DEF: Cherry Hill Mortgage Investment Corporation Announces Annual Meeting of Stockholders

Cherry Hill Mortgage Investment Corporation will hold its 2025 Annual Meeting of Stockholders virtually on June 12, 2025, to vote on director elections, executive compensation, auditor ratification, and other business.

Summary

• Cherry Hill Mortgage Investment Corporation will hold its Annual Meeting of Stockholders on June 12, 2025, in a virtual format.
• Stockholders will vote on the election of five director nominees, an advisory vote on executive compensation, the ratification of Ernst & Young LLP as the independent accounting firm, and the frequency of future executive compensation votes.
• The record date for determining stockholders eligible to vote is April 7, 2025.
• The board recommends voting for all director nominees, the approval of executive compensation, a one-year frequency for say-on-pay votes, and the ratification of Ernst & Young LLP.
• The company completed an internalization event on November 14, 2024, becoming an internally managed company.
• Independent directors receive a cash retainer of $70,000, with additional retainers for committee chairs and the lead independent director.
• In 2024, the company paid CHMM approximately $5.5 million in management fees and reimbursed approximately $523,000 of allocable expenses.
• The company's executive compensation program is being redesigned to align with its new status as an internally managed company.
• The company adopted an Executive Severance Plan in March 2025, providing severance payments to key executives upon qualifying terminations.
• The company's CEO pay ratio for the period between November 14, 2024, and December 31, 2024, was 4 to 1 compared to the median employee.

Sentiment

Score: 7

Explanation: The document is primarily factual and procedural, outlining the agenda for the annual meeting and providing necessary disclosures. The completion of the internalization is a positive development, but there are also some challenges and risks mentioned. Overall, the sentiment is neutral to slightly positive.

Positives

• The company completed the Internalization, transitioning to an internally managed structure, which is expected to improve efficiency and alignment of interests.
• The company is redesigning its executive compensation program to better align with performance and stockholder interests.
• The company has a clawback policy in place to recoup erroneously awarded incentive compensation.
• The company has a strong corporate governance framework, including independent board committees and a lead independent director.
• The company is committed to corporate social responsibility and sustainability, as evidenced by its ESG report and human rights policy.
• The company is committed to diversity and inclusion, with women representing one-third of the overall team.

Negatives

• The say-on-pay proposal at the 2024 annual meeting received approximately 65% support, indicating some stockholder dissatisfaction with executive compensation.
• The company's CEO pay ratio for the period between November 14, 2024, and December 31, 2024, was 4 to 1 compared to the median employee.

Risks

• Climate change could have a material adverse effect on the company's operations and financial performance.
• Cybersecurity risks and artificial intelligence risks could impact the company.
• The subservicing agreement with RoundPoint may be terminated, potentially incurring de-boarding fees.
• The company's ability to qualify as a REIT depends on distributing at least 90% of its REIT taxable income annually, limiting its ability to reinvest earnings.

Future Outlook

The company is in the process of redesigning its executive compensation strategy and philosophy to align with its new status as an internally managed company. Beginning in January 2026, NEOs will be eligible to participate in equity and non-equity incentive plans and receive annual discretionary cash bonuses.

Management Comments

• The Board believes that a virtual meeting format will provide the opportunity for full and equal participation by all stockholders, from any location around the world.
• The Board believes that the combination of its current composition, leadership structure and the intelligent, experienced and diverse perspectives of the directors provides the proper independent and expert oversight of our company's business, strategy and management.

Industry Context

The announcement reflects standard corporate governance practices for publicly traded companies, particularly REITs, including annual meetings, say-on-pay votes, and auditor ratification. The internalization of management is a significant strategic shift, aligning the company more closely with internally managed peers.

Comparison to Industry Standards

• The company's corporate governance practices, such as having independent board committees and a lead independent director, are consistent with industry standards for REITs and other publicly traded companies.
• The company's executive compensation program is being redesigned to align with industry best practices, including the use of performance-based metrics and benchmarking against peers.
• The company's commitment to corporate social responsibility and sustainability is in line with growing investor expectations and industry trends.
• The company's CEO pay ratio is lower than some other companies in the financial services industry, but it is important to consider the specific context of the company's size and structure.

Related Party Transactions

• Prior to the Internalization, Aurora leased three employees from Freedom Mortgage and reimbursed Freedom Mortgage on a monthly basis, totaling approximately $320,000 for the period from January 1, 2024 through, and including, November 14, 2024.
• In 2023, Aurora purchased MSRs with an aggregate UPB of approximately $987,000 from RoundPoint pursuant to the flow agreement for a purchase price of $5,000.

Stakeholder Impact

• Stockholders will have the opportunity to vote on key corporate governance matters.
• Employees will be impacted by the redesigned executive compensation program and the Executive Severance Plan.
• The company's commitment to corporate social responsibility and sustainability will benefit the broader community.
• The company's financial performance will impact its ability to pay dividends and generate returns for stockholders.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Board and Compensation Committee will consider the voting results when making future decisions.
• The company will continue to refine its executive compensation program and engage with investors.
• The company will monitor and manage risks related to climate change, cybersecurity, and other factors.

Key Dates

Keywords

Annual Meeting, Proxy Statement, Executive Compensation, Director Election, Internalization, Corporate Governance, Say-on-Pay, REIT, Mortgage, EY