DEF 14A: Definitive proxy statements
Published on April 8, 2003
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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|_| Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
MFA Mortgage Investments, Inc.
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[LOGO]
MFA
MORTGAGE INVESTMENTS, INC.
350 Park Avenue
21st Floor
New York, New York 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 2003
To the Stockholders of MFA Mortgage Investments, Inc.:
The 2003 Annual Meeting of Stockholders of MFA Mortgage Investments, Inc.
(the "Company") will be held at the Regency Hotel, 540 Park Avenue, New York,
New York, on Tuesday, May 20, 2003, at 10:00 a.m., New York City time, for the
following purposes:
(1) To elect two Class II Directors to serve on the Company's
Board of Directors for a term of three years;
(2) To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending
December 31, 2003; and
(3) To transact such other business as may properly come before
the 2003 Annual Meeting or any postponements or adjournments
thereof.
The close of business on April 1, 2003 has been fixed by the Company's
Board of Directors as the record date for the determination of the stockholders
entitled to notice of, and to vote at, the 2003 Annual Meeting or any
postponements or adjournments thereof.
We hope all stockholders who can do so will attend the 2003 Annual Meeting
in person. Whether or not you plan to attend, we urge you to complete, date and
sign the enclosed proxy card and return it promptly in the enclosed
postage-prepaid envelope provided for that purpose or, in the alternative,
instruct the proxies for the 2003 Annual Meeting how to vote your common stock
in the Company by telephone or via the internet. By returning your proxy
promptly, either by mail, telephone or the internet, you can help the Company
avoid the expense of follow-up mailings to ensure the presence of a quorum at
the 2003 Annual Meeting. If you attend the 2003 Annual Meeting, you may revoke
your proxy and vote your shares in person.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSED ITEMS.
By Order of the Board of Directors
/s/ Ronald A. Freydberg
Ronald A. Freydberg
Secretary
New York, New York
April 9, 2003
[LOGO]
MFA
MORTGAGE INVESTMENTS, INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 2003
This Proxy Statement is being furnished in connection with the
solicitation of proxies by, and on behalf of, the Board of Directors of MFA
Mortgage Investments, Inc., a Maryland corporation (the "Company"), for use at
its 2003 Annual Meeting of Stockholders to be held on May 20, 2003 (the "Annual
Meeting") at the Regency Hotel, 540 Park Avenue, New York, New York, at 10:00
a.m., New York City time, or at any postponements or adjournments thereof.
Stockholders are requested to complete, date and sign the enclosed proxy
card (the "Proxy") and return it in the postage-prepaid envelope provided.
Alternatively, stockholders may instruct the proxies for the Annual Meeting how
to vote their shares of common stock, par value $0.01 per share, of the Company
(the "Common Stock"), by using the toll-free telephone number or the internet
voting web site provided for this purpose. Specific voting instructions
regarding the telephone and internet voting options are included on the enclosed
Proxy. Stockholders who vote by telephone or via the internet do not need to
return their Proxy.
Valid Proxies will be voted as specified thereon at the Annual Meeting.
Any stockholder giving a Proxy in the accompanying form or by using the
toll-free telephone number or the internet voting web site retains the power to
revoke such Proxy at any time prior to its exercise by delivering to the Company
a written notice of revocation or a duly executed Proxy bearing a later date or
upon request if the stockholder attends the Annual Meeting and chooses to vote
in person. Any notice of revocation sent to the Company must include the
stockholder's name and must be received prior to the Annual Meeting to be
effective. If a Proxy is properly signed, returned without specifying any
instructions and not revoked prior to the Annual Meeting, the shares represented
by such Proxy will be voted FOR the election of the nominees to serve as Class
II Directors until the 2006 Annual Meeting of Stockholders and FOR the
ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for 2003.
This Proxy Statement, the Notice of Annual Meeting of Stockholders and the
Proxy are first being sent to stockholders on or about April 9, 2003.
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to Stockholders
of the Company for the year ended December 31, 2002, including financial
statements audited by PricewaterhouseCoopers LLP, the Company's independent
auditors for 2002, and their report thereon, dated February 3, 2003.
VOTING SECURITIES AND RECORD DATE
Holders of shares of Common Stock will be entitled to one vote for each
share of Common Stock held of record at the close of business on April 1, 2003
(the "Record Date") with respect to the election of two Class II Directors to
serve on the Company's Board of Directors for a term of three years, the
ratification and appointment of Ernst & Young LLP as the Company's independent
auditors for 2003 and any other proposal for stockholder action as may properly
come before the Annual Meeting. Abstentions and broker non-votes are each
included in the determination of the number of shares present and voting for the
purposes of determining whether a quorum is present at the Annual Meeting and
each is tabulated separately. The shares of Common Stock represented by valid
Proxies that abstain with respect to any matter will not be counted as an
affirmative vote in determining whether the requisite vote of the shares were
cast in favor of that matter.
The disposition of business scheduled to come before the Annual Meeting,
assuming a quorum is present, will require the following affirmative votes: (i)
for the election of the two nominees to serve as Class II Directors, a plurality
of the shares of Common Stock, present or represented by Proxy at the Annual
Meeting; and (ii) for the ratification of the appointment of Ernst & Young LLP
as the Company's independent auditors for 2003, a majority of the shares of
Common Stock, present or represented by Proxy at the Annual Meeting.
As of the Record Date, the Company had issued and outstanding 46,354,605
shares of Common Stock.
1
1. ELECTION OF DIRECTORS
Board of Directors
Pursuant to the Company's Amended and Restated Articles of Incorporation
and Bylaws, the Board of Directors of the Company is to be comprised of seven
Directors. The Board of Directors currently consists of six Directors, Stewart
Zimmerman, Stephen R. Blank, Michael L. Dahir, Alan L. Gosule, George H. Krauss
and W. David Scott, and is divided into three classes, with Mr. Blank
constituting one of the two Class I Directors (the other Class I Director
position is currently vacant as a result of the retirement of Michael B. Yanney
from the Board of Directors in March, 2003), Messrs. Dahir and Krauss
constituting the Class II Directors and Messrs. Zimmerman, Gosule and Scott
constituting the Class III Directors. One class of Directors is elected at each
annual meeting of the Company's stockholders for a term of three years. The term
of the Class II Directors expires at the 2003 Annual Meeting. The terms of the
other two classes of Directors expire at the 2004 Annual Meeting of Stockholders
(Class III Directors) and the 2005 Annual Meeting of Stockholders (Class I
Directors).
On March 6, 2003, Mr. Yanney, who served as Chairman of the Board of
Directors, retired from service on the Board of Directors. Mr. Zimmerman, Chief
Executive Officer, President and a Director of the Company, was appointed by the
Board of Directors to replace Mr. Yanney as Chairman of the Board of Directors.
Following the identification of a suitable candidate by the Nominating Committee
to fill the vacancy created by Mr. Yanney's retirement from the Board of
Directors, it is anticipated that such candidate will be appointed to the Board
of Directors in accordance with the Company's Bylaws.
Messrs. Dahir and Krauss have been nominated by the Board of Directors for
election as Class II Directors by the holders of Common Stock at the Annual
Meeting to serve until the 2006 Annual Meeting of Stockholders or until their
respective successors are elected and qualified. It is intended that the shares
of Common Stock represented by properly executed Proxies will be voted by the
Proxy holders FOR the election of Messrs. Dahir and Krauss, unless authority to
so vote is withheld. If the candidacy of Messrs. Dahir or Krauss should, for any
reason, be withdrawn, the Proxy holders will vote in favor of such substituted
nominee (if any) as shall be designated by the Proxy holders. The Board of
Directors has no reason to believe that Messrs. Dahir or Krauss will be unable
or unwilling to serve as Class II Directors if elected.
Nominees for Election as Class II Directors
The following information is furnished regarding the nominees for election
as Class II Directors by the holders of Common Stock.
Michael L. Dahir, 54, has served as a Director of the Company since 1998.
From 1988 to present, Mr. Dahir has been the President and Chief Executive
Officer of Omaha State Bank in Omaha, Nebraska. From 1974 to 1988, Mr. Dahir
held various positions with Omaha National Bank, including Vice President,
investment department head, Senior Vice President and Chief Financial Officer of
FirsTier Holding Company, which acquired Omaha National in 1984. Mr. Dahir is
Chairman of the Jesuit Provincial Office in Milwaukee, Wisconsin, serves on the
board of Catholic Charities and is the president of the Omaha, Nebraska chapter
of Legatus.
George H. Krauss, 61, has served as a Director of the Company since 1997.
Mr. Krauss has been a consultant to America First Companies, L.L.C. ("America
First") since 1997. From 1972 to 1997, Mr. Krauss practiced law with Kutak Rock
LLP, serving as that firm's managing partner from 1983 to 1993. Mr. Krauss has
extensive experience in corporate, merger and acquisition and regulatory
matters. In addition to his legal education, Mr. Krauss has a Masters of
Business Administration and is a registered Professional Engineer. Mr. Krauss
currently serves as a member of the boards of directors of Gateway, Inc. and
West Corporation.
The Board of Directors recommends a vote FOR the election of Messrs. Dahir
and Krauss as Class II Directors of the Company.
Continuing Class I Director
The following information is furnished regarding the Company's Class I
Director (who will continue to serve on the Board of Directors until the 2005
Annual Meeting of Stockholders or until his successor is elected and qualified).
Stephen R. Blank, 57, has served as a Director of the Company since 2002.
Since 1998, Mr. Blank has been Senior Resident Fellow, Finance, at the Urban
Land Institute, a non-profit education and research institute which studies land
use and real estate developmental policy ("ULI"). Prior to joining ULI, Mr.
Blank served from 1993 to 1998 as
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Managing Director - Real Estate Investment Banking of CIBC Oppenheimer Corp.
From 1989 to 1993, Mr. Blank was Managing Director of Cushman & Wakefield,
Inc.'s Real Estate Corporate Finance Department. From 1979 to 1989, Mr. Blank
served as Managing Director - Real Estate Investment Banking of Kidder, Peabody
& Co. From 1973 to 1979, Mr. Blank was employed by Bache & Co., Incorporated as
Vice President, Direct Investment Group. Mr. Blank also serves as a member of
the boards of directors of WestCoast Hospitality Corporation and BNP Residential
Trust, Inc. and a member of the boards of trustees of Atlantic Realty Trust and
Ramco-Gershenson Properties Trust. Since 1998, Mr. Blank has also been an
adjunct professor for the Executive MBA Program at the Columbia University
Graduate School of Business.
Continuing Class III Directors
The following information is furnished regarding the Company's Class III
Directors (who will continue to serve on the Board of Directors until the 2004
Annual Meeting of Stockholders or until their respective successors are elected
and qualified).
Stewart Zimmerman, 58, has served as Chief Executive Officer, President
and a Director of the Company since 1997 and was appointed Chairman of the Board
of Directors in March, 2003. From 1989 through 1997, he initially served as a
consultant to The America First Companies and then became Executive Vice
President of America First. During this time he held a number of positions:
President and Chief Operating Officer of America First REIT, Inc., and President
of several America First mortgage funds, including America First
Participating/Preferred Equity Mortgage Fund, America First PREP Fund 2, America
First PREP Fund II Pension Series Limited Partnership, Capital Source L.P.,
Capital Source II L.P.-A, America First Tax Exempt Mortgage Fund Limited
Partnership and America First Tax Exempt Fund 2-Limited Partnership. From 1986
through 1989, Mr. Zimmerman served as a Managing Director and Director of
Security Pacific Merchant Bank. From 1982 through 1986 Mr. Zimmerman served as
First Vice President of EF Hutton & Company, Inc. From 1980 through 1982, Mr.
Zimmerman was employed by First Pennco Securities and Cralin & Company. From
1977 to 1980, he served as Vice President of Lehman Brothers. Prior to that
time, Mr. Zimmerman was an officer of Bankers Trust Company as well as Vice
President of Zenith Mortgage Company.
Alan L. Gosule, 62, has served as a Director of the Company since 2001.
Mr. Gosule is a partner in the law firm of Clifford Chance US LLP in New York,
New York and has practiced law with that firm and its predecessors since 1991.
He serves as the Chairman of the firm's Real Estate Practice for the Americas
region. Prior to 1991, Mr. Gosule practiced law with the firm of Gaston & Snow.
Mr. Gosule also serves as a member of the boards of directors of Home Properties
of New York, Inc., Simpson Housing Limited Partnerships and Colonnade Partners.
W. David Scott, 41, has served as a Director of the Company since 1998.
Mr. Scott is President and Chief Executive Officer of Magnum Resources, Inc., a
privately held corporation that focuses on commercial real estate, a position he
has held since 1994. Mr. Scott was Vice President and Director of Cornerstone
Bank Group from 1991 to 1994 and prior to that was an accountant with Peter
Kiewit Sons', Inc. Mr. Scott serves as a member of the boards of Brownell-Talbot
School, Boy Scouts of America and Hastings College.
Vacancies occurring on the Board of Directors as a result of (i) the
removal from office, resignation, retirement, death or disqualification of a
Director may be filled by either the stockholders of the Company or a majority
of the remaining Directors and (ii) an increase in the number of Directors
serving on the Board of Directors may be filled by either the stockholders of
the Company or a majority of the entire Board of Directors.
There is no familial relationship among any of the members of the Board of
Directors or executive officers of the Company, except that Ronald A. Freydberg,
the Company's Executive Vice President and Secretary, and William S. Gorin, the
Company's Executive Vice President, Chief Financial Officer and Treasurer, are
brothers-in-law.
2. RATIFICATION OF APPOINTMENT OF AUDITOR
On March 13, 2003, the Company terminated its relationship with
PricewaterhouseCoopers LLP, its then independent auditors, and retained Ernst &
Young LLP as its new independent auditors for the fiscal year ending December
31, 2003. PricewaterhouseCoopers LLP and its predecessor, Coopers & Lybrand
L.L.P., had served as the Company's independent auditors since the Company was
formed in 1997. The Board of Directors and the Audit Committee of the Board of
Directors approved the Company's change in independent auditors.
The Board of Directors is requesting that the Company's stockholders
ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2003. In the event that
ratification
3
of this appointment of independent auditors is not approved by the affirmative
vote of a majority of the shares of Common Stock, the Board of Directors will
review its future selection of auditors.
The audit reports of PricewaterhouseCoopers LLP on the financial
statements of the Company as of and for the years ended December 31, 2002 and
2001 did not contain an adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements for the two
most recent fiscal years and through March 13, 2003, there were no disagreements
with PricewaterhouseCoopers LLP on any matter of accounting principle or
practice, financial statement disclosure, or auditing scope or procedures which,
if not resolved to PricewaterhouseCoopers LLP's satisfaction, would have caused
them to make reference thereto in their reports on the financial statements for
such years. During the two most recent fiscal years and through March 13, 2003,
there have been no reportable events as described under Item 304(a)(1)(v) of
Regulation S-K promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
The Company provided PricewaterhouseCoopers LLP with a copy of the
foregoing paragraph prior to filing its Current Report on Form 8-K containing
such disclosure with the Securities and Exchange Commission ("SEC") and
requested that PricewaterhouseCoopers LLP furnish the Company with a letter
addressed to the SEC stating whether or not it agreed with the above statements.
A copy of PricewaterhouseCoopers LLP's letter to the SEC expressing its
agreement with the above statements, dated March 19, 2003, is filed as Exhibit
16.1 to the Company's Current Report on Form 8-K, dated March 19, 2003.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will be provided with an opportunity to make a statement if
so desired and to respond to appropriate inquiries from stockholders.
Audit Fees
PricewaterhouseCoopers LLP billed the Company (i) an aggregate of $130,000
in fees for professional services rendered for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2002 and for the
review of the financial statements included in the Company's Quarterly Reports
on Form 10-Q filed with the SEC during 2002 and (ii) an aggregate of $108,200 in
fees for professional services rendered for the audit of the Company's annual
financial statements for the fiscal years ended December 31, 2001 and for the
review of the financial statements included in the Company's Quarterly Reports
on Form 10-Q filed with the SEC during 2001.
Audit-Related Fees
PricewaterhouseCoopers LLP billed the Company an aggregate of $51,600 and
$77,535 in fees for assurance and related services, which were reasonably
related to the performance of the audit or review of the Company's financial
statements and were not otherwise disclosed under "Audit Fees" above, for the
fiscal years ending December 31, 2002 and 2001, respectively. These services
included the issuance of comfort letters and consents for filings with the SEC.
Tax Fees
PricewaterhouseCoopers LLP billed the Company an aggregate of $83,000 and
$51,000 in fees for professional services relating to tax compliance, tax advice
and tax planning for the fiscal years ending December 31, 2002 and 2001,
respectively. These services included income tax compliance and related tax
services.
Financial Information Systems Design and Implementation Fees
PricewaterhouseCoopers LLP did not perform any professional services for
the Company during the fiscal years ended December 31, 2002 and 2001, either
directly or indirectly, in connection with the operation, or supervising the
operation, of the Company's information system or managing our local area
network or designing or implementing a hardware or software system that
aggregates source data underlying the Company's financial statements or that
generates information that is significant to the Company's financial statements
taken as a whole. Accordingly, no fees were paid to PricewaterhouseCoopers LLP
during 2002 or 2001 for these types of services.
4
All Other Fees
PricewaterhouseCoopers LLP did not perform any other services for the
Company during the fiscal years ended December 31, 2002 and 2001.
The Board of Directors recommends a vote FOR the ratification of the
appointment of Ernst & Young LLP as the Company's independent auditors for 2003.
BOARD OF DIRECTORS, COMMITTEE MEETINGS, AUDIT
COMMITTEE REPORT AND COMPENSATION OF DIRECTORS
Board of Directors and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the Board
of Directors and actions taken by written consent in lieu of meetings and by the
actions of its committees. During the year ended December 31, 2002, the Board of
Directors held eight meetings and acted once by written consent in lieu of a
meeting. Each of the Company's Directors attended at least 75% of the meetings
of the Board of Directors and of the committees of the Board of Directors on
which they served during 2002.
The Board of Directors has three standing committees: the Audit Committee,
the Compensation Committee and the Nominating Committee.
Audit Committee. Stephen R. Blank (Chairman), Michael L. Dahir and W.
David Scott are currently the members of the Audit Committee. The Audit
Committee, which met four times in 2002, engages independent auditors, reviews
with independent auditors the plans and results of the audit engagement,
approves professional services provided by the independent auditors, reviews the
independence of the auditors, considers the range of audit and non-audit fees,
reviews the adequacy of the Company's internal controls, accounting and
reporting practices and assesses the quality and integrity of the Company's
consolidated financial statements. The Company's Bylaws require that the entire
Audit Committee be comprised of Directors who are not employees of the Company
(each, a "Non-Employee Director").
Compensation Committee. W. David Scott (Chairman), Stephen R. Blank and
Michael L. Dahir are currently the members of the Compensation Committee. The
Compensation Committee, which met four times during 2002, determines the
compensation of the Company's executive officers and the administration of the
Company's Amended and Restated 1997 Stock Option Plan (the "Stock Option Plan").
The Company's Bylaws require that at least 50% of the members of the
Compensation Committee be Non-Employee Directors.
Nominating Committee. Michael L. Dahir (Chairman), Stephen R. Blank and W.
David Scott are currently the members of the Nominating Committee. The
Nominating Committee, which was formed in October, 2002, did not meet during
2002. The Nominating Committee is responsible for, among other things,
recommending to the Board of Directors individuals to serve as the Company's
Directors. The Nominating Committee may also consider nominees for election as
Directors made by stockholders.
Report of the Audit Committee
The Audit Committee of the Board of Directors is currently comprised of
three Non-Employee Directors, each of whom is also independent for purposes of
the rules and listing standards of the New York Stock Exchange (the "NYSE"). The
Audit Committee operates under a written charter adopted by the Board of
Directors and is responsible for overseeing the Company's financial reporting
process on behalf of the Board of Directors. A copy of the Audit Committee's
charter is included as Appendix A to this Proxy Statement.
Management is responsible for the preparation of the Company's financial
statements and for the maintenance of the Company's financial reporting process,
including internal controls. The independent auditors are responsible for
performing an independent audit of the Company's annual consolidated financial
statements in accordance with generally accepted auditing standards and for
issuing a report on the results of their audit. The Audit Committee is
responsible for providing independent, objective oversight of both of these
processes.
5
In this context, the Audit Committee has reviewed and discussed the
audited consolidated financial statements for the year ended December 31, 2002
with management of the Company and with representatives of
PricewaterhouseCoopers LLP, the Company's independent auditors for the fiscal
year ended December 31, 2002. As a result of these discussions, the Audit
Committee believes that the Company maintains an effective system of accounting
controls that allows it to prepare financial statements that fairly present the
Company's financial position and results of its operations. Management
represented to the Audit Committee that the Company's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles. The Audit Committee has also discussed with PricewaterhouseCoopers
LLP the matters required to be discussed by Statement on Auditing Standards No.
61 "Communication with Audit Committees", which included a discussion of
PricewaterhouseCoopers LLP's judgments about the quality (not just the
acceptability) of the Company's accounting principles as applied to financial
reporting.
PricewaterhouseCoopers LLP has provided the Audit Committee with the
written disclosures and the letter required by Independence Standards Board
Standard No. 1 "Independence Discussions with Audit Committees" and the Audit
Committee has held discussions with PricewaterhouseCoopers LLP regarding such
auditor's independence. The Audit Committee has further considered whether the
provision by PricewaterhouseCoopers LLP of the non-audit services to the Company
referenced elsewhere in this Proxy Statement was compatible with the maintenance
of such auditor's independence.
Based upon the Audit Committee's discussions with management and
PricewaterhouseCoopers LLP and the Audit Committee's review of the
representations of management and the disclosures by PricewaterhouseCoopers LLP
to the Audit Committee, the Audit Committee recommended to the Board of
Directors that the Company's audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002 for filing with the SEC.
Audit Committee
Stephen R. Blank, Chairman
Michael L. Dahir
W. David Scott
6
DIRECTOR COMPENSATION
Compensation of Directors
The Company pays an annual fee of $30,000 to the Non-Employee Directors,
of which $15,000 is paid in cash and $15,000 is paid in the form of shares of
Common Stock. Non-Employee Directors who serve as a Chairman of a committee of
the Board of Directors are paid an additional annual fee of $5,000. The number
of shares of Common Stock issued to the Non-Employee Directors is based on the
fair market value of the Common Stock at the date of issuance. Non-Employee
Directors are eligible to participate in the Company's 2003 Nonemployee
Directors' Deferred Compensation Plan which allows participants to elect to
defer receipt of 50% or 100% of their $30,000 annual fee. Directors are also
eligible to receive grants of stock options and dividend equivalent rights
("DERs") under the Stock Option Plan. The Non-Employee Directors also receive a
fee of $1,000 for each annual, quarterly or special meeting of the Board of
Directors that they attend and $500 for telephonic meetings of the Board of
Directors in which they participate. Directors who are employees of the Company
are not paid a director fee. The Company reimburses all Directors for travel and
other expenses incurred in connection with their activities on behalf of the
Company.
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table sets forth certain information regarding the annual
and long-term compensation paid to the Company's Chief Executive Officer and the
other executive officers of the Company whose total salary and bonus paid with
respect to acting as an executive officer of the Company during 2002 exceeded
$100,000 (collectively, the "Named Executive Officers").
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1 All salaries and bonuses to the Named Executive Officers for: (i) 2002
were paid by the Company and (ii) 2001 and 2000 were paid by America First
for services rendered to America First Mortgage Advisory Corporation, the
Company's former external advisor (the "Advisor"), in connection with the
day-to-day operation of the Company. Other than the salary and bonus
amounts set forth above, no Named Executive Officer received any other
form of annual compensation required to be reported under the rules of the
SEC.
2 The amount of salary and bonus paid to Mr. Gorin in 2001 set forth above
represents the allocable portion of the annual salary and bonus paid to
him by America First in 2001 which was attributable to the services
performed by him for the Advisor. Beginning in the fourth quarter of 2001,
Mr. Gorin was employed on a full-time basis by the Advisor. For 2000, the
amount of salary and bonus paid to Mr. Gorin by America First for services
performed by him for the Advisor was below the $100,000 threshold for
reporting established by the rules of the SEC.
3 Ms. Covello joined the Company as Senior Vice President and Controller on
October 1, 2001.
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Options/SAR Grants in Last Fiscal Year
No options were granted to any of the Named Executive Officers during
2002. The Company does not maintain any plan that awards restricted stock or
stock appreciate rights ("SARs") to its officers or employees.
Aggregated Option/SAR Exercises in Last
Fiscal Year and Fiscal Year-End Option/SAR Values
No options were exercised during 2002 by any of the Named Executive
Officers. The following table sets forth certain information concerning the
number and value of unexercised options held by the Named Executive Officers on
December 31, 2002.
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1 No stock appreciation rights are held by any of the Named Executive
Officers.
2 In accordance with the rules of the SEC, values are calculated by
subtracting the exercise price of an option from the fair market value of
the underlying common stock. At December 31, 2002, the exercise prices of
all outstanding options ranged from $4.875 to $9.375. For purposes of this
table, fair market value of the Common Stock is deemed to be $8.40, the
closing price of the Common Stock reported on the NYSE on December 31,
2002.
Long-Term Incentive Plans and Other Matters
On December 19, 2002, the Company's Board of Directors adopted the
Company's 2003 Nonemployee Directors' Deferred Compensation Plan and 2003 Senior
Officers' Deferred Bonus Plan (collectively, the "Deferred Plans"). Under the
Deferred Plans, Non-Employee Directors and officers of the Company may elect to
defer a percentage of their compensation earned subsequent to December 31, 2002.
The Deferred Plans are intended to provide Non-Employee Directors and officers
of the Company with an opportunity to defer up to 100% of certain compensation,
as defined in the Deferred Plans, while at the same time aligning their
interests with the interests of stockholders. Under the Deferred Plans, amounts
deferred are deemed to be converted into "stock units" of the Company, which do
not represent capital stock of the Company, but rather the right to receive a
cash payment equal to the fair market value of an equivalent number of shares of
Common Stock. Deferred amounts increase or decrease in value as would equivalent
shares of Common Stock and are settled in cash at the termination of the
deferral period, based on the value of the stock units at that time. The
Deferred Plans are non-qualified plans under the Employee Retirement Income
Security Act of 1974, as amended, and are not funded. Prior to the time that the
deferred accounts are settled, participants are unsecured creditors of the
Company.
The Company also maintains the Stock Option Plan which was originally
adopted on December 12, 1997 and amended and restated on March 8, 2001. The
Stock Option Plan authorizes the Compensation Committee to grant Incentive Stock
Options as defined under Section 422 of the Internal Revenue Code of 1986, as
amended, Non-Qualified Stock Options ("NQSOs") and DERs to Directors, officers
and employees of the Company. Certain other persons providing services to the
Company are also eligible to receive grants of NQSOs and DERs pursuant to the
provisions of the Stock Option Plan. Upon the recommendation of the Compensation
Committee, all eligible participants may be awarded options and DERs under the
Stock Option Plan as determined and approved by a majority of the members of the
Compensation Committee.
Holders of stock options have the right to acquire shares of Common Stock
at an exercise price set at the time the stock option is granted. The exercise
price for any stock options granted to eligible participants under the Stock
Option Plan may not be less than the fair market value of the Common Stock on
the day of the grant. Pursuant to the Stock Option Plan, stock options expire if
not exercised ten years after the date granted. The holder of a DER is entitled
to receive a cash payment equal to the dividend distribution paid on each share
of Common Stock that is subject to an outstanding stock option. DERs terminate
upon the exercise or expiration of the stock option relating to such share of
Common Stock.
8
As of April 1, 2003, under the Stock Option Plan, there were outstanding
(i) options to acquire a total of 460,000 shares of Common Stock at a purchase
price of $9.375 per share and a total of 100,000 shares of Common Stock at a
purchase price of $4.875 per share and (ii) a total of 452,500 DERs, which were
attached to an equal number of outstanding stock options. During 2002, no stock
options were granted, 90,000 stock options were exercised and 60,000 stock
options expired or were terminated. The Stock Option Plan authorizes the
granting of options to purchase an aggregate of up to 1,400,000 shares of Common
Stock. As of April 1, 2003, options for 580,000 shares of Common Stock remained
available for grant to eligible participants under the Stock Option Plan. During
2002, the Company did not reprice any outstanding stock options for any of the
Named Executive Officers.
Employment Contracts and Termination of Employment
and Change-in-Control Arrangements
The Company entered into new employment agreements with the Named
Executive Officers during 2002, which were effective as of August 1, 2002 with
respect to Messrs. Zimmerman, Freydberg and Gorin and as of October 1, 2002 with
respect to Ms. Covello.
The employment agreements for Messrs. Zimmerman, Freydberg and Gorin,
which took effect on August 1, 2002, provide that the annual salaries to be paid
to Messrs. Zimmerman, Freydberg and Gorin will be equal to 0.25%, 0.20% and
0.20%, respectively, of the Company's tangible net worth, which will be
calculated on a semi-annual basis on each June 30 and December 31. In the event
that the Company's annualized return on equity for any given six-month period
were to fall below 10%, the salaries to be paid to Messrs. Zimmerman, Freydberg
and Gorin with respect to the following six-month period would be adjusted
downward to equal (i) 0.2375%, 0.19% and 0.19%, respectively, of the Company's
tangible net worth if the Company's annualized return on equity was between 10%
and 5% and (ii) 0.225%, 0.18% and 0.18%, respectively, of the Company's tangible
net worth if its annualized return on equity was less than 5%. Notwithstanding
the foregoing, the annual base salaries payable to Messrs. Zimmerman, Freydberg
and Gorin pursuant to the employment agreements will in no event exceed
$1,000,000, $750,000 and $750,000, respectively. In addition, the employment
agreements provide for a performance bonus to be paid to Messrs. Zimmerman,
Freydberg and Gorin based on the determination of the Compensation Committee as
to the amount, manner and timing of such bonus payment. The employment
agreements for Messrs. Zimmerman, Freydberg and Gorin each have a term of three
years, subject to earlier termination in certain circumstances. Each of the
employment agreements for Messrs. Zimmerman, Freydberg and Gorin also provides
that, upon the occurrence of a change in control of the Company, each of Messrs.
Zimmerman, Freydberg and Gorin, respectively, is eligible for the following
benefits if their employment is terminated, if they resign for any reason within
three months of a change in control, or if they are terminated for any reason
other than for cause or due to the their resignation of employment for good
reason within twelve months of a change in control: (a) a sum equal to 300% of
their respective then current base salary and bonus for the preceding year, (b)
all of their respective stock options shall immediately vest and become
exercisable for a period of 90 days from the date of termination and (c) they
shall each continue to participate in all health, life insurance, retirement and
other benefit programs at the Company's expense for the balance of the term of
their respective employment agreement. Each of Messrs. Zimmerman, Freydberg and
Gorin is eligible to participate in the Stock Option Plan, the options of which
are granted at the discretion of the Compensation Committee, and the Company's
2003 Senior Officers' Deferred Bonus Plan.
The employment agreement for Ms. Covello, which took effect on October 1,
2002, provides for an annual salary of $140,000 and an opportunity to earn a
performance bonus as determined appropriate by the Chief Executive Officer or
the Chief Financial Officer and approved by the Compensation Committee. The
employment agreement for Ms. Covello has a term of one year, subject to earlier
termination in certain circumstances. Subject to certain provisions in the
agreement, upon the occurrence of a change in control of the Company, Ms.
Covello is eligible for the following benefits if she is terminated without
cause within two months, resigns her employment for any reason within three
months of a change in control or is terminated for any reason other than for
cause or resigns for good reason within twelve months of a change in control:
(a) an amount equal to nine months of her base salary plus 75% of the prior
year's bonus, (b) all of her stock options shall immediately vest and become
exercisable for a period of 90 days from the date of termination, subject to
certain conditions and (c) she shall continue to participate in all health, life
insurance, retirement and other benefit programs at the Company's expense for
the balance of the term of her employment agreement. Ms. Covello is also
eligible to participate in the Stock Option Plan, the options of which are
granted at the discretion of the Compensation Committee, and the Company's 2003
Senior Officers' Deferred Bonus Plan.
9
Report of the Compensation Committee
on Executive Compensation
This report is presented to describe the compensation policies applied by
the Compensation Committee of the Board of Directors with regard to the
Company's executive officers and the basis for the compensation of Stewart
Zimmerman, the Company's Chief Executive Officer, for the year 2002.
The primary objectives of the Compensation Committee's compensation
program are to provide a level of compensation to the Company's executive
officers that will attract and retain well-qualified individuals, to structure
their compensation packages so that a significant portion is tied to incentives
and achieving specific targets and to align the interests of such executive
officers with those of the Company's stockholders through compensation
incentives.
During 2002, the Compensation Committee undertook an evaluation of the
compensation packages then being offered by the Company to the Named Executive
Officers. In connection with its evaluation, the Compensation Committee retained
an independent compensation consultant to assist the Compensation Committee's
assessment of, and to provide market information regarding, the compensation
packages offered to executive officers at other comparable companies within the
Company's industry. The Compensation Committee met several times during 2002,
both separately from, and together with, the compensation consultant, and, based
upon its evaluation, ultimately determined that the structure and substance of
the compensation packages being offered to the Named Executive Officers should
be revised to be more in line with those currently available elsewhere in the
marketplace. The Compensation Committee then entered into negotiations with the
Named Executive Officers to structure new employment agreements for these
individuals and, upon the conclusion of these negotiations, recommended to the
Board of Directors that the new employment agreements for the Named Executive
Officers be approved. Based on this recommendation of the Compensation
Committee, the Board of Directors approved the new employment agreements for the
Named Executive Officers.
Executive Officer Compensation. The Compensation Committee reviews the
compensation packages and employment agreements of the Named Executive Officers
and makes recommendations to the Board of Directors regarding such compensation.
The Compensation Committee may also grant awards of stock options and DERs to
the Company's executive officers in order to provide an incentive to maximize
their efforts on behalf of the Company by providing them with a proprietary
interest in the Company. Such awards also encourage executive officers to remain
employed with the Company and assist the Company in its efforts to attract new
executive officers as the need arises. Upon the recommendation of the
Compensation Committee, the Board of Directors approves employment agreements,
awards stock options and DERs to the Company's executive officers and
determines, as applicable, the terms of such awards. During 2002, no stock
options or DERs were awarded to the Company's executive officers under the Stock
Option Plan.
Compensation of CEO. Stewart Zimmerman, the Company's Chief Executive
Officer, is compensated pursuant to an employment agreement that became
effective August 1, 2002 (the "CEO Employment Agreement"), a copy of which has
been publicly filed with the SEC. The CEO Employment Agreement was negotiated by
the Compensation Committee on behalf of the Company, after discussions with the
independent compensation consultant, and approved by the Board of Directors upon
the recommendation of the Compensation Committee. For the year ended December
31, 2002, Mr. Zimmerman, as Chief Executive Officer of the Company, received a
base salary of $533,333 and a performance bonus of $356,816, which partially
reflected the payment provisions of Mr. Zimmerman's prior employment agreement
which was in effect until July 31, 2002. Mr. Zimmerman's previous employment
agreement provided for an annual base salary of $300,000 and a portion of a
minimum annual bonus pool of $265,000, as well as an additional bonus pool equal
to 0.65% of the additional equity capital raised. The Compensation Committee
awarded Mr. Zimmerman's bonus for 2002, which was based in part on his prior
employment agreement, based on an assessment by the Compensation Committee of
Mr. Zimmerman's performance with respect to specified goals and objectives,
which included both qualitative and quantitative factors. The Compensation
Committee believes that the CEO Employment Agreement is consistent in structure
and substance to the compensation packages offered to chief executive officers
of other comparable companies in the Company's industry. The Compensation
Committee will continue to monitor compensation packages in the industry to
ensure that the CEO Employment Agreement remains comparable to compensation
structures throughout the industry.
Compliance with Section 162(m) of the Internal Revenue Code. Current tax
laws impose an annual, individual limit of $1 million on the deductibility of
the Company's compensation payments to its executive officers. Specified
compensation is excluded for this purpose, including performance-based
compensation, provided that certain
10
conditions are satisfied. The Compensation Committee has determined to preserve,
to the maximum extent practicable, the deductibility of all compensation
payments to the Company's executive officers.
Compensation Committee
W. David Scott, Chairman
Stephen R. Blank
Michael L. Dahir
Compensation Committee Interlocks
and Insider Participation
There are no compensation committee interlocks and no insider
participation in compensation decisions that are required to be reported under
the rules and regulations of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
SHARE PERFORMANCE GRAPH
The following graph and table set forth certain information comparing the
cumulative total return from a $100 investment in the Company and in the stocks
making up two comparative stock indices on April 13, 1998, the date on which the
Common Stock commenced trading on the NYSE, through December 31, 2003. The
following graph reflects stock price appreciation and the value of dividends
paid on the Common Stock and for each of the comparative indices.
[PERFORMANCE CHART OMITTED]
- ----------
1 The Mortgage REIT Peer Group consists of Redwood Trust, Inc., Thornburg
Mortgage, Inc., American Residential Investment Trust, Inc. and Annaly
Mortgage Management, Inc.
The foregoing information has been obtained from sources believed to be
reliable, but neither its accuracy nor its completeness can be guaranteed. There
can be no assurance that the Company's share performance will continue
11
into the future with trends the same or similar to those depicted in the graph
or the table above. The Company will not make or endorse any predictions as to
future share performance.
The foregoing Report of Audit Committee, Report of the Compensation
Committee on Executive Compensation and Share Performance Graph shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act or the
Exchange Act, except to the extent that the Company specifically incorporates
such reports or graph by reference and shall not otherwise be deemed filed under
such acts.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's Directors,
executive officers and holders of more than 10% of the outstanding shares of
Common Stock ("10% Holders") to file with the SEC and the NYSE initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Directors, executive officers and 10% Holders
are required by the SEC's regulations to furnish the Company with copies of all
Section 16(a) forms and amendments thereto filed during any given year.
Based on the review of copies of the Section 16(a) reports and amendments
thereto furnished to the Company and written representations from the Company's
Directors, executive officers and 10% Holders that no other reports were
required to be filed, the Company believes that for the year ended December 31,
2002 the Company's Directors, executive officers and 10% Holders complied with
all Section 16(a) filing requirements applicable to them, except that Stephen R.
Blank, a Director of the Company, filed a delinquent Statement of Initial
Beneficial Ownership on Form 3 following his appointment to the Board of
Directors and Michael L. Dahir and W. David Scott, Directors of the Company,
each filed a delinquent Annual Statement of Changes in Beneficial Ownership on
Form 5 for the year ended December 31, 2001 regarding their acquisition of
Common Stock pursuant to Rule 16b-3 of the Securities Act.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as described herein, the Company is not a party to any transaction
or proposed transaction with any person who is (i) a Director or executive
officer of the Company, (ii) a nominee for election as a Director, (iii) an
owner of more than 5% of the Common Stock or (iv) a member of the immediate
family of any of the foregoing persons.
Advisor Fees and Advisor Merger
Prior to December 31, 2001, the Advisor managed the operations and
investments of, and performed administrative services for, the Company. Prior to
the merger of the Advisor with and into the Company on January 1, 2002 (the
"Advisor Merger"), the Advisor was owned directly and indirectly by certain of
the Company's Directors and executive officers (see discussion below). For the
services and functions provided to the Company, the Advisor received a monthly
management fee in an amount equal to 1.10% per annum of the first $300 million
of stockholders' equity of the Company, plus 0.80% per annum of the portion of
stockholders' equity of the Company above $300 million. The Company also paid
the Advisor, as incentive compensation for each calendar quarter, an amount
equal to 20% of the dollar amount by which the annualized return on equity for
such quarter exceeded the amount necessary to provide an annualized return on
equity equal to the Ten-Year U.S. Treasury Rate plus 1%. For the years ended
December 31, 2001 and 2000, the Advisor earned a base management fee of
approximately $1,424,000 and $740,000, respectively, and an incentive
compensation fee of approximately $2,914,000 and $797,054, respectively.
Approximately $511,000 and $519,000 of the incentive compensation fee earned in
2001 and 2000, respectively, was attributable to the gains on the sale of
certain of the Company's interests in real property.
The Company entered into an Agreement and Plan of Merger, dated September
24, 2001 (the "Advisor Merger Agreement"), with the Advisor, America First and
the stockholders of the Advisor. In December 2001, the Company's stockholders
approved the terms of the Advisor Merger Agreement, which provided for the
merger of the Advisor into the Company effective 12:01 a.m. on January 1, 2002.
Pursuant to the Advisor Merger Agreement, the Company issued 1,287,501 shares of
its Common Stock to the stockholders of the Advisor effective January 1, 2002.
As a result, the Company became self-advised commencing January 1, 2002 and,
since such time, has directly incurred the cost of all overhead necessary for
its operation and administration. The market value of the Common Stock issued in
the Advisor Merger, valued as of the consummation of the Advisor Merger in
excess of the fair value of the net tangible assets acquired, in an amount of
$12,539,000, was charged to operating income of the Company for the year ended
December 31, 2001.
12
Certain of the Company's Directors and executive officers who were
involved in discussions and negotiations relating to the Advisor Merger had, and
continue to have, interests that would be affected by the Advisor Merger. At the
time of the Advisor Merger, America First owned 80% of the outstanding capital
stock of the Advisor. At that time, Michael B. Yanney, the Company's former
Chairman of the Board who retired in March 2003, and George H. Krauss, one of
the Company's Directors, beneficially owned approximately 57% and 17%,
respectively, of America First. In addition, Stewart Zimmerman, the Company's
Chairman of the Board, President and Chief Executive Officer, and William S.
Gorin, the Company's Executive Vice President, Chief Financial Officer and
Treasurer, collectively owned approximately 3% of America First. At the time of
the Advisor Merger, Messrs. Zimmerman, Gorin and Ronald A. Freydberg, the
Company's Executive Vice President and Secretary, also owned, in the aggregate,
the remaining 20% of the Advisor. Accordingly, the Advisor Merger resulted in
these individuals receiving, in the aggregate, beneficial ownership of an
additional 1,287,501 shares of the Common Stock valued at approximately $11.3
million at the time of the Advisor Merger.
Because the Advisor Merger was between affiliated parties and may not be
considered to have been negotiated in a completely arm's-length manner, the
Company's Board of Directors established a special committee of the Board of
Directors which consisted of three Non-Employee Directors who had no personal
interest in the Advisor Merger, to direct the negotiations relating to the
Advisor Merger on the Company's behalf and to consider and make recommendations
to the Board of Directors relating to the Advisor Merger.
Management Contracts
America First Properties Management Company L.L.C. (the "Property
Manager") provides property management services for certain of the multifamily
properties in which the Company has an interest. The Property Manager also
provided property management services to certain properties previously held by
the Company. The Property Manager receives a management fee equal to a stated
percentage of the gross revenues generated by the Company's properties under
management, ranging from 3.5% to 4% of gross revenues. The Property Manager
received $412,000, $423,000 and $375,000 for the years ended December 31, 2002,
2001 and 2000, respectively, for property management services provided at
properties in which the Company has an interest. The Property Manager is a
wholly owned subsidiary of America First.
Investments of the Company
Prior to the Company liquidating its portfolio of corporate debt
securities during 2002, the Company held the corporate debt securities of RCN
Corporation ("RCN"), which were purchased between February 1999 and August 2000,
and Level 3 Corporation ("Level 3"), which were purchased between August 1998
and August 2000. During the fourth quarter of 2001, the Company recognized an
other-than-temporary impairment charge of $2,453,000 on its investment in RCN
debt securities, with an aggregate par value of $5,000,000. During the third
quarter of 2002, the Company sold all of its RCN debt securities on the open
market for an aggregate sale price of $856,000, recognizing a loss of
$1,291,000. During the first quarter of 2002, the Company recognized an
other-than-temporary impairment charge of $3,474,000 on its investment in Level
3 debt securities, with an aggregate par value of $7,000,000. During the third
quarter of 2002, the Company sold all of its Level 3 debt securities on the open
market for $4,008,000, realizing a gain of $928,000. Michael B. Yanney, the
Company's former Chairman of the Board who retired in March 2003, served on the
board of directors of both RCN and Level 3 during 2002. One of the Company's
Directors, W. David Scott, is the son of the Chairman of both RCN and Level 3.
Retirement Centers Corporation
From 1998 until October 2002, the Company held all of the non-voting
preferred stock, representing 95% of the ownership and economic interest, in
Retirement Centers Corporation ("RCC"), an entity formed in 1998 to hold certain
of the Company's property interests. Prior to October 1, 2002, all of the common
stock, representing 5% of the ownership and economic interest, in RCC was held
by William S. Gorin, the Company's Executive Vice President, Chief Financial
Officer and Treasurer. During 2002, the Board of Directors determined that it
would be in the best interests of the Company to purchase Mr. Gorin's interest
in RCC and, accordingly, engaged independent appraisers to provide an estimate
of the value of the underlying properties. In September 2002, the Board of
Directors approved the Company's purchase of Mr. Gorin's interest in RCC after
examining the estimates of value and the balance sheets relating to the
underlying properties. The Company's purchase of Mr. Gorin's interest in RCC was
consummated on October 1, 2002, for a purchase price of $260,000. As a result of
this transaction, RCC became a wholly-owned subsidiary of the Company. During
the years ended December 31, 2002, 2001 and 2000, the Company received
13
distributions from RCC totaling $237,500, $0 and $98,800, respectively, and Mr.
Gorin received distributions of $12,500, $0 and $5,200, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
regarding the beneficial ownership of the Common Stock with respect to (i) each
person known to the Company to be the beneficial owner of 5% or more of the
Company's outstanding shares of Common Stock, (ii) the Named Executive Officers,
(iii) the Company's executive officers, (iv) the Company's Directors and
nominees for Director and (v) all Directors and executive officers of the
Company as a group.
Beneficial Ownership Table(1)
- ----------
* Less than 1% of class.
1 For purposes of this table, a person is deemed to be the beneficial owner
of shares of Common Stock if that person has the right to acquire such
shares within 60 days of the Record Date by the exercise of any stock
options. Stock options held by a person are deemed to have been exercised
for the purpose of computing the percentage of outstanding shares of
Common Stock beneficially owned by such person, but shall not be deemed to
have been exchanged or exercised for the purpose of computing the
percentage of outstanding shares of Common Stock beneficially owned by any
other person. Additionally, for the purposes of this table, a person or
entity shall be deemed to be a beneficial owner of shares of Common Stock
if such person or entity has or shares either investment or voting power
with respect to such shares.
2 The business address of each Director and executive officer is c/o MFA
Mortgage Investments, Inc., 350 Park Avenue, 21st Floor, New York, New
York 10022.
3 Each Director and executive officer has sole voting and investment power
over the shares such individual beneficially owns and all such shares are
owned directly unless otherwise indicated.
4 Includes 22,223 shares which are owned of record by S. Kyker Krauss, Mr.
Krauss's wife.
5 On its Schedule 13G filed with the SEC on February 12, 2003, Wellington
Management Company, LLP reported shared voting power with respect to
4,043,800 shares of Common Stock beneficially owned by them and shared
dispositive power with respect to 6,328,700 shares of Common Stock
beneficially owned by them. The Schedule 13G reports a beneficial
ownership percentage of shares of Common Stock of 13.68%, which does not
include any shares issued since such percentage was calculated for
purposes of the Schedule 13G.
6 On its Schedule 13G filed with the SEC on February 11, 2003, Capital Group
International, Inc. reported sole voting power with respect to 1,746,870
shares of Common Stock beneficially owned by them and sole dispositive
power with respect to 2,375,390 shares of Common Stock beneficially owned
by them. The Schedule 13G reports a beneficial ownership percentage of
shares of Common Stock of 5.1%, which does not include any shares issued
since such percentage was calculated for purposes of the Schedule 13G.
14
OTHER MATTERS
The Board of Directors knows of no other business that will be presented
at the Annual Meeting. The enclosed Proxy for the Annual Meeting confers
discretionary authority on the Board of Directors to vote on any matter proposed
by stockholders for consideration at the Annual Meeting. If any other business
is properly brought before the Annual Meeting, it is intended that Proxies in
the enclosed form will be voted in respect thereof in accordance with the
judgments of the persons voting the Proxies.
MISCELLANEOUS
The cost of soliciting Proxies will be borne by the Company. This
solicitation is being made primarily by mail, but may also be made by Directors,
executive officers and employees of the Company by telephone, telegraph,
facsimile transmission, electronic transmission, internet, mail or personal
interview. No additional compensation will be given to Directors, executive
officers or employees for such solicitation. The Company will request brokers
and nominees who hold shares of Common Stock in their names to furnish proxy
material to beneficial owners of such shares and will reimburse such brokers and
nominees for their reasonable expenses incurred in forwarding solicitation
material to such beneficial owners.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who intends to submit a proposal at the 2004 Annual
Meeting of Stockholders and who wishes to have the proposal considered for
inclusion in the proxy statement and proxy card must, in addition to complying
with the applicable laws and regulations governing submissions of such
proposals, deliver the proposal to the Company no later than December 10, 2003.
Pursuant to the Company's Bylaws, any stockholder who intends to submit a
proposal for presentation at an annual meeting of stockholders, without having
such proposal included in the proxy statement for such annual meeting, must
notify the Company not less than 60 days nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting. Accordingly, any
stockholder who intends to submit such a proposal at the 2004 Annual Meeting of
Stockholders must notify the Company of such proposal by March 21, 2004, but in
no event earlier than February 20, 2004.
Such proposal should be sent to Ronald A. Freydberg, Secretary, at MFA
Mortgage Investments, Inc., 350 Park Avenue, 21st Floor, New York, New York
10022.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (FILED WITH THE SEC AND THE
NYSE), WHICH CONTAINS ADDITIONAL INFORMATION ABOUT THE COMPANY, IS AVAILABLE
WITHOUT CHARGE TO ANY STOCKHOLDER. REQUESTS SHOULD BE DIRECTED TO RONALD A.
FREYDBERG, SECRETARY, AT MFA MORTGAGE INVESTMENTS, INC., 350 PARK AVENUE, 21ST
FLOOR, NEW YORK, NEW YORK 10022.
By Order of the Board of Directors
/s/ Ronald A. Freydberg
Ronald A. Freydberg
Secretary
New York, New York
April 9, 2003
15
APPENDIX A
MFA MORTGAGE INVESTMENTS, INC.
AUDIT COMMITTEE CHARTER
I. Purpose
The principal purpose of the Audit Committee (the "Committee") is to assist the
Board of Directors (the "Board") of MFA Mortgage Investments, Inc. ("MFA") in
fulfilling its responsibilities to the stockholders, potential stockholders and
investment community relating to the corporate accounting and reporting
practices of MFA and its subsidiaries, the quality and integrity of MFA's
consolidated financial statements, MFA's compliance with applicable legal and
regulatory requirements, the performance, qualifications and independence of
MFA's external auditors and the performance of MFA's internal audit function.
In discharging its oversight role, the Committee is granted the authority to
adopt policies and procedures to ensure that the accounting and reporting
practices of MFA are of the highest quality and integrity, including the
authority to investigate any matter brought to its attention, with full access
to all books, records, facilities and personnel of MFA, and the authority to
engage independent counsel and other advisers as it determines necessary to
carry out its duties.
It shall also be the responsibility of the Committee to maintain free and open
means of communication among the Board and MFA's external auditors, internal
auditors and personnel. Through these lines of communication, the Committee
shall monitor any issues or areas that fall within the scope of its duties,
purpose or responsibilities that require special attention. MFA's external
auditors are ultimately accountable to the Committee and the Board.
II. Membership
1. The Committee will have at least three members, each of whom shall be
appointed by the Board. Each member of the Committee shall be financially
literate (i.e., able to read and understand financial statements and aware of
the functions of auditors for a company) as affirmatively determined by the
Board in connection with such member's appointment to the Committee.
2. The Committee shall be composed solely of "independent" directors who have no
employment or professional relationship with MFA, who are independent of MFA's
management and who comply with the requirements for serving on audit committees
as set forth in the corporate governance standards, as amended from time to
time, of the New York Stock Exchange ("NYSE") and all other applicable laws,
rules and regulations of the Securities and Exchange Commission (the "SEC") or
other similar governing bodies. The definition of "independent" requires that
the Board affirmatively determine that a director to be appointed to the
Committee not have any material relationship with MFA or any of its
subsidiaries. In addition, the independence of each member of the Committee
shall be reviewed on an annual basis by the Board or more frequently as the
circumstances dictate. For purposes of the Committee, a director is not
independent if:
a) the director receives, directly or indirectly, any consulting, advisory or
other compensatory fees from MFA, other than fees for serving in his or her
capacity as a member of the Board and as a member of the Board's committees;
b) the Board determines that the director has a material relationship with MFA
(either directly or as a partner, stockholder or officer of an organization that
has a relationship with MFA) or is otherwise an affiliate of MFA;
c) the director is a former employee of MFA, unless a "cooling-off" period of at
least five years after the termination of such employment has elapsed;
d) the director is, or in the past five years has been, affiliated with or
employed by a present or former auditor of MFA or an affiliate thereof, unless a
"cooling-off" period of at least five years after the termination of either the
affiliation or employment with the auditor or the auditing relationship has
elapsed;
e) the director is, or in the past five years has been, part of an interlocking
directorate in which an executive officer of MFA serves on the compensation
committee of the board of directors of another company that employs such
director; or
f) the director has an immediate family member in any of the categories listed
in (d) or (e) above, unless a "cooling-off" period of at least five years has
elapsed since the termination of the applicable relationship or until after such
family member is deceased or becomes incapacitated.
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3. A director appointed to the Committee may not serve on more than two
additional audit committees for publicly listed companies, unless the Board has
made an affirmative determination that such director is able to effectively
undertake the responsibilities of serving on MFA's Audit Committee in addition
to his or her positions on other such audit committees.
4. The Board shall appoint one member of the Committee to serve as the
Chairperson and shall affirmatively determine at the time of such appointment
that such member possesses accounting or related financial management expertise.
III. Responsibilities and Duties
A. Financial and Related Reporting
1. The Committee shall, prior to each filing by MFA of a Quarterly Report on
Form 10-Q (the "Form 10-Q") with the SEC, review with MFA's management and
external auditors the interim financial information to be included in the Form
10-Q and review the matters described in Statement on Auditing Standards No. 61,
as it may be modified or supplemented, of the American Institute of Certified
Public Accountants, Communication with Audit Committees ("SAS 61"). In
connection therewith, the Committee shall review any matters of significance,
including significant adjustments, management judgments and accounting
estimates, significant reserves and/or accruals, significant new accounting
principles, disagreements between management and the external auditors and their
effect, if any, on MFA's consolidated financial statements and recent or
proposed requirements of the SEC, the Financial Accounting Standards Board (the
"FASB") or other similar governing bodies.
2. The Committee shall, prior to each filing by MFA of an Annual Report on Form
10-K (the "Form 10-K") with the SEC, review with MFA's management and external
auditors the audited financial statements to be included in the Form 10-K and in
MFA's annual report to stockholders (the "Annual Report") and review and
consider the matters described in SAS 61. In connection therewith, the Committee
shall review significant adjustments, management judgments and accounting
estimates, significant reserves and/or accruals, significant new accounting
principles, disagreements between management and the external auditors and their
effect, if any, on MFA's consolidated financial statements and recent or
proposed requirements of the SEC, the FASB or other similar governing bodies.
Following such review, the Committee shall recommend to the Board whether the
audited financial statements should be included in the Annual Report or the Form
10-K.
3. The Committee shall meet with MFA's Chief Executive Officer and Chief
Financial Officer, prior to their certification of each Form 10-Q or Form 10-K
filed with the SEC, and review with such officers their disclosures relating to
(a) all significant deficiencies in the design or operation of internal controls
which could adversely affect MFA's ability to record, process, summarize and
report financial data and identify any material weakness in internal controls
and (b) any fraud, whether or not material, that involves MFA's management or
other employees who have a significant role relating to MFA's internal controls.
4. In connection with its review of each Form 10-Q and Form 10-K and prior to
issuance of any earnings press release by MFA, the Committee shall review with
MFA's management and external auditors the consolidated statements of
operations, earnings guidance and other financial information to be included in
such earnings press release. Prior to issuance of any release of financial
information or earnings guidance to analysts or rating agencies, the Committee
shall review with MFA's management and external auditors the financial
information or earnings guidance to be included in such release to be provided
to analysts or rating agencies.
5. The Committee shall annually issue a written report to the Board, a copy of
which shall be included in MFA's proxy statement related to the annual meeting
of stockholders, stating whether the Committee has (a) reviewed and discussed
the audited financial statements with MFA's management, (b) discussed with MFA's
external auditors the matters required to be discussed by SAS 61, (c) received
from MFA's external auditors disclosures regarding such auditors' independence
required by Independence Standards Board 1 and discussed with such auditors
their independence, (d) recommended to the Board that the audited financial
statements of MFA be included in the Annual Report and the Form 10-K and (e)
such other information as may be required, from time to time, by the rules
and/or regulations of the NYSE, the SEC, the FASB or other similar governing
bodies.
6. The Committee shall periodically discuss with MFA's external auditors, such
auditors' judgments about the quality, not just the acceptability, of MFA's
accounting principles as applied in its consolidated financial statements. The
discussion should include such issues as the clarity of MFA's financial
disclosures, the degree of aggressiveness or conservatism of MFA's accounting
principles and the underlying estimates and other significant decisions made by
MFA's management in preparing the financial disclosures.
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7. The Committee shall obtain and review, on an annual basis, a report prepared
by MFA's management and/or external auditors setting forth all significant
financial reporting issues and judgments made in connection with the preparation
of MFA's financial statements, including an analysis of the effects on the
financial statements of MFA of any alternative generally accepted accounting
principle ("GAAP") methods adopted by MFA, any regulatory and/or accounting
initiatives and any off-balance sheet structures and all critical accounting
policies and practices MFA uses or expects to use.
B. Controls and Compliance
8. The Committee shall periodically review with MFA's management, external
auditors and internal auditors (a) the adequacy and effectiveness of MFA's
system of internal accounting controls, (b) any recommendations of such external
and/or internal auditors with respect to any material weaknesses in MFA's system
of internal controls, (c) any material matters or problems with respect to
accounting, EDP records, procedures or operations of MFA which have not been
resolved to such external and/or internal auditors' satisfaction after having
been brought to the attention of management and (d) any material matters or
problems with respect to the safeguarding of MFA's assets and limitations on
authority of MFA's management relating to, among other things, investments,
borrowings and derivative instruments. Such review should also consider the
impact of the adequacy and effectiveness of MFA's system of internal accounting
controls on MFA's financial reporting on both an annual and quarterly basis.
9. The Committee shall discuss and review policies with respect to risk
assessment and risk management, including, but not limited to, (a) guidelines
and policies to govern the process by which risk assessment and risk management
is undertaken by MFA and its management, (b) the adequacy of MFA's insurance
coverage, (c) any uninsured or commercially uninsurable risks, (d) MFA's
interest rate risk management, (e) MFA's counter-party and credit risks and (f)
any environmental risks relating to MFA.
10. The Committee shall review with MFA's management and tax advisors the status
of all tax returns, including open years and potential disputes. The Committee
shall review with MFA's external auditors the adequacy of tax reserves included
in MFA's consolidated financial statements.
11. On at least an annual basis, the Committee shall review with MFA's legal
counsel, (a) any legal or regulatory matters that could have a significant
impact on MFA's financial statements, (b) MFA's compliance with applicable laws
and regulations and (c) inquiries received from regulators or governmental
agencies.
12. The Committee shall review the status of significant litigation with MFA's
legal counsel and external auditors, if appropriate, and whether reserves, if
any, in connection with actual and/or potential litigation are appropriate.
13. The Committee shall monitor and review MFA's compliance with applicable SEC
and NYSE rules and regulations relating to, among other things, MFA's corporate
accounting and reporting practices, the quality and integrity of MFA's
consolidated financial statements, the performance, qualifications and
independence of MFA's external auditors and the performance of MFA's internal
audit function.
C. Internal Audit
14. To the extent applicable, the Committee shall review the function of MFA's
internal audit department, its budget, organization, activities, independence
and authority of its reporting obligations. The Committee shall, on a regular
basis, review MFA's internal audit charter and compliance by MFA's internal
audit department with applicable IIA standards. The Committee shall also review
the appointment and replacement of MFA's senior internal auditing executive and
the coordination of such activities with MFA's external auditors.
15. The Committee shall meet regularly, but in no event less than once every six
months, with MFA's internal auditors in executive sessions without MFA's
management present.
D. External Audit
16. The Committee shall hire and fire (subject, if applicable, to stockholder
ratification) the external auditors to be used to audit the consolidated
financial statements of MFA.
17. The Committee shall review and pre-approve the engagement fees and the terms
of all auditing and non-auditing services to be provided by MFA's external
auditors and evaluate the effect thereof on the independence of the external
auditors. The Committee shall also review and evaluate the scope of all
non-auditing services to be provided by MFA's external auditors in order to
confirm that such services are permitted by the rules and/or regulations of the
NYSE, the
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SEC, FASB or other similar governing bodies. As necessary, the Committee shall
consult with MFA's management regarding the engagement fees or terms of any such
auditing or non-auditing services.
18. The Committee shall, at least annually, evaluate MFA's external auditors'
qualifications, performance and independence and present a written report to the
Board of its conclusions with respect to such evaluation. In connection with
this evaluation, the external auditors shall provide a written annual report to
the Committee describing: (a) such external auditors' internal quality-control
procedures; (b) any material issues raised by the most recent internal
quality-control review, or peer review, of such external auditors or by any
inquiry or investigation by government or professional authorities within the
preceding five years, respecting one or more independent audits carried out by
such external auditors, and any steps taken to deal with any such issues; and
(c) in order to assess such external auditors' independence, all relationships
between such external auditors and MFA. The Committee shall consult with MFA's
management, its external auditors and/or personnel responsible for its internal
audit function, as necessary, regarding this evaluation.
19. The Committee shall review and evaluate the qualifications, performance and
independence of the lead partner of the external auditors, ensure that neither
the lead partner nor the concurring partner of the external auditors serves,
respectively, in that capacity for more than five years (or such other period as
may be prescribed by rules and/or regulations of the NYSE, the SEC, the FASB or
other similar governing bodies) and present its conclusions with respect to the
independent auditors, including whether the audit firm itself should be changed
periodically, to the Board.
20. The Committee shall meet with MFA's management and external auditors prior
to commencement of the annual audit by such external auditors for the purpose of
reviewing the scope and audit procedures of such audit, including special audit
risk areas and materiality. The Committee shall also meet with MFA's external
auditors subsequent to completion of that audit for the purpose of reviewing the
results.
21. The Committee shall obtain and review any written reports issued by MFA's
external auditors regarding all critical accounting policies and practices MFA
uses or expects to use, all alternative treatments of financial information
within GAAP that have been discussed with MFA's management, the ramifications of
the use of such alternative disclosures and treatments and the treatment
preferred by the external auditors.
22. The Committee shall meet regularly, but in no event less than once every six
months, with MFA's external auditors in executive sessions without MFA's
management present. Among the items to be discussed at these meetings are the
auditors' evaluation of MFA's financial, accounting and internal auditing
personnel and the cooperation that the auditors received during the course of
the audit, including any audit problems or difficulties, together with the
responses of MFA's management thereto, any restrictions on the scope of such
external auditors' activities and any disagreements with MFA's management. If
applicable, such review may also include any accounting adjustments that were
noted or proposed by such auditors but were "passed" (including similar
adjustments that were passed because individually they were not material), any
communications between the audit team and the audit firm's national office
respecting auditing or accounting issues presented by the engagement, any
"management" or "internal control" letter issued, or proposed to be issued, by
such auditors to MFA and all other material written communications between the
external auditors and the management of MFA.
E. Other Committee Activities
23. The Committee shall report to the Board on a regular basis.
24. The Committee shall serve as access for MFA's management, external auditors
and internal auditors to the Board with respect to all matters within the scope
of the Committee's duties.
25. In accordance with the applicable rules and/or regulations of the NYSE, the
SEC, the FASB or other similar governing bodies, the Committee shall set clear
policies for MFA's hiring of employees or former employees of MFA's external
auditors. In addition, the Committee shall also conduct exit interviews with
departing executive officers in order to evaluate MFA's corporate accounting and
reporting practices.
26. The Committee shall establish, review and update periodically an orientation
and training program for new Committee members, based upon the New Member
Orientation Guidelines attached hereto as Exhibit A, and ensure continuing
education and training for current Committee members.
A-4
27. The Committee shall conduct an annual evaluation of its own performance,
including the performance of individual members, and confirm annually that all
of the Committee's responsibilities set forth in this Charter have been
performed.
28. The Committee shall annually review and assess this Charter. This Charter
may be amended by the recommendation of the Committee and the approval of the
independent members of the Board. All amendments will be reported to the Board.
IV. Complaint Procedures
Any issue of significant financial misconduct shall be brought to the attention
of the Committee for its consideration. In this connection, the Committee shall
establish procedures for (a) the receipt, retention and treatment of complaints
received by MFA's employees and stockholders regarding accounting, internal
accounting controls or auditing matters and (b) the confidential, anonymous
submission by employees of MFA of concerns regarding questionable accounting or
auditing matters. The Committee shall investigate all matters brought to its
attention within the scope of its duties, including the review of any
significant fraudulent or illegal activities that may be discovered and any
preventative action taken in response to such activities.
V. Committee Powers
In the course of fulfilling its responsibilities and duties, the Committee shall
be empowered (a) to initiate, if warranted, an investigation of any special
situation, (b) to retain outside legal, accounting or other advisors and
consultants without seeking approval from the Board if, in the Committee's
judgment, it is appropriate and (c) to delegate to one or more of its members
any responsibility or duty of the Committee, which by its nature is not required
to be performed by the entire Committee. MFA shall provide appropriate funding,
as determined by the Committee, in its capacity as a committee of the Board, for
payment of compensation to any external auditors employed to audit MFA's
consolidated financial statements and any legal, accounting or other advisors
and consultants employed by the Committee in carrying out its duties.
VI. Meetings
The Committee shall meet at least four times annually or more frequently as the
circumstances dictate. For each Committee meeting, the Committee will appoint a
secretary to keep minutes of such meeting. After approval of each set of minutes
by the Committee, the Committee will submit such minutes to the Board for review
and will cause such minutes to be filed with the minutes of the Board.
VII. Limitations on Scope
The Committee members shall serve on the Committee subject to the understanding
on their part and the part of MFA's management, external auditors and internal
auditors that:
1. The Committee members are not employees or officers of MFA and are not
directly involved in MFA's daily operations and they will not serve as members
of the Committee on a full-time basis.
2. The Committee members expect MFA's management, external auditors and internal
auditors to provide the Committee with prompt and accurate information, so that
the Committee can discharge its duties properly.
3. To the extent permitted by law, the Committee shall be entitled to rely on
the information and opinions of the persons and entities noted above in carrying
out its responsibilities.
The Committee members, in adopting this Charter and in agreeing to serve on the
Committee, do so in reliance on, among other things, the provisions of MFA's
Amended and Restated Articles of Incorporation which:
1. Together with MFA's By-laws, provide indemnification for their benefit; and,
2. To the fullest extent provided by law, provide that no director shall be
liable to MFA or its stockholders for monetary damages for breach of fiduciary
duty as a director.
A-5
Please
Mark Here
for Address |_|
Change or
Comments
SEE REVERSE SIDE
1. Election of Directors.
Nominees:
01 Michael L. Dahir
02 George H. Krauss
INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
"FOR" but cross out such nominee's name above.
FOR WITHHOLD
the election of all nominees AUTHORITY
listed to the left to vote for all
(except as marked nominees
to the contrary) listed to the left
|_| |_|
2. AUDITORS. Ratification of the appointment of Ernst & Young LLP as
independent auditors for fiscal 2003.
FOR AGAINST ABSTAIN
|_| |_| |_|
In their discretion as proxies, the members of the Board of Directors present at
the Annual Meeting are hereby authorized to vote upon such other business as may
properly come before the Annual Meeting and any adjournment or postponement
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ELECTION OF THE BOARD OF DIRECTORS' NOMINEES FOR DIRECTORS AND FOR THE
RATIFICATION OF THE APPOINTMENT OF AUDITORS.
Please sign exactly as name appears on this proxy. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If a corporation, please sign
in full corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.
This proxy is revocable and the undersigned may revoke it at any time prior to
the Annual Meeting by giving written notice of such revocation to the Secretary
of the Company. Should the undersigned be present and want to vote in person at
the Annual Meeting, or at any adjournment or postponement thereof, the
undersigned may revoke this proxy by giving written notice of such revocation to
the Secretary of the Company on a form provided at the meeting. The undersigned
hereby acknowledges receipt of a Notice of Annual Meeting of Stockholders of the
Company called for May 20, 2003 and the Proxy Statement for the Annual Meeting
prior to the signing of this proxy.
By checking the box to the right, I consent to future delivery of
annual reports, proxy statements, prospectuses and other materials and
stockholder communications electronically via the Internet at a
webpage which will be disclosed to me. I understand that the Company
may no longer distribute printed materials to me from any future
stockholder meeting until such consent is revoked. I understand that I
may revoke my consent at any time by contacting the Company's transfer
agent, Mellon Investor Services LLC, Ridgefield Park, NJ and that
costs normally associated with electronic delivery, such as usage and |_|
telephone charges as well as any costs I may incur in printing
documents, will be my responsibility.
Signature_______________________ Signature_______________________ Date__________
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11PM Eastern Time
the day prior to annual meeting day, May 19, 2003.
Your Internet or telephone vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card.
REVOCABLE PROXY
MFA MORTGAGE INVESTMENTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MFA
MORTGAGE INVESTMENTS, INC. FOR USE ONLY AT THE 2003 ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON TUESDAY, MAY 20, 2003 AND AT ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
The undersigned hereby authorizes each member of the Board of Directors of
MFA Mortgage Investments, Inc. (the "Company"), or his respective successor, in
attendance at the 2003 Annual Meeting of Stockholders of the Company (the
"Annual Meeting") as proxy, with full powers of substitution, to represent the
undersigned at the Annual Meeting to be held at the Regency Hotel, 540 Park
Avenue, New York, New York on Tuesday, May 20, 2003, at 10:00 a.m., New York
City time, and at any adjournments or postponements thereof, and to act with
respect to all votes that the undersigned would be entitled to cast, if then
personally present, in accordance with the instructions below and on the reverse
hereof.
(continued and to be signed on the reverse hereof)
________________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
You can now access your MFA Mortgage Investments, Inc. account online.
Access your MFA Mortgage Investments, Inc. stockholder account online via
Investor ServiceDirect(R) (ISD).
Mellon Investor Services LLC, transfer agent for MFA Mortgage Investments, Inc.,
now makes it easy and convenient to get current information on your stockholder
account. After a simple and secure process of establishing a Personal
Identification Number (PIN), you are ready to log in and access your account to:
o View account status
o View certificate history
o View book-entry information
o View payment history for dividends
o Make address changes
o Obtain a duplicate 1099 tax form
o Establish/change your PIN
Visit us on the web at http://www.melloninvestor.com
and follow the instructions shown on this page.
Step 1: FIRST TIME USERS - Establish a PIN
You must first establish a Personal Identification Number (PIN) online by
following the directions provided in the upper right portion of the web screen
as follows. You will also need your Social Security Number (SSN) or Investor ID
available to establish a PIN.
The confidentiality of your personal information is protected using secure
socket layer (SSL) technology.
o SSN or Investor ID
o PIN
-------------
o Then click on the Establish PIN button
-------------
Please be sure to remember your PIN, or maintain it in a secure place for future
reference.
Step 2: Log in for Account Access
You are now ready to log in. To access your account please enter your:
o SSN or Investor ID
o PIN
------
o Then click on the Submit button
------
If you have more than one account, you will now be asked to select the
appropriate account.
Step 3: Account Status Screen
You are now ready to access your account information. Click on the appropriate
button to view or initiate transactions.
o Certificate History
o Book-Entry Information
o Issue Certificate
o Payment History
o Address Change
o Duplicate 1099
For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time