Securities Exchange Act of 1934
(Amendment No. )
COLONY CREDIT REAL ESTATE,
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The enclosed materials include a notice of meeting, proxy statement, proxy card, self-addressed pre-paid envelope and Annual Report to Stockholders for the fiscal year ended December 31, 2020.
New York, New York
OF STOCKHOLDERS
Wednesday,
8:3016, 2023
219091430
brightspire2023
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21, 2023.
In addition to accessing
Pursuant to the U.S. Securities and Exchange Commission’s “notice and access” rules, the Company’s Proxy Statement and 2022 Annual Report to Stockholders are available online at www.proxyvote.com.
31, 2023
Wednesday,
16, 2023.
http:
Proxy Summary
Proxy Summary
2021
•Place: Via live audio webcast at https://web.lumiagm.com/286413441;219091430; passcode: colony2021brightspire2023 (unique 11-digit control number required)
•Voting: Only holders of record of the Company’s Class A common stock, $0.01 par value per share (the “common stock”), as of the closeof business on March 19, 202121, 2023 (the “Record Date”) will be entitled to notice and to vote at the 20212023 Annual Meeting of Stockholders (the “2021“2023 Annual Meeting”) and any postponement or adjournment thereof. Each share of common stock entitles its holder to one vote.
•Technical Support for the 20212023 Annual Meeting: If you have difficulty accessing the virtual 20212023 Annual Meeting, technicians will beavailable to assist you via the toll freetoll-free phone number listed at https://web.lumiagm.com/286413441.
PROPOSAL | BOARD RECOMMENDATION | FOR MORE INFORMATION | ||||||||||||
1 | Election of Directors | FOR all nominees | Page | |||||||||||
2 | ||||||||||||||
To approve (on a non-binding basis) the compensation of our named executive officers as of December 31, | FOR | Page | ||||||||||||
3 | ||||||||||||||
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, | FOR | Page | ||||||||||||
4 | To approve the BrightSpire Capital, Inc. Charter Amendment to eliminate the supermajority voting requirement in Article VIII, thereby establishing the affirmative vote of a majority of all the votes entitled to be cast on the matter as the voting standard to approve any and all amendments to the Charter (except for those amendments permitted to be made without stockholder approval under Maryland law or by a specific provision in the Charter) | FOR | Page 59 |
thereof
.Proxy Summary |
2022.
NAME | AGE(1) | DIRECTOR SINCE | INDEPENDENCE STATUS | OCCUPATION | COMMITTEE MEMBERSHIPS | |||||||||
AC | CC | NCG | ||||||||||||
Catherine D. Rice(2) | 61 | 2018 | Yes | Private Investor; Former Senior Managing Director of W.P.Carey | M | M | M | |||||||
Vernon B. Schwartz | 70 | 2018 | Yes | Private Investor; Former Executive Vice President iStar | M | C | M | |||||||
John E. Westerfield | 62 | 2018 | Yes | Chief Executive Officer of Mitsui Fudosan America, Inc. | M | M | C | |||||||
Winston W. Wilson | 53 | 2018 | Yes | Private Practice; Adjunct Professor – Pace University | C, E | M | M | |||||||
Michael J. Mazzei | 59 | 2020 | No | Chief Executive Officer and President of Colony Credit Real Estate, Inc. | — | — | — |
Proxy Summary
AGE (1) | COMMITTEE MEMBERSHIPS (2) | ||||||||||||||||||||||
NAME | DIRECTOR SINCE | INDEPENDENCE STATUS | OCCUPATION | AC | CC | NCG | |||||||||||||||||
Catherine D. Rice (3) | 63 | 2018 | Yes | Private Investor; Former Senior Managing Director of W.P. Carey | M, E | ||||||||||||||||||
Kim S. Diamond | 58 | 2021 | Yes | Former Founding Executive of Kroll Bond Rating Agency | M | M | |||||||||||||||||
Catherine Long | 66 | 2021 | Yes | Former Chief Financial Officer of Store Capital, Inc. | C, E | M | |||||||||||||||||
Vernon B. Schwartz | 72 | 2018 | Yes | Private Investor; Former Executive Vice President iStar | M, E | C | |||||||||||||||||
John E. Westerfield | 64 | 2018 | Yes | Chief Executive Officer of Mitsui Fudosan America, Inc. | M | C | |||||||||||||||||
Michael J. Mazzei | 61 | 2020 | No | Chief Executive Officer of BrightSpire Capital, Inc. |
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ACAudit Committee | CCCompensation Committee | NCGNominating and Corporate Governance Committee | ||||||
CCommittee Chair | MCommittee Member | EAudit Committee Financial Expert |
Proxy Summary |
How to Vote / Authorize a Proxy | Stockholder of Record
name with American Stock Transfer & Trust Company) | Street Name Holders
Broker, Bank or Other Nominee) | ||||||||||||
Visit the applicable voting website and follow the on-screen instructions: | www.voteproxy.com | Refer to voting instruction form. | ||||||||||||
BY INTERNET USING A COMPUTER | ||||||||||||||
| In the United States call: In foreign countries call: |
1-800-proxies 1-718-921-8500 | Refer to voting instruction form. | |||||||||||
BY TELEPHONE | ||||||||||||||
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| Sign, date and return by mail: | Completed proxy card. | Refer to voting instruction form. | |||||||||||
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DURING THE VIRTUAL MEETING |
About the Meeting (FAQs)
About the Meeting (FAQs) |
(FAQS)
About the Meeting (FAQs) |
•Internet: You may vote by internet by visiting |
About the applicable voting website and following the on-screen instructions.
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we encourage you to submit a proxy in advance to ensure your shares are represented. Your voting in person (virtually) at the 2023 Annual Meeting will automatically result in the revocation of any previously submitted proxy.
Meeting
.About the Meeting (FAQs) |
About the Meeting (FAQs)
The affirmative vote of a majority of the votes cast at the meeting is required for approval of the advisory “say on pay” resolutionproposal regarding the compensation of our named executive officers. For purposes of the foregoing, a majority of the votes cast means that the number of shares that are cast and are voted “for” the resolutionproposal must exceed the number of shares that are cast and are voted “against” the resolution.proposal. For purposes of the vote on this proposal, pursuant to our organizational documents and Maryland state law, abstentions and broker non-votes, if any, will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.
About the Meeting (FAQs) |
•Proposal 1: FOR the election of each of the nominees for director specified in this proxy statement;
•Proposal 2: FOR the non-binding advisory approval of the resolution approving the compensation of our named executive officers as ofDecember 31, 2020; and
•Proposal 3: FOR the ratification of the appointment of EY as our independent registered public accounting firm for 2021.
Company Overview
Company Overview |
Colony Credit Real Estate,
Maryland on August 23, 2017 and maintain key offices in New York, New York and Los Angeles, California. The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with its taxable year ended December 31, 2018. We are organized and conduct our operations to qualify as a REIT and generally are not subject to U.S. federal income taxes on our taxable income to the extent that we annually distribute all of our taxable income to stockholders and maintain qualification as a REIT (although we are subject to U.S. federal income tax on income earned through our taxable subsidiaries). We also operate our business in a manner that will permit us to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended.
The Company is externally managed by CLNC Manager, LLC (the “Manager”), a subsidiary of Colony Capital, Inc. (“Colony Capital”), a NYSE-listed global investment firm.
Company Overview |
Company Overview |
capitalizing on asset level underwritingØ leveraging long standing relationships, our organization structure and the experience of the team;
Øprimarily originating and structuring CRE senior mortgage loans and selective investments in mezzanine loans and preferred equity with attractive return profiles relative to the underlying value and financial operating performance of the real estate collateral, given the strength and quality of the sponsorship;
Østructuring transactions with a prudent amount of leverage, if any, given the risk of the underlying asset’s cash flows, attempting to match the structure and duration of the financing with the underlying asset’s cash flows, including through the use of hedges, as appropriate;
andidentifyingØ operating our net leased real estate investments and selectively pursuing new investments based on property location and purpose, tenant credit quality, market lease rates and potential appreciation of, and alternative uses for, the real estate; and
creating capital appreciation opportunities through active asset management and equity participation opportunities.
The period for which we intend to hold our investments will vary depending on the type of asset, interest rates, investment performance, micro and macro real estate environment, capital markets and credit availability, among other factors. We generally expect to hold debt investments until the stated maturity and equity investments in accordance with each investment’s proposed business plan. We may sell all or a partial ownership interest in an investment before the end of the expected holding period if we believe that market conditions have maximized its value to us or the sale of the asset would otherwise be in the best interests of our stockholders.
During the third quarter of 2019, the Company completed a comprehensive portfolio bifurcation plan, managing its business operations
Company Overview
of direct investmentsover time in operating real estate such as multi-tenant officeresponse to opportunities available in different economic and multifamily residentialcapital market conditions. This flexibility in our investment strategy allows us to employ a customized, solutions-oriented approach, which we believe is attractive to borrowers and tenants. We believe that our diverse portfolio, our ability to originate, acquire and manage our target assets real estate acquired in settlement of loans, real estate private equity interests and certain retail and other legacy loans originated prior to the combination that created the Company on January 31, 2018. As part of this plan, investment-level business plans were amended to accelerate legacy, non-strategic portfolio dispositions to redeploy available proceeds into the Company’s Core Portfolio to focus on core business growth.
As of December 31, 2020, the Company resolved 56 investments from the Legacy, Non-Strategic Portfolio and the remaining Legacy, Non-Strategic Portfolio net asset value represented less than 1%flexibility of Company total net book value.
our investment strategy positions us to capitalize on market inefficiencies and generate attractive long-term risk-adjusted returns for our stockholders through a variety of market conditions and economic cycles.
1.
2. Independent Chairperson; Lead Independent Director. Concurrent with the re-election of directors at the 2021
As of the date hereof, the Company’s Board is comprised of six members, including our five independent directors, led by Catherine D. Rice, our Independent Chairperson, Vernon Schwartz, John Westerfield, Kim S. Diamond, Catherine F. Long and Michael J. Mazzei, the Company’s Chief Executive Officer. Prospectively, we will have six directors assuming re-election at the 2023 Annual Meeting, five of whom are independent. As a result, the Company’s Board currently and will reflect independent board membership of 83.3%. All of our NYSE-required Board committees consist solely of independent directors. Independent directors meet regularly in executive session (separate from management). |
Company Overview |
3. Board Diversification and Refreshment. Importantly, since inception in 2018, 50% of our independent directors have comprised either gender or racial/ethnic diversity. Prospectively, upon re-election at the 2021 Annual Meeting, 50% of the independent directors (and 40% of the Board) will be represented by individuals of either gender or racial/ethnic diversity. Generally, our Board recognizes the benefits of multifaceted diversity, including the importance of having the right mix of skills, expertise, experience, fresh perspectives, and a commitment to continuously reviewing its capabilities. Notably, upon re-election, the four incumbent independent directors would begin their fourth year of service on the Board and Mr. Mazzei would begin his second year of service on the Board.
4.
Ø Board Diversification and Refreshment. | ||||||||
Importantly, since inception in 2018, gender and racial/ethnic diversity have been a priority of the Board. Assuming re-election at the 2023 Annual Meeting, 50% of the Board is and will be represented by female members. In addition, as set forth in the table below on page 16, our Board recognizes the benefits of multifaceted diversity, including the importance of having the right mix of skills, expertise, experience, fresh perspectives, and a commitment to continuously reviewing its capabilities. |
5.
6.
7. Board
8. Independent Director Meetings. Independent Directors meet regularly in executive session (separate from management).
9. Outside Advisor Guidance. The Board and each committee have express authority to retain outside advisors, including (i) an independent compensation consultant to advise the Compensation Committee, and (ii) separate financial and legal advisors to represent the Special Committee.
10. Compensation Review. Independent Directors conduct an annual review of the CEO, Manager and Company performance.
11.
Company Overview |
Ø Outside Advisor Guidance.
performance.
Company Overview |
PRI.
our investment committee materials.
Ø Diligence Priorities: Focus on sustainability certifications, energy management, air quality management, water and site management, natural and environmental concerns, and DEI policies, including governance codes of conduct (including anti-discrimination and harassment principles), unconscious bias and other training, and hiring, retention and leadership practices
ØLead Transparently: Better understand counterparty commitment, measure and manage our business operations to improveenvironmental and financial performance and openly communicate progress with stakeholders
Ø Create a Positive Impact: Make a positive, lasting impact in our global communities by working to improve the health and well-being of our employees and supporting charitable activities, including through a commitment to diversity, equity and inclusion in hiring and engagement practices
Company Overview |
such communications.
Proposal No. 1: Election of Directors
Proposal No. 1: Election of Directors |
upcoming year.
Board of Directors
Board of Directors |
COMMITTEE | |||||||||||||||||||||||
AGE (1) | DIRECTOR | INDEPENDENCE | MEMBERSHIPS (2) | ||||||||||||||||||||
NAME | SINCE | STATUS | OCCUPATION | AC | CC | NCG | |||||||||||||||||
Catherine D. Rice (3) | 63 | 2018 | Yes | Private Investor; Former Senior Managing Director of W.P. Carey | M, E | ||||||||||||||||||
Kim S. Diamond | 58 | 2021 | Yes | Former Founding Executive of Kroll Bond Rating Agency | M | M | |||||||||||||||||
Catherine Long | 66 | 2021 | Yes | Former Chief Financial Officer of Store Capital, Inc. | C, E | M | |||||||||||||||||
Vernon B. Schwartz | 72 | 2018 | Yes | Private Investor; Former Executive Vice President iStar | M, E | C | |||||||||||||||||
John E. Westerfield | 64 | 2018 | Yes | Chief Executive Officer of Mitsui Fudosan America, Inc. | M | C | |||||||||||||||||
Michael J. Mazzei | 61 | 2020 | No | Chief Executive Officer of BrightSpire Capital, Inc. |
AC Audit Committee | CC Compensation Committee | NCG Nominating and Corporate Governance Committee | ||||||
C Committee Chair | M Committee Member | E Audit Committee Financial Expert |
Board of Directors |
CATHERINE D. RICE Independent Chairperson Director since 2018 Committee Membership ● Audit Committee | Catherine D. Rice.Catherine D. Rice | From June 2015 to February 2016, Ms. Rice was Senior Managing Director of W.P. Carey Inc. (“W.P. Carey”), a New York Stock Exchange publicly listed company (NYSE: WPC), one of the largest public global net-lease REITs. Prior to that role, from March 2013 to June 2015, Ms. Rice was Managing Director and Chief Financial Officer of W.P. Carey. While at W.P. Carey, Ms. Rice completed a comprehensive reorganization of the finance, accounting, and IT functions as well as the development of the investor relations and capital markets areas to facilitate the company’s growth plan. She was responsible for financial strategy, public capital-raising initiatives and company-wide strategic evaluation, and was also a member of the operating and investment committees. Prior to joining W.P. Carey, Ms. Rice was a partner and a Managing Director at Parmenter Realty Partners, a private real estate investment firm focused on distressed and value-add properties in the southern regions of the U.S. Her responsibilities included both capital raising and investing for the firm’s fourth fund. Prior to that, Ms. Rice was the Chief Financial Officer of iStar Inc. (“iStar”) (NYSE: STAR), a publicly traded finance company focused on the commercial real estate industry, where she was responsible for financial strategy and capital-raising initiatives, financial reporting and investor relations. Ms. Rice spent the first 16 years of her career as a professional in the real estate investment banking groups of Merrill Lynch, Lehman Brothers and Banc of America Securities. During her career as an investment banker, she was involved in numerous capital-raising and strategic advisory transactions, including REIT IPOs, public and private debt and equity offerings, mergers and acquisitions, leveraged buyouts, and asset and corporate acquisitions and dispositions. Ms. Rice received a Bachelor of Arts degree from the University of Colorado and a Master of Business Administration from Columbia University. Consideration for Ms. Rice's Recommendation: Ms. Rice’s extensive real estate and capital markets experience, her prior leadership as a chieffinancial officer of real estate and finance focused publicly listed companies, as well as her current and past service on the boards of real estate investment trusts and other real estate-based organizations, highlights her value to continue serving as an independent director and Chairperson of the Company. |
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Board of Directors |
KIM S. DIAMOND Independent Director Director since 2021 Committee Membership ● Compensation Committee ● Nominating & Corporate Governance Committee | Kim S. Diamond. Kim S. Diamond is an independent director of the Company. Ms. Diamond has over 30 years of experience in the commercial real estate capital and structured finance debt capital markets industries. Prior to becoming a board member, Ms. Diamond was a Founding Principal and Head of Structuring and Credit at Crescit Capital Strategies (“Crescit”), a middle-market, commercial real estate debt fund from July 2017 until August 2021. Before joining Crescit, Ms. Diamond was a Founding Executive and Senior Managing Director at Kroll Bond Rating Agency, Inc. (“KBRA”). As a member of the KBRA executive team, Ms. Diamond played a pivotal role in the establishment, growth and ultimate sale of the start-up ratings firm. In addition to running all aspects of KBRA’s Structured Finance Ratings group, Kim was a member of the firm’s policy committee. Prior to joining KBRA, Ms. Diamond was a Managing Director at Standard and Poor’s (“S&P”). As an early member of S&P’s CMBS group, Ms. Diamond participated with other industry veterans in developing the standards and criteria that became the foundation for the US CMBS business. Ms. Diamond served as Practice Leader of S&P’s U.S. Commercial Mortgage Ratings Group and also helped develop S&P’s International CMBS and other Structured Finance efforts via short term management positions in the firm’s Melbourne, Australia and London, England offices. Ms. Diamond also served as the Interim Head of Structured Finance Ratings for S&P’s Asia/Pacific region in Tokyo, Japan. Ms. Diamond has served on the Board of Governors of the Commercial Real Estate Finance Council (“CREFC”), where she held positions as Programming Chair, Membership Chair and Treasurer and has been a recipient of the trade association’s prestigious Founder’s Award. She has also served on the Commercial Board of Governors (“COMBOG”) for the Mortgage Bankers Association (“MBA”). Ms. Diamond currently serves as an advisory board member of Ai SPARK, a start-up commercial real estate fintech firm and Great One Digital Holdings, the parent company of fintech start-ups GreatX and HOMZ Global, and is an adjunct professor at New York University’s School of Professional Studies Schack Institute of Real Estate. Ms. Diamond received a Bachelor of Arts degree from Cornell University and a Master of Business Administration from Columbia University. Consideration for Ms. Diamond’s Recommendation: Ms. Diamond’s extensive knowledge of commercial real estate credit, structured finance and risk management and oversight, her executive leadership and founding role in real estate related organizations, together presents a distinguishable skill set and positions her strongly to continue forward as an independent director of the Company. |
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Board of Directors |
CATHERINE LONG Independent Director Director since 2021 Committee Membership ● Audit Committee (Chair) ● Nominating & Corporate Governance Committee |
Catherine Long. Catherine Long is an independent director of the Company. Ms. Long has over 30 years of accounting, operating and financial management expertise. Most recently, Ms. Long was one of the founders of STORE Capital Corporation (NYSE: STOR), an internally managed net-lease real estate investment trust formed in 2011 to focus on single tenant operational real estate of middle market companies across the United States. Ms. Long served as STORE’s Executive Vice President – Chief Financial Officer, Treasurer and Assistant Secretary from its inception in May 2011 until November 2021. As Chief Financial Officer, her responsibilities included financial planning, asset-liability management, treasury, accounting and controls, and serving on STORE’s executive investment committee. Prior to co-founding STORE, Ms. Long was Chief Financial Officer, Senior Vice President and Treasurer of |
Ms. Long was named CFO of the Year in 2008 by the Consideration for Ms. Long's Recommendation: Ms. Long’s career has been highlighted by a longstanding commitment to financial management, accounting and operating discipline and expertise, previously as a founder and chief financial officer of a New York Stock Exchange publicly traded real estate investment trust for 10+ years. With this prior financial expertise and executive experience in the real estate industry, Ms. Long is well positioned to serve as |
Catherine D. Rice. Catherine D. Rice is a director of the Company. Ms. Rice has served as a director of Store Capital Corporation, a New York Stock Exchange publicly listed company (NYSE: STOR), since November 2017. Ms. Rice has also served as a director of RMG Acquisition Corporation II, a NASDAQ publicly listed company (NASDAQ: RMGBU), since its initial public offering in December 2020, and as a director of RMG Acquisition Corporation III, a NASDAQ publicly listed company (NASDAQ: RMGCU), since its initial public offering in February 2021. Ms. Rice has over 30 years of experience in the real estate capital and investment markets and in the management and operation of public and private real estate companies.
From June 2015 to February 2016, Ms. Rice was Senior Managing Director of W.P. Carey Inc. (“W.P. Carey”), a New York Stock Exchange publicly listed company (NYSE: WPC), one of the largest public global net-lease REITs. Prior to that role, from March 2013 to June 2015, Ms. Rice was Managing Director and Chief Financial Officer of W.P. Carey. While at W.P. Carey, Ms. Rice completed a comprehensive reorganization of the finance, accounting, and IT functions as well as the development of the investor relations and capital markets areas to facilitate the company’s growth plan. She was responsible for financial strategy, public capital-raising initiatives and company-wide strategic evaluation, and was also a member of the operating and investment committees.
Prior to joining W.P. Carey, Ms. Rice was a partner and a Managing Director at Parmenter Realty Partners, a private real estate investment firm focused on distressed and value-add properties in the southern regions of the U.S. Her responsibilities included both capital raising and investing for the firm’s fourth fund. Prior to that, Ms. Rice was the Chief Financial Officer of iStar Inc. (“iStar”) (NYSE: STAR), a publicly traded finance company focused on the commercial real estate industry, where she was responsible for financial strategy and capital-raising initiatives, financial reporting and investor relations.
Ms. Rice spent the first 16 years of her career as a professional in the real estate investment banking groups of Merrill Lynch, Lehman Brothers and Banc of America Securities. During her career as an investment banker, she was involved in numerous capital-raising and strategic advisory transactions, including REIT IPOs, public and private debt and equity offerings, mergers and acquisitions, leveraged buyouts, and asset and corporate acquisitions and dispositions.
Ms. Rice received a Bachelor of Arts degree from the University of Colorado and a Master of Business Administration from Columbia University.
Consideration for Ms. Rice’s Recommendation: Ms. Rice’s extensive real estate and capital markets experience, her recent leadership as a chieffinancial officer of real estate and finance focused publicly listed companies, as well as her current and past service on the boards of real estate investment trusts and other real estate-based organizations, highlights her value to continue serving as a director (and Independent Chairperson) of the Company.
Board of Directors
Vernon B. Schwartz. Vernon B. Schwartz is a director of the Company. Mr. Schwartz was an independent director of NorthStar Real Estate IncomeTrust, Inc. and a member of its Audit Committee, positions he held between March 2016 and January 2018. Mr. Schwartz served as Executive Vice President at iStar from 2005 to February 2017, where he was responsible for managing a portfolio of real estate investments, including iStar’s condominium portfolio and its European assets. He has also served as President of AutoStar, iStar’s platform focused on the auto dealership market.
Mr. Schwartz has been active in real estate investment and development for almost 30 years. Previously, Mr. Schwartz was a founding partner and Chief Executive Officer of Falcon Financial, the predecessor of AutoStar before it was acquired by iStar in 2005. Prior to forming Falcon Financial, Mr. Schwartz was the Chief Executive Officer of Soros Real Estate Advisors, the advisor to Quantum Realty Partners, an offshore real estate investment fund sponsored by George Soros and Paul Reichmann. Mr. Schwartz previously served as Chairman, President and Chief Executive Officer of Catellus Development Corporation, the largest private landowner in the state of California, and also held executive positions at both Bank of Montreal and The Hahn Company, a developer, owner and operator of regional shopping centers.
Mr. Schwartz has a Bachelor of Commerce degree in Economics and a Master of Business Administration from the University of the Witwatersrand in Johannesburg, South Africa.
Consideration for Mr. Schwartz’s Recommendation:Mr. Schwartz’s strengths include his knowledge of the real estate investment and financeindustries, including his extensive experience in real estate development and portfolio management, both domestically and internationally. With prior executive experience for real estate related companies and board service for a predecessor of the Company, Mr. Schwartz is recommended to serve as an independent director of the Company.
John E. Westerfield. John E. Westerfield is a director of the Company. Mr. Westerfield serves as Chief Executive Officer of Mitsui Fudosan America, Inc. (“MFA”) and is a member of MFA’s board of directors. MFA is the U.S. subsidiary of Mitsui Fudosan Group, a publicly listed real estate company in Japan. Mr. Westerfield was appointed Chief Executive Officer of MFA in April 2015 after serving as Senior Advisor to MFA’s board of directors from 2012 to 2015.
Mr. Westerfield spent the majority of his career as a managing director at Morgan Stanley, having joined the firm in 1985 upon graduation from business school. At Morgan Stanley, Mr. Westerfield worked in numerous roles in investment banking, fixed income and investment management, all with a specialization in commercial real estate finance and investment. In his last role at Morgan Stanley, Mr. Westerfield had responsibility for the firm’s global commercial mortgage finance business. Upon retirement from Morgan Stanley in June 2008, Mr. Westerfield formed and managed Braddock Capital Management LLC, a private company which invested in REITs and commercial real estate related assets, including various office, industrial, multi-family rental and condominium development projects, primarily in the New York area.
Mr. Westerfield received a Master of Business Administration from Harvard Business School in 1985 and a Bachelor of Arts in Government from Dartmouth College in 1981.
Consideration for Mr. Westerfield’s Recommendation: Mr. Westerfield’s extensive knowledge of commercial real estate finance and investment,continuing leadership as a chief executive officer of a prominent U.S. focused real estate investment business, and expertise in strategic business planning and investment strategy, highlight attributes qualifying him to serve as an independent director of the Company.
Board of Directors
Winston W. Wilson. Winston W. Wilson is a director of the Company. Mr. Wilson was an independent director of NorthStar Real Estate Income II, Inc.and the chairman and financial expert of its Audit Committee, positions he held between April 2013 and January 2018. Mr. Wilson has also served as a director of NorthStar/RXR New York Metro Real Estate, Inc. and as the chairman and financial expert of its audit committee between February 2015 and October 2018.
Prior to becoming a board member, Mr. Wilson most recently worked for Grant Thornton’s New York office, from August 2008 until December 2012 as Partner in Charge and Financial Services Industry Leader, and from August 2011 until December 2012 as National Asset Management Sector Leader. Mr. Wilson has over 29 years of experience with financial services companies including, among others, mortgage and equity REITs, broker-dealers, mutual funds and registered investment advisors. Prior to joining Grant Thornton in 2000, Mr. Wilson worked for PricewaterhouseCoopers LLP, Credit Suisse First Boston and Brown Brothers Harriman & Co. Mr. Wilson is a certified public accountant in the states of New York, New Jersey and Pennsylvania. He is a member of the American Institute of Certified Public Accountants and New York State Society of CPAs. Mr. Wilson was also previously a member of the American Institute of Certified Public Accountants (AICPA) Investment Company Expert Panel, as well as a member of the Strategic Partners Advisory Committee for Managed Funds Associations.
Mr. Wilson has a Master of Business Administration in Finance and Marketing from New York University’s Stern School of Business in New York, New York and a Master of Science in Economics and a Bachelor of Science in Accounting from Brooklyn College in Brooklyn, New York. Mr. Wilson also has a doctorate degree in management from Pace University, New York, where he is also an adjunct professor.
Consideration for Mr. Wilson’s Recommendation: Mr. Wilson’s expertise in finance and accounting service, through years of service for leadingaccounting firms in addition to board and audit committee representation for public commercial real estate investment companies, highlight his leading qualifications to serve as a director of the Company.
Michael J. Mazzei. Michael J. Mazzei is the Company’s Chief Executive Officer and President. Mr. Mazzei will lead and oversee our operations, including investmentand credit risk, capital raising and relationship management activities among stockholders, clients, partners, financing counterparties, research analysts and rating agencies.
Mr. Mazzei served as a member of the board of directors of Ladder Capital Corp from June 2017 through March 2020. Previously, Mr. Mazzei served as President of Ladder Capital from June 2012 through June 2017. From September 2009 to June 2012, Mr. Mazzei served as Global Head of the CMBS and Bank Loan Syndication Group at Bank of America Merrill Lynch.
Prior to that, Mr. Mazzei served as Co-Head of CMBS and Commercial Real Estate Debt Markets at Barclays Capital from March 2004 to June 2009. Prior to Barclays Capital, Mr. Mazzei spent
Board of Directors |
VERNON B. SCHWARTZ Independent Director Director since 2018 Committee Membership ● Compensation Committee (Chair) ● Audit Committee | Vernon B. Schwartz. Vernon B. Schwartz is an independent director of the Company. Mr. Schwartz was an independent director of NorthStar Real Estate Income Trust, Inc. and a member of its Audit Committee, positions he held between March 2016 and January 2018. Mr. Schwartz served as Executive Vice President at iStar from 2005 to February 2017, where he was responsible for managing a portfolio of real estate investments, including iStar’s condominium portfolio and its European assets. He has also served as President of AutoStar, iStar’s platform focused on the auto dealership market. Mr. Schwartz has been active in real estate investment and development for almost 30 years. Previously, Mr. Schwartz was a founding partner and Chief Executive Officer of Falcon Financial, the predecessor of AutoStar before it was acquired by iStar in 2005. Prior to forming Falcon Financial, Mr. Schwartz was the Chief Executive Officer of Soros Real Estate Advisors, the advisor to Quantum Realty Partners, an offshore real estate investment fund sponsored by George Soros and Paul Reichmann. Mr. Schwartz previously served as Chairman, President and Chief Executive Officer of Catellus Development Corporation, the largest private landowner in the state of California, and also held executive positions at both Bank of Montreal and The Hahn Company, a developer, owner and operator of regional shopping centers. Mr. Schwartz has a Bachelor of Commerce in Economics and a Master of Business Administration from the University of the Witwatersrand in Johannesburg, South Africa. Consideration for Mr. Schwartz'sRecommendation: Mr. Schwartz’s strengths include his knowledge of the real estate investment and finance industries, including his extensive experience in real estate development and portfolio management, both domestically and internationally. With prior executive experience for real estate related companies and his relevant real estate investment acumen, Mr. Schwartz is recommended to serve as an independent director of the Company. |
Mr. Mazzei received a B.S. from Baruch College and a J.D. from St. John’s University School of Law, and is a graduate of the New York University Real Estate Institute.
Consideration for Mr. Mazzei’s Recommendation: Mr. Mazzei’s over 35 years of experience in commercial real estate finance and having served asexecutive officer, director and in other senior leadership positions at a series of commercial real estate financing and banking institutions qualify him to serve as a director of the Company.
Board of Directors |
JOHN E. WESTERFIELD Independent Director Director since 2018 Committee Membership ● Nominating & Corporate Governance Committee (Chair) ● Compensation Committee | John E. Westerfield. John E. Westerfield is an independent director of the Company. Mr. Westerfield serves as Chief Executive Officer of Mitsui Fudosan America, Inc. (“MFA”) and is a member of MFA’s board of directors. MFA is the U.S. subsidiary of Mitsui Fudosan Group, a publicly listed real estate company in Japan. Mr. Westerfield was appointed Chief Executive Officer of MFA in April 2015 after serving as Senior Advisor to MFA’s Board of Directors from 2012 to 2015. Mr. Westerfield spent the majority of his career as a managing director at Morgan Stanley, having joined the firm in 1985 upon graduation from business school. At Morgan Stanley, Mr. Westerfield worked in numerous roles in investment banking, fixed income and investment management, all with a specialization in commercial real estate finance and investment. In his last role at Morgan Stanley, Mr. Westerfield had responsibility for the firm’s global commercial mortgage finance business. Upon retirement from Morgan Stanley in June 2008, Mr. Westerfield formed and managed Braddock Capital Management LLC, a private company which invested in REITs and commercial real estate related assets, including various office, industrial, multi-family rental and condominium development projects, primarily in the New York area. Mr. Westerfield received a Master of Business Administration from Harvard Business School in 1985 and a Bachelor of Arts in Government from Dartmouth College in 1981. Consideration for Mr. Westerfield’s Recommendation: Mr. Westerfield's extensive knowledge of commercial real estate finance and investment,continuing leadership as a chief executive officer of a prominent U.S. focused real estate investment business, and expertise in strategic business planning and investment strategy, highlight attributes qualifying him to serve as an independent director of the Company. |
Board of Directors |
MICHAEL J. MAZZEI Director (Executive) Director since 2020 | Michael J. Mazzei. Michael J. Mazzei is the Company's Chief Executive Officer and a member of our Board. Since April 2020, Mr. Mazzei has led and overseen our operations, including investment and credit risk, capital raising and relationship management activities among stockholders, clients, partners, financing counterparties, research analysts and rating agencies. Mr. Mazzei served as a member of the board of directors of Ladder Capital Corp, (“Ladder”) from June 2017 through March 2020. Previously, Mr. Mazzei served as President of Ladder from June 2012 through June 2017. From September 2009 to June 2012, Mr. Mazzei served as Global Head of the CMBS and Bank Loan Syndication Group at Bank of America Merrill Lynch. Prior to that, Mr. Mazzei served as Co-Head of CMBS and Commercial Real Estate Debt Markets at Barclays Capital from March 2004 to June 2009. Prior to Barclays Capital, Mr. Mazzei spent 20 years at Lehman Brothers, including 18 years in commercial real estate finance-related functions. Having started in commercial mortgage trading in 1984, Mr. Mazzei became the head of CMBS in 1991 and served as the Co-Head of Global Real Estate Investment Banking from March 2002 to February 2004. Mr. Mazzei received a Bachelor of Science from Baruch College and a Juris Doctor from St. John’s University School of Law, and is a graduate of the New York University Real Estate Institute. Consideration for Mr. Mazzei’s Recommendation: Mr. Mazzei’s over 35 years of experience in commercial real estate finance and having served asexecutive officer, director and in other senior leadership positions at a series of commercial real estate financing and banking institutions qualify him to serve as a director of the Company. |
Executive Officers |
NAME | AGE (1) | POSITION | ||||||||
Michael J. Mazzei | 61 |
| Chief Executive Officer | |||||||
Andrew E. Witt | 45 |
| President & Chief Operating Officer | |||||||
Frank V. Saracino | 56 |
| Chief Financial Officer, | |||||||
David A. Palamé | 45 |
| General Counsel, Secretary and |
|
In addition, Mr. Palamé also serves as Executive Vice President of the Company and the chief compliance officer of the Company’s registered investment advisor, BrightSpire Capital Advisors, LLC.
Executive Officers |
Corporate Governance
Corporate Governance |
Officer.
Corporate Governance |
Corporate Governance
positions at a series of commercial real estate financing and banking institutions, best serves the interests of the Company. Our Board periodically evaluates the Company’s leadership structure and will periodically evaluate the Chairperson and Chief Executive Officer positions, including determining whether the separate roles continue to serve the best interests of the Company.
LEAD INDEPENDENT DIRECTOR AND TRANSITION TO
Corporate Governance |
Corporate Governance
DIRECTORS OFFER OF RESIGNATION POLICY
Ødiversity, age, background, skill and experience;
Øpersonal qualities, high ethical standards and characteristics, accomplishments and reputation in the business community;
Øknowledge and contacts in the communities in which the Company conducts business and in the Company’s industry or other industries relevant to the Company’s business;
Øability and willingness to devote sufficient time to serve on the Board and committees of the Board;
Øknowledge and expertise in various areas deemed appropriate by the Board; and
Øfit of the individual’s skills, experience and personality with those of other directors in maintaining an effective, collegial and responsive Board.
Corporate Governance |
Corporate Governance
director. When reviewing and evaluating a related party transaction, our Audit Committee may consider, among other things, any effect a transaction may have upon a director’s independence, whether the transaction involves terms and conditions that are no less favorable to us than those that could be obtained in a transaction between us and an unrelated third party and the nature of any director’s or officer’s involvement in the transaction. In the event any such related party transaction involves a member of the Audit Committee, the transaction must be approved by a majority of the disinterested members of the Audit Committee.
director or executive officer or any member of his or her immediate family, has an interest. In addition, pursuant to our Code of Business Conduct and Ethics, all potential conflict of interest situations, including related party transactions, must be disclosed to our General Counsel. To the extent any such potential conflict of interest disclosed to our General Counsel is a proposed related party transaction, the General Counsel will communicate such conflict and the proposed transaction to the Audit Committee. Further, our General Counsel will notify the members of our Audit Committee promptly of any material changes to previously approved or conditionally approved related party transactions.
Information about Our Board of Directors and its Committees
Information About Our Board of Directors and Its Committees |
2022.
AUDIT COMMITTEE | COMPENSATION COMMITTEE | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | ||||||||||
INDEPENDENT DIRECTOR | ||||||||||||
Catherine D. Rice(1) | M | M | M | |||||||||
Vernon B. Schwartz | M | C | M | |||||||||
John E. Westerfield | M | M | C | |||||||||
Winston W. Wilson | C, E | M | M | |||||||||
NUMBER OF MEETINGS HELD IN 2020 | 4 | 6 | 5 |
C Committee Chair M Committee Member E Audit Committee Financial Expert
AUDIT COMMITTEE | COMPENSATION COMMITTEE | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | |||||||||||||||||||||
INDEPENDENT DIRECTOR | |||||||||||||||||||||||
Catherine D. Rice (1) | M, E | M | M | ||||||||||||||||||||
Kim S. Diamond (2) | M | M | |||||||||||||||||||||
Catherine Long (3) | C, E | M | |||||||||||||||||||||
Vernon B. Schwartz (4) | M, E | C | M | ||||||||||||||||||||
John E. Westerfield (5) | M | M | C | ||||||||||||||||||||
Winston W. Wilson (3) | C, E | M | M | ||||||||||||||||||||
NUMBER OF MEETINGS HELD IN 2022 | 4 | 6 | 4 | ||||||||||||||||||||
C | Committee Chair | M | Committee Member | E | Audit Committee Financial Expert | ||||||||||||||||||
(1) Independent Chairperson. Ms. Rice transitioned off the Compensation Committee and Nominating & Corporate Governance Committee on May 5, 2022. (2) Ms. Diamond joined such committees on May 5, 2022. (3) Ms. Long began service as Chair of the Audit Committee and joined the Nominating & Corporate Governance Committee on May 5, 2022. Mr. Wilson retired as a member of the Board and committees (including as Chair of Audit Committee) upon completing his annual term of service ending concurrent with the 2022 Annual Meeting on May 5, 2022. (4) Mr. Schwartz transitioned off the Nominating & Corporate Governance Committee on May 5, 2022. (5) Mr. Westerfield transitioned off the Audit Committee on May 5, 2022. |
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Information About Our Board of Directors and Its Committees |
Øour accounting and financial reporting processes;
Øthe integrity of our consolidated financial statements and financial reporting process;
Øour systems of disclosure controls and procedures and internal control over financial reporting;
Øour compliance with financial, legal and regulatory requirements and our ethics program;
Øthe evaluation of the qualifications, independence and performance of our independent registered public accounting firm;
Øthe performance of our internal audit function; and
Øthe Company’s overall risk profile and risk management practices.
Information about Our Boardmeetings held during their term of Directors and its Committees
service on the Audit Committee.
Øidentify and recommend to the full Board qualified candidates for election as directors and recommend nominees for election as directors at the annual meeting of stockholders;
Ødevelop and recommend to the Board corporate governance guidelines and implement and monitor such guidelines;
Øreview and make recommendations on matters involving the general operation of the Board, including board size and composition, and committee composition and structure;
Ørecommend to the Board nominees for each committee of the Board;
Øannually facilitate the assessment of the Board’s performance as a whole and of individual directors, as required by applicable law, regulations and the NYSE corporate governance listing standards; and
Øoversee the Board’s evaluation of management.
meetings held during their term of service on the Nominating & Corporate Governance Committee.
Information About Our Board of Directors and Its Committees |
oversee the Manager and the management fees and other compensation payable to the Manager;
Øreview and approve on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluate our Chief Executive Officer’s performance in light of such goals and objectives and determine and approve the compensation of our Chief Executive Officer based on such evaluation;
Øreview and approve the compensation, if any, of all of our executive officers, including our “named executive officers”;
Øimplement and administer our incentive compensation equity-based remuneration plans, including the Colony Credit Real Estate, Inc. 2018Company’s 2022 Equity Incentive Plan (the “CLNC Incentive“2022 Plan”);
Øoversee and assist management in preparing the compensation disclosure and analysis for inclusion in our proxy statement and/or annual report;
Øprepare and submit a report on executive compensation to be included in our proxy statement and/or annual report; and
Øreview, evaluate and recommend changes, if appropriate, to the compensation for directors.
meetings held during their term of service on the Compensation Committee.
Information about Our Board of Directors and its Committees
SPECIAL COMMITTEE
In October 2019, our Board formed a Special Committee, consisting exclusively of independent and disinterested directors, including Ms. Rice and Messrs. Schwartz, Westerfield and Wilson. Ms. Rice serves as the committee chair.
On November 6, 2019, Colony Capital sent a letter to our independent directors proposing to explore with us the possible internalization of the management of the Company and a transfer of Colony Capital’s credit management business to us. The letter provided that an internalization would be subject to, among other things, the negotiation of terms and definitive documentation and approval of our Board of Directors and the board of directors of Colony Capital (or an authorized committee thereof in each case). The Special Committee was formed to explore this internalization proposal as well as other strategic alternatives.
Subsequently, due to ongoing uncertainty surrounding the duration and magnitude of the COVID-19 pandemic and its impact on the global economy, on April 1, 2020, Colony Capital reported in Amendment No. 3 to Schedule 13D (filed with the U.S. Securities and Exchange Commission) that it has postponed any decision regarding a disposition of its management agreement with the Company. On March 4, 2021, Colony Capital reported in Amendment No. 4 to Schedule 13D (filed with the U.S. Securities and Exchange Commission) that it has engaged in, and currently plans to continue to engage in, confidential discussions and negotiations with the Special Committee regarding a possible internalization of management, including, without limitation, a potential disposition or termination of Colony Capital’s management agreement with the Company.
There can be no assurance that the Company and Colony Capital will be able to negotiate and execute a definitive agreement to internalize the management of the Company or that any such internalization would be completed. The Special Committee will continue to consider value-enhancing alternatives for the Company as opportunities arise.
Director Compensation
Director Compensation |
such periods of service.
2022
Name | Annual Fees Earned or Paid in Cash | Annual Stock Awards(1) | Total | |||||||||
Richard B. Saltzman(2) | $ | 27,322.50 | $ | 0 | $ | 27,322.50 | ||||||
Catherine D. Rice | 100,000 | 100,000 | 200,000 | |||||||||
Vernon B. Schwartz | 95,000 | 100,000 | 195,000 | |||||||||
John E. Westerfield | 95,000 | 100,000 | 195,000 | |||||||||
Winston W. Wilson | 100,000 | 100,000 | 200,000 |
Annual | ||||||||||||||
Fees Earned | Annual | |||||||||||||
or Paid in | Stock | |||||||||||||
Name | Cash $ | Awards $ (1) | Total $ | |||||||||||
Catherine D. Rice | 100,000 | 100,126 | 200,126 | |||||||||||
Kim S. Diamond | 80,000 | 100,126 | 180,126 | |||||||||||
Catherine Long (2) | 93,150 | 100,126 | 193,276 | |||||||||||
Vernon B. Schwartz | 95,000 | 100,126 | 195,126 | |||||||||||
John E. Westerfield | 95,000 | 100,126 | 195,126 | |||||||||||
Winston W. Wilson | 34,247 | 0 | 34,247 |
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For the fiscal year end December 31, 2020
Because the Management Agreementconsultation with the Manager provides that the Manager is responsibleCompany’s independent compensation consultant and Chief Executive Officer, enhanced compensation structuring for managing the affairs of the Company, we do not pay, award or provide ournamed executive officers anyas follows (each as described in further detail below):
Pursuant to the terms of the Management Agreement, we reimburse our Manager or its affiliates for our allocable share of the compensation (including annual base salary, bonus and any related withholding taxes and employee benefits) our Manager pays to its personnel serving asChief Operating Officer;
Our Manager is responsible, and we do not reimburse our Manager or its affiliates, for the cash compensation and benefits awarded to personnel of our Manager and its affiliates who serve as our named executive officers other than that for Mr. Neale W. Redington, our Chief Financial Officer for the fiscal year ended December 31, 2020. In addition, the Management Agreement does not require that any of our named executive officers dedicate a specific amount of time to fulfilling our Manager’s obligations to us under the Management Agreement and does not require a specified amount or percentagedate.
Colony Capital’s compensation philosophyprogram is to seek to align the interests of itsour professionals (including our executive officers) with those of its investors and investors in the vehicles that it manages, including us.our stockholders. In setting compensation for its professionals, Colony Capitalthe Company takes into consideration variousquantitative, qualitative and individual factors in determining the total compensation payable to itssuch professionals, includingincluding:
Our named executive officers for 2020 were Michael J. Mazzei, our Chief Executive Officer and President, appointeda new company, with respect to compensation, that began on April 1, 2020; Andrew E. Witt, our Chief Operating Officer, appointed effective April 1, 2020 (having served30, 2021, which engaged in substantial transition and stabilization responsibilities as interim chief executive officer and president from March 1, 2020 until April 1, 2020), and David A. Palamé, our General Counsel and Secretary. In addition, during 2020, Kevin P. Traenkle, served as our former Chief Executive Officer and President, from January 1, 2020 and resigning effective February 29, 2020, and Neale W. Redington served as our Chief Financial Officer and Treasurer, from January 1, 2020 and resigning effective December 31, 2020. Mr. Saracino was appointed as Chief Financial Officer and Treasurer effective January 1, 2021. Therefore, Mr. Saracino was not a named executive officernewly internalized business. As described in 2020.
In setting compensation for its professionals, includingfurther detail herein, our named executive officers Colony Capital didwere not take into account the amount of the management fee we pay to our Manager. For the fiscal year ended December 31, 2020, we incurred a total management fee expense of $29.74 million. We did not pay any incentive compensation fees to our Manager during the fiscal year ended December 31, 2020. For the year ended December 31, 2020, the total reimbursements of expenses incurred by the Manager on behalfemployees of the Company until April 30, 2021, when the Company internalized management upon terminating its management agreement with its former external manager. As a result, we caution placing significant reliance on trailing analyses (whether 3-year, 5-year or similar), that capture and reimbursable in accordance withaggregate Company performance, results and compensation under the Management Agreement was $9.8 million. Of the reimbursement amount, $530,878 represented our aggregate reimbursement for the salaryseparate stewardship and other compensation/benefits earned by our former Chief Financial Officer, Mr. Redington, in 2020.
Executive Compensation
We have adopted an incentive plan, the CLNC Incentive Plan, under which we may award equity-based and cash-based awards to our and our subsidiaries’ directors, officers, employees, consultants and advisors and directors, officers and employeescompensation policies of our Managerprior and its affiliates that are providing servicesnow unaffiliated external manager. If referencing data prior to usApril 30, 2021, we believe such trailing performance measures may not reflect the current organizational structure of the Company from and after our subsidiaries. These awards are designedinternalization of management.
Executive Compensation |
Our Compensation Committee may, from time to time, grant our named executive officers and Manager (and/or employees of its affiliates) equity-based awards, including stock options, restricted shares of our common stock, RSUs, stock appreciation rights and other equity-based awards that are exercisable for or settle in shares of our common stock. These awards are designed to align the interests of our named executive officers and such other recipients with those of our stockholders, by allowing each to share in the creation of value for our stockholders through capital appreciation and dividends. These equity awards are generally subject to vesting requirements over a number of years, and are designed to promote the retention of management and achievement of strong performance for the Company. These awards provide a further benefit to us by enabling our Manager to attract, motivate and retain talented individuals to serve as our executive officers and other personnel to the Company. The Compensation Committee reviews the recommendations of the Company’s Chief Executive Officer, the Manager and outside compensation consultant in determining the appropriate size of the equity award for each executive officer, the Manager (and/or employees of its affiliates), as applicable. These recommendations take into account certain quantitative, qualitative and individual variables, which may include the financial performance of the Company during the prior fiscal year, certain performance standards designed in consultation with the Compensation Committee at the beginning of a subject year, peer benchmarking (including relative total stockholder return evaluations), current
In considering equity grants from
Compensation Element | Type of Compensation | Chief Executive Officer 2022 Target % | Other NEO 2022 Target % (average) | |||||||||||
Annual Base Salary | Fixed | 14% | 18% | |||||||||||
Annual Cash Incentive Awards | Variable | 32% | 32% | |||||||||||
Long-Term Incentive Plan Awards | Variable / Equity-Based | 54% | 50% | |||||||||||
Total | 100% | 100% |
Executive Compensation |
Executive Compensation |
EXECUTIVE COMPENSATION PEERS | |||||||||||
Starwood Property Trust, Inc. | Ladder Capital Corp. | Granite Point Mortgage Trust Inc. | |||||||||
iStar Inc. | Arbor Realty Trust, Inc. | MFA Financial, Inc. | |||||||||
Walker & Dunlop, Inc. | Main Street Capital Corporation | Hercules Capital, Inc. | |||||||||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. | New York Mortgage Trust, Inc. |
PERFORMANCE PEERS | ||||||||
Claros Mortgage Trust, Inc. | Ladder Capital Corp. | Granite Point Mortgage Trust Inc. | ||||||
Blackstone Mortgage Trust | Apollo Commercial Real Estate Finance | KKR Real Estate Finance Trust | ||||||
TPG RE Finance Trust | Ares Commercial Real Estate Corp. | Franklin BSP Realty Trust, Inc. |
Executive Compensation |
Covered Person | Ownership Threshold (market value of stock held greater than) | ||||
Chief Executive Officer | 5x Base Salary | ||||
Other Executive Officers | 3x Base Salary | ||||
Directors | 5x Annual Cash Retainer |
Executive Compensation |
Executive Compensation |
Executive Compensation |
Name | 2022 Annual Cash Incentive Target ($) | 2022 Annual Cash Incentive Compensation Earned ($) | |||||||||
Michael J. Mazzei, Chief Executive Officer | 1,750,000 | 2,030,000 | |||||||||
Andrew E. Witt, President & COO | 800,000 | 992,000 | |||||||||
Frank V. Saracino, CFO, Treasurer & EVP | 600,000 | 696,000 | |||||||||
David A. Palamé, GC, Secretary & EVP | 600,000 | 642,000 |
Executive Compensation |
Executive Compensation |
2023 LTIP Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 Restricted Stock Awards | 2023 PRSUs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(# shares) (65%) | (Target unit #) (35%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael J. Mazzei, Chief Executive Officer | 282,609 | 152,174 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Andrew E. Witt, President & COO | 141,305 | 76,087 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Frank V. Saracino, CFO, Treasurer & EVP | 89,493 | 48,189 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David A. Palamé, GC, Secretary & EVP | 91,782 | 49,422 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Compensation |
After careful consideration, discussions withso-called “covered employees,” which includes the Manager,chief executive officer, chief financial officer, certain other highly-compensated executive officers, and certain former executive officers. In approving the amount and form of compensation consultant, and meetings among members of the Compensation Committee, the Compensation Committee elected to not approve any grants of restricted common stock tofor our named executive officers, or the Manager for services provided toCompensation Committee considers all elements of our cost of providing such compensation, including the Company in 2020, other than in connection with the appointmentpotential impact of a new chief executive officer and president as noted below.
The Manager completed a search for a permanent chief executive officer and president in early 2020. Concurrently, the Nominating and Corporate Governance Committee and the Board approved the appointment of Mr. Michael J. Mazzei as Chief Executive Officer and President of the Company effective April 1, 2020.Section 162(m). The Compensation Committee approved a grant of 143,000 shares of restricted common stock (subject to vesting on the one-year anniversary of the grant date) to Mr. Mazzei following his appointment. The Compensation Committee believed the grant wasmay, in its judgment, approve compensation for our named executive officers that is not deductible for federal income tax purposes when it believes that such compensation is in the best interests of the Company providing alignment between Mr. Mazzei and our stockholders.
Executive Compensation
Executive Compensation |
2022
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||
Kevin P. Traenkle(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Chief | 2020 | — | — | — | — | — | — | — | 0 | |||||||||||||||||||||||||||||||||||||||||||
2019 | — | — | 1,600,275 | — | — | — | — | 1,600,275 | ||||||||||||||||||||||||||||||||||||||||||||
2018 | — | — | 1,137,980 | — | — | — | — | 1,137,980 | ||||||||||||||||||||||||||||||||||||||||||||
Michael J. Mazzei(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Executive | 2020 | — | — | 466,180 | — | — | — | — | 466,180 | |||||||||||||||||||||||||||||||||||||||||||
Neale W. Redington(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Financial | 2020 | 164,092 | — | — | — | 328,183 | — | 38,603 | 530,878 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 162,818 | — | 525,293 | — | 324,826 | — | 29,940 | 1,042,877 | ||||||||||||||||||||||||||||||||||||||||||||
2018 | 16,794 | — | 242,530 | — | 35,469 | — | 809 | 295,602 | ||||||||||||||||||||||||||||||||||||||||||||
Andrew E. Witt(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Operating | 2020 | — | — | — | — | — | — | — | 0 | |||||||||||||||||||||||||||||||||||||||||||
David A. Palamé | ||||||||||||||||||||||||||||||||||||||||||||||||||||
General Counsel | 2020 | — | — | — | — | — | — | — | 0 | |||||||||||||||||||||||||||||||||||||||||||
2019 | — | — | 360,096 | — | — | — | — | 360,096 | ||||||||||||||||||||||||||||||||||||||||||||
2018 | — | — | 248,367 | — | — | — | — | 248,367 |
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Executive Compensation
Nonqualified Non-Equity Deferred Stock Option Incentive Plan Compensation All Other Name and Principal Salary Bonus Awards Compensation Earnings Compensation Position Year ($) ($) ($) ($) ($) ($) ($) Michael J. Mazzei Chief Executive Officer 2022 800,000 — 3,034,851 — 2,030,000 — 13,269 5,878,120 2021 533,333 1,500,000 3,633,700 — — — 3,619 5,670,652 2020 — — 466,180 — — — — 466,180 Andrew E. Witt President & 2022 400,000 — 1,400,705 — 992,000 — 13,055 2,805,760 Chief Operating Officer 2021 266,667 900,000 2,027,680 — — — 216 3,194,563 2020 — — — — — — — 0 Frank V. Saracino Chief Financial Officer, 2022 400,000 — 933,806 — 696,000 — 13,055 2,042,861 Treasurer & 2021 333,333 600,000 960,480 — — — 324 1,894,137 Executive Vice President David A. Palamé General Counsel, 2022 352,500 — 956,495 — 642,000 — 12,954 1,963,949 Secretary & 2021 235,000 600,000 1,227,280 — — — 216 2,062,496 Executive Vice President 2020 — — — — — — — 0
2022
Name | Grant Date | Approval Date (1) | All Other Stock Awards: Number of Shares of Stock (#) (2) | Grant Date Fair Value of Stock or Unit Awards ($) (3) | |||||||||||||
Michael J. Mazzei | 5/5/2022 | 2/23/2022 | 377,469 | 3,034,851 | |||||||||||||
Andrew E. Witt | 5/5/2022 | 2/23/2022 | 174,217 | 1,400,705 | |||||||||||||
Frank V. Saracino | 5/5/2022 | 2/23/2022 | 116,145 | 933,806 | |||||||||||||
David A. Palamé | 5/5/2022 | 2/23/2022 | 118,967 | 956,495 |
Name | Grant Date | All Other Stock Awards; Number of Shares or Stock or Units (#) | Grant Date Fair Value of Stock or Unit Awards ($) | |||||||
Kevin P. Traenkle | n/a | 0 | 0 | |||||||
Michael J. Mazzei(1) | 4/2/2020 | 143,000 | 466,180 | |||||||
Neale W. Redington | n/a | 0 | 0 | |||||||
Andrew E. Witt | n/a | 0 | 0 | |||||||
David A. Palamé | n/a | 0 | 0 |
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Executive |
2022
Stock Awards | ||||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested(1) (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||
Kevin P. Traenkle | 3/15/2019 | — | — | — | — | |||||
3/15/2018 | — | — | — | — | ||||||
Michael J. Mazzei | 4/2/2020 | 143,000 | 1,072,500 | |||||||
Neale W. Redington | 3/15/2019 | 22,579 | 169,343 | — | — | |||||
3/15/2018 | 4,170 | 31,275 | — | — | ||||||
Andrew E. Witt | 3/15/2019 | 9,334 | 70,005 | |||||||
3/15/2018 | 2,350 | 17,625 | ||||||||
David A. Palamé | 3/15/2019 | 15,478 | 116,085 | — | — | |||||
3/15/2018 | 4,271 | 32,033 | — | — |
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Executive Compensation
Stock Awards Grant Date (#) ($) (#) ($) Michael J. Mazzei 5/5/2022 377,469 2,351,632 — — 1/12/2021 233,334 1,453,671 — — 1/12/2021 — — 35,000 218,050 Andrew E. Witt 5/5/2022 174,217 1,085,372 — — 1/11/2021 126,667 789,135 — — 1/11/2021 — — 19,000 118,370 Frank V. Saracino 5/5/2022 116,145 723,583 — — 1/11/2021 60,000 373,800 — — 1/11/2021 — — 9,000 56,070 David A. Palamé 5/5/2022 118,967 741,164 — — 1/11/2021 76,667 477,635 — — 1/11/2021 — — 11,500 71,645
2022
Stock Awards | ||||||||||||||||||||
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting (1) | ||||||||||||||||||
(#) | ($) | |||||||||||||||||||
Michael J. Mazzei | 116,666 | 1,024,327 | ||||||||||||||||||
Andrew E. Witt | 63,333 | 556,064 | ||||||||||||||||||
Frank V. Saracino | 36,559 | 320,988 | ||||||||||||||||||
David A. Palamé | 46,072 | 404,512 | ||||||||||||||||||
Stock Awards | ||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||
Kevin P. Traenkle | 142,303 | 1,701,944 | ||
Michael J. Mazzei | — | — | ||
Neale W. Redington | 15,458 | 80,072 | ||
Andrew E. Witt | 7,017 | 36,348 | ||
David A. Palamé | 12,008 | 62,201 |
| ||
Executive Compensation |
Upon a
Uponaward agreement) and (iii) a “change in control” (as defined in the CLNC2022 Annual Incentive Plan). Pursuant to the form PRSU award agreements used for 2021 awards, (i) upon the grantee’s death, “disability” (as defined in the 2022 Annual Incentive Plan), or “involuntary termination” (as defined in the award agreement), the PRSUs remain eligible to vest following the end of the performance period based on actual performance, with respect to the sum of the number of PRSUs eligible to vest as of such grantee’s termination plus, if applicable, a pro-rated number of PRSUs, and (ii) upon a “CoC Event” (as defined in the award agreement), the PRSUs will vest in connection with the CoC Event (A) at target, if such CoC Event occurs prior to the first anniversary date or (B) based on actual performance, if such CoC Event occurs on or following the first anniversary date.
Benefits and Payments | Without Cause or For Good Reason outside CIC Protection Period (1)(2) | Without Cause or For Good Reason during CIC Protection Period (1)(3) | For Cause or Without Good Reason | Death or Disability (4) | Change in Control (No Termination) (5) | ||||||||||||
Michael J. Mazzei | |||||||||||||||||
Cash Severance (6) | $5,575,000 | $6,850,000 | $0 | $0 | $0 | ||||||||||||
Accelerated Vesting of Equity Awards (7) | $4,023,353 | $4,023,353 | $0 | $4,023,353 | $4,023,353 | ||||||||||||
Medical Benefits (8) | $0 | $0 | $0 | $0 | $0 | ||||||||||||
Total | $9,598,353 | $10,873,353 | $0 | $4,023,353 | $4,023,353 | ||||||||||||
Andrew E. Witt | |||||||||||||||||
Cash Severance (6) | $1,200,000 | $3,200,000 | $0 | $0 | $0 | ||||||||||||
Accelerated Vesting of Equity Awards (7) | $1,992,877 | $1,992,877 | $0 | $1,992,877 | $1,992,877 | ||||||||||||
Medical Benefits (8) | $33,054 | $66,108 | $0 | $0 | $0 | ||||||||||||
Total | $3,225,931 | $5,258,985 | $0 | $1,992,877 | $1,992,877 | ||||||||||||
Frank V. Saracino | |||||||||||||||||
Cash Severance (6) | $1,000,000 | $2,600,000 | $0 | $0 | $0 | ||||||||||||
Accelerated Vesting of Equity Awards (7) | $1,153,453 | $1,153,453 | $0 | $1,153,453 | $1,153,453 | ||||||||||||
Medical Benefits (8) | $44,973 | $89,946 | $0 | $0 | $0 | ||||||||||||
Total | $2,198,426 | $3,843,399 | $0 | $1,153,453 | $1,153,453 | ||||||||||||
David A. Palamé | |||||||||||||||||
Cash Severance (6) | $952,500 | $2,505,000 | $0 | $0 | $0 | ||||||||||||
Accelerated Vesting of Equity Awards (7) | $1,290,445 | $1,290,445 | $0 | $1,290,445 | $1,290,445 | ||||||||||||
Medical Benefits (8) | $28,570 | $57,140 | $0 | $0 | $0 | ||||||||||||
Total | $2,271,515 | $3,852,584 | $0 | $1,290,445 | $1,290,445 |
Executive Compensation |
Our named executive officers are not entitled to any additional severance payments or benefits upon termination of employment or a change in control of the Company.
As of December 31, 2020, the cash value of benefits each named executive officer would receive upon death, disability or a change in control in which the awards are not being assumed or continued are set forth above in the table of Outstanding Equity Awards at December 31, 2020. In connection with Mr. Traenkle’s resignation effective February 29, 2020, all of his outstanding unvested stock awards vested in accordance with the terms of his award agreement under the CLNC Incentive Planvesting as a result of his separate employment agreement with Colony Capital and had a marketthe applicable trigger, multiplied by the closing price of our common stock on the NYSE as of December 30, 2022, the last trading day of the fiscal year, of $6.23.
Executive Compensation
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights | Weighted-Average Exercise Price of Outstanding Options Warrants, and Rights | Number of Securities Remaining Available for Future Issuance | |||||||||||||||||||||||||||||||||
Equity compensation plans approved by security holders | ||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
| 272,000 (1) | — | 8,751,556 (2) | |||||||||||||||||||||||||||||||||
Total | — | — | 8,751,556 |
|
Executive Compensation |
Year | Summary Compensation Table Total for Prior CEO 1 (Mr. Traenkle) (1)(2) | Compensation Actually Paid to Prior CEO 1 (Mr. Traenkle) (3) | Summary Compensation Table Total for Prior CEO 2 (Mr. Witt) (1)(2) | Compensation Actually Paid to Prior CEO 2 (Mr. Witt) (3) | Value of Initial Fixed $100 Investment Based on: | Net Income (5) | Return on Average Equity (6) | |||||||||||||||||||
Company Total Shareholder Return (4) | BBREIT Mortgage Index Total Shareholder Return (4) | |||||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | ($) | (%) | |||||||||||||||||||
2020 | 0 | (128,079) | 0 | (115,348) | 59.28 | 77.66 | (353.3) | 6.80 |
Year | Summary Compensation Table Total for CEO (Mr. Mazzei) (1) | Compensation Actually Paid to CEO (Mr. Mazzei) (3) | Average Summary Compensation Table Total for Non-CEO NEOs(1)(2) | Average Compensation Actually Paid to Non-CEO NEOs (3) | Value of Initial Fixed $100 Investment Based on: | Net Income (5) | Return on Average Equity (6) | |||||||||||||||||||
Company Total Shareholder Return (4) | BBREIT Mortgage Index Total Shareholder Return (4) | |||||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | ($) | (%) | |||||||||||||||||||
2022 | 5,878,120 | 4,005,123 | 2,270,857 | 1,566,837 | 58.35 | 69.75 | 45.8 | 8.04 | ||||||||||||||||||
2021 | 5,670,652 | 6,657,752 | 2,383,732 | 2,689,103 | 86.20 | 94.19 | (101.0) | 7.05 | ||||||||||||||||||
2020 | 466,180 | 1,072,500 | 265,439 | 35,060 | 59.28 | 77.66 | (353.3) | 6.80 |
Executive Compensation |
(1) | In 2020, we were an externally managed company and all of our named executive officers, including our CEO, were employees of our former external manager and/or affiliates thereof. Accordingly, we did not pay, award or provide any cash compensation or benefits to Mr. Kevin P. Traenkle, who served as CEO until his resignation effective February 29, 2020 (“Prior CEO 1”) or to Andrew E. Witt, who served as our interim CEO from March 1, 2020 to April 1, 2020 (“Prior CEO 2”). Michael Mazzei was appointed CEO and President effective April 1, 2020 (continuing as CEO and no longer serving as President since February 22, 2022). In 2020, the other NEOs were Neale W. Redington, our Chief Financial Officer and Treasurer, and David A. Palamé, our General Counsel and Secretary. In 2021 and 2022, the other NEOs were Andrew E. Witt, our Chief Operating Officer (and President, from and after February 22, 2022), Frank V. Saracino, our Chief Financial Officer, Treasurer and Executive Vice President, and David A. Palamé, our General Counsel, Secretary and Executive Vice President. | ||||
(2) | The values reflected in this column for 2020 reflect the “Total” compensation set forth in the Summary Compensation Table (“SCT”) on page 24 of the proxy statement of Colony Credit Real Estate, Inc. filed on March 24, 2021 (the “2021 Proxy”). See the footnotes to the SCT in the 2021 Proxy for further detail regarding the amounts in this column. | ||||
(3) | This column is computed in accordance with Item 402(v) of Regulation S-K with “Compensation Actually Paid” as a calculation that begins with the Summary Compensation Table (“SCT”) total compensation in the given year with certain adjustments prescribed by the SEC rules. Amounts for “Other NEOs” represents the average of each named executive officer (“NEO”) other than the CEO, Prior CEO 1 (“CEO P1”) or Prior CEO 2 (“CEO P2”). |
Name | Year | SCT Total | SCT Stock Awards | Year End Fair Value of Unvested Stock Awards Granted | Year End Change In Fair Value of Prior Year Unvested Stock Awards | Vesting Date Fair Value of Stock Awards Granted and Vested in the Same Year | Change in Fair Value of Prior Year Stock Awards that Vested | Fair Value of Stock Awards Forfeited | Value of Dividends on Unvested Stock Awards | Compensation Actually Paid | ||||||||||||||||||||||
CEO | 2022 | $ | 5,878,120 | $ | (3,034,851) | $ | 2,351,632 | $ | (1,440,486) | $ | — | $ | (172,666) | $ | — | $ | 423,374 | $ | 4,005,123 | |||||||||||||
2021 | 5,670,652 | (3,633,700) | 4,309,200 | — | — | 157,300 | — | 154,300 | 6,657,752 | |||||||||||||||||||||||
2020 | 466,180 | (466,180) | 1,072,500 | — | — | — | — | — | 1,072,500 | |||||||||||||||||||||||
CEO P1 | 2020 | 0 | — | — | — | — | (170,770) | — | 42,691 | (128,079) | ||||||||||||||||||||||
CEO P2 | 2020 | 0 | — | — | 66,131 | — | (55,996) | — | 6,779 | (115,348) | ||||||||||||||||||||||
NEO Average | 2022 | 2,270,857 | (1,097,002) | 850,040 | (541,897) | — | (72,009) | — | 156,848 | 1,566,837 | ||||||||||||||||||||||
2021 | 2,383,732 | (1,405,147) | 1,621,080 | 13,154 | — | 21,555 | — | 54,729 | 2,689,103 | |||||||||||||||||||||||
2020 | 265,439 | — | — | (131,589) | — | (109,589) | — | 10,800 | 35,060 |
(4) | Total Shareholder Return is calculated for the year ended December 31, 2020, the two-years ended December 31, 2021 and the three years ended December 31, 2022, assuming a $100 investment at the closing price on December 31, 2019 and the reinvestment of all dividends. The Bloomberg Real Estate Investment Trust Mortgage Index (“BBREIT Mortgage Index”) is a capitalization-weighted index of infinite life Mortgage REITs having a market capitalization of $15 million or greater. | ||||
(5) | Net Income (Loss) as determined in accordance with generally accepted accounting principles in the United States. Amounts in millions. | ||||
(6) | Return on Average Equity is defined in “Non-GAAP Financial Measures” below. |
Executive Compensation |
Executive Compensation |
Compensation Committee Report
“Undepreciated Book Value” is a non-GAAP financial metric which is defined as total stockholders’ equity (or “GAAP net book value”) excluding the impact of our pro rata share of accumulated depreciation and amortization on real estate investments (including related intangible assets and liabilities). The Company reports undepreciated book value in its quarterly and annual financial statements, including reconciliations to GAAP net book value. We believe that undepreciated book value is a more
Executive Compensation |
Compensation Committee Report |
Catherine D. Rice
Chair
Kim S. Diamond
John E. Westerfield
Winston W. Wilson
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners and Management |
•each director;
•each of our named executive officers; and
•all of our directors and executive officers as a group.
Common Share Equivalents(2) | Common Stock | |||||||||
Name and Address of Beneficial Owner(1) | Number | Percentage | Percentage(2) | |||||||
5% Stockholders
|
| |||||||||
Colony Capital, Inc. | 48,010,680 | (3) |
|
36.12% |
|
36.97% | ||||
BlackRock, Inc. | 7,975,585 | (4) | 6.00% | 6.14% | ||||||
The Vanguard Group | 7,303,571 | (5) | 5.49% | 5.62% | ||||||
Directors, Director Nominees and Executive Officers:
|
|
|
| |||||||
Catherine D. Rice
|
| 36,185
|
| * | * | |||||
Vernon Schwartz
|
| 42,398
|
| * | * | |||||
John E. Westerfield
|
| 36,185
|
| * | * | |||||
Winston W. Wilson
|
| 43,151
|
| * | * | |||||
Mark M. Hedstrom
|
| 34,267
|
| * | * | |||||
Michael J. Mazzei
|
| 493,000
|
| * | * | |||||
Andrew E. Witt
|
| 206,530
|
| * | * | |||||
Frank V. Saracino
|
| 112,298
|
| * | * | |||||
David A. Palamé
|
| 194,082
|
| * | * | |||||
Kevin P. Traenkle(6)
|
| 209,490
|
| * | * | |||||
Neale W. Redington
|
| 83,631
|
| * | * | |||||
All directors and executive officers as a group(7)
|
| 1,491,217
|
| 1.12% | 1.14% |
Common Stock | |||||||||||||||||
Name and Address of Beneficial Owner (1) | Number | Percentage (2) | |||||||||||||||
5% Stockholders | |||||||||||||||||
Nut Tree Capital Management, LP | 9,414,811 (3) | 7.25% | |||||||||||||||
The Vanguard Group | 8,947,191 (4) | 6.89% | |||||||||||||||
BlackRock, Inc. | 7,456,988 (5) | 5.74% | |||||||||||||||
Directors, Director Nominees and Executive Officers: | |||||||||||||||||
Catherine D. Rice | 65,138 | * | |||||||||||||||
Kim S. Diamond | 18,128 | * | |||||||||||||||
Catherine Long | 16,981 | * | |||||||||||||||
Vernon Schwartz | 64,351 | * | |||||||||||||||
John E. Westerfield | 58,138 | * | |||||||||||||||
Michael J. Mazzei | 1,126,395 | * | |||||||||||||||
Andrew E. Witt | 458,904 | * | |||||||||||||||
Frank V. Saracino | 295,818 | * | |||||||||||||||
David A. Palamé | 374,928 | * | |||||||||||||||
All directors and executive officers as a group (6) | 2,478,781 | 1.91% |
|
|
|
|
Security Ownership of Certain Beneficial Owners and Management
|
|
|
|
Proposal No. 2: Advisory Vote on Executive Compensation
Table of Contents | ||||||
Proposal No. 2: | Advisory Vote on Executive Compensation |
As described under “Executive Compensation—Compensation Discussion and Analysis” elsewhere in this proxy statement, we are externally managed by our Manager pursuant to the Management Agreement. All of our named executive officers are employees of our Manager or one or more of its affiliates and, in such capacity, devote a portion of their time to our affairs as is required pursuant to the Management Agreement. We do not have any employees. Because the Management Agreement with the Manager provides that the Manager is responsible for managing the affairs of the Company, we do not pay, award or provide our executive officers any cash compensation or benefits, and we have no compensation agreements with our executive officers. Additionally, we do not determine the form and amount of compensation and benefits awarded by our Manager or its affiliates to our executive officers for their services to us. Instead, our Manager or its affiliates have discretion to determine the form and level of cash compensation and other benefits paid to and earned by our executive officers for their services to us. Our Manager or its affiliates also determine whether and to what extent our executive officers will be provided with pension, deferred compensation and other employee benefits plans and programs. Instead, the Company pays the Manager management fees and reimbursement amounts, as described above under “Certain Relationships and Related Transactions—ManagementAgreement with our Manager”.
However, as set forth above under “Executive Compensation—Equity-Based Compensation” elsewhere in this proxy statement, we have adopted an incentive plan, the CLNC Incentive Plan, under which we may award equity-based and cash-based awards to our and our subsidiaries’ directors, officers, employees, consultants and advisors and directors, officers and employees of our Manager and its affiliates that are providing services to us and our subsidiaries. These awards are designed to align the interests of such individuals with those of our stockholders and to provide incentive to eligible persons (including at our Manager and its affiliates) to stimulate their efforts towards the success of the Company and to operate and manage its business in a manner that will provide for the long term growth and profitability of the Company.
2022.
Proposal No. 3: Ratification of Appointment of Our Independent Registered Public Accounting Firm |
Audit Committee Report
Audit Committee Report |
Winston W. Wilson, Chairman
John E. Westerfield
Independent Registered Public Account Firm’s Fees
Independent Registered Public Accounting Firm's Fees |
TYPE OF FEE | 2020 | 2019 | ||||||
Audit Fees(1)
| $ | 2,536,450 | $ | 2,750,650 | ||||
Audit-Related Fee
|
|
—
|
|
|
—
|
| ||
Tax Fee(3)
|
|
356,000
|
|
|
402,738
|
| ||
All Other Fees
|
|
—
|
|
|
—
|
| ||
| ||||||||
Total
| $
| 2,892,450
|
| $
| 3,153,388
|
| ||
|
��
|
|
TYPE OF FEE | 2022 | 2021 | |||||||||||||||
Audit Fees (1) | $1,605,649 | $2,931,225 | |||||||||||||||
Audit-Related Fee | — | — | |||||||||||||||
Tax Fee (2) | 651,871 | 468,288 | |||||||||||||||
All Other Fees | — | — | |||||||||||||||
Total | $2,257,520 | $3,399,513 | |||||||||||||||
Certain Relationships
PROPOSAL NO. 4: Approval Of The BrightSpire Capital, Inc. Amended Charter |
Reasons for the Charter Amendment
PROPOSAL NO. 4: Approval Of The BrightSpire Capital, Inc. Amended Charter |
Certain Relationships and Related Transactions |
THE COMBINATION
On January 31, 2018, the Company completed the transactions contemplated by that certain Master Combination Agreement, dated as of August 25, 2017, as amended and restated on November 20, 2017 (the “Combination Agreement”), by and among (i) the Company, (ii) the Operating Partnership, (iii) Colony Capital Operating Company, LLC (“CLNY OP”), a Delaware limited liability company and the operating company of Colony Capital, (iv) NRF RED REIT Corp., a Maryland corporation and indirect subsidiary of CLNY OP (“RED REIT”), (v) NorthStar Real Estate Income Trust, Inc., a Maryland corporation (“NorthStar I”), (vi) NorthStar Real Estate Income Trust Operating Partnership, LP, a Delaware limited partnership and the operating partnership of NorthStar I (“NorthStar I OP”), (vii) NorthStar Real Estate Income II, Inc., a Maryland corporation (“NorthStar II”), and (viii) NorthStar Real Estate Income Operating Partnership II, LP, a Delaware limited partnership and the operating partnership of NorthStar II (“NorthStar II OP”).
Pursuant to the Combination Agreement, (i) CLNY OP contributed and conveyed to the Company a select portfolio of assets and liabilities (the “CLNY Contributed Portfolio”) of CLNY OP (the “CLNY OP Contribution”), (ii) RED REIT contributed and conveyed to the OP a select portfolio of assets and liabilities of RED REIT (together with the CLNY OP Contribution, the “CLNY Contributions”), (iii) NorthStar I merged with and into the Company, with the Company surviving the merger (the “NorthStar I Merger”), (iv) NorthStar II merged with and into the Company, with the Company surviving the merger (the “NorthStar II Merger” and, together with the NorthStar I Merger, the “Mergers”), and (v) immediately following the Mergers, the Company contributed and conveyed to the OP the CLNY Contributed Portfolio and the equity interests of each of NorthStar I OP and NorthStar II OP then-owned by the Company in exchange for units of membership interest in the OP (the “Company Contribution” and, collectively with the Mergers and the CLNY Contributions, the “Combination”).
On and since the Combination on January 31, 2018, we
Øthe act or omission of the director or executive officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty;
Øthe director or executive officer actually received an improper personal benefit in money, property or services; or
Øwith respect to any criminal action or proceeding, the director or executive officer had reasonable cause to believe that his or her conduct was unlawful;
Certain Relationships and Related Transactions
MANAGEMENT AGREEMENT WITH OUR MANAGER
On January 31, 2018, the Company and the OP entered into a management agreement with the Manager, as amended by that certain amended and restated management agreement on November 6, 2019 (the “Management Agreement”), pursuant to which the Manager manages the Company’s assets and its day-to-day operations. The Manager will be responsible for, among other matters, (1) the selection, origination, acquisition, management and sale of the Company’s portfolio investments, (2) the Company’s financing activities and (3) providing the Company with investment advisory services. The Manager is also responsible for the Company’s day-to-day operations and will perform (or will cause to be performed) such services and activities relating to the Company’s investments and business and affairs as may be appropriate. The Management Agreement requires the Manager to manage the Company’s business affairs in conformity with the investment guidelines and other policies that are approved and monitored by the Board. The Manager and its affiliates also provide the Company with a management team, including a chief executive officer, president and chief financial officer, which persons must be approved by the Board, and currently each of the Company’s executive officers is also an employee of the Manager or its affiliates. The Manager’s role as Manager will be under the supervision and direction of the Company’s Board.
The initial term of the Management Agreement expires on the third anniversary of the closing of the Mergers and will be automatically renewed for a one-year term each anniversary date thereafter unless earlier terminated as described below. The Company’s independent directors review the Manager’s performance and the fees that may be payable to the Manager annually and, following the initial term, the Management Agreement may be terminated if there has been an affirmative vote of at least two-thirds of the Company’s independent directors determining that (1) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company or (2) the compensation payable to the Manager, in the form of base management fees and incentive fees taken as a whole, or the amount thereof, is not fair to the Company, subject to the Manager’s right to prevent such termination due to unfair fees by accepting reduced compensation as agreed to by at least two-thirds of the Company’s independent directors. The Company must provide the Manager 180 days’ prior written notice of any such termination.
The Company may also terminate the Management Agreement for cause (as defined in the Management Agreement) at any time, including during the initial term, without the payment of any termination fee, with at least 30 days’ prior written notice from the Company’s Board. Unless terminated for cause, the Manager will be paid a termination fee as described below. The Manager may terminate the Management Agreement if the Company becomes required to register as an investment company under the Investment Company Act with such termination deemed to occur immediately before such event, in which case the Company would not be required to pay a termination fee. The Manager may decline to renew the Management Agreement by providing the Company with 180 days’ prior written notice, in which case the Company would not be required to pay a termination fee. The Manager may also terminate the Management Agreement with at least 60 days’ prior written notice if the Company breaches the Management Agreement in any material respect or otherwise is unable to perform its obligations thereunder and the breach continues for a period of 30 days after written notice to the Company, in which case the Manager will be paid a termination fee as described below.
Fees to our Manager – Base Management Fee
The base management fee payable to the Manager is equal to 1.5% of the Company’s stockholders’ equity (as defined in the Management Agreement), per annum (0.375% per quarter), payable quarterly in arrears in cash. For purposes of calculating the base management fee, the Company’s stockholders’ equity means: (a) the sum of (1) the net proceeds received by the Company (or, without duplication, the Company’s direct subsidiaries, such as the OP) from all issuances of the Company’s or such subsidiaries’ common and preferred equity securities since inception (allocated on a pro rata basis for such issuances during the calendar quarter of any such issuance), plus (2) the Company’s cumulative core earnings (as defined in the Management Agreement) from and after the Closing Date to the end of the most recently completed calendar quarter, less (b)(1) any distributions to the Company’s common stockholders (or owners of common equity of the Company’s direct subsidiaries, such as the OP, other than the Company or any of such subsidiaries), (2) any amount that the Company or any of the Company’s direct subsidiaries, such as the OP, have paid to (x) repurchase for cash the Company’s common stock or common equity securities of such subsidiaries or (y) repurchase or redeem for cash the Company’s preferred equity securities or preferred equity securities of such subsidiaries, in each case since the Closing Date and (3) any incentive fee (as described below) paid to the Manager since the Closing Date.
For the year ended December 31, 2020, the total management fee expense incurred was $29.7 million. As of December 31, 2020 there was $7.4 million of unpaid management fee included in due to related party in the Company’s consolidated balance sheets.
Certain Relationships and Related Transactions
Fees to our Manager – Incentive Fee
The incentive fee payable to the Manager is equal to the difference between (i) the product of (a) 20% and (b) the difference between (1) core earnings (as defined in the Management Agreement) for the most recent 12-month period (or the Closing Date if it has been less than 12 months since the Closing Date), including the current quarter, and (2) the product of (A) common equity (as defined in the Management Agreement) in the most recent 12-month period (or the Closing Date if it has been less than 12 months since the Closing Date), and (B) 7% per annum and (ii) the sum of any incentive fee paid to the Manager with respect to the first three calendar quarters of the most recent 12-month period (or the Closing Date if it has been less than 12 months since the Closing Date); provided, however, that no incentive fee is payable with respect to any calendar quarter unless core earnings (as defined in the Management Agreement) is greater than zero for the most recently completed 12 calendar quarters (or the Closing Date if it has been less than 12 calendar quarters since the Closing Date).
The Company did not incur any incentive fees during the year ended December 31, 2020.
Reimbursement of Expenses
Reimbursement of expenses related to the Company incurred by the Manager, including legal, accounting, financial, due diligence and other services are paid on the Company’s behalf by the OP or its designee(s). The Company reimburses the Manager for the Company’s allocable share of the salaries and other compensation of the Company’s chief financial officer and certain of its affiliates’ non-investment personnel who spend all or a portion of their time managing the Company’s affairs, and the Company’s share of such costs are based upon the percentage of such time devoted by personnel of our Manager (or its affiliates) to the Company’s affairs. The Company may be required to pay the Company’s pro rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the Manager and its affiliates required for the Company’s operations, including direct costs incurred for the benefit of certain portfolio investments owned by the Company.
For the year ended December 31, 2020, the total reimbursements of expenses incurred by the Manager on behalf of the Company and reimbursable in accordance with the Management Agreement was $9.8 million.
Termination Fee
We will be required to pay a termination fee equal to three (3) times the sum of (x) the average annual base management fee and (y) the average annual incentive fee, in each case earned by our Manager during the 24-month period immediately preceding the most recently completed calendar quarter prior to the date of termination. Additionally, upon termination of the Management Agreement for any reason, including for cause, we will be required to pay our Manager all accrued and unpaid fees and expense reimbursements earned prior to the date of termination.
Equity-Based Compensation to Our Manager
For services provided by or on behalf of our Manager for the benefit of the Company, in furtherance of recommendations received from our Chief Executive Officer, our Manager and outside compensation consultant, the Compensation Committee elected to not issue any common stock, restricted common stock or other forms of grants to the Manager (and/or its employees) pursuant to the CLNC Incentive Plan in 2020, except for a grant of 143,000 shares of restricted common stock to Mr. Mazzei upon his appointment as Chief Executive Officer and President of the Company in April 2020.
After evaluating Company performance through year end 2020 and to-date in 2021, having applied the principles set forth above in “Executive Compensation—Equity-Based Compensation”, on January 5, 2021, the Compensation Committee authorized the issuance of 1,450,000 restricted stock units (subject to annual vesting in thirds on the first three anniversaries following the grant date) and 282,000 performance stock units (with a total payout of between 0 and two-times such award subject to vesting and the achievement of performance conditions tested on and as of December 31, 2022), in each case, directly to the Company’s officers and other individual employees (of our Manager) providing services to the Company. For the avoidance of doubt, no awards were issued to the Company’s external Manager.
REGISTRATION RIGHTS AGREEMENT
In connection with the closing of the Combination, on
Certain Relationships and Related Transactions |
Certain Relationships and Related Transactions
Pursuant to the Registration Rights Agreement CLNY OP and RED REIT are also entitled to receive notice of any proposed underwritten public offering for the Company’s own account or for another security holder. Such holders may request in writing within five business days following receipt of such notice to participate in any underwritten public offering; provided that if the number of shares of common stock as to which registration has been demanded exceeds the maximum number of shares that can be sold in such offering without adversely affecting its success, the shares of common stock requested by CLNY OP or RED REIT may be cutback from such underwritten public offering.
The Company is required to bear the registration expenses, other than underwriting discounts and commissions and transfer taxes, associated with any registration of shares by the holders. The Company also is required to indemnify each holder who includes registrable securities in any registration and any person who is or might be deemed a controlling person of such holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against certain liabilities incurred in connection with the registration of such holder’s registrable securities.
The registrationtheir rights described above will terminate as to any stockholder at such time as all of such stockholder’s securities could be sold in a single calendar quarter without compliance with the registration requirements of the Securities Act pursuant to Rule 144.
TRADEMARK LICENSE AGREEMENT
On January 31, 2018, a subsidiary of our Company entered into license agreements with each of CLNY OP and Colony Capital, pursuant to which CLNY OP and Colony Capital granted us a non-exclusive, royalty-free license to use the name and trademark “Colony”, and the logo for Colony Capital.
Each license agreement provides CLNY OP or Colony Capital, as applicable, with the right to terminate the applicable license agreement in the event that: (1) our Company becomes insolvent or admits its inability to pay its debts; (2) our Company becomes subject to any bankruptcy or insolvency proceeding; (3) our Company is dissolved or liquidated or takes any corporate action for such purpose; (4) our Company makes a general assignment for the benefit of creditors; (5) our Company has an agent appointed by a court to take charge of or sell any material portion of its property or business; or (6) any lawsuit or proceeding is commenced (or claim threatened) relating to the relevant marks or the relevant trademark license agreement. The license agreements automatically terminate (i) upon a change of control of our Company without the consent of CLNY OP or Colony Capital, as applicable, or (ii) in the event the Manager or one of its affiliates ceases to be the external manager of the Company for any reason. CLNY OP and Colony Capital alsothereunder have the right to terminate the applicable license agreement without cause upon 120 days’ prior written notice.
INVESTMENT ACTIVITY
All investment acquisitions are approvedtherefore terminated in accordance with the Company’s investment and related party guidelines, which may include approval by either the Audit Committee or disinterested members of the Company’s Board. No investment by the Company will require approval under the related party transaction policy solely because such investment constitutes a co-investment made by and between the Company and any of its subsidiaries, on the one hand, and one or more investment vehicles formed, sponsored, or managed by an affiliate of the Manager on the other hand.
In July 2017, we originated a $189.0 million commitment to an approximately $574 million mezzanine loan and preferred equity investment in a development project in Los Angeles County, which includes a hospitality and retail renovation and a new condominium tower construction (the “Mixed-use Project”). Our investment interests are held through a joint venture (the “Colony Mezzanine Lender”) with affiliates of our Manager. In April 2020, the senior mortgage lender notified the borrower developer that the Mixed-use Project loan funding was out of balance, due to cost overruns from certain hard and soft costs and senior loan interest reserve shortfalls projected through completion. To address the out of balance circumstance during the second quarter of 2020, the Colony Mezzanine Lender made two protective advances to the senior mortgage lender totaling $69.1 million, of which our share was $28.5 million. The Colony Mezzanine Lender placed this investment on nonaccrual status. In June 2020, the senior mortgage lender funded a third protective advance of $15.5 million. Additionally, the loans held by the senior mortgage lender and Colony Mezzanine Lender, respectively, matured on July 9, 2020.
On September 1, 2020, in cooperation with the borrower and the EB-5 lender, the Colony Mezzanine Lender and senior mortgage lender secured $275 million of additional mezzanine financing from a third-party mezzanine lender (the “Senior Mezzanine Lender”). To consummate the new mezzanine financing, the Colony Mezzanine Lender simplified its investment interest by converting its existing preferred equity principal and accrued interest into the existing mezzanine loan, transferred the mezzanine loan to the Senior Mezzanine Lender, who subsequently increased the mezzanine loan amount by $275 million to an approximately $821 million total mezzanine loan (the “Upsized Mezzanine Loan”). The Senior Mezzanine Lender holds a
Certain Relationships and Related Transactions
$275 million A-participation and the Colony Mezzanine Lender (including our interest) continues to hold an approximately $546 million B-participation interest in the Upsized Mezzanine Loan at the Mixed-use Project. The Senior Mezzanine Lender is the sole administrative agent and Upsized Mezzanine Loan owner. The Colony Mezzanine Lender’s B-participation investment continues to carry an interest rate of 12.90% per annum, consistent with our interest rate prior to this mezzanine refinancing event. The B-participation investment is a subordinate interest to the A-participation interest in respect to payments of principal and interest. The Colony Mezzanine Lender is no longer subject to future funding commitments in accordance with the revised budget. As previously reported, the Colony Mezzanine Lender had a remaining unfunded commitment of $39.3 million, of which our share was $14.5 million.
Having recently completed the Upsized Mezzanine Loan refinancing, among other factors, we continue to maintain the nonaccrual status and fair value loss adjustment on our proportionate share of the Colony Mezzanine Lender’s B-participation investment.
In May 2018, the Company acquired an $89.1 million (at par) preferred equity investment in an investment vehicle that owns a seven-property office portfolio located in the New York metropolitan area from an affiliate of the Company’s Manager. The affiliate has a 27.2% ownership interest in the borrower. The preferred equity investment carries a fixed 12.0% interest rate. This investment was sold in the second quarter of 2020.
In July 2018, the Company entered into a joint venture to invest in a development project for land and a Grade A office building in Ireland. The Company agreed to invest up to $69.9 million of the $139.7 million total commitment. The Company co-invested along with two affiliates of the Manager, with the Company owning 50.0% of the joint venture and the affiliate entities owning the remaining 50.0%. The joint venture invested in a senior mortgage loan of $66.7 million with a fixed interest rate of 12.5% and a maturity in December 2021.
In October 2018, the Company entered into a joint venture to invest in a development project for land and a mixed-use development project in Ireland. The Company holds a $189.6 million interest of the $310.9 million total senior loan origination. The Company co-invested along with two affiliates of the Manager, with the Company owning 61.0% of the joint venture and the affiliate entities owning the remaining 39.0%. The land has planning permission for 420 apartments and approximately 380,000 square feet of offices, but the project borrower has applied for planning permission to increase these numbers to approximately 1,000 total residential units across two towers of 40 and 44 stories and 540,000 square feet of offices. These applications are currently under review by the planning authorities. Pre-letting discussions are ongoing in respect to the office building. While the Project Dockland schedule had been extended by approximately six to nine months, as previously disclosed, the majority of enabling works commenced in July 2020 and were on track to be completed in January 2021. The enabling works are currently on hold due to new restrictions (closure of construction sites) imposed by the Irish government in early January 2021 and such restrictions are expected to last through at least through February 2021. During the three months ended September 30, 2020, we placed the senior mortgage loan on nonaccrual status. The aforementioned delay and/or further delays may limit the ability of the borrower to obtain a senior secured development construction facility within the expected timeline as initially underwritten. We and our senior mortgage co-lenders regularly engage in discussions with the borrower to address continuing developments at the project.
Other Matters
Other Matters |
2024
December 2, 2023.
STOCKHOLDER NOMINATIONS AND RECOMMENDATIONS OF POTENTIAL CANDIDATES
The Nominating and Corporate Governance Committee will consider written recommendations from
the name, age and business address of the individual(s) recommended for nomination;
the class, series and number of any shares of our stock that are beneficially owned by the individual(s) recommended for nomination;
the date such shares of our stock were acquired by the individual(s) recommended for nomination and the investment intent of such acquisition;
whether and the extent to which the individual(s) recommended for nomination or the nominating stockholder(s) have engaged in any hedging, derivative or similar transactions involving our securities, including our common stock, since our last annual meeting; and
all other information relating to such candidate that would be required to be disclosed pursuant to Regulation 14ARule 14a-19 under the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected.
The Nominating and Corporate Governance Committee expects to use a similar process to evaluate candidates to our Board recommended by stockholders as the one it uses to evaluate candidates otherwise identified by the Nominating and Corporate Governance Committee.
A copy of
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. These persons are also required by SEC rules and regulations to furnish us with copies of these reports. Precise due dates for these reports have been established, and we are required to report in this Proxy Statement any failure to timely file these reports by those due dates by these persons in the most recent fiscal year or prior fiscal years.
Other Matters
Based solely on a review of the copies of the forms received and written representations, we believe that our executive officers, directors and persons who own more than 10% of a registered class of our equity securities have timely filed all reports required by Section 16(a) of the Exchange Act, except for annual grants made to our independent directors on May 13, 2020, in accordance with the Company’s non-executive independent director compensation policy annual awards, which due to a processing error by the Company were filed on October 2, 2020.
HOUSEHOLDING OF PROXY MATERIALS
590 Madison Avenue, 34th Floor
New York, New York 10022
www.clncredit.com
Proxy
Solicited on Behalf ofthose amendments permitted to be made without stockholder approval under Maryland law or by a specific provision in the Charter, any amendment to the Charter shall be valid only if declared advisable by the Board of Directors
The undersigned hereby appoints David A. Palamé, with full power and approved by the affirmative vote of substitution and power to act alone, as proxy to votea majority of all the shares of Common Stock which the undersigned would bevotes entitled to vote if personally present and acting atbe cast on the Annual Meeting of Stockholders of Colony Credit Real Estate, Inc.,matter.
(ContinuedCorporation and approved by stockholders of the Corporation entitled to vote thereon as required by law.
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ANNUAL MEETING OF STOCKHOLDERS OF
COLONY CREDIT REAL ESTATE, INC.
May 5, 2021
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE MEETING OF STOCKHOLDERS TO BE HELD ON MAY 5, 2021.
The Notice
http://www.astproxyportal.com/ast/CLNC
Please sign, dateon its behalf by its Chief Executive Officer and mail
your proxy card in the
envelope provided as soon
as possible.
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ATTEST: | BRIGHTSPIRE CAPITAL, INC. | |||||||||||||||||||||||||||||||||||||
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____________________________ | By: | |||||||||||||||||||||||||||||||||||||
Name: David A. Palamé Title: Secretary | Name: Michael J. Mazzei Title: Chief Executive Officer |