UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
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o Preliminary Proxy Statemento Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))x Definitive Proxy Statemento Definitive Additional Materialso Soliciting Material Pursuant to §240.14a-12
| o | Preliminary Proxy Statement |
| o | Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| o | Definitive Additional Materials |
| o | Soliciting Material Pursuant to §240.14a-12 |
REDWOOD TRUST, INC.
(Name of Registrant as Specified Inin Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
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REDWOOD TRUST, INC.
One Belvedere Place, Suite 300
Mill Valley, California 94941
(415) 389-7373
NOTICE OF 20092010 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Redwood Trust, Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders of Redwood Trust, Inc., a Maryland corporation, to be held on May 19, 200918, 2010 at 10:30 a.m., local time, at the Acqua Hotel, 555 Redwood Highway, Mill Valley, California 94941, for the following purposes:
| 1. | To elect |
| 2. | To ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for |
| 3. | To consider and vote upon an amendment to our 2002 |
| 4. |
| To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting. |
A Proxy Statement describing the matters to be considered at the Annual Meeting is attached to this notice. Our Board of Directors has fixed the close of business on March 31, 20092010 as the record date for determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement of the Annual Meeting.
Your proxy to vote your shares at the Annual Meeting is solicited by our Board of Directors, which recommends that your votes be cast “FOR” the specified nominees for election as directors, “FOR” ratification of the appointment of our independent registered public accounting firm for 2009,2010, and “FOR” approval of the amendment to the 2002 Employee Stock Purchase Plan, and “FOR” approval of the amendment to our Charter.Incentive Plan.
We would like your shares to be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we respectfully request that you date, execute,sign, and promptly mail the enclosed proxy card in the accompanying postage-paid envelope or authorize a proxy to vote your shares by telephone or viathrough the Internet as instructed on the proxy card.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 19, 2009:18, 2010:
| • | our Proxy Statement can be directly accessed through our website at: http://www.redwoodtrust.com/ |
| • | our Annual Report on Form 10-K for the year ended December 31, |
By Order of the Board of Directors,
/s/ Andrew P. StoneSecretary
 | | |
| By Order of the Board of Directors, /s/ Andrew P. Stone Secretary |
April 2, 20092010
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY MARK, DATE, SIGN, AND RETURN YOUR PROXY CARD
IN THE ENCLOSED ENVELOPE
OR AUTHORIZE A PROXY TO VOTE YOUR SHARES BY TELEPHONE
OR THROUGH THE INTERNET AS INSTRUCTED ON THE PROXY CARD.
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REDWOOD TRUST, INC.
One Belvedere Place, Suite 300
Mill Valley, California 94941
(415) 389-7373
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 200918, 2010
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of Redwood Trust, Inc., a Maryland corporation (the Company, Redwood,(Redwood, we, or us), for exercise at the Annual Meeting of Stockholders (the Annual Meeting) to be held on Tuesday, May 19, 200918, 2010 at 10:30 a.m., local time, at the Acqua Hotel, 555 Redwood Highway, Mill Valley, California 94941, and at any adjournment or postponement thereof. This Proxy Statement, the accompanying proxy card, and the Notice of Annual Meeting are being sentmailed to stockholders beginning on or about April 10, 2009.12, 2010.
Redwood, Trust, Inc., together with its subsidiaries, is a financial institution focused on investingthat seeks to invest in financing, and managing residential and commercial real estate loans and securities. We seek to invest inrelated assets that have the potential to provide attractive cash flow returnsflows over a long period of time and support our goal of distributing attractive levels of dividends to our stockholders. For tax purposes, we are structured as a real estate investment trust, or REIT. We are able to pass through substantially all of our earnings generated at our REIT to our stockholders without paying income tax at the corporate level. We pay income tax on the REIT taxable income we retain and on the income we earn at our taxable subsidiaries.
Our primary real estate investments include investments in real estate loans and securities, investments Redwood was incorporated in the securitization entities that we sponsor,State of Maryland on April 11, 1994, and investments in a private fund that we sponsor.commenced operations on August 19, 1994. Our executive offices are located at One Belvedere Place, Suite 300, Mill Valley, California 94941.
The address and telephone number of our principal executive office are as set forth above and our website is www.redwoodtrust.com.www.redwoodtrust.com.
INFORMATION ABOUT THE ANNUAL MEETING
Who May Attend the Annual Meeting
Only stockholders who own our common stock as of the close of business on March 31, 2009,2010, the record date for the Annual Meeting, will be entitled to attend the Annual Meeting. In the discretion of management, we may permit certain other individuals to attend the Annual Meeting, including members of the media and our employees.
Who May Vote
Each share of our common stock outstanding on the record date for the Annual Meeting is entitled to one vote. The record date for determining stockholders entitled to notice of, and to vote at, the Annual Meeting is the close of business on March 31, 2009.2010. As of the record date, there were 60,228,05877,750,697 shares of common stock issued and outstanding. You can vote in person at the Annual Meeting or by proxy. To vote by proxy, please mark, date, execute,sign, and mail the enclosed proxy card, or authorize a proxy to vote your shares by telephone or through the Internet as instructed on the proxy card.
If your shares are held in the name of a bank, broker, or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted. If your shares are not registered in your own name and you plan to vote your shares in person at the Annual Meeting, you should contact your broker or agent to obtain a broker’s proxy card and bring it to the Annual Meeting in order to vote.
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Voting by Proxy
If you vote by proxy, the individuals named on the proxy, or their substitutes, will vote your shares in the manner you indicate. If you date, sign, and return the proxy card without indicatingmarking your voting instructions, your shares will be voted as follows:
You may revoke or change your proxy at any time before it is exercised by delivering to us a signed proxy with a date later than your previously delivered proxy, by submitting a new proxy by telephone or through the Internet, by voting in person at the Annual Meeting, or by sending a written revocation of your proxy addressed to Redwood’s Secretary at our principal executive office.
Quorum Requirement
The presence, in person or by proxy, of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting constitutes a quorum for the transaction of business. Abstentions and broker non-votes are counted as present for purposes of establishing a quorum. A broker non-vote occurs when a nominee holding shares for a beneficial owner returns a proxy card but does not vote on a matter because the nominee holder has not received instructions from the beneficial owner and does not have or chooses not to exercise discretionary authority to vote the shares.
Other Matters
Our Board of Directors knows of no other matters that may be presented for stockholder action at the Annual Meeting. If other matters do properly come before the meeting, however, it is intended that the persons named in the proxies will vote upon themon those matters in their discretion.
Information About the Proxy Statement and the Solicitation of Proxies
The enclosed proxy is solicited by our Board of Directors and we will bear the costs of this solicitation. Proxy solicitations will be made by mail, and also may be made by our directors, officers, and employees in person or by telephone, facsimile transmission, e-mail, or other means of communication on our behalf by our directors and officers. Banks, brokerage houses, nominees, and other fiduciaries will be requested to forward the proxy soliciting material to the beneficial owners of shares of our common stock entitled to be voted at the Annual Meeting and to obtain authorization for the execution of proxies. We will, upon request, reimburse those parties for their reasonable expenses in forwarding proxy materials to their beneficial owners.
Annual Report
Our 20082009 Annual Report, consisting of our Annual Report on Form 10-K for the year ended December 31, 2008,2009, as amended, is being mailed to stockholders together with this Proxy Statement and contains financial and other information about Redwood, including audited financial statements for our fiscal year ended December 31, 2008.2009. Certain sections of our 20082009 Annual Report are incorporated into this Proxy Statement by reference, as described in more detail under “Information Incorporated by Reference” below. A copy of our 2008Our 2009 Annual Report is also available on our website.
Householding
We have adopted a procedure approved by the Securities and Exchange Commission (SEC) called “householding.” Under this procedure, stockholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of our Notice of Annual Meeting, Proxy Statement, and Annual Report, unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. This procedure reduces our printing costs and postage fees.
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Stockholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings.
If you are eligible for householding, but you and other stockholders of record with whom you share an address currently receive multiple copies of the Notice of Annual Meeting, Proxy Statement, and Annual Report, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of each of these documents for your household, please contact our transfer agent, Computershare Trust Company, N.A. (in writing at: Computershare Investor Services, 250 Royall Street, Canton, MA 02021; or by telephone at: (888) 472-1955).
If you participate in householding and wish to receive a separate copy of this Notice of Annual Meeting, Proxy Statement, and 20082009 Annual Report, or if you do not wish to participate in householding and prefer to receive separate copies of these documents in the future, please contact Computershare as indicated above.
Beneficial owners can request information about householding from their banks, brokers, or other holders of record.
CORPORATE GOVERNANCE
Corporate Governance Standards
Our Board of Directors has adopted Corporate Governance Standards (Governance Standards). Our Governance Standards are available on our website as well as in print at the written request of any stockholder addressed to Redwood’s Secretary at our principal executive office. The Governance Standards contain general principles regarding the composition and functions of our Board of Directors and its committees.
Director Independence
As required under Section 303A of the New York Stock Exchange (NYSE) Listed Company Manual and our Governance Standards, our Board of Directors has affirmatively determined that none of the following directors has a material relationship (either directly or as a partner, shareholder, or officer of an organization that has a relationship) with us and that each of them qualifies as “independent” under Section 303A: Richard D. Baum, Thomas C. Brown, Mariann Byerwalter, Greg H. Kubicek, Diane L. Merdian, Georganne C. Proctor, Charles J. Toeniskoetter, and David L. Tyler.
Process for Nominating Potential Director Candidates
Director Qualifications. Our Governance Standards contain Board membership criteria that apply to nominees for our Board of Directors. The Governance Standards require that each member of our Board of Directors must exhibit high standards of integrity, commitment, and independence of thought and judgment, and must be committed to promoting the best interests of Redwood. In addition, each director must devote the time and effort necessary to be a responsible and productive member of our Board of Directors. This includes developing knowledge about Redwood’s business operations and doing the work necessary to participate actively and effectively in Board and committee meetings. The members of our Board of Directors should collectively possess a broad range of talent, skill, expertise, and experience useful to effective oversight of our business and affairs and sufficient to provide sound and prudent guidance with respect to our operations and interests.
Identifying and Evaluating Nominees for Directors.Directors. Our Board of Directors nominates director candidates for election by stockholders at each annual meeting and elects new directors to fill vacancies on our Board of Directors between annual meetings of the stockholders. Our Board of Directors has delegated the selection and initial evaluation of potential director nominees to the Governance and Nominating Committee with input from the Chief Executive Officer and the President. The Governance and Nominating Committee makes the final recommendation of candidates to our Board of Directors for nomination. Our Board of Directors, taking into consideration the assessment of the Governance and Nominating Committee, also determines whether a nominee would be an independent director.
Stockholders’ Nominees.Nominees. Our Bylaws permit stockholders to nominate a candidate for election as a director at an annual meeting of the stockholders subject to compliance with certain notice and informational
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requirements, as more fully described below in this Proxy Statement under “Stockholder Proposals for the 20102011 Annual Meeting.” A copy of the full text of our Bylaws may be obtained by any stockholder upon written request addressed to Redwood’s Secretary at our principal executive office. Among other matters required under our Bylaws, any stockholder nominations should include the nominee’s name and qualifications for Board membership and should be addressed to Redwood’s Secretary at our principal executive office.
The policy of the Governance and Nominating Committee is to consider properly submitted stockholder nominations for candidates for election to our Board of Directors. The Governance and Nominating Committee evaluates stockholder nominations in connection with its responsibilities set forth in its written charter and applies the qualification and diversity criteria set forth in the Governance Standards.
Director Qualifications. Our Governance Standards contain Board membership criteria that apply to nominees for our Board of Directors. Each member of our Board of Directors must exhibit high standards of integrity, commitment, and independence of thought and judgment, and must be committed to promoting the best interests of Redwood. In addition, each director must devote the time and effort necessary to be a responsible and productive member of our Board of Directors. This includes developing knowledge about Redwood’s business operations and doing the work necessary to participate actively and effectively in Board and committee meetings.
Our Governance Standards also contain criteria that are intended to guide our Governance and Nominating Committee’s considerations of diversity in identifying nominees for our Board of Directors. In particular, our Governance Standards provide that the members of our Board of Directors should collectively possess a broad range of talent, skill, expertise, and experience useful to effective oversight of our business and affairs and sufficient to provide sound and prudent guidance with respect to our operations and interests. The self-assessments that are conducted each year by our Board of Directors and our Governance and Nominating Committee include an assessment of whether the Board’s then current composition represents the broad range of talent, skill, expertise, and experience that is called for by our Governance Standards.
Director Independence
As required under “Director Qualifications.Section 303A of the New York Stock Exchange (NYSE) Listed Company Manual and our Governance Standards, our Board of Directors has affirmatively determined that none of the following directors has a material relationship (either directly or as a partner, shareholder, or officer of an organization that has a relationship) with us and that each of them qualifies as “independent” under Section 303A: Richard D. Baum, Thomas C. Brown, Mariann Byerwalter, Greg H. Kubicek, Jeffrey T. Pero, Georganne C. Proctor, Charles J. Toeniskoetter, and David L. Tyler. The Board of Directors’ determination was made with respect to Mr. Pero after consideration of the following: Mr. Pero is a retired partner of Latham & Watkins LLP and has been a director of Redwood since November 2009; Latham & Watkins LLP provides legal services to Redwood; and Mr. Pero’s retirement payments from Latham & Watkins LLP are adjusted to exclude any proportionate benefit received from the fees paid by Redwood to Latham & Watkins LLP.
Board Leadership Structure
Current Board Leadership Structure. Our Board of Directors has adopted a leadership structure that it believes is appropriate for Redwood. In particular, the Chairman of the Board of Directors, who was one of the founders of Redwood in 1994 and who has continuously served as our Chief Executive Officer since the inception of Redwood, presides over meetings of the Board of Directors and serves as the primary liaison between the Board of Directors and management of Redwood.
Under our Corporate Governance Standards, the Board of Directors has also designated a Presiding Director, who acts as a lead independent director and carries out certain other responsibilities, as described below. In addition, each of the Audit Committee, Compensation Committee, and Governance and Nominating Committee is chaired by an independent director.
Presiding Director. Our Corporate Governance Standards provide that the Board shall elect one of our independent directors to serve as the Presiding Director. Richard D. Baum currently serves as the Presiding Director. The Presiding Director is responsible for chairing executive sessions of our independent directors, as well as providing input regarding Board agendas, materials, and areas of focus, serving as one of the liaisons between management and the Board, working with the chair of each of the Board’s committees to ensure that each committee functions effectively and keeps the Board apprised of actions taken, and performing other functions to facilitate effective communication and corporate governance.
Change in Board Leadership Structure. As previously announced, George E. Bull, III, who is currently the Chairman of the Board of Directors and our Chief Executive Officer, will retire as Chief Executive Officer effective on May 18, 2010, and continue to serve as Chairman of the Board of Directors following his retirement. In addition, as previously announced, Martin S. Hughes, who is currently our President, will also assume the role of Chief Executive Officer on May 18, 2010. As a result of these changes, the Board’s leadership structure will be modified, as discussed below.
New Board Leadership Structure. In June 2010, following Mr. Bull’s retirement, our Board of Directors will implement a new leadership structure, as follows:
The Board believes this leadership structure will be appropriate for Redwood, as it provides for the Board to be led by non-employee directors. As a non-employee Chairman of the Board, Mr. Bull will bring significant prior experience as the Chief Executive Officer to bear on his leadership responsibilities, while Mr. Baum, in his role as Presiding Director, will continue to bring the important perspective of an independent director.
Executive Sessions
Our Governance Standards require that our non-management directors meet in executive session at each regularly scheduled meeting of our Board of Directors and at such other times as determined by our Presiding Director. In addition, if any non-management director is not also an independent director, then our Governance Standards require that our independent directors meet at least annually without any such non-management directors.
Board of Directors’ Role in Risk Oversight
Our Board of Directors takes an active role in risk oversight. At its regular meetings it reviews Redwood’s business, investment strategies and plans, and related risks, as well as management’s approach to identifying and managing those risks. Because of the nature of Redwood’s business, the Board focuses on, among other things, establishing the appropriate philosophy with respect to investment risk and determining whether risks actually taken are in accordance with this philosophy. In carrying out its role in risk oversight, the Board of Directors receives and responds to periodic reports from our Chief Risk Officer and reports from each of its standing committees, which also carry out risk oversight functions.
Under its charter, the Audit Committee is specifically charged with (i) inquiring of management and Redwood’s independent auditors about significant risks or exposures with respect to corporate accounting, our reporting practices, the quality and integrity of our financial reports and controls, regulatory and accounting initiatives, and any off-balance sheet structures, and (ii) assessing the steps management has taken to minimize such risks. In addition, the Audit Committee is specifically charged with regularly discussing with management Redwood’s policies with respect to risk assessment and risk management, including identification of Redwood’s major financial and operational risk exposures and the steps management has taken to monitor and control those exposures.
The Audit Committee carries out this function by, among other things, receiving periodic risk management reports from our Chief Risk Officer and periodic internal audit reports from our head of internal audit, reviewing these reports, and responding to them by asking questions and providing direction to management. In addition, as noted below under “Audit Committee Matters — Audit Committee Report,” the Audit Committee also receives and responds to regular and required communications from Redwood’s independent registered public accounting firm regarding, among other things, our internal controls. In addition to discussion of these reports during Audit Committee meetings, as circumstances merit, the Audit Committee holds separate executive sessions with one or more of our Chief Risk Officer, our head of internal audit, and representatives of our independent registered public accounting firm to discuss any matters that the Audit Committee or these persons believe should be discussed in the absence of other members of management.
The Board of Directors’ other standing committees also carry out certain risk management functions. For example, the Compensation Committee reviews risks that may arise from Redwood’s compensation policies and practices, as further described below under “Executive Compensation — Other Compensation Matters — Compensation Risks” and the Governance and Nominating Committee also reviews certain legal and compliance-related risks that may arise in connection with Redwood’s business and operations.
The Board of Directors believes that this manner of administering the risk oversight function effectively integrates such oversight into the Board of Directors’ leadership structure, because the risk oversight function is carried out both at the Board level as well as through its standing committees, each of which consists solely of independent directors.
Communications with the Board of Directors
Stockholders and other interested parties may communicate with our Board of Directors by e-mail addressed toboardofdirectors@redwoodtrust.com. The Presiding Director has access to this e-mail address and provides access to the other directors as appropriate. Communications that are intended specifically for non-management directors should be addressed to the Presiding Director.
Director Attendance at Annual Meetings of Stockholders
Pursuant to our Governance Standards, our directors are expected to attend annual meetings of stockholders. All ten of our then ten directors attended last year’s Annual Meeting of Stockholders in person. We currently expect nine of our ten directors to attend this year’s Annual Meeting of Stockholders.
Code of Ethics
Our Board of Directors has adopted a Code of Business Conduct and Ethics (Code of Ethics) that applies to all of our directors, officers, and employees. Our Code of Ethics is available on our website as well as in print at the written request of any stockholder addressed to Redwood’s Secretary at our principal executive office.
We intend to post on our website and disclose in a Current Report on Form 8-K, to the extent required by applicable regulations, any change to the provisions of our Code of Ethics as well asand any waiver of a provision of the Code of Ethics.
Presiding Director
Our Governance Standards provide that the Chair of the Governance and Nominating Committee of the Board of Directors will serve as the Presiding Director for our independent directors, chairing executive sessions of our non-management directors, and performing other duties set forth in our Governance Standards. Richard D. Baum currently serves as the Presiding Director.
Executive Sessions
Our Governance Standards require that our non-management directors meet in executive session at each regularly scheduled meeting of our Board of Directors and at such other times as determined by our Presiding Director. In addition, if any non-management director is not also an independent director, then our Governance Standards require that our independent directors meet at least annually without any non-management directors who are not independent.
Communications with the Board of Directors
Stockholders and other interested parties may communicate with our Board of Directors by e-mail addressed toboardofdirectors@redwoodtrust.com. The Presiding Director has access to this e-mail address and will provide access to the other directors as appropriate. Communications that are intended specifically for non-management directors should be addressed to the Presiding Director.
Director Attendance at Annual Meetings of Stockholders
Pursuant to our Governance Standards, our directors are expected to attend annual meetings of stockholders. Eight of our then nine directors attended last year’s Annual Meeting of Stockholders in person. We currently expect all of our ten directors to attend this year’s Annual Meeting of Stockholders.
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STOCK OWNERSHIP REQUIREMENTS
Required Stock Ownership by Directors
Pursuant to our Governance Standards, non-employee directors are required to purchase from their own funds at least $50,000 (as measured on a purchase cost basis, including deferred stock units acquired in the deferred compensation plancredited to our Executive Deferred Compensation Plan through the voluntary deferral of what otherwise would have been current cash compensation) of our common stock within three years from the date of commencement of their Board membership. Any director whose status has changed from being an employee director to being a non-employee director is not subject to this requirement if that director held at least $50,000 of our common stock at the time of that change in status (as measured on the purchase cost basis outlined in the prior sentence).
In addition, non-employee directors are required to own at least $250,000 of our common stock (as measured on a purchase cost basis, including deferred stock units acquired through both voluntary and involuntary deferred compensation) by the later of December 31, 2011 or five years from the date of commencement of their Board membership. Stock and deferred stock units acquired with respect to the $50,000 stock ownership requirement countscount toward the attainment of the $250,000 stock ownership requirement.
As of the date of this proxy statement,Proxy Statement, all of our non-employee directors were in compliance with these guidelines.
Required Stock Ownership by Named Executive Officers
The Compensation Committee of our Board of Directors has also set the following executive stock ownership guidelines with respect to the Company’sour Named Executive Officers, using original purchase/acquisition price as the basis for tracking compliance.
As of the date of this proxy statement,Proxy Statement, all of our Named Executive Officers were in compliance with these guidelines.
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ITEM 1 — ELECTION OF DIRECTORS
Our Charter and Bylaws provide for a classified Board of Directors consisting of Classes I, II, and III. Class IIII directors are scheduled to be elected at the 20092010 Annual Meeting to serve for a three-year term and until their successors are duly elected and qualify. The nominees for the fourthree Class IIII director positions are set forth below. In the event we are advised prior to the Annual Meeting that any nominee will be unable to serve or for good cause will not serve as a director if elected at the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the present Board of Directors to fill the vacancy. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them for the nominees listed below and against any other nominees. As of the date of this Proxy Statement, we are not aware of any nominee who is unable or unwilling to serve as a director for the full three-year term. The nominees listed below currently are serving as directors of Redwood.
Vote Required
If a quorum is present, a plurality of the votes cast at the Annual Meeting is required for the election of directors. Cumulative voting in the election of directors is not permitted. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the results of the vote in the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTEFORTHE NOMINEES IDENTIFIED BELOW.
Class IIII Nominees to Board of Directors
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| Name | ||
| Director | ||
| Director | ||
| Director |
Certain biographical information regarding each nominee for election at the Annual Meeting is set forth below along with biographical information for other directors.
Richard D. Baum, age 63, has been a director of Redwood since 2001. Mr. Baum is currently the President and Managing Partner of Atwater Retirement Village LLC (a private company). From 2008 to mid-2009, Mr. Baum served as Executive Director of the California Commission for Economic Development. He also served as the Chief Deputy Insurance Commissioner for the State of California from 1991 to 1994 and 2003 to 2007. Mr. Baum served from 1996 to 2003 as the President of Care West Insurance Company, a worker’s compensation insurance company, and prior to 1991 as Senior Vice President of Amfac, Inc., a diversified operating company engaged in various businesses, including real estate development and property management. Mr. Baum holds a B.A. from Stanford University, an M.A. from the State University of New York, and a J.D. from George Washington University, National Law Center, Washington, D.C. Mr. Baum is a Class I director whose term expires in 2010.
The Board of Directors concluded that Mr. Baum should be nominated to continue to serve as a director on account of, among other things, the following experience, qualifications, attributes, and skills:
Mariann Byerwalter, age 49, has been a director of Redwood since 1998. Ms. Byerwalter is currently Chairman of JDN Corporate Advisory LLC (a privately held advisory services firm). Ms. Byerwalter served as the Chief Financial Officer and Vice President for Business Affairs of Stanford University from 1996 to 2001. She was a partner and co-founder of America First Financial Corporation from 1987 to 1996, and she served as Chief Operating Officer, Chief Financial Officer, and a director of America First Eureka Holdings, a publicly traded institution and the holding company for Eureka Bank, from 1993 to 1996. She serves on the Board of Directors of Pacific Life Corp., SRI International, Burlington Capital Corporation, the Lucile Packard Children’s Hospital, and the Stanford Hospital and Clinics. She also currently serves on the Board of Trustees of Stanford University and as a Trustee of certain investment companies affiliated with Charles Schwab Corporation. Ms. Byerwalter holds a B.A. from Stanford University and an M.B.A. from Harvard Business School. Ms. Byerwalter is a Class I director whose term expires in 2010.
The Board of Directors concluded that Ms. Byerwalter should be nominated to continue to serve as a director on account of, among other things, the following experience, qualifications, attributes, and skills:
Jeffrey T. Pero, age 63, has been a director of Redwood since November 2009. Mr. Pero retired in October 2009, after serving as a partner for more than 23 years, from the international law firm of Latham & Watkins LLP. At Latham & Watkins LLP, Mr. Pero’s practice focused on advising clients regarding corporate governance matters, debt and equity financings, mergers and acquisitions, and compliance with U.S. securities laws; Mr. Pero also served in various firm management positions. Mr. Pero currently serves as a director of BRE Properties, Inc., a real estate investment trust. Mr. Pero holds a B.A. from the University of Notre Dame and a J.D. from New York University School of Law. Mr. Pero is a Class I director, whose term expires in 2010.
The Board of Directors concluded that Mr. Pero should be nominated to continue to serve as a director on account of, among other things, the following experience, qualifications, attributes, and skills:
Current Directors — Terms Expiring After 2010
George E. Bull, III, age 60,61, is a founder of Redwood and has served as Chairman of the Board and Chief Executive Officer of Redwood since 1994. From 1983 tothrough 1997, Mr. Bull was the President of George E. Bull, III Capital Management, Inc. (GB Capital).GB Capital. GB Capital assisted banks, insurance companies, and savings and loans in managing portfolios of securitized and unsecuritized mortgage loans, in arranging collateralized borrowings, in hedging balance sheet risks, and with other types of capital markets transactions. Mr. Bull holds a B.A. in Economics from the University of California at Davis. Mr. Bull is a Class III director whose term expires in 2012.
The Board of Directors concluded that Mr. Bull should continue to serve as a director on account of, among other things, the following experience, qualifications, attributes, and skills:
As noted above, Mr. Bull has announced that he will retire as Chief Executive Officer effective on May 18, 2010, and continue to serve as Chairman of the Board of Directors following his retirement.
Thomas C. Brown, age 60,61, has been a director of Redwood since 1998. Mr. Brown is currently Chief OperatingExecutive Officer of McGuire Real Estate and principal shareholder of Urban Bay Properties, Inc. and Chief Operating Officer for McGuire Real Estate. Mr. Brown has previously held CEO or senior officer positions with PMI Mortgage Insurance, Centerbank, and Merrill Lynch and Co., Inc. Mr. Brown’s experience encompasses over 25 years in mortgage finance, real estate, banking, and investment banking. Mr. Brown holds a B.S. from Boston University and an M.B.A. from the University of Buffalo. Mr. Brown is a Class III director whose term expires in 2012.
The Board of Directors concluded that Mr. Brown should continue to serve as a director on account of, among other things, the following experience, qualifications, attributes, and skills:
Diane L. Merdian,Douglas B. Hansen, age 49,52, is a founder of Redwood and served as President from 1994 through 2008. Mr. Hansen retired from his position as President of Redwood at the end of 2008. He remains a director of Redwood. From 1990 through 1997, Mr. Hansen was a Principal with GB Capital. GB Capital assisted banks, insurance companies, and savings and loans in managing portfolios of securitized and unsecuritized mortgage loans, in arranging collateralized borrowings, in hedging balance sheet risks, and with other types of capital markets transactions. Mr. Hansen holds a B.A. in Economics from Harvard College and an M.B.A. from Harvard Business School. Mr. Hansen is a Class II director whose term expires in 2011.
The Board of Directors concluded that Mr. Hansen should continue to serve as a director on account of, among other things, the following experience, qualifications, attributes, and skills:
Greg H. Kubicek, age 53, has been a director of Redwood since August 2008. Ms. Merdian2002. Mr. Kubicek is President of The Holt Group, Inc., a real estate company that develops, owns, and manages commercial real estate properties and is a residential homebuilder. Mr. Kubicek currently retired fromserves as a 24-year careerdirector for Cadet Manufacturing Co. He has also served as Chairman of the Board of Cascade Corporation, an equity research analyst focused on the banking sector. From 2003 to April 2008, Ms. Merdian was a bank strategist and senior bank research analyst of Keefe, Bruyette & Woods (KBW), an investment banking firm focused on financial services companies. In addition, she was a managing director and headed KBW’s large-cap bank group. Previously, Ms. Merdian was managing director and head of bank equity research for Morgan Stanley from 2001 through 2002 and managing director and head of bank equity research at Montgomery Securities from 1995 to 2001. Ms. Merdian held similar equity analyst positions at Wellington Management, Smith Barney, and Salomon Brothers where she started in 1984. Ms. Merdian was an economic research associate for the Federal Reserve Bank of Kansas City from 1981 to 1983. Ms. Merdianinternational manufacturing corporation. Mr. Kubicek holds a B.A. in Economics with highest distinction, from Harvard College. Mr. Kubicek is a Class II director whose term expires in 2011.
The Board of Directors concluded that Mr. Kubicek should continue to serve as a director on account of, among other things, the University of Kansas. Ms. Merdian also attendedfollowing experience, qualifications, attributes, and skills:
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Georganne C. Proctor, age 52,53, has been a director of Redwood since March 9, 2006. Ms. Proctor is currently Executive Vice President, and Chief Financial Officer, and Chief Integration Officer of TIAA-CREF, and has been in this position since 2006.TIAA-CREF. From 2003 to 2005, Ms. Proctor was Executive Vice President of Golden West Financial Corporation, a thrift institution. From 1994 to 1997, Ms. Proctor was Vice President of Bechtel Group, a global engineering firm, and also served as its Senior Vice President and Chief Financial Officer from 1997 to 2002 and as a director from 1999 to 2002. From 1991 to 1994, Ms. Proctor served as finance director of certain divisions of The Walt Disney Company, a diversified worldwide entertainment company. Ms. Proctor also servesserved on the Board of Directors of Kaiser Aluminum Corporation.Corporation from 2006 to 2009. Ms. Proctor holds a B.S. in Business Management from the University of South Dakota and an M.B.A. from California State University at Hayward.
Current Directors — Terms Expiring After 2009
Richard D. Baum, age 62, has been a director of Redwood since 2001. Mr. Baum is the Executive Director of the California Commission for Economic Development. Between 2003 and 2007 he was the Chief Deputy Insurance Commissioner for the State of California. Previously, Mr. Baum served from 1996 to 2003 as the President of Care West Insurance Company, a worker's compensation insurance company, and prior to that as Senior Vice President of Amfac, Inc., a diversified operating company engaged in various businesses, including real estate development and property management. Mr. Baum holds a B.A. from Stanford University, an M.A. from the State University of New York, and a J.D. from George Washington University, National Law Center, Washington, D.C. Mr. Baum Ms. Proctor is a Class IIII director whose term expires in 2010.2012.
Mariann Byerwalter, age 48, has been a director of Redwood since 1998. Ms. Byerwalter is currently Chairman of JDN Corporate Advisory LLC (a privately held advisory services firm). Previously, Ms. Byerwalter served as the Chief Financial Officer and Vice President for Business Affairs of Stanford University from 1996 to 2001. She was a partner and co-founder of America First Financial Corporation, and was also Chief Operating Officer, Chief Financial Officer, and a director of America First Eureka Holdings, a publicly traded institution and the holding company for EurekaBank. She serves as Trustee of certain investment companies affiliated with Charles Schwab Corporation and a director of The PMI Group, Inc., Pacific Life Corporation, SRI International, Burlington Capital, the Lucile Packard Children’s Hospital, and the Stanford Hospital and Clinics, where she serves as Chair of the Board. She also currently serves on the Board of Trustees of Stanford University.Directors concluded that Ms. Byerwalter holds a B.A. from Stanford University and an M.B.A. from Harvard Business School. Ms. Byerwalter is a Class I director whose term expires in 2010.
Douglas B. Hansen, age 51, is a founder of Redwood and served as President from 1994 to 2008. Mr. Hansen retired from his position as President of Redwood at the end of December 2008 and continuesProctor should continue to serve as a director on account of, Redwood. From 1990 to 1997, Mr. Hansen wasamong other things, the following experience, qualifications, attributes, and skills:
Greg H. Kubicek, age 52, has been a director of Redwood since 2002. Mr. Kubicek is President of The Holt Group, Inc., a real estate company that develops, owns, and manages commercial real estate properties and is a residential homebuilder. He has also served as Chairman of the Board of Cascade Corporation, an international manufacturing corporation. Mr. Kubicek holds a B.A. in Economics from Harvard College. Mr. Kubicek is a Class II director whose term expires in 2011.TABLE OF CONTENTS
Charles J. Toeniskoetter, age 64,65, has been a director of Redwood since 1994. Mr. Toeniskoetter is Chairman of Toeniskoetter & Breeding, Inc., Development, a company that has developed, owns, and manages over $300$250 million of commercial and industrial real estate properties.properties, and Chairman and Chief Executive Officer of Toeniskoetter Construction, Inc. Mr. Toeniskoetter serves on the Board of Directors of SJW Corp. and Heritage Commerce Corp., as well as a number of other community organizations. Mr. Toeniskoetter holds a B.S. in Mechanical Engineering from the University of Notre Dame and an M.B.A. from the Stanford University Graduate School of Business. Mr. Toeniskoetter is a Class II director whose term expires in 2011.
7The Board of Directors concluded that Mr. Toeniskoetter should continue to serve as a director on account of, among other things, the following experience, qualifications, attributes, and skills:
Expertise and experience in the commercial real estate industry
TABLE OF CONTENTSCurrent Directors — Retiring from Board Service in May 2010
David L. Tyler, age 71,72, has been a director of Redwood since 2001. Mr. Tyler retired in 2001 as Executive Vice President, director, and Chief Financial Officer of Interland Corporation, a private owner and developer of commercial centers and apartment communities. Interland owned and operated in excess of 5,000 multifamily units and over two million square feet of office space. Prior to his employment at Interland beginning in 1972, Mr. Tyler served as Controller at Kaiser Resources from 1968 to 1971 and with the accounting firm Touche Ross from 1963 to 1968. Mr. Tyler holds a B.A from the University of California, Riverside and an M.B.A from the Graduate School of Business, University of California, Berkeley. Mr. Tyler is a Class I director whose term expires in May 2010.
Mr. Tyler is retiring from service on the Board of Directors effective in May 2010 in accordance with the mandatory retirement provision of Redwood’s Corporate Governance Standards. The Board of Directors concluded that Mr. Tyler’s long-time service as a director was supported by, among other things, the following experience, qualifications, attributes, and skills:
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors currently consists of ten directors. Our Board of Directors has established three standing committees of the Board: the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee. The membership of each committee during 2008 and the function of each committee are described below. Each of the committees has adopted a charter and the charters of all committees are available on our website and in print at the written request of any stockholder addressed to Redwood’s Secretary at our principal executive office.
Our Board of Directors held a total of tennine meetings during 2008.2009. The independent directors of Redwood meetmet in executive session at each of the five regularly scheduled meetings, for a total of five times during 2008.2009. The Presiding Director, who was also the Chair of the Governance and Nominating Committee also designated as the Presiding Director,during 2009, presided at executive sessions of the independent directors. No director attended fewer than 75% of the meetings of the Board of Directors and the committees on which he or she served, and as noted above, eightall ten of our then nineten directors attended last year’s Annual Meeting of Stockholders in person, while one attended via teleconference.person.
Audit Committee
The Audit Committee provides oversight regarding accounting, auditing, risk management, and financial reporting practices of Redwood. The Audit Committee consists solely of non-management directors, all of whom our Board of Directors has determined are independent within the meaning of the listing standards of the NYSE and the rules of the SEC. Our Board of Directors has determined that all members of the Audit Committee are “financially literate” within the meaning of the applicable regulations and standards, and has designated Mr. Tyler and Ms. Proctor as “audit committee financial experts” within the meaning of the applicable regulations and standards. The Audit Committee met eightfive times in 20082009 in order to carry out its responsibilities, as discussed below under “Audit Committee Matters — Audit Committee Report.”
Compensation Committee
The Compensation Committee reviews and approves Redwood’s compensation philosophy, reviews the competitiveness of Redwood’s total compensation practices, as well as risks that may arise from those practices, determines and approves the annual base salaries and incentive awards paid to our named executive officers,Named Executive Officers, approves the terms and conditions of proposed incentive plans applicable to our named executive officersNamed Executive Officers and other key management employees, approves and administers Redwood’s employee benefit plans, and reviews and approves hiring and severance arrangements for our named executive officers.Named Executive Officers. The Compensation Committee consists solely of non-management directors, all of whom our Board of Directors has determined are independent within the meaning of the listing standards of the NYSE, are “non-employee directors” within the meaning of the rules of the SEC, and are “outside directors” within the meaning of the rules of the Internal Revenue Service (the IRS). The Compensation Committee met fivefour times in 20082009 in order to carry out its responsibilities as more fully discussed below under “Executive Compensation — Compensation Discussion and Analysis.”
Governance and Nominating Committee
The Governance and Nominating Committee reviews and considers corporate governance guidelines and principles, evaluates potential director candidates and recommends qualified candidates to the full Board, reviews the management succession plan and executive resources, oversees the evaluation of the Board of Directors, and, in collaboration with the Compensation Committee, evaluates management. The Governance and Nominating Committee consists solely of non-management directors, all of whom our Board of Directors has determined are independent within the meaning of the listing standards of the NYSE. The Governance and Nominating Committee met sixfive times in 20082009 in order to carry out its responsibilities.
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Committee Members
The current members of each of the three standing committees are listed below, with the Chair appearing first.
| | | ||
| Audit | Compensation | Governance and Nominating | ||
| Greg H. Kubicek | Mariann Byerwalter | Richard D. Baum | ||
| Thomas C. Brown | Richard D. Baum | Greg H. Kubicek | ||
| Thomas C. Brown | Jeffrey T. Pero | |||
| Charles J. Toeniskoetter | Jeffrey T. Pero | Georganne C. Proctor | ||
| David L. Tyler | Charles J. Toeniskoetter | |||
DIRECTOR COMPENSATION
Information on our non-employee director compensation to be paid in 20092010 is set forth below.
| | |||
| Annual Retainer | $ | 50,000* | ||
| Board Meeting Fee (in person attendance) | $ | 2,000 | ||
| Board Meeting Fee (telephonic attendance) | $ | 1,000 | ||
| Committee Meeting Fee (in person attendance) | $ | 2,000 | ||
| Committee Meeting Fee (telephonic attendance) | $ | 1,000 | ||
| * | The |
Non-employee directors are also reimbursed for reasonable out-of-pocket expenses incurred in attending Board and committee meetings.meetings, as well as for their and, in some cases, their guest’s attendance at other Redwood-related meetings or events. Non-employee directors may also be reimbursed for out-of-pocket expenses incurred in attending conferences or educational seminars that relate to their Board service.
Non-employee directors are also granted deferred stock units each year followingat the time of the annual meeting of stockholders. DirectorsNon-employee directors may also be granted equity awards upon their initial election to the Board. Deferred stock units are credited under Redwood’s executive deferred compensation plan.our Executive Deferred Compensation Plan. The number of deferred stock units granted is determined by dividing $60,000 by the closing price of the Company'sRedwood’s common stock on the NYSE on the day immediately prior to grant. These deferred stock units are fully vested upon grant, although they are subject to a mandatory holding period due to the fact that they are not distributed from the executive deferred compensation planour Executive Deferred Compensation Plan in shares of common stock until a date elected by the director (with the earliest distribution date being four years from the date of grant). Dividend equivalent rights on these deferred stock units are paid in cash to directors on each dividend distribution date.
Each director may elect to defer receipt of cash compensation or dividend equivalent rights on deferred stock units in Redwood’s executive deferred compensation plan.our Executive Deferred Compensation Plan. Cash balances in the executive deferred compensation planExecutive Deferred Compensation Plan are unsecured liabilities of Redwood and are utilized by Redwood as available capital to fund investments and operations. Based on each director’s election, deferred compensation can either (i) be deferred into a cash account and earn a rate of return that is equivalent to 120% of the applicable long-term federal rate published by the IRS compounded monthly or (ii) be deferred into deferred stock units which will, among other things, entitle them to receive dividend equivalent rights.
The following table provides information on non-employee director compensation for 2008.2009. Directors who are employed by Redwood do not receive any compensation for their Board activities. During 2008 Messrs. Bull and Hansen were employee directors. As noted below, beginning in 2009, Mr. Hansen became a non-employeeBull was an employee director.
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Non-Employee Director Compensation — 20082009(1)
 | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||
| Name | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(4) | Total ($) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||||||||||||||
| Richard D. Baum | $ | 101,000 | $ | 60,000 | — | — | — | — | $ | 161,000 | $ | 102,000 | $ | 60,000 | — | $ | 7,750 | $ | 169,750 | |||||||||||||||||||||||||||||
| Thomas C. Brown | $ | 86,000 | $ | 60,000 | — | — | — | $ | 52,717 | $ | 198,717 | $ | 81,000 | $ | 60,000 | $ | 28 | $ | 1,427 | $ | 142,455 | |||||||||||||||||||||||||||
| Mariann Byerwalter | $ | 90,000 | $ | 60,000 | — | — | — | $ | 56,341 | $ | 206,341 | $ | 86,000 | $ | 60,000 | $ | 5,572 | $ | 426 | $ | 151,998 | |||||||||||||||||||||||||||
| Douglas B. Hansen | $ | 62,000 | $ | 60,000 | $ | 4,645 | $ | 258,812 | $ | 385,457 | ||||||||||||||||||||||||||||||||||||||
| Greg H. Kubicek | $ | 104,000 | $ | 60,000 | — | — | — | — | $ | 164,000 | $ | 101,000 | $ | 60,000 | — | — | $ | 161,000 | ||||||||||||||||||||||||||||||
| Diane L. Merdian(5) | $ | 25,145 | $ | 45,041 | — | — | — | — | $ | 70,186 | $ | 64,750 | $ | 60,000 | — | — | $ | 124,750 | ||||||||||||||||||||||||||||||
| Jeffrey T. Pero | $ | 10,250 | $ | 30,000 | — | — | $ | 40,250 | ||||||||||||||||||||||||||||||||||||||||
| Georganne C. Proctor | $ | 73,000 | $ | 60,000 | — | — | — | — | $ | 133,000 | $ | 76,000 | $ | 60,000 | $ | 2,765 | — | $ | 138,765 | |||||||||||||||||||||||||||||
| Charles J. Toeniskoetter | $ | 84,000 | $ | 60,000 | — | — | — | $ | 13,073 | $ | 157,073 | $ | 75,000 | $ | 60,000 | — | $ | 1,427 | $ | 136,427 | ||||||||||||||||||||||||||||
| David L. Tyler | $ | 86,000 | $ | 60,000 | — | — | — | — | $ | 146,000 | $ | 82,000 | $ | 60,000 | — | $ | 6,600 | $ | 148,600 | |||||||||||||||||||||||||||||
| (1) | The table does not include dividend equivalent rights |
| (2) | Fees earned include the annual retainer and meeting fees. |
| (3) | Value of deferred stock units awarded |
| (4) | Represents gains realized from the exercise of stock |
| (5) |
In 2008, in connection with an amendment we made to our Executive Deferred Compensation Plan, and in accordance with the regulations promulgated by the IRS under Section 409A of the Internal Revenue Code, participants in our Executive Deferred Compensation Plan had the option to make a one-time election to revise existing distribution elections, including by making an election to receive distributions on or after January 2, 2009 of vested amounts that were otherwise scheduled to be distributed in 2009 or later.
The following table provides information on stock unit distributions to non-employee directors from our Executive Deferred Compensation Plan in 2009.
| | | ||||||
| Name | Stock Units Distributed | Aggregate Value of Stock Units Distributed ($)(10) | ||||||
| Richard D. Baum(1) | 5,524 | $ | 82,366 | |||||
| Thomas C. Brown(1) | 5,524 | $ | 82,366 | |||||
| Mariann Byerwalter(2) | 1,129 | $ | 18,367 | |||||
| Douglas B. Hansen(3) | 237,006 | $ | 3,597,751 | |||||
| Greg H. Kubicek(4) | 31,881 | $ | 475,339 | |||||
| Diane L. Merdian(5) | 2,490 | $ | 37,123 | |||||
| Jeffrey T. Pero(6) | — | — | ||||||
| Georganne C. Proctor(7) | 12,799 | $ | 190,832 | |||||
| Charles J. Toeniskoetter(8) | 5,524 | $ | 82,366 | |||||
| David L. Tyler(9) | 5,694 | $ | 84,892 | |||||
| (1) | Both Mr. Baum and Mr. Brown opted to make a one-time election to revise existing distribution elections. The distributions for Mr. Baum and Mr. Brown were of deferred stock units previously awarded from 2005 to 2008. Mr. Baum and Mr. Brown both opted to forfeit units to address the payment |
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