Granite Point Mortgage Trust Inc.
3 Bryant Park, Suite 2400A
New York, New York 10036
PROXY STATEMENT FOR 20202021 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 2, 20201, 2021
This proxy statement is being furnished by and on behalf of the board of directors, or theour Board, of Granite Point Mortgage Trust Inc., a Maryland corporation, or the Company, we, us or our, in connection with the solicitation of proxies to be voted at the 20202021 annual meeting of stockholders, or the Annual Meeting.
GENERAL INFORMATION ABOUT THE 20202021 ANNUAL MEETING AND VOTING
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE 2, 2020.1, 2021.
This proxy statement and our 2019 Annual Report, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020 are available at www.proxyvote.com.
Pursuant to rules adopted by the U.S. Securities and Exchange Commission, or the SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, or the Notice of Availability, to the holders of our common stock as of the close of business on April 3, 2020.1, 2021, unless they have directed us to provide the materials in a different manner. All common stockholders will be able to access our proxy materials on the website referred to in the Notice of Availability (www.proxyvote.com) or request to receive a printed set of our proxy materials. Instructions on how to access our proxy materials over the Internet or request a printed copy of our proxy materials may be found in the Notice of Availability.
We anticipate thatOn or about April 16, 2021, we are mailing the Notice of Availability will be mailed to commoncertain of our stockholders beginning on or about April 23, 2020.and a printed set of proxy materials to other stockholders who have indicated they prefer receiving such materials in paper form.
What is the purpose of the Annual Meeting?
The purpose of the Annual Meeting is to vote on the following matters:
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(1) | To elect as directors the six nominees named in this proxy statement, each to serve until our next annual meeting of stockholders and until his or her successor is elected and qualified; |
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(2) | To hold an advisory vote relating to the compensation of our executive officers; |
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(3) | To ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for our fiscal year ending December 31, 2020; and |
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(4) | To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
(1)To elect as directors the six nominees named in this proxy statement, each to serve until our next annual meeting of stockholders and until his or her successor is elected and qualified; (2)To hold an advisory vote relating to the compensation of our named executive officers;
(3)To ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for our fiscal year ending December 31, 2021; and
(4)To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
Are there any matters to be voted on at the Annual Meeting that are not included in this proxy statement?
We currently are not aware of any business to be acted upon at the Annual Meeting other than as described in this proxy statement. If, however, other matters are properly brought before the Annual Meeting, or any adjournment or postponement of the Annual Meeting, your proxy includes discretionary authority on the part of the individuals appointed to vote your shares of common stock or act on those matters according to their best judgment.
Why is the Company holding a virtual annual meeting?
We have elected to conduct our Annual Meeting in a virtual format in order to better facilitate stockholder participation by enabling stockholders to participate fully, and equally, from any location at no cost, particularly in light of the
COVID-19 pandemic. We believe this approach increases our ability to engage with all stockholders, regardless of size, resources or physical location, and also provides cost savings for the Company. We have designed this virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the online format allows stockholders to communicate with us in advance of, and during, the meeting so they can ask any appropriate questions ofto management and our Board.
Who is entitled to vote at the Annual Meeting?
Our Board has set April 3, 2020,1, 2021 as the record date for the Annual Meeting. This means that the holders of our common stock as of the close of business on that date are entitled to receive notice of, and to vote at, the Annual Meeting and any postponements or adjournments thereof. On the record date, there were 55,136,88555,107,657 shares of our common stock outstanding and entitled to vote at the Annual Meeting.
A list of the holders of our common stock as of the record date will be available at our principal executive office, during normal business hours for the ten days preceding the Annual Meeting, for examination by any registered common stockholder as of the record date for any purpose pertaining to the Annual Meeting. Our principal executive office is located at 3 Bryant Park, Suite 2400A, New York, New York 10036.
What are my voting rights?
You are entitled to one vote for each share of our common stock held by you on the record date on all matters presented at the Annual Meeting or any adjournment or postponement thereof. There is no cumulative voting.
How many shares must be present to hold the Annual Meeting?
The presence, in person or represented by proxy, of the holders of shares of our common stock entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting. Your shares will be counted toward the quorum if you submit a proxy or vote at the Annual Meeting. Shares represented by proxies marked “abstain” and “broker non-votes” also are counted in determining whether a quorum is present.
What is a proxy?
A proxy is your designation of another person to vote shares of our common stock that you own. The person you designate is called a proxy.proxy holder. If you designate someone as your proxy holder in a written document, that document also is called a proxy or a proxy card. When you designate a proxy holder, you also may direct the proxy holder how to vote your shares. We refer to this as your “proxy vote.” Two executive officers have been designated as proxiesproxy holders for our Annual Meeting. These executive officers are John (“Jack”) A. Taylor, our President and Chief Executive Officer, and Michael J. Karber, our Vice President, General Counsel and Assistant Secretary.
What is a proxy statement?
A proxy statement is a document that SEC regulations require us to make available to you by Internet or, if you request, by mail when we ask you to designate proxiesproxy holders to vote your shares of our common stock at a meeting of our stockholders. This proxy statement includes information regarding the matters to be acted upon at the Annual Meeting and certain other information required by regulations of the SEC and rules of the New York Stock Exchange, or the NYSE.
Why did I receive a notice instead of a full set of proxy materials?
As permitted by SEC rules, we have elected to provide access to our proxy materials over the Internet, which reduces the environmental impact and costs of our Annual Meeting. Accordingly, we mailed a Notice of Availability to beneficial owners and the holders of record of our common stock who have not previously requested a printed set of proxy materials. The Notice of Availability contains instructions on how to access our proxy materials and vote online, as well as instructions on how to request a printed set of proxy materials.
Why did I receive more than one notice or printed set of proxy materials?
If you receive more than one Notice of Availability or printed set of proxy materials, it likely means that you hold shares of our common stock in more than one account. To ensure that all of your shares are voted, you should vote once for each control number you receive, as described below under “How can I vote prior to the Annual Meeting?”
How can I obtain a paper copy or an electronic copy of the proxy materials?
To obtain a paper copy or an electronic copy of the proxy materials, you will need your control number, which was provided to you in the Notice of Availability or the proxy card included with your printed set of proxy materials. Once you have your control number, you may request a paper copy or an electronic copy of our proxy materials using any of the following methods: (i) visit www.proxyvote.com and enter your control number when prompted; (ii) call 1-800-579-1639 and enter your control number when prompted; or (iii) send an email requesting electronic delivery of the materials to sendmaterial@proxyvote.com.
What is the difference between a stockholder of record and a beneficial owner?
If your shares of common stock are registered directly in your name with our transfer agent, Equiniti Trust Company, you are considered the stockholder of record with respect to those shares.
If your shares of common stock are held in a stock brokerage account, or by a bank, trustee or other nominee, you are considered the beneficial owner of shares held in “street name.” As the beneficial owner, you have the right to direct your broker, bank, trustee or other nominee on how to vote the shares that you beneficially own and you are also invited to attend our Annual Meeting. However, beneficial owners generally cannot vote their shares directly because they are not the stockholder of record; instead, beneficial owners must instruct the broker, bank, trustee or other nominee how to vote their shares using the method described below under “How can I vote prior to the Annual Meeting?”
Where can I find the voting results of the Annual Meeting?
We plan to publish the final voting results in a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting. If final voting results are not available within the four business day timeframe, we plan to file a Form 8-K disclosing preliminary voting results within the required four business days, to be followed as soon as practicable by an amendment to the Form 8-K containing final voting results.
How can I vote prior to the Annual Meeting?
Stockholders of Record. If you are a holder of record of our common stock, you may vote your shares or submit a proxy to be voted at the Annual Meeting by one of the following methods:
Vote by Internet: You may authorize your proxy online via the Internet by accessing the website www.proxyvote.com and following the instructions provided on the Notice of Availability or proxy card. Internet voting facilities will be available 24 hours a day and will close at 11:59 p.m. Eastern Time, on June 1, 2020. To vote by Internet, you will need to use the control number listed on your Notice of Availability or proxy card, which was provided to you by our vote tabulator, Broadridge Financial Solutions, Inc.; then follow the additional steps when prompted. These steps have been designed to authenticate your identity, allow you to give voting instructions and confirm that those instructions have been recorded properly.
Vote by Telephone: You may authorize your proxy by touch-tone telephone by calling 1-800-690-6903. Telephone voting facilities will be available 24 hours a daythe number and will close at 11:59 p.m. Eastern Time, on June 1, 2020. To vote by telephone, you will need to usefollowing the control number listedinstructions provided on the Notice of Availability or proxy card, which was provided to you by our vote tabulator, Broadridge Financial Solutions, Inc.; then follow the additional steps when prompted. The steps have been designed to authenticate your identity, allow you to give voting instructions and confirm that those instructions have been recorded properly.card.
Vote by Mail: If you request paper copies of the proxy materials to be sent to you by mail, you may authorize your proxy by completing, signing and dating your proxy card and returning it in the reply envelope included with the paper proxy materials.
Beneficial Owners. If your shares of common stock are held in a stock brokerage account or by a bank, trustee or other nominee, you are considered the beneficial owner of shares held in “street name.” If you hold your shares in street name, you
must vote your shares in the manner prescribed by your broker, bank, trustee or other nominee, which is similar to the voting procedures for stockholders of record. Other than ratifying the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2020, the rules do not permit2021, your broker, bank, trustee or other nominee is not permitted to vote your shares of stock on any proposal unless you provide them with specific instructions on how to vote your shares of common stock. You should instruct your broker, bank, trustee or other nominee how to vote your shares of common stock by following the directions provided by such party. However, if you request the proxy materials by mail after receiving a Notice of Availability from your broker, bank, trustee or other nominee, you will receive a voting instruction form (not a proxy card) to use in directing such party how to vote your shares.
Can I vote my shares during the Annual Meeting?
You may vote your shares during the Annual Meeting until such time as the ChairmanChair declares the polls closed by visiting www.virtualshareholdermeeting.com/GPMT2020GPMT2021 and following the instructions. You will need the 16-digit control number included in your proxy card, voting instructions form or Notice of Availability.
How does theour Board recommend that I vote my shares and what vote is required for approval of each proposal at the Annual Meeting?
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| Proposal | Board Recommendation | Available Voting Options | Voting Approval Standard | Effect of an Abstention | Effect of a Broker Non-Vote |
1.1 | Election of six directors | FOR each of the six nominees | FOR; AGAINST or ABSTAIN, with respect to each nominee | A nominee who receives a majority of all votes cast “for” such nominee is elected as a director | No Effect | No Effect |
2.2 | Advisory vote relating to executive compensation | FOR | FOR; AGAINST or ABSTAIN | Majority of all votes cast “for” the proposal | No Effect | No Effect |
3.3 | Ratification of Ernst & Young as our independent registered public accounting firm | FOR | FOR; AGAINST or ABSTAIN | Majority of all votes cast “for” the proposal | No Effect | Not Applicable |
If I submit my proxy, how will my shares of common stock be voted?
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| How Do You Hold Your Shares? | How Your Shares will be Voted
if You Specify How to Vote:
| How Your Shares will be Voted if You Specify How to Vote: | How Your Shares will be Voted if You Do Not Specify How to Vote: |
Stockholder of Record (your shares are registered in your name) | The named proxies will vote your shares as you direct on the proxy card. | The named proxies will vote as recommended by theour Board. In the case of Proposal 1, that means your shares will be votedFOR each director nominee. In the case of Proposals 2 and 3, that means your shares will be voted votedFOR each proposal. |
| Beneficial Owner (your shares are held in “street name”) | Your broker, bank, trustee or other nominee will vote your shares as you direct them to. | Your broker, bank, trustee or other nominee may use its discretion to vote only on items deemed by the NYSE to be “routine,” such as Proposal 3 - Ratification of Auditors.Ernst & Young as our independent registered public accounting firm. For non-routine items, such as Proposals 1 and 2, your shares will be considered “uninstructed” and result in a broker non-vote. |
How are abstentions and broker non-votes treated?
Under NYSE rules, brokers, banks, trustees or other nominees who hold shares for a beneficial owner have the discretion to vote on a limited number of “routine” proposals when they have not received voting instructions from the beneficial owner at least ten days prior to the annual meeting. A “broker non-vote” occurs when a broker, bank, trustee or other nominee does not receive such voting instructions and does not have the discretion to vote the shares. Pursuant to Maryland law, abstentions and broker non-votes are not included in the determination of the shares of common stock voting on such matters, but are counted for quorum purposes.
The only “routine” matter to be voted on at our Annual Meeting is Proposal 3 - Ratification of Auditors.Ernst & Young as our independent registered public accounting firm. Therefore, if you do not provide voting instructions to your broker, bank, trustee or other nominee, they may only vote your shares only on Proposal 3.
Your vote is important. We urge you to vote, or to instruct your broker, bank, trustee or other nominee how to vote, your shares on all matters before the Annual Meeting. For more information regarding the effect of abstentions and broker non-votes on the outcome of a vote, please see “How does theour Board recommend that I vote my shares and what vote is required for approval of each proposal at the Annual Meeting?” and “If I submit my proxy, how will my shares of common stock be voted?”
Can I change my vote after submitting my proxy?
You may change your vote at any time before the proxy is exercised. For holders of record of our common stock, if you voted by mail, you may revoke your proxy at any time before it is voted at the Annual Meeting by executing and delivering a timely and valid later-dated proxy, by voting via the Internet during the virtual Annual Meeting or by giving written notice of such revocation to the Secretary. If you voted by Internet or telephone, you may also change your vote with a timely and valid later-dated Internet or telephone vote, as the case may be, or by voting via the Internet during the Annual Meeting. Attendance at the virtual Annual Meeting will not have the effect of revoking a proxy unless (i) you give proper written notice of revocation to the Secretary before the proxy is exercised or (ii) you vote online during the Annual Meeting.
Notices of revocation of proxies should be sent to Granite Point Mortgage Trust Inc., Attention: Michael J. Karber, Vice President, General Counsel and Assistant Secretary, 3 Bryant Park, Suite 2400A, New York, New York 10036.
Who will count the votes?
Broadridge Financial Solutions, Inc., our independent proxy tabulator, will count the votes.
How can I attend the Annual Meeting?
The Annual Meeting will be conducted virtually via the Internet on Tuesday, June 2, 2020.1, 2021. You can attend the meeting by logging in to www.virtualshareholdermeeting.com/GPMT2020GPMT2021 and following the instructions provided on your Notice of Availability. We recommend that you log in at least ten minutes before the Annual Meeting to ensure you are logged in when the meeting starts. Only stockholders who own shares of our common stock as of the record date, April 3, 2020,1, 2021, may submit questions and vote at the Annual Meeting. You may still virtually attend the Annual Meeting if you vote by proxy in advance of the Annual Meeting.
If you wish to attend the virtual Annual Meeting at a location provided by us, our legal counsel, StinsonSkadden, Arps, Slate, Meagher & Flom LLP, will air the webcast at its offices located at 50 South Sixth Street, Suite 2600, Minneapolis, Minnesota 55402.One Manhattan West, New York, New York 10001. Please note that no members of management or theour Board will be in attendance at this location and you will not have the ability to vote your shares during the Annual Meeting from this location. If you wish to attend the Annual Meeting via webcast at StinsonSkadden, Arps, Slate, Meagher & Flom LLP’s offices, you must complete and return the Reservation Request Form found at the end of this proxy statement.
How can I submit questions for the Annual Meeting?
You may submit questions prior to the meeting at www.proxyvote.com or during the meeting by logging in to www.virtualshareholdermeeting.com/GPMT2020GPMT2021. Questions pertinent to matters to be acted upon at the Annual Meeting, as well as appropriate questions regarding the business and operations of the Company, will be answered during the Annual Meeting, subject to time constraints. In the interests of time and efficiency, we reserve the right to group questions of a similar nature together to facilitate the question and answer portion of the meeting. We may not be able to answer all questions submitted in the allotted time.
What is householding?
We may send a single Notice of Availability, as well as other stockholder communications, to any household at which two or more stockholders reside unless we receive other instructions from you. This practice, known as “householding,” is designed to reduce duplicate mailings and printing and postage costs, and conserve natural resources. If your Notice of Availability is being householded and you wish to receive multiple copies of the Notice of Availability, or if you are receiving multiple copies and would like to receive a single copy, you may contact:
Broadridge Financial Solutions, Inc.
Householding Department
51 Mercedes Way
Edgewood, New York 11717
1-866-540-7095
If you participate in householding and would like to receive a separate copy of our 2019 Annual Report on Form 10-K, Notice of Availability or proxy statement, please contact Broadridge in the manner described above. Broadridge will deliver the requested documents to you promptly upon receipt of your request.
Who pays for the cost of proxy preparation and solicitation?
We will pay the cost of soliciting proxies and may make arrangements with brokerage houses, custodians, nominees and other fiduciaries to send proxy materials to beneficial owners of our common stock. We will reimburse these third parties for reasonable out-of-pocket expenses. In addition to solicitation by mail, our directors and officers may solicit proxies by telephone, electronic transmission and personally. Our directors and officers will not receive any special compensation for such services. We have retained Morrow Sodali LLC, 470 West Avenue, Stamford, Connecticut 06902, for an estimated fee of $6,500, plus out of pocket expenses, to assist us in soliciting proxies.
Who can help answer my questions?
If you have any questions or need assistance voting your shares or if you need additional copies of this proxy statement or the enclosed proxy card, please contact our Investor Relations department at our principal executive office:
Granite Point Mortgage Trust Inc.
Attention: Investor Relations
3 Bryant Park, Suite 2400A
New York, New York 10036
Phone 212-364-5500
Email: investors@gpmortgagetrust.cominvestors@gpmtreit.com
PROPOSAL 1: ELECTION OF DIRECTORS
Director Nominee Snapshot
•Highly qualified director nominees reflecting a broad and diverse mix of business backgrounds, skills and experience
•Average tenure of 3.2 years
•Average age of 61.7 years
•66.7% of director nominees qualify as independent
•50% of director nominees self-identify as women and/or ethnically and/or racially diverse:
◦2 out of 6 director nominees self-identify as women
◦2 out of 6 director nominees self-identify as ethnically and/or racially diverse
Board Composition
Pursuant to our Amended and Restated Bylaws, or Bylaws, our directors are elected by stockholders each year at our annual meeting to serve terms expiring at the next annual meeting.meeting and until his or her successor is duly elected and qualified. Our Bylaws provide that our Board may be comprised of no less than the number of directors required by the Maryland General Corporation Law and no more than 15, with the precise number to be set by our Board. OurOn October 26, 2020, our Board has setincreased its size atfrom six to seven and appointed Devin Chen to fill the vacancy. Mr. Chen was appointed to our Board is currently comprised of seven directors. On April 9,pursuant to an Investor Rights Agreement, dated September 25, 2020, with the Initial Lenders (as defined below), or the Investor Rights Agreement. For more information regarding the Investor Rights Agreement, please see “Certain Relationships and Related Party Transactions - Transactions with Related Persons - Investor Rights Agreement” below. In addition, on March 17, 2021, Martin A. Kamarck, one of our current directors, Thomas E. Siering, notified the Board that he would not stand for reelection at the Annual Meeting. As a result, Mr. Siering’sKamarck's current term will expire at the Annual Meeting and there will be a vacancy on our Board after the Board approved a reduction in the size of the Board from seven to six effective upon the expiration of Mr. Siering’s current term.Annual Meeting.
Director Nominations
Action will be taken at the Annual Meeting for the election of six directors, each to hold office until our annual meeting of stockholders to be held in 20212022 and until his or her successor is duly elected and qualified. Proxies cannot be voted for a greater number of persons than the number of nominees named.
Director Nominees
Following are the names, ages as of April 3, 2020,1, 2021, and existing positions with us of the six director nominees standing for election to our Board at the Annual Meeting:
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| Name | | Age | | Office or Position Held |
| Stephen G. Kasnet | | 7475 | | ChairmanChair of the Board and Independent Director |
| John (“Jack”) A. Taylor | | 6465 | | President, Chief Executive Officer and Director |
| Devin Chen | | 46 | | Director |
| Tanuja M. Dehne | | 4849 | | Independent Director |
| Martin A. KamarckW. Reid Sanders | | 7071 | | Independent Director |
| W. Reid Sanders | | 70 | | Independent Director |
| Hope B. Woodhouse | | 6364 | | Independent Director |
Information concerning each of the director nominees is set forth below. Each of the nominees has been recommended for nomination by our Nominating and Corporate Governance Committee and nominated by our Board. Except as described below, there were no arrangements or understandings between any director nominee and any other person pursuant to which they were selected as a director nominee. There are no family relationships between any director nominee and our executive officers. If elected, it is expected that each of the director nominees will be able to serve, but if any such nominee is unable serve or for good cause will not serve, the proxies reserve discretion to vote or refrain from voting for a substitute nominee or nominees.
We believe that each of the director nominees, displays personalas a group, have the experience and professional integrity; satisfactory levels of education and/or business experience; business acumen; an appropriateskills in areas such as senior level of understandingmanagement, commercial real estate, corporate governance, finance and risk management that are necessary to effectively oversee the Company. In addition, we believe that each of our businessdirector nominees possesses high standards of ethics, integrity and its industry and other industries relevant to our business; the ability and willingness to devote adequate time to the work of our Board and its Committees; a fit of skills and personality with those of our other directors that helps build a board that is effective and responsive to the needs of our Company; strategic thinkingprofessionalism, sound judgment and a willingnesscommitment to express ideas; a diversity of experiences, expertise and background; andrepresenting the ability to represent thelong-term interests of our stockholders.
Among our six director nominees, two self-identify as women and two self-identify as racially and/or ethnically diverse, reflecting our commitment to diversity and inclusion. The information presented below regarding each director nominee also sets forth specific experience, qualifications, attributes and skills that led our Board to conclude that he or she should be nominated to stand for election to serve as a director.
Stephen G. Kasnet is an independent member and the ChairmanChair of our Board. He has served as a director of the Company since its inception. Mr. Kasnet alsohas served as a director of Two Harbors Investment Corp. (NYSE: TWO), a hybrid mortgage real estate investment trust, since 2009, where he currently serves as ChairmanChair of the Board of Directors, chair of the audit committee and a member of the risk oversight committee of Two Harbors Investment Corp., a hybrid mortgage real estate investment trust (NYSE: TWO), or Two Harbors, since 2009, andcommittee. He served as a director of Silver Bay Realty Trust Corp. (NYSE: SBY), a real estate investment trust, (NYSE: SBY), or Silver Bay, from 2012 to 2017. Mr. Kasnet was also a director of Columbia Laboratories, Inc. (NASDAQ: CBRX), a specialty pharmaceuticals company, (NASDAQ: CBRX), now Juniper Pharmaceuticals, from August 2004 to June 2015, including as ChairmanChair of the Board from November 2004 to June 2015. From 2007 to 2009, Mr. Kasnet was the ChairmanChair of Dartmouth Street Capital LLC, a private investment firm. He was also the President and Chief Executive Officer of Raymond Property Company LLC, a real estate company, from 2007 through October 2009. From 2000 to 2006, he was President and Chief Executive Officer of Harbor Global Company, Ltd., an asset management, natural resources and real estate investment company, and President of PIOglobal, a Russian
real estate investment fund. From 1995 to 1999, Mr. Kasnet was a director and member of the Executive Committee of The Bradley Real Estate Trust, a real estate investment trust. He was ChairmanChair of Warren Bank, a state commercial bank, and Warren Bancorp., a bank holding company, from 1990 to 2003. Mr. Kasnet has also held senior management positions with other financial organizations, including Pioneer Group, Inc., First Winthrop Corporation and Winthrop Financial Associates;Associates, and Cabot, Cabot and Forbes, a real estate development firm. He served as ChairmanChair of the Board of Rubicon Ltd. (NZX: RBC), an international investor in forestry related industries, (NZX: RBC), from 2004 to 2018, as a director of First Ipswich Bancorp, a holding company for The First National Bank of Ipswich, which is owned by Brookline Bancorp, Inc., from 2008 to 2020, and as a director of GoodBulk Ltd., a cargo company, from 2017 to 2019. He served as a director and ChairmanChair of Tenon Ltd., a wood products company, from 2016 to 2018. He is also a trustee of the board of the Governor’s Academy, a private coed boarding high school in Byfield, Massachusetts. Mr. Kasnet received a B.A. from the University of Pennsylvania. Mr. Kasnet was initially appointed to our Board pursuant to a Director Designation Agreement, between us and Two Harbors, entered into in connection with our formation transaction and initial public offering, or our IPO. We believe Mr. Kasnet is qualified to serve as a director of the Company because of his broad business background, extensive experience as a director of public companies and his qualification as an audit committee financial expert.
John (“Jack”) A. Taylor is our President and Chief Executive Officer, a member of our Investment Committee and a member of our Board. Mr. Taylor has been a director and executive officer of the Company since its inception. Mr. Taylor has also served as Global Head of Commercial Real Estate of our company’s external manager, Pine River Capital Management L.P., or ourFormer Manager since(as defined below) from November 2014.2014 to December 31, 2020. Prior to joining our Former Manager, Mr. Taylor served as a Managing Director and Head of Global Real Estate Finance for Prudential Real Estate Investors (now known as PGIM Real Estate Company), a commercial real estate investor, from 2009 to November 2014, where he was also a member of the Global Management Committee and chaired the Global Investment Committee for debt and equity. From 2003 to 2007, Mr. Taylor was a partner at Five Mile Capital Partners LLC, an alternative investment and asset management company. Prior to Five Mile Capital Partners, he was co-head of real estate investment banking for the Americas and Europe at UBS Group AG, a Swiss multinational investment bank and financial services company. He previously led the Real Estate Group at PaineWebber & Co., an investment bank and stock brokerage firm, and served on the firm’s Operating Committee. He was head trader and manager of the CMBS and Principal Commercial Mortgage business for Kidder, Peabody & Co., Inc., a securities firm. Mr. Taylor was a founding governor of the Commercial Mortgage Securities Association (now the Commercial Real Estate Finance Council) and a member of the President’s Council of the Real Estate Roundtable. Mr. Taylor received a J.D. from Yale Law School, a MSc. in international relations from the London School of Economics and Political Science and a B.A. in philosophy from the University of Illinois. We believe Mr. Taylor is qualified to serve as a director of the Company because of his role as the Company’s President and Chief Executive Officer and his extensive knowledge of, and experience in, the commercial real estate markets in which the Company operates.
Devin Chen is a member of our Board and has served as a director of the Company since October 2020. Mr. Chen is an executive vice president and portfolio manager for Pacific Investment Management Company LLC, or PIMCO. He is the head of commercial real estate, or CRE, strategy and is a member of the investment committees for PIMCO’s CRE equity and debt strategies. Mr. Chen has experience across all major CRE sectors, including asset and corporate investments. Prior to joining PIMCO in 2010, he was with JER Partners, a private equity real estate firm, for 11 years, most recently as managing director and a member of the firm’s investment committee. Mr. Chen previously worked in the fixed income group of Banc of America Securities. He has 22 years of investment experience and holds an A.B. in economics from Georgetown University. On September 25, 2020, the Company (i) entered into a term loan credit agreement, or the Credit Agreement, with certain investment vehicles managed by PIMCO, as initial lenders, or the Initial Lenders, (ii) issued warrants, or the Warrants, to the Initial Lenders and (iii) in connection with the transactions contemplated by the foregoing, entered into the Investor Rights Agreement, which, among other things, granted the Initial Lenders certain governance rights. Mr. Chen was appointed to our Board pursuant to the Investor Rights Agreement. We believe Mr. Chen is qualified to serve as a director of the Company because of his extensive background in the CRE industry and experience serving in executive management and leadership roles.
Tanuja M. Dehneis an independent member of our Board and has served as a director of the Company since its inception. Since 2019, Ms. Dehne has also served as a director of Advanced Disposal Services, Inc., a solid waste collection company (NYSE: ADSW), since May 2017. Ms. Dehne is currently the President and Chief Executive Officer of the Geraldine R. Dodge FoundationFoundation. She has served as a director of Climate Real Impact Solutions II Acquisition Corporation (NYSE: CLIM.U), a climate-focused special-purpose acquisition company, since September 2019.February 2021. Ms. Dehne also serves as the Co-Chair of the Gupta Governance Institute at Drexel University. From May 2017 until October 2020, Ms. Dehne served as a director of
Advanced Disposal Services, Inc. (NYSE: ADSW), a solid waste collection company. From December 2012 until May 2017, Ms. Dehneshe served as an independenta director of Silver Bay.Bay Realty Trust Corp. (NYSE: SBY), a real estate investment trust. From October 2014 through April 2016, sheMs. Dehne was the Executive Vice President, Chief Administrative Officer and Chief of Staff of NRG Energy, Inc. (NYSE: NRG), a power generation and retail electricity company (NYSE: NRG).company. In this role, Ms. Dehne oversaw NRG’s Human Resources, Information Technology, Communications, Corporate Marketing and Sustainability Departments, including the company’s charitable giving program, mergers and acquisition integrations and Big Data Analytics.big data analytics. Prior to these positions, she was the Senior Vice President, Human Resources of NRG since 2011, where she led NRG’s Human Resources department, which handled all HRhuman resources functions for more than 8,000 employees. From 2004 to 2011, Ms. Dehne served as the Corporate Secretary and Deputy/Assistant General Counsel of NRG, leading corporate governance and corporate transactions, including financing, mergers and acquisitions, public and private securities offerings, securities and stock exchange matters and reporting compliance. Prior to joining NRG, from 1998 to 2004, Ms. Dehne practiced corporate law as a member of the business department of Saul Ewing Arnstien & Lehr, LLP. She received a J.D. from Syracuse University, an M.A. from the University of Pennsylvania in political science and a B.A. from Lafayette College. We believe Ms. Dehne is qualified to serve as a director of the Company because of her knowledge of corporate governance, background serving in various executive management roles and prior public company experience.
Martin A. Kamarck is an independent member of our Board and has served as a director of the Company since its inception. Mr. Kamarck has over 45 years of experience in business and law in both the public and private sectors. He was a partner at Elanus Capital Management, LLC, an alternative asset manager, from 2011 to 2018. Prior to that time, from 1999 to 2005, he was the President of Radian Asset Assurance Inc., the financial guaranty arm of Radian Group Inc., a mortgage insurance company (NYSE: RDN). Prior to Radian, Mr. Kamarck served as Chairman of the Export-Import Bank of the United States from 1996 to 1997, and Co-Head of Structured Credit and General Counsel at Financial Guarantee Insurance Company, a monoline bond insurer, from 1989 to 1993. Mr. Kamarck began his professional career as an attorney with Morrison & Foerster LLP, at which he ultimately became a Partner and head of the securitization practice. He received a J.D. from Stanford Law School and a B.A. in English Literature from Haverford College. We believe Mr. Kamarck is qualified to serve as a director of the Company because of his extensive background in the financial services industry and experience serving in executive management and leadership roles.
W. Reid Sanders is an independent member of our Board and has served as a director of the Company since its inception. He currently servesSince 2004, Mr. Sanders has served as the President of Sanders Properties, Inc., a real estate company, since 2004, and iscompany. He has served as a director andof Two Harbors Investment Corp. (NYSE: TWO), a member ofhybrid mortgage real estate investment trust, since 2009, where he currently serves on the audit, compensation and risk oversight committees of Two Harbors since 2009. He also servescommittees. Since 2010, Mr. Sanders has served as a director and member of the audit and investment committees of Mid-America Apartment Communities, Inc. (NYSE: MAA), a real estate investment trust that owns and operates apartment complexes, (NYSE: MAA), since 2010. Mr. Sanderswhere he is currently a member of the audit committee. Mr. Sanders has been a member of the board and executive and compensation committees of Independent Bank, a bank holding company, since 2004, serveswhere he is currently a member of the executive, nominating and corporate governance and strategic planning committees. He has served on the investment committee at Cypress Realty, a commercial real estate company, since 2002, and, issince 2000, has been on the advisory board of SSM Venture Partners III, L.P., a private venture capital firm, since 2000. Hefirm. Mr. Sanders was the chairmanchair of the board of Two Rivers Capital Management, a financial planning and investments firm, from 2004 to 2007, and his former directorships include those at Harbor Global Company Ltd., an asset management, natural resources and real estate investment company, from 2001 to 2006, Silver Bay Realty Trust Corp. (NYSE: SBY), a real estate investment trust, from 2015 to 2016, PioGlobal Asset Management, a private investment management company, from 2001 to 2006, The Pioneer Group Inc., a global investment management firm, from 1999 to 2000, and TBA Entertainment Corporation, a strategic communications and entertainment marketing company, from 2000 to 2004. He was co-founder and Executive Vice President of Southeastern Asset Management, Inc., a global investment management firm, and former President of Longleaf Partners Mutual Funds, from 1975 to 2000. He served as an Investment Officer at First Tennessee Investment Management, the investment management division of First Horizon National Corporation, a bank holding company, from 1973 to 1975. Mr. Sanders is chairman of the Hugo Dixon Foundation and a trustee of the Dixon Gallery and Gardens the Hutchison School, Rhodes CollegeEndowment Fund, Dixon Gallery and Gardens and the Tennessee Shakespeare Company, and is a former trustee of the Hutchison School, Rhodes College, The Jefferson Scholars Foundation and the Campbell Clinic Foundation. Mr. Sanders was initially appointed to our Board pursuant toreceived a Director Designation Agreement, between us and Two Harbors, entered intoB.A. in connection with our formation transaction and IPO.economics from the University of Virginia. We believe Mr. Sanders is qualified to serve as a director of the Company because of his extensive background in the financial services and real estate businesses and his experience serving as a director and audit committee member of public companies.
Hope B. Woodhouse is an independent member of our Board and has served as a director of the Company since its inception. Ms. Woodhouse has over 25 years of experience in the financial services industry at top-ranked, global alternative asset management firms and broker dealers. Ms. Woodhouse has served as a director of Two Harbors Investment Corp. (NYSE: TWO), a hybrid mortgage real estate investment trust, since May 2012, and is currently the chair of its risk oversight committee and a member of its audit committee. She also serves as a member of the Advisory Committee of Atomyze, a private company in the tokenization and digital asset space. From 2005 to 2009, she served as Chief Operating Officer and as a member of the management committee for Bridgewater Associates, LP, an investment management firm. Between 2003 and 2005, Ms. Woodhouse was President and Chief Operating Officer of Auspex Group LP, an investment management firm, and was Chief Operating Officer and a member of the management committee of Soros Fund Management, LLC, an investment management firm, from 2000 to 2003. Prior to that, she held various executive leadership positions, including Treasurer of Funds at Tiger Management Corp., a hedge fund, from 1998 to 2000, and Managing Director of the Global Finance Department at Salomon Brothers Inc., an investment bank, from 1983 to 1998. She served as a director of Piper Jaffray Companies (NYSE: PJC), a multinational independent investment bank and financial services company, (NYSE: PJC), and as a member of its audit and compensation committees from 2011 to 2014, Seoul Securities Co. Ltd., a brokerage firm, from 2001 to 2003, and The Bond Market Association, an international trade association, from 1997 to 1998. Ms. Woodhouse also serves on the boards of the Kindergarten Reading Collaborative, Children’s Services Advisory Committee of Indian River County and the John’s Island Community Service League, and is a trustee of the Tiger Foundation. Ms. Woodhouse received an M.B.A. from Harvard Business School and an A.B. degree in Economicseconomics from Georgetown University. Ms. Woodhouse was initially appointed to our Board pursuant to a Director Designation Agreement, between us and Two Harbors, entered into in connection with our formation transaction and IPO. We believe Ms. Woodhouse is qualified to serve as a director of the Company because of her
background in the financial services industry, her experience as a director of public companies and her qualification as an audit committee financial expert.
VOTING RECOMMENDATION
OUR BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS
Corporate Governance Highlights
•Annual election of all directors – all of our directors are elected annually for a one-year term.
•Majority voting – we have a majority standard for uncontested elections of directors and a resignation policy for directors who do not receive a majority of the votes cast.
•One share equals one vote – we have a single class of shares with equal voting rights.
•Separation of Board Chair and Chief Executive Officer – our Chief Executive Officer is able to focus on managing the Company and our independent Board Chair drives accountability at the Board level.
•Independent Board committees – all of our Board committees are comprised entirely of independent directors.
•Regular executive sessions of independent directors – we hold regular executive sessions of our independent directors.
•Director education – our new Director Education Policy empowers our directors to be well-versed in leading edge principles of corporate governance and other critical subject matters.
•Overboarding policy – our enhanced overboarding policy ensures that directors can devote sufficient time to the Company.
•Board, Committee and Individual Self-Evaluations – the Chair of our Nominating and Corporate Governance Committee leads annual self-evaluations, involving both questionnaires and one-on-one meetings with directors.
•Stock ownership guidelines – our enhanced stock ownership guidelines promote even greater alignment of interests between our directors and our stockholders.
•Prohibitions on hedging, pledging and other transactions – we prohibit short sales, transactions in derivatives, hedging and pledging of our securities by directors, executive officers and employees.
Our Board is committed to maintaining the highest standards of business conduct and corporate governance. As described more fully below,The independent directors of our Board successfully negotiated the internalization of our management function on our behalf with Pine River Capital Management L.P., our former manager, or Former Manager, which process was completed on December 31, 2020, or the Internalization. The Internalization underscores the Company’s commitment to further align the interests of management and stockholders and demonstrates the Company’s continued efforts toward enhanced governance practices that incorporate the views of long-term stockholders, including the elimination of any potential conflicts of interest inherent in an external management structure, increased transparency and disclosure around executive compensation in the future and expected long-term cost savings.
In connection with the completion of the Internalization, we have adopted aan enhanced Code of Business Conduct and Ethics applicable to the conduct of our officers, directors and directors, as well as to the employees of our Manager and its affiliates. We have also adoptedenhanced Corporate Governance Guidelines. Our Corporate Governance Guidelines, which, in conjunction with our Charter, Bylaws and our boardBoard committee charters, provide the framework for our corporate governance practices.
You can access our Code of Business Conduct and Ethics, our Corporate Governance Guidelines, the charters for our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and certain other policies under “Corporate Governance” in the Investor Relations section of our website at www.gpmtreit.com or by writing to our Investor Relations department atby email to investors@gpmtreit.com or by regular mail to Granite Point Mortgage Trust Inc., 3 Bryant Park, Suite 2400A, New York, New York 10036.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our officers, and directors and to the officers, directors and employees ofand specifically to our Managerprincipal executive officer, principal financial and its affiliates when such individuals are acting for usaccounting officer and controller, or on our behalf.persons performing similar functions. Among other matters, our Code of Business Conduct and Ethics is designed to detect and deter wrongdoing and to promote:
•honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
•full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;
•compliance with applicable governmental laws, rules and regulations;
•prompt internal reporting of violations of the Code of Business Conduct and Ethics to appropriate persons identified in the Code; and
•accountability for adherence to the Code of Business Conduct and Ethics.
Any waiver of the Code of Business Conduct and Ethics for our executive officers or directors may be made only by our Board, or a committee thereof, and will be promptly disclosed as required by applicable law or stock exchange listing standards. The Code of Business Conduct and Ethics was adopted by theour Board on June 14, 2017 and was last updated on March 18, 2020.January 1, 2021.
Director Independence
NYSE listing standards require that a majority of a company’s board of directors be composed of “independent directors,” which is defined generally as a person other than an executive officer or employee ofdirector having a material relationship with the company (either directly as a partner, stockholder or its subsidiaries, or any other individual havingofficer of an organization that has a relationship with the company), which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these considerations, our Board has affirmatively determined, upon the review and recommendation of our Nominating and Corporate Governance Committee, that each of the following directors and director nominees meets the qualifications of an independent director: Tanuja M. Dehne, Martin A. Kamarck, Stephen G. Kasnet, W. Reid Sanders and Hope B. Woodhouse.
Board Leadership Structure
Our Board is led by a Chair who is appointed by the directors. Both independent and non-independent directors are eligible for appointment as the Chair. The Chair presides at all meetings of our stockholders and of our Board. The Chair performs such other duties and exercises such powers as from time to time shall be prescribed in our Bylaws or Corporate Governance Guidelines or by our Board. Our Board has appointed Mr. Kasnet, who qualifies as an independent director, to serve as our Chair. Accordingly, we currently separate the roles of Chair and Chief Executive Officer.
Our Board consists of a majority of independent directors and exercises a strong, independent oversight function. All of the committees of our Board are comprised entirely of independent directors. A number of board committee processes and procedures, including regular executive sessions of independent directors and a regular review of the performance of our Manager, provide substantial independent oversight of our management’s performance. Under our Bylaws and Corporate Governance Guidelines, our Board has the ability to change its structure if it determines that such a change is appropriate and in the best interest of our Company. Our Board believes that these factors provide the appropriate balance between the authority of those who oversee our Company and those who manage it on a day-to-day basis. basis
We currently separate the roles of Chair and Chief Executive Officer.
Board Committees
Our Board has formed three standing committees, including our Audit, Compensation and Nominating and Corporate Governance Committees, and has adopted charters for each of these committees. Each committee is composed exclusively of directors who meet the independence and other requirements established by the rules and regulations of the SEC and the NYSE listing standards. Additionally, the Compensation Committee is composed exclusively of individuals intended to be, to the extent required by“non-employee directors,” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, non-employee directors. Act.
The following table summarizes the current membership of each of our standing committees.
|
| | | | | | | | | | | | | |
| Director | | Audit | Compensation | Nominating and Corporate Governance |
| Tanuja M. Dehne | | | x | Chair |
Martin A. Kamarck(1) | | | Chair | x |
| Stephen G. Kasnet | | Chair | | |
| W. Reid Sanders | | x | x | |
| Hope B. Woodhouse | | x | | x |
______________________
(1)Mr. Kamarck will not stand for reelection at the Annual Meeting.
In addition, in 2019, theour Board formed an ad hoc committee, the Independent Committee, composed exclusively of ourthe five independent directors. On March 2, 2020, we announceddirectors on the Board at that we have agreed to a process with our Manager to internalizetime, that successfully negotiated the Company’s management function and that the Independent Committee has been negotiating the internalizationInternalization on our behalf.behalf in 2020 and has since been abolished.
Audit Committee
Our Audit Committee is responsible for for:
•engaging our independent registered public accounting firm, firm;
•preparing Audit Committee reports, reports;
•reviewing with the independent registered public accounting firm the plans and results of the audit engagement, engagement;
•approving professional services provided by the independent registered public accounting firm, firm;
•reviewing the independence of the independent registered public accounting firm, firm;
•considering the range of audit and non-audit feesfees; and
•reviewing the adequacy of our internal accounting controls.
Our Audit Committee is, and will at all times be, composed exclusively of “independent directors,” as defined under the NYSE listing standards and who otherwise meet the NYSE listing standards. Each member of our Audit Committee is also financially literate, in that they are able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.
In addition, as a listed company, we must certify that our Audit Committee has, and will continue to have, at least one member who is financially sophisticated, in that he or she has past employment experience in finance or accounting, requisite professional certification in accounting or other comparable experience or background that results in the individual’s financial sophistication. Our Board has determined that each of Mr. Kasnet and Ms. Woodhouse satisfies the definition of financial sophistication and also qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.
Our Audit Committee’s purpose and responsibilities are more fully set forth in its charter.
Compensation Committee
The principal functions of our Compensation Committee are to:
•oversee the Company's overall compensation structure, policies and programs;
•establish the Company’s general compensation philosophy;
•evaluate the performance of our executive officers;
in consultation with senior management, establish the Company’s general compensation philosophy•produce an annual Compensation Committee Report and review and discuss with management the compensation philosophy of our Manager;discussion and analysis and related disclosures for inclusion in the Company's annual proxy statement;
evaluate the performance of our Manager;
review the compensation and fees payable to our Manager under the Management Agreement between us and our Manager dated June 28, 2017, or the Management Agreement;
review the compensation and fees payable to any affiliates of our Manager or any other related party;
prepare Compensation Committee reports;
•make recommendations to our Board with respect to our Company’s incentive compensation plans and equity-based plans; and
•administer any equity incentive plan, including the issuance of any common stock or other equity awards thereunder to employees of our Manager or its affiliates who provide services to us under the Management Agreement.thereunder.
Our Compensation Committee is responsible for reviewing and making recommendations to our Board regarding the compensation of our Company’s independent directors. In doing so, our Compensation Committee will work with our independent compensation consultant and consider, among other things, the following:
•the compensation that is paid to directors of other companies that are comparable to us;
•the amount of time directors are expected to devote to preparing for and attending meetings of our Board and the committees on which they serve;
•the success of our Company;
•whether a director is a lead independent director or chair of our Board or one of the committees of our Board and the time commitment related thereto;
•if a committee on which a director serves undertakes a special assignment, the importance of that special assignment to our Company and its stockholders; and
•the risks involved in serving as a director on our Board or a member of its committees.
Other than our Chief Executive Officer, who serves as a non-independent director, none of our executive officers are involved in determining independent director compensation levels, although our management team may provide support to the Compensation Committee and its independent compensation consultant, including certain information, data and other resources in connection with its compensation recommendations to our Board.
Our Compensation Committee may delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee. Our Compensation Committee’s purpose and responsibilities are more fully set forth in the Compensation Committee’sits charter.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is responsible for for:
•seeking, considering and recommending to our Board qualified candidates for election as directors and approves and recommendsdirectors;
•recommending to theour full Board the appointment of each of our executive officers. It also officers;
•periodically preparespreparing and submitssubmitting to our Board for adoption its selection criteria for director nominees. It reviewsnominees;
•reviewing and makesmaking recommendations on matters involving the general operation of our Board and our corporate governance, and governance;
•annually recommends to our Boardrecommending nominees for each committee ofto our Board. In addition, our NominatingBoard; and Corporate Governance Committee
•annually facilitatesfacilitating the assessment of our Board’s performance and reportreporting thereon to our Board.
Our Nominating and Corporate Governance Committee considers the following factors in making its recommendations to theour Board: background experience, skills, expertise, accessibility and availability to serve effectively on theour Board. Our Nominating and Corporate Governance CommitteeIt also conducts inquiries into the background and qualifications of potential candidates.
Our Nominating and Corporate Governance Committee’s purpose and responsibilities are more fully set forth in its charter.
Board, Committee and Director Evaluations
Recognizing the importance of a rigorous self-evaluation process to allow boards to assess their performance and identify and address any potential gaps in the boardroom, our Board conducts an annual self-assessment of its performance, its committees and individual directors. The Chair of the Nominating and Corporate Governance Committee is responsible for leading the evaluation process, which takes place in advance of the annual consideration of director nominees. In the first quarter of 2021, the Chair of the Nominating and Corporate Governance Committee conducted one-on-one interviews with each director and reviewed with our Board the results of those self-assessments. This annual evaluation process provides a way to monitor progress in certain areas targeted for improvement from year to year and to identify opportunities to enhance Board and committee effectiveness. The assessments confirm whether our current Board leadership and structure continue to be optimal for us and are an important factor considered by the Nominating and Corporate Governance Committee in making its recommendations to our Board regarding director nominees. As part of the evaluation process, each committee reviews its charter responsibilities and the actions taken during the year to fulfill such responsibilities.
Role of Ourour Board in Risk Oversight
Our management team is responsible for assessing and managing the risks faced by our Company, subject to the oversight of our Board. Our Board exercises its oversight of our Company’s risks, including through the review of our business plans, capital structure, financial results and infrastructure. Our Board has also established investment guidelines, which set parameters for the type and size of investments we can make without further Board approval. Additionally, our Board relies upon our Audit Committee to oversee risks related to the quality and integrity of our financial reports, our tax positions, including our qualifications as a real estate investment trust, or REIT, for U.S. federal income tax purposes, the performance and independence of our external auditor, the performance of our internal audit function, our policies regarding accounting, financial matters and internal controls, performance of our information technology and data security function, including as it relates to cybersecurity, and compliance with legal and regulatory requirements. Our Audit Committee also discusses and reviews policies with respect to our risk assessment and risk management, including, but not limited to, the adequacy of our insurance coverage, our interest rate risk management, our counter-party and credit risks, our capital availability and refinancing risks.
Our Board relies upon our Compensation Committee to oversee and evaluate risks related to our Company’s compensation programs, including the formulation, administration and regulatory compliance with respect to compensation matters. The Compensation Committee also considers, and discusses with management, whether any risks arising from those compensation policies the Company oversees are reasonably likely to have a material adverse effect on our Company. Our Nominating and Corporate Governance Committee oversees and evaluates programs and risks associated with theour Board and its committees’ membership and structure, succession planning and corporate governance.
Management routinely informs theour Board and its committees of developments that could affect our risk profile or other aspects of our business.
Cyber Security
Our Manager currently provides our Company with personnel, including its Chief Information Security Officer, to help manage the growing complexity of cyber risks. Our Manager’s Chief Information Security Officer reports to our Board and/or our Audit Committee on a regular basis regarding our Company’s exposure to cyber risk, including with respect to our cyber security infrastructure, the development and implementation of policies, procedures, standards and technical measures to create an environment that is designed to minimize exposure to cyber threats and recovery from adverse events, if any.
Board and Committee Meetings
Our Board meets on a regularly scheduled basis during the year to review significant developments affecting the Company and to act on matters requiring Board approval. It also holds special meetings when important matters require Board action between scheduled meetings. Members of senior management regularly attend Board meetings to report on and discuss their areas of responsibility. Our Board has been active during the COVID-19 pandemic, holding virtual Board meetings and receiving regular updates from management as we navigated the many challenges presented by the pandemic. In 2020, our Board held nine meetings during 2019.26 meetings. During fiveeight of the meetings of our Board, the independent directors also met separately in executive sessions, without management present, to discuss various matters.matters, including our response to the COVID-19 pandemic. The Chair of theour Board presided at such executive sessions. During 2019,2020, our Audit Committee held sevensix meetings, our Compensation Committee held seven meetings and our Nominating and Corporate Governance Committee held one meeting.five meetings. Each of our directors attended at least 75% of the aggregate total number of meetings held by theour Board and all committees on which he or she served during 2019.2020. Although we do not have a policy on director attendance at our annual meetings of stockholders, directors are encouraged to attend all annual meetings. Each of our then-current directors attended our annual meeting of stockholders held in May 2019.June 2020.
Director Nomination Process
Our Corporate Governance Guidelines provide the following minimum qualifications for directors in order to be considered for a position on our Board:
•possession of the highest personal and professional ethics, integrity and values;
•the ability to exercise good business judgment and be committed to representing the long-term interests of the Company and its stockholders;
•having an inquisitive and objective perspective, practical wisdom and mature judgment; and
•the ability and willingness to devote the sufficient time and effort to carrying out Board duties and responsibilities effectively, including preparing for and attending meetings of theour Board and its committees.
We believe that directors must be willing to devote sufficient time and effort to carrying out their duties and responsibilities effectively and should be committed to serve on our Board for an extended period of time. Under our enhanced Corporate Governance Guidelines, directors who also serve as chief executive officers or hold equivalent positions at other public companies should not serve on more than one other public company board in addition to our Board and other directors should not serve on more than three other boards of public companies in addition to our Board.
In considering candidates for nomination as a director, the Nominating and Corporate Governance Committee generally assembles all information regarding a candidate’s background and qualifications, evaluates a candidate’s mix of skills and qualifications and determines the contribution that the candidate could be expected to make to the overall functioning of our Board.
Although we do not have a formal policy on diversity, our Corporate Governance Guidelines provide that our Company shall endeavor to have a Board representing a diverse education and experience that provides knowledge of business, financial, governmental or legal matters that are relevant to our business and to our status as a publicly owned company. With respect to the re-nomination of current directors, the Committee considers the foregoing factors, as well as past participation in, and contributions to, the activities of our Board and its committees.
Our Nominating and Corporate Governance Committee will consider candidates recommended for nomination to our Board by our stockholders. Stockholder recommendations for nominees to theour Board should be submitted in writing to our Secretary. The manner in which such Committee evaluates candidates recommended by stockholders is generally the same as any other candidate, including customary diligence, interviews and background checks. However, the Committee will also seek and consider information concerning any relationship between a stockholder recommending a candidate and the candidate to determine if the candidate can represent the interests of all of theour stockholders. The Committee will not evaluate a candidate recommended by a stockholder unless the stockholder’s proposal provides a certification that the potential candidate consents to being named in our proxy statement and will serve as a director if elected.
Majority Voting for Directors and Director Resignation Policy
Our Bylaws provide that a director nominee will be elected by receiving the affirmative vote of a majority of the votes cast on the election of such nominee on a per nominee basis in an uncontested election (which occurs when the number of director nominees is the same as the number of directors to be elected). If a director nominee who is an incumbent director receives a greater number of votes “against” than votes “for” his or her election, and with respect to whom no successor has been elected, such incumbent director shall promptly tender his or her offer to resign to our Board for its consideration following certification of the stockholder vote. Within 90 days following certification of the stockholder vote, our Nominating and Corporate Governance Committee shall consider the tendered resignation offer and make a recommendation to our Board whether or not to accept such offer, and our Board shall act on our Nominating and Corporate Governance Committee’s recommendation. In determining whether to accept the resignation offer, our Nominating and Corporate Governance Committee and Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation offer, including, among other things, whether accepting the resignation of such director would cause our Company to fail to meet any applicable SEC or stock exchange rules or requirements. Thereafter, our Board shall promptly and publicly disclose its decision-making process regarding whether to accept the director’s resignation offer or the reasons for rejecting the resignation offer, if applicable, in a Form 8-K furnished to the SEC. Any director who tenders his or her resignation offer will not participate in our Nominating and Corporate Governance Committee’s recommendation or our Board’s action regarding whether to accept the resignation offer. If our Board does not accept the director’s resignation offer, such director will continue to serve until the next annual meeting of stockholders and until such director’s successor is duly elected and qualified or until the director’s earlier resignation or removal.
In a contested election, the director nominees who receive a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present will be elected as directors. Under the plurality standard, the number of nominees equal to the number of vacancies to be filled who receive more votes than other nominees are elected to our Board, regardless of whether they receive a majority of votes cast.
Communications with our Board
We provide the opportunity for our stockholders and all other interested parties to communicate with members of our Board. Stockholders and all other interested parties may communicate with the independent directors or the chair of any of the committees of theour Board by email or regular mail. All communications should be sent to the Company’s Secretary, Rebecca B. Sandberg,Michael J. Karber, by email to secretary@gpmortgagetrust.comsecretary@gpmtreit.com or by regular mail to the attention of the independent directors, the Chair of the Audit Committee, the Chair of the Compensation Committee or the Chair of the Nominating and Corporate Governance Committee, as the case may be, in each instance in care of the Secretary at the Company’s office at 3 Bryant Park, Suite 2400A, New York, New York 10036.
Our Secretary will review each communication received in accordance with this process to determine whether the communication requires immediate action. Our Secretary will forward all appropriate communications received, or a summary of such communications, to the appropriate member(s) of our Board. However, we reserve the right to disregard any communication that we determine is unduly hostile, threatening or illegal, does not reasonably relate to us or our business or is
similarly inappropriate. Our Secretary has the authority to disregard any inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications.
Stockholder proposals must be made in accordance with the procedures set forth in our current Bylaws or the procedures set forth in Rule 14a-8 of the Exchange Act and not the procedures set forth in the preceding paragraph or the procedures set forth
in “Corporate Governance and Board of Directors - Director Nomination Process.” Nominations for theour Board may only be made in accordance with the procedures set forth in our Bylaws. Certain matters set forth in our Bylaws for stockholder proposals, including nominations forto our Board, as well as certain matters set forth in Rule 14a-8 for stockholder proposals, are described in “Other Matters - Stockholder Proposals and Director Nominations for 20212022 Annual Meeting.”
Director Orientation and Continued Education
We provide each new director with a comprehensive orientation about the Company, including our business operations, strategy and governance. We also provide new directors with the opportunity to meet in one-on-one sessions with our Chief Executive Officer, other directors and other members of senior management.
In addition, we believe that our stockholders are best served by a board of directors composed of individuals who are well-versed in modern principles of corporate governance, and other subject matters relevant to board service, and who thoroughly comprehend the role and responsibilities of an effective board in the oversight of the Company and its management. To this end, we have adopted a formal Director Education Policy. Under our Director Education Policy, our directors are encouraged to attend such director education programs as they deem appropriate to stay abreast of developments in corporate governance and “best practices” relevant to their contribution to our Board generally, as well as to their responsibilities in their specific committee assignments and other roles, and we reimburse our directors for their reasonable costs and attendance fees to participate in such programs.
Director Compensation
We compensate the independent members of our Board for their service. It is our belief that director compensation should:
•align the interests of our directors and our stockholders;
•ensure our Company can attract and retain outstanding director candidates who meet the selection criteria set forth in our Corporate Governance Guidelines and Nominating and Corporate Governance Committee Charter; and
•reflect the substantial time commitment of our directors necessary to oversee our business.
Generally, it has been our practice to compensate our independent directors with a mix of cash and common stock awards. We do not pay any compensation to the non-independent directors for their service on our Board. However, all members of our Board are reimbursed for their costs and expenses of serving on theour Board, including costs and expenses of attending all meetings of our Board and its committees.committees and up to $5,000 per year for continuing education costs incurred in connection with their service on our Board. As discussed above, the Compensation Committee Charter provides that the Compensation Committee has the primary responsibility for reviewing and recommending any changes to director compensation. Our Board reviews the Compensation Committee’s recommendations and determines the amount and manner of independent director compensation.
Independent Director Compensation for 20192020
ForIn 2020, our independent director compensation program provided for the one-year term commencing immediately followingpayments described in the 2019table below:
| | | | | | | | | | | | | | |
| | Cash(1) | Restricted Stock Awards(2) | Restricted Stock Unit Awards(3) |
Board(4) Chair Member | | $87,500 $62,500 | $87,500 $62,500 | |
Audit Committee Chair | | $7,500 | $7,500 | |
Compensation Committee Chair | | $2,500 | $2,500 | |
Nominating and Corporate Governance Committee Chair | | $2,500 | $2,500 | |
Independent Committee(5) Chair Member | | $150,000 $50,000 | | $150,000 $50,000 |
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(1)Paid quarterly in arrears.
(2)Granted on the date of the 2020 annual meeting of stockholders and ending at the Annual Meeting, our independent directors, which includes the individuals listed below, earned the following fees for their service:
for each independent director, an annual fee of $125,000, paid half in cash and half in restricted shares of our common stock;
for the Audit Committee Chair, an additional fee of $15,000, paid half in cash and half in restricted shares of our common stock;
for each of the Compensation Committee Chair and the Nominating and Corporate Governance Committee Chair, an additional fee of $5,000, paid half in cash and half in restricted shares of our common stock; and
for the independent Chair of the Board, an additional fee of $50,000, paid half in cash and half in restricted shares of our common stock.
The cash portion of the annual fee is paid in four equal quarterly installments over the course of the service term. The restricted stock portion of the annual fee is granted under our 2017 Equity Incentive Plan, or the Equity Incentive Plan, which generally occurs on the date of the annual meeting of stockholders at which such director is elected. The number of shares of restricted stock subject to issuance is determined using the fair market value of our common stock on the grant date, which is based on the closing market price of our common stock on the NYSE on the grant date. The restricted stock granted to the independent directors under our Equity Incentive Plan as part of the director fee noted above fully vestsvest on the one-year anniversary thereof, subject to continued service on the Board.
(3)Granted on December 31, 2020 and vest on the one-year anniversary thereof, subject to continued service on the Board.
(4)A director who receives fees as chair of the grant date, so long as such director has complied withBoard does not receive fees for membership on the termsBoard.
(5)The chair and conditionseach other member of the applicable award agreement.Independent Committee received a one-time fee in respect of their service on the Independent Committee, which successfully negotiated the Internalization on our behalf.
The following table shows the compensation of our independent directors for services in all capacities provided to us for the year ended December 31, 2019:2020:
| | | | | | | | | | | | | | |
| Name | | Fees Paid in Cash(2) | Stock Awards(3)(4) | Total |
| Tanuja M. Dehne | | $117,590 | $114,999 | $232,589 |
Martin A. Kamarck(1) | | $117,590 | $114,999 | $232,589 |
| Stephen G. Kasnet | | $248,785 | $244,998 | $493,783 |
| W. Reid Sanders | | $114,990 | $112,499 | $227,489 |
| Hope B. Woodhouse | | $114,990 | $112,499 | $227,489 |
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(1)Mr. Kamarck will not stand for reelection at the Annual Meeting.
(2)This column sets forth the cash fees paid by us during the year ended December 31, 2020. The current term of each of the independent directors expires on the date of the Annual Meeting. The values in this column include overpayments of the following amounts resulting from a one-time administrative processing error: Ms. Dehne, $2,590; Mr. Kamarck, $2,590; Mr. Kasnet, $3,785; Mr. Sanders, $2,490; and Ms. Woodhouse, $2,490. Cash fees paid to each of the independent directors in 2021 will be reduced by the amount of the overpayment to such director in 2020.
(3)The values in this column represent the aggregate fair value of awards of restricted shares of our common stock and restricted stock units computed in accordance with FASB ASC Topic 718 and are based on the closing market price of our common stock on the NYSE on the grant date of the applicable award.
(4)As of December 31, 2020, the following directors had the following amounts of shares of outstanding unvested restricted common stock and restricted stock units, respectively: Ms. Dehne, 12,948 and 5,005; Mr. Kamarck, 12,948 and 5,005; Mr. Kasnet, 18,924 and 15,015; Mr. Sanders, 12,450 and 5,005; and Ms. Woodhouse, 12,450 and 5,005.
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| | | | | | | | |
| Name | | Fees Paid in Cash(1) | | Stock Awards(2)(3) | | Total |
| Tanuja M. Dehne | | $65,000 | | $64,993 | | $129,993 |
| Martin A. Kamarck | | $65,000 | | $64,993 | | $129,993 |
| Stephen G. Kasnet | | $91,250 | | $94,988 | | $186,238 |
| W. Reid Sanders | | $62,500 | | $62,492 | | $124,992 |
| Hope B. Woodhouse | | $62,500 | | $62,492 | | $124,992 |
| | | | | | | |
Independent Director Compensation for 2021
Based on a review of external data presented by the Compensation Committee's independent compensation consultant, the Compensation Committee recommended, and our Board approved, changes to our director compensation program. For 2021, our independent director compensation program provides for the payments described in the table below:
| | | | | | | | | | | |
(1) | This column sets forth the cash fees paid by us during the year ended December 31, 2019. The current term of each of the independent directors expires on the date of the Annual Meeting. | Cash(1) | Restricted Stock Unit Awards(2) |
Board(3) Chair Member | | $160,000 $100,000 | $160,000 $100,000 |
Audit Committee(4) Chair Member | | $10,000 $5,000 | $10,000 $5,000 |
Compensation Committee(4) Chair Member | | $6,250 $3,750 | $6,250 $3,750 |
Nominating and Corporate Governance Committee(4) Chair Member | | $6,250 $3,750 | $6,250 $3,750 |
Supplemental Compensation(5) Board Chair | |
| $155,000 |
| |
(2) | The values in this column were computed in accordance with FASB ASC Topic 718 and are based on the closing market price of our common stock on the NYSE on the grant date of the stock award. |
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(3) | As of December 31, 2019, the following directors had the following amounts of shares of outstanding unvested restricted common stock: Ms. Dehne, 3,378; Mr. Kamarck, 3,378; Mr. Kasnet, 4,937; Mr. Sanders, 3,248; and Ms. Woodhouse, 3,248. |
(1)To be paid quarterly in arrears. (2)To be granted each year on the date of the annual meeting of stockholders and vest on the one-year anniversary thereof, subject to continued service on the Board.
(3)A director who receives fees as chair of the Board does not receive fees for membership on the Board.
(4)A director who receives fees as chair of a committee does not receive fees for membership on that committee.
(5)In recognition of the extraordinary administrative burdens placed on him in respect of our transition from external management to internal management and the COVID-19 pandemic, based on a review of external data presented by the Compensation Committee's independent compensation consultant, the Compensation Committee recommended, and our Board approved, supplemental compensation for Mr. Kasnet, the independent director who currently chairs our Board, consisting of $155,000 per year for each of 2021, 2022, 2023 and 2024, subject to Mr. Kasnet's continued service on our Board. Such supplemental compensation will be paid to Mr. Kasnet on the applicable date of our annual meeting of stockholders.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation Committee is, or has been, employed by us. None of our executive officers currently serves as a member of the board of directors or compensation committee of another entity that has one or more executive officers serving on our Board or our Compensation Committee. In 2019, two of our directors, Messrs. Siering and William M. Roth, each of whom was a partner of our Manager during that time, participated in making compensation decisions for our executive officers and employees of our Manager and its affiliates who provide services to our Company. Mr. Roth retired from our Board effective December 31, 2019.
Transactions with Related Persons
Management Agreement with our Former Manager
We are currentlyPrior to the Internalization effective December 31, 2020, we were party to a Management Agreement with our Former Manager pursuant to which our Former Manager providesprovided the day-to-day management of our business, including providing us with our executive officers and all other personnel necessary to support our operations. The Management Agreement requiresrequired our Former Manager to manage our business in conformity with the policies and the investment guidelines that are approved and monitored by our Board. The Management Agreement has an initial three-year term, which expires on June 28, 2020, and renews automatically for successive one-year terms unless earlier terminated by either us or our Manager in accordance with the terms thereof. Our Manager is entitled to receive a termination fee from us under certain circumstances. In exchange for its services, we are obligated to pay our Manager an annual management fee comprised of a base fee and an incentive fee, as well as reimburse it for certain expenses incurred by it and its affiliates in rendering management services to us. Mr. Siering, a member of our Board, is a partner of our Manager. Mr. Taylor, a member of our Board and our President and Chief Executive Officer, Marcin Urbaszek, our Chief Financial Officer and Treasurer, Stephen Alpart, our Chief Investment Officer, Steven Plust, our Chief Operations Officer, Rebecca B. Sandberg, our Secretary, and Michael J. Karber, our General Counsel and Assistant Secretary, are each employees of an affiliate of our Manager.
We incurred charges of $26.8 million for fiscal year 2019 related to the Management Agreement, of which $14.9 million represented the base management fee, $0.2 million represented incentive fees and $11.7 million represented expense reimbursements for general and administrative expenses incurred on behalf of the Company in the normal course of its operations and certain compensation expenses incurred by our Manager, as described in greater detail below.
Under the Management Agreement, we were obligated to pay our Former Manager a base management fee equal to 1.5% of equity“equity,” as defined in the Management Agreement, on an annualized basis. For purposes of calculating the management fee, “equity” means the sum of the net proceeds from all issuances of our equity securities, plus cumulative “core earnings” at the end of the most recently completed calendar quarter, less any distributions to stockholders, any amount paid to repurchase stockbasis and, any incentive fees earned by our Manager, but excluding the incentive
fee earned in the current quarter. In addition, if earned, we pay our Manager an incentive fee equal to the excess of (1) the product of (a) 20% and (b) the result of (i) “core earnings”earnings,” as defined in the Management Agreement, for the previous 12-month period, minus (ii) the product of (A) equity in the previous 12-month period and (B) 8% per annum, less (2) the sum of any incentive fees paid to our Former Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive fees are payable with respectperiod. In addition, under the Management Agreement, we were required to any calendar quarter unless “core earnings”reimburse our Former Manager for certain expenses incurred by it and its affiliates in rendering management services to us.
We incurred charges of $28.1 million for fiscal year 2020 related to the 12 most recently completed calendar quarters in the aggregate is greater than zero.
For purposeManagement Agreement, of calculatingwhich $15.8 million represented the base management fee and $12.3 million represented expense reimbursements for general and administrative expenses incurred on behalf of the Company in the normal course of its operations and certain compensation expenses incurred by our Former Manager, as described in greater detail below. We also made a $44.5 million one-time payment to our Former Manager in connection with the Internalization. We did not pay our Former Manager any incentive fees “core earnings” means net income (loss) attributable to common stockholders, excluding non-cash equity compensation expense, incentive fees earned by our Manager, depreciation and amortization, any unrealized gains or losses or other similar non-cash items that are included in net income for the applicable period (regardless of whether such items are included in other comprehensive income or loss or in net income) and one-time events pursuant to changes in U.S. GAAP and certain material non-cash income or expense items, in each case after discussions between our Manager and the independent members of our Board and approved by a majority of our independent directors.2020.
In 2019,2020, we reimbursed our Former Manager for a share of the compensation expenses paid by our Former Manager’s affiliate to its employees providing services to us, including a total of approximately $2.1$2.2 million for compensation paid to employees of our Former Manager’s affiliate serving as our Chief Financial Officer, Chief Operating Officer and General Counsel.Chief Development Officer. We did not reimburse our Former Manager for any expenses related to the compensation of our Chief Executive Officer or Chief Investment Officer.
As noted above,
Investor Rights Agreement
On September 25, 2020, we recently announced(i) entered into the Credit Agreement with the Initial Lenders, (ii) issued the Warrants to the Initial Lenders and (iii) in connection with the transactions contemplated by the foregoing, entered into the Investor Rights Agreement with the Initial Lenders. Mr. Chen was appointed to our Board pursuant to the Investor Rights Agreement.
The Investor Rights Agreement provides the Initial Investors and certain of their permitted transferees with certain demand, shelf and piggyback registration rights with respect to the shares of common stock issuable upon exercise of the Warrants. The registration rights provisions also contain customary provisions relating to cooperation with the registration process, black-out periods and securities law indemnity provisions in favor of the selling stockholders. We are required to bear all registration and offering-related expenses, except that in any underwritten registration, we are not responsible for certain fees of the applicable selling stockholder’s legal counsel and the applicable selling stockholder’s portion of underwriting discounts, commissions and transfer taxes, if any, relating to the sale of its common stock under the Investor Rights Agreement.
Pursuant to the Investor Rights Agreement, our Board was required to appoint a director designated by the Initial Lenders as promptly as practicable after September 25, 2020. Effective October 26, 2020, Mr. Chen was appointed to our Board as the initial designated director for the Initial Lenders. Additionally, the Initial Lenders may elect to designate a nominee, or the Initial Lender Designee, for election to our Board until the first day on which (i) the Initial Lenders no longer beneficially own, in the aggregate, at least 51% of the Warrants outstanding (or the shares of common stock acquired upon exercise thereof), (ii) the Initial Lenders no longer hold, in the aggregate, at least 51% of the aggregate principal amount of all outstanding loans and unused commitments of all the lenders pursuant to the Credit Agreement or (iii) the aggregate principal amount of all outstanding loans and unused commitments of all the lenders pursuant to the Credit Agreement no longer exceeds $75 million. For any Initial Lender Designee, we have agreed to (a) use reasonable best efforts to cause such Initial Lender Designee to be nominated for election, (b) recommend that the holders of common stock vote to elect such Initial Lender Designee and (c) use reasonable best efforts to cause the election of a process with our Manager to internalizeslate of directors that includes the Company’s management function.Initial Lender Designee. If the internalizationInitial Lender Designee that is completed, the Management Agreementelected, or an Initial Lender Director, is an independent director under NYSE listing standards, such Initial Lender Director will be terminatedentitled to become a member of one of the following committees, as selected by our Board in its sole discretion: (i) the Audit Committee; (ii) the Compensation Committee; or (iii) the Nominating and thereafter, we willCorporate Governance Committee.
From September 25, 2020 until the later of (i) September 25, 2022 and (ii) 30 days after the date on which an Initial Lender Director is no longer serving on our Board (and as of such time the Initial Lenders (x) no longer have rights to designate an Initial Lender Designee to be obligatedappointed or nominated for election to pay our Manager base managementBoard or incentive fees or reimburse our Manager for expenses as described above. There can be no assurance that(y) otherwise have irrevocably and permanently waived in a writing delivered to us its director rights under the internalizationInvestor Rights Agreement), the Initial Investors, any holder of a Warrant, any lenders party to the Credit Agreement and certain affiliates thereof and other persons will be consummated.subject to certain customary standstill provisions that restrict them from, among other things, purchasing additional securities of the Company, subject to certain exceptions.
Indemnification Agreements with Directors and Officers
We have entered into customary indemnification agreements with each of our directors and officers that require us to indemnify them to the maximum extent permitted by Maryland law and our Articles of Amendment and Restatement against any claim or liability that may arise by reason of their service to us. The agreements also require us to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. In addition, each agreement provides for procedures for the determination of entitlement to indemnification, including requiring that such determination be made by independent counsel after a change in control of us.
Related Person Transaction Policies
Our Audit Committee Charter requires our Audit Committee to review, approve and oversee anyBoard has adopted a written related party transactions involving our Company and also authorizes such Committee to developperson transaction policy setting forth the policies and procedures for itsthe review, approval or ratification of related partyperson transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act of 1933, as amended, or the Securities Act, any financial transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest. Under the policy, related person transactions are approved or ratified by our Audit Committee.
OurIn addition, our Management Agreement placesplaced restrictions on our Former Manager from entering into transactions with its related parties or providing services under the Management Agreement on terms that arewere no more favorable to our Former Manager or its affiliates than would be obtained from a third party on an arm’s-length basis, in any event unless approved by a majority of our independent directors.
STOCK OWNERSHIP
Beneficial Ownership of Directors, Director Nominees and Named Executive Officers
Our common stock is listed on the NYSE under the symbol “GPMT.” The following table sets forth information regarding the beneficial ownership of our common stock as of April 3, 20201, 2021 (unless otherwise indicated) by each of our “named executive officers,” as such term is defined in Item 402(a) of Regulation S-K of the Exchange Act, or our Named Executive Officers, current directors and director nominees and by all of the current directors, director nominees and executive officers as a group.
Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. A person is deemed to be the beneficial owner of any shares of common stock if that person has or shares voting power or investment power with respect to those shares or has the right to acquire beneficial ownership at any time within 60 days of April 3, 2020.1, 2021. “Voting power” is the power to vote or direct the voting of shares and “investment power” is the power to dispose or direct the disposition of shares.
| | Name and Address of Beneficial Owner(1) | | Number of Shares Beneficially Owned(2) | | Percent of Class(2) | Name and Address of Beneficial Owner(1) | | Number of Shares Beneficially Owned(2)(3) | | Percent of Class(2) |
| Directors and Director Nominees: | | Directors and Director Nominees: | |
| | | |
| Devin Chen | | Devin Chen | | — | | * |
| Tanuja M. Dehne | | 10,581 | | * | Tanuja M. Dehne | | 23,529(4) | | * |
Martin A. Kamarck | | 9,581 | | * | | 22,529(4) | | * |
| Stephen G. Kasnet | | 27,155 | | * | Stephen G. Kasnet | | 46,079(4) | | * |
W. Reid Sanders | | 77,175 | | * | | 89,625(4) | | * |
| Thomas E. Siering | | 185,482 | | * | |
| John (“Jack”) A. Taylor | | 278,862 | | * | |
John (“Jack”) A. Taylor(7) | | John (“Jack”) A. Taylor(7) | | 229,445(4) | | * |
| Hope B. Woodhouse | | 19,674 | | * | Hope B. Woodhouse | | 32,124(4) | | * |
| Named Executive Officers: | | Named Executive Officers: | |
| | Stephen Alpart | | 147,112 | | * | Stephen Alpart | | 125,403(8) | | * |
| Peter Morral | | Peter Morral | | 58,471(8) | | * |
| Steven Plust | | 174,502 | | * | Steven Plust | | 158,711(8) | | * |
Marcin Urbaszek(3) | | 59,146 | | * | |
| Rebecca B. Sandberg | | 33,330 | | * | |
All director nominees and executive officers as a group (12 individuals) (2) | | 1,044,309 | | 1.89% | |
Marcin Urbaszek(9) | | Marcin Urbaszek(9) | | 50,063(8) | | * |
All directors, director nominees and executive officers as a group (12 individuals) (2) | | All directors, director nominees and executive officers as a group (12 individuals) (2) | | 853,891 | | 2% |
| | | | |
*Represents ownership of less than 1.0% of our outstanding common stock as of April 1, 2021.
(1)The business address of each of the individuals is 3 2020.
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(1) | The business address of each of the individuals is 3 Bryant Park, Suite 2400A, New York, New York 10036. |
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(2) | Based on 55,136,885 shares of common stock outstanding as of April 3, 2020. Under our Insider Trading Policy, our directors, Named Executive Officers and employees are prohibited from hedging or pledging shares of our stock in any manner, whether as collateral for a loan, in a margin account held at a broker or otherwise. |
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(3) | Includes 94 shares of common stock held by Mr. Urbaszek’s mother. |
Bryant Park, Suite 2400A, New York, New York 10036.
(2)Based on 55,107,657 shares of common stock outstanding as of April 1, 2021. Under our Insider Trading Policy, our directors, Named Executive Officers and employees are prohibited from hedging or pledging shares of our stock in any manner, whether as collateral for a loan, in a margin account held at a broker or otherwise.
(3)The unvested shares of restricted stock included in the footnotes are deemed beneficially owned because the respective holders thereof have the right to vote such shares.
(4)Includes restricted shares issued pursuant to the Granite Point Mortgage Trust Inc. 2017 Equity Incentive Plan, subject to a one-year vesting period from the date of grant.
(5)Mr. Kamarck will not stand for reelection at the Annual Meeting.
(6)Includes 10,000 shares of common stock held by Green Meadows, LLC. Mr. Sanders is the managing member and a 2% owner of Green Meadows, LLC.
(7)Mr. Taylor is also a Named Executive Officer.
(8)Includes restricted shares issued pursuant to the Granite Point Mortgage Trust Inc. 2017 Equity Incentive Plan, subject to a three-year vesting period from the date of grant.
(9)Includes 94 shares of common stock held by Mr. Urbaszek’s mother.
Beneficial Owners of More than Five Percent of Ourour Common Stock
Based on their filings made under Section 13(g) of the Exchange Act, the persons known by us to be beneficial owners of more than five percent (5%) or more of our common stock are as follows:
| | | | | | | | | | | | | | |
| Name and Address of Beneficial Owner | | Number of Shares Beneficially Owned | | Percent of Class(1) |
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 100 | | 10,274,232 | | 18.64% |
The Vanguard Group(3) 100 Vanguard Blvd. Malvern, PA 19355 | | 4,428,189 | | 8.04% |
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| Name and Address of Beneficial Owner | | Number of Shares Beneficially Owned | | Percent of Class(1) |
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | | 9,658,833 | | | 17.52% |
The Vanguard Group(3) 100 Vanguard Blvd. Malvern, PA 19355 | | 5,663,346 | | | 10.27% |
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(1) | Based on 55,136,885 shares of our common stock outstanding as of April 9, 2020. |
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(2) | Based on a Schedule 13G/A filed with the SEC on February 4, 2020, by BlackRock, Inc. reporting that it has sole voting power with respect to 9,516,084 shares and sole dispositive power with respect to all shares reported. |
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(3) | Based on a Schedule 13G/A filed with the SEC on April 9, 2020, by The Vanguard Group reporting that it has sole voting power with respect to 0 shares, shared voting power with respect to 58,589 shares, sole dispositive power with respect to 5,565,788 shares and shared dispositive power with respect to 97,558 shares. |
(2)Based on a Schedule 13G filed with the SEC on January 25, 2021 by BlackRock, Inc. reporting that it has sole voting power with respect to 10,159,556 shares and sole dispositive power with respect to all shares reported. (3)Based on a Schedule 13G/A filed with the SEC on February 10, 2021 by The Vanguard Group reporting that it has sole voting power with respect to 0 shares, shared voting power with respect to 58,308 shares, sole dispositive power with respect to 4,325,036 shares and shared dispositive power with respect to 103,153 shares.
Hedging and Other Transactions Prohibited
TheOur Board has adopted, as part of our insider trading policy,Insider Trading Policy, prohibitions against our officers, directors, employees and consultants and all employees, partners and consultants of our Manager, engaging in transactions designed to profit from fluctuations in the price of our securities, such as short sales or purchasing our securities on margin. In addition, such persons are prohibited from purchasing or selling puts or calls or other derivative securities on our securities, pledging our securities as collateral for a loan or entering into hedging or monetization transactions or similar arrangements with respect to our securities.
Director Stock Ownership Guidelines
Our directors are encouraged to own shares of our common stock in order to better align their personal interests with the interests of our stockholders. In furtherance of this objective, under our director stock ownership guidelines, require each non-employee, independent director is expected to own at least $200,000 inaccumulate shares of our common stock or restricted stock units in an amount equal to three (3) times such director’s annual base cash fee. Each such director is expected to attain the ownership target within five (5) years of being elected to our Board or, in the event the target is not attained by such date or maintained after such date, such director shall retain 50% of the net after-tax shares received upon vesting and thereafter so long asexercise of equity incentive awards until the applicable ownership target is achieved. Awards of restricted shares of our common stock, including unvested shares, and restricted stock unit awards, including the common stock issuable under such person continues to serve as a director. Common stockawards, granted in respect of annual independent director fees, isor otherwise, are counted toward achieving these director stock ownership guidelines. Under our Insider Trading Policy, our directors are prohibited from hedging or pledging sharesAll of our common stock in any manner, whether as collateral for a loan, in a margin account held at a brokerindependent director nominees have met, or otherwise.
are on track to meet, these guidelines.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following sets forth the positions, ages and selected biographical information for our executive officers as of April 23, 2020.1, 2021. Mr. Taylor’s biographical information is provided in the section of this Proxy Statementproxy statement entitled “Proposal 1: Election of Directors.” There are no arrangements or understandings between any executive officer and any other person pursuant to which they were selected as an executive officer.
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| | | | | | | | | | | | | | | | |
| Name | | Age | | Office or Position Held | |
| John (“Jack”) A. Taylor | | 6465 | | President, Chief Executive Officer and Director | |
| Stephen Alpart | | 5657 | | Vice President and Chief Investment Officer | |
| Peter Morral | | 53 | | Vice President and Chief Development Officer | |
| Steven Plust | | 6162 | | Vice President and Chief Operating Officer | |
| Marcin Urbaszek | | 4445 | | Vice President, Chief Financial Officer and Treasurer |
| Rebecca B. Sandberg | | 48 | | Vice President and Secretary |
| Michael J. Karber | | 4041 | | Vice President, General Counsel and Assistant Secretary | |
Stephen Alpart is our Vice President and Chief Investment Officer and has served in that role since the Company’s inception. Mr. Alpart is also our Co-Head of Originations and a member of our Investment Committee. BeforeFrom 2014 to 2020, he was a Managing Director at our Former Manager. Prior to joining our Former Manager, he was Managing Director in the Prudential Financial, Inc., an insurance, investment management and financial products company, Global Real Estate Finance Group, focused on the United States from 2009 to 2014. Previously, he was a Managing Director in the Real Estate Group at GMAC Commercial Mortgage and Capmark Investments where he focused on originating, underwriting and closing large structured commercial real estate loans for private equity firms and private owner/operators. Prior to that, he was a Managing Director in the Real Estate Group at PaineWebber & Co., an investment bank and stock brokerage firm, and later an Executive Director in the Real Estate Group of UBS Group AG, a Swiss multinational investment bank and financial services company, where he focused on originating, underwriting and closing large structured commercial real estate loans for private equity firms and owner/operators. He has worked in real estate finance and debt investing for over 25 years in a variety of functions, including third-party funds management, proprietary on-book lending, transaction advisory business, loan syndications, loan sales and workouts/restructurings. Mr. Alpart received a Masters in Business Administration, Finance and Real Estate from New York University and a B.S. in Business Administration, Accounting and Economics from Washington University.
Peter Morral is our Vice President and Chief Development Officer and has been with the Company since its inception. Mr. Morral is also our Co-Head of Originations and a member of our Investment Committee. From 2014 to 2020, he was a Managing Director at our Former Manager. Prior to joining our Former Manager, Mr. Morral served as a Managing Director in Annaly Capital’s Commercial Real Estate Group. Prior to joining Annaly Capital, Mr. Morral was a Managing Director and member of the Investment Committee at UBS Securities, LLC where he was responsible for institutional client and large loan originations, investment banking coverage, subordinate debt pricing and distribution and loan syndications. Mr. Morral has worked in real estate finance and debt investing for over 20 years in a variety of functions, including on-balance sheet lending, syndications and investing, credit policy and underwriting, and CMBS loan originations, pricing, ratings and credit distribution. Mr. Morral received an M.B.A. from the Ohio State University and a B.L.A. in History from the University of Connecticut.
Steven Plust is our Vice President and Chief Operating Officer and has served in that role since the Company’s inception. Mr. Plust is also a member of our Investment Committee. From 2014 to 2020, he was a Managing Director at our Former Manager. Prior to joining our Former Manager, Mr. Plust was a Managing Director in the Prudential Financial, Inc., an insurance, investment management and financial products company, Global Real Estate Finance Group from 2009 to 2014. He has over 25 years of experience in real estate finance and capital markets, and was an advisor to the Resolution Trust Corporation in the development and implementation of its securitization programs. Mr. Plust has worked for over 20 years in principal investing platforms on Wall Street and in investment management, where he has been primarily responsible for transaction pricing and structuring, credit risk assessment and analysis of complex transactions and multi-asset portfolios. He received a Masters in Business Administrationan M.B.A. from Columbia University and a B.S. in Chemistry from Rensselaer Polytechnic Institute.
Marcin Urbaszek is our Vice President, Chief Financial Officer, Treasurer and TreasurerHead of Investor Relations and has served in those roles since the Company’s inception. He joined our Former Manager in May 2013 and, until the formation of the Company, served as a Managing Director of Two Harbors Investment Corp. (NYSE: TWO), a hybrid mortgage real estate investment trust, focusing on strategy, corporate development and capital markets activities. Prior to joining our Former Manager, Mr. Urbaszek worked at Credit Suisse Group AG, a Swiss multinational investment bank and financial services company, in the Financial Institutions Group, Investment Banking serving in various capacitiesDivision from 2006 to April 2013, most recently serving as a team lead and partner on coverage and
strategic transaction execution for various financial institutions, including residential and commercial mortgage companies, banks and other specialty consumer and commercial lenders. He has over 1920 years of finance experience, in various areas of finance including corporate finance, capital markets and equity research, with the last 15 years dedicated to financial institutions. Over the course of his career, Mr. Urbaszek has been primarily responsible for strategic and capital raising transaction advisory, structuring, negotiation and execution, as well as financial planning and analysis. Mr. Urbaszek received a Bachelor of Business AdministrationB.B.A. in Finance, with a Minor focused on Financial Accounting and Economics, from Zicklin School of Business, Bernard M. Baruch College, CUNY. Mr. Urbaszek is a Chartered Financial Analyst (CFA) Charterholder.CFA
Rebecca B. Sandberg® is our Vice President and Secretary and has served in that role since the Company’s inception. From the Company’s inception to December 31, 2019, Ms. Sandberg also served as our General Counsel. In addition, she serves as the General Counsel, Chief Compliance Officer and Secretary of Two Harbors, a position she has held since March 2013. Ms. Sandberg served as Deputy General Counsel and Secretary of Two Harbors beginning in May 2012, and from 2010 to May 2012 she served as Senior Counsel to Two Harbors. Prior to joining Two Harbors in 2010, Ms. Sandberg was in the private practice of law wherecharterholder.
she advised clients of all sizes primarily in the areas of federal and state securities laws, mergers and acquisitions, public and private capital markets transactions, corporate governance and general corporate law. She received a Bachelor of Arts from the University of Minnesota and a Juris Doctorate from William Mitchell College of Law.
Michael J. Karber is our Vice President, General Counsel and Assistant Secretary and has served in that role since January 1, 2020.Secretary. He has been with the Company since its inception, previously serving as our Deputy General Counsel from 2018 to 2019 and our Assistant Secretary from 2018 to 2019.2020. Prior to joining the Company, he was Lead Counsel -– Business Operations at Two Harbors Investment Corp. (NYSE: TWO), a hybrid mortgage real estate investment trust, beginning in 2014. Prior to joining Two Harbors, he was a Portfolio Manager at Presidium Asset Solutions, an asset management and loan servicing company, from 2010 to 2014, and from 2007 to 2009 he was an Associate at Pircher, NicolsNichols & Meeks LLP. Prior to that, Mr. Karber was an Associate at Dykema Gossett PLLC. Mr. Karber received a J.D. from Northwestern University, Pritzker School of Law, and a B.A. in Political Science and Psychology from the University of Michigan and a J.D. from Northwestern University, Pritzker School of Law..
COMPENSATION COMMITTEE REPORT
Our Compensation Committee has furnished the following report. The information contained in this “Compensation Committee Report” is not to be deemed “soliciting material” or to be “filed” with the SEC, nor is such information to be incorporated by reference into any future filings under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that we specifically incorporate it by reference into such filings.
Our Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K of the Exchange Act with management.
Based on such review and discussions, our Compensation Committee recommended to our Board that the “Compensation Discussion and Analysis” be included in this proxy statement.
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| Submitted by the Compensation Committee of the Company’s Board: |
Martin A. Kamarck (Chair)
Tanuja M. Dehne
W. Reid Sanders
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our Compensation Committee is, or has been, employed by us. None of our executive officers currently serves as a member of the board of directors or compensation committee of another entity that has one or more executive officers serving on our Board or our Compensation Committee. In 2020, one of our directors, Thomas E. Siering, a partner of our Former Manager during that time, participated in making compensation decisions for our executive officers and employees of our Former Manager and its affiliates who provided services to our Company. Mr. Siering did not stand for reelection at the 2020 annual meeting of stockholders.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Our Compensation Discussion and Analysis describes our compensation program, objectives and policies for our Named Executive Officers for our fiscal year ended December 31, 2019,2020, or fiscal 2019.2020.
Our Named Executive Officers for fiscal 20192020 were:
•John (“Jack”) A. Taylor, our President, Chief Executive Officer and Director;
•Stephen Alpart, our Vice President and Chief Investment Officer;
•Peter Morral, our Vice President and Chief Development Officer;
•Steven Plust, our Vice President and Chief Operating Officer; and
•Marcin Urbaszek, our Vice President, Chief Financial Officer and Treasurer; andTreasurer.
Rebecca B. Sandberg, our Vice President, Secretary and former General Counsel.
Michael J. Karber was appointed as our Vice President, General Counsel and Assistant Secretary effective as of January 1, 2020 following the resignation of Ms. Sandberg as our General Counsel.
Overview of Compensation Program and Philosophy
We do not currently have any employees andPrior to the Internalization on December 31, 2020, we are currentlywere managed by our Former Manager pursuant to the Management Agreement.Agreement and did not have any employees. As a result, prior to the Internalization, none of our Named Executive Officers arewere employees of ourthe Company and none of our Named Executive Officers receivereceived cash compensation from us.us in 2020, other than the Special Awards (as defined below) paid pursuant to employment agreements entered into by the Company and each of our Named Executive Officers in connection with the Internalization, or the Employment Agreements, as described in more detail in “Executive Compensation - Compensation Discussion and Analysis - New Employment Agreements.”
OurPrior to the Internalization, our Former Manager currently providesprovided the day-to-day management of our Company’s operations. AllUnder the terms of the Management Agreement, all of our Named Executive Officers are currentlywere employees of an affiliate of our Former Manager, who makesmade them available to our Former Manager who, in turn, providesprovided them to us under the terms of the Management Agreement.us. Because the Management Agreement providesprovided that our Former Manager iswas responsible for managing our affairs, in fiscal 2020, other than the Special Awards, our Named Executive Officers dodid not currently receive any cash compensation from us or any of our subsidiaries for serving as our executive officers and we dodid not reimburse our Former Manager for any cash compensation paid by it to our Chief Executive Officer or Chief Investment Officer. In addition, the Management Agreement doesdid not require our Named Executive Officers to dedicate a specific amount of time to fulfilling our Former Manager’s obligations to us under the Management Agreement. OurAgreement, nor did the Management Agreement also does not require that any specified amount or percentage of the base management fees and incentive fees, if any, we paypaid to our Former Manager be allocated to our Named Executive Officers. However, we estimate that the aggregate cash compensation paid to our Named Executive Officers by our Former Manager that may reasonably be associated with their management of ourthe Company totaled approximately $4.6$4.7 million for fiscal 2019.2020. This aggregate amount represents approximately 17.2%16.7% of the $26.8$28.1 million in total base management fees, incentive fees and expense reimbursements paid by us to our Former Manager for fiscal 2019.2020.
Of the aggregate cash compensation paid by our Former Manager to our Named Executive Officers in 2019fiscal 2020 that was reasonably associated with their management of ourthe Company, we estimate that approximately 52.0%57% represented fixed compensation (e.g., salaries) and 48.0%43% represented variable compensation (e.g., performance-based bonuses and profit sharing). We understand that our Former Manager takestook into account a number of factors in determining the amount of variable compensation it payspaid to each of our Named Executive Officers; for example, based on the individual’s position, factors may include ourhave included the Company’s net equity, financial results and overall performance, total stockholder return, market practices and the recommendations of our Compensation Committee and its independent compensation consultant.
Our Former Manager and its affiliates also determinedetermined whether, and to what extent, our Named Executive Officers will bewere provided with employee benefit plans. We do not currently have employment agreements with our Named Executive Officers and we do not currently provideNo pension or retirement benefits, perquisites or other personal benefits were provided to our Named Executive Officers.Officers in fiscal 2020.
While we may not currently payhave paid our Named Executive Officers any cash compensation in fiscal 2020, other than the Special Awards, we currently paypaid our Former Manager the base management and incentive fees and reimbursereimbursed our Former Manager for certain expenses it incursincurred in the course of rendering services to us under the Management Agreement, as described in more detail in “Certain Relationships and Related Party Transactions - Transactions With Related Persons - Management Agreement.” For fiscal 2020, we incurred $15.8 million in base management fees and $12.3 million in expense reimbursements to our Former Manager under the Management Agreement, as well as a one-time fee of $44.5 million in connection with the Internalization. We did not pay any incentive fees to our Former Manager in fiscal 2020.
Additionally, in the discretion of theour Compensation Committee, of our Board, as ratified by our Board, we may also grant our Named Executive Officers equity awards that vest annually over a three-year period pursuant to our 2017 Equity Incentive Plan, or our Equity Incentive Plan, or equity awards, as described in more detail in “Executive Compensation - Compensation Discussion and Analysis - Equity Awards.” We believe that our use of equity awards and the long-term nature of the vesting of those equity awards serve to further align the interests of our Named Executive Officers with those of our stockholders
and mitigate the possibility of excessive risk taking. For fiscal 2019, we incurred $14.9 million in base management fees, $0.2 million in incentive fees and $11.7 million in expense reimbursements
Prior to our Manager under the Management Agreement.
OurInternalization, our Corporate Governance Guidelines and our committee charters requirerequired our Board and certain of its committees to oversee our relationship with, and compensation paid to, our Manager. TheFormer Manager, and the base management and incentive fees cannotcould not be increased or revised without the approval of our independent directors. See “Certain Relationships and Related Party Transactions - Transactions with Related Persons - Management Agreement” for further discussion of the terms of the Management Agreement, including the base management and incentive fees payable to our Former Manager and our expense reimbursement obligations to our Former Manager thereunder.
As noted above, we recently announced that we have agreed to a process with our Manager to internalize the Company’s management function. In connection with the completion of the internalization, we expect to continue to be managed by our strong senior management team along with other personnel providing services to us, who are currently employed by our Manager, and to whom the Independent Committee expects to extend offers of employment. If the internalization is completed, the Management Agreement will be terminated and, thereafter, we will no longer be obligated to pay our Manager base management or incentive fees or reimburse our Manager for expenses. There can be no assurance that the internalization will be consummated.
Role of Compensation Committee
Currently,Prior to the Internalization, we dodid not have any employees and our Named Executive Officers, each of whom iswas an employee of an affiliate of our Former Manager, dodid not receive any cash compensation from us or any of our subsidiaries, other than the Special Awards, for serving as executive officers. While our Compensation Committee consultsconsulted with our Former Manager in fiscal 2020 regarding cash compensation it payspaid to our Named Executive Officers, other than with respect to the Special Awards, our Former Manager iswas responsible for paying such cash compensation and making all decisions relating thereto based on such factors as it determinesdetermined were appropriate. Our Compensation Committee reviews and approves the equity awards to be paid or made by us to our Named Executive Officers based on recommendations from our Company’s Chief Executive Officer, other than with respect to himself, and its independent compensation consultant. In addition, our Compensation Committee negotiated the Employment Agreements entered into with our Named Executive Officers in fiscal 2020.
Role of Compensation Consultant
From January through July 2019, our Compensation Committee engaged Pay Governance, LLC, or Pay Governance, as its independent compensation consultant. Beginning in August 2019,In fiscal 2020, our Compensation Committee engaged Semler Brossy Consulting Group LLC, or Semler Brossy, as its independent compensation consultant. Our Compensation Committee considered advice and recommendations received from Pay Governance and Semler Brossy regarding compensation matters, including decisions made with respect to executive and director compensation and equity awards. Neither Pay Governance norcompensation. Semler Brossy provideddid not provide services to our Company, other than the advice provided to our Compensation Committee, and each of Pay Governance and Semler Brossy has advised our Compensation Committee that the payments for fees and direct expense reimbursements it received from us during 2019fiscal 2020 were immaterial as a percentage of their income for the period. Each of Pay Governance and Semler Brossy has also advised us that neither it nor, to its knowledge, any member of its consulting team who provides services to our Compensation Committee owns any shares of our common stock. After considering the foregoing, as well as theSemler Brossy's conflict of interest policies and procedures of each of Pay Governance and Semler Brossy and the lack of known business and personal relationships between each of Pay Governance and Semler Brossy, its team members providing services to our Compensation Committee and its members and our Named Executive Officers, our Compensation Committee concluded that the provision of services to the Committeeit by each of Pay Governance and Semler Brossy did not raise any conflict of interest concerns pursuant to the SEC and NYSE rules.
Role of Executive Officers
OurPrior to the Internalization, our Compensation Committee iswas responsible for making all equity award decisions related to our Named Executive Officers and negotiating the terms of the Employment Agreements with our Named Executive Officers. OurOn an annual basis, our Chief Executive Officer annually reviewshas generally reviewed the financial performance of our Company, current market conditions and the performance of each Named Executive Officer and, based on these reviews, providesprovided a recommendation regarding the appropriate equity awards, if any, other than his own, to be presented to our Compensation Committee for approval.
Say-On-Pay Vote
At our 20192020 annual meeting of stockholders, we provided our stockholders with the opportunity to vote to approve, on a non-binding advisory basis, our executive compensation. More thanApproximately 98% of the votes cast at our 20192020 annual meeting of stockholders voted to approveapproved our executive compensation as described in our proxy statement for the 20192020 annual meeting of stockholders. Our Compensation Committee will carefully consider future stockholder votes on this matter, along with other expressions of stockholder views it receives on specific compensation policies and desirable actions.
Equity Compensation
Our Compensation Committee may, from time to time pursuant to our Equity Incentive Plan and the terms of the Employment Agreements, grant equity awards to our Named Executive Officers. These equity awards generally provide for ratable vesting on an annual basisvest over a three-year period of time (e.g., ratably over three years for restricted stock awards and five-year cliff vesting for the Sign-on Awards (as defined below) granted to Named Executive Officers in 2020), with accelerated vesting occurring under certain circumstances, as described in further detail in “Executive Compensation - Compensation Discussion and Analysis - New Employment Agreements” and “Executive Compensation - Potential Payments Upon Termination or Change in Control.” These awards are designed to align the interests of our Named Executive Officers with those of our stockholders by allowing our Named Executive Officers to share in the creation of value for our stockholders through capital appreciation and dividends. We also believe that the vesting restrictions are an important retention and risk management device that encouragesencourage our Named Executive Officers to focus on sustaining our Company’s long-term performance and delivering an attractive total return to our stockholders, rather than encouraging decisions that result in short-term benefits to our Company or excessive risk-taking.
OurOn an annual basis, our Compensation Committee reviewshas generally reviewed the recommendations from our Chief Executive Officer, other than with respect to himself, and an analysis of market data presented by its independent compensation consultant in determining the appropriate size of the equity award forrestricted stock awards granted to each Named Executive Officer. These recommendations take into accounthave generally considered the financial performance of our Company during the prior fiscal year, current market conditions, the performance of each executive officerNamed Executive Officer and the desire to align the interests of each of our executive officersNamed Executive Officers with our stockholders.
In addition, our Compensation Committee considered, among other factors, a number of key factors in determining the sizenumber of the equityrestricted stock awards granted to our Named Executive Officers in 2019,fiscal 2020, including that, in 2018, we 2019, we:
•executed our firstsecond collateralized loan obligation transaction, we transaction;
•established a two-year $75$150 million short-termnon-mark-to-market financing facility, we facility;
•raised approximately $130over $200 million of additional investable capital to support further portfolio growth by issuing five-year senior unsecured convertible bonds, we common equity;
•originated forty-four45 new commercial real estate loans for a total of $1.57approximately $2.0 billion during the fiscal year, an increase of 24%approximately 25% in volume and 63% in loan count versus 2017,2018; and we
•maintained a 100% performing portfolio with no credit impairments recognized, among other things. recognized.
There was no specific numerical value given to any individual factor and each factor was considered in light of the other factors noted, along with any additional information available to our Compensation Committee at the time, including market conditions in general.
In addition, our Compensation Committee considered the terms of the Employment Agreements in determining the number of restricted stock units granted to our Named Executive Officers as Sign-on Awards (as defined below) in fiscal 2020.
New Employment Agreements
In connection with the Internalization effective December 31, 2020, we entered into the Employment Agreements with the Named Executive Officers pursuant to which each became employed directly by the Company on the effective date of the Internalization.
Our Compensation Committee consulted with Semler Brossy with respect to the Employment Agreements. The Compensation Committee negotiated the Employment Agreements and our Board determined that the Employment Agreements, including the compensation arrangements contemplated therein, were in the best interests of the Company and approved and authorized the Employment Agreements, including the compensation arrangements contemplated therein.
Under the Employment Agreements, in consideration for performing services in connection with the Company’s transition in the Internalization process, on December 31, 2020, Messrs. Taylor, Alpart, Morral, Plust and Urbaszek received cash in an amount equal to $1,000,000, $450,000, $450,000, $450,000 and $420,000, respectively, or a Special Award. In addition, under the Employment Agreements, on December 31, 2020, Messrs. Taylor, Alpart, Morral, Plust and Urbaszek also received equity awards, or a Sign-on Award, having a total grant date fair market value equal to $1,000,000, $600,000, $600,000, $600,000 and $560,000, respectively, in the form of restricted stock units that vest on the fifth anniversary of the grant date, subject to continued service through such date.
The Employment Agreements provide that Messrs. Taylor, Alpart, Morral, Plust and Urbaszek will receive an annual base salary of $1,000,000, $600,000, $600,000, $600,000 and $560,000, respectively, or a Base Salary. Messrs. Taylor, Alpart,
Morral, Plust and Urbaszek will be eligible to receive an annual cash bonus, or an Annual Cash Bonus, with a target amount of 100%, 75%, 75% , 75% and 75%, respectively, of the Named Executive Officer’s annual base salary, or the Target Bonus, based on goals established by our Board or the Compensation Committee, each subject to a maximum of 200% of the respective Target Bonus, in respect of 2021 and subsequent years.
In addition, under the Employment Agreements, on January 29, 2021, Messrs. Taylor, Alpart, Morral, Plust and Urbaszek received equity awards with a total grant date fair market value equal to $2,250,000, $1,200,000, $1,200,000, $1,200,000 and $670,000, respectively, in the form of restricted stock units, or a 2021 Award, of which 50% will vest ratably over three years following the vesting commencement date of January 1, 2021, subject to continued service through each applicable vesting date, or a Time-Based 2021 Award, and 50%, or the 2021 Target Shares, will vest based on the achievement of performance metrics from January 1, 2021 to December 31, 2023, subject to continued service through December 31, 2023, or a Performance-Based 2021 Award. Each Performance-Based 2021 Award may be earned up to a maximum of 200% of the respective 2021 Target Shares and, to the extent earned, settled by March 15, 2024.
Under the Employment Agreements, beginning in calendar year 2022, Messrs. Taylor, Alpart, Morral, Plust and Urbaszek will receive equity awards in the form of restricted stock units, or an Annual Equity Award, a portion of which will vest ratably over three years following the grant date, subject to continued service through each applicable vesting date, or a Time-Based Annual Equity Award, and a portion of which, or the Annual Target Shares, will vest based on the achievement of performance metrics, subject to continued service through the end of the performance period, or a Performance-Based Annual Equity Award. Each Performance-Based Annual Equity Award may be earned up to a maximum of 200% of the respective Annual Target Shares and, to the extent earned, settled by March 15 of the calendar year following the end of the applicable performance period.
All equity awards granted as restricted stock units under the Employment Agreements will include dividend equivalent rights.
The Named Executive Officers will also be eligible to participate in all employee benefit programs made available to the Company’s employees generally from time to time and to receive certain other perquisites, each as described in their respective Employment Agreement.
Each Employment Agreement also contains covenants relating to the treatment of confidential information and intellectual property matters and restrictions on the ability of each of the Named Executive Officers on the one hand and the Company on the other hand to disparage the other. In addition, the Employment Agreements provide that the Named Executive Officer shall not, without the prior written consent of our Chief Executive Officer (or the Board, in the case of Mr. Taylor), (i) for a period of one year for Mr. Taylor, nine months for Messrs. Alpart and Plust and six months for Messrs. Morral and Urbaszek following the termination of the Named Executive Officer’s employment relationship with the Company for any reason, engage in certain competitive activities and (ii) for a period of one year following the termination of the Named Executive Officer’s employment relationship with the Company for any reason, solicit certain current or former employees or customers of the Company.
The Employment Agreements also provide for payments upon termination or change in control as described in detail in “Executive Compensation - Potential Payments Upon Termination or Change in Control.”
Summary Compensation Table
The following table summarizes the equity and bonus compensation paid to our Named Executive Officers during the fiscal years ending December 31, 2020, 2019 2018 and 20172018 for services rendered to us during the fiscal years presented:
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Name and Principal Position | | Year | Restricted Stock Awards(1)
| | All Other Compensation(2)
| | Total(3)
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John (“Jack”) A. Taylor,
President and Chief Executive Officer
| | 2019
2018
2017
| $1,199,981
$999,993
$1,516,125
| | $216,317
$170,867
$24,880
| | $1,416,298
$1,170,830
$1,541,005
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Stephen Alpart,
Vice President and Chief Investment
Officer
| | 2019
2018
2017
| $749,981
$599,999
$390,000
| | $109,363
$67,680
$6,400
| | $859,344
$667,679
$396,400
|
Steven Plust
Vice President and Chief Operating
Officer
| | 2019
2018
2017
| $749,981
$599,999
$390,000
| | $109,363
$67,680
$6,400
| | $859,344
$667,679
$396,400
|
Marcin Urbaszek,
Vice President, Chief Financial
Officer and Treasurer
| | 2019
2018
2017
| $249,987
$199,988
$263,250
| | $42,193
$31,488
$4,320
| | $292,180
$231,476
$267,570
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Rebecca B. Sandberg,
Vice President and Secretary
| | 2019
2018
2017
| $69,999
$49,997
$195,000
| | $16,604
$16,529
$3,200
| | $86,603
$66,526
$198,200
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| Name and Principal Position | | Year | | Bonus(2) | | Stock Awards(3) | | All Other Compensation(4) | | Total(5) |
| John (“Jack”) A. Taylor, | | 2020 | | $1,000,000 | | $2,199,995 | | $78,269 | | $3,278,264 |
| President and Chief Executive | 2019 | - | $1,199,981 | $216,317 | $1,416,298 |
| Officer | 2018 | - | $999,993 | $170,867 | $1,170,830 |
| Stephen Alpart, | | 2020 | | $450,000 | | $1,349,992 | | $44,415 | | $1,844,407 |
| Vice President and Chief | 2019 | - | $749,981 | $109,363 | $859,344 |
| Investment Officer | 2018 | - | $599,999 | $67,680 | $667,679 |
| Steven Plust, | | 2020 | | $450,000 | | $1,349,992 | | $44,415 | | $1,844,407 |
| Vice President and Chief | 2019 | - | $749,981 | $109,363 | $859,344 |
| Operating Officer | 2018 | - | $599,999 | $67,680 | $667,679 |
| Peter Morral, | | 2020 | | $450,000 | | $1,449,988 | | $35,772 | | $1,935,760 |
| Vice President and Chief | |
Development Officer (1) | |
| Marcin Urbaszek, | | 2020 | | $420,000 | | $809,990 | | $15,761 | | $1,245,751 |
| Vice President, Chief Financial | 2019 | - | $249,987 | $42,193 | $292,180 |
| Officer and Treasurer | 2018 | - | $199,988 | $31,488 | $231,476 |
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(1) | See also “Grants of Plan-Based Awards.” The shares of restricted stock were granted pursuant to our Equity Incentive Plan and vest in three equal annual installments beginning on the first anniversary of the grant date, so long as the Named Executive Officer complies with the terms and conditions of his or her restricted stock agreement. The values in this column represent the grant date fair value of the restricted stock awards, computed in accordance with FASB ASC Topic 718, using the closing market price of our common stock on the NYSE on the date of such grant.(1)Mr. Morral was not a Named Executive Officer in 2018 or 2019. (2)The values in this column represent the Special Awards paid in cash in connection with the Named Executive Officer performing services for the transition in the Internalization process pursuant to the Employment Agreements. See “Executive Compensation - Compensation Discussion and Analysis - New Employment Agreements” for further detail about the Employment Agreements. (3)See also “Grants of Plan-Based Awards.” The values in this column represent the aggregate fair value of awards of restricted shares of our common stock and restricted stock units computed in accordance with FASB ASC Topic 718 and are based on the closing market price of our common stock on the NYSE on the grant date of the applicable award. (4)The values in this column represent dividends paid on unvested restricted shares of common stock and amounts paid, if any, in respect of the dividend equivalent rights accompanying restricted stock units. (5)Any cash compensation paid to our Named Executive Officers by our Former Manager is not included in this Summary Compensation Table. See “Compensation Discussion and Analysis - Overview of Compensation Program and Philosophy” for further discussion of cash compensation paid by our Former Manager.
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(2) | The values in this column represent dividends paid on unvested shares of restricted common stock. |
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(3) | Because we do not currently pay cash compensation to our Named Executive Officers, any such compensation paid to our Named Executive Officers by our Manager is not included in this Summary Compensation Table. See “Compensation Discussion and Analysis - Overview of Compensation Program and Philosophy” for further discussion of cash compensation paid by our Manager.
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Grants of Plan-Based Awards in 20192020
The following table provides information regarding awards of restricted stock awardsand restricted stock units granted to our Named Executive Officers under our Equity Incentive Plan during the fiscal year ended December 31, 2019.2020.
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| Name | | Grant Date | | All Other Stock Awards: Number of Shares of Stock(1) | | Grant Date Fair Value of Stock Awards(2) |
| John (“Jack”) A. Taylor | | 01/28/2019 | | 62,143 | | $1,199,981 |
| Stephen Alpart | | 01/28/2019 | | 38,839 | | $749,981 |
| Steven Plust | | 01/28/2019 | | 38,839 | | $749,981 |
| Marcin Urbaszek | | 01/28/2019 | | 12,946 | | $249,987 |
| Rebecca B. Sandberg | | 01/28/2019 | | 3,625 | | $69,999 |
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(1)Name | | Grant Date | | See also “All Other Stock Awards: Number of Shares of Stock or UnitsSummary Compensation Table.”(1)
| | Grant Date Fair Value of Stock Awards The shares of restricted stock were granted pursuant to our Equity Incentive Plan and vest in three equal annual installments beginning on the first anniversary of the grant date, so long as the Named Executive Officer complies with the terms and conditions of his or her restricted stock award agreement.(2) |
| John (“Jack”) A. Taylor | | 1/29/2020 | | 64,970(3) | | $1,199,996 |
(2)12/31/2020 | The values in this column represent the grant date fair value of the restricted stock awards, computed in accordance with FASB ASC Topic 718, using the closing market price of our common stock on the NYSE on the date of such grant.100,100(4) | $999,999 |
| Stephen Alpart | | 1/29/2020 | | 40,606(3) | | $749,993 |
| 12/31/2020 | 60,060(4) | $599,999 |
| Steven Plust | | 1/29/2020 | | 40,606(3) | | $749,993 |
| 12/31/2020 | 60,060(4) | $599,999 |
| Peter Morral | | 1/29/2020 | | 46,020(3) | | $849,989 |
| 12/31/2020 | 60,060(4) | $599,999 |
| Marcin Urbaszek | | 1/29/2020 | | 13,535(3) | | $249,991 |
| 12/31/2020 | 56,056(4) | $559,999 |
(1)See also “Summary Compensation Table.”
(2)The values in this column represent the grant date fair value of the restricted stock and restricted stock unit awards, computed in accordance with FASB ASC Topic 718, using the closing market price of our common stock on the NYSE on the date of such grant.
(3)The shares of restricted stock were granted on January 29, 2020 pursuant to our Equity Incentive Plan and vest in three equal annual installments beginning on the first anniversary of the grant date, so long as the Named Executive Officer complies with the terms and conditions of his restricted stock award agreement.
(4)The restricted stock units were granted on December 31, 2020 pursuant to our Equity Incentive Plan and vest on the fifth anniversary of the grant date, so long as the Named Executive Officer complies with the terms and conditions of his restricted stock unit award agreement.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning unvested restricted stock and restricted stock unit awards for each of the Named Executive Officers as of December 31, 2019.
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| | | | | | | | | | | | | | | | | | | | |
| | | | Stock Awards | |
| Name | | Grant Date | | Number of Shares or Units of Stock That Have Not Vested(1) that have not vested | | Market Value of Shares or Units of Stock That Have Not Vestedthat have not vested(2)(1) |
| John (“Jack”) A. Taylor | | 12/31/2020 | | 01/28/2019
01/29/2018
06/22/2017100,100(2)
| | $999,999 |
| 1/29/2020 | 62,143
38,469
25.91764,970(3)
| $649,050 |
| 1/28/2019 | 41,429(3) | $1,142,188413,876 |
| 1/29/2018 | 19,235(3) | $707,060$476,354
192,158 |
| Stephen Alpart | | 12/31/2020 | | 01/28/2019
01/29/2018
06/22/201760,060(2)
| | $599,999 |
| 1/29/2020 | 38,839
23,082
6,66740,606(3)
| $405,654 |
| 1/28/2019 | 25,893(3) | $713,861258,671 |
| 1/29/2018 | 11,541(3) | $424,247$122,539
115,295 |
| Steven Plust | | 12/31/2020 | | 01/28/2019
01/29/2018
06/22/201760,060(2)
| | $599,999 |
| 1/29/2020 | 38,839
23,082
6,66740,606(3)
| $405,654 |
| 1/28/2019 | 25,893(3) | $713,861258,671 |
| 1/29/2018 | 11,541(3) | $115,295 |
| Peter Morral | | 12/31/2020 | | 60,060(2) | | $424,247599,999 |
| 1/29/2020 | 46,020(3) | $459,740 |
| 1/28/2019 | 23,304(3) | $122,539232,807 |
| 1/29/2018 | 5,771(3) | $57,652 |
| Marcin Urbaszek | | 12/31/2020 | | 01/28/2019
01/29/2018
06/22/201756,056(2)
| | 12,946
7,694
4,500
| | $237,947 $141,416
$82,710
559,999 |
Rebecca B. Sandberg | 1/29/2020 | 01/28/2019
01/29/2018
06/22/201713,535(3)
| $135,215 |
| 1/28/2019 | 3,625
1,924
3,3348,631(3)
| $86,224 |
| 1/29/2018 | 3,847(3) | $66,627$35,363
$61,279
38,432 |
| |
(1) | The shares of restricted stock were granted pursuant to our Equity Incentive Plan and vest in three equal annual installments beginning on the first anniversary of the grant date, so long as the Named Executive Officer complies with the terms and conditions of his or her restricted stock award agreement. |
| |
(2) | The values in this column are based on the $18.38 closing market price of our common stock on the NYSE on December 31, 2019. |
(1)The values in this column are based on the $9.99 closing market price of our common stock on the NYSE on December 31, 2020. (2)The restricted stock units were granted pursuant to our Equity Incentive Plan and vest on the fifth anniversary of the grant date, so long as the Named Executive Officer complies with the terms and conditions of his restricted stock unit award agreement.
(3)The shares of restricted stock were granted pursuant to our Equity Incentive Plan and vest in three equal annual installments beginning on the first anniversary of the grant date, so long as the Named Executive Officer complies with the terms and conditions of his restricted stock award agreement.
Stock Vested in 20192020
The following table sets forth information concerning the shares of restricted stock held by our Named Executive Officers that vested during the year ended December 31, 2019.2020.
| | | | | Stock Awards | | Stock Awards |
| Name | | | Number of Shares Acquired on Vesting | | Value Realized on Vesting(1) | Name | | Number of Shares Acquired on Vesting | | Value Realized on Vesting(1) |
| John (“Jack”) A. Taylor | | 45,151 | | $860,981 | John (“Jack”) A. Taylor | | 65,865 | | $913,868 |
| Stephen Alpart | | 18,207 | | $348,777 | Stephen Alpart | | 31,154 | | $497,481 |
| Steven Plust | | 18,207 | | $348,777 | Steven Plust | | 31,154 | | $497,481 |
| Peter Morral | | Peter Morral | | 20,338 | | $341,485 |
| Marcin Urbaszek | | 8,346 | | $159,271 | Marcin Urbaszek | | 12,662 | | $181,309 |
| Rebecca B. Sandberg | | 4,294 | | $81,517 | |
The following table sets forth estimates of the potential benefits to our Named Executive Officers in connection with such circumstances,certain termination and change in control events, assuming such eventevents occurred on December 31, 2019 and assuming our Compensation Committee exercised its discretion to accelerate vesting of unvested restricted stock awards upon a change in control.2020. The actual payments due upon the occurrence of certainsuch events could materially differ from the estimates provided in the table if such events occur on a different date.
