Ethics and Business Conduct Policy
Under the direction of the Board of Directors of Stratus Properties Inc., it is the policy of the Company that its business activities are managed and operated in conformity with applicable law and high ethical standards. The Board has also directed that all personnel employed by or affiliated with the Company comply with this policy at all times. (References to "the Company" include Stratus Properties Inc. and its direct and indirect subsidiaries; references to "Personnel" include employees, officers, and directors of the Company; and references to "Personnel affiliated with the Company" include affiliated and unaffiliated service providers). This Statement of Ethics and Business Conduct Policy summarizes some of the important principles that should afford guidance to Personnel in carrying out their responsibilities. Both the Board of Directors and the Company's management are determined to maintain the Company's reputation for integrity and fairness in business dealings with others and in the communities where its offices and operations are located. Departures from our standards will not be tolerated. Individuals who violate the Ethics and Business Conduct Policy are subject to discharge or other appropriate disciplinary action. All Personnel employed by or affiliated with the Company are therefore expected to be familiar with and to abide by this Policy. To this end, all appropriate Personnel will be asked to provide an Annual Ethics and Business Conduct Certification.
 
Most of the standards articulated in the Policy are established by U.S. and other applicable laws. Violations of these laws can expose the Company and the individuals involved to criminal and civil liability and to other serious consequences. At the same time, in practice these principles can raise difficult issues in particular situations. All Personnel are responsible for seeking guidance in the case of any doubt regarding the Policy's application. Any inquiries should be directed to the Company's general counsel, Kenneth N. Jones, at (512) 435-2312.
 
Conflicts of Interest
It is the Company's policy that its Personnel must avoid any investments, associations or other relationships that would interfere, or could appear to interfere, with their good judgment concerning the Company's best interests. A conflict situation can arise when Personnel take actions or have interests that may make it difficult to perform their work objectively and effectively. Conflicts of interest also arise when an employee, officer or director, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company.
 
If such a situation arises, or an individual is unsure if a situation constitutes a conflict of interest, he or she must immediately report the circumstances of the situation to the Company's compliance officer. If the Company's senior management determines that such circumstances constitute a conflict of interest, they must immediately report such conflict to the Audit Committee.
 
Corporate Opportunities
No employee, officer or director may: (1) take for himself or herself personally opportunities that are discovered through the use of Company property, information or position; (2) use Company property, information or position for personal gain; or (3) compete with the Company.
 
All Company personnel owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.
 
Insider Trading
No employee, officer or director may trade in Company securities unless he or she does not possess material nonpublic information. No employee, officer or director may disclose such information to others, including family members, who might use it for trading or pass it along to others who might trade.
 
"Material" information includes any information that would influence a reasonable investor to buy, sell or hold Company stock. If a person learns or knows of information that would prompt anyone to want to buy or sell stock, chances are the information is material. Generally, "nonpublic" information is information that has not been disclosed by means of a widely distributed press release.
 
The Company will periodically issue more detailed guidance and procedures to certain personnel that are subject to the Company's window period recommendations with respect to transactions in Company securities.
 
Outside Business Activities
The Company endeavors to conduct its business operations with the highest degree of proficiency. To that end, each of the Company's officers, managers and employees is expected to devote virtually all of his or her business time to the Company's business and to use his or her best efforts to perform faithfully and efficiently his or her duties to the Company. Accordingly, each of the Company's officers, managers and employees is expected to refrain from any outside employment or business activities that interfere with his or her ability to perform services and fulfill the responsibilities that the Company requires of him or her.
 
All employees will be judged by the same performance standards and will be subject to the Company's scheduling demands regardless of any outside employment and business activities.
 
If the Company determines, in its sole discretion, that an officer, manager, or employee's outside employment or business activities interfere with his or her ability to perform services and fulfill the responsibilities that the Company requires, the Company may ask the officer, manager, or employee to reduce or even terminate the outside employment or business activities if he or she wishes to remain employed by the Company.
 
Confidentiality
All information about the Company's business and its plans that has not been disclosed to the public is a valuable asset that belongs to the Company. All Personnel employed by and affiliated with the Company should maintain the confidentiality of information entrusted to them by the Company, its business partners, suppliers, customers or others related to the Company's business. Such information must not be disclosed to anyone, including friends and family members, except when disclosure is authorized by the Company or legally mandated.
 
Trade Secrets and Fair Dealing
All Personnel are prohibited from (1) misappropriating any form of confidential financial, business, or technical information, or any property, from any other person or company, or (2) receiving any such information or property from a person or company with knowledge or reason to know that such information or property is misappropriated or has otherwise been obtained without permission of the owner. All Personnel should endeavor to deal fairly with the Company's customers, suppliers, business partners, competitors and other employees. Additionally, Personnel should not take advantage of any person through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice.
 
Protection and Proper Use of Company Assets
All Personnel should protect the Company's property and assets and ensure their efficient and proper use. Theft, carelessness and waste can directly impact the Company's profitability, reputation and success. All Company property and assets should be used for legitimate business purposes, and personal use of such property and assets without permission is strictly prohibited.
 
Financial Record Keeping
It is the Company's policy that all of its books and records must fully and fairly reflect all receipts and expenditures. No undisclosed or unrecorded funds of the Company shall be established for any purpose. Attempts to create false or misleading records are forbidden, and no false or misleading entries shall be made in the Company's books and records for any reason. This policy covers not only expenses incurred or transactions undertaken by Personnel, but also expenses incurred by third parties (such as co-venturers, consultants, and agents) for which reimbursement is requested.
 
Improper Payments
No Personnel employed by or affiliated with the Company shall make, offer, promise or authorize any payment or use of any funds, assets or anything of value that is directly or indirectly for the benefit of any individual (including any government official), company or organization, and which is designed to secure, or is an award for securing in the past, any improper business advantage for the Company or any other person. This policy applies regardless of whether the payment or use is lawful under the laws of a particular jurisdiction. The Company will periodically issue to all appropriate Personnel more detailed guidance and procedures regarding improper payments.
 
It is the Company's policy that no payment, transfer, offer or promise of the Company's funds, assets, or anything of value shall be made that is not properly authorized, properly accounted for and clearly identified on the Company's books. Furthermore, no payment or transfer of the Company's funds or assets shall be made or approved with the intention or understanding that any part of such payment or transfer is to be used except as specified in the supporting documents. Except as approved by authorized management, payments to third parties (other than petty cash) may not be made in cash, nor may they be paid to any account in a country otherwise unrelated to the payee's business, or to any person other than the authorized payee.
 
Political Contributions
It is the Company's policy not to contribute any funds to any candidate for political office, official of a political party, or committee or organization for the election of a particular candidate to any political office (federal, state or local) in the United States. Any requests or proposals for contributions to political parties by the Company are not subject to this general policy but raise legal issues. Accordingly, all such requests or proposals should be submitted to the Company's general counsel who will arrange for necessary review and approval by senior management. This policy does not prevent any Personnel in their individual capacity from rendering services to individual candidates, political committees or political parties where permitted by applicable laws, nor is it intended to discourage voluntary contributions by Personnel to such candidates, committees, or parties (as long as such contributions are rendered in a person's individual capacity and not on behalf of the Company), including any Company-related political committee. Also, this policy does not preclude the Company from establishing programs, permitted by applicable laws, under which it may make (1) contributions to any Companyrelated political committee so as to match, in whole or in part, a contribution voluntarily made to that committee by an eligible employee or other individual; (2) contributions to any state political committee sponsored by an industry or trade association of which the Company or any subsidiary is a member; or (3) other contributions permitted by law and specifically authorized by management.
 
Business Entertainment and Gifts
It is the Company's policy that all solicitation of or dealings with suppliers, customers or others doing or seeking to do business with the Company shall be conducted solely on the basis that reflects both the Company's best business interests and its high ethical standards. Except in the case of government officials or employees of state-owned companies, the providing of common courtesies, entertainment, modest gifts and occasional meals for potential or actual suppliers, customers or others involved with aspects of the Company's business in a manner appropriate to the business relationship and associated with business discussions is permitted, provided expenses in this connection are reasonable, authorized and consistent with applicable law. The provision of business entertainment and gifts to government officials, including private persons acting in an official capacity on behalf of the government, can raise serious issues under U.S. and local laws. The payment by any Personnel employed by or affiliated with the Company of lavish or excessive gifts and entertainment expenses to or on behalf of such officials is prohibited. Any gifts or entertainment must be modest, customary and must comport with all applicable U.S. and local laws. Personnel are encouraged to consult with the Company's general counsel or his designee with any questions.
 
Travel and Travel-Related Expenses
Site visits, offsite meetings and other transactions involving the payment or reimbursement by the Company of travel and travel-related expenses (including transportation, lodging, meals and incidental expenses) incurred by government officials also can create issues under U.S. and local laws. Any such expenses paid for or reimbursed must be genuine, reasonable, directly related to the business of the Company, and allowed by U.S. or local law. Payments for travel not related to a business purpose, including side trips primarily for pleasure, and payments for travel of spouses or other family members, raise issues requiring special attention and must be specifically authorized by the Company's general counsel or designee.
 
Acceptance of Payments
It is the Company's policy that no Personnel employed by or affiliated with the Company shall, directly or indirectly, seek or accept any payments, fees, services or other gratuities (irrespective of size or amount) outside the normal course of such individual's business duties from any other person, company or organization that does or seeks to do business with the Company. Gifts of cash or cash equivalents of any amount are strictly prohibited. The receipt of common courtesies, sales promotion items of small value, modest gifts, occasional meals and reasonable entertainment appropriate to a business relationship and associated with business discussions are regarded as not inconsistent with this Ethics and Business Conduct Policy.
 
Antitrust Laws
In general, the antitrust laws prohibit competitors (both actual and potential) from making any agreements restricting or limiting competition between themselves. This prohibition applies whether the agreement is oral or written, explicit or implicit, formal or informal. Thus, it makes no difference whether competitors enter into an unlawful agreement as a result of a board room meeting or as the result of spontaneous discussions on the golf course or in a restaurant.
 
Although the most well-known examples of illegal agreements involve price fixing or bid rigging, the antitrust laws prohibit agreements that allocate customers, territories or markets, agreements that regulate the volume of products sold or the terms of their sale, and agreements among purchasers that they will only purchase from sellers on specified terms. Additionally, in certain circumstances, the antitrust laws prohibit competitors from agreeing to boycott or unreasonably refusing to deal with third parties.
 
Not only do the antitrust laws prohibit joint activities that restrain trade, they also prohibit companies from unilaterally acting to eliminate competitors through anti-competitive conduct. Depending on the particular circumstances, the antitrust laws may reach such activities as belowcost pricing, price discrimination, tying the sale of one product with another, unnecessary acquisition of scarce supplies, and conduct that has the effect of unnecessarily raising a competitor's costs.
 
Personnel who participate in a violation of the antitrust laws expose themselves and the Company to grave consequences. Criminal penalties include substantial fines for the Company and imprisonment and fines for the individuals who performed or authorized the illegal activity. A violation of the antitrust laws also exposes the Company and individual participants to civil lawsuits from the government, injured consumers and injured competitors. These lawsuits are very costly and may result in fines, punitive damages, injunctions, consent decrees, and other penalties that can adversely affect the Company years into the future.
 
This discussion has not been an exhaustive statement of antitrust law but rather is designed to alert you to antitrust problems that you may face. Personnel are encouraged to consult with the Company's general counsel or his designee with any questions.