UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Amendment No.    )

Filed by the Registrant  ☒                            Filed by a party other than the Registrant  ☐

Check the appropriate box:

Tejon Ranch Co.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

TEJON RANCH CO.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

on

May 20, 202019, 2021

The Annual Meeting of Shareholders of Tejon Ranch Co. (the “Company”, “Tejon”, “we”, “us”, “our” or words of similar import in this Proxy Statement) will be held online via a live webcast at the Hyatt Regency Newport Beach, 1107 Jamboree Road, Newport Beach, California, 92660www.virtualshareholdermeeting.com/TRC2021 on Wednesday, May 20, 2020,19, 2021, at 9:00 A.M., Pacific Time (the “Annual Meeting”), for the following purposes:

The nominees of the Board of Directors of the Company (the “Board”) for election at the meeting are Gregory S. Bielli, AnthonyJean Fuller, Geoffrey L. LeggioStack, and Norman J. Metcalfe.Michael H. Winer.

The Board recommends that you vote: (i) “FOR” the election of each of the nominees; (ii) “FOR” the ratification of the appointment of Deloitte & Touche LLP; and (iii) “FOR” the approval of named executive

officer compensation; and (iv) “FOR” each of the amendmentsamendment to the Company’s Certificate of Incorporation.Incorporation

The Board has fixed the close of business on March 25, 202024, 2021 as the record date for the determination of shareholders entitled to notice of and to vote at the meeting.meeting or the adjournment thereof.

We arecontinue to actively monitoringmonitor the public health and travel safety concerns relating to the coronavirus (COVID-19) and the advisories or mandates that federal, state, and local governments, and related agencies, may issue. In the event it is not possible or advisable to hold our annual meeting as currently planned,As a result of these uncertainties, we have determined for 2021 that we will announce any additionalonce again hold a virtual meeting instead of an in-person meeting. To attend the Annual Meeting online, vote, view the stockholder list, or alternative arrangements forsubmit questions, shareholders of record will need to go to the Annual Meeting website noted above and log in using their 16-digit control number provided on their proxy card or Notice of Internet Availability of Proxy Materials (the “Notice”). For more information about the virtual-only meeting which may include a change in venue or holding the meeting solely by means of remote communication. Please monitor our Investor Relations website at http://ir.tejonranch.com/investor-overviewformat and our filings with the SEC for updated information. Ifyour ability to participate and vote, including if you are planning to attend our meeting, please check our websitea beneficial holder of your shares, see the week ofdiscussion under “Record Date and Voting“ in the meeting.accompany proxy statement. As always, we encourage you to vote your shares prior to the annual meeting.

Your attention is directed to the accompanying Proxy Statement. To ensure that your shares are represented at the Annual Meeting, please date, sign, and mail the enclosed proxy card or voting instruction form, for which a return envelope is provided, or vote your proxy by telephone or the Internet, the instructions for which are provided on the enclosed proxy card.card, Notice or voting instruction form.

In the event of a technical malfunction or other situation that the meeting chair determines may affect the ability of the meeting to satisfy the requirements for a meeting of shareholders to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the meeting, the chair of the meeting will convene the meeting at [9:30 a.m. Pacific Time] on the date specified above and at the Company’s address specified above solely for the purpose of adjourning the meeting to reconvene at a date, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the investors page of the Company’s website at http://ir.tejonranch.com/investor-overview

Please note that if your shares are held by a broker, bank, or other holder of record, your broker, bank, or other holder of record will NOT be able to vote your shares with respect to Proposal 1, or Proposal 3, or Proposals 4(a), (b) or (c)Proposal 4 unless you provide them with directions on how to vote. We strongly encourage you to return the voting instruction form provided by your broker, bank, or other holder of record or to utilize your broker’s telephone or Internet voting, if available, and exercise your right to vote as a shareholder.

Tejon Ranch, California

April 6, 20202, 2021

PLEASE MARK YOUR INSTRUCTIONS ON THE ENCLOSED PROXY, SIGN AND DATE THE PROXY, AND RETURN IT IN THE ENCLOSED POSTAGE PAID ENVELOPE. ALTERNATIVELY, PLEASE VOTE YOUR PROXY BY TELEPHONE OR THE INTERNET.

PLEASE VOTE YOUR PROXYSHARES EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING.MEETING ONLINE. IF YOU ATTEND THE MEETING ONLINE AND WISH TO DO SO, YOU MAY VOTE YOUR SHARES IN PERSONDURING THE MEETING EVEN IF YOU HAVE PREVIOUSLY SUBMITTED YOUR PROXY.

Table of Contents of the Proxy Statement

TEJON RANCH CO.

Post Office Box 1000

Tejon Ranch, California 93243

PROXY STATEMENT

Annual Meeting of Shareholders

May 20, 202019, 2021

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders

To Be Held on May 20, 202019, 2021

The Proxy Statement and accompanying Annual Report to Shareholders and Annual Report on

Form 10-K are available at www.tejonranch.com or at http://materials.proxyvote.com/879080

This Proxy Statement is being furnished in connection with the solicitation of proxies by the Company for use at the Annual Meeting of Shareholders to be held online via live webcast at www.virtualshareholdermeeting.com/TRC2021 on Wednesday, May 20, 202019, 2021, at 9:00 A.M., Pacific Time (the “2020“2021 Annual Meeting”).

It is anticipated that the mailing of this Proxy Statement, and accompanying form of Proxy and Notice of Internet Availabilty (the “Notice”) to shareholders will begin on or about April 6, 2020.2, 2021.

SOLICITATION OF PROXIES

At the meeting, the shareholders of the Company will be asked to vote on the following matters: (1) the election of the three directors named in this Proxy Statement, (2) the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal year 2020,2021, (3) an advisory vote to approve named executive officer compensation, (4) amendmentsan amendment to the Company’s Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock, and (5) such other business as may properly come before the meeting. The Company’s Board of Directors (the “Board”) is asking for your proxy for use at the 20202021 Annual Meeting. Although management does not know of any other matter to be acted upon at the meeting, shares represented by valid proxies will be voted by the persons named on the proxy in accordance with their best judgment with respect to any other matters which may properly come before the meeting.

The costs for this proxy solicitation will be paid by the Company. Following the mailing of this Proxy Statement, directors, officers, and regular employees of the Company may solicit proxies by mail, telephone,e-mail, or in person: such persons will receive no additional compensation for such services. Brokerage houses and other nominees, fiduciaries and custodians nominally holding shares of record will be requested to forward proxy soliciting material to the beneficial owners of such shares and will be reimbursed by the Company for their charges and expenses in connection therewith at the rates approved by the New York Stock Exchange (“NYSE”).

RECORD DATE AND VOTING

General Information

We continue to actively monitor the public health and travel safety concerns relating to the coronavirus (COVID-19) and the advisories or mandates that federal, state, and local governments, and related agencies, may issue. As a result of these uncertainties, we have determined for 2021 that we will once again hold a virtual meeting instead of an in-person meeting. We have endeavored to provide shareholders with the same rights and opportunities for participation in the Annual Meeting online as an in-person meeting.

Holders of shares of the Company’s Common Stock, par value $0.50 (the ���Common“Common Stock”), of record at the close of business on March 25, 202024, 2021 (the “Record Date”) are entitled to notice of, and to vote at, and participate in, the meeting. To participate in the Annual Meeting, including to vote, ask questions, and view the list of registered shareholders as of the record date during the Annual Meeting, shareholders of record should go to the meeting website at www.virtualshareholdermeeting.com/TRC2021, enter the 16-digit control number found on their proxy card or Notice, and follow the instructions on the website. If your shares are held in street name and your voting instruction form or Notice indicates that you may vote those shares through the http://www.proxyvote.com website, then you may access, participate in, and vote at the Annual Meeting with the 16-digit access code indicated on that voting instruction form or Notice. Otherwise, shareholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the Annual Meeting.

Online check-in will begin at [8:45] A.M. Pacific Time on May 19, 2021, and the Annual Meeting will begin promptly at 9:00 A.M. Pacific Time. You are encouraged to allow sufficient time for accessing the Annual Meeting website. Technicians will be available to assist with technical difficulties and may be reached [via the toll free number available on the Annual Meeting website for such assistance][ by calling [phone number] (U.S.) or [phone number] (International)].

The rules of conduct and procedures for the Annual Meeting will be provided [in advance of and] during the Annual Meeting at www.virtualshareholdermeeting.com/TRC2021. The rules of conduct will contain more information regarding the Q&A process, including the number and types of questions permitted, the time allotted for questions, and how questions will be recognized, answered and disclosed. Shareholders may submit questions before and during the Annual Meeting at the Annual Meeting website. We plan to answer questions pertinent to Company matters as time allows during the meeting. Questions that are substantially similar may be grouped and answered once to avoid repetition. Shareholder questions related to personal or customer related matters, that are not pertinent to Annual Meeting matters, or that contain derogatory references to individuals, use offensive language, or are otherwise out of order or not suitable for the conduct of the Annual Meeting will not be addressed during the meeting. If a question is not able to be answered due to time constraints, shareholders are encouraged to contact our Investor Relations department.

There were 26,212,990[                 ] shares of Common Stock outstanding on the Record Date. Each shareholder is entitled to one vote for each share of Common Stock held as of the Record Date on all matters presented at the 20202021 Annual Meeting other than the election of directors. Each shareholder may appoint only one proxy holder or representative to attend the meeting on his or her behalf. A shareholder of record giving a proxy may revoke it at

not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Specifically, your broker, bank, or other holder of record will not have the discretion to vote with respect to Proposal 1, or Proposal 3, or Proposals 4(a), (b) or (c),Proposal 4, but will have discretion to vote on Proposal 2. Therefore, we strongly encourage you to follow the voting instructions on the materials you receive and vote your shares.

Quorum

The holders of record of a majority of the Common Stock entitled to vote at the 20202021 Annual Meeting must be present at the 20202021 Annual Meeting, either in person via the live webcast or by proxy, in order for there to be a quorum at the 20202021 Annual Meeting. Shares of Common Stock with respect to which the holders are present in person at the 20202021 Annual Meeting, but not voting, and shares of Common Stock for which we have received proxies, but with respect to which the holders of the shares have abstained from voting, will be counted as present at the 20202021 Annual Meeting for the purpose of determining whether or not a quorum exists. Brokernon-votes will also be counted as present for the purpose of determining whether a quorum exists. Shareholders cannot abstain in the election of directors, but they can withhold authority. Shareholders who withhold authority will be considered present for purposes of determining a quorum.

Voting Requirements

For Proposal 1 (election of directors), the three (3) candidates receiving the highest number of affirmative votes at the 20202021 Annual Meeting (also referred to as a plurality) will be elected as directors. Shareholders will be able to cumulate their vote in the election of directors. Cumulative voting means that each shareholder is entitled to a number of votes equal to the number of directors to be elected multiplied by the number of shares he or she holds. These votes may be cast for one nominee or distributed among two or more nominees. To exercise the right to cumulate votes, a shareholder must provide written instructions on the proxy card stating how the shareholder wishes to have his or her votes distributed. Withheld votes and brokernon-votes will not be counted as participating in the voting and will therefore have no effect for purposes of Proposal 1.

Approval of Proposal 2 (the ratification of Deloitte & Touche LLP as our independent registered public accounting firm) will require the affirmative vote of the holders of a majority of the shares of Common Stock present in personat the 2021 Annual Meeting or represented by proxy and entitled to vote at the 20202021 Annual Meeting. Abstentions will be counted as present and will thus have the effect of a vote against Proposal 2.

Approval of Proposal 3 (the advisory vote to approve named executive officer compensation) will require the affirmative vote of the holders of a majority of the shares of Common Stock present in personat the 2021 Annual Meeting or represented by proxy and entitled to vote at the 20202021 Annual Meeting. Abstentions will be counted as present and will thus

Proxy Summary

20192020 Performance Highlights

In determining the 2019 compensation for our named executive officers (“NEOs”), the Compensation Committee of the Board (the “Compensation Committee”) considered each NEO’s contributions to the Company’s strategy related to revenue generation, cash management, continued expansion of the Tejon Ranch Commerce Center (“TRCC”) and continued movement of our residential development projects through the entitlement and litigation process within California. The Compensation Committee considered these items with a particular emphasis on the following areas:

Our Mission and Objectives

We are a diversified real estate development and agribusiness company committed to responsibly using our land and resources to meet the housing, employment, and lifestyle needs of Californians and create value for our shareholders. Currently operations consist of land planning and entitlement, land development, commercial land sales and leasing, leasing of land for mineral royalties, water asset management and sales, grazing leases, farming, and ranch operations.

Our primary business objective is to maximize long-term shareholder value through the monetization of our land-based assets. A key element of our strategy is to entitle and then develop large-scalemixed-use master planned residential and commercial/industrial real estate projects to serve the growing populations of Southern and Central California. Ourmixed-use master planned residential developments have received governmental jurisdictional approvals to collectively include up to 34,78335,278 housing units, and more than 35 million square feet of commercial space.

Forward Looking StatementForward-Looking Statements and Website References

This document contains “forward-looking statements”—that is, statements related to future events that by their nature address matters that are, to different degrees, uncertain. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to assumptions and involve known risks, uncertainties, and other important factors that could cause the actual results, performance, or achievement of the Company, or industry results, to differ materially from any future results, performance, or achievement imposed by such forward-looking statements.

Shareholder Engagement

Shareholder engagement is an important and valuable means for direct input and feedback from our investors, and our directors and management recognize the benefits that come from this dialogue. We engage with shareholders throughout the year in order to:

We create many opportunities for shareholders and prospective shareholders to provide feedback to our Board and management by setting upone-on-one meetings and telephone calls. In 2019,2020, we met with investors representing over 40%30% of shares outstanding. The primary feedback that we received related to our business plans and compensation programs is summarized below. The input was similar to the feedback last year given our continued push forward toward the development of our land assets. As part of our process to respond to shareholder feedback and evaluate adjustmentsany comments related to our compensation programs, the Compensation Committee hiredworks with compensation consultant Semler Brossy Consulting Group LLC or(“Semler Brossy”). In 2019 and 2020, Semler Brossy as our new compensation consultant in late 2018. During 2019, Semler Brossy worked withand the Compensation Committee to evaluateevaluated the Company’s compensation programs. The outcome of this evaluation was aprograms, which resulted in the realignment of long-term milestone performance grants beginning in 2020 to include grants that are tied to growth in our stock price.

PROPOSAL 1

THE ELECTION OF DIRECTORS

The Board currently consists of eightnine directors divided into three classes based upon when their terms expire. The terms of three current directors (Class I) will expire at the 2021 Annual Meeting; the terms of twothree current directors (Class II) will expire at the 2022 Annual Meeting; and the terms of three current directors (Class III) will expire at the 2023 Annual Meeting. In connection with the 2020 Annual Meeting of Stockholders, stockholders approved amendments to our Certificate of Incorporation to declassify the Board over a period of three years. As a result, each director elected at the 2021 Annual Meeting will be elected for a two-year term. Next year, directors elected at the 2022 Annual Meeting will be elected for a one-year term. Beginning with the 2023 Annual Meeting, all directors will be subject to annual election for one-year terms.

The nominees of the Board for election at the 2021 Annual Meeting to serve as Class I Directors are Jean Fuller, Geoffrey L. Stack and Michael H. Winer, and all three are presently directors whose terms began at the 2018 Annual Meeting. TheIf elected, the regular term of each director expireswill expire at the third annual meeting following the annual meeting at which that director was elected, so that each director serves a three-year term,2023 Annual Meeting, and until his or her successor is elected and qualified, or until his or her earlier death, resignation, or removal, unless the authorized number of directors is decreased.

The nominees of the Board for election at the 2020 Annual Meeting to serve as Class III Directors are Gregory S. Bielli, Anthony L. Leggio and Norman J. Metcalfe, and all three are presently directors whose terms began at the 2017 Annual Meeting.

Shareholder nominations of persons for election to the Board must be made pursuant to timely written notice to the Secretary of the Company pursuant to, and contain the information required by, the Company’s Certificate of Incorporation and Bylaws. See “Shareholder Proposals for 20212022 Annual Meeting” for additional information on the procedure for shareholder nominations.

Except as noted below, each proxy solicited by and on behalf of the Board will be voted “FOR” the election of the nominees named above (unless such authority is withheld, as provided in the proxy), and unless otherwise instructed,one-halfone-third of the votes to which the shareholder is entitled will be cast for each of the nominees. All of the nominees of the Board have consented to being named in this Proxy Statement and to serve if elected. In the event that any one or more of the nominees shall become unable to serve or for good cause refuses to serve as director (an event that is not anticipated), the proxy holders will vote for substitute nominees in their discretion. If one or more persons other than those named below as nominees for the 20202021 Annual Meeting are nominated as candidates for director by persons other than the Board, the enclosed proxy may be voted in favor of any one or more of said nominees of the Board and in such order of preference as the proxy holders may determine in their discretion.

Brokers do not have discretion to vote on this proposal without your instruction. Therefore, if you are a beneficial owner and you do not instruct your broker how to vote on this proposal, your shares will not be voted on this proposal.

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE

NOMINEES NAMED ABOVE FOR ELECTION AS A DIRECTOR.

PROPOSAL 2

THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

On March 9, 2020,2, 2021, the Audit Committee selected Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2021. Services provided to the Company and its subsidiaries by Deloitte in fiscal year 20192020 are described under “Audit Fees” below. Additional information regarding the Audit Committee is provided in the Report of the Audit Committee below.

Representatives of Deloitte are expected to be present at the 20202021 Annual Meeting and will have an opportunity to make a statement if they wish and will be available to respond to appropriate questions from shareholders.

Shareholder Ratification of the Appointment of Independent Registered Public Accounting Firm

We are asking our shareholders to ratify the selection of Deloitte as our independent registered public accounting firm. Although ratification is not required by our Certificate of Incorporation, Bylaws or otherwise, the Board is submitting the selection of Deloitte to our shareholders for ratification as a matter of good corporate practice. In the event that shareholders do not ratify the appointment of Deloitte, the appointment may be reconsidered by the Audit Committee and the Board. Even if the selection is ratified, the Audit Committee may, in its discretion, select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.

Audit Fees and Services

Audit CommitteePre-Approval

The Audit Committee Charter requires that the Audit Committeepre-approve all services performed by the Company’s outside auditor. To fulfill this requirement, the Company’s independent registered public accounting firm provides a proposal to the Audit Committee for all services it proposes to provide, and the Audit Committee then reviews and approves, rejects, or seeks to modify the proposal. During the years ending December 31, 20192020 and December 31, 2018,2019, 100% of the services provided by the Company’s independent registered public accouting firmsaccounting firm werepre-approved by the Audit Committee.

Prior Independent Registered Public Accounting Firm

As previously disclosed in the Company’s Current Report onForm 8-K filed on March 21, 2019, Ernst &Young, or E&Y, served as the Company’s independent registered public accounting firm until March 18, 2019, when the Audit Committee dismissed E&Y. The decision to change our independent registered public accounting firm was recommended and approved by the Audit Committee.

The reports of E&Y on the Company’s financial statements for each ofthe fiscal yearsyear ended December 31, 2018 and December 31, 2017 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal yearsyear ended December 31, 2018 and December 31, 2017, and the subsequent interim period through March 18, 2019, there were no disagreements (as that term is defined in Item 304(a)(1)(iv) of RegulationS-K and related instructions) between the Company and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which disagreements, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference thereto in its reports on the financial statements for such years.

Representatives of E&Y are not expected to be present at the 20202021 Annual Meeting.

THE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF

DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM FOR FISCAL YEAR 2020.2021.

PROPOSAL 3

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

In accordance with Section 14A of the Securities Exchange Act of 1934, (the “Exchange Act”), we are asking shareholders to approve on an advisory basis the compensation paid to the Company’s NEOs, as disclosed in this Proxy Statement on pages 2824 to 64.55. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s NEOs and the policies and practices described in this Proxy Statement.

The Board recommends that shareholders vote to approve, on an advisory basis, the compensation paid to the Company’s NEOs as described in this Proxy Statement, for the following reasons.

Sound Program Design

We design our executive officers’ compensation programs to attract, motivate, and retain the key executives who drive our success and industry leadership while considering individual and Company performance and alignment with the interest of long-term shareholders. We achieve our objectives through compensation that:

PROPOSAL 4

AMENDMENTSAMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK

After careful consideration and upon the recommendation of the Nominating and Corporate Governance Committee, the Board unanimously voted to approve, and to recommend to our shareholders that they approve and adopt, certain amendmentsan amendment to the Company’s Restated Certificate of Incorporation (the “Certificate”).

Description of the Amendment

The amendments are being presented to shareholders for their approval as three separate proposals:

The proposed amendments in Proposals 4(a) through 4(c) (collectively, the “Proposed Certificate Amendments”) are described below.

Upon the recommendation of the Nominatingemployee plans agreements, and Corporate Governance Committee,(vi) other proper corporate purposes. If approved, the Board has adopted resolutions setting forthwill have the Proposed Certificate Amendments, declaringauthority to issue approximately 20 million additional shares of common stock without incurring the Proposed Certificate Amendments advisabledelay and expense of further shareholder approval, except as may be required for a particular transaction by applicable law or regulation or by the NYSE Listed Company Manual or any other securities exchange on which the Company’s securities may then be listed.

The increase in the best interestsnumber of authorized shares is not intended to impede a change of control, and we are not aware of any efforts to acquire control of the Company and its shareholders, directingor otherwise accumulate shares of our common stock. It is possible, however, that the Proposed Certificate Amendmentsadditional shares contemplated by the amendment could be submitted to the Company’s shareholders for approval and adoption, and recommending that the shareholders approve and adopt the Proposed Certificate Amendments.

Proposal 4(c) is conditioned on the approval of both Proposal 4(a) and Proposal 4(b). Therefore, unless shareholders approve both Proposal 4(a) and Proposal 4(b),issued in connection with defending the Company will not fileagainst a certificatehostile takeover bid to dilute the equity ownership of amendment setting forth the Proposed Certificate Amendments set forth in Proposal 4(c), even if it receives enough affirmative votesa person or entity seeking to pass independently. Proposal 4(a) and Proposal 4(b) are not conditioned on the approval of each other or the approval of Proposal 4(c). Accordingly, each of Proposal 4(a) and Proposal 4(b) will pass if it independently receives enough affirmative votes.

Proposal 4(a): Amendment to Declassify the Board and Provide for the Annual Election of All Directors

Proposal 4(a) would amend the Certificate to phase out the classificationobtain control of the Board overCompany, or in a three-year period and provide instead forprivate placement with purchasers who might side with the annual election of directors (the “Declassification Amendment”).

Reasons for Declassifying the Board

The Certificate currently divides our Board into three classes, with each class elected to serve a three-year term. As a result, at each annual meeting of shareholders, approximatelyone-third of our directors are elected to serve for a three-year term.

Our Board periodically reviews our governance structure and practices, including the continued appropriateness of our classified board structure. As part of its most recent review, and in considering the Declassification Amendment, the Board considered various factors that favor moving to the annual election of all directors, as well as factors that favor continuing with a classified board structure. Among other things, the Board considered that many investors and commentators support annual elections and believe they enhance accountability and responsiveness to shareholders. The Board also recognizes that moving to annual elections is consistent with practices adopted by many companies in recent years.

The Board also took into account the potential benefits of classified boards. These benefits include: (1) promoting stability and continuity of leadership, which are important to the Company because of the long-

term nature and multi-generational time horizons for the developmentBoard if it chose to oppose a specific change of many of the Company’s core business assets; (2) enhancingnon-management directors’ independence from special interest groups or other parties whose goals may notcontrol. These additional shares also could be issued in the best interests of all of our shareholders; and (3) helping the Board achieve value for our shareholders in the event oforder to deter an unsolicited takeover. By increasing the time necessary to elect directors who constitute a majority of the board, a classified board provides a board of directors with the time and flexibility necessary to evaluate the adequacy and fairness of any takeover proposal, negotiate on behalf of all shareholders and weigh alternative methods of maximizing value for all shareholders, without the threat of imminent removal of a majority of board members.

In addition, because the Board is classified, currently directors can be removed only for cause, whereas under Delaware law directors elected to a board that is not classified can be removed with or without cause. If the Declassification Amendment is approved and implemented, it would be easier for one or more shareholders holding a large number of shares, whether an existing or long-term shareholder or one that accumulates a large position in or for a short period of time,attempt to replace the entire Board at once.

Descriptionby diluting the percentage of shares held by persons seeking to control us by obtaining seats on the Board. Accordingly, the amendment could have the effect of discouraging efforts to gain control of the Declassification Amendment

Article VIII, Section 1Company in a matter not approved by the Board. The actual issuance of additional shares of our common stock in the future could have a dilutive effect on earnings per share and on the equity and voting rights of the Certificatepresent holders of our common stock. We currently provides thathave no formal plans, understandings, contracts, agreements or arrangements with respect to the Board is divided into three classes as nearly equal in number as possible, composedissuance of directors each serving termsadditional shares of three years. Proposal 4(a) would amend Article VIII, Section 1 to removecommon stock not previously authorized for issuance by the classified board structure over a three-year periodBoard. Shareholders do not have, and provide for the annual election of directors commencing with the 2023 annual meeting. It would also amend Article VIII, Section 3, which addresses removal of directors, to provide that directors can be removed with or without cause once the Board is declassified.

If the Declassification Amendment is approved and adopted by shareholders, the declassification of the Board would be phased in over a period of three years. The Declassification Amendmentproposed amendment would not shorten the existing terms of directors. Accordingly, a director who has been elected to a three-year term (including directors elected at the 2020 Annual Meeting) will serve for that term. At the 2021 annual meeting of shareholders, the Class I directors, whose terms expire at that meeting, would be elected for atwo-year term expiring at the 2023 annual meeting of shareholders. At the 2022 annual meeting of shareholders, the Class II directors, whose terms expire at that meeting, would be elected for aone-year term expiring at the 2023 annual meeting of shareholders. Beginning with the 2023 annual meeting of shareholders, the declassification of the Board would be complete and all directors would be subject to annual election forone-year terms. Consistent with Delaware law, the Declassification Amendment also provides that beginning with the 2023 annual meeting, directors may be removed either with or without cause. Until that time, directors would continue to be removable only for cause.

The general description of the Declassification Amendment set forth above is qualified in its entirety by reference to the text of the Declassification Amendment, which is included onAnnex 1 to these proxy materials and which is incorporated by reference herein. Additions are indicated by double underlining and deletions are indicated by strike-outs.create, any preemptive rights.

Additional Information

If shareholders approve the Declassification Amendment,proposed amendment, it will become effective upon filing and effectiveness of a certificate of amendment to the Certificate setting forth the Declassification Amendment with the Delaware Secretary of State, which we anticipate doing as soon as practicable following shareholder approval. The Board also intends to approve conforming amendments to the Bylaws that would take effect once the Declassification Amendment is effective. If shareholders do not approve the Declassification Amendment, the Board will remain classified, the certificate of amendment will not be filed with the Delaware Secretary of State, and the Board will not adopt conforming amendments to the Bylaws.

THE BOARD RECOMMENDS

A VOTE “FOR” PROPOSAL 4(A).

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 each individual director should possess certain attributes, as 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 a nominee must meet. 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 Board and committee activities 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 backgrounds and cultures, including on the basis of gender, race, ethnicity, underrepresented communities, viewpoints, and practical experiences can enhance the effectiveness of the Board, asBoard. As part of its evaluation of each candidate, the Nominating Committee takes into account how each candidate’s diversity, 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. In addition, the Board is committed to having a membership that reflects a diversity of ethnicity, race and gender.

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, public policy 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 2021 Annual Meeting; (2) Class II Directors, whose terms will expire at the 2022 Annual Meeting; and (3) Class III Directors, whose terms will expire at the 20202023 Annual Meeting. The Board currently consists of eightnine directors, as the Board reducedincreased its size from eight to nine to eight directors following the 2019 Annual Meeting.on January 1, 2021.    The Board’s leadership is structured so that the Chairman of the Board and Chief Executive Officer (“CEO”) are separate positions. 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 as to management and management’s activities and allows the Board to act independently 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

The following table sets forth information regarding the nominees for Class III Directors at the 20202021 Annual Meeting, as well as the Class III and Class III Directors.

CORPORATE GOVERNANCE MATTERS

The Board has determined that all directors, except Mr. Bielli, are “independent” under the listing standards of the NYSE and the Company’s categorical criteria used to determine whether a director is independent (the “Independence Standards”). 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 is attached as Appendix A to this Proxy Statement. Thus, the Board determined that the following directors are independent: Steven A. Betts, Jean Fuller, Anthony L. Leggio, Norman J. Metcalfe, Frawn Morgan, Geoffrey L. Stack, Daniel R. Tisch, and Michael H. Winer. In addition, the Board also determined that Robert A. Alter, who served as a director through the 2019 Annual Meeting, was independent during the time he served as a director. 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 this 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 compensation committees. In reaching a determination on these directors’ independence, the Board considered that neither the directors nor their immediate family members have within the past three years had any direct or indirect business or professional relationships with the Company other than in 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 performed 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 the Independence Standards or the NYSE’s objective listing standards.

The independent directors of the Board meet regularly in executive sessions outside the presence of management. As Chairman of the Board, Mr. Metcalfe presides over these executive sessions. During 2019,2020, there were four meetings of the Board, and all directors attended 75% or more100% 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 meeting of shareholder in person. All directors including Robert A. Alter, who retired at the conclusion of the 2019 Annual Meeting, attended the 20192020 Annual Meeting of the Company.

COMMITTEES 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 as of the date of this proxy statement are set forth belowbelow:

Committee Chair		Committee Member

During 2019,2020, there was one meeting of the Executive Committee, sevenfour meetings of the Audit Committee, eightthree meetings of the Compensation Committee, two meetings of the Real Estate Committee, nofour meetings of the Nominating and Corporate Governance 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.

Each year, the Board performs a self-evaluation to assess its effectiveness and the participation of each board member. In addition, on an annual basis, the Audit Committee, Real Estate Committee, Compensation Committee, and Nominating and Corporate Governance Committee all perform self-evaluations to measure their effectiveness.

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.

The Audit Committee

The Audit Committee represents and assists the Board in discharging 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 appointment, retention, compensation and oversight of the independent auditor and approves all audit andnon-audit services the independent auditor performs. It also reviews and discusses the Company’s policies with respect to risk

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 officers have any input in executive

The Real Estate Committee

The Real Estate Committee provides oversight, guidance, and strategic input into management plans and operations for development and entitlement of Company land. It reviews and either approves or recommends to the Board appropriate action on significant proposed real estate transactions and development proformas and budgets. It reports regularly to the full Board with respect to its meetings. The Real Estate Committee’s current charter is available on the Company’s website,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, 4436 Lebec Rd., P.O. Box 1000, Tejon Ranch, California 93243.

The Investment Policy Committee

The Investment Policy Committee reviews policies and activities related to the investment of the Company’s assets. It receives and reviews the marketable securities investment policy and data regarding marketable security investments and recommends approval of the Company’s investment security policy to the Board.

CODE 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 Company’sweb-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, Tejon Ranch, California 93243.

SUCCESSION PLANNING

The Board, with the assistance of the Compensation Committee, oversees succession plans for the CEO 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 CEO also provides the Board with input regarding these matters.

BOARD’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 shareholder 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, cybersecurity and compensation risks. In addition to discussing risk with the full Board, the independent directors discuss risk management during executive sessions without management present.

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 reviews and discusses the Company’s policies with respect to risk assessment and risk management; 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 assesses the independence of directors and evaluates potential new Board nominees, which allows it to limit the risk associated with having conflicted or otherwise inappropriate directors. Pursuant to the Board’s instruction, management regularly reports on applicable risks to the relevant committee or the full Board, as appropriate, and additional review or reporting on risks is 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.

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) provides a detailed description of the objectives and principles of our executive compensation programs. It explains how compensation decisions are linked to performance as compared to Company performance and shareholder interests. The NEOs, for the 20192020 fiscal year are as follows.

Executive Summary and Compensation Philosophy

Our executive compensation program aligns with our strongpay-for-performance philosophy and ties a substantial portion of executive compensation to the achievement of annual and long-term strategic objectives directly linked to the creation of shareholder value. The objectives of our executive compensation program are to (i) drive performance against critical strategic goals designed to create long-term shareholder value through the enhancement of our land asset values 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. At our 2019 Annual Meeting, our shareholders expressed support for our executive compensation program, with 93.7% of shareholders casting votes in favor of the advisory vote proposal.

We design our compensation programs to support our commitment to performance. We view our compensation program in three year increments tied to the time period of our milestone grants, which we make every three years. The current three year period is from 2017 to 2019.

The compensation program for our NEOs is designed to align management’s incentives with the long-term interests of our shareholders and to be competitive with comparable employers. Our compensation philosophy recognizes the value of rewarding our NEOs 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-based incentive bonus, and long-term performance-based and time-based equity awards. At the NEO level, a significant portion of 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 ofyear-to-year operating performance goals. Our overall goal is to have variable compensation be 70% or more of target total compensation for the three-year period.

Our long-term and short-term performance incentive plans are designed to reward the NEOs for success in moving projects forward along the above continuum. Success in achieving these performance objectives is critical to the creation of value within our land assets. Due to the long-term nature of the real estate development process in California, the increase in value of land within our projects is not immediately recognized in stock market value largely due to the timing of revenue generation, which does not begin to occur until the execution phase of development operations. Therefore, we measure and reward the progress based on achievement of milestone related goals rather than typical financial measures used by many companies.

We design our compensation programs to support our commitment to performance. We view our compensation program in three-year increments tied to the time period of our milestone grants, which we make every three years. Our performance milestones are tied to a variety of factors that will create long-term value for our shareholders such as cash management, planning and design, achievement of land entitlements, successful defense of litigation against our entitlements, development of projects, and finally sales and leasing within the projects. The current three-year measurement period is from 2020 to 2022.    

Executing2020 Operational and Financial Results

The impact of COVID-19 varied across our businesses, but primarily impacted our retail segment, which had a strong January and February, and then slowed down significantly in March. Some of our other business lines were not impacted by the pandemic such as our industrial retail activities. Others such as farming and mineral resources were indirectly impacted as oil supplies remained higher than normal. In addition, the almond and pistachio markets were impacted by restaurants and companies serving restaurants buying less than their historical levels. In response, the Company initiated cost reduction programs and implemented a voluntary pay reduction for senior management, which included a 10% base salary reduction for all of our NEOs that continued until the end of 2020. During this time, our teams quickly adapted to the new operating environment and incorporated new health and safety practices into all aspects of our business. Our priority was to keep employees, trade partners, and customers safe while continuing to focus on our Strategy—2019 Company Highlightsbusiness operations. As you will see below, the primary driver leading to lower net income and revenues is attributed to land sales and a joint venture land and building sale that did not occur during 2020.

2019 Operational and Financial Results

Improvements in revenue and net income during 2019 led to EBITDA and Total Revenue and Other Income, which are the annual corporate incentive bonus quantitative metrics, being above the target goal levels for revenue and above maximum goal levels for EBITDA. These metrics are discussed below under “Annual Incentive Plan.” The Company also met the 2017-2019 rolling three-year cash flow objectives at 175.62% of the target award level. The rolling three-year cash flow metric is described in the equity compensation section.

Pay-for-Performance

Consistent with ourpay-for-performance philosophy, Company financial performance in 2019, as well as over the 2017-2019 measurement period,2020 directly impacted incentive payouts for 2019,2020, as follows:

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, the success of the Company in achieving real estate development milestones, and the individual performance of each 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 land development, including obtaining complex entitlement approvals, managing the litigation process, completing development, and many of the other actions and decisions of our NEOs requires an extended time horizon before the Company realizes a tangible financial benefit. The stock price of the Company is also important to ensure alignment between executive compensation and in 2019shareholder interests, and during 2020 the Compensation Committee, with guidance from the Committee’s compensation consultant, has designedcompleted the design of a performancenew stock grant program that incorporates stock performance intoin the long-term incentive plan.determination of future vesting of the grants issued. The new long-term incentive planstock performance grants made in 2020 will become effective for 2020 and will cover years 2020-2022.

The principles of our pay philosophy influence the design and administration of our executive compensation programs. The Compensation Committee uses several components of pay that are linked to both our long-term and short-term performance in the executive compensation programs, including long-term incentives, annual cash incentives, base pay, and benefits. The chart below illustrates the linkage between the vehicles of pay we use and our pay principles.

Our Executive Compensation Best Practices

2020 Executive Compensation Plan Framework

Our variable compensation consists of two programs: the annual incentive plan (“AIP”), which is an annual cash incentive program, and the long-term incentive plan (“LTIP”), which consists of performance-based and time-based equity vehicles.

Our AIP has three primary performance measures:

Our LTIP consists of three equity delivery vehicles:

The Compensation Committee believes that long-term performance award design reflects the value creation process inherent in large-scale land development by first identifying projects, securing complex entitlements, managing litigation, mapping projects, and then developing the projects to maximize financial returns. Please refer to earlier graphic describing the land entitlement and development process within California.

For the 2020-2022 long-term incentive plan measurement period the CEO’s equity awards are intended to cover three years of grants for each equity award vehicle. The Compensation Committee does not intend to make additional awards to the CEO during the 2020-2022 period.

Pay Mix Analysis

The target mix of total direct compensation elements for our CEO and NEOs, as a percentage of total compensation, is set forth in the tables below. We show a three-year period to account for the granting of project milestone equity performance grants that occurs once every three years and occurred in 2020. A significant percentage of our compensation is delivered through variable cash and equity, with over 50% of our CEOs target compensation provided through equity incentives.

Elements of Compensation

The Compensation Committee seeks to create a compensation plan that is balanced in its use of short-term and long-term compensation elements in order to align management’s incentives with the long-term interests of our shareholders and the development of our land assets. In developing the compensation plan, the Compensation Committee seeks to be aware of changing economic and industry conditions, as well as changing compensation trends. To achieve these objectives, the plan uses a variety of compensation elements as described below.

Base Salaries

When establishing base salaries, the Compensation Committee takes into account each NEO’s performance of his role and responsibilities and, to the extent useful, the range of compensation of comparable executives in our peer group. The Compensation Committee believes that compensation objectives are effectively met when a majority of an executive’s compensation is composed of performance-based bonuses and long-term incentive compensation, rather than fixed compensation such as base salaries. We believe that having the overall compensation emphasis on long-term equity incentives instead of short-term fixed compensation better aligns management with shareholders.

The Compensation Committee approved the following 2019 and 2020 base salaries for our NEOs.

The following chart provides the performance level weightings for the Chief Executive Officer and the other NEOs.

Quantitative Financial Goal – Corporate

We measure adjusted EBITDA as an indicator of our financial performance relative to budget and our ability to fund our real estate development activities. Our definition of adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, abandonment charges, and non-cash stock compensation. We believe adjusted EBITDA provides a good indicator of management’s creation of operating cash, which is critical to the funding of our entitlement and development efforts, since the Company has significant non-cash expenses each year. The following table outlines adjusted EBITDA results for 2020. Adjusted EBITDA for compensation purposes includes only company specific operations and not the add back of our share of unconsolidated joint venture depreciation, amortization, and interest expense. Therefore, this number is different from the numbers shown in the 2020 Annual Report and Form 10-K, Non-GAAP measures.

Individual Performance Objectives

In addition to the goals described above, the CEO and each NEO also has individual performance objectives. The CEO’s individual performance objectives are proposed by the CEO and agreed upon and approved by the Compensation Committee. These objectives are tied to business development and organizational goals that move the Company forward in achieving its long-term objectives. Individual goals for our CEO in 2020 specifically related to:

Based on management’s proactive response to the COVID-19 pandemic, guidance in setting the stage for approval of the TRCC residential multi-family conditional use permit received January 2021, and continued reduction in controllable costs, the Compensation Committee determined that the CEO’s individual performance was at the maximum achievement.

The other NEOs individual performance goals are generally tied to individual areas of responsibility, which focus on both short-term and long-term goals (including improving operational efficiencies and achieving short-term milestones and other goals with respect to the Company’s long-term business strategy related to land entitlement, development, and conservation). Generally, the qualitative goals covered:

The CEO and the Compensation Committee evaluate the success of the other NEOs in meeting their individual performance objectives, with final approval provided by the Compensation Committee. The Chief Executive Officer and the Compensation Committee note whether each objective was accomplished in the time frame designated and if the outcome achieved was as specified in the original objective. The individual payouts as a percentage of target are shown in the table below.

2020 Performance Achievement

The following chart provides a breakdown of 2020 annual incentive award measurement by performance measurement category and the total 2020 incentive award as a percentage of salary. Final award measurement for the NEOs reflects actual results.

Equity Compensation

The Compensation Committee believes that the long-term value of the Company will be driven by the execution of its long-term strategies. Accordingly, Tejon uses long-term equity incentives to align senior management’s interests with shareholders’ interests. The Compensation Committee believes that management should own stock and that teamwork among the management group is important in meeting business goals. Therefore, long-term milestone incentives are goal-based, with common performance measures for all participants to encourage teamwork.

Shares associated with the above performance milestones were granted in March 2020 with a target vesting date of December 2022. These shares cliff vest at the end of three years based on performance and are either achieved or forfeited. There is no maximum or threshold level achievement. Exception is Milestone 1 above, which if achieved prior to December 31, 2021, target shares are adjusted up by 25%. If Milestone 1 is achieved between January 1, 2022 and December 31, 2022 there is no adjustment to shares. The following table identifies the target value and target shares granted in 2020, representing three years’ worth of long-term incentive grants based on performance of milestones at target:

Actual shares earned in respect of 2018-2020 three-year cash flow performance shares are as follows:

Chief Executive Officer and discusses his performance with him. At the beginning of the year, the Chief

Elements of Compensation

The Compensation Committee seeks to create a compensation plan that is balanced in its use of short-term and long-term compensation elements in order to align management’s incentives with the long-term interests of our shareholders and the development of our land assets. In developing the compensation plan, the Compensation Committee seeks to be aware of changing economic and industry conditions, as well as changing compensation trends. To achieve these objectives, the plan uses a variety of compensation elements as described below.

Base Salaries

When establishing base salaries, the Compensation Committee takes into account each NEO’s performance of his role and responsibilities and, to the extent useful, the range of compensation of comparable executives in our peer group. The Compensation Committee believes that compensation objectives are effectively met when a majority of an executive’s compensation is composed of performance-based bonuses and long-term incentive compensation, rather than fixed compensation such as base salaries. We believe that having the overall compensation emphasis on long-term equity incentives instead of short-term fixed compensation better aligns management with shareholders.

The Compensation Committee approved the following 2019 and 2020 base salaries for our NEOs.