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  x                             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):

Post Office Box 1000

Tejon Ranch, California 93243

March 30, 20152016

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Tejon Ranch Co. (“Company”(the “Company”) on Wednesday, May 6, 2015,11, 2016, at 9:30 A.M., Pacific Time, at the Balboa Bay Resort, 1221 West Coast Highway, Newport Beach, California, 92663. Your Board of Directors and management look forward to greeting those stockholders who are able to attend. If you are planning to attend the meeting in person you will need to present proof that you own shares of the Company.Company, such as a government-issued photo identification and a proxy card or voting instruction form with your name on it.

The Notice of Annual Meeting and Proxy Statement, which contain information concerning the business to be transacted at the meeting, appear in the following pages.

It is important that your shares be represented and voted at the meeting, whether or not you plan to attend. Please vote on the enclosed proxy at your earliest convenience.

Your interest and participation in the affairs of the Company are greatly appreciated.

Sincerely,

Gregory S. Bielli,

President and Chief Executive Officer

TEJON RANCH CO.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

on

May 6, 201511, 2016

The Annual Meeting of Stockholders of Tejon Ranch Co. (the “Company” or “Tejon” or referred to as “we”, “us”, “our” or words of similar import in this Proxy Statement) will be held at the Balboa Bay Resort, 1221 West Coast Highway, Newport Beach, California, 92663 on Wednesday, May 6, 2015,11, 2016, at 9:30 A.M., Pacific Time, for the following purposes:

The nominees of the Board of Directors of the Company for election at the meeting are Anthony L. Leggio, Geoffrey L. Stack, Frederick C. Tuomi,Robert A. Alter, Steven A. Betts, and Michael H. Winer.Daniel R. Tisch.

The Board of Directors of the Company recommends that you vote “FOR” the election of each of the nominees and “FOR” the approval of each of the other proposals outlined in the Proxy Statement accompanying this notice.

The Board of Directors has fixed the close of business on March 11, 2015,14, 2016, as the record date for the determination of stockholders entitled to notice of and to vote at the meeting.

Your attention is inviteddirected to the accompanying Proxy Statement. To ensure that your shares are represented at the meeting, please date, sign, and mail the enclosed proxy card, for which a return envelope is provided, or vote your proxy by phone or the internet, the instructions for which are provided on the enclosed proxy card.

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 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 utilize your broker’s telephone or internet voting if available and exercise your right to vote as a stockholder.

For the Board of Directors,

Tejon Ranch, California

March 30, 20152016

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 PHONE OR THE INTERNET. PLEASE VOTE YOUR PROXY EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU ATTEND THE MEETING AND WISH TO DO SO, YOU MAY VOTE YOUR SHARES IN PERSON 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 Stockholders

May 6, 201511, 2016

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on May 6, 201511, 2016

The Proxy Statement and accompanying Annual Report to Stockholders are available at www.tejonranch.com or at http://www.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 Stockholders to be held on May 6, 201511, 2016 (the “2015“2016 Annual Meeting”).

It is anticipated that the mailing of this Proxy Statement and accompanying form of Proxy to stockholders will begin on or about March 31, 2015.2016.

SOLICITATION OF PROXIES

At the meeting, the stockholders of the Company will be asked to vote on the following matters: (1) the election of the fourthree directors named in this Proxy Statement, (2) the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2015,2016, (3) an advisory vote to approve executive compensation, and (4) 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 20152016 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.

RECORD DATE AND VOTING

General Information

Holders of shares of the Company’s Common Stock, par value $0.50 (the “Common Stock”) of record at the close of business on March 11, 201514, 2016 (the “Record Date”) are entitled to notice of, and to vote at, the meeting. There were 20,645,54720,703,838 shares of Common Stock outstanding on the Record Date. Each stockholder is entitled to one vote for each share of Common Stock held as of the Record Date on all matters presented at the 2015 Annual Meeting other than the election of directors. A stockholder of record giving a proxy may revoke it at any time before it is voted by filing with the Company’s Secretary a written notice of revocation or by submitting a later-dated proxy via the Internet, by telephone, or by mail. Unless a proxy is revoked, shares represented by a proxy will be voted in accordance with the voting instructions on the proxy and, on matters for which no voting instructions are given, shares will be voted “for” the nominees of the Board and “for” Proposals 2 and 3. If you hold shares in a stock brokerage account or by a bank or other holder of record, you must follow the instructions of your broker, bank or other holder of record to change or revoke your voting instructions.

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Broker Non-Votes

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered to be the “beneficial owner” of those shares. As the beneficial owner, you have the right to instruct your broker, bank or other holder of record how to vote your shares. If you do not provide instructions, your broker, bank or other holder of record will not have the discretion to vote with respect to certain matters and your shares will constitute “broker non-votes” with respect to those matters. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does 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 and Proposal 3, but will have discretion to vote on Proposal 2. Therefore, we strongly encourage you to follow the voting instructions on the materials you receive.

Quorum

The holders of record of a majority of the Common Stock entitled to vote at the 20152016 Annual Meeting must be present at the 20152016 Annual Meeting, either in person or by proxy, in order for there to be a quorum at the 20152016 Annual Meeting. Shares of Common Stock with respect to which the holders are present in person at the 20152016 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, will be counted as present at the 20152016 Annual Meeting for the purpose of determining whether or not a quorum exists. Broker non-votes will also be counted as present for the purpose of determining whether a quorum exists. Stockholders cannot abstain in the election of directors, but they can withhold authority. Stockholders who withhold authority will be considered present for purposes of determining a quorum.

Voting Requirements

For Proposal 1 (election of directors), the four (4)three (3) candidates receiving the highest number of affirmative votes at the 20152016 Annual Meeting (also referred to as a plurality) will be elected as directors. Stockholders will be able to cumulate their vote in the election of directors. Cumulative voting means that each stockholder 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 stockholder must provide written instructions on the proxy card how the stockholder wishes to have his or her votes distributed. AbstentionsWithhold votes and broker non-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 Ernst & Young 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 person or represented by proxy and entitled to vote at the 20152016 Annual Meeting. Abstentions will be counted as present and will thus have the effect of a vote against Proposal 2.

Approval of Proposal 3 (advisory approval vote on executive compensation) will require the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote at the 20152016 Annual Meeting. Abstentions will be counted as present and will thus have the effect of a vote against Proposal 3. Broker non-votes will not be counted as participating in the voting and will therefore have no effect on the outcome of the vote.

Pursuant to Delaware corporate law, the actions contemplated to be taken at the 20152016 Annual Meeting do not create appraisal or dissenters rights.

2015 Performance Highlights

2In determining 2015 compensation for our named executive officers, (NEOs), the Compensation Committee of the Board of Directors considered the contributions of each of our executive officers to the Company’s strategy related to revenue, cash management, continued expansion of Tejon Ranch Commerce Center, and moving our residential development projects through the mapping and entitlement process. The Compensation Committee considered these items with a particular emphasis on the following areas:

Our Compensation Discussion and Analysis is on pages 18 to 39 and our Summary Compensation Table and other compensation tables are on pages 39 to 47.

PROPOSAL 1

THE ELECTION OF DIRECTORS

The Board currently consists of eleventen directors divided into three classes based upon when their terms expire. The terms of four directors (Class I) will expire at the 2015 Annual Meeting, the terms of threetwo current directors (Class II) will expire at the 2016 Annual Meeting, and the terms of four current directors (Class III) will expire at the 2017 Annual Meeting, and the terms of four directors (Class I) will expire at the 2018 Annual Meeting. The regular term of each director expires at the third Annual Meeting following the Annual Meeting at which that director was elected, so that each director serves a three-year term, although directors continue to serve until their successors are elected and qualified, unless the authorized number of directors has been decreased.

The nominees of the Board for election at the 20152016 Annual Meeting to serve as Class III directors are Anthony L. Leggio, Geoffrey L. Stack, Frederick C. Tuomi,Robert A. Alter, Steven A. Betts and Michael H. Winer,Daniel R. Tisch, all of whom are presently directors. Mr. Tisch was last elected by the stockholders at the 2013 Annual Meeting and Messrs. Alter and Betts were originally recommended by a third-party search firm, approved by the non-management directors then serving on the Nominating and Corporate Governance Committee and elected by the Board of Directors in September 2014. Messrs. Alter and Tisch currently serve as Class II Directors and Mr. Betts currently serves as a Class III Director. In order to cause the three classes of directors to be as nearly equal in number of directors as possible, the Board wishes to change Mr. Betts from a Class III Director to a Class II Director. To facilitate this change, the Board is nominating for election as a Class II Director at the 2016 Annual Meeting Mr. Betts, who has agreed to resign from Class III if he is elected as a Class II Director. If Mr. Betts is elected, he will resign as a Class III director, effective upon his taking office as a Class II Director. If Mr. Betts is not elected, he will remain in office until his term as a Class III Director expires at the 2017 Annual Meeting or his earlier death, resignation or removal.

Nominations of persons for election to the Board by stockholders must be made pursuant to timely notice in writing to the Secretary of the Company pursuant to the Company’s Certificate of Incorporation. See “Stockholder Proposals for 20162017 Annual Meeting” for additional information on the procedure for stockholder 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-quarterone-third of the votes to which the stockholder 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 any one or more of the nominees shall become unable to serve or for good cause refuse to serve as director (an event which 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 20152016 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 UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE NOMINEES NAMED ABOVE FOR ELECTION AS A DIRECTOR.

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PROPOSAL 2

THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015.2016. Services provided to the Company and its subsidiaries by Ernst & Young LLP in fiscal years 20142015 and 20132014 are described under “Audit Fees” below. Additional information regarding the Audit Committee is provided in the Report of the Audit Committee below.

Representatives of Ernst & Young LLP are expected to be present at the 20152016 Annual Meeting and will have an opportunity to make a statement if they wish and will be available to respond to appropriate questions from stockholders.

Stockholder Ratification of the Appointment of Independent Registered Public Accountant.Accounting Firm.

We are asking our stockholders to ratify the selection of Ernst & Young LLP 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 Ernst & Young LLP to our stockholders for ratification as a matter of good corporate practice. In the event stockholders do not ratify the appointment of Ernst & Young LLP, 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 stockholders.

Independent Registered Public Accounting Firm

Ernst & Young LLP served as the Company’s independent registered public accounting firm for the year ended December 31, 20142015 and was selected by the Audit Committee to serve in that capacity for the fiscal year 20152016

Audit Fees. The aggregate fees billed by Ernst & Young LLP for professional services rendered for the audit of the Company’s annual financial statements for the year ended December 31, 2015 and for the reviews of the financial statements included in the Company’s Forms 10-Q for the year ended December 31, 2015 were $524,438. The aggregate fees billed by Ernst & Young LLP for professional services rendered for the audit of the Company’s annual financial statements for the year ended December 31, 2014 and for the reviews of the financial statements included in the Company’s Forms 10-Q for the year ended December 31, 2014 were $504,429. The aggregate fees billed by Ernst & Young LLP for professional services rendered for the audit of the Company’s annual financial statements for the year ended December 31, 2013 and for the reviews of the financial statements included in the Company’s Forms 10-Q for the year ended December 31, 2013 were $517,334.

Audit-Related Fees. The aggregate fees billed for assurance and related services by Ernst & Young LLP that were reasonably related to the performance of the audit or review of the Company’s financial statements, including fees for the performance of audits and attest services not required by statute or regulations; audits of the Company’s employee benefit plans; due diligence activities related to investments; and accounting consultations about the application of generally accepted accounting principles to proposed transactions (collectively, the “Audit-Related Fees”), for the year ended December 31, 20142015 were $2,000. The Audit-Related Fees billed by Ernst & Young LLP for the year ended December 31, 20132014 were $12,360.$2,000.

Tax Fees. The aggregate fees billed by Ernst & Young LLP for tax compliance, advice and planning services for the year ended December 31, 20142015 were $101,070.$134,698. The aggregate fees billed by Ernst & Young LLP for tax compliance, advice and planning services for the year ended December 31, 20132014 were $85,544.$101,070. All fees billed for both 20142015 and 20132014 were solely related to compliance and planning services for tax return preparation.

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All Other Fees. Ernst & Young LLP did not bill for any services other than those listed above for the years ended December 31, 20142015 or December 31, 2013.2014.

The Audit Committee Charter requires that the Audit Committee pre-approve all services performed by the Company’s outside auditor. To fulfill this requirement, Ernst & Young LLP provides a proposal to the Audit Committee for all services it proposes to provide, and the Audit Committee then takes such action on the proposal, as it deems advisable. During the years ending December 31, 20142015 and 2013,2014, 100% of the services provided by Ernst & Young LLP were pre-approved by the Audit Committee.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2015.2016.

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PROPOSAL 3

ADVISORY APPROVAL VOTE ON EXECUTIVE COMPENSATION

In accordance with Section 14A of the Securities Exchange Act of 1934, or the Exchange Act, we are asking stockholders to approve on an advisory basis the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement on pages 1618 to 42.47.

The Board of Directors recommends athat shareholders vote FOR this proposal because it believes that ourto approve, on an advisory basis, the compensation policies and practices are effective in achievingpaid to the Company’s goals of rewarding financial and operating performance, aligning the executives’ long-term interests with those of our stockholders and motivating the executives to remain with the Company.

Our executive compensation programs have a number of features designed to promote these objectives. In determining 2014 compensation for our named executive officers or NEOs, the Compensation Committee evaluated the successas described in meeting defined cash and segment profit goals as well as the achievement of short-term goals that set the stagethis Proxy Statement , for the achievementfollowing 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 performance milestone goals.long-term shareholders. We achieve our objectives through compensation that:

Best practices in executive compensation

Some of our leading practices include:

The advisory proposal, commonly referred to as a “say-on-pay” proposal, is not binding on the Board of Directors. Although the voting results are not binding, the Board will review and consider them when evaluating our executive compensation program.

The Board’s policy going forward is to hold an advisory vote on executive compensation every year, and accordingly, we expect that, after the 20152016 Annual Meeting, the next advisory vote on the compensation of our named executive officers will take place at our 20162017 Annual Meeting.

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 OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED ON PAGES 1618 TO 4247 IN THE PROXY STATEMENT.

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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 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 2016 Annual Meeting, and (3) Class III Directors, whose terms will expire at the 2017 Annual Meeting. The Board currently consists of eleventen 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

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“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 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 his 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 III Directors and also regarding the Class IIIII 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. Bielli and Mr. Stine,, are “independent” under the listing standards of the New York Stock Exchange (the “NYSE”) and the Company’s categorical criteria used to determine whether a director is independent (the “Independence Standards”). In addition, the Board determined that former director Robert A. Stine, who 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 is attached as Appendix A to this Proxy Statement. Thus, the Board determined that the following directors are independent: Robert A. Alter, Steven A. Betts, John L. Goolsby, Anthony L. Leggio, Norman J. Metcalfe, Geoffrey L. Stack, Daniel R. Tisch, Frederick C. Tuomi, and Michael H. 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 this information in the context of the NYSE’s objective listing standards, the Independence Standards, and for directors serving on committees, the

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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 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 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. Metcalfe presides over these executive sessions.

During 2014,2015, there were sixfour meetings of the Board. During 20142015 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 attended the 20142015 Annual Meeting of the Company.

Committees of the Board

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 are set forth below:

During 2014,2015, there were notwo meetings of the Executive Committee, seven of the Audit Committee, twoseven of the Compensation Committee, twofour of the Real Estate Committee, onetwo 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.

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.

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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. 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, 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 Exchange Act. The Board has further found that Mr. Leggio 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 Compensation Committee

The Compensation Committee oversees 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 employees, 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 recommends changes for the compensation 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, 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. 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 officers have any input in executive

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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.

During 2013,2015, the Compensation Committee engaged Poe Consulting to assist in the review of executive officer compensation.the CEO’s, compensation and identification of Peer Group companies. The decision to engage an outside compensation consultant was not recommended by management. Poe Consulting completed its 2013 engagement during March of 2014,was used throughout 2015 and its feesservices were $55,000.used in helping to determine 2016 salary adjustments. Poe Consulting did not provide any other services to the Company in 2014.2015 and its fees were $51,191 for the 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 provides oversight, guidance and strategic input into management action plans for development and entitlement of Company land, and it provides a review function to management regarding major decision 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 development pro formas and budgets. The Real Estate Committee also provides oversight and guidance to the Company’s Chief Executive Officer with regard to recruitment and employment of senior real estate executives. It reports regularly to the full Board with respect to its meetings. 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, 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.

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.

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, 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,

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c/o Corporate Secretary, P.O. Box 1000, 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 20162017 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 Guidelines

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 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, 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.

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

This Compensation Discussion and Analysis (“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 factors 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 following is a discussionobjectives of our executive compensation philosophy,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 components,ultimately to development. A key element of our strategy is to provide entitled land for large scale residential and compensation decisions made with respectmixed use real state communities to serve the following NEOs as listedgrowing 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 2014 Summary Compensation Table:mapping process and entitlement process for our three 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

Executive Summary

Our Compensation Committee has developed and maintains a compensation program that is intended to reward performance, retain talent, and encourage actions that drive achievementIncrease in wine grape revenue of our business strategies.

Our executive compensation program features the following:

2014 – Year in Review

For 2014, we had net income attributable to common stockholders of $5,655,000 compared to net income attributable to common stockholders of $4,165,000 for 2013. This improvement is driven by an increase in revenue, primarily from mineral resources revenue,revenues also improved during 2015 as a result of 2014 water salesimproved commercial/industrial revenues and improvedan increase in equity in earnings of unconsolidated joint venturesventures.

		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

During 2014, three significant objectives were accomplished. First,

2015 Company successfully guided the development of the Outlets at Tejon, which opened in August 2014 on time and within the construction budget. This development is part of a joint venture with the Rockefeller Development Group. Achievement of this goal was one of the short-term annual incentives objectives for 2014. Second, we received preliminary zoning for the Centennial project during the fourth quarter of 2014 when the Los Angeles County Board of Supervisors approved the Antelope Valley Area Plan, or AVAP. The AVAP is designed to guide future development and conservation in

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the region. We expect the Los Angeles County Counsel, per instruction from the Board of Supervisors, to prepare final documents and ordinance for the AVAP for the Board of Supervisors final approval in the first half of 2015. To take advantage of this momentum, our next steps would be to submit a specific plan for phase one entitlement and permits. Third, the Company acquired full ownership of TMV LLC through the purchase of DMB TMV LLC’s interest in the joint venture for $70,000,000. The decision to obtain full ownership of TMV LLC reflects the Company’s growth as a fully integrated real estate company and demonstrates our belief in the future success of the development. In connection with the acquisition of the membership interest, we entered into a new long-term debt facility of $70,000,000. The new debt has a ten-year term and a fixed rate of interest of 4.11%. These last two accomplishments are tied to the ultimate successful completion of our long-term performance milestones.

Improvements in total revenue and net income during 20142015 led to EBITDA and total revenues, the annual corporate incentive bonus quantitative metrics, being met at maximum level and above the target goal level for the year, respectively.year. These metrics are discussed below under “Annual Performance-Based Incentive Bonuses.Incentives.” Revenue and operating profit goals for commercial/

industrial real estate were aboveat target and at maximumabove the target goal level, respectively. Revenue and operating goals for farming were above target for revenue and at the maximum level for operating profits. The named executive officers met the 20122013 rolling three-year cash flow objectives at 103%92% of the target award level. The rolling three-year cash flow metric is described in the equity compensation section. The grants associated with the 20122013 three-year cash flow metric were paid out during March 2015.2016. The number of stock units that vested in 2015 are2016 is identified in the footnotes to the Outstanding Equity Awards at 20142015 Fiscal Year-End table that begins on page 36.42.

For 2014,2015, the Compensation Committee made the following decisions:

Consideration of Say-on-PaySay-On-Pay Results

At our 20142015 Annual Meeting, our stockholders expressed support for our executive compensation program, with 78%62% of shareholders casting votes 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 20142015 and 20152016 executive compensation programs, the Compensation Committee considered among other things, the 2011 and 2014 vote results and feedback we received from stockholders.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’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 executiveentitlement of land for development, the development of land, and the management of cash and capital allocations. During 2016, the Compensation Committee adjusted the CEO’s long-term performance stock compensation program in 2013 for 2014 and approved additional changes in early 2014 for 2014 and future compensation periods.to include a Total Shareholder Return (TSR) component. The changes implemented centered on the design of performance milestone objectives for the Company, more quantitative annual incentive objectives, the use ofCompensation Committee also reviewed peer companies inand adjusted our analysis, andpeer group to better reflect the establishment of executive officer stock ownership guidelines. These changes remain in effect for 2015 and have contributed to our executive compensation program discussed in this Compensation Discussion and Analysis.Company’s activities.

20152016 – The Year Ahead

The Company believes 20152016 will be a challenging but successful year in the accomplishment of corporate objectives. The challenges of 20152016 relate to farmingthe continuing decline in oil prices; the potential decline in farm crop prices, especially almonds; and water management as we allocate our water resources to our permanent crops of almonds, pistachios, and wine grapes and to real estate development, while at the same time selling any excess water we have. California iscontinues in a severe drought, and state water project allocations currently have been reduced to onlyset at a 20%45% allocation of state water project contracts. We will also have challenges regarding oil

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royalty revenue, as prices have declined in excess of 50% from the previous year’s levels. ThisThe above items will challenge us in meeting our 20152016 budgeted revenue and cash flow objectives. In order to conserve cash going forward,Our successes can come from 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 Centennial development opportunities, future capital investment requirements for infrastructure at TRCC and residential projects, and possible continued investment in water assets.

2014 Executive Compensation Plan Developments

During 2013, the Compensation Committee undertook a holistic reviewapproval of the executive compensation program with the assistance of the POE Group. During the first quarter of 2014, the updated compensation program was approved by the Compensation Committee and the Board of Directors. The program was analyzed with respect to the following strategic principles:

Beginning in 2014, our annual incentive compensation plan, or AICP, has four primary performance measures:

The specific weight attached to each performance measure is dependent on each position’s responsibilities. Generally, corporate goals have a greater weight than divisional goals for all positions. This encourages mutual accountability among the executive team.

Beginning in 2014, our long-term incentive plan, or LTIP, consists of three equity delivery vehicles:

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The Compensation Committee believes that the changes to our executive compensation program approved in 2014 will encourage mutual accountability among our executive team while focusing the team on important goals in the short and long term. Furthermore, our new long-term design reflects the value creation process inherent in large-scale landGrapevine development by first identifying and implementing projects, and then maximizing their respective financial returns.Kern County late in 2016.

General Objectives of theand Compensation Plan.Philosophy

The compensation program for our NEOs 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 NEO level, our incentive compensation arrangements are designed to reward the achievement of long-term milestone objectives related to real estate development whichthat 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.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 the determination ofdetermining 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 Compensation Committee’s objectives when settingfollowing core tenets inform the design of our compensation for our named executive officers are:plan.

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Pay Mix Analysis.

The mix of total compensation elements for our NEOs in 2014, as a percentage of total compensation, is set forth in the table below. Note that the 2014 CEO values represent the first full year of employment for our new CEO.

The pay component percentages illustrate that variable compensation comprises a significant percentage of total compensation. The emphasis on variable compensation supports the Compensation Committee’s goal of a pay-for-performance orientation with a significant percentage of total compensation at risk. Also evident in the table below is the importance placed by the Compensation Committee on long-term compensation elements. The Company’s business is long-term in nature. Therefore, the compensation program places strong emphasis on long-term pay opportunity to link the executive pay programs to the business strategy.

The Role of Compensation Committee in Setting Compensation.Compensation

The Compensation Committee of the Board approves all compensation and awards to senior management, including the Chief Executive Officer and the other named executive officers. The Compensation Committee independently reviews and establishes the compensation levels of the Chief Executive Officer; it also reviews the performance of the Chief Executive Officer and discusses his performance with him. At the beginning of the year, the Chief Executive Officer works with the Compensation Committee to establish his goals and objectives to be evaluated throughout the year. For the remaining executive officers, the Chief Executive Officer makes recommendations as to compensation levels, including grants of equity awards, for final approval by the Compensation Committee, which then makes its recommendation to the full Board of Directors for its approval.

The Role of the Compensation Consultant.Consultant

During the second half of 2013,In accordance with its Charter, the Compensation Committee hired an outside consultant,has the POE Group,sole authority to prepare a new analysisretain and terminate independent consultants on matters of executive officercompensation and benefits, including sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee also has the authority to obtain advice and assistance for internal and external legal, accounting, or other advisors. The Compensation Committee utilizes the Poe Group, Inc. as its compensation consultant. The Poe Group reports directly to the Compensation Committee. The Poe Group was not engaged to perform any additional services beyond its support of the Compensation Committee.

In reviewing conflicts of interest, our Compensation Committee considered the following six factors with respect to the Poe Group:

Upon consideration of these factors, our Compensation Committee concluded that the engagement of the Poe Group did not present any conflicts of interest.

In connection with its engagement by the Compensation Committee, the Poe Group has:

The total amount of fees paid to the Poe Group for 2015 was $51,191.

Compensation Risk Assessment

As part of its risk assessment process, the Compensation Committee reviewed material elements of executive and non-executive employee compensation. The Compensation Committee requestedconcluded these policies and practices do not create risk that is reasonably likely to have a material adverse effect on the POE Group’s adviceCompany.

The structure of our compensation program for NEOs does not incentivize unnecessary or excessive risk taking. The base salary component of compensation does not encourage risk taking because it is a fixed amount. The incentive plan awards have these risk limiting characteristics:

ü    The Compensation Committee, which is composed of independent members of our Board of Directors, approves final incentive plan cash and stock awards in its discretion after reviewing executive and corporate performance.

ü    Awards are subject to our clawback policy.

ü    The majority of long-term value is delivered in shares of the Company with a multi-year vesting schedule, which aligns the interests of our NEOs to the long-term interests of shareholders.

ü    NEOs are subject to our executive stock ownership requirements.

2015 Executive Compensation Plan Developments

Beginning in 2014 and continued in 2015, our annual incentive compensation plan (“AICP”) has four primary performance measures:

The specific weight attached to each performance measure is dependent on each position’s responsibilities. Corporate goals have a varietygreater weight than divisional goals for all positions. This encourages mutual accountability among the executive team.

Beginning in 2014 and continued into 2015, our long-term incentive plan (“LTIP”) consists of matters, includingthree equity delivery vehicles:

The Compensation Committee believes that the form ofchanges to our executive compensation compensation strategy, market comparisons, payprogram approved in 2014, and performance alignment versus peers, pay trends,continued in 2015, encourage mutual accountability among our executive team while focusing the team on important goals in the short and potential compensation plan designslong term. Furthermore, our new long-term design reflects the value creation process inherent in large-scale land development by first identifying projects, securing entitlements, mapping projects, and modifications. The POE Group met withthen developing the projects to maximize financial returns.

2016 Executive Compensation Plan Developments

During 2016, the Board of Directors of the Company, on the recommendation of the Compensation Committee, approved and granted to the Chief Executive Officer a one-time supplemental long-term stock incentive compensation opportunity. The supplemental stock incentive provides the CEO with the opportunity to earn up to an additional 158,982 shares of stock, with a potential maximum grant date value of $3,000,000, primarily from the achievement of two multi-year strategic performance components through December 31, 2019. The Board and without managementCompensation Committee awarded the CEO the supplemental incentive opportunity to increase his stock ownership in consideration of his relatively short tenure, for retention purposes, and to drive performance against critical long-term strategic development objectives, including a total shareholder return component. The milestone performance grant values described below will be included in the Fiscal Year 2016 Summary Compensation Table.

Under the first component (“Component 1”), the CEO will have the opportunity to earn up to a maximum of 42,395 shares of stock with a grant date value of $800,000. The performance criteria for Component is based on several occasions during late 2013an increase of the net two-year Tejon Ranch Commerce Center-East (“TRCC-East”) revenue over the measurement period from December 31, 2015 to December 31, 2017 as a percentage of 2015 actual revenue as follows:

Increase in TRCC-East Revenue

Note: Payout will be determined through interpolation for performance results between 40% and early54%

The second component (“Component 2”) allows the CEO the opportunity to earn up to a maximum of 90,090 shares of stock with a grant date value of $1,700,000, if, by December 31, 2019, full and clear entitlement is in place, a preliminary tract map is developed and approved, and the business plan is approved by the Board for Grapevine at Tejon RanchandMountain Village at Tejon Ranch.

A threshold award, at 50% of maximum, would be achieved if, by December 31, 2019, a full and clear entitlement is in place, a preliminary tract map is developed and approved, and a business plan is approved by the Board for either Grapevine at Tejon Ranch or Mountain Village at Tejon Ranch. No prorated award will occur for results between threshold and maximum. No incentive award is earned for results below the threshold level described. Any award payment is made at the end of the measurement period and is conditioned upon the CEO remaining employed by the Company.

The third component (“Component 3”) is payable if and to the extent that the CEO is entitled to a payment pursuant to Component 1 and/or Component 2. Under Component 3, the CEO may earn up to an additional 26,497 shares of stock, which have a grant date value of $500,000, based on the Company’s total shareholder return relative to the Company’s peer group (“Relative TSR”), calculated for January 1, 2016 through December 31, 2017 for Component 1 and for January 1, 2016 through December 31, 2019, for Component 2, as follows:

Increase in TRC Relative TSR

Note:

Pay Mix Analysis

The target mix of total compensation elements for our NEOs, as a percentage of total compensation, is set forth in the table below. The first set of exhibits illustrates the three-year target of compensation that the Compensation Committee is targeting. We show a three-year period to account for the granting of project milestone equity performance grants that occurs once every three years. The last project milestone grant was provided in 2014. At the end of the three-year measurement period, the Compensation Committee will measure actual outcomes to the pay mix goal described in the chart and table below.

Also illustrated is the 2015 actual pay mix for our CEO and other NEOs compared to the peer group, based on data for 2014. The comparison does not include the project milestone equity grant that is only provided every three years.

The pay component percentages illustrate that variable compensation comprises a significant percentage of total compensation. The emphasis on variable compensation supports the Compensation Committee’s goal of a pay-for-performance orientation with a significant percentage of total compensation at risk. Also evident in the tables above is the importance placed by the Compensation Committee on long-term compensation elements. The Company’s business is long-term in nature. Therefore, the compensation program places strong emphasis on long-term pay opportunity to link the executive pay programs to the business strategy.

The chart below compares the five-year change in CEO compensation and the change in value of $100 invested in the Company (indexed total stock return, or TSR). CEO compensation has decreased over the period, while the change in value of the $100 investment has also decreased over the period,. CEO compensation in 2014 with respectwas significantly higher than in other years due to performance milestone grants awarded that year. The milestone grants, which comprised a significant portion of long-term compensation, represented long-term pay opportunity for 2014 compensation plans.– 2016.

Market Comparison Review.Review – 2015 Peer Group

Although the Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on market comparisons or industry practices, the Compensation Committee believes that information regarding pay practices at other companies is useful in three respects. First, marketplace information is one of the many factors that the Compensation Committee considers in assessing the reasonableness of compensation. Second, it recognizes that our compensation practices must be generally competitive for executive talent in the real estate, land development, and agriculture industries and the market overall. Third, it recognizes that marketplace information reflects emerging and changing components and forms of compensation. While the Compensation Committee considers peer compensation levels and practices when making its compensation decisions, it does not target compensation at any particular point within a range established by a comparison of the financial performance or compensation levels of our peer companies.

In 2014,2015, the Compensation Committee, with guidance from our independent compensation consultant, the POE Group, reviewed our 2014 peer group. The goal was to identify companies that are engaged in real estate development activities and are appropriate for comparison purposes based on revenues and market capitalization. The Compensation Committee compared NEOs’ total compensation against athe new peer group when evaluating 2015 compensation of publicly traded real estate land companies (the 2014 Compensation Report).

Note in the table below that TRC’s revenue is below the majority of the peer group, but market capitalization approximates the peer group median. The Compensation Committee believes that market capitalization is a more appropriate criteria in comparison to peer companies considering that our primary assets are under development and not producing their projected revenues.

The peer group data is based on 2014 and 20132015 results and consisted of the following companies:

Peer Company Data Comparison

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Elements of Compensation.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 stockholders. In developing the compensation plan, the Compensation Committee seeks to be aware of changing economic and industry conditions, andas well as changing compensation trends. In achievingTo achieve these objectives, the plan uses a variety of compensation elements are used as described below.

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Base Salaries.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 a 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 stockholders.

In 2013, theThe Compensation Committee approved the following 2014 and 2015 base salaries for our NEOs.

In deciding to keep Mr. Bielli’s 20142015 base salary began at $475,000,$500,000. The Compensation Committee determined mid-year 2015 to provide Mr. Bielli with an adjustment in base salary to $600,000. The analysis the Compensation Committee determined thatundertook to support the total compensation package forincrease included comparison of CEO salaries in the Chief Executive Officer, including base salary, is competitive with the market, based on a review of peer group, information,recognition of Mr. Bielli’s leadership and contribution to our short-term goals, the general experience of the Compensation Committee’s members in our industry, the Company’s current stage within the land development process, the current economic environment, the status of the current real estate industry and market, and how these factors impact current compensation levels.

The base salaries for Mr. Lyda Mr. Atkinson, and Mr. TobiasAtkinson were increased by 3%, whileand Mr. Drew’s baseMcMahon’s salary was increased by 8%20%. Mr. Rentfro began working for the Company during March 2015. When granting these salary increases, the Compensation Committee, along with the Chief Executive Officer, performed an annual review of each of the other named executive officers’ salaries and evaluated possible changes to base salary for each of the other named executive officers for 2014. The Compensation Committee also took into accountsalary. This review considered several factors, including peer group information, in evaluating salary increases.the market for similar job functions, and the general experience of the Compensation Committee members. Mr. Drew’s 8%McMahon’s 20% increase also reflects increaseda promotion and new additional operational responsibilities.

In December 2014,2015, the Compensation Committee determined that for 2015,2016, our Chief Executive Officer’s salary would be increased by 5% to $500,000remain at $600,000 and the base salaries of the other NEOs would be increased by 3%. In determining the 20152016 salary levels, the Compensation Committee evaluated overall companyCompany performance, peer group information, base salary compensation in relation to total compensation, and information from the Poe Group, a compensation consultant.

Annual Performance-Based Incentive Bonuses.

Tejon’s practice is to award annual incentive bonuses based upon the achievement of performance objectives established at the beginning of each year. Each named executive officer at a minimum hasAt least 50% of the annual incentive bonus for each named executive officer is based upon corporate total revenues and EBITDA. Each NEO also has atAt least 20% of the annual incentive bonus for each NEO is tied to corporate short-term objectives that are defined and measureable.measurable. The remaining 30% of the annual incentive is tied to divisional revenues and earnings and identified individual objectives that the Compensation Committee believes are important for the particular named executive officer to focus on in the context of achieving the Company’s long-term strategic goals and creating stockholder value. Annual incentive bonuses are paid in restricted stock (which is subject to time-based vesting conditions following the award of the annual bonus) and cash, with restricted stock equaling at least one-quarter of the annual incentive payment. Vesting of restricted stock issued in settlement of 2014 annual bonuses will occur in two installments, one-half each year, beginning in March 2016 and ending in March 2017.cash. The attainment of each year’s quantitative financial goals for each of the named executive officers is uncertain and is dependent upon factors such as real estate sales and leasing programs, the

timing of entitlement activities for our developments, and the uncertainty

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inherent in our farming and mineral operations due to the commodity nature of the products we produce and the fact that we do not know the prices we will receive for our products until harvest begins for a particulareach year. The achievement of individual objectives tied to land entitlement, development, and conservation efforts are veryis highly dependent on working with groups outside of the Company, such as government agencies, local county planning departments, and environmental resource groups, all of which make the timing of achieving specific steps in the process very complicated. Accordingly, goal achievement under the annual bonus plan is not guaranteed.

The following chart provides the performance level weightings for the Chief Executive Officer and the other named executive officers who were employed for the entire fiscal year and were eligible to receive an annual performance-based incentive bonus.

Generally, the Chief Executive Officer’s individual objectives are tied to land entitlement, public outreach in support of entitlement, and development and conservation goals as well as operational, strategic planning, and staffing objectives. The individual objectives for the other NEOs are generally related to land entitlement, development, and operational goals that support the achievement of corporate entitlement and development goals. The Compensation Committee, after taking into account the Chief Executive Officer’s recommendations, sets the specific weighting for the individual objectives of each NEO at 10%15% to 15%20% of the total annual bonus. This judgment is based on the relative importance of a specific objective in moving the Company forward in achieving its long-term goals and objectives, and also each NEO’s direct role in achieving such objective.

The annual incentive plan is structured and bonus levels are determined based upon the level of achievement of threshold, target, and maximum performance of quantitative and qualitative objectives. If achievement of a performance objective is below threshold, no incentive bonus is earned for that objective, and if achievement is greater than maximum, the maximum bonus level is earned. The Chief Executive Officer and the other NEOs have different cash incentive pay levels (expressed as a percentage of base salary) for achievement at the threshold, target, and maximum levels. These percentage levels are based on athe 2014 Compensation Report prepared by the Poe Group that compared prior target bonus levels with market levels and determined that the Company was below competitive levels.

The target percentage levels below are based on a range of 80% to 90% of the competitive ranges determined in the 2014 Compensation Report.

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The following chart provides a breakdown of 2014 annual incentive award measurement by performance measurement categories and the total 2014 incentive award as a percentage of salary. Final award measurement for the named executive officers reflect actual results. The award measurement percentage for each NEO for each category is a number between target and maximum or maximum achievement for 2014. As an example, if the EBITDA goal achievement for a particular year was 25% in excess of target, then the award measurement for the CEO would be 100% for that year, or 1.25 times his target level of 80%:

Quantitative Financial Goal – Corporate

Because the achievement of entitlement and the beginning of development for our real estate projects is a very important long-term goal, and because Tejon does not generate significant revenue at this time, its short-term objectives, both quantitative and qualitative, are tied to metrics that are critical for the accomplishment of long-term goals. For our annual incentive, two corporate financial goals are considered: EBITDA and total corporate revenue. Total corporate revenue includes revenue from operations, other income, and equity in earnings of unconsolidated joint ventures. Our definition of EBITDA is earnings before interest, taxes, depreciation, amortization, and non-cash stock compensation. We believe this is a more accurate measurement of the cash used in the operations of the Company. Each named executive officer’s weighting is different based on whether or not they havethe officer has division revenue and operating income responsibility and the emphasis placed each year on division performance. EBITDA is being used with total revenue because at this stage in the Company’s business, EBITDA provides a better indicator of management’s creation of operating cash, which is critical to the funding of our entitlement and overall financial performance,development efforts, since the Company has significant non-cash expenses each year. The following table outlines EBITDA and total revenue results for 2014:2015.

These performance measurement numbers are determined based on calculations within the Company’s 20142015 business plan and operating budget.

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* EBITDA Actual 2015 Calculation:
Net Income		$	2,912,000
Interest, net			(528,000	)
Depreciation and amortization			5,090,000
Stock compensation expense			3,757,000
Income taxes			1,125,000
Total			12,356,000

Quantitative Financial Goal – Division

The following are the division financial results for the SeniorExecutive Vice President, Real EstateCommercial/Industrial Development and the Senior Vice President, Agriculture.

The Senior Vice President, Real Estate, Joe Drew, has quantitative goals related to revenue and income that complement the overall corporate objective. Commercial/industrial real estate revenues and net income targets do not include grazing leases, land management ancillary revenues, and joint venture revenues from the TA/Petro joint venture. Mr. Drew’s blended performance percentage is shown in the table above.

The Senior Vice President, Agriculture, Dennis J. Atkinson, had 2014 quantitative goals related to farming revenues and net income. For 2014, the Company recognized farming revenue that was greater than target but less than the maximum level. Mr. Atkinson also had a target net income goal for the year that was achieved at greater than the maximum level. Both goals were achieved at a greater than budgeted target level due to increases in pistachio, grape and hay revenues, and lower cost of sales when compared to the 2014 operating budget. In the setting of quantitative goals each year, ourwe develop target goals are developed through our annual budgeting process, and weprocess. We believe these are realistically attainable goals and that maximum achievement levels will be difficult to attain without significant effort and development of new business opportunities.

Individual Performance Objectives

In addition to the quantitative goals described above, the Chief Executive Officer’s annual incentive bonus in 20142015 was based upon the achievement of individual performance objectives proposed by the Chief Executive Officer 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, (includingincluding the achievement of strategic milestones related to land development and entitlement efforts that the Compensation Committee and the Board believe to be critical to the achievement of the Company’s long-term business plan).plan. Individual goals for 20142015 specifically related to leading and directing a ranch-wide strategy to facilitate future successful entitlement of our development projects, overseeing a publican outreach strategy to build support for our entitlement programs in Los Angeles County and Kern County, getting approval to move forward with tentative tract maps for Mountain Village at Tejon, and overseeing the continued implementation of our water strategy, and completion of outlet center development.strategy. Based on achieving preliminaryfinal approval of zoning for the Centennial project, internal integration of all management functions for TMV and the Grapevine Development, completion and openingBoard approval of the new outlet center at the Tejon Ranch Commerce Center,Mountain Village business plan, and the continued strengthening of the Company’s water investment, the Compensation Committee determined that the Chief Executive Officer achieved a maximum level of performance. In addition, the Compensation Committee approved a discretionary bonus of $25,000 based on the successes just mentioned and the overall progress made in transitioning the Company to internal management of all development projects.

The other named executive officers have more diverse individual performance goals than the CEO,Chief Executive Officer, generally tied to individual areas of responsibility, which focus on both on short-term and long-term goals (including improving operational efficiencies and achieving milestones and other goals with respect to the

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Company’s long-term business strategy related to land entitlement, development, and conservation). Generally, the qualitative goals covered: (1) coordination regarding entitlement and permitting activity milestones for our Tejon Mountain Village community, Centennial community, and Grapevine community; (2) guiding the Company in working with various government agencies as a part of the entitlement process; (3) acquiring and managing new water resources; (4) management of oil leases on ranch lands; (5) oversight of the construction of the new outlet center; (6) implementation of the approved ten-year farm management program; (7) implementing new capital funding activities and financing corporate operations; and (8) coordination

•    Completion of infrastructure bond sales through Tejon Ranch Public Facilities Financing Authority.

•    Coordination with key Resource Organizations and the Tejon Ranch Conservancy to allow for successful entitlement of our development projects.

The Chief Executive Officer and the Compensation Committee evaluate the success of the named executive officers (other than the CEO)Chief Executive Officer) in meeting their individual performance objectives, with final approval provided by the Compensation Committee. In evaluating the success of meeting specific individual objectives, the Chief Executive Officer and the Compensation Committee review the objective and identify whether or not the objective was accomplished or if the proper amount of progress has been made in achieving the objective. The Chief Executive Officer and the Compensation Committee note forwhether each objective if the objective was accomplished in the time frame designated and if the outcome achieved was as specified in the original objective. Based on each named executive officer’s achievement

2015 Performance Achievement

The following chart provides a breakdown of his and her goals and objectives2015 annual incentive award measurement by performance measurement category and the qualitative goals listed above, the Compensation Committee approved achievementtotal 2015 incentive award as a percentage of the qualitative goals for 2014salary. Final award measurement for the named executive officers atreflect actual results. The award measurement percentage for each NEO for each category is a number between target and maximum achievement for 2015. As an example, if the levels shownEBITDA goal achievement for a particular year was 25% in excess of target, then the above table.award measurement for the CEO would be 125% for that year, or 1.25 times his target level of 100%.

Equity Compensation.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 incentives to align senior management’s interests with stockholders’ 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 thatto encourage teamwork.

The vesting of equity grants issued since 2004 has been tied to the achievement of specific goals and objectives. The Company grants long-term milestone performance units that are tied to the achievement of several objectives related to our land entitlement and real estate development activities, including our success in achieving entitlements for our planned communities. The performance milestone units currently outstanding are related to our three development projects and are tied to successful entitlement and approval of development plans. Due to their strategic significance, we believe that disclosing specific milestones and time frames might result in competitive harm or delay achievement of long-term strategic objectives. We believe that the achievement of the target level of performance will require significant effort and substantial progress over the next three years in light of the current entitlement environment in California.

With respect to the grant of the annualWhen granting three-year cash flow performance shares, the Company’s practice is to determine annually a dollar amount of equity compensation that it wishes to providebe provided, and to grant a number of performance shares that have a fair market value equal to that amount on the date of grant. Vesting of these annual grants is tied to the achievement of a rolling three-year cash metric. The rolling three-year cash metric is budgeted cash provided from operations as calculated per GAAP for cash flow statements. For 2014,2015, the dollar amount attributed to performance shares for the Chief Executive Officer was $380,000,$400,000, and for the other named executive officers it ranged from $80,000 to $170,000$175,000, depending on the importance of the input from each of the other named executive officers to the successful achievement of the goal. The level of the target dollar amount for each named executive officer is based on the Poe Group report from 2013 Compensation Reportand 2014 that recommended long-term compensation goals for each position. The number of shares of stock is based on a ninety-day average stock price divided into each named executive officer’s dollar amount of value. The shares granted are expensed based on the closing price of the stock on grant date.

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The annual performance shares are tied to the achievement of the rolling three-year cash flow metric, described above. This performance metric was selected by the Compensation Committee as a measurement of management’s ability to create operating cash over an extended period at a time when cash demands will be high and net income will not be significant. For 2014,2015, this cash flow measure covers the years 20142015 through 20162017 and has a cumulative cash from operations target of $36,374,000.$32,292,000. The Company believes that achievement of this target level of performance will require significant effort and is dependent on the continued absorption of land at Tejon Ranch Commerce Center, improvement in oil and mineral revenues, maintenance of farm revenues at current levels, and progress with respect to pre-development activities at Tejon Mountain Village and entitlement activities at Centennial and Grapevine. Please refer to our Annual Report on Form 10-K for the year ended December 31, 20142015 for additional information regarding entitlement and development activities. This target assumes we are moving forward in a positive manner with respect to our development projects. These grants vest after three years, and theyears. The number of shares to be received is determined by the extent of performance achievement and can range from zero shares to the maximum award amount, which is 150% of the target award.

The goals for years prior to 2014 were tied to cumulative cash usage, which is defined as cash provided from operations less cash used for capital investments, excluding activities within marketable securities. For the 2012–20142013 – 2015 period, the goal for cumulative cash usage was $50,154,000, and the goal for the 2013–2015 period is cumulative cash usage of $107,207,000. For the 2012–20142013 – 2015 period, goal

achievement was 103%92% of the target objective, with cash usage at $46,800,000.$115,841,000. Adjustments are made to the cash flow presentation within the 2015 Form 10-K, to account for marketable securities activity and any reimbursement proceeds from the Communities Facilities District. These grants, which are referenced in footnote 2 to the Outstanding Equity Awards at 20142015 Fiscal Year-End table that begins on page 36,42, vested and were delivered in early March after approval by the March 2015 Board of Directors meeting.Compensation Committee. See the 20142015 Grants of Plan Based Awards Table on page 3445 for the number of shares granted to each named executive officer for the 2014–20162015 – 2017 rolling three-year period. The table below summarizes the outstanding (as of the end of 2014)2015) performance share measurement goals.