DEF 14A of Apollo Commercial Real Estate Finance, Inc.
Filed Apr 26, 2024 · FY20230001193125-24-118094
1. ELECTION OF DIRECTORS
1. ELECTION OF DIRECTORS
Board of Directors
Board of Directors Our board of directors is currently comprised of nine directors: Mark C. Biderman, Pamela G. Carlton, Brenna Haysom, Robert A. Kasdin, Katherine G. Newman, Scott S. Prince, Stuart A. Rothstein, Michael E. Salvati and Carmencita N.M. Whonder. As previously disclosed, in January 2024, our board of directors decreased the size of our board of directors from ten directors to nine directors in connection with the resignation of Eric L. Press as a member of our board of directors. Mr. Press’ decision to resign from our board of directors was not the result of any dispute or disagreements with our Company on any matter relating to our Company’s operations, policies or practices. In accordance with our charter (the “Charter”) and bylaws (the “Bylaws”), each director will hold office until our next annual meeting of stockholders and until his or her successor has been duly elected and qualifies, or until the director’s earlier resignation, death or removal. Upon the recommendation of the Nominating and Corporate Governance Committee of our board of directors (the “Nominating and Corporate Governance Committee”), our board of directors has nominated Mark C. Biderman, Pamela G. Carlton, Brenna Haysom, Robert A. Kasdin, Katherine G. Newman, Scott S. Prince, Stuart A. Rothstein, Michael E. Salvati and Carmencita N.M. Whonder to stand for election as directors, by the stockholders at the Annual Meeting, to serve until our 2025 annual meeting of stockholders and until their respective successors are duly elected and qualify, or until their earlier resignation, death or removal. It is intended that the shares of Common Stock represented by properly submitted proxies will be voted by the persons named therein as proxy holders FOR the election of Messrs. Biderman, Kasdin, Prince, Rothstein and Salvati and Mses. Carlton, Haysom, Newman and Whonder as directors, unless otherwise instructed. If the candidacy of Messrs. Biderman, Kasdin, Prince, Rothstein or Salvati or Mses. Carlton, Haysom, Newman or Whonder should, for any reason, be withdrawn prior to the Annual Meeting, the proxies will be voted by the proxy holders in favor of such substituted candidates (if any) as shall be nominated by our board of directors. Our board of directors has no reason to believe that, if elected, any of Messrs. Biderman, Kasdin, Prince, Rothstein and Salvati and Mses. Carlton, Haysom, Newman and Whonder will be unable or unwilling to serve as director.
Information Regarding the Nominees for Election as Directors
Information Regarding the Nominees for Election as Directors The following information is furnished as of April 26, 2024 regarding the nominees for election as directors. Mark C. Biderman, 78, has been one of our directors since November 2010. Since April 2021, Mr. Biderman has been a member of the board of directors and chair of the Audit Committee of The Liberty Company Insurance Brokers LLC, and since February 2023, Mr. Biderman has been a member of the board of directors of Corse Energy Corp. Mr. Biderman served as a member of the board of directors of Atlas Energy Group, LLC from February 2015 to May 2020. Since January 2009, Mr. Biderman has been a consultant focused on the financial services sector. Mr. Biderman served as Vice Chairman of National Financial Partners Corp. (NYSE: NFP), a benefits, insurance and wealth management services firm, from September 2008 through December 2008. From November 1999 until September 2008, he served as National Financial Partners Corp.’s Executive Vice President and Chief Financial Officer. From 1987 to 1999, Mr. Biderman served as Managing Director and Head of the Financial Institutions Group at CIBC World Markets, or CIBC, an investment banking firm, and its predecessor, Oppenheimer & Co., Inc. Prior to investment banking, he was an equity research analyst covering the commercial banking industry. Mr. Biderman chaired the Due Diligence Committee at CIBC and served on the Commitment and Credit Committees. Mr. Biderman was a member of the Disciplinary Review Committee of the CFA Institute from September 2016 to August 2022. He serves on the Board of Trustees of Congregation Rodeph Sholom. Mr. Biderman is a Chartered Financial Analyst. Mr. Biderman received a B.S.E. degree, with high honors, in chemical engineering from Princeton University and an M.B.A. from the Harvard Graduate School of Business Administration. Mr. Biderman qualifies as an “audit committee financial expert” under the guidelines of the Securities and Exchange Commission (the “SEC”). Mr. Biderman was selected to serve on our board of directors because of his business acumen and valuable operational experience. Pamela G. Carlton, 69, has been one of our directors since July 2021. Ms. Carlton is the President of Springboard Partners in Cross Cultural Leadership, LLC. After 22 years as an investment banker on Wall Street, Ms. Carlton launched Springboard in 2003, a diversity, equity and inclusion strategy and consulting firm. Prior to founding Springboard, Ms. Carlton retired as a Managing Director and Associate Director of U.S. Equity Research at JPMorgan Chase in 2003, having also served as Director of U.S. Equity Research for Chase Asset Management from 1996 to 1999. Prior to JPMorgan Chase, Ms. Carlton was an investment banker with Morgan Stanley and served as Morgan Stanley’s Co-Director of U.S. and Latin America Equity Research from 1991 to 1996. She began her career as a corporate attorney at Cleary Gottlieb Steen & Hamilton. Ms. Carlton has served on the board of directors of Evercore (NYSE: EVR) since 2019 and the board of directors of Columbia Funds (a mutual fund board of Columbia Threadneedle Investments, a subsidiary of Ameriprise Financial) since 2007, where she has served as Chair since January 2023. Ms. Carlton also has served on the board of directors of DR Bank since 2017 and the Board of Trustees of New York Presbyterian Hospital since 1996. She is a member of the Women’s Forum of New York. Ms. Carlton earned a B.A. from Williams College, graduating Magna Cum Laude, was a member of the Phi Beta Kappa Society and was elected as President of the Williams College Phi Beta Kappa Society. She also earned a J.D. from Yale Law School and an M.B.A. from Yale School of Management. Ms. Carlton was selected to serve on our board of directors because of her significant professional experience, investment banking and capital markets experience as well as her expertise in diversity, equity and inclusion matters. Brenna Haysom, 47, has been one of our directors since February 2020. Ms. Haysom is the founder and Chief Executive Officer of Rally Labs, LLC, a consumer pharmaceutical company. Prior to founding Rally Labs in 2010, Ms. Haysom worked in the Private Equity Group at Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”), where she focused on both equity and credit investing across a range of industries that included financial services, transportation, chemicals, telecom, and media. She started her career at Lazard Ltd (formerly known as Lazard Frères & Co.) in New York where she worked in both the Mergers & Acquisitions and Restructuring groups. Ms. Haysom serves on the board of directors of H&R Real Estate Investment Trust (TSX: HR.UN), a diversified real estate investment trust (“REIT”) with office, retail, industrial and residential properties across North America for which she also serves as the chair of the Compensation, Governance and Nominating Committee and as a member of the Audit Committee. Ms. Haysom also serves on the board of directors of Venerable Holdings, Inc. and its subsidiaries Corporate Solutions Life Reinsurance Company and Venerable Insurance and Annuity Company, both insurance companies that are focused on the consolidation of variable annuity blocks. Ms. Haysom is a member of the Venerable Holdings, Inc. Audit Committee. She chairs the Venerable Insurance and Annuity Company Compensation Committee and is a member of its Nominating and Corporate Governance Committee. Ms. Haysom has an A.B. with honors in Social Studies from Harvard College, and an M.B.A. from Harvard Business School. Ms. Haysom qualifies as an “audit committee financial expert” under the guidelines of the SEC. Ms. Haysom was selected to serve on our board of directors because of her significant professional and management experience and strong background in finance. Robert A. Kasdin, 66, has been one of our directors since April 2014. From July 2015 to July 2022, Mr. Kasdin served as Senior Vice President and Chief Operating Officer of Johns Hopkins Medicine and from 2018 to July 2022 also as Chief Financial Officer of Johns Hopkins Medicine. Prior to joining Johns Hopkins Medicine, he served as Senior Executive Vice President of Columbia University from September 2002 to June 2015. Prior to joining Columbia University, he served as the Executive Vice President and Chief Financial Officer of the University of Michigan from 1997 to 2002. Before his service at the University of Michigan, he was the Treasurer and Chief Investment Officer for the Metropolitan Museum of Art in New York City from 1993 to 1997, and, from 1988 to 1992, served as Vice President and General Counsel for Princeton University Investment Company. He began his career as a corporate attorney at Davis Polk & Wardwell LLP. Mr. Kasdin has also served as a director of the Harbor Funds since January 2014, a trustee of Barnard College since July 2023, and as a member of the Council on Foreign Relations. From February 2008 to March 2014, Mr. Kasdin served as a member of the board of directors of Noranda Aluminum Holding Corporation (NYSE: NOR). Mr. Kasdin earned his A.B. from Princeton University and his J.D. from Harvard Law School. Mr. Kasdin was selected to serve on our board of directors based on his legal experience as well as his leadership, financial and management experience with large, complex institutions, including construction projects and major real estate development on behalf of those institutions, which brings an important perspective to our strategic planning.
Information Regarding the Nominees for Election as Directors
Katherine G. Newman, 45, has been one of our directors since June 2020. Ms. Newman is Partner and Senior Tax Counsel at Apollo, specializing in tax matters with respect to Apollo’s private equity funds, their investors and their investments worldwide. She also advises the firm on its public holding structure. Prior to joining Apollo in 2010, Ms. Newman practiced law at the law firm of Akin Gump Strauss Hauer & Feld LLP. Ms. Newman serves on the board of directors for Women’s Justice Initiative, a non-profit focused on education, access to legal services and gender-based violence prevention, and on the board of directors for Chances for Children, a non-profit which provides clinical intervention services for families with young children to strengthen family bonds. Ms. Newman graduated magna cum laude from Harvard University with an A.B. in Social Studies, and holds a J.D. from Georgetown University Law Center. Ms. Newman was selected to serve on our board of directors based on her significant legal and tax experience in the asset management industry as well as her experience counseling business leaders across Apollo on broad organizational changes. Scott S. Prince, 60, has been one of our directors since November 2013. Mr. Prince is also a Founding Member of GPS Investment Partners, LLC and an Executive Chairman of Merchant Investment Management. Additionally, Mr. Prince is a Partner of Maxim Capital Group, a real estate investment and lending platform where he is a Member of the Board. Mr. Prince was the Vice Chairman of Chiron Investment Management, LLC from 2015 until 2021 and Co-Managing Partner of Skybridge Capital from 2007 until 2011. Prior to Skybridge, Mr. Prince was a Partner at Eton Park Capital Management from launch in 2004 until 2007, where he headed global trading and the fund’s derivatives business. Mr. Prince was Co-Head of Equities Trading and Global Equity Derivatives at Goldman Sachs through 2004, where he was named a Partner in 1998, and served on the firm’s Finance Committee and the Equity Division’s Risk and Operating Committees. He serves as a Board Member of the Hope and Heroes Pediatric Cancer Foundation and a Director of the Miami Community-Police Relations Foundation. Mr. Prince received a B.S. in Economics from the Wharton School of the University of Pennsylvania and an M.B.A. from the University of Chicago. Mr. Prince qualifies as an “audit committee financial expert” under the guidelines of the SEC. Mr. Prince was selected to serve on our board of directors because of his significant finance and capital markets expertise. Stuart A. Rothstein, 58, has been our President and Chief Executive Officer and one of our directors since March 2012, and also served as our interim Chief Financial Officer, Treasurer, and Secretary from January 2022 to April 2022. From September 2009 through April 2013, Mr. Rothstein also served as our Chief Financial Officer, Treasurer and Secretary. He is also a member of the Investment Committee of our Manager. Since April 2023, Mr. Rothstein has been the Chief Operating Officer-Asset Backed Finance of Apollo and since 2009, Mr. Rothstein has been a Partner and the Chief Operating Officer-Real Estate of Apollo. In those roles, Mr. Rothstein is responsible for managing the day-to-day operations of the businesses as well as strategic planning development and implementation of growth and product strategies and new business development. Mr. Rothstein has been a director of Apollo Realty Income Solutions, Inc., a non-traded REIT managed by Apollo (“ARIS”), since September 2021 and has served as Chairman of the ARIS board of directors since June 2022. Since April 2022, he has been a member of the Investment Committee of ARIS Management, LLC, an affiliate of Apollo. Since February 2024, Mr. Rothstein has been Chair of the board of directors of Apollo Asset Backed Credit Company LLC. Prior to joining Apollo in 2009, Mr. Rothstein was a Co-Managing Partner of Four Corners Properties, a privately held real estate investment company. Previously, he was employed by KKR Financial Advisors, LLC, RBC Capital Markets, Related Capital Company and Spieker Properties, Inc. Mr. Rothstein graduated from the Schreyer Honors College at the Pennsylvania State University with a B.S. in Accounting and received an M.B.A. from the Stanford University Graduate School of Business. Mr. Rothstein was selected to serve on our board of directors because of the strategic leadership and business judgment he has demonstrated in his role as our President and Chief Executive Officer, and previously as our Chief Financial Officer, and his extensive managerial and executive experience. Michael E. Salvati, 71, has been one of our directors since September 2009. Since December 2000, Mr. Salvati has been President at Oakridge Consulting, Inc., which provides interim management, management consulting and corporate advisory services to companies ranging in size from start-ups to multinational corporations. From February 2004 to May 2004, Mr. Salvati served as Chief Financial Officer of AMI Semiconductor, Inc. From September 1998 to February 2000, Mr. Salvati was Executive Vice President—Chief Operating Officer of National Financial Partners Corp. (NYSE: NFP), an Apollo-affiliated venture focusing on the consolidation of small financial services firms that service high net worth individuals. From June 1996 to June 1998, he was Chief Financial Officer of Culligan Water Technologies, Inc., where he oversaw the completion of nearly 50 acquisitions over a period of 18 months. Mr. Salvati was a partner at KPMG LLP from 1990 to 1996. Mr. Salvati is a Certified Public Accountant (Inactive) and member of the American Institute of Certified Public Accountants, Illinois CPA Society. He also serves as a member of the boards of directors of MidCap FinCo Holdings, Limited, MidCap FinCo Intermediate Holdings, Limited, MidCap FinCo Designated Activity Company, MC Feeder, Limited, and MFIC GP, LLC (affiliates of Apollo), and he is a member of the audit committee, risk management committee and conflicts committee of MidCap FinCo Designated Activity Company. Mr. Salvati’s previous board memberships include Global Power Equipment Group, Inc. (OTC: GLPW), Things Remembered, Inc., Lazydays, Inc., NCH Nu World Marketing, Ltd., Coho Energy, Inc. (OTC: COHIQ), Prime Succession, Inc., and Castle Holdco 4, Ltd., an Apollo affiliate. Mr. Salvati received a B.S. in microbiology and a M.S. in accounting from the University of Illinois at Champaign-Urbana. Mr. Salvati qualifies as an “audit committee financial expert” under the guidelines of the SEC. Mr. Salvati was selected to serve on our board of directors due to his strong background in public accounting and auditing.
Information Regarding the Nominees for Election as Directors
Carmencita N.M. Whonder, 47, has been one of our directors since June 2021. Ms. Whonder serves as Policy Director at the lobbying and law firm of Brownstein Hyatt Farber Schreck, LLP (“Brownstein”). At Brownstein, Ms. Whonder provides strategic public policy advice to clients primarily in the financial services and housing sectors before the U.S. Congress and executive branch agencies. In February 2013, she founded OF WHONDER, a size inclusive luxury womenswear brand, and is the chief executive officer of Whonder Apparel Group, LLC. Prior to joining Brownstein in November 2008, Ms. Whonder served as the staff director for the Senate Subcommittee on Housing, Transportation, and Community Development and as the principal advisor on the Senate Banking, Housing and Urban Affairs Committee to United States Senator Charles E. Schumer. During the 109th Congress, from March 2004 to December 2006, she held the position of Minority Staff Director for the Senate Subcommittee on Economic Policy. From January 2001 to July 2003, Ms. Whonder has also worked as a Leadership Education Counselor for Gates Millennium Scholars Program/UNCF, an initiative of the Bill and Melinda Gates Foundation. She has been recognized as a MiSK Global Forum Delegate, a Milken Institute Young Leader, an Aspen Institute Socrates Scholar, a Council on Foreign Relations Term Member and served as a member of the Council on Foreign Relations Independent Taskforce on U.S. Trade and Investment Policy. Ms. Whonder has served as a director of MidCap Financial Investment Corporation (NASDAQ: MFIC) since July 2022. Ms. Whonder also has served as a trustee at the Population Council since 2021, and on the boards of the Brooklyn Org and DC Jazz Festival since 2022 and 2010, respectively. Ms. Whonder previously served as director of Direct ChassisLink, Inc. (March 2020 to November 2022). Ms. Whonder has a B.A. from Howard University, a diploma from the Universidad Pontificia de Salamanca and a Masters in International Public Policy from Johns Hopkins University School of Advanced International Studies. Ms. Whonder was selected to serve on our board of directors because of her significant professional experience and expertise in public policy in the financial services and housing sectors. Our director nominees represent a mix of age, race, gender, tenure, skills and experience, as shown below.
Information Regarding the Nominees for Election as Directors
| Director Nominee Demographics | | | | | | | | | | | | Biderman | Carlton | Haysom | Kasdin | Newman | Prince | Rothstein | Salvati | Whonder | | Years of Board Tenure(1) | 13 | 2 | 4 | 10 | 3 | 10 | 12 | 14 | 2 | | Average Board Tenure | 7.8 | | | | | | | | | | Gender | M | F | F | M | F | M | M | M | F | | Race/Ethnicity | | | | | | | | | | | African American or Black | | X | | | | | | | X | | White | X | | X | X | X | X | X | X | |
Information Regarding the Nominees for Election as Directors
| (1) Board tenure as of April 26, 2024. |
Information Regarding the Nominees for Election as Directors
| Director Nominee Skills and Experience | | | | | | | | | | | | Biderman | Carlton | Haysom | Kasdin | Newman | Prince | Rothstein | Salvati | Whonder | | Public Board | X | X | X | X | | X | X | X | X | | Investment | X | X | X | X | | X | X | X | | | REIT or Real Estate | | | X | X | | X | X | | | | Business Strategy or Operations | X | X | X | X | X | X | X | X | X | | Financial Literacy | X | X | X | X | X | X | X | X | X | | Government or Public Policy | | | | X | | | | | X | | Regulatory, Legal or Compliance | | X | | X | X | | | | X |
Information Regarding the Nominees for Election as Directors
Our board of directors recommends a vote FOR the election of Messrs. Biderman, Kasdin, Prince, Rothstein and Salvati and Mses. Carlton, Haysom, Newman and Whonder as directors. A plurality of all of the votes cast in the election of directors at the Annual Meeting is necessary to elect a director. Proxies solicited by our board of directors will be voted FOR Messrs. Biderman, Kasdin, Prince, Rothstein and Salvati and Mses. Carlton, Haysom, Newman and Whonder unless otherwise instructed. Abstentions, if any, and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum. We have a majority vote policy for the election of directors. In an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election is required to promptly tender his or her resignation to our board of directors. Our Nominating and Corporate Governance Committee is required to promptly consider the resignation and make a recommendation to our board of directors with respect to the tendered resignation. Our board of directors is required to take action with respect to this recommendation. Any director who tenders his or her resignation to our board of directors will not participate in the committee’s consideration or board action regarding whether to accept such tendered resignation. The policy is included in our Corporate Governance Guidelines and is more fully described below under “Corporate Governance—Corporate Governance Guidelines—Majority Vote Policy.” In accordance with our Bylaws, any vacancies occurring on our board of directors, including vacancies occurring as a result of the death, resignation, or removal of a director, or due to an increase in the size of the board of directors, may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is duly elected and qualifies, or until such director’s earlier resignation, death or removal. There is no familial relationship among any of the members of our board of directors or executive officers. See “Corporate Governance—Director Independence.”
Board of Directors
Board of Directors Our board of directors is responsible for overseeing our business and affairs. Our board of directors conducts its business through meetings and actions taken by consent in lieu of meetings. During the year ended December 31, 2023, our board of directors held eight meetings. All of the directors then serving on our board of directors attended at least 75% of the aggregate number of meetings of our board of directors and of the committees of our board of directors on which they served during 2023, except for Stuart A. Rothstein. During the period, Mr. Rothstein attended 63% of the aggregate number of meetings of our board of directors, missing certain meetings due to unforeseen scheduling conflicts with certain activities and meetings in connection with his service as our Chief Executive Officer. The meetings of our board of directors that Mr. Rothstein missed were limited in scope and covered topics that were presented by management, for which Mr. Rothstein was involved in preparing and reviewing the materials, and Mr. Rothstein communicated his support of such topics to members of our board of directors ahead of such meetings. During the period, Mr. Rothstein attended all of the regular quarterly meetings of our board of directors where our business updates and financial results were discussed, among other matters. In addition, during the period, Mr. Rothstein attended all of the meetings of the Nominating and Corporate Governance Committee and five of the six meetings of the Compensation Committee, each at the invitation of the respective committees, for his views and perspective as our Chief Executive Officer. Eight of the directors then serving on our board of directors attended our 2023 annual meeting of stockholders. Our board of directors’ policy, as set forth in the Corporate Governance Guidelines, is to encourage and promote the attendance by each director at all scheduled meetings of our board of directors and all meetings of our stockholders.
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS In 2023, the Chair of our board of directors earned a $225,000 annual base director’s fee, $125,000 of which was paid in cash and $100,000 of which was paid in shares of restricted Common Stock or other equity awards, and each of our other non-employee directors earned a $175,000 annual base director’s fee, $75,000 of which was paid in cash and $100,000 of which was paid in shares of restricted Common Stock or other equity awards. These shares of restricted Common Stock vest in full on the anniversary of the date of grant. Upon the declaration of a dividend payable to holders of shares of our Common Stock, our directors will receive dividend payments on the shares of restricted Common Stock or other equity awards they hold to the same extent, and in the same per share amounts, as other holders of our Common Stock. In addition, in 2023 the Chairpersons of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee earned an annual cash retainer of $20,000, $10,000 and $10,000, respectively, and the other members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee earned an annual cash retainer of $10,000, $5,000 and $2,500, respectively. We also reimburse all members of our board of directors for their travel related expenses incurred in connection with their attendance at board and committee meetings. We pay directors’ fees only to those directors who are not employees of Apollo. Our independent directors and non-employee directors are also eligible to receive grants of stock options, shares of restricted Common Stock, restricted stock units, phantom shares, dividend equivalent rights and other equity-based awards under the 2019 Equity Incentive Plan, which must be approved by the Compensation Committee. The following table summarizes the compensation received by our non-employee directors in the fiscal year ended December 31, 2023.
COMPENSATION OF DIRECTORS
| Name | Fees Earned or Paid in Cash($)(1) | Restricted Stock Awards ($)(2) | Total ($) | | Mark C. Biderman | 100,000 | 100,000 | 200,000 | | Pamela G. Carlton | 90,000 | 100,000 | 190,000 | | Brenna Haysom | 90,000 | 100,000 | 190,000 | | Robert A. Kasdin | 82,500 | 100,000 | 182,500 | | Scott S. Prince | 95,000 | 100,000 | 195,000 | | Michael E. Salvati | 137,500 | 100,000 | 237,500 | | Carmencita N.M. Whonder | 75,000 | 100,000 | 175,000 |
COMPENSATION OF DIRECTORS
| (1) Amounts in this column represent annual board of directors, Chair, committee Chairperson and committee member fees paid to non-employee directors in 2023. |
COMPENSATION OF DIRECTORS
| (2) Amounts in this column represent the aggregate grant date fair value of awards granted in 2023. |
Equity Compensation
Equity Compensation The Compensation Committee has granted, and may continue to grant, from time to time, equity-based awards designed to align the interests of our Manager and personnel of our Manager and its affiliates who support our Manager in providing services to us under our Management Agreement with those of our stockholders, by allowing our Manager and personnel of our Manager and its affiliates to share in the creation of value for our stockholders through stock appreciation and dividends. These equity-based awards are generally subject to time-based vesting requirements designed to promote retention and to achieve strong performance for our Company. These awards further provide flexibility to us in our ability to enable our Manager and its affiliates who support our Manager to attract, motivate and retain talented individuals. The 2019 Equity Incentive Plan provides for the issuance of equity-based awards, including restricted shares of Common Stock, restricted stock units, stock options, phantom shares, dividend equivalents and other awards based on our Common Stock. Restricted shares of Common Stock issued to our non-employee directors in respect to a portion of their annual director fees are also issued under this plan. Our board of directors has delegated its administrative responsibilities under the 2019 Equity Incentive Plan to the Compensation Committee. In its capacity as plan administrator, the Compensation Committee has the authority to make awards to our Manager, directors and officers, and employees and other personnel of our Manager and its affiliates who support our Manager in providing services to us under our Management Agreement, and to determine what form the awards will take and the terms and conditions of the awards. The Compensation Committee considers our performance as one of the important factors in determining the awards granted under the 2019 Equity Incentive Plan. The Compensation Committee in consultation with our Manager and executive officers, developed performance measures in order to link awards under the 2019 Equity Incentive Plan and our financial and operating performance. Accordingly, in evaluating our performance for 2023, the Compensation Committee considered the achievement of various qualitative measures of Company performance, including portfolio-related performance, operating performance, capital management and deployment, investor relations and regulatory compliance. The Compensation Committee also considered quantitative performance objectives for 2023 including results of operations, financial performance ratios, stock performance metrics and dividends. In addition, the Compensation Committee considered individual contributions to our activity during 2023 by our executive officers and other personnel of our Manager and its affiliates who support our Manager in providing services to us under our Management Agreement. As a result of this review process, the Compensation Committee determined to make the grants set forth under “—2023 Equity Grants” below to personnel of our Manager and its affiliates who support our Manager in providing services to us under our Management Agreement, including our named executive officers. The Compensation Committee has not adopted a formal equity incentive compensation program for 2023, and, to the extent the Compensation Committee determines to make grants during 2023, we expect that goals, business objectives and measures of our performance will be considered by the Compensation Committee, in consultation with our Manager and executive officers, in determining whether to make, and the amount of any, such grants.
2023 Equity Grants
2023 Equity Grants In December 2023, after consideration of our Company’s performance in light of the qualitative and quantitative performance measures set forth above under “—Equity Compensation” and after consultation with our Manager and senior management of affiliates of our Manager who provide services to us, the Compensation Committee approved the grant of an aggregate value of approximately $13.1 million of restricted stock units under the 2019 Equity Incentive Plan to personnel of our Manager and its affiliates who support our Manager in providing services to us under our Management Agreement, including our named executive officers. Pursuant to the Compensation Committee’s approval, Mr. Rothstein and Ms. Mironova received 90,909 and 12,396 of these restricted stock units, respectively. The restricted stock units vest in substantially equal annual installments on the last day of each fiscal year over a period of three years, beginning with the first full fiscal year following the date of the original grant of such restricted stock units. In addition, the recipients have the right to receive, with respect to each restricted stock unit, cash distributions paid not later than 30 days after any ordinary cash distributions are paid to the holders of shares of our Common Stock. We will deliver to the recipients shares of Common Stock equal to the number of vested restricted stock units no later than March 15 following the year in which the applicable vesting date occurs. Please see “2019 Equity Incentive Plan and Other Matters—Awards” for a description of restricted stock units.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Stuart A. Rothstein(2), President and Chief Executive Officer | 2023 | — | — | 1,099,999 | — | 1,099,999 | | | 2022 | — | — | 2,200,163 | — | 2,200,163 | | | 2021 | — | — | 2,200,000 | — | 2,200,000 | | Anastasia Mironova(3), Chief Financial Officer, Treasurer and Secretary (commenced serving as Chief Financial Officer, Treasurer and Secretary on April 4, 2022) | 2023 | 329,837 | 470,014 | 149,992 | 50,418 | 1,000,261 | | | 2022 | 217,231 | 691,389 | 249,999 | 37,005 | 1,195,624 |
Summary Compensation Table
| (1) Amounts in this column represent the aggregate grant date fair value of awards of shares of restricted Common Stock or restricted stock units computed in accordance with FASB ASC Topic 718. Under FASB ASC Topic 718, each grant date fair value is calculated using the closing price of our Common Stock on the date of grant. |
Summary Compensation Table
| (2) Mr. Rothstein is an employee of an affiliate of our Manager and is not paid cash compensation by us. |
Summary Compensation Table
| (3) Ms. Mironova is an employee of an affiliate of our Manager and is not paid cash compensation by us. Amounts in the columns entitled “Salary,” “Bonus” and “All Other Compensation” for Ms. Mironova represent the compensation expense, including annual base salary and bonus (comprised of cash and value of equity-based awards made by an affiliate of our Manager, which value may differ from the amortized compensation expense during such period), that was allocable to us based on the percentage of time she spent managing our affairs in her capacity as Chief Financial Officer. For 2023, the amount in the column entitled “All Other Compensation” includes our allocable share of the expenses in the amount of $21,679 and $28,741 associated with taxes and benefits, respectively. For 2022, the amount in the column entitled “All Other Compensation” includes our allocable share of the expenses in the amount of $19,256 and $17,749 associated with taxes and benefits, respectively. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table summarizes certain information regarding all plan-based awards granted during the 2023 fiscal year to our named executive officers. Awards granted under the 2019 Equity Incentive Plan include a minimum vesting period of at least one year.
Grants of Plan Based Awards for 2023
Grants of Plan Based Awards for 2023
Grants of Plan Based Awards for 2023
| | Grant Date | Date of Board of Director or Committee Action | All Other Stock Awards: Number of Shares of Stock or Units (#)(1) | Grant Date Fair Value of Stock and Option Awards(2) ($) | | Stuart A. Rothstein | 12/26/2023 | 12/8/2023 | 90,909 | 1,099,999 | | Anastasia Mironova | 12/26/2023 | 12/8/2023 | 12,396 | 149,992 |
Grants of Plan Based Awards for 2023
| (1) Amounts in this column represent restricted stock unit awards. |
Grants of Plan Based Awards for 2023
| (2) Amounts in this column represent the aggregate grant date fair value of awards granted in 2023 computed in accordance with FASB ASC 718. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth certain information with respect to all outstanding equity-based awards held at the end of the 2023 fiscal year by each named executive officer.
Outstanding Equity Awards at Fiscal Year End
| | Stock Awards | | | Names | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Stuart A. Rothstein | 276,183(3) | 3,242,388 | | Anastasia Mironova | 25,929(4) | 304,406 |
Outstanding Equity Awards at Fiscal Year End
| (1) Represents restricted stock units granted pursuant to the 2019 Equity Incentive Plan. |
Outstanding Equity Awards at Fiscal Year End
| (2) Based on the closing price of our Common Stock on the last business day of the fiscal year ended December 31, 2023 — $11.74. |
Outstanding Equity Awards at Fiscal Year End
| (3) These restricted stock units vest in substantially equal annual installments on December 31 of each of 2024, 2025 and 2026. |
Outstanding Equity Awards at Fiscal Year End
| (4) 21,207 restricted stock units vest in substantially equal annual installments on December 31 of each of 2024, 2025 and 2026. 4,722 restricted stock units vest in substantially equal annual installments on April 4 of each of 2024 and 2025. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested No stock options have been granted by our Company to date. The following table summarizes certain information regarding restricted stock unit awards that vested during the 2023 fiscal year with respect to the named executive officers.
Option Exercises and Stock Vested
| | Stock Vested in 2023 | | | | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(1)(2) | | Stuart A. Rothstein | 190,222 | 2,233,206 | | Anastasia Mironova | 6,765 | 73,521 |
Option Exercises and Stock Vested
| (1) This value includes the value of vested restricted stock units which settled in shares of Common Stock. The restricted stock units generally vest on an annual schedule over a period of time. Following the expiration of each vesting period, our Company will deliver shares of non-restricted Common Stock to the applicable named executive officers. Please see “2019 Equity Incentive Plan and Other Matters—Awards” for a more detailed description of the restricted stock units. |
Option Exercises and Stock Vested
| (2) The Value Realized on Vesting column reflects the aggregate value realized with respect to all stock awards that vested in fiscal year 2023. The value realized in connection with each vesting of stock awards is calculated as follows: the number of vested shares underlying a restricted stock unit award multiplied by the closing price of the Common Stock on the vesting date. |
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between “compensation actually paid” to our named executive officers and certain financial performance metrics of our Company and the Bloomberg REIT Mortgage Index (the “BBREMTG Index”), a capitalization-weighted index of mortgage REITs, for the same period. The Compensation Committee has not historically evaluated, and does not currently evaluate “compensation actually paid” as calculated pursuant to Item 402(v)(2) of Regulation S-K as part of its executive compensation determinations; accordingly, the Compensation Committee does not use any financial or non-financial performance measure specifically to link executive “compensation actually paid” to our Company’s performance. For further information concerning our compensation philosophy, refer to “—Compensation Discussion and Analysis”. The following tables illustrate the compensation actually paid to our Chief Executive Officer (“PEO”) and our current and former Chief Financial Officers (“non-PEO NEOs”) for the years ended December 31, 2023, 2022, 2021 and 2020:
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO (1) | Average Summary Compensation Table Total for non-PEO NEOs (2) | Average Compensation Actually Paid to non-PEO NEOs (1)(2) | Value of Initial Fixed $100 Investment Based On: | | Net Income (4) | Distributable Earnings (5) | | | | | | | Total Stockholder Return (3) | BBREMTG Index Return (3) | | | | 2023 | $1,099,999 | $1,694,641 | $1,000,261 | $1,028,736 | $107 | $79 | $58,127 | $157,534 | | 2022 | $2,200,163 | $1,499,935 | $1,233,608 | $1,051,086 | $86 | $69 | $265,232 | $239,294 | | 2021 | $2,200,000 | $3,129,238 | $361,968 | $429,051 | $93 | $92 | $223,515 | $188,679 | | 2020 | $2,399,993 | $1,497,093 | $948,720 | $870,215 | $71 | $78 | $18,377 | $125,592 |
Pay Versus Performance
| (1) Refer to the following table which illustrates the calculation of compensation actually paid for the years ended December 31, 2023, 2022, 2021 and 2020: |
Pay Versus Performance
| | PEO | | | | Non-PEO NEOs (2) | | | | | | 2023 | 2022 | 2021 | 2020 | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table (“SCT”) Total | $1,099,999 | $2,200,163 | $2,200,000 | $2,399,993 | $1,000,261 | $1,233,608 | $361,968 | $948,720 | | SCT Stock Awards | (1,099,999) | (2,200,163) | (2,200,000) | (2,399,993) | (149,992) | (249,999) | — | (165,750) | | Year End Fair Value of Unvested Stock Awards | 1,067,272 | 2,085,794 | 2,212,525 | 2,331,123 | 145,529 | 218,406 | — | 160,993 | | Year End Change In Fair Value of Prior Year Unvested Stock Awards | 181,569 | (435,958) | 362,071 | (882,617) | 13,262 | — | 24,891 | (74,746) | | Change in Fair Value of Prior Year Stock Awards | 186,418 | (404,210) | 299,919 | (124,961) | 730 | — | 24,681 | (13,699) | | Fair Value of Stock Awards Forfeited | — | — | — | — | — | (164,605) | — | — | | Value of Dividends on Unvested Stock Awards | 259,384 | 254,309 | 254,723 | 173,548 | 18,946 | 13,676 | 17,511 | 14,697 | | Compensation Actually Paid | $1,694,641 | $1,499,935 | $3,129,238 | $1,497,093 | $1,028,736 | $1,051,086 | $429,051 | $870,215 |
Pay Versus Performance
| (2) Includes compensation for Jai Agarwal and Ms. Mironova for the applicable period. Anastasia Mironova became our Chief Financial Officer, Treasurer and Secretary effective April 4, 2022, succeeding Jai Agarwal who resigned from these positions effective January 21, 2022. For purposes of determining compensation and compensation actually paid to non-PEO NEOs, we have shown the aggregate compensation for Mr. Agarwal and Ms. Mironova as they were non-PEO NEOs at different times of the year. |
Pay Versus Performance
| (3) Total Stockholder Return and BBREMTG Index return represents the return on a $100 investment for the year ended December 31, 2020, the two years ended December 31, 2021, the three years ended December 31, 2022, and the four years ended December 31, 2023 assuming investment at the closing price on December 31, 2019 and reinvestment of all dividends. |
Pay Versus Performance
| (4) Net Income as determined in accordance with accounting principles generally accepted in the United States (“GAAP”). Amounts in thousands. |
Pay Versus Performance
| (5) Represents Distributable Earnings, a non-GAAP financial measure as defined below. Amounts in thousands. |
Pay Versus Performance
The graphs below reflect the relationship between “compensation actually paid” to our PEO and non-PEO NEOs and (i) Total Stockholder Return (of both our Company and the BBREMTG Index), (ii) Net Income, and (iii) Distributable Earnings, for the periods indicated. Compensation Actually Paid vs Total Stockholder Return (“TSR”) : Compensation Actually Paid vs Net Income (in thousands): Compensation Actually Paid vs Distributable Earnings (in thousands): List of Financial Performance Measures The Compensation Committee considers various financial performance metrics, along with other quantitative, qualitative, and individual performance measures when determining the appropriate compensation for our named executive officers. Pursuant to Item 402(v)(6) of Regulation S-K, the most important measures considered for the year ended December 31, 2023 include:
Pay Versus Performance
| Most Important Financial Performance Measures | | Distributable Earnings | | Dividend Coverage Ratio | | Book Value Per Share |
Pay Versus Performance
Non-GAAP Financial Measures We refer to certain non-GAAP financial measures within this Proxy Statement. The below provides definitions for these measures. See also “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” in our annual report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 6, 2024. Distributable Earnings, a non-GAAP financial measure, is defined as net income available to common stockholders, computed in accordance with GAAP, adjusted for (i) equity-based compensation expense (a portion of which may become cash-based upon final vesting and settlement of awards should the holder elect net share settlement to satisfy income tax withholding), (ii) any unrealized gains or losses or other non-cash items (including depreciation and amortization related to real estate owned) included in net income available to common stockholders, (iii) unrealized income from unconsolidated joint ventures, (iv) foreign currency gains (losses), other than (a) realized gains/(losses) related to interest income, and (b) forward point gains/(losses) realized on our foreign currency hedges, (v) the non-cash amortization expense related to the reclassification of a portion of the Convertible Notes to stockholders’ equity in accordance with GAAP, and (vi) provision for loan losses. Distributable Earnings may also be adjusted to exclude certain other non-cash items, as determined by the Manager and approved by a majority of our independent directors. We believe that our investors use Distributable Earnings, or a comparable supplemental performance measure, to evaluate and compare the performance of our Company and our peers. Dividend Coverage Ratio represents the ratio of Distributable Earnings to dividends paid to common stockholders for the applicable period. Book value per share represents common stockholders’ equity divided by the number of shares of Common Stock outstanding for the applicable period.
Pension Benefits
Pension Benefits Our named executive officers received no benefits in the 2023 fiscal year from us under defined pension or defined contribution plans.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation Our Company does not have a nonqualified deferred compensation plan that provides for deferral of compensation on a basis that is not tax-qualified for our named executive officers.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Our named executive officers are employees of our Manager or its affiliates and therefore we generally have no obligation to pay them any form of compensation upon their termination of employment, except with respect to the restricted stock unit award agreements entered into between such named executive officers and our Company. These agreements provide that any unvested portion of the award shall be immediately and irrevocably forfeited upon a termination of the employment of the named executive officer by our Manager or its affiliates; including, a termination of employment due to such officer’s resignation, discharge, death or retirement.