UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [__]
Check the appropriate box:
[__] Preliminary Proxy Statement
[__] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[__] Definitive Additional Materials
[__] Soliciting Material Under ss.240.14a-12
AMERICAN HOME MORTGAGE INVESTMENT CORP.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[__] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[__] Fee paid previously with preliminary materials:
[__] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date filed:
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AMERICAN HOME MORTGAGE INVESTMENT CORP.
538 Broadhollow Road
Melville, New York 11747
May 19, 2006
Dear Fellow Stockholder:
You are cordially invited to attend the 2006 Annual Meeting of
Stockholders of American Home Mortgage Investment Corp. ("AHMIC" or the
"Company"), which will be held on Tuesday, June 20, 2006, commencing at 10:00
a.m., local time, at 538 Broadhollow Road, Melville, New York 11747.
At the Annual Meeting, you will be asked (i) to consider and vote upon
the election of two Class I directors to serve for a three-year term expiring at
the 2009 Annual Meeting of Stockholders, and until each of their respective
successors has been duly elected and qualified; (ii) to consider and ratify
Deloitte & Touche LLP as AHMIC's independent auditors for the year ending
December 31, 2006; and (iii) to consider and act upon such other business as may
properly come before the Annual Meeting or any adjournments or postponements
thereof. These proposals are more fully described in the Proxy Statement that
follows.
We hope that you will find it convenient to attend in person. Whether
or not you expect to attend in person, please promptly date, sign and mail the
enclosed proxy in the return envelope provided to ensure your representation at
the Annual Meeting and the presence of a quorum. If you do attend the Annual
Meeting, you may withdraw your proxy if you wish to vote in person.
A copy of the Company's Annual Report to Stockholders, which includes a
copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2005, is being provided with the Proxy Statement to each of the
Company's stockholders as of May 16, 2006, the record date fixed for the Annual
Meeting. Additional copies of that report may be obtained by writing to American
Home Mortgage Investment Corp., 538 Broadhollow Road, Melville, New York 11747,
Attention: Investor Relations Department.
On behalf of the Board of Directors and officers of AHMIC, I would like
to express the Company's appreciation for your continued support.
Sincerely,
/s/ Michael Strauss
MICHAEL STRAUSS
Chairman of the Board, Chief Executive
Officer and President
AMERICAN HOME MORTGAGE INVESTMENT CORP.
538 Broadhollow Road
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 2006
To the Stockholders of American Home Mortgage Investment Corp.:
Notice is hereby given that the Annual Meeting of Stockholders of
American Home Mortgage Investment Corp., a Maryland corporation ("AHMIC" or the
"Company"), will be held on Tuesday, June 20, 2006, commencing at 10:00 a.m.,
local time, at 538 Broadhollow Road, Melville, New York 11747, for the following
purposes:
1. To elect two Class I directors to serve for a three-year term
expiring at the 2009 Annual Meeting of Stockholders, and until each
of their respective successors has been duly elected and qualified.
2. To consider and ratify Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2006.
3. To consider and act upon such other business as may properly come
before the Annual Meeting.
The Board of Directors of the Company has fixed the close of business
on May 16, 2006, as the record date for the determination of stockholders
entitled to notice of and to vote on any matters that may properly come before
the Annual Meeting and at any adjournments or postponements thereof.
By order of the Board of Directors,
/s/ Alan B. Horn
ALAN B. HORN
Secretary
Dated: May 19, 2006
Melville, New York
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. YOUR VOTE
IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE
THAT YOUR SHARES WILL BE REPRESENTED. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU
ATTEND THE MEETING.
AMERICAN HOME MORTGAGE INVESTMENT CORP.
538 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
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PROXY STATEMENT
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Annual Meeting of Stockholders
June 20, 2006
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This Proxy Statement is furnished by the Board of Directors of American
Home Mortgage Investment Corp., a Maryland corporation ("AHMIC" or the
"Company"), in connection with the Company's solicitation of proxies for use at
the 2006 Annual Meeting of Stockholders of AHMIC (the "Annual Meeting"), which
will be held on Tuesday, June 20, 2006, commencing at 10:00 a.m., local time, at
538 Broadhollow Road, Melville, New York 11747, and at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. All stockholders are entitled and encouraged to
attend the Annual Meeting in person. This Proxy Statement and the accompanying
Proxy Card will be mailed on or about May 19, 2006 to AHMIC stockholders of
record as of May 16, 2006.
SOLICITATION OF PROXIES
The proxy enclosed with this Proxy Statement is solicited by the Board
of Directors of AHMIC. Proxies may be solicited by officers, directors and
regular supervisory and executive employees of AHMIC, none of whom will receive
any additional compensation for their services. Such solicitations may be made
personally, or by mail, facsimile, telephone, telegraph or messenger. The
Company may reimburse brokers and other persons holding shares in their names or
in the names of nominees for expenses in sending proxy materials to beneficial
owners and obtaining proxies from such owners. All of the costs of solicitation
of proxies will be paid by AHMIC.
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted in accordance with the directions given and, in
connection with any other business that may properly come before the Annual
Meeting, in the discretion of the persons named in the proxy.
In voting by proxy with regard to the election of directors,
stockholders may vote in favor of each nominee or withhold their votes as to
each or all of the nominees. If no instruction is given on a properly completed
proxy, it will be voted FOR the election of each of the nominees for director
named in this Proxy Statement, or, if any such nominee is unable or unwilling to
serve for any reason, for such other person or persons as the Board of Directors
may recommend.
In voting by proxy with regard to the ratification of Deloitte & Touche
LLP as the Company's independent auditors for the year ending December 31, 2006,
stockholders may vote in favor of ratification or against or may abstain from
voting with respect to this proposal. If no instruction is given on a properly
completed proxy, it will be voted FOR the ratification of Deloitte & Touche LLP
as the Company's independent auditors.
As to any other matter of business that may be brought before the
Annual Meeting, such proxy will be voted in accordance with the judgment of the
persons named in the proxy.
A stockholder who has given a proxy may revoke it at any time before it
is exercised by giving notice of revocation to the Secretary of AHMIC, by
submitting a proxy bearing a later date or by attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting will not, in itself,
constitute revocation of a proxy.
VOTING SECURITIES
The Board of Directors has fixed the close of business on May 16, 2006,
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting. Holders of record of
the Company's common stock, par value $0.01 per share ("Common Stock"), as of
the Record Date will be entitled to one vote for each share held. On the Record
Date, there were 50,016,186* shares of the Company's Common Stock outstanding
and entitled to vote.
The presence in person or by proxy of stockholders entitled to cast a
majority of all the votes entitled to be cast at the Annual Meeting shall
constitute a quorum for the transaction of business at the Annual Meeting.
Assuming the presence of a quorum at the Annual Meeting: (i) a
plurality of the votes cast by holders of shares of Common Stock represented at
the Annual Meeting is required for the election of directors; and (ii) the
affirmative vote of a majority of the votes cast by holders of shares of Common
Stock represented at the Annual Meeting is required for the ratification of
Deloitte & Touche LLP as the Company's independent auditors for the year ending
December 31, 2006.
Broker non-votes exist when a broker who holds shares in street name
does not receive voting instructions from a beneficial stockholder and such
broker does not have discretionary authority under applicable exchange rules to
vote on the particular proposal. Stockholder abstentions and broker non-votes
are considered present and entitled to vote for purposes of determining a
quorum. There should not be any broker non-votes on Proposal I, election of
directors, or Proposal II, ratification of independent auditors, because a
broker who holds shares in street name and does not receive voting instructions
from a beneficial stockholder has discretionary authority to vote on these
proposals. A vote "withheld" from a director nominee will have no effect on the
outcome of the vote because a plurality of the votes cast at the annual meeting
is required for the election of directors, and for purposes of the vote on
Proposal II, ratification of independent auditors, an abstention will have no
effect.
EXPLANATORY NOTE
AHMIC was incorporated in July, 2003, under the laws of the State of
Maryland. On December 3, 2003, through an internal reorganization, AHMIC became
the parent company of American Home Mortgage Holdings, Inc. ("AHM Holdings"),
which was a publicly owned company whose common stock traded on the Nasdaq
National Market under the symbol "AHMH." Concurrent with the reorganization,
Apex Mortgage Capital, Inc. ("Apex"), a Maryland corporation, which operated as
a real estate investment trust ("REIT"), merged with and into AHMIC, with AHMIC
as the surviving corporation. In connection with these transactions, the Common
Stock of the Company was exchanged for the outstanding shares of common stock of
AHM Holdings and Apex, and the Company commenced operating in a manner allowing
it to qualify as a REIT for federal income tax purposes. The Company's common
stock began trading on the New York Stock Exchange ("NYSE") under the symbol
"AHH" on December 4, 2003. The Company's trading symbol on the NYSE was changed
to "AHM" as of June 1, 2004.
As a result of the reorganization and merger, both completed on
December 3, 2003, among other things: (i) AHM Holdings became a wholly owned
subsidiary of the Company and ceased trading on the Nasdaq National Market, (ii)
Apex ceased to exist, and (iii) the directors and executive officers of AHM
Holdings at the time of completion of these transactions became the directors
and executive officers of the Company. Accordingly, certain references in this
Proxy Statement to the Company or to historical information relating to the
Company, in each case relative to periods prior to December 3, 2003, generally
apply to AHM Holdings.
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* Number of shares is an estimate. This number will be updated following the
Record Date.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of April 20, 2006, the following are the only persons, entities or
groups (other than as set forth under "Security Ownership of Directors and
Executive Officers" below) known to the Company to be the beneficial owners of
more than 5% of the Company's outstanding Common Stock:
Shares of Common Stock Percent of Common Stock
Name and Address of Beneficial Owner Beneficially Owned Beneficially Owned (1)
------------------------------------------------ ------------------------------- -----------------------------------
Barclays Global Investors, N.A. 3,898,397 (2) 7.79%
45 Fremont Street
San Francisco, CA 94105
Morgan Stanley 3,655,121 (3) 7.31%
1585 Broadway
New York, NY 10036
Greenlight Capital, L.L.C. 3,466,900 (4) 6.93%
140 East 45th Street, Floor 24
New York, New York 10017
Munder Capital Management 3,151,906 (5) 6.30%
Munder Capital Center
480 Pierce Street
Birmingham, MI 48009
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(1) Ownership percentages are based on 50,016,186 shares of Common Stock
outstanding as of April 20, 2006.
(2) Barclays Global Investors, N.A. ("Barclays NA"), filed a Schedule 13G with
the Securities and Exchange Commission ("SEC") on January 26, 2006, on
behalf of Barclays NA, Barclays Global Fund Advisors ("Barclays Fund"),
Barclays Global Investors, Ltd. ("Barclays Ltd") and Barclays Global
Investors Japan Trust and Banking Company Limited ("Barclays Japan").
According to the Schedule 13G: (i) Barclays NA beneficially owned
3,225,921 shares of Common Stock, with sole voting power over 2,848,509
shares and sole dispositive power over 3,225,921 shares; (ii) Barclays
Fund beneficially owned 672,476 shares of Common Stock, with sole voting
power over 670,750 shares and sole dispositive power over 672,476 shares;
(iii) Barclays Ltd. did not beneficially own or have sole voting or sole
dispositive power over any shares of Common Stock; and (iv) Barclays Japan
did not beneficially own or have sole voting or sole dispositive power
over any shares of Common Stock.
(3) Morgan Stanley filed a Schedule 13G with the SEC on February 16, 2006.
According to the Schedule 13G, Morgan Stanley beneficially owned 3,655,121
shares of Common Stock, with sole voting and dispositive power over
3,654,907 shares.
(4) Greenlight Capital, L.L.C., a Delaware limited liability company ("GC
LLC"), filed a Schedule 13G/A with the SEC on February 14, 2006, on behalf
of GL LLC, Greenlight Capital, Inc., a Delaware corporation ("GC Inc."),
DME Advisors, L.P., a Delaware limited partnership ("DME") and David
Einhorn ("Einhorn"). According to the Schedule 13G/A: (i) GC LLC
beneficially owned 1,981,700 shares of Common Stock, with sole voting and
dispositive power over 1,981,700 shares; (ii) GC Inc. beneficially owned
1,184,900 shares of Common Stock, with sole voting and dispositive power
over 1,184,900 shares; (iii) DME LP beneficially owned 300,300 shares of
Common Stock, with sole voting and dispositive power over 300,300 shares;
and (iv) David Einhorn beneficially owned 3,466,900 shares of Common
Stock, with sole voting and dispositive power over 3,466,900 shares.
(5) Munder Capital Management, a Delaware general partnership ("Munder"),
filed a Schedule 13G with the SEC on March 30, 2006. According to the
Schedule 13G, Munder beneficially owned 3,151,906 shares of Common Stock,
with sole voting power over 3,001,386 shares and sole dispositive power
over 3,151,906 shares.
The determination that there were no other persons, entities or groups
(other than as set forth under "Security Ownership of Directors and Executive
Officers" below) known to the Company to beneficially own more than 5% of the
Company's outstanding Common Stock was based on a review of all statements filed
with the SEC
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with respect to the Company pursuant to Section 13(d) or 13(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since the beginning of
the prior fiscal year.
Security Ownership of Directors and Executive Officers
The following table sets forth certain information regarding ownership
of Common Stock as of April 20, 2006, by (i) each of the members of the
Company's Board of Directors, (ii) each of the Company's executive officers
named in the "Summary Compensation Table" under the caption "Executive
Compensation" below (sometimes referred to herein as the "named executive
officers"), and (iii) all directors and executive officers of the Company as a
group. Unless otherwise indicated, all shares were owned directly with sole
voting and investment power.
Shares of Common Stock Percent of Common Stock
Name and Address of Beneficial Owner (1) Beneficially Owned Beneficially Owned (2)
---------------------------------------------- ------------------------- ------------------------
Michael Strauss 4,623,513(3) 9.23%
John A. Johnston 609,174 1.22%
Nicholas R. Marfino 32,182 *
Michael A. McManus, Jr 27,286 *
C. Cathleen Raffaeli 38,877 *
Kenneth P. Slosser (4) 76,667 *
Irving J. Thau 8,316 *
Stephen A. Hozie 52,250(5) *
Donald Henig 55,000(6) *
Thomas M. McDonagh 30,400(7) *
Richard S. Loeffler 10,000 *
All directors and executive officers as a
group (thirteen individuals) 5,569,665 11.09%
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* Represents less than 1%.
(1) Each individual listed in the table is a director or named executive
officer of the Company, with an address at c/o American Home Mortgage
Investment Corp., 538 Broadhollow Road, Melville, New York 11747.
(2) Ownership percentages are based on 50,016,186 shares of Common Stock
outstanding as of April 20, 2006. Under the rules of the SEC, shares of
common stock that an individual has a right to acquire within 60 days from
April 20, 2006, pursuant to the exercise of options, warrants or other
convertible securities, are deemed to be outstanding for the purpose of
computing the percentage of ownership of such person, but are not deemed
to be outstanding for the purpose of computing the percentage of ownership
of any other person shown in the table.
(3) This number includes currently exercisable options to purchase 81,407
shares of Common Stock.
(4) Mr. Slosser's term of service as a director of the Company will expire at
the 2006 Annual Meeting of Stockholders.
(5) This number includes currently exercisable options to purchase 51,250
shares of Common Stock.
(6) This number represents currently exercisable options to purchase 55,000
shares of Common Stock.
(7) This number includes currently exercisable options to purchase 10,860
shares of Common Stock and options to purchase 15,000 shares of Common
Stock that become exercisable on June 30, 2006. This number also includes
4,140 shares of Common Stock held by trusts established for Mr. McDonagh's
minor children, as to which shares Mr. McDonagh disclaims beneficial
ownership.
4
CORPORATE GOVERNANCE
Board of Directors
The bylaws of the Company provide that the Board of Directors will
consist of not less than three members nor more than 12 members, the exact
number to be determined by resolution adopted by the affirmative vote of a
majority of the Board of Directors of AHMIC. Currently, there are seven members
on the Board of Directors, which is divided into three classes. Directors in
each class are elected for a three-year term in staggered years.
Meetings of the Board of Directors
The Board of Directors of the Company held 10 meetings during 2005 and
took action by written consent on seven occasions. Each current director
attended 75% or more of the aggregate number of meetings of the Board of
Directors and Board committees on which he or she served that were held during
such period.
Directors are encouraged, but are not required, to attend the Company's
annual meetings of stockholders. One director attended the Company's 2005 Annual
Meeting of Stockholders, which was held on June 14, 2005.
Independence of the Board of Directors
The Board of Directors of the Company has affirmatively determined that
four of its seven directors, including all members of its Audit, Compensation
and Nominating and Corporate Governance Committees, are "independent" as defined
by the listing standards of the NYSE and applicable rules and regulations of the
SEC. The four independent directors are Nicholas R. Marfino, Michael A. McManus,
Jr., C. Cathleen Raffaeli and Irving J. Thau. The Board of Directors also has
determined that Kristian R. Salovaara, a director nominee, is "independent" as
defined by the listing standards of the NYSE and applicable rules and
regulations of the SEC.
Executive Sessions of Non-Management Directors
Meetings of non-management directors are scheduled to be held regularly
throughout the year. Additional meetings may be scheduled by any non-management
director. These non-management executive sessions may be chaired by any of the
chairpersons of the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee. In this regard, the Company's
current policy is to rotate the chairperson position at such sessions among the
various committee chairpersons.
Communications with Directors
Stockholders and other interested parties may communicate directly with
any director, including any non-management member of the Board of Directors, by
writing to the attention of such individual at the following address: American
Home Mortgage Investment Corp., 538 Broadhollow Road, Melville, New York 11747.
Communications that are intended for the non-management directors
generally should be marked "Personal and Confidential" and sent to the attention
of the Chair of the Nominating and Corporate Governance Committee. The Chair
will distribute any communications received to the non-management director(s) to
whom the communication is addressed. Communications that are intended for the
whole Board should be sent to the attention of the Company's General Counsel and
Secretary.
Corporate Governance Principles
The Board of Directors adopted Corporate Governance Principles that,
along with the charters of the various Board committees, provide the framework
for the governance of the Company. The Nominating and Corporate Governance
Committee is responsible for overseeing and reviewing the Corporate Governance
Principles from time to time and recommending proposed changes to the Board for
approval. The Corporate Governance Principles are available on the Company's
website at http://www.americanhm.com. The Corporate Governance
5
Principles are also available in print to anyone who requests them by writing to
the Company at the following address: 538 Broadhollow Road, Melville, New York
11747, Attention: Investor Relations Department.
Code of Business Conduct and Ethics
All directors, officers and employees of the Company must act ethically
and in accordance with the Company's Code of Business Conduct and Ethics (the
"Code of Ethics"). The Code of Ethics satisfies the definition of "code of
ethics" under the rules and regulations of the SEC and is available on the
Company's website at http://www.americanhm.com. The Code of Ethics is also
available in print to anyone who requests it by writing to the Company at the
following address: 538 Broadhollow Road, Melville, New York 11747, Attention:
Investor Relations Department.
Committees of the Board of Directors and Committee Meetings
The Board of Directors of the Company currently has three standing
committees: the Audit Committee, the Compensation Committee and the Nominating
and Corporate Governance Committee. The members and functions of these
committees are described below. The Board of Directors has adopted written
charters for each such committee, current versions of which are available on the
Company's website at http://www.americanhm.com. The charters are also available
in print to anyone who requests them by writing to the Company at the following
address: 538 Broadhollow Road, Melville, New York 11747, Attention: Investor
Relations Department.
Audit Committee
The Audit Committee assists the Board of Directors in monitoring: (i)
the integrity of the financial statements of the Company, (ii) the
qualifications and independence of the Company's independent auditors, (iii) the
performance of the Company's internal audit function and independent auditors,
(iv) the compliance by the Company with legal and regulatory requirements and
(v) the processes by which management assesses and manages risk. The Audit
Committee pre-approves all auditing services and permitted non-audit services
(including the fees and terms thereof) to be performed for the Company by the
independent auditors, subject to the exceptions for non-audit services which are
approved by the Audit Committee prior to the completion of the audit. The
Amended and Restated Charter of the Audit Committee, which describes all of the
Audit Committee's responsibilities, is posted on the Company's website.
During 2005, the Audit Committee held ten meetings. The Audit Committee
Report appears on page 15 of this Proxy Statement.
The members of the Audit Committee are Irving J. Thau (Chair), C.
Cathleen Raffaeli, Nicholas R. Marfino and Michael A. McManus, Jr.
The Board of Directors has determined that each member of the Audit
Committee satisfies the independence standards for Audit Committee membership as
set forth in Section 10A(m)(3) of the Exchange Act and the rules promulgated
thereunder and applicable listing standards of the NYSE. In addition, the Board
of Directors has determined that Mr. Thau satisfies the SEC's criteria for an
"audit committee financial expert."
Compensation Committee
The primary purpose of the Compensation Committee is (i) to review and
approve corporate goals and objectives relevant to compensation of the Company's
Chief Executive Officer ("CEO"), evaluate the CEO's performance in light of such
goals, and determine and approve the salary, benefits and other compensation of
the CEO, (ii) to review, with the CEO, the salaries, benefits and other
compensation of the Company's other executive officers, and (iii) to make
recommendations to the Company's Board of Directors regarding the other
executive officers' salaries, benefits, and other compensation. The Charter of
the Compensation Committee, which describes all of the Compensation Committee's
responsibilities, is posted on the Company's website.
6
During 2005, the Compensation Committee held three meetings and took
action by written consent on one occasion. The Compensation Committee Report on
Executive Compensation begins on page 22 of this Proxy Statement. The members
of the Compensation Committee are Nicholas R. Marfino (Chair), Michael A.
McManus, Jr., and C. Cathleen Raffaeli.
Nominating and Corporate Governance Committee
The primary purpose of the Nominating and Corporate Governance
Committee is to consider and make recommendations to the Board of Directors
concerning the appropriate size, functions and needs of the Board of Directors.
The responsibilities of the Nominating and Corporate Governance Committee also
include, among other things, identifying and nominating individuals qualified to
become members of the Board, developing the Company's Corporate Governance
Principles and overseeing the evaluation of the Board and management. The
Charter of the Nominating and Corporate Governance Committee, which describes
all of the Nominating and Corporate Governance Committee's responsibilities, is
posted on the Company's website.
During 2005, the Nominating and Corporate Governance Committee held two
meetings. The members of the Nominating and Corporate Governance Committee are
Michael A. McManus, Jr. (Chair), Nicholas R. Marfino and C. Cathleen Raffaeli.
Compensation of the Board of Directors
Directors who are neither employees of the Company nor employees of its
subsidiaries each received $4,000 per Board of Directors or committee meeting
attended (except for committee meetings held on the same day as a Board
meeting). In addition, the chairperson of the Audit Committee receives an
additional fee of $10,000 per year of service. Directors also are reimbursed for
reasonable out-of-pocket expenses incurred in connection with their service as
directors.
Each non-employee director is eligible to be awarded non-qualified
stock options and shares of restricted stock under the Company's 1999 Omnibus
Stock Incentive Plan (the "Plan"). A recipient of restricted stock under the
Plan is entitled to vote such stock and is entitled to all dividends paid on
such stock, except that dividends paid in shares of Common Stock or other
property also will be subject to the same restrictions. During 2005, the Company
did not award any shares of restricted stock or stock options to non-employee
members of the Board of Directors.
Directors who serve either as the Company's officers or employees or as
officers or employees of any of its subsidiaries do not receive any additional
compensation for their services as directors.
Director Nomination Process
Role of the Nominating and Corporate Governance Committee
In accordance with the Company's Corporate Governance Principles, the
Nominating and Corporate Governance Committee considers director candidates
based on criteria approved by the Board of Directors, including such
individuals' backgrounds, skills, expertise, accessibility and availability to
serve constructively and effectively on the Board. The Nominating and Corporate
Governance Committee considers and evaluates director candidates based upon
certain minimum qualifications set forth in the Charter of the Nominating and
Corporate Governance Committee.
The Nominating and Corporate Governance Committee may retain a director
search firm to assist the Nominating and Corporate Governance Committee in
identifying qualified director nominees. In addition, the Nominating and
Corporate Governance Committee will consider potential nominees proposed by the
Chairman of the Board, the CEO, any member of the Nominating and Corporate
Governance Committee and any search firm engaged by any of the foregoing for the
purpose of identifying potential candidates for Board membership. After
identifying qualified individuals and conducting interviews, as appropriate, the
Nominating and Corporate Governance Committee will recommend the selected
individuals to the Board. In the event there is a vacancy on the
7
Board between stockholders' meetings, the Nominating and Corporate Governance
Committee will recommend one or more of the qualified individuals for
appointment to the Board.
Candidates Proposed by Stockholders
The Nominating and Corporate Governance Committee has a policy to
consider recommendations for director candidates submitted in good faith by
stockholders. A stockholder recommending an individual for consideration by the
Nominating and Corporate Governance Committee must provide (i) evidence in
accordance with Rule 14a-8 of the Exchange Act of compliance with the
stockholder eligibility requirements, (ii) the written consent of the
candidate(s) for nomination as a director, (iii) a resume or other written
statement of the qualifications of the candidate(s) for nomination as a director
and (iv) all information regarding the candidate(s) and the stockholder that
would be required to be disclosed in a proxy statement filed with the SEC if the
candidate(s) were nominated for election to the Board, including, without
limitation, name, age, business and residence address and principal occupation
or employment during the past five years. Stockholders should send the required
information to the Company at 538 Broadhollow Road, Melville, New York 11747,
Attention: General Counsel and Secretary.
In order for a recommendation to be considered by the Nominating and
Corporate Governance Committee for the 2007 Annual Meeting of Stockholders, the
Company's General Counsel and Secretary must receive the recommendation no later
than 5:00 p.m., local time, on January 19, 2007. Such recommendations must be
sent via registered, certified or express mail (or other means that allows the
stockholder to determine when the recommendation was received by the Company).
The Company's General Counsel and Secretary will send properly submitted
stockholder recommendations to the Nominating and Corporate Governance Committee
for consideration at a future meeting of the Nominating and Corporate Governance
Committee. Individuals recommended by stockholders in accordance with these
procedures will receive the same consideration as other individuals evaluated by
the Nominating and Corporate Governance Committee.
Stockholder Nominations
In addition, the Company's bylaws permit stockholders to nominate
directors to be voted upon at an annual meeting of stockholders or at a special
meeting at which directors are to be elected in accordance with the notice of
meeting. Stockholders intending to nominate a person for election as a director
must comply with the requirements set forth in the Company's bylaws, which were
filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2003. A copy of the Company's bylaws can be obtained, without
charge, upon written request to the Company at 538 Broadhollow Road, Melville,
New York 11747, Attention: Investor Relations Department. The bylaws generally
require, among other things, that the Company receive written notification from
the record stockholder containing the information described in the section above
and any other information required by the bylaws no earlier than February 20,
2007, and no later than March 22, 2007.
8
PROPOSAL I - ELECTION OF DIRECTORS
C. Cathleen Raffaeli, whose term expires at the Annual Meeting, is a
Class I director and has been nominated for re-election to the Board of
Directors as a Class I director to hold office for a three-year term expiring at
the 2009 Annual Meeting of Stockholders and until her successor has been duly
elected and qualified. Ms. Raffaeli has consented to be named as a nominee and,
if elected, to serve as a director. The Board of Directors of the Company has
affirmatively determined that Ms. Raffaeli is "independent" as defined by the
listing standards of the NYSE and applicable rules and regulations of the SEC.
Kristian R. Salovaara has been nominated for election to the Board of
Directors as a Class I director to hold office for a three-year term expiring at
the 2009 Annual Meeting of Stockholders and until his successor has been duly
elected and qualified. Mr. Salovaara has consented to be named as a nominee and,
if elected, to serve as a director. Mr. Salovaara was recommended to the
Nominating and Corporate Governance Committee of the Board of Directors by the
Company's Chief Executive Officer. The Board of Directors of the Company has
affirmatively determined that Mr. Salovaara is "independent" as defined by the
listing standards of the NYSE and applicable rules and regulations of the SEC.
If any of the nominees named above is unable or unwilling to serve as a
director, the enclosed proxy will be voted for such other person or persons as
the Board of Directors may recommend. Management of AHMIC does not anticipate
that such an event will occur.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
NOMINEE SET FORTH ABOVE.
9
Information about the Nominees, the Continuing Directors and Executive and Other
Key Officers of the Company
The table below sets forth the names and ages of the current directors,
including the nominees, and the executive and other key officers of AHMIC, as
well as the position(s) and office(s) held by those individuals. A summary of
the background and experience of each of those individuals is set forth after
the table.
Name Age Position(s)
--------------------------------- ------ ------------------------------------------------------------------
DIRECTOR NOMINEES - CLASS I
(WHOSE TERMS EXPIRE IN 2009):
C. Cathleen Raffaeli 49 Director
Kristian R. Salovaara 45 Director Nominee
CONTINUING DIRECTORS - CLASS II
(WHOSE TERMS EXPIRE IN 2007):
John A. Johnston 52 Director and President, Western Division
Michael A. McManus, Jr. 63 Director
CONTINUING DIRECTORS - CLASS III
(WHOSE TERMS EXPIRE IN 2008):
Michael Strauss 47 Chairman of the Board, Chief Executive Officer and President
Nicholas R. Marfino 50 Director
Irving J. Thau 66 Director
EXECUTIVE AND OTHER KEY
OFFICERS WHO ARE NOT DIRECTORS:
Ronald L. Bergum 44 Executive Vice President, Western Division
Robert Bernstein 40 Executive Vice President and Controller
Chris Cavaco 37 Executive Vice President and Chief Information
Officer
Doug Douglas 58 Executive Vice President, Business Processes
Thomas J. Fiddler 40 Executive Vice President, Eastern Division
Mark Filler 46 Executive Vice President, Mergers and Acquisitions
David M. Friedman 54 Executive Vice President and Director of Servicing
Kathleen R. Heck 51 Executive Vice President, Eastern Division
Donald Henig 47 President, Wholesale and Direct-to-Consumer
Division
Alan B. Horn 54 Executive Vice President, General Counsel and
Secretary
Stephen A. Hozie 47 Executive Vice President and Chief Financial
Officer
Robert F. Johnson, Jr. 33 Executive Vice President, Capital Markets
Dena L. Kwaschyn 45 Executive Vice President, Operations
Richard S. Loeffler 47 Executive Vice President and Chief Administrative
Officer
John A. Manglardi 52 President, Eastern Division
Thomas M. McDonagh 41 Executive Vice President and Chief Investment
Officer
Jeffrey R. McGuiness 40 Executive Vice President, Direct-to-Consumer
Lending
Craig Pino 41 Executive Vice President and Treasurer
Cedric Pishalski 60 Executive Vice President, Correspondent Lending
Ronald Rosenblatt 59 Executive Vice President, Sales Support and
Development
Lisa M. Schreiber 45 Executive Vice President, Wholesale
Director Nominees - Class I
C. Cathleen Raffaeli. Ms. Raffaeli has served on the Company's Board of
Directors since October, 1999. She is currently the President and Chief
Executive Officer of UNext LLC, an online education company, a position she has
held since February 23, 2004. From September, 2002 until February, 2004, Ms.
Raffaeli served as Managing Partner of the Hamilton White Group, LLC, a
financial advisory firm. From December, 1998 until September, 2002, Ms. Raffaeli
was the President and Chief Operating Officer of ProAct Technologies Corp., an
e-commerce company majority owned by IXL Enterprises, a Nasdaq National
Market-listed Internet services company. Prior to joining ProAct Technologies
Corp., Ms. Raffaeli was the Executive Director of the commercial credit card
division of Citicorp from 1994. From 1992 to 1994, Ms. Raffaeli served as Senior
Vice President of
10
Chemical Bank, where she was responsible for its New York retail mortgage and
national telemarketing business. Ms. Raffaeli is a director of E*TRADE Group,
Inc., an online brokerage.
Kristian R. Salovaara. Mr. Salovaara has been nominated for election to
the Board of Directors as a Class I director. Since 2004, Mr. Salovaara has
served as the General Partner of Watch Hill Partners LLC, where he is
responsible for originating and executing investment banking services with a
broad array of businesses. From 2002 to 2004, Mr. Salovaara served as a Managing
Director of Helander Partners, where he assisted with the formation of an
investment fund focused on investing in "distressed" companies. Prior to that
time, Mr. Salovaara was employed by Bear, Stearns & Co. Inc., where he served as
a Managing Director in the Telecom Banking Group from 1999 to 2001 and as a
Managing Director in the Media Banking Group from 1997 to 1999. Prior to that
time, Mr. Salovaara was employed by Goldman, Sachs & Co., where he served as a
Vice President from 1990 to 1997 and as an Associate from 1986 to 1990 in the
Investment Banking and Operations, Technology and Finance Divisions.
Continuing Directors - Class II
John A. Johnston. Mr. Johnston has served as the Company's President,
Western Division, since January, 2003, and has held other senior leadership
positions with the Company since 1999. Mr. Johnston joined the Company as a
result of the Company's acquisition of Marina Mortgage Company, Inc. ("Marina
Mortgage"), where Mr. Johnston served as Chief Executive Officer since 1991. Mr.
Johnston has been one of the Company's directors since March 2000.
Michael A. McManus, Jr. Mr. McManus has served on the Company's Board
of Directors since December, 2001. Since October 30, 1998, Mr. McManus has
served as President and Chief Executive Officer of Misonix, Inc., a medical
equipment manufacturer. Before that time, he served as President and Chief
Executive Officer of New York Bancorp Inc. from 1991 through March 1998 and as a
director of that company from 1990 through March 1998. Mr. McManus also served
as President and Chief Executive Officer of Home Federal Savings Bank, the
principal subsidiary of New York Bancorp Inc., from February 1995 through March
1998. Currently, Mr. McManus serves on the boards of directors of NWH, Inc., a
telecommunications holding firm, Novavax, Inc., a pharmaceuticals manufacturer,
and LQ Corporation, Inc., a publicly held security services company, the stock
of which is traded on The Nasdaq OTC Bulletin Board.
Continuing Directors - Class III
Michael Strauss. Mr. Strauss has served as the Chairman of the Board of
Directors, Chief Executive Officer and President of the Company since its
founding and initial public offering in 1999. In addition, Mr. Strauss served as
Chairman of the Board of Directors, Chief Executive Officer and President of the
Company's predecessor corporation since its founding by Mr. Strauss in 1988. He
is responsible for the Company's strategic direction as well as overseeing its
day-to-day operations.
Nicholas R. Marfino. Mr. Marfino has served on the Company's Board of
Directors since July, 2001. Mr. Marfino currently serves as Head of
Institutional Sales for VDM Trading LLC, a company engaged in options trading
and market-making activities. From October, 2001 to July, 2005, Mr. Marfino
served as Vice President of Adirondack Electronic Markets, LLC, where he managed
and supervised institutional equity option sales and brokerage. Prior to that
time, Mr. Marfino was employed at Ladenburg Thalmann & Co., Inc., an investment
bank and securities dealer, from September, 1993 until September, 2001.
Irving J. Thau. Mr. Thau was appointed to the Company's Board of
Directors on April 27, 2004. Mr. Thau is a Certified Public Accountant and, from
1962 to 1995, he held various positions with Ernst & Young LLP, where his
primary responsibilities were directing and providing accounting, auditing, and
business advisory services to publicly held and privately owned organizations.
He was admitted to partnership in 1974, and most recently served as Ernst &
Young's West Region Director of Financial Advisory Services. In 1995, Mr. Thau
founded Thau and Associates, Inc., a financial consulting company of which he
currently serves as President. Currently, Mr. Thau serves on the board of
directors of American Vanguard Corporation, and is the chair of its audit
committee and a member of its nominating and corporate governance committee.
11
Executive Officers
Ronald L. Bergum. Mr. Bergum has served as the Company's Executive Vice
President, Western Division, since January, 2003, and has held other senior
leadership positions at the Company since 1999. Mr. Bergum joined the Company in
1999 as a result of the Company's acquisition of Marina Mortgage, where Mr.
Bergum served as President since 1994.
Robert Bernstein. Mr. Bernstein joined the Company in December, 2002,
as Controller. He has served as the Company's Senior Vice President and
Controller from April, 2003 to April, 2006 and its Executive Vice President and
Controller since April, 2006. From January, 2001, to February, 2002, he served
as Chief Financial Officer of GreenPoint Mortgage. Mr. Bernstein worked in
various positions at GreenPoint Mortgage and GreenPoint Bank for 15 years.
Chris Cavaco. Mr. Cavaco joined the Company in November, 2000, and
served as its Chief Technology Officer until April, 2001, when he became the
Company's Chief Information Officer. Since April, 2003, Mr. Cavaco has served as
the Company's Executive Vice President and Chief Information Officer. Prior to
joining the Company, Mr. Cavaco worked for MCI WorldCom Wireless from June,
1997, as the Network and Systems Manager and, later, Applications Development
Manager. From 1991 until June, 1997, Mr. Cavaco was self-employed as an
information system consultant.
Doug Douglas. Mr. Douglas joined the Company in June, 2002, as
Executive Vice President, Business Processes, through the Company's acquisition
of Columbia National, Incorporated ("Columbia") in June, 2002, where he served
as Chief Financial Officer since August, 1971. His prior roles at Columbia were
in secondary marketing, technology and both commercial and FHA multi-family loan
origination. Previously, he served as President of Columbia Real Estate
Investments, a publicly owned real estate investment trust managed by Columbia.
Thomas J. Fiddler. Mr. Fiddler serves as the Company's Executive Vice
President, Eastern Division, a position he has held since 2003. Mr. Fiddler
joined the Company in 2000 in connection with the Company's acquisition of First
Home Mortgage Corp. ("First Home Mortgage"), where Mr. Fiddler served as
Executive Vice President of Sales and Marketing.
Mark Filler. In January, 2003, Mr. Filler joined the Company as
Executive Vice President, Mergers and Acquisitions. Since September, 2001, Mr.
Filler has also served as a Principal with Division Sales International, a
wholesale distributions company. Previously, Mr. Filler served as Chief
Executive Officer of Prism Financial Corporation ("Prism"), a mortgage banking
company, from December, 1999 to June, 2001 and President from September, 1998 to
June, 2001. While at Prism, he sourced and negotiated numerous acquisitions
during his eight-year tenure.
David M. Friedman. Mr. Friedman, the Company's Executive Vice President
and Director of Servicing, joined the Company in August, 2004. Prior to joining
the Company, Mr. Friedman served as President of Servicing for PCFS Mortgage
Resources, a division of Provident Bank, from January, 2002, to August, 2004.
Since 1983, Mr. Friedman held a number of senior-level positions in the mortgage
industry with such entities as Chase Mortgage/Advanta and Bank of
America/Nations Credit.
Kathleen R. Heck. Ms. Heck joined the Company in September, 2004, as
Executive Vice President, Eastern Division. Prior to joining the Company, Ms.
Heck served as Senior Vice President and Area Sales Manager for Washington
Mutual, Inc., from February, 2001, to September, 2004. From December, 1995, to
February, 2001, Ms. Heck held various managerial positions with PNC Financial
Services Group, Inc. (whose residential mortgage banking division was acquired
by Washington Mutual in February, 2001), such as Producing Manager, Branch
Manager and District Manager.
Donald Henig. Mr. Henig has served as the President of the Company's
Wholesale and Direct-to-Consumer Division since April 1, 2004. From April, 2003
through December, 2003, Mr. Henig served as the Company's Executive Vice
President, Alternative Channels Division. Mr. Henig joined the Company in
February, 2001 as Senior Vice President, New Sales Channels. From February, 2000
until February, 2001, Mr. Henig served as Senior Vice President at
LoanTrader.com, where he was responsible for business development and corporate
12
relations. From October, 1999 until February, 2000, Mr. Henig was Managing
Director - National Account Sales and Eastern Region Manager of Ultraprise.com,
an online secondary market exchange. Between 1997 and 1999, Mr. Henig served as
Senior Vice President, National Sales and Director of Lender Relations at
MtgPro, Inc. In 1995, Mr. Henig founded Mortgage Tech Group, LTD., a multistate
mortgage origination franchise, and he served as President of that company until
1997. From 1985 until 1995, Mr. Henig served as President of Island Mortgage
Network, Inc., a company that he founded.
Alan B. Horn. Mr. Horn joined the Company in January, 2003, as General
Counsel and Secretary. He has served as the Company's Executive Vice President,
General Counsel and Secretary since April, 2003. From November, 2001 to
December, 2002, Mr. Horn was a Partner and Chair of the New York Financial
Institutions Practice Group for Greenberg Traurig, LLP. From October, 1989 to
July, 2001, Mr. Horn served as General Counsel and Secretary of European
American Bank ("EAB"), where he oversaw overall legal strategy and was directly
involved in the development and implementation of strategic initiatives. Mr.
Horn served as a staff and managing attorney in EAB's legal department from May,
1985 to October, 1989.
Stephen A. Hozie. Mr. Hozie joined the Company in March, 2002, as Chief
Financial Officer. He has served as the Company's Executive Vice President and
Chief Financial Officer since April, 2003. From May, 1998 until January, 2002,
Mr. Hozie served as Senior Vice President, Finance, and then as Deputy Chief
Financial Officer, of Fleet Mortgage Group. Mr. Hozie was Vice President of
Mellon Mortgage Company from April, 1997 until April, 1998.
Robert F. Johnson, Jr. Mr. Johnson joined the Company in May, 2001, as
Vice President, Secondary Marketing. He has served as the Company's Executive
Vice President, Capital Markets, since January, 2004. Prior to joining the
Company, Mr. Johnson worked for ComNet Mortgage Services, a division of
Commonwealth Bank, in Norristown, Pennsylvania, from July, 1994 to April, 2001
in various secondary marketing positions. He also served as Vice President,
Secondary Marketing, and as a voting member of Commonwealth Bank's Asset
Liability Committee from February, 2000 to April, 2001.
John A. Johnston. See narrative description under the caption
"Continuing Directors - Class II" above.
Dena L. Kwaschyn. Ms. Kwaschyn has served as the Company's Executive
Vice President, Operations, since April, 2003. She joined the Company in
February, 2001, as Senior Vice President, Operations. From April, 2000, to
February, 2001, Ms. Kwaschyn served as Director of Operations for L'Argent
Mortgage Bankers. From April, 1999, until March, 2000, Ms. Kwaschyn was a
self-employed consultant to various mortgage banking firms. Ms. Kwaschyn was
Executive Vice President, Director of Mortgage Lending, from September, 1997
until April, 1999 at Long Island Savings Bank, having first served as Long
Island Savings Bank's Director of Operations of the Mortgage Division from
February, 1986 through September, 1997.
Richard S. Loeffler. Mr. Loeffler joined the Company in August, 2000,
as part of the Company's acquisition of Roslyn National Mortgage Corporation,
where he served as Chief Operating Officer since June, 1998. Since January,
2005, Mr. Loeffler has served as the Company's Chief Administrative Officer and
is responsible for all Company operations, information technology, secondary
marketing and vendor management. From June, 2004, until January, 2005, Mr.
Loeffler served as the Company's Deputy Chief Administrative Officer. Prior to
that, Mr. Loeffler served as an Executive Vice President, Sales Manager, of the
Company (June, 2002, until June, 2004) and as the Company's Director of Mergers
and Acquisitions (August, 2000, until June, 2002). Earlier in his career, Mr.
Loeffler held management positions with Fannie Mae, Long Island Savings Bank,
Entrust and NVR Financial Services.
John A. Manglardi. Mr. Manglardi serves as the Company's President,
Eastern Division, a position he has held since January, 2003. Previously, Mr.
Manglardi was employed by the Company as Senior Executive Vice President. Mr.
Manglardi joined the Company in June, 2000, in connection with the Company's
acquisition of First Home Mortgage. Prior to the acquisition, Mr. Manglardi
served as President and Chief Executive Officer of First Home Mortgage since he
co-founded that company in 1994.
13
Thomas M. McDonagh. Mr. McDonagh joined the Company on June 30, 2003,
as Executive Vice President and Chief Investment Officer. Prior to that time,
Mr. McDonagh served as a Portfolio Manager for CalPERS from 1999 until June,
2003. During that time, his responsibilities included, among other things,
managing portfolios of structured products such as mortgage-backed securities,
asset-backed securities and collateralized mortgage-backed securities. From 1997
until 1999, Mr. McDonagh served as Chief Investment Officer of Vanderbilt
Capital Advisors.
Jeffrey R. McGuiness. Mr. McGuiness joined the Company in November,
2005, as Executive Vice President, Direct-to-Consumer Lending. Prior to joining
the Company, Mr. McGuiness served in senior management roles at CitiMortgage
from June, 1998 to June, 2005, most recently as Managing Director and Executive
Vice President, Correspondent Lending from February, 2002 to June, 2005. From
July, 1995 to July, 1998, Mr. McGuiness served as President, Chief Operating
Officer and Partner of The Lazear Agency, an international literary agency.
Prior to joining The Lazear Agency, Mr. McGuiness held management positions at
Norwest Mortgage in their Corporate and Private Mortgage banking areas from 1988
to 1995, most recently as Senior Vice President, Sales from 1993 to 1995. Mr.
McGuiness currently also serves on the Board of Directors of Ranken Jordan
Children's Hospital in St. Louis, Missouri.
Craig Pino. Mr. Pino joined the Company in February, 2004, as Senior
Vice President and Treasurer. Since April, 2006, he has served as the Company's
Executive Vice President and Treasurer. Prior to joining the Company, Mr. Pino
spent eight years at Countrywide Home Loans, most recently as Executive Vice
President and Assistant Treasurer. Mr. Pino has over 14 years of experience in
mortgage banking finance.
Cedric Pishalski. Mr. Pishalski joined the Company in July, 2005, as
Executive Vice President, Correspondent Lending. Prior to joining the Company,
Mr. Pishalski was the correspondent channel senior executive and business
manager at E*Trade Bank in Arlington, Virginia for four and a half years. Prior
to that, he held a number of mortgage industry executive positions with several
firms including First Horizon Home Loans, Citicorp, Merrill Lynch, Fannie Mae,
Bank United and Old Kent Mortgage Company. Mr. Pishalski has also performed
consulting work for investment banks.
Ronald Rosenblatt, Ph.D. Dr. Rosenblatt has served as the Company's
Executive Vice President, Sales Support and Development, since January, 2004.
Dr. Rosenblatt joined the Company as Senior Vice President, Sales Support and
Development, in March, 2003, when the Company acquired the former retail group
of Principal Residential Mortgage Inc. ("Principal Residential Mortgage"), a
division of The Principal Financial Group. Dr. Rosenblatt served as Vice
President and Head of Retail Lending for Principal Residential Mortgage from
January, 2000 through March, 2003, and in such capacity oversaw all sales and
operations, including training, recruiting and all policy development and
implementation, for the retail channel. From June, 1999 until January, 2000, Dr.
Rosenblatt served as Regional Sales Manager for Wells Fargo Mortgage in Illinois
and Northwest Indiana. From January, 1995 until June, 1999, he was the Area
Sales Manager in Iowa for Wells Fargo Mortgage (formerly Norwest Mortgage).
Lisa M. Schreiber. Ms. Schreiber joined the Company in March, 2002, and
currently serves as the Company's Executive Vice President, Wholesale. Prior to
joining the Company, Ms. Schreiber served as the Southeast Regional Vice
President for Bank of America Mortgage. Prior to joining Bank of America
Mortgage, Ms. Schreiber served as the Regional Wholesale Vice President for
Arbor National.
Michael Strauss. See narrative description under the caption
"Continuing Directors - Class III" above.
14
AUDIT COMMITTEE REPORT
The members of the Audit Committee have been appointed by the Board of
Directors. The Audit Committee is governed by a charter that has been approved
and adopted by the Board of Directors and which will be reviewed and reassessed
annually by the Audit Committee. The Audit Committee is comprised of four
directors, each of whom satisfies the independence requirements of the New York
Stock Exchange and the Securities and Exchange Commission ("SEC").
The following Audit Committee Report does not constitute soliciting
material and shall not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent the Company
specifically incorporates this Audit Committee Report by reference therein.
The Audit Committee assists the Board of Directors in monitoring: (1)
the integrity of the financial statements of the Company, (2) the qualifications
and independence of the Company's independent auditors, (3) the performance of
the Company's internal audit function and independent auditors, (4) the
compliance by the Company with legal and regulatory requirements and (5) the
processes by which management assesses and manages risk.
Management is responsible for the preparation and integrity of the
Company's financial statements. The Audit Committee reviewed the Company's
audited financial statements for the year ended December 31, 2005, and met with
both management and the Company's independent auditors to discuss those
financial statements. Management and the independent auditors have represented
to the Audit Committee that the financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America.
The Audit Committee has received from and discussed with the Company's
independent auditors the written disclosure and letter regarding the independent
auditors' independence from the Company as required by Independence Standards
Board Standard No. 1. The Audit Committee has also discussed with the
independent auditors any matters required to be discussed by Statement on
Auditing Standards No. 61 (as amended by Statement on Auditing Standards No.
90).
Based upon these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2005, for filing with the SEC. The Audit Committee has elected, and the
Board of Directors has ratified, subject to stockholder approval, the selection
of the Company's independent auditors for the year ending December 31, 2006.
Respectfully submitted,
The Audit Committee
Irving J. Thau, Chair
Nicholas R. Marfino
Michael A. McManus, Jr.
C. Cathleen Raffaeli
15
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
compensation paid by the Company during 2005 to or on behalf of the Chief
Executive Officer and to each of the Company's four most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers as of December 31, 2005.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards
--------------------------------- -------------------------------------
Other Securities
Annual Restricted Underlying LTIP All Other
Name and Principal Salary Bonus Compen- Stock Options/SARs Payouts Compen-
Position Year ($) (1) ($) sation ($) Awards (#) ($) sation ($)
--------------------------- ------- --------- ---------------------------------- ------------- --------- ----------------
Michael Strauss 2005 841,035 2,000,000 -- -- 160,863 -- 38,532 (2)
Chairman of the Board, 2004 593,095 600,000 -- -- 162,813 -- 30,073 (2)
Chief Executive 2003 350,000 -- -- -- -- -- 30,322 (2)
Officer
and President
Stephen A. Hozie 2005 512,500 600,000 -- -- 45,000 -- 65,526 (3)
Executive Vice 2004 429,167 525,000 -- -- 32,500 -- 53,788 (3)
President
and Chief Financial 2003 304,167 337,500 -- -- 20,000 -- 48,665 (3)
Officer
Donald Henig 2005 395,641 2,472,290 -- -- 35,000 -- 9,000 (5)
President, 2004 397,917 611,401 -- -- 20,000 -- 7,753 (5)
Wholesale and 2003 300,000 300,000 106,250(4) -- -- -- 6,506 (5)
Direct-to-Consumer
Division
Thomas McDonagh 2005 816,667 450,000 49,680 (6) -- 60,000 -- 17,237 (7)
Executive Vice 2004 650,000 200,000 -- -- -- -- 8,141 (7)
President
and Chief Investment 2003 300,417 75,000 -- -- 30,000 -- 2,714 (7)
Officer
Richard S. Loeffler 2005 583,333 350,000 150,650(8) -- -- -- 55,114 (9)
Executive Vice 2004 278,126 409,486 -- -- 30,000 -- --
President and
Chief Administrative 2003 175,000 383,013 333,100(10) -- -- -- --
Officer
--------------------------------
(1) For each year noted above, an officer's reported salary may be less than
appears in his employment agreement because of a change in the Company's
payroll practices that resulted in salary earned in December of each such
year being paid in January of the following year.
(2) Primarily represents Mr. Strauss' automobile allowance and related
expenses.
(3) Represents Mr. Hozie's automobile allowance and housing expenses.
(4) Represents income from Mr. Henig's exercise of 20,000 options to purchase
Common Stock in April, 2003.
(5) Represents Mr. Henig's automobile allowance.
(6) Represents income from Mr. McDonagh's exercise of 4,140 options to
purchase Common Stock in December, 2005.
(7) Represents Mr. McDonagh's automobile allowance.
(8) Represents income from Mr. Loeffler's exercise of 5,000 options to
purchase Common Stock in July, 2005.
(9) Represents Mr. Loeffler's automobile allowance and housing expenses
(10) Represents proceeds from Mr. Loeffler's exercise of 35,000 options to
purchase Common Stock and sale of such shares in October, 2003.
16
Stock Option Grants and Exercises During the Last Fiscal Year
The following table sets forth information concerning stock option
grants made during 2005 to the executive officers named in the "Summary
Compensation Table," including the present value of each grant on the date of
grant, estimated using the Black-Scholes option-pricing model. This pricing
model is for illustration purposes only and is not intended to predict the
future price of the Common Stock. The actual future value of the options will
depend on the market value of the Common Stock.
STOCK OPTION GRANTS IN FISCAL YEAR 2005
Individual Grants
--------------------------------------------------------------------------------
Number of
Securities Percent of Total
Underlying Options/SARs Exercise Grant Date
Options/SARs Granted to Price Expiration Present Value
Name Granted Employees (%) ($/Share) Date ($)
------------------------ -------------- ------------------ ------------ ---------------- ---------------
Michael Strauss 160,863 36.36% $32.95 03/03/2015 $600,000 (1)
Stephen A. Hozie 45,000 10.17% $32.95 03/03/2015 $167,845 (2)
Donald Henig 35,000 7.91% $31.44 05/16/2015 $132,882 (3)
Thomas M. McDonagh 30,000 6.78% $32.95 03/03/2015 $111,897 (4)
Thomas M. McDonagh 30,000 6.78% $26.54 10/27/2015 $130,748 (5)
Richard S. Loeffler -- -- -- -- --
-------------------
(1) The present value of the options granted to Mr. Strauss was estimated
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
Dividend yield 9.10%
Expected volatility 28.40%
Risk-free interest rate 5%
Expected life 3 years
(2) The present value of the options granted to Mr. Hozie was estimated using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
Dividend yield 9.10%
Expected volatility 28.40%
Risk-free interest rate 5%
Expected life 3 years
(3) The present value of the options granted to Mr. Henig was estimated using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
Dividend yield 8.90%
Expected volatility 29.40%
Risk-free interest rate 5%
Expected life 3 years
(4) The present value of these options granted to Mr. McDonagh was estimated
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
Dividend yield 9.10%
Expected volatility 28.40%
Risk-free interest rate 5%
Expected life 3 years
(5) The present value of these options granted to Mr. McDonagh was estimated
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
Dividend yield 9.60%
Expected volatility 39.30%
Risk-free interest rate 5%
Expected life 3 years
17
The following table sets forth certain summary information concerning
exercised and unexercised options to purchase AHMIC's Common Stock as of
December 31, 2005, held by the executive officers named in the "Summary
Compensation Table."
STOCK OPTION EXERCISES IN FISCAL YEAR 2005
AND FISCAL YEAR-END OPTION VALUES
Number of Shares
Underlying Unexercised Value of Unexercised
Options/SARs Held In-The-Money Options/SARs at
at Fiscal Year-End (#) Fiscal Year-End ($)
--------------------------- -------------------------------
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------------------ --------------- --------------- ----------- -------------- ------------- ----------------
Michael Strauss -- -- -- 323,676 -- 1,387,167 (1)
Stephen A. Hozie -- -- 25,000 87,500 497,650 (2) 399,950 (2)
Donald Henig -- -- 45,000 55,000 1,015,650 (3) 240,950 (3)
Thomas McDonagh 4,140 49,680 10,860 75,000 143,461 (4) 379,050 (4)
Richard S. Loeffler 5,000 150,650 -- 30,000 -- 108,900 (5)
----------------------------------
(1) As of December 31, 2005, Mr. Strauss held options to purchase 323,676
shares of Common Stock, of which (i) 81,407 options became exercisable on
April 27, 2006, with an exercise price of $24.05 per share, (ii) 81,406
options will become exercisable on April 27, 2007, with an exercise price
of $24.05 per share, (iii) 80,432 options will become exercisable on March
4, 2007, with an exercise price of $32.95 per share, and (iv) 80,431
options will become exercisable on March 4, 2008, with an exercise price
of $32.95 per share. The closing price of AHMIC's Common Stock at December
30, 2005, the last trading day of the year, was $32.57. Accordingly,
162,813 of Mr. Strauss' stock options were in-the-money at year-end 2005.
The value of these stock options held by Mr. Strauss at year-end 2005 is
calculated by multiplying the number of in-the-money stock options by the
difference between the exercise price per share of such stock options and
the closing price of AHMIC's Common Stock at year-end 2005. The exercise
price of Mr. Strauss' remaining 160,863 options is $32.95 per share, and,
as such, these options were not in-the-money at year-end 2005.
(2) As of December 31, 2005, Mr. Hozie held options to purchase 112,500 shares
of Common Stock, of which (i) 7,500 became exercisable on March 25, 2004,
with an exercise price of $14.40 per share, (ii) 7,500 became exercisable
on March 25, 2005, with an exercise price of $14.40 per share, (iii)
10,000 became exercisable on April 4, 2005, with an exercise price of
$10.06 per share, (iv) 10,000 became exercisable on April 4, 2006, with an
exercise price of $10.06 per share, (v) 16,250 became exercisable on March
3, 2006, with an exercise price of $27.19 per share, (vi) 16,250 will
become exercisable on March 3, 2007, with an exercise price of $27.19 per
share, (vii) 22,500 will become exercisable on March 4, 2007, with an
exercise price of $32.95 per share, and (viii) 22,500 will become
exercisable on March 4, 2008, with an exercise price of $32.95 per share.
The closing price of AHMIC's Common Stock at December 30, 2005, the last
trading day of the year, was $32.57. Accordingly, 67,500 of Mr. Hozie's
stock options were in-the-money at year-end 2005. The value of these stock
options held by Mr. Hozie at year-end 2005 is calculated by multiplying
the number of in-the-money stock options by the difference between the
exercise price per share of such stock options and the closing price of
AHMIC's Common Stock at year-end 2005. The exercise price of Mr. Hozie's
remaining 45,000 options is $32.95 per share, and, as such, these options
were not in-the-money at year-end 2005.
(3) As of December 31, 2005, Mr. Henig held options to purchase 100,000 shares
of Common Stock, of which (i) 20,000 became exercisable on February 5,
2004, with an exercise price of $6.25 per share, (ii) 12,500 became
exercisable on February 5, 2004, with an exercise price of $13.00 per
share, (iii) 12,500 became exercisable on February 5, 2005, with an
exercise price of $13.00 per share, (iv) 10,000 became exercisable on
April 14, 2006, with an exercise price of $22.50 per share, (v) 10,000
will become exercisable on April 14, 2007, with an exercise price of
$22.50 per share, (vi) 17,500 will become exercisable on May 17, 2007,
with an exercise price of $31.44 per share, and (vii) 17,500 will become
exercisable on May 17, 2008, with an exercise price of $31.44 per share.
The closing price of AHMIC's Common Stock at December 30, 2005, the last
trading day of the year, was $32.57. Accordingly, all of these stock
options were in-the-money as of December 31, 2005. The value of the
exercisable and unexercisable stock options held by Mr. Henig at year-end
2005 is calculated by multiplying the number of exercisable and
unexercisable stock options held by the difference between the exercise
price per share of such stock options and the closing price of AHMIC's
Common Stock at year-end 2005.
(4) As of December 31, 2005, Mr. McDonagh held options to purchase 85,860
shares of Common Stock, of which (i) 10,860 options became exercisable on
June 30, 2005, with an exercise price of $19.36 per share, (ii) 15,000
options will become exercisable on June 30, 2006, with an exercise price
of $19.36 per share, (iii) 15,000 will become exercisable on March 4,
2007, with an exercise price of $32.95 per share, (iv) 15,000 will become
exercisable on March 4, 2008, with an exercise price of $32.95 per share,
(v) 15,000 will become exercisable on October 28, 2007, with an exercise
price of $26.54 per share, and (vi) 15,000 will become exercisable on
October 28, 2008, with an exercise price of $26.54 per share. The closing
price of AHMIC's Common Stock at December 30, 2005, the last trading day
of the year, was $32.57. Accordingly, 55,860 of Mr. McDonagh's stock
options were in-the-money at year-end 2005. The value of these stock
options held by Mr. McDonagh at year-end 2005 is calculated by multiplying
the number of in-the-money stock options by the difference between the
18
exercise price per share of such stock options and the closing price of
AHMIC's Common Stock at year-end 2005. The exercise price of Mr.
McDonagh's remaining 30,000 options is $32.95 per share, and, as such,
these options were not in-the-money at year-end 2005.
(5) As of December 31, 2005, Mr. Loeffler held options to purchase 30,000
shares of Common Stock, of which (i) 15,000 will become exercisable on
September 21, 2006, with an exercise price of $28.94 per share, and (ii)
15,000 will become exercisable on September 21, 2007, with an exercise
price of $28.94 per share. The closing price of AHMIC's Common Stock at
December 31, 2005, was $32.57. Accordingly, all of these stock options
were in-the-money as of December 31, 2005. The value of these
unexercisable in-the-money stock options held by Mr. Loeffler at year-end
2005 is calculated by multiplying the number of stock options held by the
difference between the exercise price per share of such stock options and
the closing price of AHMIC's Common Stock at year-end 2005.
19
Equity Compensation Plan Information
The following table sets forth certain information as of December 31,
2005, with respect to the Company's equity compensation plans under which shares
of the Company's Common Stock may be issued.
EQUITY COMPENSATION PLAN INFORMATION
Number of Securities
Remaining Available for
Number of Securities to Future Issuance Under
be Issued Upon Exercise Weighted Average Exercise Equity Compensation Plan
of Outstanding Options, Price of Outstanding (Excluding Securities
Plan Category Warrants and Rights Options, Warrants and Rights Reflected in Column (a))
--------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
Equity compensation plans
approved by security
holders. ................ 1,501,384 $23.09 1,256,318
Equity compensation plans
not approved by security
holders. ................ N/A N/A N/A
Total. ......... 1,501,384 $23.09 1,256,318
Employment Arrangements
The Company is a party to employment agreements with certain of its
executive officers and directors. The following is a summary of the key terms of
the Company's employment agreements with its Chief Executive Officer and the
four most highly compensated executive officers of the Company during the year
ended December 31, 2005.
The Company's employment agreement with Michael Strauss, its Chairman
of the Board, Chief Executive Officer and President, provides for an annual base
salary of not less than $350,000 commencing January 1, 2000, and a discretionary
bonus. The agreement has an initial term of three years and automatically renews
for additional one-year terms, provided that either party may elect not to renew
the agreement upon 12-months' notice before the expiration date. The employment
agreement contains covenants not to compete for a period ending on the first
anniversary of the termination of Mr. Strauss' employment. If (i) the Company
terminates the agreement for any reason other than for cause or upon Mr.
Strauss' disability, (ii) Mr. Strauss terminates his employment for good reason
or (iii) in connection with or following a change in control, Mr. Strauss'
position is eliminated or Mr. Strauss no longer serves as the Company's Chief
Executive Officer with power, authority and responsibility attendant to such
office, then the Company must pay him a lump sum payment equal to 299% of his
base salary, plus the average of his annual incentive award over the preceding
five years.
The Company's employment agreement with Stephen A. Hozie, its Executive
Vice President and Chief Financial Officer, provides for (i) a base salary of
not less than $325,000 per year, (ii) a potential objective achievement bonus of
not less than $175,000, (iii) a management evaluation bonus targeted at $75,000,
and (iv) a potential company performance award of not less than $75,000. Under
the agreement, the minimum and maximum cumulative bonus paid to Mr. Hozie
pursuant to (ii), (iii) and (iv) is $162,500 and $487,500, respectively. The
term of employment is indefinite and employment is at will, terminating four
weeks after Mr. Hozie's resignation or the Company's discharge of Mr. Hozie, as
applicable. Mr. Hozie is entitled to certain fringe benefits and the
reimbursement of work-related expenses. The agreement provides for an option
grant of 20,000 shares of common stock upon execution of his employment
agreement and the grant of up to an additional 32,500 options under certain
circumstances. The agreement also provides for severance payments upon Mr.
Hozie's resignation after a "change of control" of the Company, but these
provisions have expired and are no longer in effect. The employment agreement
contains non-solicitation covenants for a period of six months following the
termination of the agreement.
20
The Company's employment agreement with Donald Henig, the President of
its Wholesale and Direct-to-Consumer Division, provides for (i) a base salary of
not less than $400,000 per year, (ii) a potential objective monthly achievement
bonus of 0.001% of certain loans originated by the Company, and (iii) a
performance award equal to 4% of the profits from certain loans originated by
the Company. Mr. Henig is entitled to certain fringe benefits and the
reimbursement of work-related expenses. The term of employment is indefinite and
employment is at will, terminating four weeks after the earlier of Mr. Henig's
resignation or the Company's discharge of Mr. Henig. If the Company discharges
Mr. Henig without cause, the Company will pay Mr. Henig a severance amount equal
to three months of his base salary.
The Company's employment agreement with Thomas McDonagh, its Executive
Vice President and Chief Investment Officer, provides for (i) a base salary of
not less than $850,000 per year, (ii) a potential performance bonus of between
$50,000 and $200,000 for the period from January 1, 2005 through June 29, 2005,
(iii) a potential performance bonus of $275,000 for the period from June 30,
2005 through December 31, 2005, and (iv) a potential performance bonus of
$275,000 for the period from January 1, 2006 through June 29, 2006. The term of
the employment agreement continues through June 29, 2006, and employment is at
will, terminating on the earlier of June 29, 2006, the Company's discharge of
Mr. McDonagh, or four weeks after Mr. McDonagh's resignation. Mr. McDonagh is
entitled to certain fringe benefits and the reimbursement of work-related
expenses. The employment agreement provides for a grant of options to purchase
30,000 shares of Common Stock. The employment agreement also provides for the
payment of a severance award to Mr. McDonagh (i) upon the Company's termination
of the employment agreement without cause prior to its expiration in an amount
equal to $3,835.62 per day for the number of days from the date of discharge to
June 29, 2006, and (ii) upon Mr. McDonagh's discharge or resignation after a
"change of control" of the Company in an amount equal to $3,835.62 per day for
the number of days from the date of discharge or resignation to June 29, 2006.
The employment agreement contains a non-solicitation covenant for a period of
one year following the termination of the agreement. The agreement also contains
a non-competition covenant.
The Company's employment agreement with Richard S. Loeffler, its
Executive Vice President and Chief Administrative Officer, provides for (i) a
base salary of not less than $600,000 per year, and (ii) (a) an objective
achievement bonus, (b) a management evaluation bonus, and (c) a company
performance award, collectively targeted at 50% of Mr. Loeffler's base salary,
but which may be greater or lesser in the Company's discretion. The term of
employment is indefinite and employment is at will, terminating four weeks after
the earlier of Mr. Loeffler's resignation or the Company's discharge of Mr.
Loeffler. Mr. Loeffler is entitled to certain fringe benefits and the
reimbursement of work-related expenses. The employment agreement contains a
non-solicitation covenant for a period of six months following the termination
of the agreement.
21
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The primary purpose of the Compensation Committee is (i) to review and
approve corporate goals and objectives relevant to compensation of the Company's
Chief Executive Officer ("CEO"), evaluate the CEO's performance in light of such
goals, and determine and approve the salary, benefits, and other compensation of
the CEO, (ii) to review, with the CEO, the salaries, benefits and other
compensation of the Company's other executive officers, and (iii) to make
recommendations to the Company's Board of Directors regarding the other
executive officers' salaries, benefits and other compensation. The Compensation
Committee also administers the Company's 1999 Omnibus Stock Incentive Plan, as
amended (the "Plan"), and determines awards to be made under the Plan to the
Company's directors and executive officers. Awards made under the Plan,
including awards made to the Company's directors and executive officers, have
been approved by the Company's Board of Directors.
The Compensation Committee met three times in 2005. In 2005, the
Compensation Committee engaged an outside compensation consultant to review the
compensation of the Company's CEO.
The following Compensation Committee Report describes the
considerations that have guided, or will guide, the Compensation Committee in
assessing executive compensation.
Philosophy
The goal of the Compensation Committee is to provide competitive levels
of compensation that integrate pay with the Company's short-term and long-term
performance goals, reward corporate performance, and recognize individual
initiative and achievement. It is anticipated that these policies will help the
Company to continue to attract and retain quality personnel and thereby enhance
the Company's long-term profitability and share value.
Executive compensation ranges will be designed to be competitive with
(i) those amounts paid to senior executives at mortgage REITs and mortgage banks
that compete with the Company, (ii) companies that are similar in size and
profitability to the Company, and (iii) companies with which the Company
competes for senior executives. Within this framework, individual executive
compensation will continue to be based on personal and corporate achievement and
the individual's level of responsibility and experience. However, in any
particular year, the Company's executives may be paid more or less than
executives in peer companies, depending on the Company's own performance.
The executive officers' compensation consists of three principal
components: base salary, bonus and stock options and/or shares of restricted
stock. Each of those components is discussed below.
Base Salary
The base salaries of the Company's executive officers are based in part
on comparative industry data and on various quantitative and qualitative
considerations regarding corporate and individual performance. An executive's
base salary will be determined only after an assessment of his or her sustained
performance, current salary in relation to an objective salary range for the
executive's job responsibilities, and experience and potential for advancement.
In recommending base salaries for the Company's executive officers, the
Compensation Committee may consider several additional factors, including, but
not limited to: (i) industry compensation trends; (ii) cost of living and other
local and geographic considerations; (iii) industry-specific job skills and
knowledge; (iv) historical and expected contributions to the Company's
performance; and (v) level, complexity, breadth and difficulty of duties.
22
Bonus Program
Eligible executive officers of the Company may also be awarded bonuses
for achieving certain performance levels. These bonuses are based on various
quantitative and qualitative performance criteria for these executive officers
and are designed to attract and retain qualified individuals and also encourage
them to meet the Company's desired performance goals.
Stock Options, Stock Appreciation Rights and Restricted Stock
The Company provides long-term executive compensation incentives in the
form of stock option awards, stock appreciation rights and restricted stock to
more closely align the interests of management with the Company's stockholders.
The Compensation Committee believes that grants of stock option awards, stock
appreciation rights and restricted stock are an effective means of advancing the
long-term interests of the Company's stockholders by integrating executive
compensation with the long-term value of the Company's common stock. Stock
options are granted at the prevailing market price on the date of grant and are
valuable to executives only if the Company's common stock appreciates. During
2005, the Company granted 442,419 stock options among seventeen individuals and
issued 2,556 shares of restricted stock among two individuals. Awards, including
awards made to the Company's directors and executive officers, have been
approved by the Company's Compensation Committee and its Board of Directors.
Chief Executive Officer
Michael Strauss, the Company's CEO, earned an annual base salary of
$900,000 in 2005. In addition, in 2006, in consideration of Mr. Strauss'
services to the Company during 2005, the Compensation Committee awarded Mr.
Strauss a cash bonus of $2 million and options to purchase 132,159 shares of the
Company's common stock as incentive compensation. In determining the fairness
and adequacy of Mr. Strauss' compensation for 2005, the Compensation Committee
reviewed and approved the Company's short- and long-term goals and objectives
relevant to the CEO's compensation and evaluated Mr. Strauss' performance in
light of those goals and objectives, including the Company's actual financial
performance as well as Mr. Strauss' continued contributions to the growth and
success of the Company. Other factors that guided the Compensation Committee in
its evaluation of the CEO's performance are Mr. Strauss' ability to lead the
Company through its continuing growth as a public company; Mr. Strauss'
leadership and vision in connection with the Company's evolving business
strategy, including its conversion into a real estate investment trust; the
Company's total return on stockholders' equity; the integration of acquired
businesses; the Company's increased market share; Mr. Strauss' continued
recruiting of valuable personnel throughout the Company; and the Company's
overall compliance with laws and regulations. The Compensation Committee
retained an executive compensation consultant to review and evaluate Mr.
Strauss' salary in light of his contributions to the Company and the
compensation awarded to CEOs at comparable companies. Based on the Compensation
Committee's evaluation of the standards set forth above, and after consultation
with the executive compensation consultant retained, the Compensation Committee
approved Mr. Strauss' compensation level, bonus payment and award of options to
purchase common stock.
Respectfully submitted,
The Compensation Committee
Nicholas R. Marfino, Chair
Michael A. McManus, Jr.
C. Cathleen Raffaeli
23
Performance Graph
As described on page 2 of this Proxy Statement under "Explanatory
Note," on December 3, 2003, the Company became the parent company of AHM
Holdings through an internal reorganization and merged with Apex. The Company's
Common Stock began trading on the NYSE under the symbol "AHH" on December 4,
2003. The Company's trading symbol on the NYSE was changed to "AHM" as of June
1, 2004.
Before the Company's internal reorganization and merger with Apex, AHM
Holdings' common stock traded on the Nasdaq National Market under the symbol
"AHMH." Set forth below is a graph comparing the cumulative total stockholder
return on the Company's Common Stock with the S&P 500 Index and a "peer group"
selected by management. The graph assumes an investment of $100.00 on December
31, 2000 in (i) the Company's Common Stock, (ii) the stocks comprising the S&P
500 Index and (iii) a "peer group" selected by management. From December 31,
2000, to December 3, 2003, the peer group includes Countrywide Financial Corp.,
Flagstar Bancorp, Inc., Resource Bancshares Mortgage Group, Inc., Irwin
Financial Corporation, E Loan, Inc., and Finet.com, Inc. From December 3, 2003,
to December 31, 2005, in light of the Company's internal reorganization and
conversion into a REIT, the peer group includes Countrywide Financial Corp.,
Flagstar Bancorp, Inc., Thornburg Mortgage, Inc., Redwood Trust, Inc., and
Annaly Mortgage Management, Inc.
Comparison of Cumulative Five Year Total Return
[GRAPHIC OMITTED - Line Chart]
24
CUMULATIVE TOTAL RETURN PERFORMANCE GRAPH
Date AHMH/AHM (1) S&P 500 Index Peer Group Index
December 31, 2000 $100.00 $100.00 $100.00
December 31, 2001 256.43 88.11 86.86
December 31, 2002 236.81 68.64 110.66
December 31, 2003 510.45 84.45 227.88
December 31, 2004 826.45 97.94 309.20
December 31, 2005 859.71 102.75 276.57
--------------
(1) As described above, from December 31, 2000, to December 3, 2003, the
results in the table relate to American Home Mortgage Holdings, Inc. From
December 3, 2003, until December 31, 2005, the results in the table relate
to American Home Mortgage Investment Corp.
25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Kenneth P. Slosser, one of the Company's non-employee directors, whose
term of service as a director of the Company will expire at the 2006 Annual
Meeting of Stockholders, is a Senior Managing Director of Friedman, Billings,
Ramsey & Co., Inc. ("Friedman Billings"), an investment bank that has from time
to time in the past provided, and may from time to time in the future provide,
investment banking and general financing services to the Company for which
Friedman Billings has in the past received, and may in the future receive, fees
and commissions. In November, 2005, Friedman Billings acted as the placement
agent in connection with the Company's $50,000,000 private placement of trust
preferred securities, and received an advisory fee in the amount of $750,000 for
such services. In 2006, the Company engaged Friedman Billings to evaluate a
potential acquisition, for which the Company paid Friedman Billings an advisory
fee in the amount of $500,000 and reimbursed Friedman Billings for $9,095 of
expenses.
Michael Strauss, the Company's Chairman of the Board, Chief Executive
Officer and President, is permitted to beneficially own up to 20% of the value
of the total number of shares of Common Stock and preferred stock of the
Company. Typically, in order to maintain REIT status, a REIT imposes general
limitations on the ownership of its voting securities. However, the Company's
charter excepts Mr. Strauss from those general ownership limitations and, thus,
Mr. Strauss is permitted to beneficially own up to 20% of the value of the total
number of shares of Common Stock and preferred stock of the Company. The Company
believes that as the Company's founder, Chief Executive Officer and President
and significant stockholder, Mr. Strauss has played an integral role in the
growth and success of the Company and has effectively led the Company through
its first years as a public company, acquired and integrated multiple businesses
and recruited valuable members of management and other personnel. Accordingly,
the Company's Board of Directors believes that permitting Mr. Strauss to
maintain significant ownership in the Company is appropriate and is beneficial
to the Company because it will provide an incentive for Mr. Strauss to continue
to lead and provide his services to the Company.
Acquisition of Marina Mortgage
The Company acquired Marina Mortgage on December 29, 1999. In
connection with the Company's acquisition of Marina Mortgage, the Company issued
restricted shares of its Common Stock to Ronald L. Bergum, an executive officer
of the Company, and John A. Johnston, an executive officer and director of the
Company, and certain other Marina Mortgage stockholders as initial consideration
in exchange for their interests in Marina Mortgage. The former Marina Mortgage
stockholders were entitled to receive additional consideration, consisting of
restricted shares of the Company's Common Stock, periodically until May, 2006,
based on the earnout provisions contained in the merger agreement. Under these
earnout provisions, former Marina Mortgage stockholders were entitled to receive
an annual earnout consisting of restricted shares of Common Stock of the Company
based on the profitability of the acquired business. During 2005, Mr. Bergum
received an aggregate of 58,643 restricted shares of Common Stock (with a value
of approximately $1,863,499). During 2005, Mr. Johnston received an aggregate of
64,988 restricted shares of Common Stock (with a value of approximately
$2,065,124).
Acquisition of First Home Mortgage
The Company acquired First Home Mortgage on June 30, 2000. In
connection with the Company's acquisition of First Home Mortgage, the Company
issued restricted shares of its Common Stock to Thomas J. Fiddler and John A.
Manglardi, currently two of the Company's executive officers, and the other
First Home Mortgage stockholders, as initial consideration for their interests
in First Home Mortgage. In addition, the former stockholders of First Home
Mortgage, including Messrs. Fiddler and Manglardi, were entitled to receive
additional consideration, consisting of cash and restricted shares of Common
Stock, pursuant to the earnout provisions contained in the merger agreement.
Under the merger agreement's earnout provisions, former stockholders of
First Home Mortgage were entitled to receive two quarterly payments. One of
these quarterly payments, which was automatically paid to the former First Home
Mortgage stockholders on a pro rata basis based on their former stock ownership
in First Home Mortgage regardless of the profitability of the acquired business,
was equal to an aggregate of $75,000 in restricted shares of Common Stock (or
cash, before 2002). The other quarterly payment to which former First Home
Mortgage stockholders were entitled was equal to an aggregate of $150,000, one
half of which was payable in cash and the other half of which was payable in
restricted shares of Common Stock, and which, if earned, also was payable on a
pro rata basis; the cash payment of this
26
quarterly earnout depended on the acquired business being profitable and having
positive cash income for the applicable quarter.
In addition to the quarterly earnouts, the former First Home Mortgage
stockholders were entitled to an annual earnout, consisting of cash and
restricted shares of Common Stock, based on the profitability of the acquired
business. The previous stockholders of First Home Mortgage received such
earnouts during a five-year period ending in May, 2005. During 2005, Mr. Fiddler
received an aggregate of 12,852 restricted shares of Common Stock (with a value
of approximately $401,593). During 2005, Mr. Manglardi received an aggregate of
15,480 restricted shares of Common Stock (with a value of approximately
$487,123). With respect to earnouts paid in cash during 2005, Mr. Fiddler
received aggregate cash payments of $533,783 and Mr. Manglardi received
aggregate cash payments of $583,283.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and 10% stockholders to file reports of ownership and reports
of changes in ownership of AHMIC's Common Stock and other equity securities with
the SEC. Directors, executive officers and 10% stockholders are required to
furnish AHMIC with copies of all Section 16(a) forms they file. Based on a
review of the copies of such reports furnished to it, AHMIC believes that,
during 2005, AHMIC's directors, executive officers and 10% stockholders complied
with all Section 16(a) filing requirements applicable to them, except that: (i)
Stephen A. Hozie failed to timely file a Form 4 in connection with a grant of
stock options; (ii) Alan B. Horn failed to timely file a Form 4 in connection
with a grant of stock options; (iii) John A. Johnston failed to timely file a
Form 4 in connection with the acquisition of restricted shares of Common Stock;
(iv) Richard S. Loeffler failed to timely file a Form 4 in connection with a
sale of Common Stock; (v) Thomas M. McDonagh failed to timely file a Form 4 in
connection with certain grants and an exercise of stock options; and (vi)
Michael Strauss failed to timely file a Form 4 in connection with a grant of
stock options. Each of these reports subsequently has been filed with the SEC.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described above under "Corporate Governance," the members of the
Compensation Committee are Nicholas R. Marfino (Chair), Michael A. McManus, Jr.,
and C. Cathleen Raffaeli. No interlocking relationship exists between the
Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company, nor has any such
interlocking relationship existed in the past.
27
PROPOSAL II - RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Deloitte & Touche LLP,
independent accountants, to be the Company's independent auditors for the fiscal
year ending December 31, 2006, and recommends to stockholders that they vote for
ratification of that appointment.
Deloitte & Touche LLP served as the Company's independent auditors for
the fiscal years ended December 31, 1999, 2000, 2001, 2002, 2003, 2004 and 2005.
A representative of Deloitte & Touche LLP will be present at the Annual Meeting
and will have an opportunity to make a statement and be available to respond to
appropriate questions. The appointment of the Company's independent auditors is
approved annually by the Board of Directors of AHMIC and subsequently submitted
to the stockholders for ratification. The decision of the Board is based on the
recommendation of the Audit Committee, which reviews and approves in advance the
scope of the audit, the types of non-audit services that AHMIC will need and the
estimated fees for the coming year. The Audit Committee also reviews and
approves non-audit services to ensure that these services will not impair the
independence of the independent auditors.
Before making its recommendation to the Board of Directors for
appointment of Deloitte & Touche LLP, the Audit Committee carefully considered
the firm's qualifications as independent auditors for the Company, which
included a review of Deloitte & Touche LLP's performance in prior years, as well
as its reputation for integrity and competence in the fields of accounting and
auditing. The Audit Committee expressed its satisfaction with Deloitte & Touche
LLP in these respects.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
RATIFICATION OF DELOITTE & TOUCHE LLP
AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE YEAR ENDING DECEMBER 31, 2006.
28
FEES PAID TO INDEPENDENT AUDITORS
Audit and Non-Audit Fees
The following table presents the aggregate fees billed for professional
services rendered by Deloitte & Touche LLP in 2004 and 2005. Other than as set
forth below, no professional services were rendered or fees billed by Deloitte &
Touche LLP during 2004 or 2005.
--------------------------------------------------------------------------------
Service 2004 2005
--------------------------------------------------------------------------------
Audit Fees (1) ........................ $2,245,145 $2,479,050
--------------------------------------------------------------------------------
Audit-Related Fees (2) ................ 262,900 357,500
--------------------------------------------------------------------------------
Tax Fees (3) .......................... 583,500 464,465
--------------------------------------------------------------------------------
All Other Fees (4) .................... 0 0
--------------------------------------------------------------------------------
TOTAL ................................. $3,091,575 $3,301,015
--------------------------------------------------------------------------------
------------------------
(1) Audit fees include fees for audit of the Company's annual consolidated
financial statements; reviews of the Company's quarterly consolidated
financial statements; comfort letters, consents and other services related
to SEC filings; accounting consultation attendant to the audit; the 2005
audit of management's assessment of the Company's internal control over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act
of 2002; and the 2005 audit of the Company's internal control over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act
of 2002.
(2) Audit-related fees include fees for audits of employee benefit plans; data
verification and agreed upon procedures related to securitizations; and
other agreed upon procedures engagements.
(3) Tax fees include fees for Federal and state tax compliance and planning.
(4) No services were performed by Deloitte & Touche LLP in connection with
financial information systems design and implementation or otherwise.
Pre-Approved Services
Prior to engaging Deloitte & Touche LLP to render the above services,
and pursuant to its charter, the Audit Committee approved the engagement for
each of the services and determined that the provision of such services by the
independent auditors was compatible with the maintenance of Deloitte & Touche
LLP's independence in the conduct of its auditing services.
The Audit Committee will use the following procedures for the
pre-approval of all audit and permissible non-audit services provided by the
independent auditors.
Before engagement of the independent auditors for the next year's
audit, the independent auditors will submit a detailed description of services
expected to be rendered during that year within each of four categories of
services to the Audit Committee for approval.
Audit Services include audit work performed on the Company's financial
statements, as well as work that generally only the independent auditors can
reasonably be expected to provide, including statutory audits, comfort letters,
consents and assistance with and review of documents filed with the SEC.
29
Audit-Related Services are for assurance and related services that are
traditionally performed by the independent auditors, including due diligence
related to mergers and acquisitions, employee benefit plan audits, and special
procedures required to meet certain regulatory requirements and discussions
surrounding the proper application of financial accounting and/or reporting
standards.
Tax Services include all services, except those services specifically
related to the audit of the financial statements, performed by the independent
auditors' tax personnel, including tax analysis; assisting with coordination of
execution of tax related activities, primarily in the area of corporate
development; supporting other tax related regulatory requirements; and tax
compliance and reporting.
Other Services are those associated with services not captured in the
other categories. The Company generally does not request such services from the
independent auditors.
The Audit Committee pre-approves services to be provided by the
independent auditors within each category. The fees are budgeted and the Audit
Committee requires the independent auditors to report actual fees versus the
budget periodically throughout the year by category of service. During the year,
circumstances may arise when it may become necessary to engage the independent
auditors for additional services not contemplated in the original pre-approval
categories. In those instances, the Audit Committee requires specific
pre-approval before engaging the independent auditors.
30
OTHER MATTERS
The Board of Directors does not intend to bring any other business
before the Annual Meeting, and as far as is known by the Board, no matters are
to be brought before the Annual Meeting except as disclosed in the Notice of
Annual Meeting of Stockholders. However, as to any other business which may
properly come before the Annual Meeting, it is intended that proxies, in the
form enclosed, will be voted in respect thereof in accordance with the judgment
of the persons voting such proxies.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report on Form 10-K (excluding the
exhibits thereto) for the fiscal year ended December 31, 2005, including the
Company's audited financial statements contained therein, is being delivered to
stockholders of AHMIC as of the Record Date, together with this Proxy Statement.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder who satisfies the requirements of Rule 14a-8 under the
Exchange Act may submit a proposal for inclusion in the Company's proxy
statement in connection with the 2007 Annual Meeting of Stockholders. Such
proposal must be delivered to AHMIC no later than January 19, 2007.
The Company's bylaws have an advance notice procedure for stockholders
wishing to nominate a director or have a stockholder proposal (other than a
stockholder proposal included in the Company's proxy statement pursuant to Rule
14a-8 under the Exchange Act) considered at the next Annual Meeting of
Stockholders. The advance notice procedure generally requires that a stockholder
proposal for the 2007 Annual Meeting of Stockholders must be delivered in
writing to the Company's General Counsel and Secretary, together with certain
required information relating to such stockholder's stock ownership and
identity, as set forth in the Company's bylaws, not earlier than February 20,
2007, and not later than March 22, 2007. If, however, the 2007 Annual Meeting
of Stockholders is scheduled for a date that is more than 30 days before (or
more than 60 days after) the anniversary date of the 2006 Annual Meeting of
Stockholders, a stockholder's notice of proposal, in order to be timely, must be
so delivered not earlier than the 120th day before the 2007 Annual Meeting of
Stockholders and not later than the close of business on the later of the 90th
day before the 2007 Annual Meeting of Stockholders or the tenth day following
the day on which the Company publicly announces the date of the 2007 Annual
Meeting of Stockholders. Stockholder proposals should be sent to: American Home
Mortgage Investment Corp., 538 Broadhollow Road, Melville, New York 11747,
Attention: General Counsel and Secretary.
By order of the Board of Directors,
/s/ Michael Strauss
MICHAEL STRAUSS
Chairman of the Board, Chief Executive
Officer and President
Dated: May 19, 2006
31
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
AMERICAN HOME MORTGAGE INVESTMENT CORP.
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 2006
The undersigned hereby appoints Michael Strauss and Stephen A. Hozie,
and each or either of them, with full power of substitution, as his or her true
and lawful agents and proxies (the "Proxies") to represent the undersigned at
the 2006 Annual Meeting of Stockholders of American Home Mortgage Investment
Corp. ("AHMIC") to be held at AHMIC's headquarters, 538 Broadhollow Road,
Melville, New York 11747, at 10:00 A.M. (Eastern Time) on Tuesday, June 20,
2006, and at any adjournments or postponements thereof, and authorizes the
Proxies to vote all shares of AHMIC shown on the other side of this card with
all the powers the undersigned would possess if personally present at the 2006
Annual Meeting of Stockholders.
This proxy, when properly executed, will be voted as directed on the
reverse side. If this proxy is properly executed and no direction is made, this
proxy will be voted "FOR" the election of the named nominees for director and
"FOR" the ratification of the independent auditors and in the discretion of the
Proxies with respect to any other matter that may properly come before the
Annual Meeting or any adjournment or postponement thereof. The undersigned
hereby acknowledges receipt of the proxy statement of AHMIC dated May 19, 2006,
soliciting proxies for the 2006 Annual Meeting.
All previous proxies given by the undersigned to vote at the 2006
Annual Meeting or at any adjournment or postponement thereof are hereby revoked.
(Continued and to be signed on the reverse side)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
AMERICAN HOME MORTGAGE INVESTMENT CORP.
June 20, 2006
\|/ Please Detach and Mail in the Envelope Provided \|/
--------------------------------------------------------------------------------
[X] PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE USING
DARK INK ONLY
1. ELECTION OF DIRECTORS to serve for a
three-year term expiring at the 2009
Annual Meeting of Stockholders, and in
each case, until their respective
successors shall be duly elected and
qualified.
"FOR" ALL NOMINEES LISTED AT RIGHT (EXCEPT WITHHOLD Nominees:
AS MARKED TO THE CONTRARY BELOW) AUTHORITY TO VOTE
FOR ALL NOMINEES C. Cathleen Raffaeli (Class I)
LISTED AT RIGHT Kristian R. Salovaara (Class I)
[__] [__]
TO WITHHOLD AUTHORITY TO VOTE FOR A
PARTICULAR NOMINEE, PRINT THE NAME OF
SUCH NOMINEE ON THE LINE PROVIDED __________________________________
FOR AGAINST ABSTAIN
2. RATIFICATION OF DELOITTE & TOUCHE LLP as the Company's [ ] [ ] [ ]
independent auditors for the year ending December 31, 2006.
OTHER MATTERS:
Discretionary authority is hereby granted with respect to such
other matters as may properly come before the meeting or any
adjournment or postponement thereof.
SIGNATURE(S) ____________________________________ DATE ________________
____________________________________ DATE ________________
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREIN. WHEN SIGNING AS ATTORNEY,
ADMINISTRATOR, EXECUTOR, GUARDIAN OR TRUSTEE, PLEASE GIVE YOUR FULL TITLE
AS SUCH. IF A CORPORATION, PLEASE SIGN BY PRESIDENT OR OTHER AUTHORIZED
OFFICER AND INDICATE TITLE. IF SHARES ARE REGISTERED IN THE NAMES OF JOINT
TENANTS OR TRUSTEES, EACH TENANT OR TRUSTEE IS REQUIRED TO SIGN.