DEF 14A of Chimera Investment Corp
Filed Apr 24, 2025 · FY20240001206774-25-000244
2025 ANNUAL MEETING OF STOCKHOLDERS
Mr. Chavers currently serves as a board member of SMBC Americas Holdings, Inc., Toorak Capital Partners and on the board of trustees of Optimum Funds. Mr. Chavers previously served as a board member of Freddie Mac from February 2022 until March 2025. In addition, Mr. Chavers serves as a board member of various nonprofit organizations, including the Enterprise Community Partners, the University of Virginia Foundation, Upper Manhattan Empowerment Zone, and the Bedford Stuyvesant Restoration Corporation. Mr. Chavers earned a J.D. from Harvard Law School and a Bachelor’s Degree from the University of Virginia. The Board believes that Mr. Chavers’ experience and qualifications, including, among other things, his broad range of expertise in real estate finance, capital markets and mortgage industry, including the various management positions he has held in both private and public organizations in the mortgage-backed securities industry, and his board experience with other companies and organizations, make him a valuable member of the Board. Gerard Creagh was elected as one of our Class I Directors effective as of April 1, 2010. Since December 2023, Mr. Creagh has served as Chief Executive Officer and previously from December 2019 had served as Chief Administrative Officer of Brosnan Risk Consultants, a privately held provider of technology-driven security services. Brosnan sold substantially all of its assets to a third party in December 2024, but Mr. Creagh remains on as Chief Executive Officer of the surviving entity to manage its remaining assets and liabilities. Since May 2011, Mr. Creagh has served as a Managing Partner at CVC Advisers LLC, a financial consulting firm. From September 2005 through April 2010, Mr. Creagh served as the President and a member of the Board of Directors of Duff & Phelps Corporation. From September 2005 to September 2007, Mr. Creagh served as President of Duff & Phelps Acquisitions, LLC. Prior to its merger with Duff & Phelps in September 2005, Mr. Creagh served as executive managing director of Standard & Poor’s Corporate Value Consulting practice. Mr. Creagh joined Standard & Poor’s from PricewaterhouseCoopers, where he held the position of North American Valuation Services practice leader. Mr. Creagh previously served as the U.S. leader for the Valuation Practice of Coopers & Lybrand. Mr. Creagh has a Bachelor’s Degree and Master’s Degree in mechanical engineering from Manhattan College and has an M.B.A. in finance from New York University’s Leonard N. Stern School of Business. The Board believes that Mr. Creagh’s experience and qualifications, including, among other things, his experience in the oversight of risk management policies and procedures, his significant background as a lead corporate executive and his prior board experience with other companies, make him a valuable member of the Board. Susan Mills was elected as one of our Class I Directors effective as of November 13, 2023. Since October 2023, Ms. Mills has been a Managing Director at Academy Securities, a veteran-owned and operated investment bank with strengths in capital markets, asset management, public finance, geopolitical intel, fixed income and equity trading. Since January 2025, Ms. Mills has also been serving as a member of the Advisory Board of RiskSpan. Until May 2023, she spent 36 years at Citigroup Global Markets (“Citi”) as the successor to Salomon Brothers. During her time at Citi, Ms. Mills held various senior management positions in businesses related to North American Residential Mortgages, including contract finance related to whole loan transactions, securitization, warehouse lending and sourcing residential investment opportunities for Citi or their private credit clients. While at Citi, she was active in women’s mentoring and recruiting groups. She was on the board of Kingsbridge Heights Community Center for two years. Ms. Mills received a bachelor’s degree in Accounting from Long Island University. The Board believes that Ms. Mill’s experience and qualifications, including among other things, her extensive expertise in the mortgage banking industry, including in positions of management, make her a valuable member of the Board. Continuing Class II Directors The following information is furnished regarding our Class II Directors who will continue to serve on the Board until our 2027 annual meeting and until their respective successors are duly elected and qualified. Debra W. Still was elected as one of our Class II Directors on March 6, 2018. Ms. Still has served as Vice Chair of Pulte Financial Services since April 1, 2023. Previously, Ms. Still had served as President and Chief Executive Officer of Pulte Financial Services from 2010, which includes the mortgage lending, title and insurance operations of PulteGroup, Inc., one of the nation’s largest homebuilders. In addition to Pulte Financial Services, from 2004 to 2020, Ms. Still was also President of, and from 2004 to July 1, 2024 was a member of the board of managers of, Pulte Mortgage, LLC, a nationwide lender headquartered in Englewood, Colorado. Ms. Still began her career with Pulte Mortgage, LLC in 1983 where she served in various executive capacities, including Chief Operating Officer, prior to being named President in 2004. Ms. Still currently serves on the board of Enact Holdings, Inc. (NASDAQ GS: ACT) and as a member of Fannie Mae’s Affordable Housing Advisory Council. Ms. Still is a graduate of Ithaca College, Ithaca, N.Y., with a Bachelor of Science degree and has completed graduate work in Finance at George Washington University, Washington, D.C. The Board believes that Ms. Still’s experience and qualifications, including, among other things, her significant experience as a senior executive in real estate finance overseeing mortgage lending operations, make her a valuable member of the Board.
Overview
| ● | One-year, rather than three-year, employment agreement terms; | | ● | A compensation mix which is more heavily weighted toward stock-based compensation with the average percentage of target long-term incentive based stock awards representing approximately 52% of total compensation of the named executive officers; | | ● | A maximum multiple for the annual cash incentive (also referred to as an annual cash bonus) that is limited to 200% of the target; | | ● | Use of Company and individual performance metrics for the 2024 annual cash bonus; and | | ● | Use of Company performance metrics for the performance share units (“PSUs”) granted in 2024. |
Overview
| ● | Company ROE and Relative ROE — Company ROE means (i) Company Return for the Annual Cash Bonus Measurement Period, divided by (ii) Company average equity for the four quarters beginning on October 1, 2023 and ending on September 30, 2024 (the “Annual Cash Bonus Measurement Period”). Relative ROE means Company ROE as such amount stands in relation to the return on average equity (determined in the same way that the Company ROE is determined) for the Annual Cash Bonus Measurement Period of the entities (other than the Company) included in the iShares Mortgage Real Estate ETF Group. Company Return means, for purposes of calculating Company ROE, the Company’s net income as determined in accordance with GAAP and shown on the Company’s quarterly and annual financial statements as filed with the Securities and Exchange Commission, but excluding non-cash, non-operating expense items such as depreciation expense, amortization of goodwill and other non-cash, non-operating expense items as determined by the compensation committee in its sole discretion for the Annual Cash Bonus Measurement Period. For the avoidance of doubt, any realized and/or unrealized gains or losses from hedging instruments are not excluded from the calculation of Company Return.(1) | | ● | Company TSR and Relative TSR — Company TSR means for the Annual Cash Bonus Measurement Period or a 3-year period from October 1, 2023 to September 30, 2026 (the “LTI Measurement Period”), as applicable, the percentage change in the value of a share of the Company’s common stock from the closing price on the last trading day before the beginning of the applicable measurement period to the closing price on the last trading day of the applicable measurement period (plus common stock dividends paid during the applicable measurement period, assuming immediate reinvestment of such dividends in additional common shares), as determined by the compensation committee in its sole discretion. Relative TSR means the Company TSR as such amount stands in relation to the total shareholder return (determined in the same way that the Company TSR is determined) for the Annual Cash Bonus Measurement Period or LTI Measurement Period, as applicable, of the entities (other than the Company) included in the iShares Mortgage Real Estate ETF Group, as determined by the compensation committee in its sole discretion. | | ● | Company Economic Return and Relative Economic Return – Company Economic Return means (x) the Company’s change in book value per share (“BVPS”), plus (y) common stock dividends, for the LTI Measurement Period. Relative Economic Return means (i) the Company Economic Return for the LTI Measurement Period, divided by (ii) BVPS at the beginning of the LTI Measurement Period, as such amount stands in relation to the Economic Return (measured in the same way that the Company Economic Return is measured) during the LTI Measurement Period of the entities in the iShares Mortgage Real Estate ETF Group. | | ● | iShares Mortgage Real Estate ETF Group — The iShares Mortgage Real Estate ETF Group means the entities (other than the Company) included in the iShares Mortgage Real Estate ETF as of the beginning of the Annual Cash Bonus Measurement Period or LTI Measurement Period, as applicable. Any entity (other than the Company) that ceases to be included in the iShares Mortgage Real Estate ETF during the Annual Cash Bonus Measurement Period or LTI Measurement Period, as applicable, is treated as performing at the lowest level in the iShares Mortgage Real Estate ETF Group for such Annual Cash Bonus Measurement Period or LTI Measurement Period, as applicable. |
Overview
| ● | annual cash bonuses with payouts ranging from 0% to 200% of the applicable target amount, which payout is based: |
Overview
| ▪ | 35% on Relative ROE performance, subject to adjustment based on Company ROE, with cap based on the Company’s ROE performance for the Annual Cash Bonus Measurement Period, | | ▪ | 35% on Relative Economic Return performance with cap based on the Company’s Economic Return performance for the Annual Cash Bonus Measurement Period, and | | ▪ | 30% based on achievement of the strategic goals by each named executive officer during the 2024 calendar year; and |
Overview
| ● | long-term incentives, |
Overview
| ▪ | 50% of which is in the form of a restricted stock unit (“RSU”) award that vests ratably over 3 years, and | | ▪ | 50% of which is in the form of a performance stock unit (“PSU”) award that cliff vests in 3 years based on performance over the LTI Measurement Period with payouts ranging from 0% to 200% of the target for three-year PSU awards, based 50% on Relative Economic Return, with cap based on the Company’s Economic Return for the LTI Measurement Period, and 50% on Relative TSR, with cap based on the Company’s TSR for the LTI Measurement Period; and |
Overview
| ● | to the extent earned, is delivered in a balanced mix of cash and equity awards that include additional vesting requirements, to further encourage retention and alignment of executive officer interests with the long-term interests of our stockholders. |
Overview
| ● | for 2024 annual cash bonuses, our ROE (carrying 35% of the weighting) for the Annual Cash Bonus Measurement Period was approximately 23.6%, which placed us 2nd across the 32 companies in the iShares Mortgage Real Estate ETF; our Relative Economic Return (carrying 35% of the weighting) for the Annual Cash Bonus Measurement Period was approximately 15.46%, which placed us 5th across the 32 companies in the iShares Mortgage Real Estate ETF; and combined with achievement of strategic goals by each named executive officer during the 2024 calendar year carrying 30% of the weighting, resulting in 2024 annual cash bonuses being awarded to the named executive officers ranging from 166% to 189% of the target; | | ● | the named executive officers received a fixed grant of RSUs in early 2024 vesting ratably over three years. | | ● | the named executive officers received a grant of PSUs in early 2024 that become earned based on our Relative Economic Return and Relative TSR performance in the LTI Measurement Period; and | | ● | for the 2022 PSUs, which were earned based on Relative Economic Return for the three-year period beginning October 1, 2021 and ending September 30, 2024 under the NEOs’ prior employment agreements, our Relative Economic Return for that period was approximately -17.56%, which placed us 20th across the 32 companies included in the iShares Mortgage Real Estate ETF. This performance resulted in shares being issued pursuant to the 2022 PSU award at 62.4% of the target award amount. |
Overview
Mr. Macdowell joined the Company as the Chief Investment Officer on December 2, 2024. As noted above, Mr. Macdowell voluntarily waived his prorated 2024 annual cash bonus. He also received no long-term incentive compensation for 2024. Compensation Policies The compensation committee has established the following compensation policies that we believe are in the best, long-term interests of our stockholders: What We Do and How We Do It
Overview
| Provide a majority of compensation in performance-based compensation | | For our CEO, 58% of target total direct compensation is performance-based | | Pay for performance based on measurable goals for both annual and long-term awards | | Use of multiple, balanced measures, focused on ROE, TSR and Economic Return | | Balanced mix of cash and stock-based awards tied to annual and long-term performance | | Majority of cash incentive compensation is tied to ROE and Economic Return; stock portion is evenly split between time-based and performance-based vesting on 3-year Relative TSR and Relative Economic Return | | Stock ownership and retention policy | | 5x salary for CEO and 3x salary for all other named executive officers; 100% of shares must be retained until minimum ownership level is met; applies until 6 months after termination of employment | | Receive advice from independent compensation consultant | | Compensation consultant (Frederic W. Cook & Co.) provides no other services to the Company | | Compensation recovery (clawback) policy | | Recovery of annual or long-term incentive compensation based on achievement of financial results that were subsequently restated |
What We Don’t Do and The Reasons Why
| No supplemental executive retirement plans for named executive officers | | Consistent with focus on performance-oriented environment | | No change in control excise tax gross up | | Consistent with focus on performance-oriented environment and commitment to best practices aligned to long-term stockholder interests | | No excessive perquisites or severance benefits | | Consistent with focus on performance-oriented environment and commitment to best practices aligned to long-term stockholder interests | | No single trigger vesting of equity compensation upon a change in control | | Per employment agreements, vesting following a change in control requires involuntary termination of employment (double-trigger) | | No hedging or pledging transactions permitted | | Policy prohibits hedging and pledging transactions, including the purchase of financial instruments designed to hedge/offset any decrease in the market value of our stock |
What We Don’t Do and The Reasons Why
| Overview of Compensation Elements | | | | Compensation Element | Description | Objectives | | Term (including Macdowell Employment Agreement) | ● 1 year with an automatic extension for 1 year if notice not given, with compensation committee discretion to change incentive targets and metrics | ● The 1 year term provides the compensation committee with year-to-year flexibility on compensation decisions | | Base Salary (including Macdowell Employment Agreement) | ● $350,000 to $850,000 | ● Fixed cash compensation for the term of each executive’s Employment Agreement ● Reflects current market competitive level ● Assists with recruitment, stability and retention | | Cash v. Stock Mix | ● 48% cash and 52% stock for CEO ● 50% to 52% cash for other NEOs | ● Large percentage awarded in stock for increased focus on Company success and alignment with stockholders | | Fixed v. Performance Compensation Mix | ● 58% of total target compensation based on performance for CEO ● 50% to 58% of total target compensation based on performance for other NEOs | ● Heavily performance-based for both annual cash bonuses and long-term incentive compensation | | Annual Cash Incentive | ● Target of $250,000 to $1,750,000 ● Payout ranges from 0% to 200% of target ● Payout is based 35% on Relative ROE performance with cap based on the Company’s ROE performance for the Annual Cash Bonus Measurement Period, 35% on Relative Economic Return performance with cap based on the Company’s Economic Return performance for the Annual Cash Bonus Measurement Period, and 30% based on achievement of the strategic goals by each named executive officer during the 2024 calendar year | ● ROE and Economic Return performance metrics and individual performance component to emphasize our focus on pay-for-performance ● Caps payout at 100% of target if the Company’s ROE and Economic Return performance is negative for the year | | Long-Term Incentives | ● LTI Target: $400,000 to $2,800,000 ● Half of long-term incentive compensation opportunity in the form of an RSU award that vests ratably over 3 years ● Half of long-term incentive opportunity in the form of a PSU award that cliff vests in 3 years based on performance over a 3-year period ● PSU payout ranges from 0% to 200% of target ● PSU payout based 50% on Relative Economic Return, with cap based on Company’s Economic Return for the LTI Measurement Period, and 50% on Relative TSR, with cap based on company’s TSR for the LTI Measurement Period | ● Higher LTI targets compared to annual cash incentive targets reflects greater focus on long-term incentives ● Aligns NEO interests with stockholders and encourages retention ● 50% of target is performance- based, with added performance measure based on TSR ● Caps payout at 100% of target if the Company’s Economic Return and TSR is negative for the 3-year period |
What We Don’t Do and The Reasons Why
| Post-Employment Benefits (including Macdowell Employment Agreement) | ● Employment agreements include severance payments and benefits in case of involuntary termination (without cause or with good reason) ● Severance amounts are not excessive (generally, 1.0-2.0x salary and cash bonus, even in connection with a termination following a change in control) ● No single-trigger vesting of equity awards upon a change in control (if awards are assumed) ● No 280G or other tax gross-ups agreements | ● Per negotiated employment agreements ● Market-competitive practice to limit executive risk of involuntary termination without cause, and encourages stable management team ● Change in control provisions ensure that management will be able to fairly assess potential transactions ● Competitive with peer companies ● Assists with recruitment and retention | | Other Benefits (including Macdowell Employment Agreement) | ● 401(k), health care and life insurance programs, same as other non-executive employees ● No executive perquisites | ● Aligns NEO interests with other non- executive employees |
What We Don’t Do and The Reasons Why
| ● | an annual cash bonus payable in cash ranging from 0% to 200% of the target, which payout is based 35% on Relative ROE performance with cap based on the Company’s ROE performance for the Annual Cash Bonus Measurement Period, 35% on Relative Economic Return performance with cap based on the Company’s Economic Return performance for the Annual Cash Bonus Measurement Period, and 30% based on achievement of the strategic goals by each named executive officer during the 2024 calendar year; | | ● | 50% of the long-term incentive bonus granted in early 2024 as an award of fixed amount of RSUs vesting ratably over three years, and | | ● | 50% of the long-term incentive bonus granted in early 2024 as a PSU award that becomes earned based 50% on Relative Economic Return, with cap based on the Company Economic Return for the LTI Measurement Period, and 50% on Relative TSR, with cap based on the Company’s TSR for the LTI Measurement Period, ranging from 0% to 200% of target. |
What We Don’t Do and The Reasons Why
Relative ROE, Relative TSR and Relative Economic Return are key financial measures for us because, as a mortgage REIT, we are focused on generating earnings efficiently against our capital base and returning those earnings to our stockholders, primarily in the form of dividends. Providing RSUs and PSUs as part of our compensation mix encourages retention and aligns the interests of the named executive officers with the long-term interests of our stockholders. The compensation committee, exercising its discretion under the Employment Agreements, established performance metrics for the 2024 annual cash bonus as ROE, Economic Return and individual performance, weighted 35%, 35% and 30%, respectively. The following chart and discussion summarize the 2024 target incentive award and the three components for our named executive officers.
What We Don’t Do and The Reasons Why
| 2024 Incentive Compensation Targets per Employment Agreements | | | | | | | 2024 Annual Cash | Fixed LTI Bonus | LTI Bonus (PSU | Total target | | Name | Bonus | (RSU award) | award) | Incentive award* | | Phillip J. Kardis II | $1,750,000 | $1,400,000 | $1,400,000 | $4,550,000 | | Subramaniam Viswanathan | $750,000 | $650,000 | $650,000 | $2,050,000 | | Dan Thakkar | $500,000 | $500,000 | $500,000 | $1,500,000 | | Miyun Sung | $250,000 | $200,000 | $200,000 | $650,000 |
What We Don’t Do and The Reasons Why
*The total target incentive award is subject to review and potential adjustment by the compensation committee. 2024 Annual Cash Bonus. The amount of the annual cash bonus for 2024 was determined based 35% on Relative ROE performance with cap based on the Company’s ROE performance for the Annual Cash Bonus Measurement Period, 35% on Relative Economic Return performance with cap based on the Company’s Economic Return performance for the Annual Cash Bonus Measurement Period, and 30% based on achievement of the strategic goals by each named executive officer during the 2024 calendar year. The annual cash bonus earned for the year is payable in cash between December 1, 2024 and January 30, 2025. We use the four quarters starting in the fourth quarter of the prior year and through the third quarter of the most recent year in order to timely settle annual cash bonuses, as we would not be able to meet our January 30 deadline if we used the full calendar year. Relative ROE Performance (35% of weighting) over Annual Cash Bonus Measurement Period. The following chart summarizes the ROE performance goals and results for 2024:
What We Don’t Do and The Reasons Why
In accordance with the Employment Agreements in effect during 2024, the Threshold was set at the lesser of (x) the average of the weekly 2-year Treasury note rates published in the U.S. Reserve H.15 Report for the 52 weeks in the Annual Cash Bonus Measurement Period plus 100 basis points or (y) the 25th percentile of Relative ROE. The percentage of target payable for Relative ROE achieved between the percentiles set forth in the above table (if performance is above the Threshold) is determined by linear interpolation. If the achieved Relative ROE is at or above the Threshold but below the 50th percentile, the percentile corresponding to the achieved Relative ROE will be used when applying such linear interpolation. Notwithstanding the foregoing, in the event that the Company ROE for the Annual Cash Bonus Measurement Period is at or below zero, achievement of the ROE component shall be deemed to not exceed 100%. Average weekly 2-year Treasury note rates plus 100 basis points was 5.5% during the Annual Cash Bonus Measurement Period and the 25th percentile performance of the iShares Mortgage Real Estate ETF constituents was 1.0%, meaning that the threshold goal for the 2024 performance period was 1.0%. Relative Economic Return (35% of weighting) over Annual Cash Bonus Measurement Period. The following chart summarizes the Economic Return performance goals and results for 2024:
What We Don’t Do and The Reasons Why
In accordance with the Employment Agreements in effect during 2024, the Threshold was set at the lesser of (x) the average of the weekly 2-year Treasury note rates published in the US. Reserve H.15 Report for the 52 weeks in the Annual Cash Bonus Measurement Period plus 100 basis points or (y) the 25th percentile of Relative Economic Return. The percentage of target payable for Relative Economic Return achieved between the percentiles set forth in the above table (if performance is above the Threshold) is determined by linear interpolation. If the achieved Relative Economic Return is at or above the Threshold but below the 50th percentile, the percentile corresponding to the achieved Relative Economic Return will be used when applying such linear interpolation. Notwithstanding the foregoing, in the event that the Company Economic Return for the Annual Cash Bonus Measurement Period is at or below zero, achievement of the Economic Return component shall be deemed to not exceed 100%. Average weekly 2-year Treasury note rates plus 100 basis points was 5.5% during the Annual Cash Bonus Measurement Period and the 25th percentile performance of the iShares Mortgage Real Estate ETF constituents was -2.35%, meaning that the threshold goal for the 2024 performance period was -2.35%. We set the threshold goals for the ROE and Economic Return components at the lesser of these two external benchmarks to discourage any excessive risk-taking in strong markets. Greater use of debt leverage enables many mortgage REITs to enhance their ROE but presents a greater risk to equity investors. By incorporating an absolute benchmark into the threshold goal, we provide an opportunity for our management team to still earn some level of bonus, albeit well below target, even if other mortgage REITs are taking on higher levels of leverage and commensurately higher levels of risk to generate higher levels of ROE and Economic Return. We compete with the other 31 constituents (excluding Chimera) of the iShares Mortgage Real Estate ETF for investor capital, and our investors primarily allocate their portfolio dollars in our sector based on sustainable and growing dividends. We aim to generate consistent earnings in order to deliver those sustainable and growing dividends by carefully managing our equity capital, using an appropriate amount of debt leverage, managing our cost of capital, and selecting appropriate investments that will yield strong levels of net investment income and total shareholder return. ROE and Economic Return encapsulate all these critical activities, and delivering stronger ROE and Economic Return than our competitors for investor capital directly connects our management team to the efforts valued most closely by our stockholders. 2024 Strategic Goals (30% of weighting) over Annual Cash Bonus Measurement Period. Achievement of strategic goals by each named executive officer is a component (weighted 30%) of performance measurement for purposes of determining actual Annual Cash Bonus amounts. As with the other components of the Annual Cash Bonus, the strategic goals component had a potential achievement range of 0% to 200%. The compensation committee exercised its discretion in setting the strategic goals for each named executive officer and in determining such named executive officer’s level of achievement of such strategic goals during the 2024 calendar year. With respect to Mr. Kardis, the compensation committee determined achievement at 200% of his target level for his leadership role in the Company’s achievements, as outlined above in “—2024 Performance Highlights.” In particular, the compensation committee noted Mr. Kardis’ overall leadership in shaping the strategic vision of the Company in 2024 and executing on that strategic vision, particularly in positioning the Company for future opportunities through both organic and external growth, including the acquisition of Palisades. Mr. Viswanathan was determined to have achieved at 175% of his target level for his role in the Company’s achievements, as outlined above in “—2024 Performance Highlights.” In addition, the compensation committee noted Mr. Viswanathan’s role in managing the Company’s cash flow and capital raising activities, enhancing the Company’s accounting, finance, tax and internal control functions, and successfully integrating Palisades’ accounting function into the Company’s public company accounting framework. Mr. Thakkar was determined to have achieved at 125% of his target level for his role in the Company’s achievements, as outlined above in “—2024 Performance Highlights.” In addition, the compensation committee noted Mr. Thakkar’s role in refreshing the Company’s capital allocation strategy, thought leadership on liquidity, leverage and risk management, and enhancing the Company’s deal surveillance and analytics tools. Ms. Sung was determined to have achieved at 160% of her target level for her role in the Company’s achievements, as outlined above in “—2024 Performance Highlights.” In addition, the compensation committee noted Ms. Sung’s role in supporting the Company’s capital markets activities, corporate transactions and other business activities, advising on public company disclosures, governance and compliance matters, facilitating the Board function and enhancing the Board’s interactions with management, and successfully integrating Palisades’ legal function into the Company’s existing legal department. The compensation committee also noted the leadership of each named executive officer in managing personnel and continuing to improve operations and processes to better position the Company for the future. Based on the results of the ROE and Economic Return components for the Annual Cash Bonus Measurement Period and each named executive officer’s achievement of the strategic goals during the 2024 calendar year, the amount of Annual Cash Bonus earned and paid to the named executive officers ranged from 166% to 189% of target, as reflected in the table below and also included in the Summary Compensation Table as 2024 compensation under the “Non-Equity Incentive Plan” column:
What We Don’t Do and The Reasons Why
| 2024 Annual Cash Bonus | | | | Name | 2024 Annual Cash Bonus Target | 2024 Annual Cash Bonus Actual | | Phillip J. Kardis II | $1,750,000 | $3,302,163 | | Subramaniam Viswanathan | $750,000 | $1,358,963 | | Dan Thakkar | $500,000 | $830,975 | | Miyun Sung | $250,000 | $441,738 |
What We Don’t Do and The Reasons Why
Fixed LTI Bonus (RSU Award). In accordance with the Employment Agreements in effect during 2024, each named executive officer received an annual “Fixed LTI” RSU bonus based on the fixed amount set forth on the chart below. The RSUs were granted in early 2024 and vest ratably over three years subject to the executive’s continued employment. The number of RSUs granted is based on the dollar value of the award and the average daily volume weighted average price (“VWAP”) for the Company’s common stock for the 20 consecutive trading days ending on December 29, 2023. Proxy disclosure rules require us to report the grant date fair value of our RSU grants using the closing stock price on the date of grant, creating the difference between the intended values below and those reported in the Summary Compensation Table. The following chart summarizes the Fixed LTI RSU bonus awards for 2024:
What We Don’t Do and The Reasons Why
| 2024 Fixed LTI Bonus (RSU Award) | | | | | Name | Amount | # Shares* | Vesting | | Phillip J. Kardis II | $1,400,000 | 91,150 | 3-year ratable | | Subramaniam Viswanathan | $650,000 | 42,320 | 3-year ratable | | Dan Thakkar | $500,000 | 32,554 | 3-year ratable | | Miyun Sung | $200,000 | 13,022 | 3-year ratable |
What We Don’t Do and The Reasons Why
* The total share numbers reflect a 1-for-3 reverse stock split that became effective following the close of business on May 21, 2024. LTI Bonus (PSU Award): 2024-2026. In accordance with the Employment Agreements in effect during 2024, the PSU bonus for 2024 was provided as an award of PSUs under our equity compensation plan granted early in 2024 with a three-year performance period (2024-2026), i.e. the LTI Measurement Period. The target number of PSUs granted was based on the target value of the award and the average daily VWAP for the Company’s common stock for the 20 consecutive trading days ending on December 29, 2023. On this basis, the target number of PSUs granted for the PSU bonus for 2024 was as follows:
What We Don’t Do and The Reasons Why
| 2024-2026 LTI Bonus (Target PSU Award) | | | | | Name | Amount | Target PSUs (#) Performance Period | | | Phillip J. Kardis II | $1,400,000 | 91,150 | 3-year performance period | | Subramaniam Viswanathan | $650,000 | 42,320 | 3-year performance period | | Dan Thakkar | $500,000 | 32,554 | 3-year performance period | | Miyun Sung | $200,000 | 13,022 | 3-year performance period |
What We Don’t Do and The Reasons Why
| Relative Economic Return Goals | | | Relative Economic Return | % of Economic Return PSUs | | Less than the threshold | 0% | | 50th percentile | 100% | | 75th percentile | 150% | | 100th percentile | 200% |
What We Don’t Do and The Reasons Why
| Relative TSR Goals | | | Relative TSR | % of TSR PSUs | | Less than the threshold | 0% | | 50th percentile | 100% | | 75th percentile | 150% | | 100th percentile | 200% |
What We Don’t Do and The Reasons Why
(2) Grant date fair value for accounting purposes differs from the intended values reported above because we calculate the number of target shares using 20-day average VWAP for the 20 consecutive trading days ending on the last day of the prior fiscal year rather than our closing price on the date of grant, and we must incorporate our best estimate of our performance at the time grants are made, which occurs about one or two quarters into the three-year performance period. Also, for the portion of the PSUs earned based on relative TSR, the grant date fair value is based on a Monte Carlo simulation value. The threshold is the lesser of (x) the average weekly interest rate on the 2-year U.S. Treasury note during the applicable LTI Measurement Period plus 100 basis points or (y) the 25th percentile of Relative TSR. For any Relative TSR achieved between the percentiles specified in the above table (if performance is above the threshold), the percentage of the target PSUs that will vest for the PSU Performance Period will be determined by linear interpolation. If the achieved Relative TSR is at or above the threshold but below the 50th percentile, the percentile corresponding to the achieved Relative TSR will be used when applying such linear interpolation. Notwithstanding the foregoing, in the event that the Company TSR for the LTI Measurement Period is at or below zero, achievement of the TSR metric shall be deemed to not exceed 100%. PSUs, to the extent earned, are payable by delivery of one share of our common stock for each PSU earned, payable by March 15th following the end of the LTI Measurement Period. We use the twelve quarters starting in the fourth quarter of the year prior to grant and through the third quarter of the third year in order to timely settle the PSUs. The named executive officer generally must remain employed with us for the full performance period to earn the full PSU, also encouraging retention. PSU Bonus Earned: October 2021 – September 2024. In accordance with prior employment agreements, the PSU bonus for 2022 was provided as an award to Messrs. Kardis, Yarlagadda and Viswanathan in early 2022 under our equity compensation plan, with Relative Economic Return measured over a three-year performance measurement period (October 2021 through September 2024) with the Relative Economic Return goals listed below. Messrs. Thakkar and Macdowell and Ms. Sung did not receive this award because they were not executive officers of the Company when the grants were awarded in 2022. The threshold goal for the 2022 PSU performance measurement period was -43%, determined as follows: the lesser of (i) the average weekly 2-year Treasury note rates plus 100 basis points during the performance measurement period and (ii) the 25th percentile performance of the iShares Mortgage Real Estate ETF constituents, which was -43% during the performance measurement period. The Company’s Relative Economic Return over the three-year performance measurement period was 20th among the companies included in the iShares Mortgage Real Estate ETF, placing the Company at the 41st percentile.
What We Don’t Do and The Reasons Why
| 2022 PSU Bonus Earned Amounts | | | | | 2022-2024 PSUs | 2022-2024 PSUs | | Name | Target (#) | Actual (#) | | Phillip J. Kardis II | 10,782 | 6,728 | | Subramaniam Viswanathan | 8,168 | 5,097 | | Choudhary Yarlagadda | 12,939 | 8,074 |
What We Don’t Do and The Reasons Why
Compensation Policies and Practices as They Relate to Risk Management The compensation committee monitors the risks and rewards associated with our compensation programs and considers, in establishing our compensation programs, whether these programs encourage unnecessary or excessive risk taking. We believe our design includes appropriate features intended to limit unnecessary or excessive risk-taking by our named executive officers, including, without limitation (i) incentive compensation capped at 200% of target depending on the performance goal, (ii) use of multiple financial measures over both annual and multi-year periods, (iii) elements of incentive compensation tied to individual performance goals, and (iv) meaningful stock ownership and retention requirements that apply until six months after termination of employment. Say-On-Pay At the 2024 annual meeting of stockholders, the Company’s stockholders voted, on an advisory basis, on the compensation paid to the Company’s named executive officers, also commonly referred to as “say-on-pay.” The stockholders voted overwhelmingly (over 92%) to approve, on an advisory basis, the compensation of the Company’s named executive officers. The Company’s Board of Directors considered the recommendations of the stockholders and determined that the Company would not make any material modifications to the overall structure of compensation arrangements for named executive officers, keeping the same mix of base salary, annual cash incentives and LTI compensation, as well as the same target amounts. See “---2024 Actions” for discussion. Say-On-Frequency Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires that a “say-on-frequency” vote be held at least every six years, the Company held a vote, on an advisory basis, on whether to hold an advisory vote on executive compensation every one, two or three years, at our 2023 annual meeting of stockholders. At that meeting, the stockholders voted, on an advisory basis, on the frequency of future advisory votes on executive compensation and voted overwhelmingly to recommend that future advisory votes on the compensation of our named executive officers be held every year. The Board of Directors adopted that recommendation and, accordingly, an advisory vote on executive compensation is being held at this 2025 Annual Meeting. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the next “say-on-frequency” vote will be held at the Company’s 2029 Annual Meeting of Stockholders. Other Features and Policies Stock Ownership and Retention Requirements Per the Company’s Corporate Governance Guidelines, each named executive officer is subject to stock ownership and retention requirements. Shares of our stock received from equity awards (including any vested restricted stock, vested and unvested RSUs and vested deferred stock units but excluding unvested PSUs), after taxes, must be held by the executive until a stated level of ownership is achieved, measured as a multiple of salary―5x for the CEO and 3x for the other named executive officers. Per the Employment Agreements, once this required minimum ownership level has been achieved, the named executive officer must continue to maintain that minimum ownership level until six months after termination of employment. The compensation committee believes that these stock ownership and retention requirements will further align the interests of our named executive officers with the long-term interests of our stockholders by requiring a meaningful portion of the executive’s accrued and earned compensation to be held as shares of our stock, not only during employment but for a period after termination of employment. Savings and Health and Welfare Benefits Our named executive officers participate in the broad-based 401(k) retirement savings plan generally available to our employees, which includes an opportunity to receive employer matching contributions. We do not currently provide any pension plans or supplemental retirement plans for our named executive officers. All our named executive officers also participate in the health, life insurance, disability benefits and other welfare programs that are provided generally to our employees. The compensation committee previously established a Stock Award Deferral Program, described below under “Nonqualified Deferred Compensation Plans.” Under this program, named executive officers could elect to defer payment of RSU and PSU awards after vesting until termination of employment or an earlier specified date. Amounts deferred are tracked as deferred stock units (“DSUs”) which continue to receive dividend equivalents and are paid in actual shares. On November 5, 2024, the compensation committee terminated the Executive Officer Plan (as defined below under “Nonqualified Deferred Compensation”) component of the Stock Award Deferral Program. The Executive Officer Plan will be liquidated on November 30, 2025, and all amounts outstanding under the Executive Officer Plan on the liquidation date will be paid at that time in accordance with applicable tax rules. Perquisites and Other Personal Benefits We do not currently provide our named executive officers with any perquisites or other personal benefits. Incentive Compensation Recovery (Clawback) Policy In November 2023, the Company’s Board of Directors adopted an incentive compensation recovery policy, consistent with newly adopted NYSE listing requirements implementing the clawback provisions of the Dodd-Frank Act, that requires that following certain accounting restatements due to material noncompliance with any financial reporting requirement under the securities laws, the Company shall recover reasonably promptly certain erroneously awarded incentive compensation that was received based on the restated financial results. Each officer to whom the incentive compensation recovery policy applies entered into an acknowledgement and agreement of the policy. Severance Protection under the Employment Agreements Each Employment Agreement includes certain severance payments and benefits for the named executive officer in case of involuntary termination during the term of the agreement, including termination by us without cause or termination by the executive for certain adverse changes in employment conditions (referred to as “good reason”). The amount and form of such severance benefits depends on whether the involuntary termination occurs in connection with a change in control or not. No severance is provided for a voluntary termination (not for good reason) or involuntary termination for cause. We do not believe that the severance benefits provided are excessive. More detail (including estimated quantifiable amounts) is provided under “Potential Payments upon Termination or Change in Control.” The Employment Agreements also include a 90-day advanced notice requirement for the executive to resign and certain post- employment covenants, including customary non-solicitation and non-competition covenants for twelve months post-employment, and customary non-disparagement and confidentiality restrictions. The compensation committee believes that these severance provisions serve the interests of stockholders by encouraging stability among our management team. The change in control protections also help to ensure that management will be able to fairly review any possible business combinations. The compensation committee believes that the severance protections in the employment agreements reflect current best practices, including (i) no 280G excise tax gross-ups, (ii) reasonable levels of severance compensation, (iii) no single-trigger (or “modified” single trigger) rights to severance (including equity vesting) and (iv) performance-based awards remain subject to performance conditions. Timing of Equity Grants
What We Don’t Do and The Reasons Why
Equity Awards, including RSUs and PSUs, and to the extent applicable, options or awards with option-like features are granted to NEOs generally during the first quarter of each year at a regularly scheduled compensation committee meeting. Dates for compensation committee meetings are usually set during the prior year, and the timing of meetings and awards is unrelated to the release of material non-public information. We also do not time the release of material nonpublic information based on equity award grant dates. Compensation Committee Report Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the compensation committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. Gerard Creagh, Chair Kevin G. Chavers Debra W. Still The Compensation Committee Report above does not constitute “soliciting material” and will not be deemed “filed” or incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate our SEC filings by reference, in whole or in part, notwithstanding anything to the contrary set forth in those filings. Summary Compensation Table The table below sets forth the aggregate compensation we paid or accrued with respect to the fiscal years ended December 31, 2024, 2023, and 2022, to our Chief Executive Officer, our Chief Financial Officer, and our three other executive officers serving in their positions on December 31, 2024.
What We Don’t Do and The Reasons Why
| Name and Principal Position (1) | Year | Salary ($) (2) | Bonus ($) | Stock Awards ($) (3) | Non-Equity Incentive Plan Compensation ($) (4) | All Other Compensation ($) (5) | Total ($) | | Phillip J. Kardis II | 2024 | $850,000 | $0 | $2,617,466 | $3,302,163 | $20,700 | $6,790,329 | | President, Chief Executive Officer and Director | 2023 | $850,000 | $0 | $2,670,453 | $2,606,625 | $19,800 | $6,146,878 | | | 2022 | $750,000 | $0 | $1,463,378 | $3,712,500 | $18,300 | $5,944,178 | | Subramaniam Viswanathan | 2024 | $700,000 | $0 | $1,215,257 | $1,358,963 | $20,700 | $3,294,920 | | Chief Financial Officer | 2023 | $700,000 | $0 | $1,239,851 | $1,004,625 | $19,800 | $2,964,276 | | | 2022 | $500,000 | $0 | $1,108,606 | $2,500,000 | $18,300 | $4,126,906 | | Jack L. Macdowell, Jr. | 2024 | $60,484 | $69,672(6) | $0 | $0 | $0 | $130,156 | | Chief Investment Officer | | | | | | | | | Dan Thakkar | 2024 | $500,000 | $0 | $934,815 | $830,975 | $20,700 | $2,286,490 | | Chief Credit & Risk Officer | 2023 | $500,000 | $0 | $1,088,067(8) | $669,750 | $19,800 | $2,277,617 | | | 2022 | $300,000 | $650,000(7) | $0 | $0 | $18,000 | $968,000 | | Miyun Sung | 2024 | $350,000 | $0 | $373,932 | $441,738 | $20,700 | $1,186,369 | | Chief Legal Officer and Corporate Secretary | 2023 | $50,705 | $94,384(9) | $0 | $0 | $0 | $145,089 | | Choudhary Yarlagadda | 2024 | $167,179 | $0 | $0 | $0 | $86,285 | $253,464 | | Former President, Chief Operating Officer, | 2023 | $800,000 | $0 | $2,288,950 | $2,263,200 | $19,800 | $5,371,950 | | Co-Chief Investment Officer and Director | 2022 | $800,000 | $0 | $1,756,036 | $4,455,000 | $18,300 | $7,029,336 |
What We Don’t Do and The Reasons Why
| (3) The amounts in this column represent the aggregate grant date fair value of the awards detailed under “Grants of Plan-Based Awards in 2024” in this Proxy Statement, which for 2024 were comprised of: |
Pension Benefits
Pension Benefits Our named executive officers received no benefits in 2024 from us under defined pension plans. Our only retirement plan in which the named executive officers were eligible to participate is the 401(k) Plan. Nonqualified Deferred Compensation The compensation committee previously established our Stock Award Deferral Program. The Stock Award Deferral Program consisted of two distinct non-qualified deferred compensation plans within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended: one for non-employee directors (the “Director Plan”) and one for certain executive officers (the “Executive Officer Plan”). Under the Stock Award Deferral Program, non-employee directors and certain executive officers could elect to defer payment of certain stock awards made pursuant to our equity incentive plan. Deferred awards are treated as deferred stock units and paid at the earlier of separation from service or a date elected by the participant who is separating. Payments are generally made in a lump sum or, if elected by the participant, in five annual installments. Deferred awards receive dividend equivalents during the deferral period in the form of additional deferred stock units. Amounts are paid at the end of the deferral period by delivery of shares from our equity incentive plan (plus cash for any fractional deferred stock units), less any applicable tax withholdings. Deferral elections do not alter any vesting requirements applicable to the underlying stock award. On November 5, 2024, the compensation committee took action to terminate the Executive Officer Plan and suspend new deferral elections under the Director Plan. The Executive Officer Plan will be liquidated on November 30, 2025, and all amounts outstanding under the Executive Officer Plan on the liquidation date will be paid at that time in accordance with applicable tax rules. All deferrals previously made under the Director Plan will remain outstanding, and all deferrals pursuant to prior elections made by directors will be paid on the originally scheduled payment dates. The following table shows the contributions, earnings, distributions, and year-end account values for each named executive officer under the Stock Award Deferral Program for the fiscal year ended December 31, 2024.
Pension Benefits
| Name | Executive Contributions ($) | Registrant Contributions ($) | Aggregate Earnings ($) | Aggregate Withdrawals/ Distributions ($) | Balance at December 31, 2024 ($)(1) | | Phillip J. Kardis II | 1,526,297 | - | (372,408) | - | 2,443,843 | | Subramaniam Viswanathan | 708,907 | - | (115,720) | - | 870,203 | | Jack L. Macdowell, Jr. | - | - | - | - | - | | Dan Thakkar | 366,732 | - | (39,170) | - | 485,934 | | Miyun Sung | 64,325 | - | (7,152) | - | 57,173 | | Choudhary Yarlagadda(2) | 2,086,141 | - | (496,699) | 9,254,993 | 0 |
Pension Benefits
| (1) Deferred awards are included in the Summary Compensation Table in the year of grant based on the grant date fair value. | | (2) Mr. Yarlagadda retired on March 15, 2024, and his deferred awards were delivered in connection with his retirement. |
Pension Benefits
Potential Payments upon Termination of Employment or Change in Control (CIC) The tables below show certain potential payments that would have been made to the named executive officers employed by the Company and subject to the Employment Agreements assuming such person’s employment had terminated at the close of business on December 31, 2024, under various scenarios, including a Change in Control. The table assumes that neither the Company nor any of the named executive officers gave notice of its or his intention not to renew the executive’s Employment Agreement with the Company for 2024. The tables include only the value of the incremental amounts payable to the named executive officer arising from the applicable scenario and do not include the value of vested or earned, but unpaid, amounts owed to the applicable named executive officer as of December 31, 2024 (including, for example, any annual bonus earned but not yet paid as of such date, dividend equivalents relating to dividends declared but not paid as of such date, vested but unsettled RSUs or PSUs, employer 401(k) matches, and the value of the shares underlying the DSUs that will be paid to the applicable named executive officer upon separation of service. See “Nonqualified Deferred Compensation” above for the value of such DSUs as of December 31, 2024). The footnotes to the tables describe the assumptions used in estimating the amounts shown in the tables. As used below, the terms “Target Cash Bonus,” “Annual Cash Bonus,” “Cause,” “Change in Control,” “Disability,” “Good Reason,” “RSUs” and “PSUs” shall have the respective meanings set forth in the applicable Employment Agreement, each of which has been filed with the SEC, or award agreement(s), forms of which have been filed with the SEC. Please refer to our annual report on Form 10-K filed with the SEC on February 19, 2025 for links to copies of the employment agreements for each of the named executive officers. Because the payments to be made to a named executive officer depend on several factors, the actual amounts to be paid out upon a named executive officer’s termination of employment can only be determined at the time of the executive’s separation from the Company. As noted earlier, Mr. Yarlagadda retired from the Company effective March 15, 2024. In connection with his retirement, Mr. Yarlagadda received the benefits for retirement as described in his Employment Agreement. In addition, Mr. Yarlagadda received the following additional benefits, pursuant to a Transition Agreement that he entered into with the Company as consideration for his transition services and his continued cooperation with the Company until the date of his retirement (the “Separation Date”):
Pension Benefits
| • | Mr. Yarlagadda’s unvested RSUs granted under the Restricted Stock Unit Award Agreement dated as of January 2, 2021 (the “Promotion RSUs”) remained outstanding following the Separation Date and vested on January 15, 2025. The value of the unvested Promotional RSUs that are allowed to continue to vest was $620,262 (based on the closing price of our common stock on his retirement date). | | • | The Company agreed to reimburse Mr. Yarlagadda for 100% of his COBRA premiums during the 12-month period following the Separation Date, at a potential value of $33,404. Mr. Yarlagadda ultimately sought reimbursement for only $19,486 representing 7 months of COBRA premiums. | | • | The Company agreed to reimburse Mr. Yarlagadda up to $6,000 for reasonable attorneys’ fees and expenses incurred relating to the review and negotiation of the Transition Agreement. Mr. Yarlagadda sought and received reimbursement for $1,239. In addition, the Company agreed to allow any unaccrued but unused vacation time from 2023 to be rolled over into 2024 and waived the noncompetition provision of the Employment Agreement, effective from and after his retirement date. |
Pension Benefits
Potential Payments upon Termination of Employment/CIC: Phillip J. Kardis II:
Pension Benefits
| Incremental Benefits due to Termination Event | Death (a) | Disability (a) | Termination Without Cause/Resignation for Good Reason (b) | Termination For Cause/Voluntary Resignation | Termination/ Resignation Relating to Change in Control (c) | Retirement (d) | | Severance/Payment to Representative or Estate | - | - | $4,057,096 | - | $8,114,192 | - | | Value of Accelerated and Continued Equity Awards | $4,081,523 | $4,081,523 | $4,081,523 | - | $4,081,523 | $4,081,523 | | Deferred Compensation | - | - | - | - | - | - | | Other Benefits | $73,034 | $73,034 | $48,690 | - | $73,034 | - | | Total Value of Incremental Benefits | $4,154,557 | $4,154,557 | $8,187,308 | - | $9,603,698 | $4,081,523 |
Pension Benefits
Potential Payments upon Termination of Employment/CIC: Subramaniam Viswanathan:
Pension Benefits
| Incremental Benefits due to Termination Event | Death (a) | Disability (a) | Termination Without Cause/Resignation for Good Reason (b) | Termination For Cause/Voluntary Resignation | Termination/ Resignation Relating to Change in Control (c) | Retirement (d) | | Severance/Payment to Representative or Estate | - | - | $2,321,196 | - | $4,642,392 | - | | Value of Accelerated and Continued Equity Awards | $1,915,522 | $1,915,522 | $1,915,522 | - | $1,915,522 | $1,915,522 | | Deferred Compensation | - | - | - | - | - | - | | Other Benefits | $73,034 | $73,034 | $48,690 | - | $73,034 | - | | Total Value of Incremental Benefits | $1,988,557 | $1,988,557 | $4,285,408 | - | $5,393,602 | $1,915,522 |
Pension Benefits
Potential Payments upon Termination of Employment/CIC: Jack L. Macdowell, Jr.:
Pension Benefits
| Incremental Benefits due to Termination Event | Death (a) | Disability (a) | Termination Without Cause/Resignation for Good Reason (b) | Termination For Cause/Voluntary Resignation | Termination/ Resignation Relating to Change in Control (c) | Retirement (d) | | Severance/Payment to Representative or Estate | - | - | $1,600,000 | - | $3,200,000 | - | | Value of Accelerated and Continued Equity Awards | - | - | - | - | - | - | | Deferred Compensation | - | - | - | - | - | - | | Other Benefits | $73,034 | $73,034 | $48,690 | - | $73,034 | - | | Total Value of Incremental Benefits | $73,034 | $73,034 | $1,648,690 | - | $3,273,034 | - |
Pension Benefits
Potential Payments upon Termination of Employment/CIC: Dan Thakkar*:
Pension Benefits
| Incremental Benefits due to Termination Event | Death (a) | Disability (a) | Termination Without Cause/Resignation for Good Reason (b) | Termination For Cause/Voluntary Resignation | Termination/ Resignation Relating to Change in Control (c) | Retirement (d) | | Severance/Payment to Representative or Estate | - | - | $1,250,363 | - | $2,500,725 | - | | Value of Accelerated and Continued Equity Awards | $1,524,895 | $1,524,895 | $1,524,895 | - | $1,524,895 | - | | Deferred Compensation | - | - | - | - | - | - | | Other Benefits | $73,034 | $73,034 | $48,690 | - | $73,034 | - | | Total Value of Incremental Benefits | $1,597,930 | $1,597,930 | $2,823,947 | - | $3,146,847 | - |
Pension Benefits
* Mr. Thakkar ceased to serve as the Chief Credit & Risk Officer of the Company on April 2, 2025, and will separate from employment with the Company on July 1, 2025, as mutually agreed between Mr. Thakkar and the Company. See “Compensation Discussion & Analysis – Key Design Features and 2024 Actions –Departure and Addition of Officers ” for further details. Potential Payments upon Termination of Employment/CIC: Miyun Sung:
Pension Benefits
| Incremental Benefits due to Termination Event | Death (a) | Disability (a) | Termination Without Cause/Resignation for Good Reason (b) | Termination For Cause/Voluntary Resignation | Termination/ Resignation Relating to Change in Control (c) | Retirement (d) | | Severance/Payment to Representative or Estate | - | - | $791,738 | - | $1,583,475 | - | | Value of Accelerated and Continued Equity Awards | $327,255 | $327,255 | $327,255 | - | $327,255 | - | | Deferred Compensation | - | - | - | - | - | - | | Other Benefits | $23,963 | $23,963 | $15,975 | - | $23,963 | - | | Total Value of Incremental Benefits | $351,217 | | $1,134,967 | - | $1,738,341 | $327,255 |
Pension Benefits
*For purposes of these tables, calculations of “Value of Accelerated Equity Awards” are based on $14.00 per share, the closing price of our common stock on December 31, 2024. For purposes of these tables, we have assumed that the target performance metrics with respect to the PSUs have been achieved, but not including dividend equivalent rights. In the event of Termination Without Cause/Resignation for Good Reason, or in the event of death or disability, unvested PSUs will continue to vest in accordance with their terms (subject to performance) as though such termination of service had not occurred.
Pension Benefits
| (a) Death and Disability |
Pension Benefits
The following incremental benefits would be paid to a named executive officer or his or her estate or legal representative in the event of his or her termination due to death or Disability as of December 31, 2024: (1) Value of Accelerated and Continued Equity Awards: For each executive officer, the amount represents the aggregate value resulting from the (a) immediate full vesting of all outstanding equity-based compensation previously granted in connection with an Annual Bonus other than the PSUs granted in connection with the LTI Bonus; and, (b) continuing vesting of any outstanding PSUs previously granted in connection with the LTI Bonus, subject to the achievement by the Company of the applicable performance goals and the applicable award agreement. For purposes of these tables, we have assumed that the target performance metric with respect to the PSUs has been achieved. (2) Other Benefits: For each of the named executive officers, 100% of the COBRA premiums incurred by such named executive officer and his or her eligible dependents under the Company’s healthcare plan during the 18-month period following the named executive officer’s termination of employment.
Pension Benefits
| (b) Termination Without Cause/Resignation for Good Reason |
Pension Benefits
The following incremental benefits would be paid to a named executive officer in the event he or she is terminated without Cause (other than within six months before or 24 months following a Change in Control) or by such named executive officer for Good Reason (other than within 24 months following a Change in Control): (1) Severance: For each of the named executive officers, a payment equal to 1.0 times the sum of (a) his or her then current base salary and (b) the greater of (x) Target Cash Bonus or (y) his or her average Annual Cash Bonus awarded for the three most recent calendar years. (2) Value of Accelerated and Continued Equity Awards: For each executive the amount represents the aggregate value resulting from the (a) immediate full vesting of all outstanding equity-based compensation previously granted in connection with his Annual Bonus other than the PSUs; and (b) continuing vesting of outstanding PSUs previously granted, subject to the achievement by the Company of applicable performance goals and the applicable award agreement. For purposes of these tables, we have assumed that the target performance metric with respect to the PSUs has been achieved. (iii) Other Benefits: For each of the named executive officers, 100% of the COBRA premiums incurred by such named executive officer and his or her eligible dependents under the Company’s healthcare plan during the 12-month period following the named executive officer’s termination of employment.
Pension Benefits
| (c) Termination/Resignation upon Change in Control |
Pension Benefits
The following incremental benefits would be paid to a named executive officer in the event of (1) the termination of such named executive officer’s employment by the Company other than for Cause (other than Disability) within six months before or 24 months following a Change in Control or (2) such named executive officer’s resignation of his employment for Good Reason within 24 months following a Change in Control: (1) Severance: A severance payment equal to 2.0 times the sum of (a) his or her base salary and (b) the greater of (x) Target Cash Bonus or (y) his average Annual Cash Bonus awarded for the three most recent calendar years. (2) Value of Accelerated and Continued Equity Awards and Pro-Rata Bonus: For each executive, the amount represents the aggregate value resulting from the (a) immediate full vesting of all outstanding equity-based compensation previously granted other than the PSUs; (b) the immediate full vesting of all PSUs that are eligible to vest solely on the basis of continued employment and any outstanding PSUs whose vesting after such Change in Control remains contingent on performance will continue to vest, subject only to attainment by the Company of the applicable performance goals; and (c) a pro-rata portion of the Annual Cash Bonus he would have earned for the year of termination based on the Company’s relevant performance metrics, payable at the time such Annual Cash Bonus would have been paid to the executive for such year absent such termination but no later than March 15 of the immediately following year. (3) Other Benefits: For each of the named executive officers, 100% of the COBRA premiums incurred by such named executive officer and his eligible dependents under the Company’s healthcare plan during the 18-month period following the named executive officer’s termination of employment.
Pension Benefits
| (d) Qualifying Retirement |
Pension Benefits
If the named executive officer’s service with the Company is terminated because of the named executive officer’s “Qualifying Retirement,” (i) the PSUs continue to vest in accordance with their terms (time and performance requirements) as though such termination of service had not occurred provided that the executive complies with any applicable post-employment covenants, and (ii) the RSUs vest immediately. “Qualifying Retirement” means the named executive officer’s termination of service with the Company or the Company terminates his or her employment without cause, in each case at any time after the named executive officer has attained age 55, and the sum of his or her age and years of service with the Company is equal to at least 65 with at least five years of service with the Company (including any predecessor), other than termination due to death, Disability, or for “Cause.” Currently, Mr. Kardis meets this condition. For a discussion of the Employment Agreements, see “Compensation Discussion and Analysis.” To receive the severance benefits discussed above, the named executive officers must comply with the covenants in the Employment Agreements, which include confidentiality, non-disparagement, and 12-month non-compete and non-solicitation restrictions. CEO Compensation Pay Ratio As required by applicable law, we determined that the 2024 total compensation of Phillip J. Kardis II, our Chief Executive Officer, of $6,790,329, as shown in the Summary Compensation Table above (the “CEO Compensation”), was approximately 25.2 times the total compensation of a median employee in 2024 of $269,500. We identified the median employee using the annual base salary and expected bonus, as of December 31, 2024, plus any incentive stock awards granted in 2024 for all individuals, excluding our Chief Executive Officer, who were employed by us on December 31, 2024. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for our CEO Compensation. The CEO pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodologies and assumptions described above. SEC rules for identifying the median employee and determining the CEO pay ratio permit companies to employ a wide range of methodologies, estimates and assumptions. As a result, the CEO pay ratios reported by other companies, which may have employed other permitted methodologies or assumptions and which may have a significantly different work force structure from ours, may not be comparable to our CEO pay ratio.
Pension Benefits
| Pay versus Performance | | | | | | | | | | | | As required by SEC rules, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.” | | | | | | | | | | | | Year | Summary Compensation Table Total for PEO(1) | | Compensation Actually Paid to PEO(2) | | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs(4) | Value of Initial Fixed $100 Investment Based On: | | Net Income (thousands)(7) | ROE(8) | | | | | | | | | Total Stockholder Return(5) | Peer Group Total Stockholder Return(6) | | | | (a) | (b) | | (c) | | (d) | (e) | (f) | (g) | (h) | (i) | | 2024 | $6,790,329 | | $6,882,085 | | $1,430,280 | $1,376,965 | 73.80 | 59.73 | $176,065 | 23.6% | | 2023 | $6,146,878 | | $6,076,344 | | $3,537,948 | $3,628,018 | 28.78 | 62.71 | $126,104 | 13.2% | | 2022(9) | Marria | Kardis | Marria | Kardis | $4,041,414 | $2,587,076 | 30.56 | 58.46 | $(513,066) | 15.0% | | | $7,481,461 | $5,944,178 | $4,858,627 | $3,687,845 | | | | | | | | 2021(10) | $11,976,596 | | $16,003,134 | | $6,517,304 | $8,035,188 | 76.04 | 82.47 | $674,519 | 17.7% | | 2020(11) | $9,403,448 | | $5,693,046 | | $5,370,904 | $3,524,918 | 51.25 | 74.01 | $89,012 | 30.7% |
Pension Benefits
| (1) The dollar amounts reported in column (b) are (i) for 2024, the amounts of total compensation reported for Mr. Kardis (our Chief Executive Officer), (ii) for 2023, the amounts of total compensation reported for Mr. Kardis (our Chief Executive Officer), (iii) for 2022, the amounts of total compensation reported for Mr. Marria (our former Chief Executive Officer until December 10, 2022) and the amounts of total compensation reported for Mr. Kardis (our Chief Executive Officer), and (iv) for 2021, the amounts of total compensation reported for Mr. Marria (our former Chief Executive Officer until December 10, 2022, and together with Mr. Kardis, the “PEOs”) and in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table.” |
Pension Benefits
| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to the relevant PEO during the applicable year as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid to the relevant PEO during the applicable year. In accordance with SEC rules, the following adjustments were made to the relevant PEO’s total compensation for each year to determine the compensation actually paid: |
Pension Benefits
| Year | Reported Summary Compensation Table Total for PEO | | Minus Reported Value of Equity Awards(a) | | Plus Equity Award Adjustments(b) | | Compensation Actually Paid to PEO | | | 2024 | $6,790,329 | | $2,617,466 | | $2,709,222 | | $6,882,085 | | | 2023 | $6,146,878 | | $2,670,453 | | $2,599,919 | | $6,076,344 | | | 2022 | Marria $7,481,461 | Kardis $5,944,178 | Marria $1,478,127 | Kardis $1,463,378 | Marria $(1,144,708) | Kardis $(792,955) | Marria $4,858,627 | Kardis $3,687,845 | | 2021 | $11,976,596 | | $6,583,196 | | $10,609,734 | | $16,003,134 | | | 2020 | $9,403,448 | | $2,614,848 | | $(1,095,554) | | $5,693,046 | |
Pension Benefits
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. | | (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
Pension Benefits
| | | | | | | | | | | | Value of | | | | | | | | | | | | | | | | Dividends or | | | | | | Year End | | | | | | Year over | | | | other Earnings | | | | | | Fair Value of | | Year over | | | | Year Change | | Fair Value at the | | Paid on Stock | | | | | | Equity | | Year Change | | Fair Value as | | in Fair Value | | End of the Prior | | or Option | | | | | | Awards | | in Fair Value | | of Vesting | | of Equity | | Year of Equity | | Awards not | | | | | | Granted in | | of | | Date of Equity | | Awards | | Awards that | | Otherwise | | | | | | the Year and | | Outstanding | | Awards | | Granted in | | Failed to Meet | | Reflected in | | Total | | | | Unvested at | | and Unvested | | Granted and | | Prior Years | | Vesting | | Fair Value or | | Equity | | | | End of the | | Equity | | Vested in the | | that Vested in | | Conditions in | | Total | | Award | | | Year | Year | | Awards | | Year | | the Year | | the Year | | Compensation | | Adjustments | | | 2024 | $2,290,712 | | $93,168 | | $450,284 | | $(124,942) | | - | | - | | $2,709,222 | | | 2023 | $2,087,683 | | $65,259 | | $417,537 | | $29,440 | | - | | - | | $2,599,919 | | | 2022 | Marria $239,811 | Kardis $237,418 | Marria $(1,369,241) | Kardis $(1,006,065) | Marria - | Kardis - | Marria $(15,278) | Kardis $(24,309) | Marria - | Kardis - | Marria - | Kardis - | Marria $(1,144,708) | Kardis $(792,955) | | 2021 | $9,677,612 | | $824,805 | | - | | $107,317 | | - | | - | | $10,609,734 | | | 2020 | $864,779 | | $(1,481,993) | | - | | $(478,340) | | - | | - | | $(1,095,554) | |
Pension Benefits
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding the relevant PEO for the applicable year) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding the relevant PEO for the applicable year) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2024, Messrs. Viswanathan, Macdowell, Thakkar and Yarlagadda and Ms. Sung; (ii) for 2023, Messrs. Yarlagadda, Viswanathan and Thakkar and Ms. Sung; (iii) for 2022, Messrs. Viswanathan, Yarlagadda and Thakkar; (iv) for 2021, Messrs. Viswanathan, Yarlagadda and Kardis; and (v) for 2020, Messrs. Yarlagadda, Marria, Kardis, and Rob Colligan. |
Pension Benefits
| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding the relevant PEO for the applicable year), as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding the relevant PEO for the applicable year) during the applicable year. In accordance with SEC rules, the following adjustments were made to average total compensation for the NEOs as a group (excluding the relevant PEO for the applicable year) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |
Pension Benefits
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Minus Average Reported Value of Equity Awards | Plus Average Equity Award Adjustments(a) | Average Compensation Actually Paid to Non-PEO NEOs | | 2024 | $1,430,280 | $504,801 | $451,486 | $1,376,965 | | 2023 | $3,537,948 | $1,538,956 | $1,629,026 | $3,628,018 | | 2022 | $4,041,414 | $(954,881) | $(499,458) | $2,587,076 | | 2021 | $6,517,304 | $(2,510,013) | $4,027,897 | $8,035,188 | | 2020 | $5,370,904 | $(1,425,554) | $(420,432) | $3,524,918 |
Pension Benefits
(a) The amounts deducted or added in calculating the total average equity award adjustments are as follows:
Pension Benefits
| | | | | | | Average | | | | | | | | | Value of | | | | | | | Year over | Average Fair | Dividends or | | | | Average | | | Year | Value at the | other | | | | Year End | | | Average | End of the | Earnings Paid | | | | Fair Value | Year over | Average Fair | Change in | Prior Year | on Stock or | | | | of Equity | Year Average | Value as of | Fair Value | of Equity | Option | | | | Awards | Change in | Vesting Date | of Equity | Awards that | Awards not | | | | Granted in | Fair Value of | of Equity | Awards | Failed to | Otherwise | Total | | | the Year and | Outstanding | Awards | Granted in | Meet | Reflected in | Average | | | Unvested at | and Unvested | Granted and | Prior Years | Vesting | Fair Value or | Equity | | | End of the | Equity | Vested in the | that Vested | Conditions | Total | Award | | Year | Year | Awards | Year | in the Year | in the Year | Compensation | Adjustments | | 2024 | $441,228 | $5,942 | $86,840 | $(82,524) | - | - | $451,486 | | 2023 | $1,212,843 | $141,584 | $233,621 | $40,978 | - | - | $1,629,026 | | 2022 | $154,920 | $(645,784) | - | $(8,594) | - | - | $(499,458) | | 2021 | $3,361,188 | $590,377 | - | $76,332 | - | - | $4,027,897 | | 2020 | $471,454 | $(726,946) | - | $(164,940) | - | - | $(420,432) |
Pension Benefits
| 5 | Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. | | 6 | Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: iShares Mortgage Real Estate ETF. | | 7 | The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. | | 8 | These are the same amounts as used for the ROE bonus under the Employment Agreements. See Appendix I for additional information on the calculation of ROE in relation to GAAP reported results. | | 9 | For 2022, we had two CEOs. The first column shows 2022 amounts for Mr. Marria, who served as CEO until December 10, 2022, and the second column shows 2022 amounts for Mr. Kardis, who serves as our CEO since December 10, 2022. | | 10 | For 2021, amounts shown are for Mr. Marria, our CEO for 2021. | | 11 | For 2020, amounts shown are for Matthew Lambiase, our CEO for 2020. |
Pension Benefits
Financial Performance Measures As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long- term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enter- prise for our stockholders. For the most recently completed fiscal year, the most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s NEOs, to the Company’s performance are as follows:
Pension Benefits
| • | Relative ROE | | • | Relative TSR | | • | Relative Economic Return |
Pension Benefits
Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, not all of those Company measures are presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and ROE As demonstrated by the following graph, the amount of compensation actually paid to the relevant PEO for the applicable year and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding the relevant PEO for the applicable year) is aligned with the Company’s ROE over the four years presented in the table. Compensation Actually Paid and TSR As demonstrated by the following graph, the amount of compensation actually paid to the relevant PEO for the applicable year and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding the relevant PEO for the applicable year) is aligned with the Company’s TSR over the four years presented in the table. Compensation Actually Paid and Net Income As demonstrated by the following table, the amount of compensation actually paid to the relevant PEO for the applicable year and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding the relevant PEO for the applicable year) is generally aligned with the Company’s net income over the four years presented in the table.
Pension Benefits
| EQUITY COMPENSATION PLAN INFORMATION |
Pension Benefits
We have adopted an equity incentive plan to provide incentives to our independent directors, employees, and other service providers to stimulate their efforts toward our continued success, long-term growth, and profitability and to attract, reward and retain personnel. The following table provides information as of December 31, 2024 concerning shares of our common stock authorized for issuance under our existing equity incentive plan. The total share numbers reflect a 1-for-3 reverse stock split that became effective following the close of business on May 21, 2024.
Pension Benefits
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (1) | Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans(2) | | Equity Compensation Plans Approved by Stockholders | 1,979,096 | — | 5,144,681 | | Equity Compensation Plans Not Approved by Stockholders (3) | — | — | — | | Total | 1,979,096 | | 5,144,681 |
Pension Benefits
| (1) Includes unvested RSUs, PSUs, DSUs and related dividends. |
Pension Benefits
| (2) Available shares are reduced by the items outstanding in column 1 plus shares previously vested and issued net of units withheld to cover tax withholding requirements. |
Pension Benefits
| (3) We do not have any equity plans that have not been approved by our stockholders. |
Pension Benefits
| COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
Pension Benefits
Our compensation committee is comprised solely of the following independent directors: Mr. Creagh (chair), Mr. Chavers and Ms. Still. None of these directors is serving or has served as an officer or employee of us or any affiliate or has any other business relationship or affiliation with us, except his or her service as a director. No member of the compensation committee has had any relationship with us requiring disclosure under Item 404 of Regulation S-K. During 2024, none of our executive officers served on the compensation committee (or other committee serving an equivalent function) of another entity whose executive officers served on the compensation committee or Board.
Pension Benefits
| COMPENSATION OF DIRECTORS |
Pension Benefits
Overview and Process We compensate only those directors who are independent under the NYSE listing standards. Any member of our Board of Directors who is an employee of ours is not considered independent under the NYSE listing standards and did not (and will not) receive additional compensation for serving on our Board of Directors. Our compensation committee, together with FW Cook, a nationally recognized compensation consulting firm retained by our Board of Directors, reviews the components of the compensation arrangements offered to our independent directors. As part of this process, our compensation committee considers, among other things, the duties and responsibilities associated with the position of each director and emerging trends and best practices in director compensation. The compensation committee will, on an ongoing basis, continue to examine and assess our director compensation practices relative to our compensation philosophy and objectives, as well as competitive market practices and total stockholder returns, and will make modifications to the compensation programs, as deemed appropriate. The compensation committee also considers the compensation of boards of directors of the same group of peer companies that the committee considers for the compensation of our named executive officers. Amount and Form of Director Compensation Based upon the recommendations of FW Cook, among other things, and our compensation committee’s review of FW Cook’s analysis, our compensation committee recommended to our Board of Directors, and our Board of Directors approved, the following annual compensation arrangements offered to our independent directors for the 2024-2025 director service year beginning June 1, 2024 for directors serving on the Board at the conclusion of the 2024 annual meeting of stockholders, which (with the exception of the annual stock award amount increasing by $10,000 and the annual cash fee for the Board Chairperson increasing by $45,000) have not changed from the 2023-2024 director service year:
Pension Benefits
| | 2024 | | Annual cash retainer (paid quarterly; may elect to be paid as a stock award) Annual stock award amount (RSUs with 1-year vesting) | $100,000 $130,000 | | | 2024 | | Annual cash fee for Board Chairperson | $120,000 | | Annual cash fee for Audit Committee Chairperson | $50,000 | | Annual cash fee for Compensation Committee Chairperson and Risk Chairperson | $25,000 | | Annual cash fee for Nominating and Corporate Governance Committee Chairperson | $25,000 | | Annual cash fee for Committee Membership (other than Committee Chair) | $10,000 |
Pension Benefits
Directors receive a grant of RSUs equal in value to the annual stock award amount (plus any amount of cash compensation the director elects to receive in stock) on the date of the annual meeting of stockholders for that year. The RSUs accrue dividend equivalent rights and vest on the earlier of (i) the one-year anniversary of the grant date and (ii) the following year’s annual meeting date, unless the director’s service terminates prior to such date in which case the RSUs vest pro rata on such date based on the number of days the director served as director during the director service year. Expense Reimbursement and Deferrals We also reimburse our directors for their travel expenses incurred in connection with their attendance at Board of Directors and committee meetings. Our independent directors are eligible to receive restricted common stock, options, and other stock-based awards under our equity incentive plan, although none are currently contemplated other than as described above as part of the annual director compensation program. Previously, we established a Stock Award Deferral Program, comprised of the Executive Officer Plan and the Director Plan, as described above under “Nonqualified Deferred Compensation.” Under this program, our directors could elect to defer payment of stock awards until termination of their directorship or an earlier specified date. Amounts deferred are tracked as DSUs, continue to receive dividend equivalents, and are paid in actual shares. The compensation committee felt that this program encourages directors’ long-term retention of stock awards earned under our director compensation program. On November 5, 2024, the compensation committee took action to suspend new deferral elections under the Director Plan. All deferrals previously made under the Director Plan will remain outstanding, and all deferrals pursuant to prior elections made by directors will be paid on the originally scheduled payment dates. 2024 Director Compensation The table below summarizes the compensation paid by us to our independent directors for the year ended December 31, 2024.
Pension Benefits
| Name | Fees Earned or Paid in Cash($) | Stock Awards ($)(2)(3) | Total($) | | Gerard Creagh(1) | $187,500 | $185,000 | $372,500 | | Brian P. Reilly | $160,000 | $130,000 | $290,000 | | Debra W. Still | $135,000 | $130,000 | $265,000 | | Kevin G. Chavers | $127,500 | $130,000 | $257,500 | | Sandra Bell(4) | $127,500 | $130,000 | $257,500 | | Susan Mills | $125,667 | $130,000 | $255,667 | | Cynthia B. Walsh | $9,166 | $65,000 | $74,167 |
Pension Benefits
| (1) In accordance with the design of the director compensation program described above, Gerard Creagh elected to receive common stock in lieu of 50% cash payments for Board of Director fees earned during the first half of 2024. |
Pension Benefits
| (2) Stock Awards includes an RSU Award on June 5, 2024, for the director service year ending on the date of the Annual Meeting. |
Pension Benefits
| (3) For amounts under the column “Stock Awards,” we disclose the grant date fair value for the RSU award measured in dollars based on the closing price of our common stock on the applicable grant date (or next preceding trading day if the grant date was not a trading day) but excluding the effect of potential forfeitures, calculated in accordance with FASB ASC Topic 718 – Compensation – Stock Compensation. |
Pension Benefits
| (4) Ms. Bell resigned from the Board effective April 9, 2025. |
Pension Benefits
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |