DEF: Angel Oak Mortgage REIT Sets 2026 Annual Meeting Agenda

Angel Oak Mortgage REIT, Inc. announces its 2026 Annual Meeting of Stockholders to address director elections, auditor ratification, and executive compensation, alongside a change in its independent registered public accounting firm.

Summary

• The 2026 Annual Meeting of Stockholders will be held on Wednesday, May 13, 2026, at 10:00 a.m. Eastern Time.
• Stockholders will vote on the election of eight directors, the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for 2026, and a non-binding advisory resolution on named executive officer compensation.
• KPMG LLP was dismissed as the independent registered public accounting firm on March 9, 2026, and Deloitte & Touche LLP was engaged on the same date.
• Net income for 2025 was $44,024 thousand, an increase from $28,750 thousand in 2024.
• The company's Total Shareholder Return (TSR) for an initial $100 investment reached $263.21 in 2025, up from $250.32 in 2024.
• Management fees paid to the Manager were approximately $4.6 million in 2025, down from $5.0 million in 2024.
• Expense reimbursements to the Manager were approximately $1.9 million in 2025, up from $1.8 million in 2024.
• The Manager did not earn an incentive fee in either 2025 or 2024.
• The Management Agreement was updated on October 1, 2025, modifying the terms for CEO compensation reimbursement.
• The company repurchased 1,707,922 shares of common stock from the DK Investor for approximately $20.0 million on July 25, 2024.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing positively due to improved financial performance metrics like net income and TSR, strong stockholder approval for executive compensation, and robust corporate governance practices, despite ongoing related party transactions and a change in auditor.

Positives

• Strong stockholder approval for the 2025 say-on-pay proposal, with 97.9% of votes cast in favor, indicating support for the executive compensation approach.
• Net income increased to $44,024 thousand in 2025 from $28,750 thousand in 2024.
• Total Shareholder Return (TSR) for an initial $100 investment grew to $263.21 in 2025 from $250.32 in 2024.
• The company's compensation framework and design were largely maintained for fiscal year 2025 due to strong stockholder support.
• The company has a robust cybersecurity program, relying on a SOC 2 compliant third-party IT service provider, with regular reporting to the Audit Committee and Board.

Negatives

• The Manager did not earn an incentive fee in 2025 or 2024, which could indicate performance below incentive thresholds.
• The change in the Management Agreement regarding CEO Sreeniwas Prabhu's compensation reimbursement suggests a tightening of terms, where reimbursement is only applicable if he devotes 100% of his working time to the company and it is approved by two-thirds of independent directors, which is currently not the case.

Risks

• Reliance on the external Manager (Angel Oak Capital and its affiliates) for day-to-day operations, investment identification, financing, risk management, and provision of management team and personnel.
• Potential for conflicts of interest due to related party transactions, including the acquisition of non-QM loans and other target assets from Angel Oak Mortgage Lending, an affiliate of the Manager.
• The Manager's ability to terminate the Management Agreement if the company becomes required to register as an investment company under the Investment Company Act, without payment of a termination fee.
• The Manager's ability to decline to renew the Management Agreement or terminate it upon company default, which would require payment of a termination fee equal to three times the sum of average annual base management fee and incentive fee.
• Cybersecurity threats and incidents, despite reliance on a third-party IT Service Provider and an information security framework.
• The non-exclusive nature of the trademark license agreement, which does not preclude the licensor from licensing or transferring the 'Angel Oak' name to third parties who may compete with the company.
• The requirement to change the company's name and NYSE ticker symbol if the trademark license agreement is terminated.

Future Outlook

The company intends to continue holding an advisory vote on executive compensation annually, with the next say-on-frequency vote scheduled for 2029. The company expects to continue acquiring a substantial portion of its target assets from Angel Oak Mortgage Lending.

Management Comments

• "We urge you to review these materials carefully and to take part in the affairs of our company by voting on the matters described in the accompanying proxy statement. Your vote is important." Sreeniwas Prabhu, Chief Executive Officer and President.
• "We look forward to your participation." Sreeniwas Prabhu, Chief Executive Officer and President.
• "Our Compensation Committee believes that our stockholders substantial approval indicated strong support for our approach to executive compensation."

Industry Context

StockSavvy.ai notes that the company's focus on acquiring and investing in first lien non-QM loans and other mortgage-related assets aligns with a specialized segment of the U.S. mortgage market, providing capital to support home ownership. The use of securitization transactions to manage debt and fund new loan purchases is a common practice among mortgage REITs to optimize capital structure and liquidity. The change in auditors from KPMG to Deloitte & Touche LLP is a notable event in the financial reporting landscape, often driven by competitive bidding, changes in audit requirements, or a desire for fresh perspectives, and is a standard practice in the industry.

Comparison to Industry Standards

• The company's use of an adjustable income measurement as a key financial metric for its short-term incentive programs is consistent with industry best practices, as StockSavvy.ai's external compensation consultant noted that nearly all comparable mortgage REITs utilize some form of an income-based metric.
• The target vesting level for performance-based restricted stock unit awards, corresponding with performance at the 55th percentile, reflects a market best practice, requiring the company to outperform its peers to achieve a target payout.
• The Stock Ownership Guideline Policy for independent directors (4x annual base cash retainers) and executives (2x-4x annual base salary) is a common corporate governance practice aimed at aligning management and director interests with those of shareholders, comparable to policies seen in other publicly traded REITs.

Management Changes

Corporate Governance

Related Party Transactions

• Management Agreement with Falcons I, LLC (the Manager), an affiliate of Angel Oak Capital, for managing business affairs. Management fees incurred were approximately $4.6 million in 2025 and $5.0 million in 2024. Expense reimbursements incurred were approximately $1.9 million in 2025 and $1.8 million in 2024. The Manager did not earn an incentive fee in 2025 or 2024. A new Management Agreement, effective October 1, 2025, modified CEO compensation reimbursement terms.
• Shareholder Rights Agreements with NHTV Atlanta Holdings LP (MS Investor, an affiliate of Morgan Stanley) and Xylem Finance LLC (DK Investor, an affiliate of Davidson Kempner Capital Management LP), granting rights to designate Board nominees.
• Loan Purchase Agreements with Angel Oak Home Loans LLC and Angel Oak Mortgage Solutions LLC (Residential Mortgage Originators), affiliates of the Manager, for the purchase of residential mortgage loans. The company purchased $160.2 million unpaid principal balance for $164.9 million in 2025 and $248.7 million unpaid principal balance for $255.4 million in 2024.
• Participation in multiple securitization transactions (AOMT 2024-3, 2024-4, 2024-6, 2024-10, 2024-13, 2025-4, 2025-6, 2025-10, 2025-HB2) with other affiliated entities or as a sole participant.
• Trademark License Agreement with an affiliate of the Manager for the non-exclusive, royalty-free use of the 'Angel Oak Mortgage REIT' name.
• Indemnification Agreements with directors and officers.
• Stock Repurchase Agreement on July 18, 2024, to repurchase 1,707,922 shares of common stock from the DK Investor for approximately $20.0 million.
• Related Party Transactions Policy requiring approval or ratification by the Affiliated Transactions and Risk Committee for transactions exceeding $120,000.

Stakeholder Impact

• Shareholders will vote on key governance matters (director elections, auditor, executive compensation) and benefit from increased net income and TSR. They are affected by related party transactions and the management fee structure, with stock ownership guidelines aiming to align interests.
• Executive Officers' compensation structure, including base salary, STIP, and LTIP, is detailed. They are subject to a new clawback policy and stock ownership guidelines, and the CEO's compensation reimbursement terms have been tightened.
• Directors are subject to stock ownership guidelines and indemnification agreements. Independent directors play a crucial role in oversight, especially through committees and the lead independent director role.
• The Manager (Falcons I, LLC) and its Affiliates (Angel Oak Capital, Angel Oak Mortgage Lending) receive management fees and expense reimbursements. They are involved in significant related party transactions (loan purchases, securitizations) and are impacted by changes in the Management Agreement, particularly regarding CEO compensation reimbursement.
• Customers (Homeowners) are indirectly impacted by the company's strategy to invest in non-QM loans, which provides capital to the housing market and supports home ownership.
• Auditors (Deloitte & Touche LLP) are the newly appointed independent registered public accounting firm, responsible for auditing financial statements for 2026.

Next Steps

• Stockholders to consider and vote on the election of eight directors at the Annual Meeting on May 13, 2026.
• Stockholders to ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the year ending December 31, 2026.
• Stockholders to approve, on a non-binding, advisory basis, a resolution regarding the compensation of the named executive officers.
• The Board and Compensation Committee will take the results of the non-binding advisory vote on executive compensation under advisement when making future decisions.
• The company will disclose final voting results in a Current Report on Form 8-K within four business days after the Annual Meeting.
• Stockholders intending to present proposals for the 2027 Annual Meeting must submit them by December 2, 2026.
• The next advisory say-on-frequency vote for executive compensation is scheduled for 2029.

Key Dates

Recommendation

The filing presents a mixed bag of information. On the positive side, the company reported increased net income and TSR for 2025, and stockholders showed strong support for the executive compensation plan. The implementation of stock ownership guidelines and a clawback policy strengthens corporate governance. However, the company's heavy reliance on related party transactions, particularly for asset acquisition and management, introduces potential conflicts of interest that require careful monitoring. The change in auditors, while not explicitly tied to disagreements over accounting principles, is a significant event that warrants attention. Given the improved financial metrics but also the inherent complexities and potential conflicts from the external management structure and related party dealings, a "hold" recommendation is appropriate as investors should monitor the execution of the new management agreement terms and the impact of the auditor change.

Keywords

Mortgage REIT, SEC Filing, Proxy Statement, Corporate Governance, Executive Compensation, Director Election, Auditor Ratification, Related Party Transactions, Non-QM Loans, Securitization, Shareholder Rights, Risk Management, Cybersecurity, Angel Oak Mortgage REIT