Common Stock Incentive Plan

6 Months Ended

Jun. 30, 2011

Common Stock Incentive Plan [Abstract]

Common Stock Incentive Plan

15.    Common Stock Incentive Plan

In 2003, our Board of Directors adopted, and stockholders approved, the 2003 Incentive Award Plan of Realty Income Corporation, or the Stock Plan, to enable us to attract and retain the services of directors, employees and consultants, considered essential to our long-term success. The Stock Plan offers our directors, employees and consultants an opportunity to own stock in Realty Income and/or rights that will reflect our growth, development and financial success. The Stock Plan was amended and restated by our Board of Directors in February 2006 and in May 2007.

The amount of share-based compensation costs recognized in "general and administrative" expense on our consolidated statements of income during the second quarter of 2011 was $2.2 million, during the second quarter of 2010 was $1.7 million, during the first six months of 2011 was $4.3 million and during the first six months of 2010 was $3.5 million.

The following table summarizes our common stock grant activity under our Stock Plan.  Our common stock grants vest over periods ranging from immediately to 10 years.

	For the six months ended June 30, 2011					For the year ended  December 31, 2010
	Number of shares			Weighted average price (1)		Number of shares			Weighted average price (1)
Outstanding nonvested shares, beginning of year		924,294		$	19.69		853,234		$	19.14
Shares granted		227,014			34.00		278,200			28.99
Shares vested		(244,774	)		25.26		(206,153	)		23.70
Shares forfeited		(348	)		31.06		(987	)		26.03
Outstanding nonvested shares, end of each period		906,186		$	23.79		924,294		$	19.69

(1) Grant date fair value.

During the first six months of 2011, we issued 227,014 shares of common stock under our Stock Plan. These shares vest over the following service periods: 25,158 vested immediately, 5,000 vest over a service period of one year, 70,400 vest over a service period of three years and 126,456 vest over a service period of five years.

As of June 30, 2011, the remaining unamortized share-based compensation expense totaled $21.6 million, which is being amortized on a straight-line basis over the service period of each applicable award.

Due to a historically low turnover rate, we do not estimate a forfeiture rate for our nonvested shares. Accordingly, unexpected forfeitures will lower share-based compensation expense during the applicable period. Under the terms of our Stock Plan, we pay non-refundable dividends to the holders of our nonvested shares. Applicable accounting guidance requires that the dividends paid to holders of these nonvested shares be charged as compensation expense to the extent that they relate to nonvested shares that do not or are not expected to vest. However, since we do not estimate forfeitures given our historical trends, we did not record any amount to compensation expense related to dividends paid in 2011 or 2010.

As of June 30, 2011, there were no remaining stock options outstanding. During the first six months of 2011, there were 2,454 stock options exercised, at an exercise price of $14.70, and there were no stock option forfeitures.  Stock options, none of which were granted after January 1, 2002, were granted with an exercise price equal to the underlying stock's fair market value at the date of grant.