27, 2013. There are currently no options outstanding our shares issuable under restricted stock grants outstanding. The requested increase to shares available in the Director Plan after amendments of 200,000 will increase shares authorized for future awards to 236,500.

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Types of Awards To Be Granted Under the Plan. As described more fully inCompensation Discussion and Analysis, the Director Plan allows the Company to enter into any type of arrangement with a non-employee director that involves or might involve the issuance of shares of Common Stock of the Company. To preserve flexibility, the Director Plan permits the grant of sales or bonuses of stock, restricted stock, restricted stock units, stock options, other rights to acquire stock, securities convertible into or redeemable for stock, stock appreciation rights, phantom stock, dividend equivalents, performance units or performance shares, and an award may consist of one such security or benefit, or two or more of them in tandem or in the alternative. For a description of the types of securities that may be issued under the Director Plan, see “Approval of Amendments to 1998 Stock Incentive Plan – Description of the Plan – Types of Awards To Be Granted Under the Plan.”

Administration. The Director Plan provides that it is to be administered by the Board or a committee of two or more directors (the “Committee”). The Director Plan gives the Board or the Committee broad authority to determine the non-employee directors to whom awards will be granted and the terms and conditions of such awards. The Board or the Committee also has the power to adopt, amend and rescind rules and regulations relating to the Director Plan and to determine whether and the extent to which adjustments are required to be made under the Director Plan and under outstanding awards in the event of events such as stock splits, reverse stock splits, stock dividends, other dividends or distributions (except cash dividends paid out of earned surplus) or a merger, recapitalization or certain other significant events.

No Repricing. There can be no repricing of options or stock appreciation rights without stockholder approval, either by canceling the option or stock appreciation right as consideration for cash, issuing a replacement option, stock appreciation right or other stock award to the participant at a lower price or by reducing the exercise price of the option or stock appreciation right, other than in connection with a change in the Company’s capitalization.

Duration, Termination and Amendment of Plan. If the Director Plan Amendments are approved by the stockholders, awards could be granted under the Director Plan through December 31, 2022 and shares could be issued under the Plan through December 31, 2032. The Board may amend, alter or terminate the Director Plan at any time in and any manner, but any such amendment is subject to the approval of the Company’s stockholder’s to the extent required by law or by any applicable listing standard of the NYSE. In addition, without approval of the stockholders of the Company, no amendment may: (a) materially increase the maximum number of shares of common stock for which awards may be granted under the Amended Director Plan; (b) reduce the exercise price of outstanding stock options and stock appreciation rights; (c) extend the term of the Director Plan; or (d) change the class of persons eligible to be participants. Further, no such amendment or termination shall deprive the recipient of any award granted under the Director Plan, without the consent of such recipient, of any of his or her right thereunder or with respect thereto.

Awards Granted Under the Director Plan. The primary form of equity compensation awarded under the Director Plan consists of stock granted on a quarterly basis, in arrears, to compensate Directors for their annual retainer and committee chairmanships. These granted shares vest immediately. The Board has the power to amend or terminate the director compensation program described above at any time without stockholder approval.

Certain Federal Income Tax Consequences of Options and Other Awards. The federal income tax treatment of awards granted under the Director Plan will be the same as described under “Approval of Amendments to the 1998 Stock Incentive Plan – Certain Federal Income Tax Consequences of Options and Other Awards.”

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE “FOR” APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE NON-EMPLOYEE DIRECTOR STOCK INVENTIVE PLAN

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THE BOARD OF DIRECTORS

Consideration of Director Nominees

The Board believes the Board, as a whole, should possess the requisite combination of skills, professional experience, and diversity of backgrounds to oversee the Company’s business. The Board also believes that there are certain attributes each individual director should possess, as reflected in the Board’s membership criteria.discussed below. Accordingly, the Board and the Nominating and Corporate Governance Committee (the “Nominating Committee”) consider the qualifications of directors and director candidates individually as well as in the broader context of the Board’s overall composition and the Company’s current and future needs.

The Nominating Committee is responsible for selecting nominees for election to the Board. In considering candidates for the Board, the Nominating Committee evaluates the entirety of each candidate’s credentials, attributes, and other factors (as described in greater detail in the Company’s Corporate Governance Guidelines), but does not have any specific minimum qualifications that must be met by a nominee. However, the Nominating Committee seeks as directors individuals with substantial management experience who possess the highest personal values, judgment and integrity, an understanding of the environment in which the Company does business and diverse experience with the key business, financial and other challenges that the Company faces. In addition, in considering the nomination of existing directors, the Nominating Committee takes into consideration (i) each director’s contribution to the Board; (ii) any material change in the director’s employment or responsibilities with any other organization; (iii) the director’s ability to attend meetings and fully participate in the activities of the Board and the committees of the Board on which the director serves; (iv) whether the director has developed any relationships with the Company or another organization, or other circumstances that may have arisen, that might make it inappropriate for the director to continue serving on the Board; and (v) the director’s age and length of service on the Board.

Because the Nominating Committee recognizes that a diversity of viewpoints and practical experiences can enhance the effectiveness of the Board, as part of its evaluation of each candidate, the Nominating Committee takes into account how each candidate’s background, experience, qualifications, attributes and skills may complement, supplement or duplicate those of other prospective candidates. The Nominating Committee reviews its effectiveness in balancing these considerations when assessing the composition of the Board, which as discussed below is one of the committee’s responsibilities.

Based on the parameters described above, the Board has determined that the directors standing for reelection and the remaining members of the Board have the qualifications, experience, and attributes appropriate for a director of the Company. As reflected below, each director has a varied background in the real estate industry, finance, and/or agriculture. These are all areas that are integral to the strategy, operations and successful oversight of the Company.

Board Composition and Leadership Structure

The Board is grouped into three classes: (1) Class I Directors, whose terms will expire at the 20152018 Annual Meeting, (2) Class II Directors, whose terms will expire at the 20132016 Annual Meeting, and (3) Class III Directors, whose terms will expire at the 20142017 Annual Meeting. The Board currently consists of nineten directors. The Board’s leadership is structured so that there is a separate Chairman of the Board and Chief Executive Officer. The Chairman of the Board is also an independent director. The Board believes that this structure is appropriate for our Company and our shareholders at this time because it provides an additional layer of oversight to management and management’s activities and allows the Board to act independent of management.

Director Qualifications and Biographical Information

The Nominating Committee considered the character, experience, qualifications and skills of each director, including the current director nominees, when determining whether each should serve as a director of the Company. In keeping with its stated criteria for director nominees described in the section entitled “Consideration

“Consideration of Director Nominees” above, the Nominating Committee determined that each director, including the current director nominees, has substantial management experience, exhibits the highest personal

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values, judgment and integrity, and possesses an understanding of the environment in which the Company does business and diverse experience with the key business, financial and other challenges that the Company faces. Each director is or has been a leader in theirhis respective field and brings diverse talents and perspectives to the Board. The Nominating Committee also considered the experience and qualifications outlined below in the biographical information for each director, including each director nominee, as well as other public company board service.

The Nominating Committee noted the following particular attributes and qualities it considers when evaluating director nominees. The Nominating Committee believes that nominees with business and strategic management experience gained from service as a chief executive officer or similar position is a critical leadership component to Board service. The Nominating Committee also seeks nominees with backgrounds in finance, banking, economics, and the securities and financial markets, in order to have directors who can assess and evaluate the Company’s financial and competitive position. The Nominating Committee emphasizes familiarity with the real estate and agricultural industries, and considers customer perspectives to be important when evaluating director nominees. Although the directors listed below each possess a number of these attributes, the Nominating and Corporate Governance Committee considered the specific areas noted below for each director when determining which of the director’s qualifications best suited the needs of the Company and qualify them to serve as a director of the Company.

The following table sets forth information regarding the nominees for Class II Directors and also regarding the Class IIII Directors and the Class IIII Directors.

Class III Directors Whose Terms Expire in 2017 and Principal Occupation, Employment, or Directorships		First Became Director		Age
Gregory S. Bielli		2013		55
Mr. Bielli is President and Chief Executive Officer of Tejon Ranch Co., a position he’s held since December 2013. Prior to this position, Mr. Bielli served as the Chief Operating Officer for the Company from September 2013 through November 2013. Mr. Bielli has nearly 25 years of experience in real estate, land acquisition, development and financing. Prior to Tejon Ranch, he was a regional president of Newland Communities, one of the country’s largest and most successful master planned community developers. Mr. Bielli served as President of Newland’s Western Region from 2006 until September 2013. Mr. Bielli earned a bachelor’s degree in Political Science from the University of Arizona in 1983. Our Board believes Mr. Bielli’s experience in real estate operations, specifically master planned communities and his position as Chief Executive Officer of the Company, make him well qualified to serve as director.
John L. Goolsby		1999		74
Mr. Goolsby was employed by the Howard Hughes Corporation from 1980 until his retirement in 1998, serving as President and Chief Executive Officer from 1988 until 1998. Howard Hughes Corporation was a real estate investment and development company that developed numerous large scale real estate projects in Nevada and California, the largest being the Summerlin community in Las Vegas, Nevada. Mr. Goolsby served as a director of Thomas Properties Group Inc. from 2006 until 2013. Mr. Goolsby also formerly served as a director of America West Airlines, Sierra Pacific Corporation and its predecessor, Nevada Power Company, First Interstate Bank of Nevada, Bank of America-Nevada, and as a Trustee of The Donald W. Reynolds Foundation. In 2005, he established the Goolsby Leadership Academy in the College of Business at The University of Texas at Arlington. Mr. Goolsby received a B.B.A. from The University of Texas at Arlington and is a certified public accountant. Our Board believes Mr. Goolsby’s extensive real estate experience and his experience as a chief executive officer of a major real estate land and development company make him well qualified to serve as director.
Norman J. Metcalfe		1998		73
Mr. Metcalfe has served as Chairman of the Company’s Board of Directors since 2014. Mr. Metcalfe has an extensive history and background in real estate development and homebuilding. He previously was Vice Chairman and Chief Financial Officer of The Irvine Company, one of the nation’s largest real estate and community development companies. Mr. Metcalfe retired from the Irvine Company in 1998. Prior to the Irvine Company, Mr. Metcalfe spent over 20 years in various real estate, corporate finance and investment positions with the Kaufman and Broad/SunAmerica family of companies. These positions included President and Chief Investment Officer of SunAmerica Investments and Chief Financial Officer of Kaufman and Broad Home Corporation (currently known as KB Homes). Mr. Metcalfe is currently a director of CalAtlantic Homes, having served since 2000. Mr. Metcalfe received a B.S. and an M.B.A. from the University of Washington. Our Board believes Mr. Metcalfe’s extensive financial experience, understanding of capital structure within the real estate industry, and experience in publicly held companies make him very qualified to serve as a director.

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Class I Directors Whose Terms Expire in 2018 and Principal Occupation, Employment, or Directorships		First Became Director		Age
Anthony L. Leggio		2012		64
Mr. Leggio has been President of Bolthouse Properties, LLC, a commercial and residential real estate development firm, since January 2006. Prior to serving at Bolthouse Properties, LLC, Mr. Leggio served as Vice President and General Counsel of Wm Bolthouse Farms from July 2001 until December 2005. Previously, Mr. Leggio was Managing Partner of the law firm of Clifford and Brown for nearly 25 years. Mr. Leggio has served as a director of Valley Republic Bank since 2008, Three Way Chevrolet Company since 2000, H.F. Cox Trucking since 1993, Mark Christopher Chevrolet since 2001, and W.B. Camp Companies since 2009. Mr. Leggio received his B.S. degree from University of the Pacific and his J.D. from University of the Pacific, McGeorge School of Law. Our Board believes Mr. Leggio’s real estate development and agricultural experience, his tenure as Chief Executive Officer of a real estate development company and his legal experience make him well qualified to serve as a director.
Geoffrey L. Stack		1998		72
Mr. Stack has been the managing director of the Sares-Regis Group, a commercial and residential real estate development and management firm, since 1993. Mr. Stack is responsible for all residential operations of Sares-Regis including development, acquisitions, finance, and management activities. Mr. Stack graduated from Georgetown University and received an M.B.A. in Real Estate Finance at the Wharton School, University of Pennsylvania. Our Board believes Mr. Stack’s real estate development experience and his experience as the managing director of a real estate company make him well qualified to serve as a director.
Frederick C. Tuomi		2014		61
Mr. Tuomi is currently the Chief Executive Officer of Colony Starwood Homes (SFR), the company formed from the merger of Colony America Homes (CAH) and Starwood Waypoint Residential Trust (SWAY). SFR is a public single family REIT, owning over 30,000 homes in markets across the U.S. Mr. Tuomi served as CAH’s Co-President from March 2015 to January 2016 and COO from July 2013 to January 2016. He was responsible for setting CAH’s strategic direction and leading the operations of CAH’s operations including construction/renovations, marketing, leasing, property management, asset management, human resources and information technology. Mr. Tuomi also served as Executive Vice President and President, Property Management for Equity Residential, a multi-family REIT from January 1994 through June 2013. He led the development of Equity Residential’s Property Management Group through years of rapid growth and expansion to become the nation’s largest apartment REIT. Throughout his 35 year career, he has served on numerous multi-family industry boards and executive committees, including the National Multi-Housing Council, California Housing Council, California Apartment Association and the USC Lusk Center for Real Estate. Mr. Tuomi also serves on the board of directors and as treasurer of the National Rental Housing Council. Mr. Tuomi is a graduate of Georgia State University, with degrees in Business Information Systems and an M.B.A. Our Board believes that Mr. Tuomi’s real estate background and understanding of the single family housing market make him very qualified to serve as a director.

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None of the corporations or organizations described above are subsidiaries, or other affiliates of the Company. There are no family relationships among any directors or executive officers of the Company.

Corporate Governance MattersCORPORATE GOVERNANCE MATTERS

The Board has determined that all directors, except Mr. Stine,Bielli , are “independent,” as that term is defined in“independent” under the listing standards of the New York Stock Exchange (the “NYSE”). In addition to and the definition of “independent” as set forth in the listing standards of the NYSE, the Board has adoptedCompany’s categorical criteria used to determine whether a director is independent (the Company’s “Independence Standards”), and. In addition, the Board has determined that all directors, except Mr.former director Robert A. Stine, are “independent” under the Independence Standards. Thesewho resigned on May 15, 2015, was not independent. The Independence Standards are set forth in Attachment A to the Company’s Corporate Governance Guidelines (the “Corporate Governance Guidelines”), and a copy of the Independence Standards areis attached as Appendix A to

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this Proxy Statement. Thus, the Board determined that the following directors are independent: George G.C. Parker, Daniel Tisch,Robert A. Alter, Steven A. Betts, John L. Goolsby, Anthony L. Leggio, Norman J. Metcalfe, Kent G. Snyder, Geoffrey L. Stack, Daniel R. Tisch, Frederick C. Tuomi, and Michael H. Winer and Anthony L. Leggio. The Board also previously determined that Barbara Grimm-Marshall (who served on the Board until March 2012) was an independent director

Winer. Also, in making its independence determinations, the Board reviewed additional information provided by the directors and the Company with regard to any business or personal activities or associations as they may relate to the Company and the Company’s management. The Board considered the transactionsthis information in the context of the NYSE’s objective listing standards, the Independence Standards, and for directors serving on committees, the additional standards established for members of audit committees and the Securities and Exchange Commission (the “SEC”) and U.S. Internal Revenue Code standards for compensation committee members. Basedcommittees. In reaching a determination on all of the foregoing,these directors’ independence, the Board made a subjective determination as required by NYSE rulesconsidered that because ofneither the nature ofdirectors nor their immediate family members have within the transaction, the director’s relationshippast three years had any direct or indirect business or professional relationships with the entity and/or the amount involved, no relationships exist that,Company other than in the opinion of the Board, would impair the director’s independence.their capacity as directors.

The Board’s independence determinations included a review of business dealings at companies where the directors serve as directors or outside consultants, all of which were ordinary course business transactions. The Board also performs a review of the Company’s charitable contributions to any organization where a director serves as an executive officer and found no contributions in excess of guidelines.the Independence Standards.

The independent directors of the Board meet regularly in executive sessions outside the presence of management. As Chairman of the Board, Mr. SnyderMetcalfe presides over these executive sessions.

During 2012,2015, there were four meetings of the Board. During 20122015 all directors attended 75% or more of the aggregate total of such meetings of the Board and committees of the Board on which they served.

The Company’s policy is that all directors are expected to attend every annual stockholders meeting in person. All directors with the exception of one, attended the 20122015 Annual Meeting of the Company.

Committees of the BoardCOMMITTEES OF THE BOARD

Standing committees of the Board include the Executive, Audit, Compensation, Investment Policy, Real Estate, and Nominating and Corporate Governance Committees. The current members of the standing committees are set forth below:

During 2012,2015, there were notwo meetings of the Executive Committee, sixseven of the Audit Committee, fourseven of the Compensation Committee, twofour of the Real Estate Committee, two of the Nominating Committee, and no meetings of the Investment Policy Committee. The major functions of each of these committees, including their role in oversight of risks that could affect the Company, are described briefly below.

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The Executive Committee

Except for certain powers that, under Delaware law, may be exercised only by the full Board, or which, under the rules of the Securities and Exchange Commission (the “SEC”) or the NYSE, may only be exercised by committees composed solely of independent directors, the Executive Committee may exercise all powers and authority of the Board in the management of the business and affairs of the Company. Messrs. Snyder, Stack, Stine, and Winer are members of the Executive Committee. Mr. Snyder is the Chairman of the Executive Committee.

The Audit Committee

The Audit Committee represents and assists the Board in fulfilling the Board’s oversight responsibility relating to (i) the accounting, reporting, and financial practices of the Company and its subsidiaries, including the integrity of the Company’s financial statements; (ii) the surveillance of administration and financial controls and the Company’s compliance with legal and regulatory requirements; (iii) the independent auditor’s qualifications and independence; and (iv) the performance of the company’s internal audit function and the Company’s independent auditor. In addition, the Audit Committee is directly responsible for the retention of the independent auditor and approves all audit and non-audit services the independent auditor performs. It also reviews and discusses the Company’s policies with respect to risk assessment and risk management. The Audit Committee reports regularly to the full Board with respect to its activities. The Audit Committee is governed by a written charter adopted and approved by the Board. Mr. ParkerThe Audit Committee’s charter is available on the ChairmanCompany’s web site,www.tejonranch.com, in the Corporate Governance section of the Audit Committee,Investor Relations webpage, and Messrs. Goolsby, Leggio, and Stack are members ofis available in print form upon request to the Audit Committee. Corporate Secretary, P.O. Box 1000, Tejon Ranch, California 93243.

The Board has determined that each member of the Audit Committee is independent under the listing standards of the NYSE and under the Company’s Independence Standards, and that each member of the Audit Committee is financially literate and meets the requirements for Audit Committee Membership set forth in Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Act. The Board has further found that Mr. ParkerLeggio qualifies as an “audit committee financial expert” for the purposes of Item 407(d)(5) of Regulation S-K, and has “accounting or related financial management expertise” as described in the listing standards of the NYSE. The Audit Committee’s charter is available on the Company’s web site,www.tejonranch.com, in the Corporate Governance section of the Investor Relations webpage, and is available in print form upon request to the Corporate Secretary, P.O. Box 1000, Lebec, California 93243.

The Compensation Committee

The Compensation Committee reviews and either adjusts or recommends to the Board appropriate adjustments tooversees the Company’s overall compensation structure, policies and programs, and it assesses whether the Company’s compensation structure establishes appropriate incentives for management and employees. It also reviews and approves corporate goals and objectives relevant to the compensation of top managerial and executive officers, evaluates their performance in light of those goals and objectives, and makes recommendations regarding their compensation. It administers and makes recommendations to the Board with respect to the Company’s incentive compensation and equity-based compensation plans and grants of awards thereunder. It also reviews and recommends to the Board the design of other benefit plans, employment agreements, and severance arrangements for top managerial and executive officers. The Compensation Committee oversees the assessment of the risks related to the Company’s compensation policies and programs applicable to officers and directoremployees, reviews the results of this assessment, and also assesses the results of the Company’s most recent advisory vote on executive compensation. It approves, amends or modifies the terms of any compensation or benefit plan that does not require shareholder approval, if delegated to the Committee by the Board. It reviews and evaluatesrecommends changes for the performancecompensation of directors, and it reviews succession plans relating to positions held by senior executive officers. It reports regularly to the Board with respect to its activities.

The Compensation Committee is governed by a written charter adopted and approved by the Board. The Compensation Committee’s charter is available on the Company’s web site,www.tejonranch.com, in the Corporate Governance section of the Investor Relations webpage, and is available in print form upon request to the Corporate Secretary, P.O. Box 1000, Lebec,Tejon Ranch, California 93243. The Compensation Committee is authorized to delegate to a subcommittee consisting of not less than two members of the Compensation Committee the responsibility to review specific issues, meet with management on behalf of the committee regarding such issues, and prepare recommendations or reports or review by the committee. Mr. Stack is the Chairman of the Compensation Committee, and Messrs. Goolsby, Metcalfe, and Winer are members of the Compensation Committee. The Board has determined that each member of the Compensation Committee is independent under the listing standards of the NYSE for directors and compensation committee members and under the Company’s Independence Standards.

The CEO does not participate in the Compensation Committee’s deliberations with regard to his own compensation. At the Compensation Committee’s request, the CEO reviews with the Compensation Committee the performance of the other executive officers, but no other executive officer hasofficers have any input in executive compensation decisions. The Compensation Committee gives substantial weight to the CEO’s evaluations and recommendations because he is particularly able to assess the other executive officers’ performance and contributions to the Company.

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During 2012,2015, the Compensation Committee engaged Poe Consulting to assist in the review of Director compensation. During 2011, the Compensation Committee did notCEO’s, compensation and identification of Peer Group companies. The decision to engage any external consulting firms. In 2010 the Compensation Committee engaged Mezrah Consulting as an outside compensation consultant to assist the Compensation Committee in evaluating near-term stock grant compensation.was not recommended by management. Poe Consulting was used throughout 2015 and Mezrahits services were used in helping to determine 2016 salary adjustments. Poe Consulting did not provide any other services to the Company in 2012. The decisions to engage these outside compensation consultants were not recommended by management. Poe Consulting completed it engagement during 20122015 and its fees in 2012 were $15,500. Mezrah Consulting completed its engagement$51,191 for the Compensation Committee during 2010. The Compensation Committee approved the services; the outside compensation consultant’s fees in 2010 were $45,000.year. The Compensation Committee has reviewed an assessment of any potential conflicts of interest raised by Poe Consulting’s work for the Compensation Committee, which assessment considered the following six factors: (i) the provision of other services to the Company by Poe Consulting; (ii) the amount of fees received from the Company by Poe Consulting, as a percentage of Poe Consulting’s total revenue; (iii) the policies and procedures of Poe Consulting that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the Poe Consulting consultant with a member of the Compensation Committee; (v) any Company stock owned by the Poe Consulting consultants; and (vi) any business or personal relationship of the Poe Consulting consultant or Poe Consulting with any of the Company’s executive officers, and concluded that there are no such conflicts of interest.

The Real Estate Committee

The Real Estate Committee reviews all significant activities and issues related to the Company’s real estate assets and opportunities. It receives and considers the analyses of the Company’s real estate staff and provides management with oversight, guidance and strategic input oninto management action plans for development and entitlement of Company land, and it provides a review function to management regarding major decision points.points within the Company’s development projects. It reviews and either approves or recommends to the Board appropriate action on significant proposed real estate transactions and developmentpro formas and budgets, and action plans.budgets. The Real Estate Committee also evaluates risk as it relatesprovides oversight and guidance to the Company’s Chief Executive Officer with regard to recruitment and employment of senior real estate plans, activities, and transactions.executives. It reports regularly to the full Board with respect to its meetings. Mr. Goolsby is the Chairman of the Real Estate Committee, and Messrs. Metcalfe, Snyder, Stack, Stine, Tisch, and Winer are members of the Real Estate Committee. The Real Estate Committee’s charter is available on the Company’s web site,www.tejonranch.com, in the Corporate Governance section of the Investor Relations webpage, and is available in print form upon request to the Corporate Secretary, P.O. Box 1000, Lebec,Tejon Ranch, California 93243.

Investment Policy Committee

The Investment Policy Committee reviews policies and activities related to the investment of the Company’s cash assets and works in coordination with the Real Estate Committee. It receives and reviews policy and data regarding marketable security investments and recommends approval of the Company’s investment security policy to the Board. Currently, this committee consists of Mr. Winer. Committee memberships are reviewed each year after the annual meeting and it is expected that members will be added to the Investment Policy Committee after the 2013 Annual Meeting.

The Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee (“Nominating Committee”) is charged with assessing existing directors to determine whether to recommend them for reelection to the Board, identifying and recruiting potential new directors, establishing a procedure for consideration of candidates for director positions recommended by stockholders, and recommending candidates to be nominated by the Board or elected by the Board as necessary to fill vacancies and newly created directorships. It also reviews and makes recommendations to the Board respecting the structure, composition and functioning of the Board and its committees, and it evaluates the Corporate Governance Guidelines and the Board’s performance. Mr. Metcalfe is the Chairman of the Nominating Committee, and Messrs. Parker, Snyder and Winer are members of the Nominating Committee.

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The Board has determined that each member of the Nominating Committee is independent under the listing standards of the NYSE and under the Company’s Independence Standards. The Nominating Committee is governed by a written charter adopted and approved by the Board. The Nominating Committee’s charter is available on the Company’s web site,www.tejonranch.com, in the Corporate Governance section of the Investor Relations webpage, and is available in print form upon request to the Corporate Secretary, P.O. Box 1000, Lebec,Tejon Ranch, California 93243.

The Nominating Committee is pleased to consider any properly submitted recommendations of director candidates from stockholders. Stockholders may recommend a candidate for consideration by the Nominating Committee by sending written notice addressed to the Nominating and Corporate Governance Committee Chair, c/o Corporate Secretary, P.O. Box 1000, Lebec,Tejon Ranch, California 93243. The Nominating Committee does not evaluate candidates differently based on who has made the recommendation. Stockholders may also nominate persons for election to the Board by providing timely notice in writing to the Secretary of the Company pursuant to the procedures set forth in the Company’s Certificate of Incorporation. See “Stockholder Proposals for 20142017 Annual Meeting” for additional information on the procedure for stockholder nominations.

The Nominating Committee has the authority under its charter to hire and pay a fee to outside counsel, experts or other advisors to assist in the process of identifying and evaluating candidates. No such outside advisors have beenwere used to dateduring 2015 and, accordingly, no fees have beenwere paid to such advisors during 2015. Past practice has been for the Nominating Committee to seek recommendations for new directors from current directors, the Chief Executive Officer, and outside advisors.

Code of Business Conduct and Ethics and Corporate Governance GuidelinesCODE OF BUSINESS CONDUCT AND ETHICS AND CORPORATE GOVERNANCE GUIDELINES

The Board has adopted a Code of Business Conduct and Ethics, which is applicable to all directors, officers and employees. It also has adopted Corporate Governance Guidelines to guide its own operations. Both documents (including Attachment A to the Corporate Governance Guidelines, which constitutes the Company’s Independence Standards) are available on the CompanyCompany’s web site,www.tejonranch.com, in the Corporate Governance section of the Investor Relations webpage, and are available in print form upon request to the Corporate Secretary, P.O. Box 1000, Lebec,Tejon Ranch, California 93243.

Succession PlanningSUCCESSION PLANNING

The Board, with the assistance of the Compensation Committee, oversees succession plans for the Chief Executive Officer and other senior executive officers. These plans relate both to succession in emergency situations and longer-term succession. As set forth in the Corporate Governance Guidelines and Compensation Committee Charter, the Compensation Committee reviews the Company’s succession planning for senior executive officers at least annually. The Chief Executive Officer also provides the Board with input regarding these matters.

Board’s Role in Risk OversightBOARD’S ROLE IN RISK OVERSIGHT

The full Board oversees the Company’s risk management process. The Board oversees a Company-wide approach to risk management, designed to enhance stockholder value, support the achievement of strategic objectives and improve long-term organizational performance. The full Board determines the appropriate level of risk for the Company generally, assesses the specific risks faced by the Company and reviews the steps taken by management to manage those risks. The full Board’s involvement in setting the Company’s business strategy facilitates these assessments and reviews, culminating in the development of a strategic plan that reflects both the Board’s and management’s consensus as to appropriate levels of risk and the appropriate measures to manage those risks. The full Board assesses risk throughout the enterprise, focusing on risks arising out of various aspects of the Company’s strategic plan and the implementation of that plan, including financial, legal/compliance, operational/strategic and compensation risks. In addition to discussing risk with the full Board, the independent directors discuss risk management during executive sessions without management present.

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While the full Board maintains the ultimate oversight responsibility for the risk management process, its committees oversee risk in certain specified areas. In particular, the Audit Committee focuses on financial risk, including internal controls, and discusses the Company’s risk profile with the Company’s internal auditors. The Audit Committee also reviews potential violations of the Company’s Code of Ethics and related corporate policies. The Compensation Committee periodically reviews compensation practices and policies to determine whether they encourage excessive risk taking. Finally, the Nominating Committee manages risks associated with the independence of directors and Board nominees. Pursuant to the Board’s instruction, management regularly reports on applicable risks to the relevant committee or the full Board, as appropriate, with additional review or reporting on risks being conducted as needed or as requested by the Board and its committees.

The Compensation Committee has also reviewed the design and operation of the Company’s compensation structures and policies as they pertain to risk and has determined that the Company’s compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company.

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COMPENSATION DISCUSSION &AND ANALYSIS

Executive Summary.TheThis Compensation Discussion and Analysis discusses and analyzes Tejon’s(“CD&A”) describes our compensation program for the following individuals, all of whom are considered NEOs for 2015.

This CD&A describes the components of our executive compensation program, providing a discussion of our executive compensation philosophy, policies, and practices. It also describes how and why the Compensation Committee of the Board of Directors arrived at specific 2015 executive compensation decisions and the amounts shownfactors the Compensation Committee considered in making those decisions.

Executive Summary

Our executive compensation program aligns with our strong pay-for-performance philosophy and ties a substantial portion of executive compensation to the achievement of annual and long-term strategic objectives directly tied to the creation of stockholder value. The objectives of our executive compensation program are to (i) drive performance against critical strategic goals designed to create long-term stockholder value and (ii) pay our executives at a level and in a manner that ensures Tejon Ranch is capable of attracting, motivating, and retaining top executive talent.

Our primary business objective is to maximize long-term shareholder value through the monetization of our land-based assets. This is accomplished by moving our assets up the value creation chain through the entitlement process, the mapping process, and ultimately to development. A key element of our strategy is to provide entitled land for large scale residential and mixed use real state communities to serve the growing population of Southern and Central California. We are currently engaged in commercial sales and leasing at our fully operational commercial/industrial center, and are in the executive compensation tablesmapping process and entitlement process for our named executive officers. Our named executive officers forthree major residential projects. All of these efforts are supported by diverse revenue streams generated from other operations, including farming, mineral resources, and our various joint ventures.

Company Performance - 2015

2012 – Year in Review

		2015				2014
Total operating revenues			51,147,000				51,069,000
Total other income			909,000				1,222,000
Equity in earnings of unconsolidated joint ventures			6,324,000				5,294,000
Total Revenue			58,380,000				57,585,000

The Company’s financial performance during 2012 was comparable to 2011, with the exception of a one time conservation easement sale for $15,750,000. For 2012, we had net

2015 Company Highlights

Operations

Improvements in total revenue during 20122015 led to EBITDA and total revenues, the annual corporate incentive bonus quantitative metric EBITDAmetrics, being met atabove the maximumtarget goal level for the year. This metric isThese metrics are discussed below under “– Annual“Annual Performance-Based Incentive Bonuses” as well as revenueIncentives.” Revenue and operating profit goals for commercial/

industrial real estate were at target and resort/residential. Based onabove the last three-years cash flow metric results thetarget goal level, respectively. Revenue and operating goals for farming were above target for revenue and operating profits. The named executive officers met the 20102013 rolling three-year cash flow objectives at 92% of the maximumtarget award level. The rolling three-year cash flow metric is described in the equity compensation section. The grants associated with the 20102013 three-year cash flow metric were paid out during March 2013.2016. The number of grantsstock units that vested arein 2016 is identified in the footnotes to the Outstanding Equity Awards at 20122015 Fiscal Year-End table that begins on page 24.42.

For 20122015, the Compensation Committee made the following decisions:

Consideration of Say-On-Pay Results

At our 20112015 Annual Meeting, our stockholders expressed support for our executive compensation program, with over 60%62% of shareholders casting votes cast voting in favor of the advisory vote proposal. In response to the decrease in support last year, the Compensation Committee undertook a review of the Company’s executive compensation program and reached out to receive input from our largest investors. In terms of stockholder outreach, we received feedback regarding our executive compensation program from stockholders representing in the aggregate more than 30% of the Company’s voting stock. When designingevaluating our 20122015 and 20132016 executive compensation programs, the Compensation Committee considered among other things, the 2011 vote results and feedback we received from stockholders. In addition,these stockholders, such as the need to tie long-term equity awards to performance goals and to stock return metrics. The Company also considered feedback from the Compensation Committee also considered the results of the 2010 Compensation Report, as discussed in the 2011 Proxy Statement.Committee’s independent consultant. After careful consideration of these results, as well as other factors described herein, the Compensation Committee determined that the Company should continue forward with the direction taken in 2014 and 2015 to make certain changestie compensation to long-term milestone and performance goals. These goals are tied to the designCompany’s long-term real estate development objectives of our executive compensation program beginning in 2012. Such changes remain in affectentitlement of land for development, the development of land, and have contributed to our executive compensation program discussed in thisthe management of cash and capital allocations. During 2016, the Compensation Discussion and Analysis. Stockholders also expressed support for our determination to hold an advisory vote on our executive compensation program once every three years. Therefore, we expectCommittee adjusted the next advisory vote on executiveCEO’s long-term performance stock compensation to occur atinclude a Total Shareholder Return (TSR) component. The Compensation Committee also reviewed peer companies and adjusted our 2014 annual meeting.

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20132016 – The Year Ahead

The Company believes 2013 may not2016 will be as strong an incomea challenging but successful year as 2012 duein the accomplishment of corporate objectives. The challenges of 2016 relate to the continuing decline in oil prices; the potential reductiondecline in farm crop prices, especially almonds; and water management as we allocate our water resources to our permanent crops of production withinalmonds, pistachios, and wine grapes and to real estate development, while at the same time selling any excess water we have. California continues in a drought, and state water project allocations currently have been set at a 45% allocation of state water project contracts. The above items will challenge us in meeting our pistachio operations due to pistachios being an alternate bearing crop2016 budgeted revenue and 2013 is anticipated to be a low production year. We expect activity at Tejon Ranch Commerce Center, or TRCC, to continue to improve through 2013 withcash flow objectives. Our successes can come from the possible development of an outlet center. In order to conserve cash going forward, the Compensation Committee’s compensation decisions will continue to be impacted by our anticipationsuccessful approval of the need to continue to fundspecific plan for our joint ventures as they pursueCentennial development opportunities, future capital investment requirements for infrastructure at TRCC, and possible continued investmentthe approval of the Grapevine development by Kern County late in water assets.2016.

General Objectives of theand Compensation Plan.Philosophy

The compensation program for our named executive officersNEOs is designed to align management’s incentives with the long-term interests of our stockholders and to be competitive with comparable employers. Our compensation philosophy recognizes the value of rewarding our named executive officers for their past performance and motivating them

to continue to excel in the future. The Compensation Committee has developed and maintains a compensation program that rewards superior performance and seeks to encourage actions that drive our business strategy. Our compensation strategy is to provide a competitive opportunity for senior executives, taking into account their total compensation packages, which include a combination of base salary, an annual cash- and stock-basedcash-based incentive bonus, (with the stock-based component taking the form of restricted stock subject to time-based vesting), and long-term performance-based equity awards. At the named executive officerNEO level, our incentive compensation arrangements are designed to reward the achievement of long-term milestone objectives related to real estate development that are measurable and instrumental to our success. This will drive the creation of value, as well as the achievement of year-to-year operating performance goals.

Overall Compensation Plan Design and Core Tenets

The compensation policies developed by the Compensation Committee are based on the philosophy that compensation should reflect both financial and operational performance of the Company and the individual performance of the executive. The Compensation Committee also believes that long-term incentives should be a significant factor in determining compensation, particularly because the business of real estate development, including obtaining entitlement approvals and completing development, and many of the other actions and decisions of our named executive officers, requires a long time horizon before the Company realizes a tangible financial benefit. The following core tenets inform the design of our compensation plan.

Our Executive Compensation Best Practices

The Role of Executivesthe Compensation Committee in Setting Compensation.Compensation