DEF 14A of Ellington Financial Inc., Apr 18, 2025

DEF 14A of Ellington Financial Inc.

Filed Apr 18, 2025 · FY20240001411342-25-000036

Open on EDGAR

  1. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS

  2. Identifying and Evaluating Nominees for Director

    Identifying and Evaluating Nominees for Director Our Board is pleased to present five nominees for election to the Board at our Annual Meeting, all of whom currently serve as directors on our Board and four of whom are considered independent in accordance with the requirements of the NYSE and our Corporate Governance Guidelines. Each director elected will serve until our next annual meeting of stockholders or until such time as his or her respective successor is elected and qualified. If any nominee is unable to stand for election for any reason, the persons appointed to vote your proxy may vote at our Annual Meeting for another candidate proposed by the Board, or the Board may choose to reduce the size of the Board. For additional information about how we identify and evaluate nominees for director, see "Corporate Governance—Information Regarding Our Board and Its Committees—Nominating and Corporate Governance Committee."

  3. Information Regarding the Nominees

    Information Regarding the Nominees To assist you in assessing our Board's nominees, we have set forth below biographical descriptions and certain other information with respect to each nominee for election as a director at the Annual Meeting, including the experience, qualifications, attributes or skills of each nominee that led us to conclude that such person should serve as a director. Our Board recommends a vote "FOR ALL" of the nominees listed below for election as directors (Proposal 1 on the proxy card).

  4. Information Regarding the Nominees

    | Name and Position With Our Company | Age | Background Summary | | Ronald I. Simon, Ph.D. Chairman of the Board | 86 | Dr. Simon is a private investor and financial consultant to businesses. Dr. Simon has served as a member of our Board since August 2007 and was appointed as Chairman of the Board and Chairman of the Audit Committee in January 2021. Dr. Simon has served as a member of the Board of Trustees and as the Chairman of the Nominating and Corporate Governance Committee of Ellington Credit Company (NYSE: EARN) ("EARN") since May 2013. From March 2003 through February 2006, when it was acquired by Wachovia Corp., Dr. Simon was a director of WFS Financial, Inc., a publicly traded financial services company specializing in automobile finance. From 1995 through 2002, Dr. Simon was a director of SoftNet Systems, Inc. ("SoftNet"), during 2001, he served as Acting Chairman, Chief Executive Officer, and Chief Financial Officer for SoftNet, Inc. From 2002 through August 2016 he was a director of its successor company, American Independence Corp. ("AIC"), a holding company engaged principally in the health insurance and reinsurance business. AIC was acquired by Independence Holdings Company ("IHC"), a holding company principally engaged in the disability, health insurance and pet insurance business, in August 2016, and he served as a director of IHC from August 2016 to February 2022, and as a member of the Audit Committee from November 2017 to February 2022. Dr. Simon earned a B.A. from Harvard University, an M.A. from Columbia University, and a Ph.D. from Columbia University Graduate School of Business. Our Board believes that Dr. Simon's expertise in finance and his extensive service in senior officer positions and directorships of public companies in a variety of industries give him the qualifications and skills to serve as a director of our Company. |

  5. Information Regarding the Nominees

    | Name and Position With Our Company | Age | Background Summary | | Laurence E. Penn Chief Executive Officer, President & Director | 63 | Mr. Penn has been our Chief Executive Officer and President and has served as a member of our Board of Directors since August 2007. Mr. Penn is also the Executive Vice President of our Manager and a Vice Chairman of EMG, where he helps oversee many functions of the firm. Mr. Penn also serves on EMG's Investment and Risk Management Committee. Mr. Penn also serves as Chief Executive Officer, President and a member of the Board of Trustees of EARN. Mr. Penn has also served as a Trustee of Ellington Income Opportunities Fund, a closed-end management investment company, since October 2018. In EMG's earlier years, Mr. Penn was the senior portfolio manager primarily responsible for investments in Agency RMBS. Prior to joining EMG in 1995 shortly after its inception, Mr. Penn was at Lehman Brothers, where he was a Managing Director and co-head of CMO origination and trading, and where he specialized in the trading of CMO derivatives. Prior to trading CMOs and CMO derivatives, Mr. Penn was in charge of Lehman Brothers' structured transaction modeling group from 1987 to 1990, where he was responsible for the structuring, modeling and computer system design for MBS and ABS, and where he was the co-creator (with Jonathan Amsterdam) of "BondTalk," the first high-level programming language specifically designed to model CMOs. Mr. Penn began his career at Lehman Brothers in 1984, after receiving a Master of Advanced Study in Mathematics from Cambridge University, where he studied as both a National Science Foundation Fellow and Winston Churchill Scholar. Mr. Penn graduated summa cum laude, Phi Beta Kappa with a B.A. in Mathematics from Harvard University in 1983. He was one of five winners nationwide in the 1980 Putnam collegiate mathematics problem solving competition, and represented the United States in the 21st International Mathematics Olympiad held in London, England. Our Board believes that Mr. Penn's operational experience as President and Chief Executive Officer of our Company, risk management and trading expertise and, in particular, his extensive experience in the mortgage securities business, give him the qualifications and skills to serve as a director of our Company. | | Edward Resendez Director | 68 | Mr. Resendez has served as a member of our Board since August 2007. Mr. Resendez served as President and Chief Operating Officer of NuBridge Commercial Lending LLC, or "NuBridge" from August 2020 through August 2023. NuBridge is a small-balance commercial mortgage origination, servicing, and finance company. From November 2013 through February 2018, Mr. Resendez served as Vice Chairman, President and Chief Operating Officer of Cherrywood Commercial Lending, LLC, or "Cherrywood." Cherrywood was a small-balance commercial mortgage origination, securitization, and finance company. Beginning from March 2018 until March 2020, Mr. Resendez served as President and Chief Operating Officer of Cherrywood Mortgage, LLC, the successor company to Cherrywood. From 2007 to September 2009, Mr. Resendez was Senior Vice President-Chief Lending Officer of Kinecta Federal Credit Union and President of Kinecta Alternative Financial Solutions, Inc. From 2002 to 2007, Mr. Resendez was Chief Executive Officer, Board Member and Co-Founder of ResMAE Financial Corporation and its wholly-owned subsidiary ResMAE Mortgage Corporation, or "ResMAE." From 1995 through 2000, Mr. Resendez was the President of Long Beach Mortgage Company. During that timeframe he was also appointed as President and a Management Member of the board of directors for both Long Beach Financial Corporation, when that company went public in 1997 (formerly NASDAQ symbol: LBFC), and its wholly-owned operating subsidiary, Long Beach Mortgage Company, a subprime mortgage company, or, collectively with Long Beach Financial Corporation, "Long Beach." Long Beach was an originator, purchaser, seller and servicer of subprime mortgages. From 1987 to 1995, Mr. Resendez held various management positions at Long Beach, including Executive Vice President—Loan Administration, First Vice President—Risk Management, Vice President—REO Loan Servicing, and Vice President—Retail Origination. Prior to joining Long Beach in 1987, Mr. Resendez held several managerial positions with Transamerica Financial Services from 1977 to 1987. Mr. Resendez earned a B.B.A. from Loyola Marymount University in Los Angeles in 1978, and is a licensed real estate broker in California. Our Board believes that Mr. Resendez's extensive operational experience in and knowledge of the mortgage lending business give him the qualifications and skills to serve as a director of our Company. |

  6. Information Regarding the Nominees

    | Name and Position With Our Company | Age | Background Summary | | Lisa Mumford Director | 61 | Ms. Mumford has served as a member of our Board since August 2018. She previously served as the Company's Chief Financial Officer ("CFO") and the CFO of our Manager, from October 2009 through her retirement in March 2018. Ms. Mumford also served as the CFO of EARN from April 2013 until her retirement in March 2018. As CFO of the Company and EARN, Ms. Mumford managed all aspects of the accounting, internal control, and financial reporting processes. Ms. Mumford has also served as a member of the Board of Directors of Radian Group Inc., a mortgage and real estate services business since February 2020, and as Chair of the Finance and Investment Committee since December 2021. From August 2008 to October 2009, Ms. Mumford was CFO of ACA Financial Guaranty Corporation, or "ACA FG," where she oversaw all aspects of the finance and accounting operations. From 2003 until August 2008, Ms. Mumford served as the Chief Accounting Officer of ACA Capital Holdings, Inc., or "ACA," of which ACA FG was an operating subsidiary. Prior to joining ACA, and beginning in 1988, Ms. Mumford was with ACE Guaranty Corp., where over her tenure she held the positions of Chief Financial Officer and Controller. She began her career as a staff accountant with Coopers & Lybrand in 1984, culminating in the role of Audit Supervisor at the time of her departure in 1988. Ms. Mumford is a Certified Public Accountant, licensed in the state of New York and holds a B.B.A. in Accounting from Hofstra University and an M.S. in Finance from Baruch College of the City University of New York. Our Board believes that Ms. Mumford's operational experience as the former CFO of our Company and, in particular, her extensive experience in preparing and reviewing financial statements for financial services companies, give her the qualifications and skills to serve as a director of our Company. | | Stephen J. Dannhauser Director | 74 | Mr. Dannhauser has served as a member of our Board and Chairman of our Nominating and Corporate Governance Committee since January 2021. Prior to joining the Board, Mr. Dannhauser worked at Weil, Gotshal & Manges LLP ("Weil") from 1975 until 2012. Mr. Dannhauser was named Weil’s executive partner in 1989 and served as its chairman from 2001 to 2012. Mr. Dannhauser continued to work at Weil in a consulting capacity through 2015. During his tenure at Weil, Mr. Dannhauser played a key role in crafting and executing business strategies that expanded Weil from its headquarters in New York to comprise 20 offices on three continents. During his tenure as chairman and executive partner, Mr. Dannhauser spent the bulk of his time overseeing the business operations of the firm, building its platform and expanding and deepening its client base. Mr. Dannhauser served as a director of Hydra Industries Acquisition Corp., a special purpose acquisition corporation, from October 2014 until December 2016. Mr. Dannhauser has served on a broad and diverse array of boards, committees and councils in the not-for-profit sector and continues to be actively involved in this arena. Mr. Dannhauser spends substantial time on various pro bono and philanthropic matters. Mr. Dannhauser graduated from the State University of New York at Stony Brook (B.A. with honors, 1972), and from Brooklyn Law School (J.D. with honors in 1975), where he was a member and decisions editor of the Brooklyn Law Review (1973-1975). Our Board believes that Mr. Dannhauser is qualified to serve as a director of our Company due to his numerous directorship roles, leadership experience, and business industry contacts. |

  7. Information Regarding Our Board and Its Committees

    Information Regarding Our Board and Its Committees Directors are expected to attend all of our regular and special meetings of the Board and all meetings of the committees on which they serve. In 2024, there were 13 meetings of the Board, and each of the current directors attended at least 75% of the meetings of both the Board and committees on which he or she served. We have a policy that directors attend our annual meetings of stockholders. Mr. Resendez, Dr. Simon, Ms. Mumford, Mr. Penn, and Mr. Dannhauser attended the 2024 Annual Meeting of Stockholders. Our Board of Directors has established three standing committees of the Board: Audit, Compensation, and Nominating and Corporate Governance. The charter for each committee, more fully describing the responsibilities of each committee, can be found on our website at www.ellingtonfinancial.com under the "Investors—Corporate Governance" section. Pursuant to their charters, each of these committees is comprised solely of independent directors. The table below indicates our current committee membership and the number of times each committee met in 2024.

  8. Information Regarding Our Board and Its Committees

    | Director Name | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | | Edward Resendez | Member | Chair | Member | | Stephen J. Dannhauser | Member | Member | Chair | | Lisa Mumford | Member | Member | Member | | Ronald I. Simon, Ph.D. | Chair | Member | Member | | Number of Meetings in 2024 | 10 | 9 | 5 |

  9. Information Regarding Our Board and Its Committees

    Our committees make recommendations to the Board as appropriate and regularly report on their activities to the entire Board. Audit Committee Pursuant to its charter, our Audit Committee assists the Board in overseeing (1) the integrity of our financial statements; (2) our compliance with legal and regulatory requirements; (3) the qualifications and independence of our independent auditors; and (4) the performance of our independent auditors and internal audit function. Each member of the Audit Committee meets the independence requirements of the NYSE and SEC rules and regulations, and each is financially literate. Our Board has determined that each of Dr. Simon, the chairman of our Audit Committee, and Lisa Mumford, is an "audit committee financial expert" as that term is defined by the SEC and that each satisfies the financial expertise requirements of the NYSE. Compensation Committee Pursuant to its charter, the Compensation Committee's principal functions are to assist the Board in discharging its responsibilities relating to (1) compensation of our directors and officers; (2) review, approval, and administration of compensation plans and programs and other benefit plans for our directors, officers, employees, and consultants and other third parties who perform services for us; and (3) compensation of our Manager. Our Board has determined that each member of the Compensation Committee meets the independence requirements of the NYSE that apply to compensation committee members. Compensation Committee Interlocks and Insider Participation The directors who served on the Compensation Committee in fiscal year 2024 included Stephen J. Dannhauser, Edward Resendez, Ronald I. Simon, Ph.D and Lisa Mumford. Other than Ms. Mumford (who previously served as Chief Financial Officer of the Company), none of the members of the Compensation Committee is, or has ever been, an officer or employee of the Company or any of its affiliates, and none of whom has any relationship requiring disclosure by the Company under Item 404 of Regulation S-K. None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who served as members of our board of directors or our compensation committee during the fiscal year ended December 31, 2024. Nominating and Corporate Governance Committee Pursuant to its charter, the Nominating and Corporate Governance Committee is responsible for identifying, recruiting, considering, and recommending to our Board qualified candidates for election as directors and recommending a slate of nominees for election as directors at our annual meetings of stockholders. It also reviews the background and qualifications of individuals being considered as director candidates pursuant to attributes and criteria established by the committee and the Board from time to time. It reviews and makes recommendations on matters involving general operation of our Board and our corporate governance, and annually recommends to our Board nominees for each committee of the Board. In addition, the committee annually facilitates the assessment of our Board's performance as a whole and of the individual directors and reports thereon to the Board. The committee is responsible for reviewing and approving in advance any related party transactions, other than related party transactions which have been pre-approved pursuant to pre-approval guidelines to address specific categories of transactions, which the committee reviews, evaluates and updates, as appropriate, from time to time. In selecting candidates to recommend to our Board as director nominees, the Nominating and Corporate Governance Committee looks at a number of attributes and criteria, including experience, skills, expertise, diversity of experience, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, conflicts of interest and such other relevant factors that the Nominating and Corporate Governance Committee considers appropriate in the context of the needs of the Board. In assessing the needs of the Board, the Nominating and Corporate Governance Committee and our Board review and consider from time to time the requisite skills and characteristics of individual directors as well as the composition of the Board as a whole. After completing its evaluation of individual director nominees and our Board as a whole, our Board concluded that the five nominees for director named in this Proxy Statement collectively have the experience, qualifications, attributes and skills to effectively oversee the management of our Company, including a high degree of personal and professional integrity, an ability to exercise sound business judgment on a broad range of issues, sufficient experience and background to have an appreciation of the issues facing our Company, a willingness to devote the necessary time to Board duties, a commitment to representing the best interests of the Company and its stockholders and a dedication to enhancing stockholder value. The Nominating and Corporate Governance Committee will consider candidates recommended by stockholders for service on our Board and such proposed nominees will be considered and evaluated under the same criteria as described above. Any recommendation submitted to the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include all information relating to such proposed nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election (even if an election contest is not involved), or is otherwise required, in each case pursuant to and in accordance with Regulation 14A, a written consent to being named in any proxy statement as a nominee at any meeting for the election of directors and to serving as a director if elected and must otherwise comply with the requirements under our bylaws for stockholders to propose nominees. Stockholders wishing to propose a candidate for consideration may do so by submitting the above information addressed to Attention: Secretary, Ellington Financial Inc., 53 Forest Avenue, Old Greenwich, Connecticut 06870. All recommendations for director nominations received by the Secretary that satisfy our bylaws requirements relating to such director nominations will be presented to the Nominating and Corporate Governance Committee for its consideration. Stockholders also must satisfy the notification, timeliness, consent, and information requirements set forth in our bylaws. For more information regarding these timing requirements, see "General Information—Stockholder Proposals."

  10. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION For the year ended December 31, 2024, our director compensation program consisted of an annual cash retainer of $105,000 for each of our independent directors. In addition, the Chairman of our Board and the Chairman of each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of our Board also received an additional annual cash retainer of $25,000, $20,000, $8,000 and $8,000, respectively, and members of our Board who serve on the board of directors of Longbridge also received an additional cash retainer of $20,000. Each of our independent directors is eligible to receive awards under our 2017 Equity Incentive Plan, or the "2017 Plan," and our director compensation program has historically included awards under the 2017 Plan of LTIP Units of Ellington Financial Operating Partnership LLC, our operating partnership subsidiary (the "Operating Partnership" and such LTIP Units, the "OP LTIP Units") that vest over a one-year period subject to the director’s continued service on the Board. In 2024, each independent director received an award of OP LTIP Units with a grant date value of approximately $110,000. Subject to certain forfeiture provisions, OP LTIP Units may be converted, at the election of the holder or at any time at our election, into common units ("OP Units") of the Operating Partnership on a one-for-one basis. Subject to certain conditions, the OP Units are redeemable by the holder for an equivalent number of Common Shares or for the cash value of such Common Shares, at the Company's election. We reimburse our directors for their travel expenses incurred in connection with their attendance at full Board and committee meetings as well as the Annual Meeting of Stockholders and certain director education events.

  11. Compensation of Our Directors in 2024

    Compensation of Our Directors in 2024 The table below describes the compensation earned by our directors during the fiscal year ended December 31, 2024. Any member of the Board who is also an employee of our Manager, EMG or their respective affiliates does not receive additional compensation for their service on the Board.

  12. Compensation of Our Directors in 2024

    | Name | Fees Earned or Paid in Cash | Equity Compensation Awards (1) | All Other Compensation(2) | Total Compensation | | Ronald I. Simon, Ph.D. | $170,000 | $110,003 | $12,133 | $292,136 | | Edward Resendez | 133,000 | 110,003 | 12,133 | 255,136 | | Lisa Mumford | 105,000 | 110,003 | 12,133 | 227,136 | | Stephen Dannhauser | 113,000 | 110,003 | 12,133 | 235,136 |

  13. Compensation of Our Directors in 2024

    (1)Represents the aggregate grant date fair value of 8,378 OP LTIP Units or restricted common shares ("Restricted Shares") granted to each independent in 2024 pursuant to the 2017 Plan. The aggregate grant date fair value was calculated in accordance with the Financial Accounting Standards Board's, or "FASB," Accounting Standards Codification, or "ASC," Topic 718 based on the closing sale price for our Common Shares on the NYSE on the date of grant and disregarding estimated forfeitures. See “Note 2—Significant Accounting Policies” of the notes to consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for additional information regarding the assumptions underlying such calculation. Each director was originally awarded 8,378 OP LTIP Units at a Board meeting held on September 11, 2024; however, the OP LTIP Units granted to Mr. Simon and Ms. Mumford were subsequently exchanged on a one-for-one basis for Restricted Shares on December 27, 2024 in accordance with the 2017 Plan. The OP LTIP Unit awards held by Mr. Resendez and Mr. Dannhauser will vest in full on September 10, 2025 and the Restricted Share awards held by Mr. Simon and Ms. Mumford will vest in full on December 26, 2025, with each subject to the independent directors’ continued service on the Board through such date. Other than such OP LTIP Units and Restricted Shares, none of our independent directors were granted any stock or option awards during the fiscal year ended December 31, 2024. (2)Amounts reported in this column reflect dividends paid on unvested OP LTIP Units held by our independent directors.

  14. Compensation of Directors

    Compensation of Directors Directors that also serve as EMG officers do not receive compensation for serving on our Board. For information regarding the compensation of our directors, see "Director Compensation" above.

  15. COMPENSATION DISCUSSION AND ANALYSIS

    COMPENSATION DISCUSSION AND ANALYSIS The following individuals were our named executive officers ("NEOs") for the year ended December 31, 2024: •Laurence E. Penn, our Chief Executive Officer and President; •Michael W. Vranos, our Co-Chief Investment Officer; •Mark Tecotzky, our Co-Chief Investment Officer; •JR Herlihy, our Chief Financial Officer; and •Christopher Smernoff, our Chief Accounting Officer. As an externally managed company, none of our NEOs are employees of the Company. In fact, other than Longbridge’s employees (of which there were over 400 as of December 31, 2024), who are solely focused on Longbridge’s operations, we do not have any employees, and we are managed by our Manager, pursuant to our management agreement. Our NEOs are employed by affiliates of our Manager, and our Manager provides them to us pursuant to our management agreement. Except as set forth below, because our management agreement provides that our Manager is responsible for managing our affairs, our executive officers do not receive cash compensation from us for serving as our executive officers, and we do not pay or provide benefits, nor do we reimburse the cost of any compensation or benefits paid by our Manager, EMG or their affiliates, to our executive officers. We do not currently have any agreements with any of our executive officers regarding their cash compensation and we do not intend to enter into any such agreement or pay any cash compensation directly to them. Additionally, our management agreement does not require that our NEOs devote a specific percentage of their time to our business. Notwithstanding the foregoing, we are required by our management agreement to reimburse our Manager for the costs of the wages, bonuses, salaries, and benefits incurred by our Manager or EMG with respect to our Chief Financial Officer and our Chief Accounting Officer (together, the "Compensated NEOs"), in each case, based on the estimated percentage of their time spent on our affairs and subject to the approval of the amount of such reimbursement by our Compensation Committee. In addition, we have the discretion to pay annual cash bonuses directly to our NEOs and make incentive equity awards to our NEOs in amounts that are subject to approval by our Compensation Committee. We did not in 2024 and have not historically provided annual cash bonuses directly to our NEOs. EMG’s compensation program for our Compensated NEOs is principally comprised of the following elements of compensation, which compensate the NEOs not only for their service to our business, but also to other interests of our Manager: (i) a base salary, (ii) an annual discretionary cash bonus award tied to the performance of the NEO and the applicable business functions for which the NEO is primarily responsible, and (iii) participation in various employee benefit plans and programs. We do not reimburse EMG for any of the compensation paid to our NEOs excluding our Compensated NEOs (the "Non-Reimbursed NEOs"), but rather EMG compensates the Non-Reimbursed NEOs out of its overall revenue stream, including the management fees that we pay to our Manager. Our management agreement does not require that any specified amount or percentage of the management fees that we pay to the Manager be allocated to our Non-Reimbursed NEOs. Based on discussions with our Manager and EMG, we estimate that the aggregate amount of our Non-Reimbursed NEO's total 2024 compensation that may reasonably be associated with the management fees that we paid to our Manager for 2024 was $6.4 million, representing approximately 27% of the $23.5 million in management fees, net of fee rebates, paid to our Manager. Of this $6.4 million, we estimate that approximately 3% represented fixed compensation (e.g., base salaries) and 97% represented variable compensation (e.g., discretionary bonuses, profit sharing and partnership distributions). Neither EMG nor we employ fixed performance metrics or contractual formulas in determining discretionary compensation, but instead take into account factors such as the officer's position, the officer's contribution to our company and/or to EMG's businesses, the performance of our company and/or EMG, market practices, reviews by the officer's superiors, compensation provided to similar employees of similarly situated companies, and, with respect to the Compensated NEOs (Mr. Herlihy and Mr. Smernoff) whose compensation is only partially reimbursed by us, the compensation they receive from other sources (such as, for Mr. Herlihy and Mr. Smernoff, from EARN for their services as Chief Operating Officer and Chief Financial Officer, respectively), and the estimated percentage of their time spent managing our affairs.

  16. Discretionary Cash Bonus and OP LTIP Unit Award

    Discretionary Cash Bonus and OP LTIP Unit Award In addition, our Compensation Committee approved on December 12, 2024, an incentive cash bonus to Mr. Herlihy of $590,000 to be paid by EMG and partially reimbursed by us and subject to deferral of approximately 27% of such cash bonus until December 31, 2025, and an award of 26,945 OP LTIP Units under our 2017 Plan. The deferred portion of Mr. Herlihy's cash bonus requires continued employment by EMG and is subject to forfeiture through December 31, 2025. Of the OP LTIP Units awarded to Mr. Herlihy in December 2024, 12,934 OP LTIP Units are subject to forfeiture restrictions that will lapse on December 12, 2025 and the remaining 14,011 OP LTIP Units are subject to forfeiture restrictions that will lapse on December 12, 2026. The Compensation Committee also approved on December 12, 2024, an incentive cash bonus to Mr. Smernoff of $280,000 to be paid by EMG and partially reimbursed by us and subject to deferral of approximately 14% of such cash bonus until December 31, 2025, and an award of 14,992 OP LTIP Units under our 2017 Plan. The deferred portion of Mr. Smernoff's cash bonus requires continued employment by EMG and is subject to forfeiture through December 31, 2025. Of the OP LTIP Units awarded to Mr. Smernoff in December 2024, 10,620 OP LTIP Units are subject to forfeiture restrictions that will lapse on December 12, 2025 and the remaining 4,372 OP LTIP Units are subject to forfeiture restrictions that will lapse on December 12, 2026. In determining whether the amount of each Compensated NEO's bonus for 2024, for which we are responsible for our allocable portion, was reasonable and appropriate for reimbursement by our Company and whether to approve their OP LTIP Unit award, our Compensation Committee considered primarily each Compensated NEO's performance, based both on their own observations as members of our Audit Committee and Board and on the assessments and recommendations of our Chief Executive Officer/President and our Co-Chief Investment Officer (which take into account such officers' review of information relating to the compensation provided to similar employees of similarly situated companies), the performance of our Company, the compensation that each of the Compensated NEOs receives for service as an executive officer of EARN, and the estimated percentage of their time and efforts managing our affairs. Our Compensation Committee also considered the total compensation that each Compensated NEO would earn for 2024 (including compensation received for service as an executive officer of EARN) and whether the amount seemed reasonable and appropriate based on their personal experience and knowledge regarding executive compensation. Taking all of these factors into account, our Compensation Committee determined that a $392,350 cash bonus and an award of 26,945 OP LTIP Units was reasonable and appropriate for Mr. Herlihy and that a $215,833 cash bonus and an award of 14,992 OP LTIP Units was reasonable and appropriate for Mr. Smernoff. Mr. Herlihy and Mr. Smernoff are entitled to receive dividends and distributions that become payable on all of their OP LTIP Units, whether they are vested or not. Cash dividends are paid on the OP LTIP Units at the same rate as is paid to all common stockholders. In 2024, dividends paid with respect to the Compensated NEOs' LTIP Units, were $1.56 per OP LTIP Unit. For 2025, we expect that our Compensation Committee will take into account substantially similar criteria in determining whether the amount of each Compensated NEO's bonuses, for which we will be responsible for our allocable portion, is reasonable and appropriate for reimbursement by our Company and whether to approve an OP LTIP Unit award for them.

  17. Summary Compensation Table

    Summary Compensation Table The following table sets forth the compensation paid to the Compensated NEOs for services they rendered to us during the fiscal years presented. NEOs who did not receive any compensation for their services rendered to us in the fiscal years presented have been omitted from the table.

  18. Summary Compensation Table

    | Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock Awards(3) | All Other Compensation(4) | Total | | JR Herlihy Chief Financial Officer | 2024 | $206,150 | $473,530 | $332,501 | $52,708 | $1,064,889 | | | 2023 | 249,000 | 434,595 | 311,259 | 57,666 | 1,052,520 | | | 2022 | 225,729 | 294,650 | 266,781 | 57,231 | 844,391 | | Christopher Smernoff Chief Accounting Officer | 2024 | 215,833 | 257,168 | 185,001 | 24,958 | 682,960 | | | 2023 | 226,575 | 224,019 | 146,860 | 26,418 | 623,872 | | | 2022 | 204,167 | 187,571 | 127,407 | 25,889 | 545,034 |

  19. Summary Compensation Table

    (1)Reflects the portion of the executive officer's salary that we were required to reimburse to the Manager. (2)Reflects the portion of the executive officer's bonuses that were earned in the relevant year and that we are required to reimburse to the Manager. For example, Messrs. Herlihy and Smernoff earned the remainder of their deferred 2023 cash bonuses ($187,580 for Mr. Herlihy and $72,168 for Mr. Smernoff) on December 31, 2024. Approximately 27% of Mr. Herlihy's and approximately 14% of Mr. Smernoff's 2024 cash bonus ($106,400 for Mr. Herlihy and $30,833 for Mr. Smernoff) will not be earned until December 31, 2025 and in accordance with SEC rules has not been included in this table. (3)Represents the aggregate grant date fair value of OP LTIP Units granted to our NEOs pursuant to the 2017 Plan. The aggregate grant date fair value was calculated in accordance with FASB ASC Topic 718 based on the closing sale price for our Common Shares on the NYSE on the date of grant and disregarding estimated forfeitures. See "Note 2—Significant Accounting Policies" to the notes to consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for additional information regarding the assumptions underlying such calculation. (4)Amounts reflect dividends paid to the executive officers in respect of their unvested OP LTIP Units in each respective year.

  20. Grants of Plan-Based Awards for Fiscal 2024

    Grants of Plan-Based Awards for Fiscal 2024 The following table presents information regarding plan-based awards to our NEOs during the fiscal year ended December 31, 2024. NEOs who did not receive any plan-based awards during the fiscal year ended December 31, 2024 have been omitted from the table.

  21. Grants of Plan-Based Awards for Fiscal 2024

    | Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards (1) ($) | | JR Herlihy | December 12, 2024 | 26,945(2) | 332,501 | | Christopher Smernoff | December 12, 2024 | 14,992(3) | 185,001 |

  22. Grants of Plan-Based Awards for Fiscal 2024

    (1)The aggregate grant date fair value is determined using the closing price for our Common Shares on the NYSE of $12.34 on December 12, 2024, the date of grant, in accordance with FASB ASC Topic 718. (2)Represents OP LTIP Unit awards issued under the 2017 Plan, which are subject to forfeiture restrictions that lapse on December 12, 2025 with respect to 12,934 of the OP LTIP Units and on December 12, 2026 with respect to the remaining 14,011 OP LTIP Units. Subject to certain forfeiture provisions, the OP LTIP Units may be converted, at the election of the holder or at any time at our election, into OP Units on a one-for-one basis. Subject to certain conditions, the OP Units are redeemable by the holder for an equivalent number of Common Shares or for the cash value of such Common Shares, at our election. (3)Represents OP LTIP Unit awards issued under the 2017 Plan, which are subject to forfeiture restrictions that lapse on December 12, 2025 with respect to 10,620 of the OP LTIP Units and on December 12, 2026 with respect to the remaining 4,372 OP LTIP Units. Subject to certain forfeiture provisions, the OP LTIP Units may be converted, at the election of the holder or at any time at our election, into OP Units on a one-for-one basis. Subject to certain conditions, the OP Units are redeemable by the holder for an equivalent number of Common Shares or for the cash value of such Common Shares, at our election.

  23. Outstanding Equity Awards at Fiscal Year End

    Outstanding Equity Awards at Fiscal Year End The following table lists the OP LTIP Units awarded to our NEOs that where unvested and outstanding as of December 31, 2024. NEOs who did not have any unvested OP LTIP Units as of December 31, 2024 have been omitted from the table. No discount has been taken to reflect risk of forfeiture or restrictions on transferability or conversion of OP LTIP Units.

  24. Outstanding Equity Awards at Fiscal Year End

    | | Stock Awards | | | Name | Number of OP LTIP Units That Have Not Vested | Market Value of OP LTIP Units That Have Not Vested (1) ($) | | JR Herlihy(2) | 38,861 | 470,995 | | Christopher Smernoff(3) | 20,614 | 249,842 |

  25. Outstanding Equity Awards at Fiscal Year End

    (1)Value is determined by multiplying the number of unvested OP LTIP Units by $12.12, the closing price for our Common Shares on the NYSE on December 31, 2024, the last trading day of the year. (2)OP LTIP Units are subject to forfeiture prior to December 12, 2025 in the case of 12,934 OP LTIP Units, December 14, 2025 in the case of 11,916 OP LTIP Units, and December 12, 2026 in the case of 14,011 OP LTIP Units. Subject to the forfeiture provisions, OP LTIP Units, may be converted, at the election of the holder or at any time at our election, into OP Units on a one-for-one basis. Subject to certain conditions, the OP Units are redeemable by the holder for an equivalent number of Common Shares or for the cash value of such Common Shares, at our election. (3)OP LTIP Units are subject to forfeiture prior to December 12, 2025 in the case of 10,620 OP LTIP Units, December 14, 2025 in the case of 5,622 OP LTIP Units, and December 12, 2026 in the case of 4,372 OP LTIP Units. Subject to the forfeiture provisions, OP LTIP Units, may be converted, at the election of the holder or at any time at our election, into OP Units on a one-for-one basis. Subject to certain conditions, the OP Units are redeemable by the holder for an equivalent number of Common Shares or for the cash value of such Common Shares, at our election.

  26. Option Exercises and Equity Vested

    Option Exercises and Equity Vested The following table lists the LTIP Units previously awarded to our NEOs that vested during the year ended December 31, 2024. NEOs who did not have any OP LTIP Units that vested during the year ended December 31, 2024 have been omitted from the table.

  27. Option Exercises and Equity Vested

    | Name | Vesting Date | Number of OP LTIP Units Vested(1) | Value Realized on Vesting (2) ($) | | JR Herlihy | December 14, 2024 | 11,917 | 147,175 | | | December 15, 2024 | 9,954 | 122,932 | | Christopher Smernoff | December 14, 2024 | 5,623 | 69,444 | | | December 15, 2024 | 4,754 | 58,712 |

  28. Option Exercises and Equity Vested

    (1)The equity awards that vested during the 2024 fiscal year consisted of OP LTIP Units previously granted by us pursuant to our 2017 Plan and outstanding on January 1, 2024. (2)The amounts reflected in this column represent the aggregate market value realized by each NEO upon vesting of the OP LTIP Units granted by us pursuant to our 2017 Plan and held by such NEO, computed based on the closing price for our Common Shares on the applicable vesting date (or if the applicable vesting date was not a trading date, on the immediately preceding trading date).

  29. Pension Benefits

    Pension Benefits Our Compensated NEOs received no benefits in the 2024 fiscal year from us under any defined benefit or defined contribution plans.

  30. Non-Qualified Deferred Compensation

    Non-Qualified Deferred Compensation We do not have a non-qualified deferred compensation plan that provides for deferral of compensation on a basis that is not tax-qualified for our Compensated NEOs.

  31. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control Since our NEOs are employees of EMG, we generally do not have any obligation to make any payments to any of our NEOs upon a termination of employment or upon a change in control. Messrs. Herlihy and Smernoff are subject to standard employment contracts for the benefit of EMG. If either Messrs. Herlihy or Smernoff is terminated by EMG other than for “cause” or his voluntary resignation, the deferred portion of such executive officer's 2024 cash bonus ($106,400 for Mr. Herlihy and $30,833 for Mr. Smernoff) would continue to vest under the terms of their employment contract. For purposes of each such NEO’s employment contract with EMG, “cause” generally means the (i) material dishonesty, theft, or fraud connected with his/her employment, (ii) violence (or serious threat of violence) in the workplace, (iii) violation of law, rule, or regulation applicable to the business, (iv) conviction or a pleading of nolo contendere for a felony of any kind or for a misdemeanor involving dishonesty, fraud, or theft, (v) a violation of or deviation from any of the employer's rules and policies that could potentially expose the employer to substantial damages, (vi) refusal to carry out any duties reasonably assigned to them, (vii) the breach or failure to comply with any term, condition or provision of this their employment agreement or trade secret agreement, or (viii) any gross negligence, willful misconduct, gross misconduct, or gross malfeasance in the performance of his/her duties. In addition, if Mr. Herlihy or Mr. Smernoff is terminated by EMG other than for "cause" or his voluntary resignation, or in the event of a “change in control,” the outstanding and unvested OP LTIP Units held by such executive officer would remain outstanding and continue to vest under the terms of their OP LTIP Unit award agreements. As of December 31, 2024, the number of OP LTIP Units granted by us pursuant to our 2017 Plan that are subject to these provisions are as follows: Mr. Herlihy (38,861) and Mr. Smernoff (20,614). For purposes of the OP LTIP Units, "cause" generally has the meaning set forth above for the employment contracts and “change in control” generally means the (i) acquisition of more than 50% of the Company’s Common Shares (subject to certain exceptions), (ii) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction that requires the approval of the Company’s stockholders, unless following such transaction, the individuals who prior to such transaction owned at least 50% of the Common Shares continue to own at least 50% of the combined voting power of the resulting entity, no person owns more than 50% of the then outstanding voting securities, and at least a majority of the members of the Board prior to the transaction remain members of the Board following the transaction, or (iii) the complete liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets.

  32. Pay Ratio Disclosure

    Pay Ratio Disclosure Pay Ratio Disclosure Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K require disclosures pertaining to the relationship of annual total compensation of employees of the registrant and its principal executive officer. We do not pay or provide benefits nor do we reimburse the cost of any compensation or benefits paid by our Manager, EMG or their affiliates to our principal executive officer. Therefore we are unable to provide an estimate of the relationship of the median of the annual total compensation of our employees and the annual total compensation of our principal executive officer. Accordingly, the pay ratio disclosures are not applicable to us.

  33. Pay Versus Performance Table

    Pay Versus Performance Table As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation and the Company’s financial performance for each of 2024, 2023, 2022, 2021, and 2020. The table below summarizes the (i) compensation values reported in the Summary Compensation Table for our principal executive officer ("PEO") and average for our other non-PEO NEOs as compared to the "Compensation Actually Paid," calculated pursuant to the applicable rules and (ii) Company’s financial performance for the years ended December 31, 2024, 2023, 2022, 2021, and 2020. The below table does not include a "Company-Selected Measure" because the Compensation Actually Paid to our NEOs is not determined by reference to any specific financial metric.

  34. Pay Versus Performance Table

    | | | | Average Summary Compensation Table Total for Non-PEO NEOs(1) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2) | Value of Initial Fixed $100 Investment Based On: | | | | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(1) | | | Total Stockholder Return(3) | Peer Group Total Stockholder Return(3)(4) | Net Income (Loss)(5) | | | | | | | | | (In thousands) | | 2024 | $— | $— | $436,962 | $429,166 | $119.53 | $79.96 | $148,104 | | 2023 | — | — | 419,098 | 421,776 | 109.94 | 79.79 | 87,898 | | 2022 | — | — | 347,356 | 288,634 | 93.05 | 69.27 | (70,869) | | 2021 | — | — | 360,325 | 383,819 | 113.92 | 94.05 | 140,556 | | 2020 | — | — | 311,499 | 284,367 | 90.17 | 81.38 | 28,377 |

  35. Pay Versus Performance Table

    (1)For each of the years included above, the PEO was Laurence E. Penn and the non-PEO NEOs were JR Herlihy, Christopher Smernoff, Michael W. Vranos, and Mark Tecotzky. As reflected in the Summary Compensation Table and noted elsewhere in this proxy statement, because our management agreement provides that our Manager is responsible for managing our affairs, our NEOs do not receive any cash compensation from us or any of our subsidiaries for serving as our executive officers. However, we are required by our management agreement to reimburse our Manager or EMG for the allocable share of the salary and other compensation paid by our Manager or EMG to certain of our executive officers who dedicated all or a portion of such officer’s time to us, based on the estimated percentage of such officer's time spent on our affairs. For the years presented above, Mr. Herlihy, our Chief Financial Officer, and Mr. Smernoff, our Chief Accounting Officer, were the only NEOs for which we paid or reimbursed any portion of the compensation paid by our Manager or EMG. (2)For details regarding how the amounts in this column are calculated, refer to the "Adjustments to Summary Compensation Tables to Determine Compensation Actually Paid" tables immediately below. (3)Total Stockholder Return and Peer Group Total Stockholder Return assumes $100 invested at December 31, 2019 in common stock of the Company and the peer group, respectively, and the reinvestment of dividends. (4)The peer group is the FTSE National Association of Real Estate Investment Trusts Mortgage REIT Index. (5)Reflects the Company's net income (loss) prepared in accordance with GAAP for each of the years shown. Compensation Actually Paid represents totals from the Summary Compensation Table above, adjusted for certain items as detailed in the following table for the years ended December 31, 2020, 2021, 2022, 2023, and 2024:

  36. Pay Versus Performance Table

    | Adjustments to Summary Compensation Tables to Determine Compensation Actually Paid | 2020 | 2021 | 2022 | 2023 | 2024 | | Average for Non-PEO NEOs Summary Compensation Table—Total | $311,499 | $360,325 | $347,356 | $419,098 | $436,962 | | Deduction of Average Amounts Reported under the "Stock Awards" column in the Summary Compensation Table | (111,244) | (131,294) | (98,547) | (114,530) | (129,376) | | Add (Subtract): | | | | | | | Average of the year-end fair value of any equity awards granted in the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | 108,325 | 134,926 | 90,972 | 111,460 | 127,069 | | Average amount of change as of the end of the covered fiscal 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 covered fiscal year | (8,783) | 8,211 | (18,631) | 1,250 | (2,587) | | For awards granted in prior years that vest in the covered fiscal year, the amount equal to the average change as of the vesting date (from the end of the prior fiscal year) in fair value | (15,430) | 11,651 | (32,516) | 4,498 | (2,902) | | Total Equity Award Related Adjustments | (27,132) | 23,494 | (58,722) | 2,678 | (7,796) | | Average Compensation Actually Paid—Total | $284,367 | $383,819 | $288,634 | $421,776 | $429,166 |

  37. Pay Versus Performance Table

    The following graph illustrates the relationship between average Compensation Actually Paid to our non-PEO NEOs and the Company's cumulative total return on our Common Shares. The graph also provides a comparison of the Company's cumulative total stockholder return to the cumulative total stockholder return of the FTSE National Association of Real Estate Investment Trusts Mortgage REIT Index (the “Peer Group”). Cumulative total returns presented below assume a $100 investment on December 31, 2019 and the reinvestment of dividends for each year presented below. We did not include a graph illustrating the relationship between Compensation Actually Paid to our PEO and the Company's cumulative total return on our Common Shares because, as discussed elsewhere in this proxy statement, we have not compensated our PEO. The following graph illustrates the relationship between average Compensation Actually Paid to our non-PEO NEOs and the Company's net income (loss) for each year presented below. We did not include a graph illustrating the relationship between Compensation Actually Paid to our PEO and the Company's net income (loss) because, as discussed elsewhere in this proxy statement, we have not compensated our PEO. Please see the "Compensation Discussion and Analysis" above for more information on how the Compensation Actually Paid to our Compensated NEOs is determined. Because the Compensation Actually Paid to our NEOs is not linked to any specific financial performance measures, we do not have a "Company-Selected Measure" and we do not have a tabular list of the most important financial metrics to disclose.