CORRESP: A correspondence can be sent as a document with another submission type or can be sent as a separate submission.
Published on August 19, 2008
August
19, 2008
VIA EDGAR AND BY
HAND
Mr.
Robert Telewicz
Division
of Corporation Finance
Securities
and Exchange Commission
100 F
Street, N.E.
Washington,
D.C. 20549
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Re:
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MFA
Mortgage Investments, Inc.
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Form
10-K for the fiscal year ended December 31,
2007
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Filed
February 14, 2008
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Schedule
14A
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Filed
April 8, 2008
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Form
10-Q for the period ended June 30,
2008
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Filed
July 30, 2008
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File
No. 001-13991
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Dear Mr.
Telewicz:
On behalf
of MFA Mortgage Investments, Inc., a Maryland corporation (the “Company”), set forth
below are the Company’s responses to the comments of the staff (the “Staff”) of the
Division of Corporation Finance of the Securities and Exchange Commission (the
“Commission”),
received by letter dated August 12, 2008 (the “August 12 Letter”),
with respect to the Company’s Form 10-K for the fiscal year ended December 31,
2007 (the “Form
10-K”), Schedule 14A filed on April 8, 2008 (the “Schedule 14A”) and
Form 10-Q for the period ended June 30, 2008 (the “Form
10-Q”). The responses to the Staff’s comments are set out
below in the order in which the comments were set out in the August 12 Letter
and are numbered accordingly.
Form 10-K for the fiscal
year ended December 31, 2007
Risk
Factors
We may experience a decline
in market value of our assets, page 8
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1.
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If
you have experienced a decline in the market value of your assets, please
revise this risk factor in subsequent filings to highlight such
experience.
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In
response to the Staff’s comment, in future filings, we will expand the
referenced risk factor, to the extent applicable, to state that the Company has
experienced declines in the market value of its MBS or other assets which have
resulted in the recognition of an “other-than-temporary” impairment against such
assets.
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Item 5. Market for
Registrant’s Common Equity, page
15
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2.
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In
subsequent filings, please provide the performance graph requested by Item
201(e) of Regulation S-K.
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Please be
advised that, pursuant to Instruction 7 to Item 201(e) of Regulation S-K, the
Company’s 2007 performance graph was set forth in the Company’s 2007 Annual
Report to Stockholders, which Annual Report accompanied the Company’s 2008 proxy
statement. Accordingly, we will continue, in future filings, to
provide the performance graph requested by Item 201(e) of Regulation S-K in a
manner permitted by such Item.
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
General, page
18
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3.
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We
note the disclosure here identifying the allocation among the benchmarked
rates and the portions of MBS that have rate caps. In
subsequent filings, please disclose the portion of the ARM-MBS portfolio
that is in fixed rate status compared to those in adjustable rate
status.
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In
response to the Staff’s comment, we note that the adjustable-rate mortgages
(“ARMs”)
collateralizing the Company’s mortgage-backed securities (“MBS”) are primarily
comprised of hybrid mortgage loans, which have interest rates that are typically
fixed for three to ten years and, thereafter, generally adjust annually to an
increment over a specified interest rate index and, to a lesser extent,
adjustable-rate mortgage loans, which have interest rates that generally adjust
annually (although some may adjust more frequently) to an increment over a
specified interest rate index. At December 31, 2007, approximately
$7.29 billion, or 88%, of the Company’s MBS portfolio was in its contractual
fixed-rate period and approximately $1.01 billion, or 12%, was in its
contractual adjustable-rate period. The Company’s MBS in the
contractual adjustable-rate period include MBS collateralized by hybrids for
which the contractual fixed-rate period has elapsed and the current interest
rate on such MBS is generally adjusted on an annual basis. In future
filings, to the extent applicable, we will revise the disclosure to include
similar information.
Market Conditions, page
20
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4.
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We
note the disclosure that spreads widened toward the end of 2007. We note
from the disclosure that the cost of funds decreased in the fourth quarter
of 2007, partially attributed to the increased spread. If possible, please
tell us the reasons for the increase in yield and the decrease in cost
experienced in the latter part of 2007. Discuss your expectations
regarding the cost of funds going
forward.
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In
response to the Staff’s comment, we note that the Company’s net interest spread
(the difference between the yield on interest-earning assets and the cost of
funds) increased in each quarter of 2007 and reached 0.65% in the fourth quarter
of 2007. As illustrated in the table and described in the text on
page 21 of the Form 10-K, while the stated coupon on the Company’s assets
remained fairly constant throughout the year (6.11% in the first quarter versus
6.12% in the fourth quarter) the net yield increased from 5.35% to 5.73%
primarily due to a decrease in the cost of premium amortization from 0.55% in
the first quarter to 0.25% in the fourth quarter of 2007. This
decrease in the cost of premium amortization during 2007 primarily reflects a
decline in the prepayment rate experienced by the Company’s MBS portfolio from
23.8% in the first quarter to 13.4% in the fourth quarter of 2007. It
is the Company’s view that prepayments slowed during this period due to the
implementation of more stringent underwriting standards and home price declines
which generally made it more difficult for homeowners to qualify for a
comparable or higher mortgage balance. In addition, the Company’s
cost of funds declined to 5.05% in the fourth quarter from 5.21% in the third
quarter of 2007. This reflects the fact that from September 18, 2007
to December 31, 2007, the Federal Reserve decreased the target federal funds
rate on three separate occasions by an aggregate of 100 basis points from 5.25%
to 4.25%. During this time period, a portion of the Company’s
repurchase agreements were rolled over at lower interest rates. The
Company’s funding costs have continued to trend down in 2008 with some time lag
after Federal Reserve interest rate reductions. As a result, we
currently anticipate that the Company’s funding costs will continue to trend
down in the third quarter of 2008.
- 2
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Liquidity and Capital
Resources, page 27
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5.
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We
note the disclosure on page 28 about margin calls. Please tell us the
amount of additional cash and assets that were pledged as a result of
margin calls in 2007. Also tell us if any assets were sold as a result of
margin calls. Please include such disclosure in future
filings.
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In
response to the Staff’s comment, we note that margin calls are both received and
initiated by the Company on a regular basis in the normal course of its
business. Margin calls (or reverse margin calls) can occur for
several reasons, including fluctuations in market valuation of securities
collateralizing the Company’s repurchase agreements and interest rate swaps
(“Swaps”) and
changes in haircuts (i.e., the contractually specified percentage of pledged
collateral) associated with repurchase agreements. In addition, the
Company receives margin calls each month as it experiences principal
amortization and unscheduled principal payments (prepayments or curtailments) on
its MBS pledged as collateral. This principal reduction is announced in advance
of its receipt, creating a receivable for the Company, but the Company receives
margin calls in the amount of the principal reduction at the time of
announcement. Margin calls may also occur when the fair value of the
MBS pledged as collateral declines due to changes in market interest rates or
other market conditions. The Company also initiates reverse margin
calls when the fair value of the MBS or restricted cash pledged in respect of
its repurchase agreements and Swaps exceeds collateral
requirements.
The
Company’s balance of cash and securities pledged changes almost every business
day. In addition to the margin calls (and reverse margin calls)
described above, this amount changes as the Company increases or decreases
leverage and/or deploys additional capital raised through various equity
offerings. The Company had $7.967 billion of MBS pledged as
collateral against $7.526 billion of repurchase agreements at December 31,
2007. In addition, as discussed above, the Company is required to
pledge assets as collateral for certain of its Swaps. The Company can
both receive and initiate margin calls with respect to this pledged collateral
based on changes in market value, notional balance and/or remaining terms of
Swaps. The Company had $79.9 million of MBS and $4.5 million of
restricted cash pledged as collateral against Swaps, which had a notional amount
of $4.628 billion at December 31, 2007. Accordingly, based on the
nature of, and reasons for, the volume of margin call activity experienced by
the Company, we do not believe that disclosure of the amount of additional cash
and assets pledged by the Company and/or received back from counterparties
during any given intra-year period is meaningful given the netting (or
offsetting) impact of the various margin-related transactions. As
such, we believe that it is more relevant for the Company to disclose, at a
point in time, (i) the amount of securities and cash pledged as collateral under
its repurchase agreements and Swaps and (ii) the amount of unpledged securities
and cash on hand to meet additional margin calls.
- 3
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The
Company maintains excess cash and collateral balances in order to meet margin
calls, both unanticipated and anticipated. At December 31, 2007, the
Company had $488.6 million available to meet margin calls, comprised of
unpledged MBS with a fair value of $254.2 million and $234.4 million of
available cash. In addition, we note for the Staff that the Company
has never sold any assets in order to meet margin calls.
Item 8. Financial Statements
and Supplementary Data
Notes to Consolidated
Financial Statements
Note 3. Investment
Securities, page 49
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6.
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We
note that approximately $14 million and $30 million of your gross
unrealized losses on mortgage backed securities as of December 31, 2007
and June 30, 2008 respectively have been in a loss position in excess of a
year. Furthermore, we note that you have determined that there is no
other-than-temporary impairment related to these securities due to the
Company’s ability and intent to hold these securities until recovery or
maturity. Given the Company’s recent history of selling mortgage backed
securities at a loss, explain to us how you determined that you have the
intent and ability to hold these securities until recovery or
maturity.
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In
response to the Staff’s comment, we note that the Company primarily invests in
agency and, to a lesser extent, AAA-rated ARM-MBS on a leveraged basis and our
intent is to purchase such securities for investment
purposes. However, MBS may be sold in order to manage the Company’s
interest rate risk and liquidity needs, meet other operating objectives and to
adapt to unanticipated changing market conditions. As such, all of
the Company’s investment securities are designated as
available-for-sale. On at least a quarterly basis, management
assesses and attests to both the ability and intent to continue to hold each of
the Company’s investment securities. Management’s assessment of
intent to hold such securities is based on factual information as well as
subjective information available at the time of the assessment, including the
Company’s current liquidity position, the credit quality of the underlying
assets and an assessment of market conditions. Such assessments may
change over time, given, among other things, the dynamic nature of interest rate
markets and other variables. As part of this process, the Company
also monitors its investment securities for other-than-temporary impairment in
conformity with FASB Staff Position FAS 115–1 and FAS 124–1, “The Meaning of
Other-Than-Temporary Impairment and its Application to Certain
Investments”. The Company has previously recognized
other-than-temporary impairments on certain of its investment
securities.
The
Company’s recent sale of MBS (at a loss) was in response to significant adverse
changes in overall financial market conditions rather than due to the specific
attributes of the securities sold. In March 2008, the Company
modified its leverage strategy to reduce risk in light of the significant
disruptions in the credit markets, by decreasing its target debt-to-equity
multiple range to 7x to 9x, from the prior range of 8x to
9x. Accordingly, during the first quarter of 2008, the Company sold
84 MBS with a market value of $1.851 billion, resulting in net losses of $24.5
million. During the third quarter of 2007, the Company also responded
to significant changes in credit market conditions by selling $650.4 million of
agency and AAA-rated MBS at a loss of $22.0 million, of which $11.8 million had
been previously reflected through other comprehensive income in the carrying
value of these assets at June 30, 2007. The sale of these securities
increased the Company’s liquidity position during a period of credit market
disruption. The Company did not sell any additional assets in the
second quarter ending June 30, 2008 or from the end of such quarter to
date.
- 4
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The
Company continually analyzes its investment securities, the composition and
underlying characteristics of such securities, and key statistics that support
the Company’s investment and leverage strategy in relation to current market
conditions. Based upon these analyses, the Company has determined
that it currently has both the ability and intent to hold its investment
securities, including the securities that have been held in an unrealized loss
position in excess of a year until recovery or maturity. However,
future significant changes in market conditions could change the Company’s
ability and/or intent to continue to hold such securities, at which time the
Company could recognize an impairment charge and/or realize losses upon the sale
of securities.
Note 13. Estimated Fair
Value of Financial Instruments, page 63
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7.
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We
note that you obtained prices for your investment securities from a
third-party pricing service. Please tell us the nature and extent of the
third party’s involvement in management’s decision making process with
respect to determining the fair value of your investment
securities.
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In
response to the Staff’s comment, we note that the Company’s investment
securities (approximately 95% of which are issued or guaranteed by Fannie Mae,
Freddie Mac or Ginnie Mae) are valued by a third-party pricing service that
provides pool-specific valuations. With consistent and regular
review, the Company’s experienced investment management team is comfortable with
both the pricing service methodology and data inputs. The pricing
service uses daily to-be-announced securities (these are liquid and have quoted
market prices), evaluation from a trading desk and market spreads of traded
ARMs. We agree with the methodology and inputs used by the pricing
service and we are comfortable in utilizing the pricing service results in
determining the fair value of the Company’s investment securities.
Form 10-Q for the period
ended June 30, 2008
Item 1. Financial
Statements
Notes to Consolidated
Financial Statements (Unaudited)
Note 9. Fair Value of
Financial Instruments, page 20
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8.
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We
note that you have designated your investment securities as Level two
assets based on the valuation hierarchy outlined in SFAS 157. Please tell
us the factors you considered in determining that both your agency and
non-agency MBS investment securities are Level two
assets.
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In
response to the Staff’s comment, we note that there are no active market quoted
prices for identical investment securities held by the Company. There
are, however, active market quoted prices for similar assets, and observable
inputs that can be used to price the Company’s investment
securities. As such, the Company has determined that both agency and
non-agency MBS investment securities are Level two assets since the inputs to
the valuation methodology are observable, either directly or indirectly, for
substantially the full term of the instrument. The evaluation
methodology for our third-party pricing service incorporates common market
pricing methods including a spread measurement to various indices such as the
Constant Maturity Treasury and LIBOR, which are observable
inputs. The evaluation also considers the underlying characteristics,
which are also observable inputs, of particular securities including, coupon,
maturity date, loan age, reset date, collateral type, periodic and life cap,
geography, and prepayment speeds. In the case of non-agency MBS,
observable inputs also include delinquency data and credit enhancement
levels.
- 5
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Schedule 14A filed April 8,
2008
Compensation Discussion and
Analysis, page 12
Setting Executive
Compensation, page 14
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9.
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We
note the list of companies you included as your comparative peer group.
Please tell us how you will revise subsequent filings to identify all the
companies included in your
benchmarking.
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In
response to the Staff’s comment, we note that, as part of the comprehensive
review of the Company’s senior executive compensation practices conducted by the
Company’s Compensation Committee (the “Committee”) in 2005,
the Committee desired to competitively update the existing executive
compensation programs and policies, including existing employment agreements
offered to the Company’s named executive officers (the “NEOs”), to reflect
current practices in the marketplace. To assist in its comprehensive
review, the Committee engaged FPL Associates Compensation, as its independent
compensation consultant (the “Consultant”), to
provide guidance and recommendations on executive compensation matters,
including compensation matters in the marketplace and within the Company’s
industry. As part of its compensation benchmarking analysis, the
Consultant identified, together with input from the Committee and the Company’s
management, distinct industry peer groups representing various asset classes
that, at that point in time, were deemed to be comparative to the
Company. The specific comparative peer group disclosed in the
Schedule 14A was intended to be illustrative in nature, focusing on the
Company’s most relevant peers, and is anticipated to change over time due to
merger and acquisition activities, de-listings and other business-related
factors impacting such companies. To the extent that the Committee
utilizes comparative peer group compensation information in the future for
benchmarking purposes, we will identify, to the extent practicable, the specific
companies identified in any such comparative peer grouping in future
filings.
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10.
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Please
tell us how you will revise subsequent filings to discuss where your
compensation falls with the comparative peer groups used in your
benchmarking.
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In
response to the Staff’s comment, we note that the Committee has not historically
established, as a policy matter, any specific percentage target level or other
similar metric to be utilized in determining the Company’s compensation levels
or in measuring such compensation levels as compared to those of any comparative
peer group used in its benchmarking analysis. As disclosed on page 13
of the Schedule 14A, we point out that the Committee has not established a
specific target market position for executive officer pay levels. We
confirm, however, that if the Committee establishes or reviews any specific
percentage target compensation levels in connection with its future benchmarking
analyses, we will disclose, in future filings, where the Company’s compensation
falls within such comparative peer groups.
Elements of Executive
Compensation, page 15
Base Salary, page
15
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11.
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Please
tell us how you determined base salaries and provide such disclosure in
future filings.
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In
response to the Staff’s comment, we note, as discussed above, that, as part of
the comprehensive review of the Company’s senior executive compensation
practices conducted by the Committee in 2005, the Committee desired to
competitively update the Company’s existing executive compensation programs and
policies offered to the NEOs. As disclosed on pages 14 and 15 of the
Schedule 14A, based on the analysis and findings of its comprehensive review and
the Consultant’s recommendations, the Committee determined to modify the
compensation arrangements offered to the NEOs, which modifications were
documented in the amended and restated employment agreements negotiated with
each of the NEOs. Accordingly, we would like to point out that the
specific dollar amounts of the annual base salaries paid to the NEOs in 2007
were established by, and set forth in, their written amended and restated
employment contracts and, as disclosed on page 15 of the Schedule 14A, no
adjustments were made to these base salaries in 2007. Certain terms
of the NEO’s employment contracts, including the dollar amount of the annual
base salaries, are disclosed on pages 26 through 33 of the Schedule
14A. In future filings, we will revise the disclosure relating the
NEOs’ annual base salaries to clarify that, to the extent applicable, the dollar
amounts are set by contract or, if not set by contract, the basis used in
determining such dollar amounts.
- 6
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Incentive Compensation, page
16
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12.
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We
note that of ROAE between 8% and 22%, the pool will be adjusted based on
an established scale. Please explain the scale to us and provide such
disclosure in future filings.
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In
response to the Staff’s comment, we note that the specific ROAE formula for
calculating the Senior Executives’ annual performance-based bonus pool (the
“Senior Bonus
Pool”) is determined by, and is set forth as an exhibit to, the
employment contracts for each of the Company’s Senior Executives (Messrs.
Zimmerman, Gorin and Freydberg). We have attached, as Exhibit A to this
letter, this ROAE formula, which was utilized by the Committee in 2007 to
calculate the Senior Bonus Pool, for the Staff’s review. We will
include, in future filings, a more detailed discussion of the ROAE formula,
including the scale of specific ROE hurdles, utilized by the Committee in
calculating the Senior Bonus Pool.
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13.
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Please
tell us how you will disclose the determination of the allocation of the
performance bonus pool to your executive officers in future filings. Also,
please clarify if the three individuals listed toward the bottom page 16
are the only persons eligible to share in the bonus
pool.
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In
response to the Staff’s comment, we note that, in accordance with the
Committee’s written charter and the applicable employment contracts of the
Company’s Senior Executives, the Committee determines, in its sole discretion,
the portion of the Senior Bonus Pool that is allocated to the Company’s Chief
Executive Officer (the “CEO”) and, together
with the CEO, determines the portion of the Senior Bonus Pool allocated amongst
the other Senior Executives. The Committee makes such allocations
based upon its subjective evaluation of individual management performance and
the Company’s achievement of strategic objectives during the applicable
period. With respect to 2007, the Committee, in its discretion, could
have adjusted the aggregate Senior Bonus Pool downward by as much as 10%
depending upon the Committee’s assessment of the Company’s leverage strategy,
share price performance relative to the S&P financial index or other
relevant indices, share price relative to peer group, total return (share price
change plus dividend), and its other asset management activities, as well as the
Senior Executives’ individual performance, among other considerations, as
determined by the Committee. We will revise the disclosure, in future
filings, to explain the manner in which allocations of the Senior Bonus Pool are
made by the Committee as between the CEO and the other Senior Executives and to
clarify that any such allocations are made based upon the Committee’s subjective
evaluation of individual management performance and the Company’s achievement of
strategic objectives during the applicable period. To the extent
applicable, we will also identify any performance targets or goals utilized by
the Committee in determining the allocation of the Senior Bonus
Pool. In addition, we note for the Staff that the three persons
identified as Senior Executive (Messrs. Zimmerman, Gorin and Freydberg) are the
only persons eligible to participate in the Senior Bonus Pool.
- 7
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14.
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Please
tell us how the additional incentive compensation awarded to your senior
executives was determined and provide such disclosure in future filings.
Are there limits to the additional
incentive?
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In
response to the Staff’s comment, we note that, as provided in the NEOs’
employment agreements, the Committee has the right, in its sole discretion, to
increase the compensation paid to the NEOs’ during their term of employment and,
as such, to determine the amount and form of any such additional
compensation. As more fully described on pages 16 and 17 of the
Schedule 14A, in making its decision to award additional incentive compensation
in 2007 to the Senior Executives, the Committee considered management’s
execution of the Company’s business and strategic plans in 2007. In
particular, as disclosed in the Schedule 14A, the Committee specifically noted
that the basis for its decision was, notwithstanding the volatility of market
conditions in 2007, the Company was able to successfully employ its business
strategy which led to consecutive quarterly increases in dividends to
stockholders, the preservation of the book value of the Company’s common stock
and the completion of multiple accretive public offerings of common stock as
well as the recognition of management’s strategy of reducing both the Company’s
asset base and leverage during the first half of 2007 which positioned the
Company to take advantage of investment opportunities later in the year in
higher-yielding MBS with attractive spreads. To the extent
applicable, we will continue to include, in future filings, a detailed
discussion of the underlying basis for any additional compensation awarded to
the NEOs pursuant to their employment contracts. In addition, we note
for the Staff that there is no limitation on the additional incentive provided
for in the NEOs’ employment agreements.
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15,
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Please
tell us how you will, in future filings, disclose the metrics and
benchmarks used to determine the annual incentive compensation for your
other named executive officers.
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In
response to the Staff’s comment, we note that the annual incentive compensation
awarded to the Company’s other NEOs (Mr. Korth and Ms. Covello) was determined
by the Committee, together with the recommendation of the CEO, based upon its
subjective evaluation of individual management performance and the Company’s
achievement of strategic objectives during the applicable period. We
will revise the disclosure, in future filings, to explain the manner in which
the annual incentive compensation awarded to these NEOs was determined and, to
the extent applicable, will also identify any performance metrics or benchmarks
utilized by the Committee in making any such determinations.
Equity Grants, page
17
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16.
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Please
tell us how you will disclose the factors used to determine the phantom
shares and DERs granted to your named executive officers. Explain your use
of the term “cliff vest.”
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In
response to the Staff’s comment, we note that, as disclosed on pages 17 and 18
of the Schedule 14A, the Committee determined to grant phantom shares and
related DERs to certain of the Company’s employees, including the NEOs,
principally to help assure the long-term retention of the Company’s key
employees and to further align the interests of such employees with those of the
Company’s stockholders. As discussed in the Schedule 14A, in
determining the appropriate amount awarded to each of the NEOs, the Committee
determined, in conjunction with a recommendation by the Consultant, to award
each of the Senior Executives an amount equal to their respective current annual
contractual base compensation and to award the other NEOs an amount recommended
by the CEO. To the extent applicable, we will include, in future
filings, a more detailed discussion of the underlying basis, including specific
factors reviewed by the Committee, for any additional incentive compensation
awarded to the NEOs. In addition, we note for the Staff the term
“cliff vest” is generally recognized in the marketplace to mean that the
referenced award, in this case phantom shares, will vest all at once on a single
date (if at all) instead of on an intermittent basis over some stated period of
time.
- 8
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The
Company hereby acknowledges that:
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·
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the Company
is responsible for the adequacy and accuracy of the disclosure in the Form
10-K, Schedule 14A and Form 10-Q;
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·
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Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to the Form
10-K, Schedule 14A and Form 10-Q;
and
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·
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the Company
may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities
laws of the United States.
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Please
direct any questions or additional comments regarding these responses to the
August 12 Letter to the undersigned or Tim Korth, the Company’s general counsel,
at (212) 207-6400.
Very
truly yours,
/s/William
S. Gorin
William
S. Gorin
President
and Chief Financial Officer
cc: Tim
Korth
- 9
- -
Exhibit
A
Aggregate
Performance Bonus Pool for Senior Executives
2007
Bonus Pool
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ROAE
less than 4.5%
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$400,000
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ROAE
4.5% to 8.0%
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$600,000
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ROAE
greater than 8.0%
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See
Below
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Senior
Executive Bonus Pool Example
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ROAE
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8% | 9% | 10% | 12% | 13% | 14% | 16% | 18% | 20% |
22%
and above
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||||||||||||||||||||||||||||||
|
9/30/05
Common Equity
|
576,000,000 | 576,000,000 | 576,000,000 | 576,000,000 | 576,000,000 | 576,000,000 | 576,000,000 | 576,000,000 | 576,000,000 | 576,000,000 | ||||||||||||||||||||||||||||||
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Net
Income
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46,080,000 | 51,840,000 | 57,600,000 | 69,120,000 | 74,880,000 | 80,640,000 | 92,160,000 | 103,680,000 | 115,200,000 | 126,720,000 | ||||||||||||||||||||||||||||||
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Net
Income to achieve 8% hurdle
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46,080,000 | 46,080,000 | 46,080,000 | 46,080,000 | 46,080,000 | 46,080,000 | 46,080,000 | 46,080,000 | 46,080,000 | 46,080,000 | ||||||||||||||||||||||||||||||
|
Earnings
over Hurdle
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0 | 5,760,000 | 11,520,000 | 23,040,000 | 28,800,000 | 34,560,000 | 46,080,000 | 57,600,000 | 69,120,000 | 80,640,000 | ||||||||||||||||||||||||||||||
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Aggregate
Bonus Pool
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600,000 | 1,000,000 | 1,500,000 | 1,800,000 | 2,200,000 | 3,000,000 | 3,600,000 | 4,200,000 | 5,100,000 | 6,000,000 | ||||||||||||||||||||||||||||||
In
the event of a fractional ROAE (with respect to the percentages contained in the
above table), the Aggregate Bonus Pool shall be interpolated in linear fashion
between the applicable whole percentages.