UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under ss.240.14a-12
AMERICAN HOME MORTGAGE INVESTMENT CORP.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date filed:
________________________________________________________________________________
AMERICAN HOME MORTGAGE INVESTMENT CORP.
538 Broadhollow Road
Melville, New York 11747
May 13, 2005
Dear Fellow Stockholder:
You are cordially invited to attend the 2005 Annual Meeting of
Stockholders of American Home Mortgage Investment Corp. ("AHMIC" or the
"Company"), which will be held on Tuesday, June 14, 2005, commencing at 10:00
a.m., local time, at 538 Broadhollow Road, Melville, New York 11747.
At the Annual Meeting, you will be asked (i) to consider and vote
upon the election of three Class III directors to serve for a three-year term
expiring at the 2008 Annual Meeting of Stockholders, and until each of their
respective successors has been duly elected and qualified; (ii) to consider and
ratify Deloitte & Touche LLP as AHMIC's independent auditors for the year ending
December 31, 2005; (iii) to consider and vote upon amendments to the Company's
1999 Omnibus Stock Incentive Plan (the "Plan") to increase the number of shares
subject to awards granted under the Plan and the maximum number of shares that
are available to be granted as incentive stock options under the Plan; and (iv)
to consider and act upon such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof. These proposals are
more fully described in the Proxy Statement that follows.
We hope that you will find it convenient to attend in person.
Whether or not you expect to attend in person, please promptly date, sign and
mail the enclosed proxy in the return envelope provided to ensure your
representation at the Annual Meeting and the presence of a quorum. If you do
attend the Annual Meeting, you may withdraw your proxy if you wish to vote in
person.
A copy of the Company's Annual Report to Stockholders, which
includes a copy of the Company's Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2004, is being provided with the Proxy Statement to each
of the Company's stockholders as of May 12, 2005, the record date fixed for the
Annual Meeting. Additional copies of that report may be obtained by writing to
American Home Mortgage Investment Corp., 538 Broadhollow Road, Melville, New
York 11747, Attention: Investor Relations Department.
On behalf of the Board of Directors and officers of AHMIC, I would
like to express the Company's appreciation for your continued support.
Sincerely,
/s/ Michael Strauss
MICHAEL STRAUSS
Chairman of the Board, Chief Executive Officer
and President
AMERICAN HOME MORTGAGE INVESTMENT CORP.
538 Broadhollow Road
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 2005
To the Stockholders of American Home Mortgage Investment Corp.:
Notice is hereby given that the Annual Meeting of Stockholders of
American Home Mortgage Investment Corp., a Maryland corporation ("AHMIC" or the
"Company"), will be held on Tuesday, June 14, 2005, commencing at 10:00 a.m.,
local time, at 538 Broadhollow Road, Melville, New York 11747, for the following
purposes:
1. To elect three Class III directors to serve for a three-year term
expiring at the 2008 Annual Meeting of Stockholders and until each
of their respective successors has been duly elected and qualified.
2. To consider and ratify Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2005.
3. To consider and vote upon amendments to the Company's 1999 Omnibus
Stock Incentive Plan (the "Plan") to increase the number of shares
subject to awards granted under the Plan from 3,000,000 to 4,000,000
and to increase the maximum number of shares that are available to
be granted as incentive stock options under the Plan from 3,000,000
to 4,000,000.
4. To consider and act upon such other business as may properly come
before the Annual Meeting.
The Board of Directors of the Company has fixed the close of
business on May 12, 2005, as the record date for the determination of
stockholders entitled to notice of and to vote on any matters that may properly
come before the Annual Meeting and at any adjournments or postponements thereof.
By order of the Board of Directors,
/s/ Alan B. Horn
ALAN B. HORN
Secretary
Dated: May 13, 2005
Melville, New York
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. YOUR VOTE
IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE
THAT YOUR SHARES WILL BE REPRESENTED. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU
ATTEND THE MEETING.
AMERICAN HOME MORTGAGE INVESTMENT CORP.
538 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
_____________
PROXY STATEMENT
_____________
Annual Meeting of Stockholders
June 14, 2005
_____________
This Proxy Statement is furnished by the Board of Directors of
American Home Mortgage Investment Corp., a Maryland corporation ("AHMIC" or the
"Company"), in connection with the Company's solicitation of proxies for use at
the 2005 Annual Meeting of Stockholders of AHMIC (the "Annual Meeting"), which
will be held on Tuesday, June 14, 2005, commencing at 10:00 a.m., local time, at
538 Broadhollow Road, Melville, New York 11747, and at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. All stockholders are entitled and encouraged to
attend the Annual Meeting in person. This Proxy Statement and the accompanying
Proxy Card will be mailed to AHMIC stockholders of record as of May 12, 2005, on
or about May 13, 2005.
SOLICITATION OF PROXIES
The proxy enclosed with this Proxy Statement is solicited by the
Board of Directors of AHMIC. Proxies may be solicited by officers, directors and
regular supervisory and executive employees of AHMIC, none of whom will receive
any additional compensation for their services. Such solicitations may be made
personally, or by mail, facsimile, telephone, telegraph or messenger. The
Company may reimburse brokers and other persons holding shares in their names or
in the names of nominees for expenses in sending proxy materials to beneficial
owners and obtaining proxies from such owners. All of the costs of solicitation
of proxies will be paid by AHMIC.
All properly executed proxies delivered pursuant to this
solicitation and not revoked will be voted in accordance with the directions
given and, in connection with any other business that may properly come before
the Annual Meeting, in the discretion of the persons named in the proxy.
In voting by proxy with regard to the election of directors,
stockholders may vote in favor of each nominee or withhold their votes as to
each or all of the nominees. If no instruction is given on a properly completed
proxy, it will be voted FOR the election of each of the nominees for director
named in this Proxy Statement, or, if any such nominee is unable or unwilling to
serve for any reason, for such other person or persons as the Board of Directors
may recommend.
In voting by proxy with regard to ratification of Deloitte & Touche
LLP as the Company's independent auditors for the year ending December 31, 2005,
stockholders may vote in favor of ratification or against or may abstain from
voting with respect to this proposal. If no instruction is given on a properly
completed proxy, it will be voted FOR the ratification of Deloitte & Touche LLP
as the Company's independent auditors.
In voting by proxy with regard to the amendment of the Company's
1999 Omnibus Stock Incentive Plan (the "Plan"), stockholders may vote in favor
of amendment or against or may abstain from voting with respect to this
proposal. If no instruction is given on a properly completed proxy, it will be
voted FOR the amendment of the Plan.
As to any other matter of business that may be brought before the
Annual Meeting, such proxy will be voted in accordance with the judgment of the
persons named in the proxy.
A stockholder who has given a proxy may revoke it at any time before
it is exercised by giving notice of revocation to the Secretary of AHMIC, by
submitting a proxy bearing a later date or by attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting will not, in itself,
constitute revocation of a proxy.
VOTING SECURITIES
The Board of Directors has fixed the close of business on May 12,
2005, as the record date (the "Record Date") for determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting. Holders of record of
the Company's common stock, par value $0.01 per share ("Common Stock"), as of
the Record Date will be entitled to one vote for each share held. On the Record
Date, there were [40,353,504*] shares of the Company's Common Stock outstanding
and entitled to vote.
The presence in person or by proxy of stockholders entitled to cast
a majority of all the votes entitled to be cast at the Annual Meeting shall
constitute a quorum for the transaction of business at the Annual Meeting.
Assuming the presence of a quorum at the Annual Meeting: (i) a
plurality of the votes cast by holders of shares of Common Stock represented at
the Annual Meeting is required for the election of directors; (ii) the
affirmative vote of a majority of the votes cast by holders of shares of Common
Stock represented at the Annual Meeting is required for the ratification of
Deloitte & Touche LLP as the Company's independent auditors for the year ending
December 31, 2005; and (iii) the affirmative vote of a majority of the votes
cast by holders of shares of Common Stock represented at the Annual Meeting is
required for approval of the amendments to the Plan, provided that the total
votes cast on this proposal represent over 50% in interest of all securities
entitled to vote thereon.
Broker non-votes exist when a broker who holds shares in street name
does not receive voting instructions from the beneficial stockholder and such
broker does not have discretionary authority under applicable exchange rules to
vote on the particular proposal. Stockholder abstentions and broker non-votes
are considered present and entitled to vote for purposes of determining a
quorum. There should not be any broker non-votes on Proposal I, election of
directors, or Proposal II, ratification of independent auditors, because a
broker who holds shares in street name and does not receive voting instructions
from the beneficial stockholder has discretionary authority to vote on these
proposals. A vote "withheld" from a director nominee will have no effect on the
outcome of the vote because a plurality of the votes cast at the annual meeting
is required for the election of directors, and for purposes of the vote on
Proposal II, ratification of independent auditors, an abstention will have no
effect. For purposes of the vote on Proposal III, amendments to the Plan, an
abstention or a broker non-vote will have the effect of a vote against, unless
the total votes cast on this proposal represent more than 50% in interest of all
securities entitled to vote on this proposal, in which event a broker non-vote
will not have any effect on the result of the vote.
EXPLANATORY NOTE
AHMIC was incorporated in July, 2003, under the laws of the State of
Maryland. On December 3, 2003, through an internal reorganization, AHMIC became
the parent company of American Home Mortgage Holdings, Inc. ("AHM Holdings"),
which was a publicly owned company whose common stock traded on the Nasdaq
National Market under the symbol "AHMH." Concurrent with the reorganization,
Apex Mortgage Capital, Inc. ("Apex"), a Maryland corporation, which operated as
a real estate investment trust ("REIT"), merged with and into AHMIC, with AHMIC
as the surviving corporation. In connection with these transactions, the Common
Stock of the Company was exchanged for the outstanding shares of common stock of
AHM Holdings and Apex, and the Company commenced operating in a manner allowing
it to qualify as a REIT for federal income tax purposes. The Company's common
stock began trading on the New York Stock Exchange ("NYSE") under the symbol
"AHH" on December 4, 2003. The Company's trading symbol on the NYSE was changed
to "AHM" as of June 1, 2004.
As a result of the reorganization and merger, both completed on
December 3, 2003, among other things: (i) AHM Holdings became a wholly owned
subsidiary of the Company and ceased trading on the Nasdaq National
* to be updated following the Record Date.
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Market, (ii) Apex ceased to exist, and (iii) the directors and executive
officers of AHM Holdings at the time of completion of these transactions became
the directors and executive officers of the Company. Accordingly, certain
references in this Proxy Statement to the Company or to historical information
relating to the Company, in each case relative to periods prior to December 3,
2003, generally apply to AHM Holdings.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of April 25, 2005, the following are the only persons, entities
or groups (other than as set forth under "Security Ownership of Directors and
Executive Officers" below) known to the Company to be the beneficial owners of
more than 5% of the Company's outstanding Common Stock:
Shares of Common Stock Percent of Common Stock
Name and Address of Beneficial Owner Beneficially Owned Beneficially Owned (1)
-------------------------------------------- ---------------------- -----------------------
Eubel Brady & Suttman Asset Management, Inc. 3,376,368 (2) 8.37%
7777 Washington Village Drive
Suite 210
Dayton, Ohio 45459
Greenlight Capital, L.L.C. 2,835,100 (3) 7.03%
140 East 45th Street, Floor 24
New York, New York 10017
------------------------------------
(1) Ownership percentages are based on 40,353,504 shares of Common Stock
outstanding as of April 25, 2005.
(2) Eubel Brady & Suttman Asset Management, Inc., a Delaware corporation
("EBS"), filed a Schedule 13G with the Securities and Exchange Commission
(the "SEC") on February 14, 2005, on behalf of EBS, Ronald L. Eubel
("Eubel"), Mark E. Brady ("Brady"), Robert J. Suttman ("Suttman"), William
E. Hazel ("Hazel") and Bernard J. Holtgreive ("Holtgreive"). According to
the Schedule 13G: (i) EBS beneficially owned 3,356,588 shares of Common
Stock, with shared voting and dispositive power over 3,356,588 shares;
(ii) Eubel beneficially owned 3,376,368 shares of Common Stock, with sole
voting and dispositive power over 530 shares and shared voting and
dispositive power over 3,375,838 shares; (iii) Brady beneficially owned
3,375,838 shares of Common Stock, with shared voting and dispositive power
over 3,375,838 shares; (iv) Suttman beneficially owned 3,375,838 shares of
Common Stock, with shared voting and dispositive power over 3,375,838
shares; (v) Hazel beneficially owned 3,375,838 shares of Common Stock,
with shared voting and dispositive power over 3,375,838 shares; and (vi)
Holtgreive beneficially owned 3,375,838 shares of Common Stock, with
shared voting and dispositive power over 3,375,838 shares.
(3) Greenlight Capital, L.L.C., a Delaware limited liability company ("GC
LLC"), filed a Schedule 13G/A with the SEC on February 14, 2005, on behalf
of GL LLC, Greenlight Capital, Inc., a Delaware corporation ("GC Inc."),
and David Einhorn ("Einhorn"). According to the Schedule 13G/A: (i) GC LLC
beneficially owned 1,409,400 shares of Common Stock, with sole voting and
dispositive power over 1,409,400 shares; (ii) GC Inc. beneficially owned
1,425,700 shares of Common Stock, with sole voting and dispositive power
over 1,425,700 shares; and (iii) David Einhorn beneficially owned
2,835,100 shares of Common Stock, with sole voting and dispositive power
over 2,835,100 shares.
The determination that there were no other persons, entities or
groups (other than as set forth under "Security Ownership of Directors and
Executive Officers" below) known to the Company to beneficially own more than 5%
of the Company's outstanding Common Stock was based on a review of all
statements filed with the SEC with respect to the Company pursuant to Section
13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the beginning of the prior fiscal year.
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Security Ownership of Directors and Executive Officers
The following table sets forth certain information regarding
ownership of Common Stock as of April 25, 2005, by (i) each of the members of
the Company's Board of Directors, (ii) each of the Company's executive officers
named in the "Summary Compensation Table" under the caption "Executive
Compensation" below (sometimes referred to herein as the "named executive
officers"), and (iii) all directors and executive officers of the Company as a
group. Unless otherwise indicated, all shares were owned directly with sole
voting and investment power.
Shares of Common Stock Percent of Common Stock
Name and Address of Beneficial Owner (1) Beneficially Owned Beneficially Owned (2)
---------------------------------------------------------------------- ------------------------- -------------------------
Michael Strauss 4,242,106 10.51%
John A. Johnston 412,409 1.02%
Nicholas R. Marfino 32,182 *
Michael A. McManus, Jr. 27,286 *
C. Cathleen Raffaeli 26,667 *
Kenneth P. Slosser 76,667 *
Irving J. Thau 8,316 *
Stephen A. Hozie 26,000 (3) *
Donald Henig 45,000 (4) *
Thomas M. McDonagh 15,400 (5) *
Richard S. Loeffler 5,000 (6) *
All directors and executive officers as a group (13 individuals) 4,990,358 12.37%
___________________________
* Represents less than 1%.
(1) Each individual listed in the table is a director or named executive
officer of the Company, with an address at c/o American Home Mortgage
Investment Corp., 538 Broadhollow Road, Melville, New York 11747.
(2) Ownership percentages are based on 40,353,504 shares of Common Stock
outstanding as of April 25, 2005. Under the rules of the SEC, shares of
common stock that an individual has a right to acquire within 60 days from
April 25, 2005, pursuant to the exercise of options, warrants or other
convertible securities, are deemed to be outstanding for the purpose of
computing the percentage of ownership of such person, but are not deemed
to be outstanding for the purpose of computing the percentage of ownership
of any other person shown in the table.
(3) This number includes currently exercisable options to purchase 25,000
shares of Common Stock.
(4) This number represents currently exercisable options to purchase 45,000
shares of Common Stock.
(5) This number includes options to purchase 15,000 shares of Common Stock
that become exercisable on June 30, 2005.
(6) This number represents currently exercisable options to purchase 5,000
shares of Common Stock.
4
CORPORATE GOVERNANCE
Board of Directors
The bylaws of the Company provide that the Board of Directors will
consist of not less than three members nor more than 12 members, the exact
number to be determined by resolution adopted by the affirmative vote of a
majority of the Board of Directors of AHMIC. Currently, there are seven members
on the Board of Directors, which is divided into three classes. Directors in
each class are elected for a three-year term in staggered years.
Meetings of the Board of Directors
The Board of Directors of the Company held nine meetings during 2004
and took action by written consent on 13 occasions. Each current director
attended 75% or more of the aggregate number of meetings of the Board of
Directors and Board committees on which he or she served that were held during
such period.
Directors are encouraged, but are not required, to attend the
Company's annual meetings of stockholders. One director attended the Company's
2004 Annual Meeting of Stockholders, which was held on June 16, 2004.
Independence of the Board of Directors
The Board of Directors of the Company has affirmatively determined
that four of its seven directors, including all members of its Audit,
Compensation and Nominating and Corporate Governance Committees, are
"independent" as defined by the listing standards of the NYSE and all applicable
rules and regulations of the SEC. The four independent directors are Nicholas R.
Marfino, Michael A. McManus, Jr., C. Cathleen Raffaeli and Irving J. Thau.
Communications with Directors
Stockholders and other interested parties may communicate directly
with any director, including any non-management member of the Board of
Directors, by writing to the attention of such individual at the following
address: American Home Mortgage Investment Corp., 538 Broadhollow Road,
Melville, New York 11747.
Communications that are intended for the non-management directors
generally should be marked "Personal and Confidential" and sent to the attention
of the Chair of the Nominating and Corporate Governance Committee. The Chair
will distribute any communications received to the non-management member(s) to
whom the communication is addressed. Communications that are intended for the
whole Board should be sent to the attention of the Company's General Counsel and
Secretary.
Corporate Governance Principles
The Board of Directors adopted Corporate Governance Principles that,
along with the charters of the various Board committees, provide the framework
for the governance of the Company. The Nominating and Corporate Governance
Committee is responsible for overseeing and reviewing the Corporate Governance
Principles from time to time and recommending proposed changes to the Board for
approval. The Corporate Governance Principles are available on the Company's
website at http://www.americanhm.com. The Corporate Governance Principles are
also available in print to anyone who requests them by writing to the Company at
the following address: 538 Broadhollow Road, Melville, New York 11747,
Attention: Investor Relations Department.
Code of Business Conduct and Ethics
All directors, officers and employees of the Company must act
ethically and in accordance with the Company's Code of Business Conduct and
Ethics (the "Code of Ethics"). The Code of Ethics satisfies the definition of
"code of ethics" under the rules and regulations of the SEC and is available on
the Company's website at
5
http://www.americanhm.com. The Code of Ethics is also available in print to
anyone who requests it by writing to the Company at the following address: 538
Broadhollow Road, Melville, New York 11747, Attention: Investor Relations
Department.
Committees of the Board of Directors and Committee Meetings
The Board of Directors of the Company currently has three standing
committees: the Audit Committee, the Compensation Committee and the Nominating
and Corporate Governance Committee. The members and functions of these
committees are described below. The Board of Directors has adopted written
charters for each such committee, current versions of which are available on the
Company's website at http://www.americanhm.com. The charters are also available
in print to anyone who requests them by writing to the Company at the following
address: 538 Broadhollow Road, Melville, New York 11747, Attention: Investor
Relations Department.
Audit Committee
---------------
The Audit Committee assists the Board of Directors in monitoring:
(i) the integrity of the financial statements of the Company, (ii) the
qualifications and independence of the Company's independent auditors, (iii) the
performance of the Company's internal audit function and independent auditors,
(iv) the compliance by the Company with legal and regulatory requirements and
(v) the processes by which management assesses and manages risk. The Audit
Committee pre-approves all auditing services and permitted non-audit services
(including the fees and terms thereof) to be performed for the Company by the
independent auditors, subject to the exceptions for non-audit services which are
approved by the Audit Committee prior to the completion of the audit. The
Amended and Restated Charter of the Audit Committee, which describes all of the
Audit Committee's responsibilities, is posted on the Company's website.
During 2004, the Audit Committee held eleven meetings and took
action by written consent on two occasions. The Audit Committee Report appears
on page 15 of this Proxy Statement.
From February 24, 2003 until April 27, 2004, the members of the
Audit Committee were C. Cathleen Raffaeli (Chair), Nicholas R. Marfino and
Michael A. McManus, Jr. As of April 27, 2004, Irving J. Thau was appointed to
the Audit Committee and named as Chair of the Audit Committee.
The Board of Directors has determined that each member of the Audit
Committee satisfies the independence standards for Audit Committee membership as
set forth in Section 10A(m)(3) of the Exchange Act and the rules promulgated
thereunder and applicable listing standards of the NYSE. In addition, the Board
of Directors has determined that Mr. Thau satisfies the SEC's criteria for an
"audit committee financial expert."
Compensation Committee
----------------------
The primary purpose of the Compensation Committee is (i) to review
and approve corporate goals and objectives relevant to compensation of the
Company's Chief Executive Officer ("CEO"), evaluate the CEO's performance in
light of such goals, and determine and approve the salary, benefits and other
compensation of the CEO, (ii) to review, with the CEO, the salaries, benefits
and other compensation of the Company's other executive officers, (iii) to make
recommendations to the Company's Board of Directors regarding the other
executive officers' salaries, benefits, and other compensation, and (iv) to
administer the Company's employee benefit plans. The Charter of the Compensation
Committee, which describes all of the Compensation Committee's responsibilities,
is posted on the Company's website.
During 2004, the Compensation Committee held three meetings. The
Compensation Committee Report on Executive Compensation begins on page 21 of
this Proxy Statement. The members of the Compensation Committee are Nicholas R.
Marfino (Chair), Michael A. McManus, Jr., and C. Cathleen Raffaeli.
6
Nominating and Corporate Governance Committee
---------------------------------------------
The primary purpose of the Nominating and Corporate Governance
Committee is to consider and make recommendations to the Board of Directors
concerning the appropriate size, functions and needs of the Board of Directors.
The responsibilities of the Nominating and Corporate Governance Committee also
include, among other things, identifying and nominating individuals qualified to
become members of the Board, developing the Company's Corporate Governance
Principles and overseeing the evaluation of the Board and management. The
Charter of the Nominating and Corporate Governance Committee, which describes
all of the Nominating and Corporate Governance Committee's responsibilities, is
posted on the Company's website.
During 2004, the Nominating and Corporate Governance Committee held
one meeting. The members of the Nominating and Corporate Governance Committee
are Michael A. McManus, Jr. (Chair), Nicholas R. Marfino and C. Cathleen
Raffaeli.
Compensation of the Board of Directors
Prior to March 4, 2005, directors who are neither employees of the
Company nor employees of its subsidiaries each received $3,000 per Board of
Directors or committee meeting attended (except for committee meetings held on
the same day as a Board meeting). Commencing in March, 2004, this per-meeting
fee was increased to $4,000. In addition, commencing in 2004, the chairperson of
the Audit Committee receives an additional fee of $10,000 per year of service.
Directors also are reimbursed for out-of-pocket expenses incurred in connection
with their service as directors.
Each non-employee director is eligible to be awarded non-qualified
stock options and shares of restricted stock under the Plan. A recipient of
restricted stock under the Plan is entitled to vote such stock and is entitled
to all dividends paid on such stock, except that dividends paid in Common Stock
or other property also will be subject to the same restrictions. During 2004,
the Company awarded an aggregate of 27,034 shares of restricted stock to
non-employee members of the Board of Directors as follows: 8,316 shares awarded
to Irving J. Thau, 10,225 shares awarded to Nicholas R. Marfino and 8,493 shares
awarded to Michael A. McManus, Jr.
Directors who serve either as the Company's officers or employees or
as officers or employees of any of its subsidiaries do not receive any
additional compensation for their services as directors.
Director Nomination Process
Role of the Nominating and Corporate Governance Committee
---------------------------------------------------------
In accordance with the Company's Corporate Governance Principles,
the Nominating and Corporate Governance Committee considers director candidates
based on criteria approved by the Board of Directors, including such
individuals' backgrounds, skills, expertise, accessibility and availability to
serve constructively and effectively on the Board. The Nominating and Corporate
Governance Committee considers and evaluates director candidates based upon
certain minimum qualifications set forth in the Charter of the Nominating and
Corporate Governance Committee.
The Nominating and Corporate Governance Committee may retain a
director search firm to assist the Nominating and Corporate Governance Committee
in identifying qualified director nominees. In addition, the Nominating and
Corporate Governance Committee will consider potential nominees proposed by the
Chairman of the Board, the CEO, any member of the Nominating and Corporate
Governance Committee and any search firm engaged by any of the foregoing for the
purpose of identifying potential candidates for Board membership. After
identifying qualified individuals and conducting interviews, as appropriate, the
Nominating and Corporate Governance Committee will recommend the selected
individuals to the Board. In the event there is a vacancy on the Board between
stockholders' meetings, the Nominating and Corporate Governance Committee will
recommend one or more of the qualified individuals for appointment to the Board.
7
Candidates Proposed by Stockholders
-----------------------------------
The Nominating and Corporate Governance Committee has a policy to
consider recommendations for director candidates submitted in good faith by
stockholders. A stockholder recommending an individual for consideration by the
Nominating and Corporate Governance Committee must provide (i) evidence in
accordance with Rule 14a-8 of the Exchange Act of compliance with the
stockholder eligibility requirements, (ii) the written consent of the
candidate(s) for nomination as a director, (iii) a resume or other written
statement of the qualifications of the candidate(s) for nomination as a director
and (iv) all information regarding the candidate(s) and the stockholder that
would be required to be disclosed in a proxy statement filed with the SEC if the
candidate(s) were nominated for election to the Board, including, without
limitation, name, age, business and residence address and principal occupation
or employment during the past five years. Stockholders should send the required
information to the Company at 538 Broadhollow Road, Melville, New York 11747,
Attention: General Counsel and Secretary.
In order for a recommendation to be considered by the Nominating and
Corporate Governance Committee for the 2006 Annual Meeting of Stockholders, the
Company's General Counsel and Secretary must receive the recommendation no later
than 5:00 p.m., local time, on January 13, 2006. Such recommendations must be
sent via registered, certified or express mail (or other means that allows the
stockholder to determine when the recommendation was received by the Company).
The Company's General Counsel and Secretary will send properly submitted
stockholder recommendations to the Nominating and Corporate Governance Committee
for consideration at a future meeting of the Nominating and Corporate Governance
Committee. Individuals recommended by stockholders in accordance with these
procedures will receive the same consideration as other individuals evaluated by
the Nominating and Corporate Governance Committee.
Stockholder Nominations
-----------------------
In addition, the Company's bylaws permit stockholders to nominate
directors to be voted upon at an annual meeting of stockholders or at a special
meeting at which directors are to be elected in accordance with the notice of
meeting. Stockholders intending to nominate a person for election as a director
must comply with the requirements set forth in the Company's bylaws, which were
filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2003, and can also be obtained, without charge, upon written
request to the Company at 538 Broadhollow Road, Melville, New York 11747,
Attention: Investor Relations Department. The bylaws generally require, among
other things, that the Company receive written notification from the record
stockholder containing the information described in the section above and any
other information required by the bylaws no earlier than February 14, 2006, and
no later than March 16, 2006.
8
PROPOSAL I - ELECTION OF DIRECTORS
Michael Strauss, whose term expires at the Annual Meeting, is a
Class III director and has been nominated for re-election to the Board of
Directors to hold office for a three-year term expiring at the 2008 Annual
Meeting of Stockholders and until his successor has been duly elected and
qualified. Mr. Strauss has consented to be named as a nominee and, if elected,
to serve as a director.
Nicholas R. Marfino, whose term expires at the Annual Meeting, is a
Class III director and has been nominated for re-election to the Board of
Directors to hold office for a three-year term expiring at the 2008 Annual
Meeting of Stockholders and until his successor has been duly elected and
qualified. Mr. Marfino has consented to be named as a nominee and, if elected,
to serve as a director.
Irving J. Thau, whose term expires at the Annual Meeting, is a Class
III director and has been nominated for re-election to the Board of Directors to
hold office for a three-year term expiring at the 2008 Annual Meeting of
Stockholders and until his successor has been duly elected and qualified. Mr.
Thau has consented to be named as a nominee and, if elected, to serve as a
director.
If any of the nominees named above is unable to or unwilling to
serve as a director, the enclosed proxy will be voted for such other person or
persons as the Board of Directors may recommend. Management of AHMIC does not
anticipate that such an event will occur.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH NOMINEE SET FORTH ABOVE.
9
Information about the Nominees, the Continuing Directors and Executive and Other
Key Officers of the Company
The table below sets forth the names and ages of the current
directors, including the nominees, and the executive and other key officers of
AHMIC, as well as the position(s) and office(s) held by those individuals. A
summary of the background and experience of each of those individuals is set
forth after the table.
Name Age Position(s)
-------------------------------------------------------------------------------------------------------------------------------
DIRECTOR NOMINEES - CLASS III
(WHOSE TERMS EXPIRE IN 2005):
Michael Strauss 46 Chairman of the Board, Chief Executive Officer and President
Nicholas R. Marfino 49 Director
Irving J. Thau 65 Director
CONTINUING DIRECTORS - CLASS I
(WHOSE TERMS EXPIRE IN 2006):
C. Cathleen Raffaeli 48 Director
Kenneth P. Slosser 41 Director
CONTINUING DIRECTORS - CLASS II
(WHOSE TERMS EXPIRE IN 2007):
John A. Johnston 51 Director and President, Western Division
Michael A. McManus, Jr. 62 Director
EXECUTIVE AND OTHER KEY OFFICERS WHO ARE NOT DIRECTORS:
Ronald L. Bergum 43 Executive Vice President, Western Division
Robert Bernstein 39 Senior Vice President and Controller
Chris Cavaco 36 Executive Vice President and Chief Information Officer
Doug Douglas 57 Executive Vice President, Business Processes
Thomas J. Fiddler 39 Executive Vice President, Eastern Division
Mark Filler 45 Executive Vice President, Mergers and Acquisitions
David M. Friedman 53 Executive Vice President and Director of Servicing
Kathleen R. Heck 50 Executive Vice President, Eastern Division
Donald Henig 46 President, Wholesale and Direct-to-Consumer Division
Alan B. Horn 53 Executive Vice President and General Counsel and Secretary
Stephen A. Hozie 46 Executive Vice President and Chief Financial Officer
Robert F. Johnson, Jr. 32 Executive Vice President, Capital Markets
Dena L. Kwaschyn 44 Executive Vice President, Operations
Richard S. Loeffler 46 Executive Vice President and Chief Administrative Officer (1)
John A. Manglardi 51 President, Eastern Division
Thomas M. McDonagh 40 Executive Vice President and Chief Investment Officer
Craig Pino 40 Senior Vice President and Treasurer
Ronald Rosenblatt 58 Executive Vice President, Sales Support and Development
Lisa M. Schreiber 44 Executive Vice President, Wholesale
______________________
(1) Mr. Loeffler was appointed Executive Vice President and Chief Administrative
Officer in January, 2005.
Director Nominees - Class III
-----------------------------
Michael Strauss. Mr. Strauss has served as the Chairman of the Board
of Directors, Chief Executive Officer and President of the Company since its
founding and initial public offering in 1999. In addition, Mr. Strauss served as
Chairman of the Board of Directors, Chief Executive Officer and President of the
Company's predecessor corporation since its founding by Mr. Strauss in 1988. He
is responsible for the Company's strategic direction as well as overseeing its
day-to-day operations.
10
Nicholas R. Marfino. Mr. Marfino has served on the Company's Board
of Directors since July, 2001. Since October, 2001, Mr. Marfino has been Vice
President of Adirondack Electronic Markets, LLC, where he manages and supervises
institutional equity option sales and brokerage. Prior to that time, Mr. Marfino
was employed at Ladenburg Thalmann & Co., Inc., an investment bank and
securities dealer, from September, 1993 until September, 2001.
Irving J. Thau. Mr. Thau was appointed to the Company's Board of
Directors on April 27, 2004. Mr. Thau is a Certified Public Accountant and, from
1962 to 1995, he held various positions with Ernst & Young LLP, where his
primary responsibilities were directing and providing accounting, auditing, and
business advisory services to publicly held and privately owned organizations.
He was admitted to partnership in 1974, and most recently served as Ernst &
Young's West Region Director of Financial Advisory Services. In 1995, Mr. Thau
founded Thau and Associates, Inc., a financial consulting company of which he
currently serves as President. Currently, Mr. Thau serves on the board of
directors of American Vanguard Corporation, and is the chair of its audit
committee and a member of its nominating and corporate governance committee.
Continuing Directors - Class I
------------------------------
C. Cathleen Raffaeli. Ms. Raffaeli has served on the Company's Board
of Directors since October, 1999. She is currently the President and Chief
Executive Officer of UNext LLC, an online education company, a position she has
held since February 23, 2004. From September, 2002 until February, 2004, Ms.
Raffaeli served as Managing Partner of the Hamilton White Group, LLC, a
financial advisory firm. From December, 1998 until September, 2002, Ms. Raffaeli
was the President and Chief Operating Officer of ProAct Technologies Corp., an
e-commerce company majority owned by IXL Enterprises, a Nasdaq National
Market-listed Internet services company. Prior to joining ProAct Technologies
Corp., Ms. Raffaeli was the Executive Director of the commercial credit card
division of Citicorp from 1994. From 1992 to 1994, Ms. Raffaeli served as Senior
Vice President of Chemical Bank, where she was responsible for its New York
retail mortgage and national telemarketing business. Ms. Raffaeli is a director
of E*TRADE Group, Inc., an online brokerage.
Kenneth P. Slosser. Mr. Slosser was appointed to the Company's Board
of Directors in March, 2000. Since January, 2005, Mr. Slosser has been a Senior
Managing Director and co-head of Financial Institutions Investment Banking
Department of the investment bank Friedman, Billings, Ramsey & Co., Inc.
("Friedman Billings"). From January, 1998, until January, 2005, Mr. Slosser was
a Managing Director of the Investment Banking Department of Friedman Billings,
and from December, 1996, until 1998, Mr. Slosser was a Senior Vice President of
Friedman Billings. From August, 1990, through November, 1996, Mr. Slosser served
as Assistant Regional Director for the Office of Thrift Supervision, a division
of the U.S. Treasury Department responsible for the oversight and examination of
savings institutions. From June, 1986, through August, 1990, he served in
various other capacities with the Office of Thrift Supervision and its
predecessor agencies.
Continuing Directors - Class II
-------------------------------
John A. Johnston. Mr. Johnston has served as the Company's
President, Western Division, since January, 2003. Mr. Johnston joined the
Company as a result of the Company's acquisition of Marina Mortgage Company,
Inc. ("Marina"), where Mr. Johnston served as Chief Executive Officer since
1991. The Company acquired Marina on December 29, 1999, and Mr. Johnston
continued to serve as Chief Executive Officer of Marina since such date. Mr.
Johnston has been one of the Company's directors since March 2000.
Michael A. McManus, Jr. Mr. McManus has served on the Company's
Board of Directors since December, 2001. Since October 30, 1998, Mr. McManus has
served as President and Chief Executive Officer of Misonix, Inc., a medical
equipment manufacturer. Before that time, he served as President and Chief
Executive Officer of New York Bancorp Inc. from 1991 through March 1998 and as a
director of that company from 1990 through March 1998. Mr. McManus also served
as President and Chief Executive Officer of Home Federal Savings Bank, the
principal subsidiary of New York Bancorp Inc., from February 1995 through March
1998. Currently, Mr. McManus serves on the boards of directors of NWH, Inc., a
telecommunications holding firm, Novavax, Inc., a pharmaceuticals manufacturer,
and LQ Corporation, Inc., which is currently a non-operating publicly reporting
company traded on The Nasdaq OTC Bulletin Board.
11
Executive Officers
------------------
Ronald L. Bergum. Mr. Bergum has served as the Company's Executive
Vice President, Western Division, since January, 2003. Mr. Bergum joined the
Company as a result of the Company's acquisition of Marina, where Mr. Bergum
served as President since 1994. The Company acquired Marina on December 29,
1999, and Mr. Bergum continued to serve as President of Marina since that date.
Robert Bernstein. Mr. Bernstein joined the Company in December, 2002
as Controller. He has served as the Company's Senior Vice President and
Controller since April, 2003. From January, 2001, to February, 2002, he served
as Chief Financial Officer of GreenPoint Mortgage. Mr. Bernstein has worked in
various positions at GreenPoint Mortgage and GreenPoint Bank for 15 years.
Chris Cavaco. Mr. Cavaco joined the Company in November, 2000, and
served as its Chief Technology Officer until April, 2001, when he became the
Company's Chief Information Officer. Since April, 2003, Mr. Cavaco has served as
the Company's Executive Vice President and Chief Information Officer. Prior to
joining the Company, Mr. Cavaco worked for MCI WorldCom Wireless from June,
1997, as the Network and Systems Manager and, later, Applications Development
Manager. From 1991 until June, 1997, Mr. Cavaco was self-employed as an
information system consultant.
Doug Douglas. Mr. Douglas joined the Company in June, 2002, as
Executive Vice President, Business Processes, through the Company's acquisition
of Columbia National, Incorporated ("Columbia") in June, 2002, where he served
as Chief Financial Officer since August, 1971. His prior roles at Columbia were
in secondary marketing, technology and both commercial and FHA multi-family loan
origination. Previously, he served as President of Columbia Real Estate
Investments, a publicly owned real estate investment trust managed by Columbia.
Thomas J. Fiddler. Since January, 2003, Mr. Fiddler has served as
the Company's Executive Vice President, Eastern Division. Mr. Fiddler served as
the Company's Executive Vice President, Sales and Marketing, since the Company
acquired First Home Mortgage Corp. ("First Home") in June, 2000. From 1997 to
June, 2000, Mr. Fiddler served as First Home's Vice President, Sales.
Mark Filler. In January, 2003, Mr. Filler joined the Company as
Executive Vice President, Mergers and Acquisitions. Since September, 2001, Mr.
Filler has also served as a Principal with Division Sales International, a
wholesale distributions company. Previously, Mr. Filler has also served as Chief
Executive Officer of Prism Financial Corporation ("Prism"), a mortgage banking
company, from December, 1999 to June, 2001 and President from September, 1998 to
June, 2001. While at Prism, he sourced and negotiated numerous acquisitions
during his eight-year tenure.
David M. Friedman. Mr. Friedman, the Company's Executive Vice
President and Director of Servicing, joined the Company in August, 2004. Prior
to joining the Company, Mr. Friedman served as President of Servicing for PCFS
Mortgage Resources, a division of Provident Bank, from January, 2002, to August,
2004. Since 1983, Mr. Friedman held a number of senior-level positions in the
mortgage industry with such entities as Chase Mortgage/Advanta and Bank of
America/Nations Credit.
Kathleen R. Heck. Ms. Heck joined the Company in September, 2004, as
Executive Vice President, Eastern Division. Prior to joining the Company, Ms.
Heck served as Senior Vice President and Area Sales Manager for Washington
Mutual, Inc., from February, 2001, to September, 2004. From December, 1995, to
February, 2001, Ms. Heck held various managerial positions with PNC Financial
Services Group, Inc. (whose residential mortgage banking division was acquired
by Washington Mutual in February, 2001), such as Producing Manager, Branch
Manager and District Manager.
Donald Henig. Mr. Henig has served as the President of the Company's
Wholesale and Direct-to-Consumer Division since April 1, 2004. From April, 2003
through December, 2003, Mr. Henig served as the Company's Executive Vice
President, Alternative Channels Division. Mr. Henig joined the Company in
February, 2001 as Senior Vice President, New Sales Channels. From February, 2000
until February, 2001, Mr. Henig served as Senior Vice President at
LoanTrader.com, where he was responsible for business development and corporate
relations. From October, 1999 until February, 2000, Mr. Henig was Managing
Director - National Account Sales and Eastern
12
Region Manager of Ultraprise.com, an online secondary market exchange. Between
1997 and 1999, Mr. Henig served as Senior Vice President, National Sales and
Director of Lender Relations at MtgPro, Inc. In 1995, Mr. Henig founded Mortgage
Tech Group, LTD., a multistate mortgage origination franchise, and he served as
President of that company until 1997. From 1985 until 1995, Mr. Henig served as
President of Island Mortgage Network, Inc., a company that he founded.
Alan B. Horn. Mr. Horn joined the Company in January, 2003, as
General Counsel and Secretary. He has served as the Company's Executive Vice
President and General Counsel and Secretary since April, 2003. From November,
2001 to December, 2002, Mr. Horn was a Partner and Chair of the New York
Financial Institutions Practice Group for Greenberg Traurig, LLP. From October,
1989 to July, 2001, Mr. Horn served as General Counsel and Chief Compliance
Officer for European American Bank ("EAB"), where he oversaw overall legal
strategy and was directly involved in the development and implementation of
strategic initiatives. Mr. Horn served as a staff and managing attorney in EAB's
legal department from May, 1985 to October, 1989.
Stephen A. Hozie. Mr. Hozie joined the Company in March, 2002, as
Chief Financial Officer. He has served as the Company's Executive Vice President
and Chief Financial Officer since April, 2003. From May, 1998 until January,
2002, Mr. Hozie served as Senior Vice President, Finance, and then as Deputy
Chief Financial Officer, of Fleet Mortgage Group. Mr. Hozie was Vice President
of Mellon Mortgage Company from April, 1997 until April, 1998.
Robert F. Johnson, Jr. Mr. Johnson joined the Company in May, 2001,
as Vice President, Secondary Marketing. He has served as the Company's Executive
Vice President, Capital Markets, since January, 2004. Prior to joining the
Company, Mr. Johnson worked for ComNet Mortgage Services, a division of
Commonwealth Bank, in Norristown, Pennsylvania, from July, 1994 to April, 2001
in various secondary marketing positions. He also served as Vice President,
Secondary Marketing, and as a voting member of Commonwealth Bank's Asset
Liability Committee from February, 2000 to April, 2001.
John A. Johnston. See narrative description under the caption
"Director Nominees - Class II" above.
Dena L. Kwaschyn. Ms. Kwaschyn has served as the Company's Executive
Vice President, Operations, since April, 2003. She joined the Company in
February, 2001, as Senior Vice President, Operations. From April, 2000, to
February, 2001, Ms. Kwaschyn served as Director of Operations for L'Argent
Mortgage Bankers. From April, 1999, until March, 2000, Ms. Kwaschyn was a
self-employed consultant to various mortgage banking firms. Ms. Kwaschyn was
Executive Vice President, Director of Mortgage Lending, from September, 1997
until April, 1999 at Long Island Savings Bank, having first served as Long
Island Savings Bank's Director of Operations of the Mortgage Division from
February, 1986 through September, 1997.
Richard S. Loeffler. Mr. Loeffler joined the Company in August,
2000, as part of the Company's acquisition of Roslyn National Mortgage
Corporation, where he served as Chief Operating Officer since June, 1998. Since
January, 2005, Mr. Loeffler has served as the Company's Chief Administrative
Officer and is responsible for all Company operations, information technology,
secondary marketing and vendor management. From June, 2004, until January, 2005,
Mr. Loeffler served as the Company's Deputy Chief Administrative Officer. Prior
to that, Mr. Loeffler served as an Executive Vice President, Sales Manager, of
the Company (June, 2002, until June, 2004) and as the Company's Director of
Mergers and Acquisitions (August, 2000, until June, 2002). Earlier in his
career, Mr. Loeffler held management positions with Fannie Mae, Long Island
Savings Bank, Entrust and NVR Financial Services.
John A. Manglardi. Mr. Manglardi has served as the Company's
President, Eastern Division, since January, 2003. Prior to that time, Mr.
Manglardi was employed by the Company as Senior Executive Vice President since
the Company acquired First Home in June, 2000. Prior to the acquisition, he
served as President and Chief Executive Officer of First Home since his
co-founding of that company in 1994. Mr. Manglardi is directly involved in the
day-to-day operations of the management, administration and expansion of the
Company's First Home sales network.
Thomas M. McDonagh. Mr. McDonagh joined the Company on June 30,
2003, as Executive Vice President and Chief Investment Officer. Prior to that
time, Mr. McDonagh served as a Portfolio Manager for
13
CalPERS from 1999 until June, 2003. During that time, his responsibilities
included, among other things, managing portfolios of structured products such as
mortgage-backed securities, asset-backed securities and collateralized
mortgage-backed securities. From 1997 until 1999, Mr. McDonagh served as Chief
Investment Officer of Vanderbilt Capital Advisors.
Craig Pino. Mr. Pino joined the Company in February, 2004, as Senior
Vice President and Treasurer. Prior to joining the Company, Mr. Pino spent eight
years at Countrywide Home Loans, most recently as Executive Vice President and
Assistant Treasurer. Mr. Pino has over 14 years of experience in mortgage
banking finance.
Ronald Rosenblatt, Ph.D. Dr. Rosenblatt has served as the Company's
Executive Vice President, Sales Support and Development, since January, 2004.
Dr. Rosenblatt joined the Company as Senior Vice President, Sales Support and
Development, in March, 2003, when the Company acquired the former retail group
of Principal Residential Mortgage Inc. ("Principal Residential Mortgage"), a
division of The Principal Financial Group. Dr. Rosenblatt served as Vice
President and Head of Retail Lending for Principal Residential Mortgage from
January, 2000 through March, 2003, and in such capacity oversaw all sales and
operations, including training, recruiting and all policy development and
implementation, for the retail channel. From June, 1999 until January, 2000, Dr.
Rosenblatt served as Regional Sales Manager for Wells Fargo Mortgage in Illinois
and Northwest Indiana. From January, 1995 until June, 1999, he was the Area
Sales Manager in Iowa for Wells Fargo Mortgage (formerly Norwest Mortgage).
Lisa M. Schreiber. Ms. Schreiber joined the Company in March, 2002,
and currently serves as the Company's Executive Vice President, Wholesale. Prior
to joining the Company, Ms. Schreiber served as the Southeast Regional Vice
President for Bank of America Mortgage. Prior to joining Bank of America
Mortgage, Ms. Schreiber served as the Regional Wholesale Vice President for
Arbor National.
Michael Strauss. See narrative description under the caption
"Director Nominees - Class III" above.
14
AUDIT COMMITTEE REPORT
The members of the Audit Committee have been appointed by the Board
of Directors. The Audit Committee is governed by a charter that has been
approved and adopted by the Board of Directors and which will be reviewed and
reassessed annually by the Audit Committee. The Audit Committee is comprised of
four directors, each of whom satisfies the independence requirements of the New
York Stock Exchange and the Securities and Exchange Commission ("SEC").
The following Audit Committee Report does not constitute soliciting
material and shall not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent the Company
specifically incorporates this Audit Committee Report by reference therein.
The Audit Committee assists the Board of Directors in monitoring:
(1) the integrity of the financial statements of the Company, (2) the
qualifications and independence of the Company's independent auditors, (3) the
performance of the Company's internal audit function and independent auditors,
(4) the compliance by the Company with legal and regulatory requirements and (5)
the processes by which management assesses and manages risk.
Management is responsible for the preparation and integrity of the
Company's financial statements. The Audit Committee reviewed the Company's
audited financial statements for the year ended December 31, 2004, and met with
both management and the Company's independent auditors to discuss those
financial statements. Management and the independent auditors have represented
to the Audit Committee that the financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America.
The Audit Committee has received from and discussed with the
Company's independent auditors the written disclosure and letter regarding the
independent auditors' independence from the Company as required by Independence
Standards Board Standard No. 1. The Audit Committee has also discussed with the
independent auditors any matters required to be discussed by Statement on
Auditing Standards No. 61 (as amended by Statement on Auditing Standards No.
90).
Based upon these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K/A for the year ended
December 31, 2004, for filing with the SEC. The Audit Committee has elected, and
the Board of Directors has ratified, subject to stockholder approval, the
selection of the Company's independent auditors for the year ending December 31,
2005.
Respectfully submitted,
The Audit Committee
Irving J. Thau, Chair
Nicholas R. Marfino
Michael A. McManus, Jr.
C. Cathleen Raffaeli
15
EXECUTIVE COMPENSATION
The following table sets forth certain summary information
concerning compensation paid by the Company during 2004 to or on behalf of the
Chief Executive Officer and to each of the Company's four most highly
compensated executive officers other than the Chief Executive Officer who were
serving as executive officers as of December 31, 2004.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation Awards
------------------------------ ---------------------------------
Other Securities
Annual Restricted Underlying LTIP All Other
Salary Bonus Compen- Stock Options/SARs Payouts Compen-
Name and Principal Position Year ($)(1) ($) sation ($) Awards (#) ($) sation ($)
----------------------------------- ---- ------ ----- ---------- ---------- ------------ -------- ---------
Michael Strauss (2) 2004 593,095 600,000 -- -- 162,813 -- 30,073(3)
Chairman of the Board, 2003 350,000 -- -- -- -- -- 30,322(3)
Chief Executive Officer 2002 335,427 -- -- -- -- -- 21,540(3)
and President
Stephen A. Hozie 2004 429,167 525,000 -- -- 32,500 -- 53,788(4)
Executive Vice President 2003 304,167 337,500 -- -- 20,000 -- 48,665(4)
and Chief Financial Officer 2002 173,365 375,000 -- -- 15,000 -- 23,776(4)
Donald Henig 2004 397,917 611,401 -- -- 20,000 -- 7,753(6)
President, 2003 300,000 300,000 106,250(5) -- -- -- 6,506(6)
Wholesale and Direct-to-
Consumer Division 2002 284,376 200,000 -- -- 25,000 -- 4,879(6)
Thomas McDonagh 2004 650,000 200,000 -- -- -- -- 8,141(7)
Executive Vice President 2003 300,417 75,000 -- -- 30,000 -- 2,714(7)
and Chief Investment Officer 2002 -- -- -- -- -- -- --
Richard S. Loeffler 2004 278,126 409,486 -- -- 30,000 -- --
Executive Vice President and 2003 175,000 383,013 333,100(8) -- -- -- --
Chief Administrative Officer 2002 175,000 160,000 -- -- -- -- --
________________________________
(1) For each year noted above, an officer's reported salary may be less than
appears in his employment agreement because of a change in the Company's
payroll practices that resulted in salary earned in December of each such
year being paid in January of the following year.
(2) In addition, before AHM Holdings' initial public offering, American Home
Mortgage Corp. ("AHMC"), AHM Holdings' predecessor and current subsidiary,
elected to be treated for income tax purposes as an S corporation. In
connection with the initial public offering, AHMC distributed to Mr.
Strauss, its sole stockholder at such time, a promissory note in the
amount of $7.8 million, which note has since been paid in full, in respect
of AHMC's previous S corporation earnings. In connection with that
distribution, AHM Holdings agreed to indemnify Mr. Strauss, on an
after-tax basis, from all liability for AHM Holdings' taxes and those of
AHMC with respect to the period after the initial public offering.
(3) Primarily represents Mr. Strauss' automobile allowance and related
expenses.
(4) Represents Mr. Hozie's automobile allowance and housing expenses.
(5) Represents proceeds from Mr. Henig's exercise of 20,000 options to
purchase Common Stock and sale of such shares in April, 2003.
(6) Represents Mr. Henig's automobile allowance.
(7) Represents Mr. McDonagh's automobile allowance.
(8) Represents proceeds from Mr. Loeffler's exercise of 35,000 options to
purchase Common Stock and sale of such shares in October, 2003.
16
Stock Option Grants and Exercises During the Last Fiscal Year
The following table sets forth information concerning stock option
grants made during 2004 to the executive officers named in the "Summary
Compensation Table," including the present value of each grant on the date of
grant, estimated using the Black-Scholes option-pricing model. This pricing
model is for illustration purposes only and is not intended to predict the
future price of the Common Stock. The actual future value of the options will
depend on the market value of the Common Stock.
STOCK OPTION GRANTS IN FISCAL YEAR 2004
Individual Grants
---------------------------------------------------------------------------------------
Number of
Securities Percent of Total
Underlying Options/SARs Exercise Grant Date
Options/SARs Granted to Price Expiration Present Value
Name Granted Employees (%) ($/Share) Date ($)
--------------------- -------------- ------------------ ----------- ------------ ----------------
Michael Strauss 162,813 24.39 24.05 04/26/2014 772,272(1)
Stephen A. Hozie 32,500 4.87 27.19 03/02/2014 220,393(2)
Donald Henig 20,000 3.00 22.50 04/13/2014 88,752(3)
Thomas M. McDonagh -- -- -- -- --
Richard S. Loeffler 30,000 4.49 28.94 09/20/2014 144,718(4)
___________________
(1) The present value of the options granted to Mr. Strauss was estimated
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
Dividend yield 9%
Expected volatility 44.2%
Risk-free interest rate 5%
Expected life 3 years
(2) The present value of the options granted to Mr. Hozie was estimated using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
Dividend yield 7%
Expected volatility 48.8%
Risk-free interest rate 5%
Expected life 3 years
(3) The present value of the options granted to Mr. Henig was estimated using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:
Dividend yield 9%
Expected volatility 44.2%
Risk-free interest rate 5%
Expected life 3 years
(4) The present value of the options granted to Mr. Loeffler was estimated
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
Dividend yield 9%
Expected volatility 38.3%
Risk-free interest rate 5%
Expected life 3 years
17
The following table sets forth certain summary information
concerning exercised and unexercised options to purchase AHMIC's Common Stock as
of December 31, 2004, held by the executive officers named in the "Summary
Compensation Table."
STOCK OPTION EXERCISES IN FISCAL YEAR 2004
AND FISCAL YEAR-END OPTION VALUES
Number of Shares
Underlying Unexercised Value of Unexercised
Options/SARs Held In-The-Money Options/SARs
at Fiscal Year-End (#) at Fiscal Year-End ($)
--------------------------- ------------------------------
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------------- ------------ ------------ ----------- ------------- ----------- -------------
Michael Strauss -- -- -- 162,813 -- 1,660,693(1)
Stephen A. Hozie -- -- 7,500 60,000 148,875(2) 862,125(2)
Donald Henig -- -- 32,500 32,500 825,625(3) 500,625(3)
Thomas McDonagh -- -- -- 30,000 -- 446,700(4)
Richard S. Loeffler -- -- 5,000 30,000 147,500(5) 159,300(5)
__________________________________
(1) As of December 31, 2004, Mr. Strauss held options to purchase 162,813
shares of Common Stock, of which (i) 81,407 options will become
exercisable on April 27, 2006, and (ii) 81,406 options will become
exercisable on April 27, 2007. All of these options have an exercise
price of $24.05. The closing price of AHMIC's Common Stock at December
31, 2004, was $34.25. Accordingly, all of these stock options were
in-the-money as of December 31, 2004. The value of the unexercisable
stock options held by Mr. Strauss at year-end 2004 is calculated by
multiplying the number of stock options held by the difference between
the exercise price per share of such stock options and the closing
price of AHMIC's Common Stock at year-end 2004.
(2) As of December 31, 2004, Mr. Hozie held options to purchase 67,500
shares of Common Stock, of which (i) 7,500 became exercisable on March
25, 2004, with an exercise price of $14.40 per share, (ii) 7,500 became
exercisable on March 25, 2005, with an exercise price of $14.40 per
share, (iii) 10,000 became exercisable on April 4, 2005, with an
exercise price of $10.06 per share, (iv) 10,000 become exercisable on
April 4, 2006, with an exercise price of $10.06 per share, (v) 16,250
become exercisable on March 3, 2006, with an exercise price of $27.19
per share, and (vi) 16,250 become exercisable on March 3, 2007, with an
exercise price of $27.19 per share. The closing price of AHMIC's Common
Stock at December 31, 2004, was $34.25. Accordingly, all of these stock
options were in-the-money as of December 31, 2004. The value of the
exercisable and unexercisable stock options held by Mr. Hozie at
year-end 2004 is calculated by multiplying the number of exercisable
and unexercisable stock options held by the difference between the
exercise price per share of such stock options and the closing price of
AHMIC's Common Stock at year-end 2004.
(3) As of December 31, 2004, Mr. Henig held options to purchase 65,000
shares of Common Stock, of which (i) 20,000 became exercisable on
February 5, 2004, with an exercise price of $6.25 per share, (ii)
12,500 became exercisable on February 5, 2004, with an exercise price
of $13.00 per share, (iii) 12,500 became exercisable on February 5,
2005, with an exercise price of $13.00 per share, (iv) 10,000 become
exercisable on April 14, 2006, with an exercise price of $22.50 per
share, and (v) 10,000 become exercisable on April 14, 2007, with an
exercise price of $22.50 per share. The closing price of AHMIC's Common
Stock at December 31, 2004, was $34.25. Accordingly, all of these stock
options were in-the-money as of December 31, 2004. The value of the
exercisable and unexercisable stock options held by Mr. Henig at
year-end 2004 is calculated by multiplying the number of exercisable
and unexercisable stock options held by the difference between the
exercise price per share of such stock options and the closing price of
AHMIC's Common Stock at year-end 2004.
(4) As of December 31, 2004, Mr. McDonagh held options to purchase 30,000
shares of Common Stock, of which (i) 15,000 options will become
exercisable on June 30, 2005, and (ii) 15,000 options will become
exercisable on June 30, 2006. All of these options have an exercise
price of $19.36. The closing price of AHMIC's Common Stock at December
31, 2004, was $34.25. Accordingly, all of these stock options were
in-the-money as of December 31, 2004. The value of the unexercisable
stock options held by Mr. McDonagh at year-end 2004 is calculated by
multiplying the number of stock options held by the difference between
the exercise price per share of such stock options and the closing
price of AHMIC's Common Stock at year-end 2004.
(5) As of December 31, 2004, Mr. Loeffler held options to purchase 35,000
shares of Common Stock, of which (i) 5,000 became exercisable on
October 31, 2002, with an exercise price of $4.75 per share, (ii)
15,000 become exercisable on September 21, 2006, with an exercise price
of $28.94 per share, and (iii) 15,000 become exercisable on September
21, 2007, with an exercise price of $28.94 per share. The closing price
of AHMIC's Common Stock at December 31, 2004, was $34.25. Accordingly,
all of these stock options were in-the-money as of December 31, 2004.
The value of the exercisable and unexercisable stock options held by
Mr. Loeffler at year-end 2004 is calculated by multiplying the number
of exercisable and unexercisable stock options held by the difference
between the exercise price per share of such stock options and the
closing price of AHMIC's Common Stock at year-end 2004.
18
Equity Compensation Plan Information
The following table sets forth certain information as of
December 31, 2004, with respect to the Company's equity compensation plans under
which shares of the Company's Common Stock may be issued.
EQUITY COMPENSATION PLAN INFORMATION
Number of Securities
Remaining Available for
Number of Securities to Future Issuance Under
be Issued Upon Exercise Weighted Average Exercise Equity Compensation Plan
of Outstanding Options, Price of Outstanding (Excluding Securities
Plan Category Warrants and Rights Options, Warrants and Rights Reflected in Column (a))
--------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
Equity compensation plans
approved by security
holders.. . . . . . . . . . . 1,248,102 18.65 672,483
Equity compensation plans
not approved by security
holders.. . . . . . . . . . . N/A N/A N/A
Total. . . . . . . . 1,248,102 18.65 672,483
Employment Arrangements
The Company is a party to employment agreements with certain of its
executive officers and directors. The following is a summary of the key terms of
the Company's employment agreements with its Chief Executive Officer and the
four most highly compensated executive officers of the Company during the year
ended December 31, 2004. The Company's employment agreements with the following
individuals were assumed by the Company upon consummation of the internal
reorganization with AHM Holdings and the merger with Apex.
The Company's employment agreement with Michael Strauss, its
Chairman of the Board, Chief Executive Officer and President, provides for an
annual base salary of not less than $350,000 commencing January 1, 2000, and a
discretionary bonus. The agreement has an initial term of three years and will
automatically renew for additional one-year terms, provided that either party
may terminate the agreement upon 12-months' notice before the expiration date.
The employment agreement contains covenants not to compete for a period ending
on the first anniversary of the termination of Mr. Strauss' employment. If (i)
the Company terminates the agreement for any reason other than for cause or upon
Mr. Strauss' disability, (ii) Mr. Strauss terminates his employment for good
reason or (iii) in connection with or following a change in control, Mr.
Strauss' position is eliminated or Mr. Strauss no longer serves as the Company's
Chief Executive Officer with power, authority and responsibility attendant to
such office, then the Company must pay him a lump sum payment equal to 299% of
his base salary, plus the average of his annual incentive award over the
preceding five years.
The Company's employment agreement with Stephen A. Hozie, its
Executive Vice President and Chief Financial Officer, provides for (i) a base
salary of not less than $325,000 per year, (ii) a potential objective
achievement bonus of not less than $175,000, (iii) a management evaluation bonus
targeted at $75,000, and (iv) a potential company performance award of not less
than $75,000. Under the agreement, the minimum and maximum cumulative bonus paid
to Mr. Hozie pursuant to (ii), (iii) and (iv) is $162,500 and $487,500,
respectively. The term of employment is indefinite and employment is at will,
terminating four weeks after Mr. Hozie's resignation or the Company's discharge
of Mr. Hozie, as applicable. Mr. Hozie is entitled to certain fringe benefits
and the reimbursement of work-related expenses. The agreement provides for an
option grant of 20,000 shares of common stock upon execution and the grant of up
to an additional 32,000 options under certain circumstances. The agreement also
provides for severance payments upon Mr. Hozie's resignation after a "change of
control" of the Company, but these provisions have expired and are no longer in
effect. The employment agreement contains non-solicitation covenants for a
period of six months following the termination of the agreement.
19
The Company's current employment agreement with Donald Henig, the
President of its Wholesale and Direct-to-Consumer Division, provides for (i) a
base salary of not less than $400,000 per year, (ii) a potential objective
monthly achievement bonus of 0.001% of certain loans originated by the Company,
and (iii) a performance award equal to 4% of the profits from certain loans
originated by the Company. The term of employment is indefinite and employment
is at will, terminating four weeks after the earlier of Mr. Henig's resignation
or the Company's discharge of Mr. Henig. If the Company discharges Mr. Henig
without cause, the Company will pay Mr. Henig a severance amount equal to three
months of his base salary.
The Company's employment agreement with Thomas McDonagh, its
Executive Vice President and Chief Investment Officer, provides for (i) a base
salary of not less than $650,000 per year, (ii) a management evaluation bonus
with a minimum bonus amount of $100,000, and a maximum bonus amount of $400,000,
and (iii) a sign-on bonus in the amount of $75,000. The term of the employment
agreement continues through June 29, 2005, and employment is at will,
terminating on the earlier of June 29, 2005, the Company's discharge of Mr.
McDonagh, or four weeks after Mr. McDonagh's resignation. Mr. McDonagh is
entitled to certain fringe benefits and the reimbursement of work-related
expenses. The employment agreement provides for a grant of options to purchase
30,000 shares of Common Stock upon execution of the agreement. The employment
agreement also provides for the payment of a severance award to Mr. McDonagh (i)
upon the Company's termination of the employment agreement without cause prior
to its expiration in an amount equal to $1,780.82 per day for the number of days
from the date of discharge to June 29, 2005, and (ii) upon Mr. McDonagh's
discharge or resignation after a "change of control" of the Company in an amount
equal to $1,780.82 per day for the number of days from the date of discharge or
resignation to June 29, 2005. The employment agreement contains a
non-solicitation covenant for a period of one year following the termination of
the agreement. The agreement also contains a non-competition covenant.
The Company's employment agreement with Richard S. Loeffler, its
Executive Vice President and Chief Administrative Officer, provides for (i) a
base salary of not less than $600,000 per year, and (ii) (a) an objective
achievement bonus, (b) a management evaluation bonus, and (c) a company
performance award, collectively targeted at 50% of Mr. Loeffler's base salary,
but which may be greater or lesser in Company's discretion. The term of
employment is indefinite and employment is at will, terminating four weeks after
the earlier of Mr. Loeffler's resignation or the Company's discharge of Mr.
Loeffler. Mr. Loeffler is entitled to certain fringe benefits and the
reimbursement of work-related expenses. The employment agreement contains a
non-solicitation covenant for a period of six months following the termination
of the agreement.
20
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The primary purpose of the Compensation Committee is (i) to review
and approve corporate goals and objectives relevant to compensation of the
Company's Chief Executive Officer ("CEO"), evaluate the CEO's performance in
light of such goals, and determine and approve the salary, benefits, and other
compensation of the CEO, (ii) to review, with the CEO, the salaries, benefits
and other compensation of the Company's other executive officers, and (iii) to
make recommendations to the Company's Board of Directors regarding the other
executive officers' salaries, benefits and other compensation. The Compensation
Committee also administers the Company's 1999 Omnibus Stock Incentive Plan, as
amended (the "Plan"), and determines awards to be made under the Plan to the
Company's directors and executive officers. Awards made under the Plan,
including awards made to the Company's directors and executive officers, have
been approved by the Company's Board of Directors.
The Compensation Committee met three times in 2004. In 2004, the
Compensation Committee engaged an outside compensation consultant to review the
CEO's compensation.
The following Compensation Committee Report describes the
considerations that have guided, or will guide, the Compensation Committee in
assessing executive compensation.
Philosophy
----------
The goal of the Compensation Committee is to provide competitive
levels of compensation that integrate pay with the Company's short-term and
long-term performance goals, reward corporate performance, and recognize
individual initiative and achievement. It is anticipated that these policies
will help the Company to continue to attract and retain quality personnel and
thereby enhance the Company's long-term profitability and share value.
Executive compensation ranges will be designed to be competitive
with (i) those amounts paid to senior executives at mortgage REITs and mortgage
banks that compete with the Company, (ii) companies that are similar in size and
profitability to the Company, and (iii) companies with which the Company
competes for senior executives. Within this framework, individual executive
compensation will continue to be based on personal and corporate achievement and
the individual's level of responsibility and experience. However, in any
particular year, the Company's executives may be paid more or less than
executives in peer companies, depending on the Company's own performance.
The executive officers' compensation consists of three principal
components: base salary, bonus and stock options and/or shares of restricted
stock. Each of those components is discussed below.
Base Salary
-----------
The base salaries of the Company's executive officers are based in
part on comparative industry data and on various quantitative and qualitative
considerations regarding corporate and individual performance. An executive's
base salary will be determined only after an assessment of his or her sustained
performance, current salary in relation to an objective salary range for the
executive's job responsibilities, and experience and potential for advancement.
In recommending base salaries for the Company's executive officers, the
Compensation Committee may consider several additional factors, including, but
not limited to: (i) industry compensation trends; (ii) cost of living and other
local and geographic considerations; (iii) industry-specific job skills and
knowledge; (iv) historical and expected contributions to the Company's
performance; and (v) level, complexity, breadth and difficulty of duties.
21
Bonus Program
-------------
Eligible executive officers of the Company may also be awarded
bonuses for achieving certain performance levels. These bonuses are based on
various quantitative and qualitative performance criteria for these executive
officers and are designed to attract and retain qualified individuals and also
encourage them to meet the Company's desired performance goals.
Stock Options, Stock Appreciation Rights and Restricted Stock
-------------------------------------------------------------
The Company provides long-term executive compensation incentives in
the form of stock option awards, stock appreciation rights and restricted stock
to more closely align the interests of management with the Company's
stockholders. The Compensation Committee believes that grants of stock option
awards, stock appreciation rights and restricted stock are an effective means of
advancing the long-term interests of the Company's stockholders by integrating
executive compensation with the long-term value of the Company's common stock.
Stock options are granted at the prevailing market price on the date of grant
and are valuable to executives only if the Company's common stock appreciates.
During 2004, the Company granted 667,634 stock options among 39 individuals and
issued 68,909 shares of restricted stock among six individuals. Awards,
including awards made to the Company's directors and executive officers, have
been approved by the Company's Compensation Committee and its Board of
Directors.
Chief Executive Officer
-----------------------
Michael Strauss, the Company's CEO, earned an annual base salary of
$600,000 in 2004. In addition, in 2005, in consideration of Mr. Strauss'
services to the Company during 2004, the Compensation Committee awarded Mr.
Strauss a cash bonus of $2 million and options to purchase 160,863 shares of the
Company's common stock as incentive compensation. In determining the fairness
and adequacy of Mr. Strauss' compensation for 2004, the Compensation Committee
reviewed and approved the Company's short- and long-term goals and objectives
relevant to the CEO's compensation and evaluated Mr. Strauss' performance in
light of those goals and objectives, including the Company's actual financial
performance as well as Mr. Strauss' continued contributions to the growth and
success of the Company. Other factors that guided the Compensation Committee in
its evaluation of the CEO's performance are Mr. Strauss' ability to lead the
Company through its continuing growth as a public company; Mr. Strauss'
leadership and vision in connection with the Company's evolving business
strategy, including its conversion into a real estate investment trust; the
Company's total return on stockholders' equity; the integration of acquired
businesses; the Company's increased market share; Mr. Strauss' continued
recruiting of valuable personnel throughout the Company; and the Company's
overall compliance with laws and regulations. The Compensation Committee
retained an executive compensation consultant to review and evaluate Mr.
Strauss' salary in light of his contributions to the Company and the
compensation awarded to CEOs at comparable companies. Based on the Compensation
Committee's evaluation of the standards set forth above, and after consultation
with the executive compensation consultant retained, the Compensation Committee
approved Mr. Strauss' compensation level, bonus payment and award of options to
purchase common stock.
Respectfully submitted,
The Compensation Committee
Nicholas Marfino, Chair
Michael A. McManus, Jr.
C. Cathleen Raffaeli
22
Performance Graph
As described on page 2 of this Proxy Statement under "Explanatory
Note," on December 3, 2003, the Company became the parent company of AHM
Holdings through an internal reorganization and merged with Apex. The Company's
Common Stock began trading on the NYSE under the symbol "AHH" on December 4,
2003. The Company's trading symbol on the NYSE was changed to "AHM" as of June
1, 2004.
Before the Company's internal reorganization and merger with Apex,
AHM Holdings' common stock traded on the Nasdaq National Market under the symbol
"AHMH." Set forth below is a graph comparing the cumulative total stockholder
return on the Company's Common Stock with the S&P 500 Index and a "peer group"
selected by management. The graph assumes an investment of $100.00 on December
31, 1999 in (i) the Company's Common Stock, (ii) the stocks comprising the S&P
500 Index and (iii) a "peer group" selected by management. From December 31,
1999, to December 3, 2003, the peer group includes Countrywide Financial Corp.,
Flagstar Bancorp, Inc., Resource Bancshares Mortgage Group, Inc., Irwin
Financial Corporation, E Loan, Inc., and Finet.com, Inc. From December 3, 2003,
to December 31, 2004, in light of the Company's internal reorganization and
conversion into a REIT, the peer group includes Countrywide Financial Corp.,
Flagstar Bancorp, Inc., Thornburg Mortgage, Inc., Redwood Trust, Inc., and
Annaly Mortgage Management, Inc.
[GRAPHIC OMITTED]
CUMULATIVE TOTAL RETURN PERFORMANCE GRAPH
Date AHMH/AHM (1) S&P 500 Index Peer Group Index
December 31, 1999 $100.00 $100.00 $100.00
December 31, 2000 71.70 90.90 154.74
December 31, 2001 183.85 80.09 134.41
December 31, 2002 169.79 62.39 171.23
December 31, 2003 365.98 76.76 352.62
December 31, 2004 592.55 89.02 478.44
______________
(1) As described above, from December 31, 1999, to December 3, 2003, the results
in the table relate to American Home Mortgage Holdings, Inc. From December 3,
2003, until December 31, 2004, the results in the table relate to American Home
Mortgage Investment Corp.
23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Kenneth P. Slosser, one of the Company's non-employee directors, is
a Senior Managing Director of Friedman, Billings, Ramsey & Co., Inc. ("Friedman
Billings"), an investment bank that has from time to time in the past provided,
and may from time to time in the future provide, investment banking and general
financing services to the Company for which Friedman Billings has in the past
received, and may in the future receive, fees and commissions. In March, 2004,
Friedman Billings acted as the sole bookrunning and joint-lead manager of a
secondary public offering of 14,375,000 shares of the Company's Common Stock,
and received fees and commissions in the amount of $10,237,915. In July, 2004,
the Company completed an offering of 2,150,000 shares of its 9.75% Series A
Cumulative Redeemable Preferred Stock, in which Friedman Billings acted as a
co-manager and received fees and commissions in the amount of $133,573. In
addition, in December, 2004, the Company completed an offering of 3,450,000
shares of its 9.25% Series B Cumulative Redeemable Preferred Stock, in which
Friedman Billings acted as lead manager and received fees and commissions in the
amount of $1,173,166. The Company also agreed to indemnify Friedman Billings and
its officers and directors against certain liabilities in connection with these
offerings.
Michael Strauss, the Company's Chairman of the Board, Chief
Executive Officer and President, is permitted to beneficially own up to 20% of
the value of the total number of shares of Common Stock and preferred stock of
the Company. Typically, in order to maintain REIT status, a REIT imposes general
limitations on the ownership of its voting securities. However, the Company's
charter excepts Mr. Strauss from those general ownership limitations and, thus,
Mr. Strauss is permitted to beneficially own up to 20% of the value of the total
number of shares of Common Stock and preferred stock of the Company. The Company
believes that as the Company's founder, Chief Executive Officer and President
and significant stockholder, Mr. Strauss has played an integral role in the
growth and success of the Company and has effectively led the Company through
its first years as a public company, acquired and integrated multiple businesses
and recruited valuable members of management and other personnel. Accordingly,
the Company's Board of Directors believes that permitting Mr. Strauss to
maintain significant ownership in the Company is appropriate and is beneficial
to the Company because it will provide an incentive for Mr. Strauss to continue
to lead and provide his services to the Company.
Acquisition of Marina
---------------------
In connection with the Company's acquisition of Marina on December
29, 1999, the Company agreed to make certain future payments to the stockholders
of Marina in exchange for their interests in the company. Ronald L. Bergum,
currently an executive officer of the Company, received a note in the amount of
approximately $1.2 million, which has been fully repaid to Mr. Bergum as of
November 15, 2004. Payments made to Mr. Bergum during 2004 under the note were
approximately $252,510. John A. Johnston, currently a director and executive
officer of the Company, received a note in the amount of approximately $1.3
million, which has been fully repaid to Mr. Johnston as of November 15, 2004.
Payments made to Mr. Johnston during 2004 under the note were approximately
$252,510.
In addition, in connection with the Company's acquisition of Marina,
the Company issued restricted shares of its Common Stock to Messrs. Bergum and
Johnston and certain other Marina stockholders as initial consideration in
exchange for their interests in Marina. The former Marina stockholders may
receive additional consideration, consisting of restricted shares of the
Company's Common Stock, periodically until May, 2006, based on the earnout
provisions contained in the merger agreement. Under these earnout provisions,
former Marina stockholders may receive an annual earnout consisting of
restricted shares of Common Stock of the Company based on the profitability of
the acquired business. During 2004, Mr. Bergum received an aggregate of 77,272
restricted shares of Common Stock (with a value of approximately $1,708,903).
During 2004, Mr. Johnston received an aggregate of 85,631 restricted shares of
Common Stock (with a value of approximately $1,893,783).
Acquisition of First Home
-------------------------
On June 30, 2000, the Company acquired First Home. In connection
with the Company's acquisition of First Home, the Company issued restricted
shares of its Common Stock to Thomas J. Fiddler and John A. Manglardi, currently
two of the Company's executive officers, and the other First Home stockholders,
as initial consideration for their interests in First Home. In addition, the
former stockholders of First Home, including
24
Messrs. Fiddler and Manglardi, may receive additional consideration, consisting
of cash and restricted shares of Common Stock, pursuant to the earnout
provisions contained in the merger agreement.
Under the merger agreement's earnout provisions, former stockholders
of First Home may receive two quarterly payments. One of these quarterly
payments, which is automatically paid to the former First Home stockholders on a
pro rata basis based on their former stock ownership in First Home regardless of
the profitability of the acquired business, is equal to an aggregate of $75,000
in restricted shares of Common Stock (or cash, before 2002). The other quarterly
payment to which former First Home stockholders may be entitled is equal to an
aggregate of $150,000, one half of which will be paid in cash and the other half
of which will be paid in restricted shares of Common Stock, and which, if
earned, also will be paid on a pro rata basis. The cash payment of the other
quarterly earnout depends on the acquired business being profitable and having
positive cash income for the applicable quarter.
In addition to the quarterly earnouts, the former First Home
stockholders may be entitled to an annual earnout, consisting of cash and
restricted shares of Common Stock, based on the profitability of the acquired
business. The previous stockholders of First Home may receive such earnouts
during a five-year period ending in May, 2005. During 2004, Mr. Fiddler received
an aggregate of 11,224 restricted shares of Common Stock (with a value of
approximately $361,000). During 2004, Mr. Manglardi received an aggregate of
15,684 restricted shares of Common Stock (with a value of approximately
$474,916). With respect to earnouts paid in cash during 2004, Mr. Fiddler
received aggregate payments of $336,969. During 2004, Mr. Manglardi received
aggregate cash payments of $402,969.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and 10% stockholders to file reports of ownership and reports
of changes in ownership of AHMIC's Common Stock and other equity securities with
the SEC. Directors, executive officers and 10% stockholders are required to
furnish AHMIC with copies of all Section 16(a) forms they file. Based on a
review of the copies of such reports furnished to it, AHMIC believes that,
during 2004, AHMIC's directors, executive officers and 10% stockholders complied
with all Section 16(a) filing requirements applicable to them, except that (i)
Michael A. McManus, Jr., failed to timely file a Form 4 to report the award of
8,493 restricted shares of Common Stock; (ii) Nicholas R. Marfino failed to
timely file a Form 4 to report the award of 10,225 restricted shares of Common
Stock; (iii) Richard S. Loeffler failed to timely file a Form 3 upon becoming an
executive officer of the Company; (iv) Stephen A. Hozie failed to timely file a
Form 4 to report the grant of options to purchase 32,500 shares of Common Stock;
(v) Alan B. Horn failed to timely file a Form 4 to report the grant of options
to purchase 10,000 shares of Common Stock; (vi) Irving J. Thau failed to timely
file a Form 3 upon becoming a director of the Company; (vii) Michael Strauss
failed to timely file a Form 4 to report the grant of options to purchase
162,813 shares of Common Stock; and (viii) Robert Bernstein failed to timely
file a Form 4 to report the grant of options to purchase 10,000 shares of Common
Stock. Each of these reports subsequently has been filed with the SEC.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described above under "Corporate Governance," the members of the
Compensation Committee are Nicholas R. Marfino (Chair), Michael A. McManus, Jr.,
and C. Cathleen Raffaeli. No interlocking relationship exists between the
Company's Board of Directors or Compensation Committee and the board of
directors or compensation committee of any other company, nor has any such
interlocking relationship existed in the past.
25
PROPOSAL II - RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Deloitte & Touche
LLP, independent accountants, to be the Company's independent auditors for the
fiscal year ending December 31, 2005, and recommends to stockholders that they
vote for ratification of that appointment.
Deloitte & Touche LLP served as the Company's independent auditors
for the fiscal years ended December 31, 1999, 2000, 2001, 2002, 2003 and 2004. A
representative of Deloitte & Touche LLP will be present at the Annual Meeting
and will have an opportunity to make a statement and be available to respond to
appropriate questions. The appointment of the Company's independent auditors is
approved annually by the Board of Directors of AHMIC and subsequently submitted
to the stockholders for ratification. The decision of the Board is based on the
recommendation of the Audit Committee, which reviews and approves in advance the
scope of the audit, the types of non-audit services that AHMIC will need and the
estimated fees for the coming year. The Audit Committee also reviews and
approves non-audit services to ensure that these services will not impair the
independence of the independent auditors.
Before making its recommendation to the Board of Directors for
appointment of Deloitte & Touche LLP, the Audit Committee carefully considered
that firm's qualifications as independent auditors for the Company, which
included a review of Deloitte & Touche LLP's performance in prior years, as well
as its reputation for integrity and competence in the fields of accounting and
auditing. The Audit Committee expressed its satisfaction with Deloitte & Touche
LLP in these respects.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF
DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 2005.
26
PROPOSAL III - APPROVAL OF AMENDMENTS TO THE 1999 OMNIBUS STOCK
INCENTIVE PLAN
General
On August 16, 1999, the Company's Board of Directors adopted, and
its sole stockholder at such time approved, the 1999 Omnibus Stock Incentive
Plan (the "Plan"). AHMIC assumed the Plan in connection with the Company's
internal reorganization completed in December, 2003. To date, the Company has
reserved an aggregate of 3,000,000 shares of Common Stock for issuance under the
Plan. The Company's Board of Directors has, subject to stockholder approval,
approved increasing the number of shares authorized for issuance under the Plan
by an additional 1,000,000 shares, for a total of 4,000,000 shares, and approved
increasing the maximum number of shares that are available to be granted as
incentive stock options under the Plan from 3,000,000 to 4,000,000 shares. The
purpose of the Plan is to promote the Company's long-term growth and
profitability by providing individuals with incentives to improve stockholder
value and contribute to the Company's growth and financial success, and by
enabling the Company to attract, retain and reward the best available persons
for positions of substantial responsibility. The Company will consider awards
pursuant to the Plan in light of its overall compensation philosophy and
competitive conditions in the marketplace.
Proposed Amendments to the Plan
Currently, an aggregate of 3,000,000 shares of Common Stock are
subject to the Plan. Shares subject to options that terminate or expire
unexercised or shares of restricted stock that are forfeited will become
available for future grants. During 2004, the Company granted 667,634 stock
options among 39 individuals and 68,909 shares of restricted stock among six
individuals. On April 15, 2005, the Board of Directors approved an increase in
the number of shares of Common Stock available for the grant of awards under the
Plan from 3,000,000 to 4,000,000 shares (subject to adjustment as described
below and provided in the Plan) and an increase in the maximum number of shares
that are available to be granted as incentive stock options under the Plan from
3,000,000 to 4,000,000 shares (subject to adjustment as described below and
provided in the Plan). The proposed increase in the aggregate number of shares
available for the grant of options is intended to enhance the Company's
flexibility in structuring incentive awards by facilitating future stock option
grants and other awards.
Set forth below is the text from Section 3 and Section 4 of the Plan
which contain the amendments being proposed at the Annual Meeting. The proposed
revisions to the Plan are underlined. The amendments are qualified in their
entirety by reference to such text.
The text of Section 3 of the Plan shall be amended to read as
follows:
"3. Shares of Stock Subject to the Plan. The total number of
shares that may be optioned or awarded under the Plan is
4,000,000 shares of Common Stock except that said number of
shares shall be adjusted as provided in Section 13. Any shares
subject to an option which for any reason expires or is
terminated unexercised and any restricted stock which is
forfeited may again be optioned or awarded under the Plan.
Shares subject to the Plan may be either authorized and
unissued shares or issued shares acquired by the Company or
its subsidiaries."
The first two sentences of Section 4 of the Plan shall be
amended to read as follows:
"4. Eligibility. Key salaried employees, including officers
and directors of the Company and its subsidiaries, are
eligible to be granted options and awarded restricted stock
under the Plan and to have their bonuses payable in stock. The
maximum number of shares of Common Stock that shall be
available for the grant of options intended to be incentive
stock options, as defined in Section 422 of the Code, shall be
4,000,000 shares (subject to adjustment as provided in Section
13 hereof). "
27
Description of the Plan
This summary of the material terms of the Plan is qualified in its
entirety by reference to the full text of the Plan, a copy of which is attached
to this Proxy Statement as Exhibit A.
The Plan provides for the grant of non-qualified stock options,
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), stock appreciation rights and
restricted and non-restricted stock awards, each of which may be granted
separately or in tandem with other awards. Participation in the Plan is open to
all of the Company's employees, officers and directors. However, only the
Company's employees or those of its subsidiaries may receive incentive stock
option awards.
As of March 31, 2005, 217,120 shares of restricted stock and
2,340,953 options (net of options that have expired or lapsed) to acquire shares
of Common Stock have been granted. The options were granted at exercise prices
ranging from $4.75 to $34.18 per share, based on the market price of the Common
Stock at the time of the grant. As of April 25, 2005, the last reported sale
price of the Company's Common Stock on the NYSE was $31.41.
The Compensation Committee of the Board of Directors administers the
Plan. With respect to awards granted to directors and executive officers under
the Plan, references in the following discussion to the Compensation Committee
shall mean the entire Board of Directors or a duly constituted committee of the
Board, as appropriate. In doing so, the Compensation Committee has the authority
to:
o determine the eligible persons to whom, and the time or times at
which, awards shall be granted;
o determine the types of awards to be granted;
o determine the number of shares to be covered by or used for
reference purposes for each award;
o impose terms, limitations, restrictions and conditions on any award
as deemed appropriate;
o modify, amend, extend or renew outstanding awards, or accept the
surrender of outstanding awards and substitute new awards (provided,
however, that except in specified circumstances, any modification
that would materially adversely affect any outstanding award shall
not be made without the consent of the grantee);
o accelerate or otherwise change the time in which an award may be
exercised or becomes payable and to waive or accelerate the lapse,
in whole or in part, of any restriction or condition with respect to
such award, including, without limitation, any restriction or
condition with respect to the vesting or exercisability of an award
following termination of any grantee's employment; and
o establish objectives and conditions, if any, for earning awards and
determining whether awards will be paid after the end of a
performance period.
As the Plan's administrator, the Compensation Committee also is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, awards in recognition of unusual or nonrecurring events affecting
the Company, or its financial statements or those of its subsidiaries, or of
changes in applicable laws, regulations or accounting principles, whenever the
administrator determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
Options intended to qualify as incentive stock options under Section
422 of the Code must have an exercise price at least equal to fair market value
on the date of grant. Incentive stock options may not be exercisable more than
10 years from the date the option is granted.
28
The option exercise price may be paid in cash, by tender of shares
of Common Stock, by a combination of cash and shares or by any other means the
administrator of the Plan approves. Stock appreciation rights may be settled in
cash, shares of Common Stock or a combination of both, in the administrator's
discretion.
Shares of restricted stock may be granted to employees or to
directors of the Company. Restricted stock may not be sold, transferred, pledged
or otherwise encumbered until (i) expiration of the "restricted period"
established by the Compensation Committee at the time of grant, or attainment of
performance goals established by the Compensation Committee at the time of
grant, or (ii) if provided by the Compensation Committee at the time of grant,
(A) death of the employee or director, (B) termination of employment or director
status by reason of permanent disability (as determined by the Compensation
Committee), (C) retirement of the employee or director under circumstances
prescribed by the Compensation Committee, or (D) a "Change in Control" of the
Company (as defined below).
The Compensation Committee also may grant to an employee or director
shares of Common Stock in lieu of all or a portion of a cash bonus otherwise
payable under the Company's (or a subsidiary's) compensation practices. Such
Common Stock may be granted subject to such terms as may be prescribed by the
Compensation Committee.
In the event of a Change in Control of the Company, the Compensation
Committee may, to assure fair and equitable treatment of the participants in the
Plan, (i) accelerate restriction periods for purposes of vesting in, or
realizing gain from, any outstanding options or shares of restricted stock
awarded pursuant to the Plan, (ii) offer to purchase any outstanding options or
shares of restricted stock made pursuant to the Plan from the holder for its
equivalent cash value or (iii) make adjustments or modifications to outstanding
options or shares of restricted stock as the Compensation Committee deems
appropriate to maintain and protect the rights and interests of participants in
the Plan following such Change in Control. In no event, however, may any option
be exercised prior to the expiration of six months from the date of grant
(unless otherwise provided in the option agreement pursuant to which such option
was granted) or after ten years from the date of grant. "Change in Control"
means: (a) any person becomes the beneficial owner of securities of the Company
representing more than 20% of the combined voting power of the Company's
outstanding securities; (b) the Company's stockholders approve a merger or
consolidation as a result of which securities representing less than 51% of the
combined voting power of the securities of the surviving or resulting
corporation will be owned by such stockholders; (c) the Company's stockholders
approve an agreement for the sale or disposition of all or substantially all of
the Company's assets (unless the agreement is with a subsidiary of the Company)
or a plan of complete liquidation; (d) persons who were members of the Company's
Board of Directors immediately before the completion of a tender offer or before
a merger, consolidation, or contested election cease to constitute a majority of
the Board of Directors as a result of any such transaction; or (e) a change in
control which would be required to be reported in the Company's Proxy Statement.
The Board of Directors may terminate, amend or modify the Plan or
any portion of it at any time. However, all awards made before the termination
of the Plan will remain in effect until they have been satisfied or terminated
in accordance with the terms of the Plan and those awards. In addition, no
amendment may be made, without the approval of the stockholders of the Company,
which would (i) increase the number of shares reserved for issuance under the
Plan, (ii) decrease the exercise price of an option to less than 100% of the
fair market value of the underlying shares of Common Stock at the time of grant
of the option, (iii) change the class of persons eligible to participate and
receive awards under the Plan, or (iv) extend the term of the Plan.
The Plan was approved on August 16, 1999, by the Company's sole
stockholder at such time, and the Plan became effective on September 23, 1999.
The Plan will terminate upon the earlier of (i) the adoption of a resolution of
the Company's Board of Directors to terminate the plan, (ii) the date all shares
of Common Stock subject to the Plan are issued according to the Plan's
provisions or (iii) ten years from the effective date of the Plan.
29
Because the Plan is discretionary, benefits to be received by
individual awardees are not determinable. The following table shows the number
of options and shares of restricted stock granted to the named executive
officers and groups under the Plan during the fiscal year ended December 31,
2004:
Number of Shares of
Individual or Group Number of Options Restricted Stock
---------------------------------------------------------------- ----------------- ----------------
Michael Strauss 162,813 --
Chairman of the Board, Chief Executive Officer and President
Stephen A. Hozie 32,500 --
Executive Vice President and Chief Financial Officer
Donald Henig 20,000 --
President, Wholesale and Direct-to-Consumer Division
Thomas McDonagh -- --
Executive Vice President and Chief Investment Officer
Richard S. Loeffler 30,000 --
Executive Vice President and Chief Administrative Officer
All current executive officers as a group (8 persons) 296,568 --
All current directors (who are not executive officers) as a group -- 27,034
All employees (who are not executive officers) as a group 371,066 41,875
Certain Federal Income Tax Consequences
The following discussion is based on the Code and applicable
regulations thereunder in effect on the date hereof. Any subsequent changes in
the Code or such regulations may affect the accuracy of this discussion. In
addition, this discussion does not consider any state, local or foreign tax
consequences or any circumstances that are unique to a particular participant
that may affect the accuracy or applicability of this discussion.
Nonqualified Stock Options ("NQSOs")
------------------------------------
The grant of an NQSO will not result in taxable income to the
grantee or an income tax deduction to the Company. The holder of an NQSO
generally recognizes ordinary compensation income at the time the NQSO is
exercised in an amount equal to the excess of the fair market value of the
shares of Common Stock acquired over the exercise price of the option. The
Company is generally entitled to a corresponding deduction at that time for the
amount of compensation income includible in the grantee's income. In the case of
an employee exercising an NQSO, the amount of compensation income is subject to
income tax withholding, and the Compensation Committee may require that an
amount equal to the tax required to be withheld on exercise be remitted to the
Company in addition to the option exercise price. The grantee's basis in the
shares acquired upon exercise of an NQSO is equal to the sum of (i) the exercise
price paid for the Common Stock, plus (ii) the amount included in the grantee's
income upon exercise (this sum will generally be equal to the fair market value
of the shares of Common Stock on the date of exercise of the NQSO). Any further
gain (or loss) upon subsequent disposition of the shares will be capital gain
(or loss) and will be long-term or short-term depending upon the amount of time
the shares were held following exercise.
Incentive Stock Options ("ISOs")
--------------------------------
Neither the grant nor the exercise of an ISO will result in taxable
income to the employee or a deduction to the Company. However, the amount by
which the fair market value of the shares acquired upon exercise exceeds the
exercise price paid will constitute an item of adjustment that must be taken
into account in determining the employee's alternative minimum taxable income.
30
If the employee holds the shares acquired upon exercise of an ISO
until the later of two years after grant of the ISO or one year after exercise,
and if he or she has been an employee of the Company or a subsidiary at all
times from the date of grant of the ISO until the date three-months before the
date of exercise, then any gain (or loss) realized by the employee on a
subsequent disposition of the shares will be long term capital gain (or loss).
However, if the employee disposes of the shares acquired upon exercise of an ISO
during the two-year period following grant of the ISO or the one-year period
following exercise, the employee is generally required to recognize, as ordinary
income for the year in which the disposition occurred, the amount by which the
fair market value of the shares on the date of exercise of the ISO exceeds the
exercise price paid, and the Company will be entitled to a corresponding
compensation deduction for such year. In the case of such a disposition, the
employee's basis in the shares disposed of is equal to the sum of the exercise
price paid and the amount includible in his or her income as compensation.
Stock Appreciation Rights ("SARs")
----------------------------------
The grant of an SAR does not result in taxable income to the grantee
or a deduction by the Company. Upon the exercise of an SAR, the grantee
recognizes compensation income equal to the amount of cash, plus the fair market
value of Common Stock or other property received, and the Company is entitled to
a compensation deduction in a like amount.
Restricted Stock
----------------
The transfer of shares of restricted stock to an employee or
director generally does not result in any taxable income to the recipient or
deduction to the Company. On the date that the restrictions lapse (whether due
to expiration of the restricted period or for any other reason), the recipient
is required to recognize, as compensation income, an amount equal to the fair
market value of the Common Stock on that date (less the amount, if any, paid by
the recipient for the restricted stock). However, a recipient of restricted
stock may elect, within thirty days after the transfer pursuant to Section 83(b)
of the Code, to include in income for the year of transfer an amount equal to
the fair market value of the Common Stock on the date of transfer (less the
amount, if any, paid for the restricted stock). The Company is entitled to a
compensation deduction for the amount includible in the recipient's income for
the year of such inclusion, whether as a result of a Section 83(b) election or
as a result of the lapse of the restrictions. In addition, in the case of a
recipient who is an employee, the amount includible in the recipient's income
and deductible by the Company is subject to income tax withholding. The
Compensation Committee may require or permit the recipient to remit to the
Company an amount, in cash, sufficient for the Company to satisfy its
withholding obligation. Once the restrictions lapse (or a Section 83(b) election
is made), the recipient's basis in the shares of Common Stock received as
restricted stock is equal to the amount includible in the recipient's income by
reason of the lapse of the restrictions (or the making of the Section 83(b)
election), plus the amount, if any, paid by the recipient for the restricted
stock, and the recipient's holding period for the stock begins on the date that
the restrictions lapse (or on the date of transfer to him or her of the
restricted stock if a Section 83(b) election is made).
Limitations on Company Deductions; Parachute Payments
-----------------------------------------------------
Under Section 162(m) of the Code, the Company's deduction for
certain payments of compensation to executive officers named in the "Summary
Compensation Table" is subject to a $1,000,000 limitation. However, certain
"performance based compensation," the material terms of which are disclosed to
and approved by stockholders, is exempt from this limitation.
In addition, under certain circumstances, payments of compensation
(including the value of the acceleration of the exercisability of options or
SARs) in connection with a "change in control" of the Company could be deemed to
be "excess parachute payments" for purposes of Sections 280G and 4999 of the
Code. To the extent that payments are so considered, the Company is denied a
deduction for the amount of the "excess parachute payment," and the recipient is
subject to a nondeductible 20% excise tax upon such amounts.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENTS
TO THE 1999 OMNIBUS STOCK INCENTIVE PLAN.
31
FEES PAID TO INDEPENDENT AUDITORS
Audit and Non-Audit Fees
The following table presents the aggregate fees billed for
professional services rendered by Deloitte & Touche LLP in 2003 and 2004. Other
than as set forth below, no professional services were rendered or fees billed
by Deloitte & Touche LLP during 2003 or 2004.
--------------------------------------------------------
Service 2003 2004
--------------------------------------------------------
Audit Fees (1) ............... $1,134,260 $2,245,145
Audit-Related Fees (2) ....... 102,660 262,900
Tax Fees (3) ................. 500,925 583,500
All Other Fees (4) ........... 0 0
TOTAL ........................ $1,737,845 $3,091,575
--------------------------------------------------------
________________________
(1) Audit fees include fees for audit of the Company's annual consolidated
financial statements; reviews of the Company's quarterly consolidated
financial statements; comfort letters, consents and other services related
to SEC filings; accounting consultation attendant to the audit; the 2004
audit of management's assessment of the Company's internal control over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act
of 2002; and the 2004 audit of the Company's internal control over
financial reporting, as required by Section 404 of the Sarbanes-Oxley Act
of 2002.
(2) Audit-related fees include fees for audits of employee benefit plans; data
verification and agreed upon procedures related to securitizations; and
other agreed upon procedures engagements.
(3) Tax fees include fees for Federal and state tax compliance and planning.
(4) No services were performed by Deloitte & Touche LLP in connection with
financial information systems design and implementation or otherwise.
Pre-Approved Services
---------------------
Prior to engaging Deloitte & Touche LLP to render the above
services, and pursuant to its charter, the Audit Committee approved the
engagement for each of the services and determined that the provision of such
services by the independent auditors was compatible with the maintenance of
Deloitte & Touche LLP's independence in the conduct of its auditing services.
The Audit Committee will use the following procedures for the
pre-approval of all audit and permissible non-audit services provided by the
independent auditors.
Before engagement of the independent auditors for the next year's
audit, the independent auditors will submit a detailed description of services
expected to be rendered during that year within each of four categories of
services to the Audit Committee for approval.
Audit Services include audit work performed on the Company's
financial statements, as well as work that generally only the independent
auditors can reasonably be expected to provide, including statutory audits,
comfort letters, consents and assistance with and review of documents filed with
the SEC.
Audit-Related Services are for assurance and related services that
are traditionally performed by the independent auditors, including due diligence
related to mergers and acquisitions, employee benefit plan audits, and
32
special procedures required to meet certain regulatory requirements and
discussions surrounding the proper application of financial accounting and/or
reporting standards.
Tax Services include all services, except those services
specifically related to the audit of the financial statements, performed by the
independent auditors' tax personnel, including tax analysis; assisting with
coordination of execution of tax related activities, primarily in the area of
corporate development; supporting other tax related regulatory requirements; and
tax compliance and reporting.
Other Services are those associated with services not captured in
the other categories. The Company generally does not request such services from
the independent auditors.
The Audit Committee pre-approves services to be provided by the
independent auditors within each category. The fees are budgeted and the Audit
Committee requires the independent auditors to report actual fees versus the
budget periodically throughout the year by category of service. During the year,
circumstances may arise when it may become necessary to engage the independent
auditors for additional services not contemplated in the original pre-approval
categories. In those instances, the Audit Committee requires specific
pre-approval before engaging the independent auditors.
33
OTHER MATTERS
The Board of Directors does not intend to bring any other business
before the meeting, and as far as is known by the Board, no matters are to be
brought before the Annual Meeting except as disclosed in the Notice of Annual
Meeting of Stockholders. However, as to any other business which may properly
come before the Annual Meeting, it is intended that proxies, in the form
enclosed, will be voted in respect thereof in accordance with the judgment of
the persons voting such proxies.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report on Form 10-K/A (excluding the
exhibits thereto) for the fiscal year ended December 31, 2004, including the
Company's audited financial statements contained therein, was delivered to
stockholders of AHMIC as of the record date, together with this Proxy Statement.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholder who satisfies the requirements of Rule 14a-8 under
the Exchange Act may submit a proposal for inclusion in the Company's proxy
statement in connection with the 2006 Annual Meeting of Stockholders. Such
proposal must be delivered to AHMIC no later than January 13, 2006.
The Company's bylaws have an advance notice procedure for
stockholders wishing to nominate a director or have a stockholder proposal
(other than a stockholder proposal included in the Company's proxy statement
pursuant to Rule 14a-8 under the Exchange Act) considered at the next Annual
Meeting of Stockholders. The advance notice procedure generally requires that a
stockholder proposal for the 2006 Annual Meeting of Stockholders must be
delivered in writing to the Company's General Counsel and Secretary, together
with certain required information relating to such stockholder's stock ownership
and identity, as set forth in the Company's bylaws, not earlier than February
14, 2006, and not later than March 16, 2006. If, however, the 2006 Annual
Meeting of Stockholders is scheduled for a date that is more than 30 days before
(or more than 60 days after) the anniversary date of the 2005 Annual Meeting of
Stockholders, a stockholder's notice of proposal, in order to be timely, must be
so delivered not earlier than the 120th day before the 2006 Annual Meeting of
Stockholders and not later than the close of business on the later of the 90th
day before the 2006 Annual Meeting of Stockholders or the tenth day following
the day on which the Company publicly announces the date of the 2006 Annual
Meeting of Stockholders. Stockholder proposals should be sent to: American Home
Mortgage Investment Corp., 538 Broadhollow Road, Melville, New York 11747,
Attention: General Counsel and Secretary.
By order of the Board of Directors,
/s/ Michael Strauss
MICHAEL STRAUSS
Chairman of the Board, Chief Executive Officer
and President
Dated: May 13, 2005
34
EXHIBIT A
----------
AMERICAN HOME MORTGAGE INVESTMENT CORP.
1999 OMNIBUS STOCK INCENTIVE PLAN
Adopted on August 16, 1999
Effective as of September 23, 1999
As amended through May 21, 2003
1. Purpose. The purpose of the American Home Mortgage Investment Corp.
1999 Omnibus Stock Incentive Plan (the "Plan") is to maintain the ability of
American Home Mortgage Investment Corp. (the "Company") and its subsidiaries to
attract and retain highly qualified and experienced employees, officers and
directors and to give such employees, officers and directors a continued
proprietary interest in the success of the Company and its subsidiaries.
Pursuant to the Plan, such employees, officers and directors will be offered the
opportunity to acquire the Company's Common Stock, par value $.01 per share (the
"Common Stock"), through the grant of options, stock appreciation rights in
tandem with such options, the award of restricted stock under the Plan, bonuses
payable in stock or a combination thereof. Unless the context clearly indicates
otherwise, references herein to "option" or "options" shall include any tandem
stock appreciation right that may be granted in connection with such option or
options in accordance with Section 6(f). As used herein, the term "subsidiary"
shall mean any present or future corporation which is or would be a "subsidiary
corporation" of the Company as the term is defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended from time to time (the "Code").
2. Administration of the Plan. The Plan shall be administered by a
compensation committee (the "Committee") as appointed from time to time by the
Board of Directors of the Company (the "Board"), which Committee shall consist
of not less than two members of the Board. With respect to directors of the
Company, the Plan shall be administered by the entire Board. With respect to any
participants who are officers within the meaning of Rule 16a-1(f) promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")
("Executive Officers"), the Plan shall be administered by the entire Board or a
duly constituted committee of the Board satisfying the requirements of Section
162(m) of the Code. For purposes of awards granted to directors of the Company,
references herein to "Committee" shall mean the entire Board or such duly
constituted committee. A majority of the members of the Committee shall
constitute a quorum. The vote of a majority of a quorum shall constitute action
by the Committee.
In administering the Plan, the Committee may adopt rules and regulations
for carrying out the Plan. The interpretation and decision with regard to any
question arising under the Plan made by the Committee shall be final and
conclusive on all employees and directors of the Company and its subsidiaries
participating or eligible to participate in the Plan. The Committee may consult
with counsel, who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the advice of
counsel. The Committee shall determine the employees and directors to whom, and
the time or times at which, grants or awards shall be made and the number of
shares to be included in the grants or awards. Within the limitations of the
Plan, the number of shares for which options will be granted from time to time
and the periods for which the options will be outstanding will be determined by
the Committee.
Each option or stock or other awards granted pursuant to the Plan shall be
evidenced by an option agreement or award agreement (an "Agreement"). An
Agreement shall not be a precondition to the granting of options or stock or
other awards; however, no person shall have any rights under any option or
A-1
stock or other awards granted under the Plan unless and until the person to whom
such option or stock or other award shall have been granted shall have executed
and delivered to the Company an Agreement. The Committee shall prescribe the
form of all Agreements. A fully executed original of the Agreement shall be
provided to both the Company and the recipient of the grant or award.
3. Shares of Stock Subject to the Plan. The total number of shares that
may be optioned or awarded under the Plan is 3,000,000 shares of Common Stock
except that said number of shares shall be adjusted as provided in Section 13.
Any shares subject to an option which for any reason expires or is terminated
unexercised and any restricted stock which is forfeited may again be optioned or
awarded under the Plan. Shares subject to the Plan may be either authorized and
unissued shares or issued shares acquired by the Company or its subsidiaries.
4. Eligibility. Key salaried employees, including officers, and directors
of the Company and its subsidiaries are eligible to be granted options and
awarded restricted stock under the Plan and to have their bonuses payable in
stock. The maximum number of shares of Common Stock that shall be available for
the grant of options intended to be incentive stock options, as defined in
Section 422 of the Code, shall be 3,000,000 shares (subject to adjustment as
provided in Section 13 hereof). The employees and directors who shall receive
awards or options under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, which may be based
upon information furnished to the Committee by the Company's management, and the
Committee shall determine, in its sole discretion, the number of shares to be
covered by the award or awards and by the option or options granted to each such
employee or director selected. Such key salaried employees and directors who are
selected to participate in the Plan shall be referred to collectively herein as
"Participants." In no event shall any Participant who is a key employee be
granted stock options with respect to more than 150,000 shares of Common Stock
in any calendar year (subject to adjustment as provided in Section 13 hereof).
5. Duration of the Plan. No award or option may be granted under the Plan
more than ten years from the date the Plan is adopted by the Board or the date
the Plan receives shareholder approval, whichever is earlier, but awards or
options theretofore granted may extend beyond that date.
6. Terms and Conditions of Stock Options. All options granted under this
Plan shall be either incentive stock options, as defined in Section 422 of the
Code, or options other than incentive stock options; provided, however, that all
options granted to persons who are not employees of the Company shall be
nonstatutory stock options not intended to qualify as incentive stock options
entitled to special tax treatment under Section 422 of the Code. Each such
option shall be subject to all the applicable provisions of the Plan, including
the following terms and conditions, and to such other terms and conditions not
inconsistent therewith as the Committee shall determine.
(a) The option price per share shall be determined by the Committee.
However, subject to Section 6(k), the option price of incentive stock options
shall not be less than 100% of the Fair Market Value of a share of Common Stock
at the time the option is granted. For purposes of the Plan, the "Fair Market
Value" on any date, means (i) if the Common Stock is listed on a national
securities exchange or quotation system, the closing sales prices on such
exchange or quotation system on such date or, in the absence of reported sales
on such date, the closing sales price on the immediately preceding date on which
sales were reported, (ii) if the Common Stock is not listed on a national
securities exchange or quotation system, the mean between the bid and asked
prices as quoted by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") for such date or (iii) if the Common Stock
is neither listed on a national securities exchange or quotation system nor
quoted by NASDAQ, the fair value as determined by such other method as the
Committee determines in good faith to be reasonable.
A-2
(b) Each option shall be exercisable pursuant to the attainment of such
performance goals and/or during and over such period ending not later than ten
years from the date it was granted, as may be determined by the Committee and
stated in the Agreement. In no event may an option be exercised more than ten
years from the date the option was granted.
(c) Unless otherwise provided in the Agreement, no option shall be
exercisable within six months from the date of the granting of the option. An
option shall not be exercisable with respect to a fractional share of Common
Stock or with respect to the lesser of 50 shares or the full number of shares
then subject to the option. No fractional shares of Common Stock shall be issued
upon the exercise of an option. If a fractional share of Common Stock shall
become subject to an option by reason of a stock dividend or otherwise, the
optionee shall not be entitled to exercise the option with respect to such
fractional share.
(d) Each Agreement shall state whether the option(s) evidenced thereby
will or will not be treated as incentive stock option(s).
(e) Each option may be exercised by giving written notice to the Company
specifying the number of shares to be purchased, which shall be accompanied by
payment in full including, if required by applicable law, taxes, if any.
Payment, except as provided in the Agreement, shall be made as follows:
(i) in United States dollars by certified check or bank draft; or
(ii) by tendering to the Company shares of Common Stock already owned for
at least six months by the person exercising the option, which may include
shares received as the result of a prior exercise of an option, and having a
Fair Market Value on the date on which the option is exercised equal to the cash
exercise price applicable to such option; or
(iii) by a combination of United States dollars and shares of Common Stock
as aforesaid; or
(iv) in accordance with a cashless exercise program established by the
Committee in its sole discretion under which either (A) if so instructed by the
optionee, shares may be issued directly to the optionee's broker or dealer upon
receipt of the purchase price in cash from the broker or dealer, or (B) shares
may be issued by the Company to an optionee's broker or dealer in consideration
of such broker's or dealer's irrevocable commitment to pay to the Company that
portion of the proceeds from the sale of such shares that is equal to the
exercise price of the option(s) relating to such shares; or
(v) in such other manner as permitted by the Committee at the time of
grant or thereafter.
No optionee shall have any rights to dividends or other rights of a
shareholder with respect to shares of Common Stock subject to such optionee's
option until such optionee has given written notice of exercise of such
optionee's option and paid in full for such shares.
(f) Notwithstanding the foregoing, the Committee may, in its sole
discretion, grant to a grantee of an option a right (a "stock appreciation
right") to elect, in the manner described below, in lieu of exercising such
grantee's option for all or a portion of the shares of Common Stock covered by
such option, to relinquish such grantee's option with respect to any or all of
such shares and to receive from the Company a payment having a value equal to
the amount by which (a) the Fair Market Value of a share of Common Stock on the
date of such election, multiplied by the number of shares as to which the
grantee shall have made such election, exceeds (b) the total exercise price for
that number of shares of Common Stock under the terms of such option. A stock
appreciation right shall be exercisable at the time the tandem option is
exercisable, and the "expiration date" for the stock appreciation right shall be
the expiration date for the tandem option. A grantee who makes such an election
shall receive payment in the sole discretion of the Committee (i) in cash equal
to such excess or (ii) in the nearest whole number of
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shares of Common Stock of the Company having an aggregate Fair Market Value,
which is not greater than the cash amount calculated in clause (i) above; or
(iii) a combination of the forms of payment described in clauses (i) and (ii)
above. A stock appreciation right may be exercised only when the amount
described in clause (a) above exceeds the amount described in clause (b) above.
An election to exercise stock appreciation rights shall be deemed to have been
made on the day written notice of such election, addressed to the Committee, is
received at the Company's offices. An option or any portion thereof with respect
to which a grantee has elected to exercise the stock appreciation rights
described above shall be surrendered to the Company and such option shall
thereafter remain exercisable according to its terms only with respect to the
number of shares as to which it would otherwise be exercisable, less the number
of shares with respect to which stock appreciation rights have been exercised.
The grant of a stock appreciation right shall be evidenced by such form of
Agreement as the Committee may prescribe. The Agreement evidencing stock
appreciation rights shall be personal and will provide that the stock
appreciation rights will not be transferable by the grantee otherwise than by
will or the laws of descent and distribution and that they will be exercisable,
during the lifetime of the grantee, only by the grantee.
(g) Except as provided in the Agreement, an option may be exercised only
if at all times during the period beginning with the date of the granting of the
option and ending on the date of such exercise, the grantee was an employee or
director of either the Company or of a subsidiary of the Company or of another
corporation referred to in Section 421(a)(2) of the Code. The Agreement shall
provide whether, and if so, to what extent, an option may be exercised after
termination of continuous employment, but any such exercise shall in no event be
later than the termination date of the option. If the grantee should die, or
become permanently disabled as determined by the Committee in accordance with
the Agreement, at any time when the option, or any portion thereof, shall be
exercisable by such grantee, the option will be exercisable within a period
provided for in the Agreement, by the optionee or person or persons to whom such
optionee's rights under the option shall have passed by will or by the laws of
descent and distribution, but in no event at a date later than the termination
of the option. The Committee may require medical evidence of permanent
disability, including medical examinations by physicians selected by it.
(h) The option by its terms shall be personal and shall not be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution as provided in Section 6(g). During the lifetime of an
optionee, the option shall be exercisable only by the optionee. In the event any
option is exercised by the executors, administrators, heirs or distributees of
the estate of a deceased optionee as provided in Section 6(g), the Company shall
be under no obligation to issue Common Stock thereunder unless and until the
Company is satisfied that the person or persons exercising the option are the
duly appointed legal representative of the deceased optionee's estate or the
proper legatees or distributees thereof.
(i) Notwithstanding any intent to grant incentive stock options, an option
granted will not be considered an incentive stock option to the extent that it
together with any earlier incentive stock options permits the exercise for the
first time in any calendar year of more than $100,000 in Fair Market Value of
Common Stock (determined at the time of grant).
(j) The Committee may, but need not, require such consideration from an
optionee at the time of granting an option as it shall determine, either in lieu
of, or in addition to, the limitations on exercisability provided in Section
6(e).
(k) No incentive stock option shall be granted to an employee who owns or
would own immediately before the grant of such option, directly or indirectly,
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company. This restriction does not apply if, at the time such
incentive stock option is granted, the option price is at least 110% of the Fair
Market Value of one share of Common Stock, as determined in accordance with
Section 6(a), on the date of grant and
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the incentive stock option by its terms is not exercisable after the expiration
of five years from the date of grant.
(l) An option and any Common Stock received upon the exercise of an option
shall be subject to such other transfer restrictions and/or legending
requirements that are specified in the Agreement.
7. Terms and Conditions of Restricted Stock Awards. All awards of
restricted stock under the Plan shall be subject to all the applicable
provisions of the Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith, as the Committee
shall determine.
(a) Awards of restricted stock may be in addition to or in lieu of option
grants.
(b) During a period set by, and/or until the attainment of particular
performance goals based upon criteria established by, the Committee at the time
of each award of restricted stock (the "restriction period") as specified in the
Agreement, the recipient shall not be permitted to sell, transfer, pledge, or
otherwise encumber the shares of restricted stock; except that such shares may
be used, if the Agreement permits, to pay the option price of any option granted
under the Plan, provided an equal number of shares delivered to the recipient
shall carry the same restrictions as the shares so used.
(c) If so provided in the Agreement, shares of restricted stock shall
become free of all restrictions if (i) the recipient dies, (ii) the recipient's
employment terminates by reason of permanent disability, as determined by the
Committee, (iii) the recipient retires under specific circumstances set forth in
the Agreement, or (iv) there is a Change in Control (as defined in Section 9
hereof) of the Company. The Committee may require medical evidence of permanent
disability, including medical examinations by physicians selected by it. If the
Committee determines that any such recipient is not permanently disabled, the
restricted stock held by such recipient shall be forfeited and revert to the
Company.
(d) Unless and to the extent otherwise provided in the Agreement in
accordance with Section 7(c), shares of restricted stock shall be forfeited and
revert to the Company upon the recipient's termination of employment or
directorship during the restriction period, except to the extent the Committee,
in its sole discretion, finds that such forfeiture might not be in the best
interest of the Company and, therefore, waives all or part of the application of
this provision to the restricted stock held by such recipient.
(e) Stock certificates for restricted stock shall be registered in the
name of the recipient but shall be appropriately legended and returned to the
Company by the recipient, together with a stock power, endorsed in blank by the
recipient. The recipient shall be entitled to vote shares of restricted stock
and shall be entitled to all dividends paid thereon, except that dividends paid
in Common Stock or other property shall also be subject to the same
restrictions.
(f) Restricted stock shall become free of the foregoing restrictions upon
expiration of the applicable restriction period, and the Company shall then
deliver Common Stock certificates evidencing such stock to the recipient.
(g) Restricted stock and any Common Stock received upon the expiration of
the restriction period shall be subject to such other transfer restrictions
and/or legending requirements that are specified in the Agreement.
8. Bonuses Payable in Stock. In lieu of cash bonuses otherwise payable
under the Company's or applicable subsidiary's compensation practices to
employees and directors eligible to participate in the Plan, the Committee, in
its sole discretion, may determine that such bonuses shall be payable in Common
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Stock or partly in Common Stock and partly in cash. Such bonuses shall be in
consideration of services previously performed and as an incentive toward future
services and shall consist of shares of Common Stock subject to such terms as
the Committee may determine in its sole discretion. The number of shares of
Common Stock payable in lieu of a bonus otherwise payable shall be determined by
dividing such amount by the Fair Market Value of one share of Common Stock on
the date the bonus is payable.
9. Change in Control.
(a) In the event of a Change in Control of the Company, the Committee may,
in its sole discretion, provide that any of the following applicable actions be
taken as a result, or in anticipation, of any such event to assure fair and
equitable treatment of Participants:
(i) accelerate restriction periods for purposes of vesting in, or
realizing gain from, any outstanding option or shares of restricted stock
awarded pursuant to this Plan;
(ii) offer to purchase any outstanding option or shares of restricted
stock made pursuant to this Plan from the holder for its equivalent cash value,
as determined by the Committee, as of the date of the Change in Control; or
(iii) make adjustments or modifications to outstanding options or with
respect to restricted stock as the Committee deems appropriate to maintain and
protect the rights and interests of the Participants following such Change in
Control.
Any such action approved by the Committee shall be conclusive and binding
on the Company, its subsidiaries and all Participants; provided, however, that
notwithstanding the foregoing, under no circumstances shall the Committee take
or approve any action that would result in an "Excess Parachute Payment," as
defined in Section 280G(b) of the Code.
For purposes hereof, "Change in Control" means a change in control of the
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A under the Exchange Act, whether or not
the Company is subject to the Exchange Act at such time; provided, however, that
without limiting the generality of the foregoing, such a Change in Control shall
in any event be deemed to occur if and when:
(i) any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act), the Company, its subsidiaries and affiliates (as defined in Rule
12b-2 under the Exchange Act), becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 20% of the combined voting power of the Company's
then outstanding securities;
(ii) stockholders approve a merger or consolidation as a result of which
securities representing less than 51% of the combined voting power of the
outstanding voting securities of the surviving or resulting corporation will be
beneficially owned, directly or indirectly, in the aggregate by the former
stockholders of the Company;
(iii) stockholders approve either (A) an agreement for the sale or
disposition of all or substantially all of the Company's assets to an entity
which is not a subsidiary of the Company, or (B) a plan of complete liquidation;
(iv) the persons who were members of the Board immediately before the
completion of a tender offer by any person other than the Company or a
subsidiary or affiliate of the Company, or before a
A-6
merger, consolidation, or contested election, or before any combination of such
transactions, cease to constitute a majority of the Board as a result of such
transaction or transactions; or
(v) a change in control of the Company occurs of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A under the Exchange Act if the Company were subject to the provisions of the
Exchange Act at the time such change in control occurs (whether or not the
Company is subject to the Exchange Act at that time), and at the time such
change in control occurs, the Company is the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing (A) more than 30% of the combined voting power of the
Company's then outstanding securities, and (B) more than the percentage of the
combined voting power of the Company's outstanding securities beneficially
owned, directly or indirectly, at that time by any other person (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act).
(b) In no event, however, may (i) any option be exercised prior to the
expiration of six months from the date of grant (unless otherwise provided for
in the Agreement), or (ii) any option be exercised after ten years from the date
it was granted.
10. Transfer, Leave of Absence. For the purpose of the Plan: (a) a
transfer of an employee from the Company to a subsidiary or affiliate of the
Company, whether or not incorporated, or vice versa, or from one subsidiary or
affiliate of the Company to another, and (b) a leave of absence, duly authorized
in writing by the Company or a subsidiary or affiliate of the Company, shall not
be deemed a termination of employment.
11. Rights of Employees and Directors.
(a) No person shall have any rights or claims under the Plan except in
accordance with the provisions of the Plan and the Agreement.
(b) Nothing contained in the Plan or Agreement shall be deemed to give any
employee or director the right to be retained in the service of the Company or
its subsidiaries.
12. Tax Withholding Obligations.
(a) If required by applicable law, the payment of taxes, upon the exercise
of an option pursuant to Section 6(e) or a stock appreciation right pursuant to
Section 6(f), shall be in cash at the time of exercise or on the applicable tax
date under Section 83 of the Code, if later; provided, however, tax withholding
obligations may be met by the withholding of Common Stock otherwise deliverable
to the optionee pursuant to procedures approved by the Committee; provided,
further, however, the amount of Common Stock so withheld shall not exceed the
minimum required withholding obligation.
(b) If required by applicable law, recipients of restricted stock,
pursuant to Section 7, shall be required to pay taxes to the Company upon the
expiration of restriction periods or such earlier dates as elected pursuant to
Section 83 of the Code; provided, however, tax withholding obligations may be
met by the withholding of Common Stock otherwise deliverable to the recipient
pursuant to procedures approved by the Committee. If tax withholding is required
by applicable law, in no event shall Common Stock be delivered to any awardee
until such awardee has paid to the Company in cash the amount of such tax
required to be withheld by the Company or has elected to have such awardee's
withholding obligations met by the withholding of Common Stock in accordance
with the procedures approved by the Committee or otherwise entered into an
agreement satisfactory to the Company providing for payment of withholding tax.
A-7
(c) the Company shall first withhold from any cash bonus described in
Section 8, an amount of cash sufficient to meet its tax withholding obligations
before the amount of Common Stock paid in accordance with Section 8 is
determined.
13. Changes in Capital; Reorganization.
(a) Upon changes in the outstanding Common Stock by reason of a stock
dividend, stock split, reverse split, subdivision, recapitalization, an
extraordinary dividend payable in cash or property, combination or exchange of
shares, separation, reorganization or liquidation, and the like, the aggregate
number and class of shares available under the Plan as to which stock options
and restricted stock may be awarded, the number and class of shares under (i)
each option and the option price per share and (ii) each award of restricted
stock shall, in each case, be correspondingly adjusted by the Committee, such
adjustments to be made in the case of outstanding options without change in the
total price applicable to such options.
(b) In the event (i) the Company is merged or consolidated with another
entity and the Company is not the surviving corporation, or the Company shall be
the surviving corporation and there shall be any change in the Common Stock of
the Company by reason of such merger or consolidation, or (ii) all or
substantially all of the assets of the Company are acquired by another
corporation, or (iii) there is a reorganization or liquidation of the Company
(each, a "Reorganization Event"), or (iv) the Board shall propose that the
Company enter into a Reorganization Event, then the Board (acting solely through
members of the Board who were members of the Board prior to the occurrence of
the Reorganization Event) may in its discretion take any or all of the following
actions:
(i) by written notice to the holders of stock options or restricted stock
awards, provide that the stock options or restricted stock awards shall be
terminated unless exercised within 30 days (or such longer period as the Board
shall determine in its discretion) after the date of such notice; and
(ii) advance the dates upon which (A) any or all outstanding stock options
and stock appreciation rights shall be exercisable or (B) restrictions
applicable to restricted stock awards shall lapse.
Whenever deemed appropriate by the Board, any action referred to in this
Section 13(b) may be made conditioned upon the consummation of the applicable
Reorganization Event.
(c) Any adjustments or other action pursuant to this Section 13 shall be
made by the Board and the Board's determination as to what adjustments shall be
made or actions taken, and the extent thereof, shall be final and binding.
14. Miscellaneous Provisions.
(a) The Plan Shall be Unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares or the payment of cash upon exercise of
any option or stock appreciation right under the Plan. Proceeds from the sale of
shares of Common Stock pursuant to options granted under this Plan shall
constitute general funds of the Company. The expenses of the Plan shall be borne
by the Company.
(b) It is understood that the Committee may, at any time and from time to
time after the granting of an option or the award of restricted stock or bonuses
payable in Common Stock hereunder, specify such additional terms, conditions and
restrictions with respect to such option or stock as may be deemed necessary or
appropriate to ensure compliance with any and all applicable laws, including,
without limitation, terms, restrictions and conditions for compliance with
federal and state securities laws and methods of withholding or providing for
the payment of required taxes.
A-8
(c) If at any time the Committee shall determine, in its discretion, that
the listing, registration or qualification of shares of Common Stock upon any
national securities exchange or quotation system or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale or
purchase of shares of Common Stock hereunder, no option may be exercised or
restricted stock or stock bonus may be transferred in whole or in part unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.
(d) By accepting any benefit under the Plan, each Participant and each
person claiming under or through such Participant shall be conclusively deemed
to have indicated such Participant's or person's acceptance and ratification,
and consent to, any action taken under the Plan by the Committee, the Company or
the Board.
(e) THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF.
15. Limits of Liability.
(a) Any liability of the Company or any of its subsidiaries to any
participant with respect to any option or award shall be based solely upon
contractual obligations created by the Plan and the Agreement.
(b) None of the Company or any of its subsidiaries, or any member of the
Committee or the Board, or any other person participating in any determination
of any question under the Plan, or in the interpretation, administration or
application of the Plan, shall have any liability to any party for any action
taken or not taken in connection with the Plan, except as may expressly be
provided by statute.
16. Amendments and Termination. The Board may, at any time, amend, alter
or discontinue the Plan; provided, however, no amendment, alteration or
discontinuation shall be made which, without the approval of the stockholders,
would:
(a) except as is provided in Section 13, increase the maximum number of
shares of Common Stock reserved for the purpose of the Plan;
(b) except as is provided in Section 13, decrease the option price of an
option to less than 100% of the Fair Market Value of a share of Common Stock on
the date of the granting of the option;
(c) change the class of persons eligible to receive an award of restricted
stock, options or bonuses payable in Common Stock under the Plan; or
(d) extend the duration of the Plan.
The Committee may amend the terms of any award of restricted stock or
option theretofore granted, retroactively or prospectively, but no such
amendment shall impair the rights of any holder without such holder's written
consent.
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17. Duration. The Plan shall be adopted by the Board as of the date on
which it is approved by a majority of the Company's stockholders, which approval
must occur within the period ending 12 months after the date the Plan is
adopted. The Plan shall terminate upon the earliest of the following dates or
events to occur:
(a) the adoption of a resolution of the Board, terminating the Plan; or
(b) the date all shares of Common Stock subject to the Plan are purchased
according to the Plan's provisions; or
(c) ten years from the date hereof.
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PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
AMERICAN HOME MORTGAGE INVESTMENT CORP.
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 2005
The undersigned hereby appoints Michael Strauss and Stephen A.
Hozie, and each or either of them, with full power of substitution, as his or
her true and lawful agents and proxies (the "Proxies") to represent the
undersigned at the 2005 Annual Meeting of Stockholders of American Home Mortgage
Investment Corp. ("AHMIC") to be held at AHMIC's headquarters, 538 Broadhollow
Road, Melville, New York 11747, at 10:00 A.M. (Eastern Time) on Tuesday, June
14, 2005, and at any adjournments or postponements thereof, and authorizes the
Proxies to vote all shares of AHMIC shown on the other side of this card with
all the powers the undersigned would possess if personally present at the 2005
Annual Meeting of Stockholders.
This proxy, when properly executed, will be voted as directed on the
reverse side. If this proxy is properly executed and no direction is made, this
proxy will be voted "FOR" the election of the named nominees for director, "FOR"
the ratification of the independent auditors, and "FOR" the amendments to the
Company's 1999 Omnibus Stock Incentive Plan and in the discretion of the Proxies
with respect to any other matter that may properly come before the Annual
Meeting or any adjournment or postponement thereof. The undersigned hereby
acknowledges receipt of the proxy statement of AHMIC dated May 13, 2005,
soliciting proxies for the 2005 Annual Meeting.
All previous proxies given by the undersigned to vote at the 2005
Annual Meeting or at any adjournment or postponement thereof are hereby revoked.
(Continued and to be signed on the reverse side)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
AMERICAN HOME MORTGAGE INVESTMENT CORP.
June 14, 2005
\|/ Please Detach and Mail in the Envelope Provided \|/
--------------------------------------------------------------------------------
[X] PLEASE MARK YOUR VOTES AS
IN THIS EXAMPLE USING
DARK INK ONLY
1. ELECTION OF DIRECTORS to
serve for a three-year term
expiring at the 2008 Annual
Meeting of Stockholders, and
in each case, until their
respective successors shall be
duly elected and qualified.
"FOR" ALL NOMINEES LISTED AT WITHHOLD Nominees:
RIGHT (EXCEPT AS MARKED TO THE AUTHORITY TO
CONTRARY BELOW) VOTE FOR ALL Michael Strauss (Class III)
NOMINEES Nicholas R. Marfino (Class III)
LISTED AT Irving J. Thau (Class III)
RIGHT
[__] [__]
TO WITHHOLD AUTHORITY TO VOTE FOR A
PARTICULAR NOMINEE, PRINT THE NAME OF
SUCH NOMINEE ON THE LINE PROVIDED __________________________________
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. RATIFICATION OF DELOITTE & TOUCHE LLP as
the Company's independent auditors for
the year ending December 31, 2005.
FOR AGAINST ABSTAIN
3. AMENDMENTS TO THE 1999 OMNIBUS STOCK [ ] [ ] [ ]
INCENTIVE PLAN.
OTHER MATTERS:
Discretionary authority is hereby
granted with respect to such other
matters as may properly come before
the meeting or any adjournment or
postponement thereof.
SIGNATURE(S)____________________________________ DATE ________________
____________________________________ DATE ________________
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREIN. WHEN SIGNING AS
ATTORNEY, ADMINISTRATOR, EXECUTOR, GUARDIAN OR TRUSTEE, PLEASE GIVE YOUR
FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN BY PRESIDENT OR OTHER
AUTHORIZED OFFICER AND INDICATE TITLE. IF SHARES ARE REGISTERED IN THE
NAMES OF JOINT TENANTS OR TRUSTEES, EACH TENANT OR TRUSTEE IS REQUIRED TO
SIGN.