DEF: New York Mortgage Trust Sets June 12 Date for 2025 Virtual Annual Meeting, Outlines Director Nominees and Executive Compensation Proposals

New York Mortgage Trust has scheduled its 2025 Annual Meeting of Stockholders for June 12, 2025, via virtual web conference, where shareholders will vote on the election of seven directors, advisory approval of executive compensation, the frequency of future compensation votes, and the ratification of Grant Thornton LLP as its independent auditor.

Summary

• New York Mortgage Trust, Inc. (NYMT) will hold its 2025 Annual Meeting of Stockholders virtually on June 12, 2025, at 9:00 a.m. Eastern Time.
• Stockholders of record as of April 17, 2025, are entitled to vote on several key proposals.
• The proposals include the election of seven director nominees, an advisory vote to approve named executive officer (NEO) compensation, an advisory vote on holding future NEO compensation votes annually, and the ratification of Grant Thornton LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.
• NYMT is an internally-managed real estate investment trust (REIT) focused on acquiring, investing in, financing, and managing mortgage-related residential assets.
• Key developments in 2024 included focusing on prudent portfolio growth to increase interest income, particularly through Agency RMBS and short-duration residential loans, optimizing asset financing, and preserving liquidity.
• The company's investment portfolio increased by approximately $2.2 billion in 2024, and adjusted interest income grew by over 60% year-over-year.
• As of December 31, 2024, the portfolio recourse leverage ratio was 1.1x, and the cost of operations for 2024 was 1.9% of average stockholders' equity.
• The company emphasizes its commitment to corporate responsibility, including social, environmental, and governance (ESG) factors.
• Executive compensation for 2024 featured base salaries representing about 25% of total NEO compensation, with the majority linked to performance-based incentives and subject to double-trigger vesting upon a change in control.

Sentiment

Score: 4

Explanation: The document reports significant financial underperformance, including a net loss and failure to meet key incentive plan targets, alongside negative total economic return; however, it details proactive stockholder engagement, compensation plan adjustments responding to feedback, and maintains strong governance structures, slightly mitigating the negative performance impact.

Positives

• The company demonstrated responsiveness to shareholders by engaging extensively and adjusting compensation practices after the lower 2023 say-on-pay vote, resulting in 95% approval in 2024.
• NYMT is internally managed, which can align management interests more closely with shareholders compared to external management structures.
• The company maintains a diversified investment portfolio aimed at delivering stable long-term earnings.
• There is a stated commitment to corporate responsibility and ESG principles, including workforce diversity metrics (30% women, 33% minorities as of March 1, 2025).
• Strong corporate governance practices are highlighted, including a majority independent board, separate Chair and CEO roles, an independent Lead Director, annual election of all directors, and majority voting standard.
• Executive compensation structure emphasizes performance, with a significant portion being variable and performance-based.
• Executive equity awards feature double-trigger vesting upon a change in control.
• Robust stock ownership guidelines are in place for both directors and executives.
• A comprehensive anti-hedging and anti-pledging policy prohibits speculative trading activities by insiders.
• The company successfully grew its investment portfolio and significantly increased adjusted interest income in 2024.

Negatives

• The company reported a significant net loss attributable to common stockholders of $103.8 million for 2024, following a $90.0 million loss in 2023.
• Adjusted Total Economic Return (Adjusted TER) was negative 11.9% for 2024.
• Economic return on adjusted book value was negative 11.9% in 2024 and negative 12.8% in 2023.
• The company failed to meet the threshold performance levels for both the absolute and relative Adjusted TER measures under the quantitative component of the 2024 Annual Incentive Plan, resulting in zero payout from that 75% weighted portion.
• Performance Share Units (PSUs) granted in 2022 resulted in a 0% payout upon completion of the performance period on December 31, 2024, due to underperformance in relative Total Shareholder Return (TSR) (26th percentile vs 30th percentile threshold).
• The 62% say-on-pay approval rate in 2023 indicated significant shareholder dissatisfaction with prior compensation practices, necessitating program changes.

Risks

• The company faces significant interest rate risk, which can impact the value of its mortgage assets and borrowing costs.
• Credit risk is inherent in the company's portfolio of residential loans and non-Agency RMBS.
• Liquidity risk could arise from difficulties in financing assets or meeting margin calls, particularly during market stress.
• The company relies on repurchase agreements and other forms of financing, which carry rollover and counterparty risks.
• Potential impacts from climate change, such as severe weather events or rising sea levels, could negatively affect the value of properties underlying the company's assets and increase insurance costs or decrease availability.
• The market for mortgage-related assets is competitive, potentially impacting the availability and pricing of desired investments.
• Changes in laws and regulations affecting REITs, the financial services industry, or the housing market could adversely impact operations.
• Cybersecurity threats pose a risk to the company's information technology systems and data.
• The company's success depends on its ability to attract and retain key management and personnel.
• Future financial performance may continue to be volatile, impacting profitability and the ability to meet incentive compensation targets.

Future Outlook

The company states its principal objective is to deliver long-term stable earnings for distribution to stockholders over changing economic conditions through a diversified investment portfolio. The proxy statement outlines the proposed executive compensation structure for 2025, including the 2025 Annual Incentive Plan and 2025 Long-Term Equity Incentive Program. The company intends to continue its stockholder engagement efforts. No specific quantitative financial guidance for future periods is provided, beyond standard forward-looking statement disclaimers.

Management Comments

• The company's principal objective is to deliver long-term stable earnings for distribution to stockholders over changing economic conditions with a diversified investment portfolio.
• Management focused in 2024 on prudent portfolio growth to increase interest income, optimizing financing, and preserving liquidity.
• The Compensation Committee believes the executive compensation program effectively aligns management interests with stockholders, motivates performance, and aids in attracting and retaining talent.

Industry Context

New York Mortgage Trust operates as an internally-managed mortgage REIT within the U.S. real estate finance sector, focusing primarily on residential mortgage assets. This industry is highly sensitive to fluctuations in interest rates, credit spreads, and housing market conditions. The company competes with numerous other mortgage REITs (both internally and externally managed) and financial institutions for investment opportunities and capital. The use of non-GAAP metrics like adjusted book value and adjusted total economic return is common practice among mortgage REITs for performance evaluation and comparison. Increased focus on stockholder engagement and responsiveness regarding executive compensation reflects broader trends across public companies, particularly relevant given NYMT's recent say-on-pay history.

Comparison to Industry Standards

• NYMT utilizes a peer group of 11 companies, including Arbor Realty Trust, Chimera Investment Corporation, and Redwood Trust, Inc., for executive compensation benchmarking, assisted by independent consultant Pearl Meyer.
• The company targets total direct compensation for its NEOs between the 25th and 50th percentile relative to its peer group.
• Target long-term equity incentive compensation levels for NEOs are positioned below the median of the peer group.
• The 2022 PSU awards paid out at 0% due to achieving only the 26th percentile in relative TSR against an 18-company peer group, falling below the 30th percentile threshold.
• The relative performance measure (Adjusted TER) in the 2024 Annual Incentive Plan also resulted in a 0% payout, ranking 17th out of 18 peers and missing the 25th percentile threshold.
• The structure of the 2024 Long-Term EIP (60% PSUs, 40% RSUs) is consistent with common industry practices.
• Paying 100% of the annual incentive award in cash aligns with the practice of the majority of its peer group.
• Setting the target performance hurdle for 100% PSU payout at the 55th percentile (for 2024 and 2025 awards) is slightly above the median, designed to incentivize above-average peer performance.
• Capping PSU payouts at 100% of target when absolute TSR is negative is a governance enhancement adopted in response to feedback and observed in some peer practices.

Corporate Governance

Related Party Transactions

• The company stated there were no material related party transactions during 2024.
• The company has entered into indemnification agreements with its directors and executive officers, providing for indemnification and advancement of expenses to the maximum extent permitted by Maryland law.

Stakeholder Impact

• Shareholders are asked to vote on key governance matters and are impacted by the company's financial performance, which was negative in 2024.
• Employees' compensation, particularly incentive pay for executives, is directly linked to company performance metrics, some of which were not met in 2024.
• The company's investment activities provide liquidity to the residential mortgage market, potentially benefiting borrowers and the housing market.
• Creditors and financing counterparties are impacted by the company's financial health, leverage levels, and ability to meet obligations.

Next Steps

• Hold the Annual Meeting of Stockholders on June 12, 2025.
• Conduct votes on the election of directors, advisory approval of NEO compensation, advisory vote on frequency of NEO compensation votes, and ratification of the independent auditor.
• Continue engagement with stockholders regarding compensation and governance matters.
• Implement the 2025 Annual Incentive Plan and grant awards under the 2025 Long-Term Equity Incentive Program.
• File the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Key Dates

Keywords

New York Mortgage Trust, NYMT, REIT, Mortgage REIT, Proxy Statement, DEF 14A, Executive Compensation, Annual Meeting, Corporate Governance, Residential Mortgage-Backed Securities, RMBS, Agency RMBS, Residential Loans, Say-on-Pay, Stockholder Engagement, ESG, Director Election, Auditor Ratification, Grant Thornton, Adjusted Total Economic Return, Adjusted Book Value, Total Shareholder Return