William H. Armstrong III
About William H. Armstrong III
Chairman, President, and CEO of Stratus Properties Inc. since 1998; previously President, COO, and CFO (1996–1998). Age 60; B.A. in Economics from the University of Colorado. Biography cites “over 30-year career in real estate” and “over 29 years of leadership experience” at Stratus, with deep local relationships in Texas markets critical to entitlements and development execution . Recent performance markers: 2024 net income attributable to common stockholders of $1.956 million; Company TSR values (SEC methodology, $100 initial investment) of $61.20 (2022), $91.57 (2023), and $65.87 (2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Stratus Properties Inc. | Chairman, President & CEO | 1998–Present | Led strategy, entitlements, and development; long-standing relationships with tenants, lenders, regulators, and Texas stakeholders . |
| Stratus Properties Inc. | President, COO & CFO | 1996–1998 | Pre-CEO operating and finance leadership during Company’s early years . |
| Stratus Properties Inc. | Employee since inception | 1992–Present | Continuity and institutional knowledge since formation . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Moody National REIT II, Inc. | Director | Sep 2017–Present | Public REIT directorship . |
| Moody National REIT I, Inc. | Director | Sep 2008–Sep 2017 | Public REIT directorship . |
| Green Business Certification Inc. | Secretary-Treasurer | Mar 2021–Jan 2024 | LEED program implementation organization . |
Fixed Compensation
| Year | Base Salary ($) | AIP Target (% of Base) | AIP Threshold / Max (% of Base) |
|---|---|---|---|
| 2024 | 750,000 | 100% | 50% / 150% |
- No base salary changes in 2024; salaries were last increased effective March 1, 2023 (CEO to $750k) .
Performance Compensation
2024 Annual Incentive Plan (AIP) Structure and Results
- AIP pays the greater of AIP vs. LTIP; 2024 LTIP generated no payout, so AIP determined awards .
- Committee paid 50% in cash and 50% in RSUs vesting in one year .
| Metric (2024) | Weight | Threshold | Target | Max | Actual | Weighted % of Target Achieved |
|---|---|---|---|---|---|---|
| NOI | 20% | $10.0m | $11.0m | $12.0m | $11.015m | 20.2% |
| Cash G&A | 20% | $15.0m | $13.0m | $11.0m | $11.234m | 28.8% |
| Manage Liquidity | 20% | $34.0m | $49.0m | $64.0m | $54.731m | 23.8% |
| Strategic Goals | 40% | — | — | — | Committee-assessed | 37.0% |
| Total | 100% | — | — | — | — | 109.8% |
| Executive | Total 2024 AIP Award ($) | Paid in Cash ($) | Paid in RSUs ($) | RSUs Granted (Feb 13, 2025) |
|---|---|---|---|---|
| W.H. Armstrong III | 688,975 | 344,505 | 344,470 | 17,258 |
- 2024 Summary Compensation Table entries reflect cash AIP in “Non-Equity Incentive Plan Compensation” ($344,505) and other 2024 stock awards (distinct RSUs from 2023 AIP and 2023 valuation event) in “Stock Awards” ($587,923) .
Long-Term Incentive Plan (LTIP) Design and 2024 Status
- LTIP grants participation interests in project “profits pools” equal to 25% of net company profits per project; payouts upon capital transactions (cash, with cash cap=4x base salary; excess in 1-year RSUs) or valuation events (3-year RSUs), with 10% preferred return and return of capital hurdles .
- Governance guardrails for NEOs: reductions up to 25% if NAV-based results not achieved; 5–10% reduction if AIP objective payouts below target on average; elimination if AIP exceeds LTIP for the year .
- 2024: No LTIP payout; only 2024 RSUs recognized for a 2023 valuation event at Kingwood Place (RSU price reference $24.90) .
| Project | Plan | Armstrong Participation | Grant Date | Substantial Completion | Valuation Event Date |
|---|---|---|---|---|---|
| Amarra Villas | Profit Plan | 32% | Aug 2, 2018 | N/A | N/A |
| Jones Crossing | Profit Plan | 30% | Aug 2, 2018 | N/A | N/A |
| Magnolia Place | Profit Plan | 25% | Sep 23, 2019 | Aug 31, 2022 | Aug 31, 2025 |
| The Saint June | Profit Plan | 27.5% | Feb 17, 2022 | Oct 31, 2023 | Oct 31, 2026 |
| The Saint George | LTIP | 25% | Aug 10, 2023 | N/A | N/A |
Equity Ownership & Alignment
| Holder | Direct/Indirect Shares Not Subject to RSU Vesting | Shares Subject to Vesting within 60 Days | Total Beneficial Ownership | % Outstanding |
|---|---|---|---|---|
| W.H. Armstrong III | 630,883 | 0 | 630,883 | 7.8% |
- Additional unvested RSUs (not counted above): 30,688 for Armstrong .
- Shares outstanding at record date: 8,072,897 .
- Pledging: Armstrong has pledged 363,489 STRS shares (grandfathered under 2016 policy) .
- Anti-hedging and anti-pledging: hedging prohibited; new pledges prohibited since March 3, 2016 .
- CEO stock ownership guideline: 3x base salary (trailing average price methodology); executives exceed targets .
Outstanding Equity Awards and Vesting Schedule (as of Dec 31, 2024)
| Name | Unvested RSUs (#) | Market Value ($) at $20.76 | Notable Vesting Dates/Schedules |
|---|---|---|---|
| W.H. Armstrong III | 48,377 | 1,004,307 | 4,688 (Mar 15, 2025); 5,000 (50% on Mar 15, 2025 & 2026); 13,671 (Feb 17, 2025); 16,395 (33% on Feb 15, 2025/2026/2027); 8,623 (Feb 15, 2025) . |
- Anti-hedging policy, ownership guidelines, and significant unvested RSUs support alignment; however, legacy pledging is a monitoring item for potential margin call risk in adverse markets .
Employment Terms
- New severance and change-of-control (COC) agreements effective April 1, 2025:
- Non-COC termination without cause/with good reason: lump sum = 2x (base salary + 3-year average bonus); benefits continuation to earlier of Dec 31 next year or new employment .
- COC termination without cause/with good reason (double trigger): lump sum = 2.99x (base salary + 3-year average bonus); accelerated RSUs per plan, with LTIP/Profit Plan interests remaining outstanding and payable per plan; benefits continuation similar to prior .
- No excise tax gross-ups; best net approach if 280G applies .
- Clawback policy adopted Oct 2, 2023; awards subject to recoupment .
Potential Payments for Armstrong (Assuming 12/31/2024)
| Scenario | Lump Sum Severance ($) | Unvested LT Incentives ($) | Accrued Dividend Equivalents ($) | Health/Life Benefits ($) | Total ($) |
|---|---|---|---|---|---|
| Death/Disability/Retirement | N/A | 1,004,307 | 109,089 | N/A | 1,113,396 |
| Termination without Cause | 1,686,858 | 1,004,307 | 109,089 | 25,813 | 2,827,781 |
| Termination with Good Reason | 1,686,858 | 803,184 | 109,089 | 25,813 | 2,626,685 |
| Termination after COC (w/o Cause or w/ Good Reason) | 8,222,500 | 1,004,307 | 109,089 | 25,813 | 9,363,423 |
Board Governance
- Dual role: Armstrong serves as Chairman and CEO; he is not independent and holds no committee assignments .
- Board structure: 7 directors; 6 independents; Lead Independent Director (Dr. Joseph) renewed for 3-year term to April 1, 2028 .
- All Audit, Compensation, and Nominating/Governance committees are fully independent; committee chairs: Audit (Rhone), Compensation (Joseph), Nominating/Governance (Henriksen) .
- Attendance: each director attended over 92% of Board and committee meetings in 2024; Armstrong attended the 2024 annual meeting .
- Director/Executive ownership guidelines: in place and exceeded; anti-hedging and anti-pledging policies apply .
- Armstrong receives no additional director compensation as an employee .
Director Compensation Context (for Governance Quality)
- Non-employee director annual cash: Board $35k; Lead Independent $25k; Committee chair/member fees per committee; 2024 annual RSU target $65k; grants vest in one year .
- Illustrates independent committee control and market-aligned board pay; Armstrong not paid as director .
Compensation & Incentives – Additional Analytics
- Program redesign (2023) after FTI review: AIP with objective metrics (70% weight for CEO) + LTIP tied to project profitability; “greater of” logic avoids double-paying in years with LTIP payouts .
- Compensation best practices: clawbacks; anti-hedging/pledging; double-trigger equity and COC cash; independent consultant; no excise tax gross-ups or special retirement; majority variable/at-risk pay .
- Say-on-Pay: 95% approval at 2024 annual meeting .
2024 Summary Compensation (NEO excerpt)
| Year | Salary ($) | Stock Awards ($) | Non-Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|
| 2024 (CEO) | 750,000 | 587,923 | 344,505 | 68,948 | 1,751,376 |
| 2023 (CEO) | 708,333 | 0 | 607,931 | 70,517 | 1,386,781 |
Pay vs. Performance (SEC format)
| Year | CEO SCT Total ($) | CEO “Compensation Actually Paid” ($) | Company TSR (Value of $100) | Net Income (Loss) Attrib. to Common ($) |
|---|---|---|---|---|
| 2022 | 7,548,069 | 4,582,260 | 61.20 | 90,426,000 |
| 2023 | 1,386,781 | 1,901,890 | 91.57 | (14,807,000) |
| 2024 | 1,751,376 | 1,287,433 | 65.87 | 1,956,000 |
Compensation Peer Group (for benchmarking)
| Peer Companies (13) |
|---|
| Armada Hoffler Properties; CatchMark Timber Trust; CTO Realty Growth; Farmland Partners; Forestar Group; FRP Holdings; Maui Land & Pineapple; One Liberty Properties; SoTHERLY Hotels; Tejon Ranch; The InterGroup Corporation; UMH Properties; Whitestone REIT . |
Performance & Track Record Highlights
- 2024 operational/financial execution: $20.2m cash and cash equivalents at YE; $39.0m availability on revolver; revolver extended to March 2027 at lower rate; refinancing of multiple project loans; project sales at Magnolia Place; multi-family lease-up at The Saint June; continued construction at The Saint George; progress at Holden Hills .
- Shareholder returns/leverage actions: Approved $5.0m buyback in Nov 2023; repurchased 62,686 shares for ~$1.6m in 2024 at ~$25.37/share; 83,380 shares total through Mar 26, 2025 for ~$2.0m at ~$23.98/share .
Compensation Structure Analysis (Signals)
- Shift to objective, formulaic AIP and project-profit LTIP improves alignment with development outcomes and shareholder experience; guardrails can reduce/eliminate payouts if NAV/AIP metrics underperform or if AIP > LTIP for the year .
- Cash payout caps (4x base salary) and stock-settlement for certain events limit liquidity strain and reinforce retention via vesting .
- Majority variable/at-risk pay (2022–2024) underscores performance orientation; say-on-pay support (95%) indicates investor acceptance .
Risk Indicators & Red Flags
- Pledging: 363,489 STRS shares pledged by Armstrong (grandfathered pre-2016); Company prohibits new pledges and any hedging for insiders—ongoing monitoring warranted .
- CEO/Chair dual role: mitigated by strong lead independent director structure and fully independent committees; lead independent director reappointed to 2028 .
- COC severance at 2.99x (double trigger) is shareholder-standard; no excise tax gross-ups .
- No special retirement plans; limited perquisites .
Board Service Summary (for dual-role context)
| Director | Independent | Board Since | Committees |
|---|---|---|---|
| W.H. Armstrong III | No | 1998 | None |
- Board independence: 6 of 7 independent; committee leadership refreshed; >92% attendance in 2024; lead independent director manages executive sessions and agendas with CEO .
Equity Ownership & Pledging Detail (Alignment vs. Pressure)
- Beneficial ownership: 630,883 shares (7.8%); plus 30,688 unvested RSUs not counted in beneficial tally .
- Pledge magnitude: 363,489 shares; anti-pledging policy prohibits new pledges since 2016 (grandfathered status) .
- Upcoming RSU vesting dates (Feb/Mar 2025–2027) may create periodic Form 4 flows; anti-hedging rules apply and ownership guidelines exceed targets .
Employment Terms – Key Definitions
- Double trigger for equity acceleration and COC cash; LTIP/Profit Plan interests do not accelerate on COC and remain subject to plan terms; clawback policy in place (Dodd-Frank compliant) .
- Definitions of Cause/Good Reason/Change of Control summarized in proxy; benefits subject to 280G “best net” cutback if applicable .
Investment Implications
- Alignment: Project-based LTIP with stringent hurdles, “greater of” AIP/LTIP, double-trigger mechanics, and clawbacks collectively enhance pay-for-performance and retention—supportive for long-term value creation in a development-driven model .
- Watch items: Legacy pledge of 363k shares is a governance and potential liquidity risk in stress scenarios; dual CEO/Chair structure remains a classical governance concern but is mitigated by a robust lead independent director and fully independent committees .
- Near-term trading supply: Significant RSU vesting over 2025–2027 introduces periodic settlement events; however, ownership guidelines and anti-hedging/pledging policies (no new pledges) remain supportive of alignment .
- Severance economics: 2.99x COC multiple (double trigger) without tax gross-ups is market-consistent; non-COC severance increased to 2x salary+average bonus, improving retention but increasing potential cash obligations .
- Shareholder sentiment: 95% say-on-pay support and active engagement suggest governance acceptance of the redesigned incentive architecture .