DEF 14A 1 nt10021286x1_def14a.htm DEF 14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
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))
 Definitive Proxy Statement
 Definitive Additional Materials
 Soliciting Material under §240.14a-12
STARWOOD PROPERTY TRUST, INC.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LETTER FROM OUR
CHAIRMAN AND CEO
March 18, 2021

Dear Shareholders and Stakeholders of Starwood Property Trust:

The directors and officers of Starwood Property Trust, Inc. (the “Company”) join me in extending to you a cordial invitation to attend the Company’s 2021 Annual Meeting of Shareholders (the “Annual Meeting”), which will be conducted via live audio webcast on April 27, 2021 at 2:00 p.m. Eastern time. In light of public health concerns regarding the COVID-19 pandemic, and in order to provide expanded access, improved communication and cost savings for our shareholders and our Company, this year’s Annual Meeting will again be conducted virtually. You will be able to attend the virtual Annual Meeting, vote your shares and submit questions during the meeting via live audio webcast by visiting:

www.virtualshareholdermeeting.com/STWD2021.

To participate, you will need the 16-digit control number included in your proxy materials or on your proxy card. We encourage you to allow ample time for online check-in, which will begin at 1:45 p.m. Eastern time. Please note that there is no in-person meeting for you to attend.

At the Annual Meeting, we are seeking to elect eight directors. The shareholders will also be asked to vote, on an advisory basis, to approve the Company’s executive compensation as disclosed in the accompanying proxy statement and to vote to ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the current calendar year. The accompanying Notice of the 2021 Annual Meeting of Shareholders and proxy statement describes each of these matters in further detail.

Even if you plan to attend the Annual Meeting via the live webcast, please submit your proxy as promptly as possible—by telephone, via the Internet or, if you requested a printed set of the Company’s proxy materials, by completing, signing and returning a proxy card. We encourage you to vote by Internet. Even if you submit a vote prior to the Annual Meeting, you will have an opportunity to change your earlier vote and vote again during the Annual Meeting.
We ask for your voting support for the items presented in this proxy statement and thank you for your investment, and your faith, in us.

Sincerely,

Barry S. Sternlicht
Chairman and Chief Executive Officer


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NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2021
To the Shareholders of Starwood Property Trust, Inc.:
NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Shareholders (the “Annual Meeting”) of Starwood Property Trust, Inc., a Maryland corporation (the “Company”), will be held via live audio webcast on April 27, 2021 at 2:00 p.m., Eastern time, at www.virtualshareholdermeeting.com/STWD2021, to consider and vote on the following matters:
1.
The election of the eight director nominees identified in the accompanying proxy statement, each to serve for a one-year term expiring at our 2022 Annual Meeting of Shareholders, and with each elected director holding office until his or her successor has been elected and qualified or until his or her earlier resignation or removal;
2.
The approval, on an advisory basis, of the Company’s executive compensation as disclosed in the accompanying proxy statement;
3.
The ratification of the appointment by the Audit Committee of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the calendar year ending December 31, 2021; and
4.
The transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
Details concerning those matters to come before the Annual Meeting are set forth in the accompanying Proxy Statement for your review.
The Board of Directors of the Company has fixed March 1, 2021 as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting and any meetings held upon adjournment or postponement thereof. Only the holders of record of the Company’s shares of common stock as of the close of business on March 1, 2021 are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof.
On or about March 18, 2021, we first mailed the Notice of Internet Availability of Proxy Materials and posted our proxy materials on the website referenced in the Notice of Internet Availability of Proxy Materials (www.proxyvote.com). For shareholders who already requested to receive a printed set of proxy materials, we mailed this Proxy Statement, the accompanying proxy card and our Annual Report on Form 10-K for the year ended December 31, 2020. Shareholders of record may vote their shares by telephone, via the Internet, at the Annual Meeting or, if such shareholder received a printed set of proxy materials, by signing, dating and mailing the proxy card provided with the written proxy materials. Instructions regarding all methods of voting are contained in the Notice of Internet Availability of Proxy Materials or, for printed sets of proxy materials, on the proxy card that is included with the Proxy Statement.

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Shareholders are cordially invited to attend the virtual Annual Meeting in person. Your vote is important. Whether or not you plan to attend the Annual Meeting via the live webcast, please authorize proxies to cast your votes today by following the easy instructions in the Notice of Internet Availability of Proxy Materials or, if you requested a printed set of proxy materials, on the proxy card enclosed with the proxy materials.
By Order of the Board of Directors,

Andrew J. Sossen
Secretary
Dated: March 18, 2021
Greenwich, Connecticut
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING IN PERSON OR BY PROXY; PLEASE PROMPTLY VOTE BY TELEPHONE, VIA THE INTERNET OR, IF YOU REQUESTED A PRINTED SET OF THE PROXY MATERIALS, BY MARKING, DATING, SIGNING AND RETURNING A PROXY CARD. IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE CALL INNISFREE M&A INCORPORATED, THE COMPANY’S PROXY SOLICITOR, TOLL-FREE AT 888-750-5834 (BANKS AND BROKERS MAY CALL COLLECT AT 212-750-5833).
Important Notice of Internet Availability of Proxy Materials for the 2021 Annual Meeting to Be Held on April 27, 2021
Our proxy materials relating to the Annual Meeting (notice, proxy statement and annual report) are available at www.proxyvote.com and can also be viewed on our website at www.ir.starwoodpropertytrust.com/proxymaterials.

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PROXY STATEMENT — ANNUAL MEETING OF SHAREHOLDERS
INTRODUCTION 
This Proxy Statement, the accompanying proxy card and the Notice of Annual Meeting are being provided in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Starwood Property Trust, Inc., a Maryland corporation (the “Company,” “we,” “us” or “our”), for use at the Company’s 2021 Annual Meeting of Shareholders (the “Annual Meeting”), to be held via live webcast accessible at www.virtualshareholdermeeting.com/STWD2021 on April 27, 2021 at 2:00 p.m., Eastern time, and any adjournments or postponements thereof. In accordance with the rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), we are making our proxy materials available to our shareholders electronically via the Internet. Accordingly, on or about March 18, 2021, the Company will be mailing a Notice of Internet Availability of Proxy Materials to our shareholders containing instructions on how to access the proxy materials on the Internet, how to vote online or by telephone and, if desired, how to receive a printed set of the proxy materials. For additional details regarding the Annual Meeting and voting generally, please refer to “Information Concerning the Annual Meeting and Voting.”
Matters to Be Voted on at the Annual Meeting
At the Annual Meeting, the following matters will be voted on:
1.
The election of the eight director nominees identified in this Proxy Statement, each to serve for a one-year term expiring at our 2022 Annual Meeting of Shareholders, and with each elected director holding office until his or her successor has been elected and qualified or until his or her earlier resignation or removal;
2.
The approval, on an advisory basis, of the Company’s executive compensation as disclosed in this Proxy Statement;
3.
The ratification of the appointment by the Audit Committee of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the calendar year ending December 31, 2021; and
4.
The transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
2021  Proxy Statement  1

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OUR BOARD 
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board recommends a vote “FOR” our nominees

The Board, elected annually, reflects our agility, teamwork and drive for excellence. The Board also brings expertise from key sectors, including real estate, technology/digital, finance/investment, law and management. The Board has unanimously proposed each of our current directors, Richard D. Bronson, Jeffrey G. Dishner, Camille J. Douglas, Solomon J. Kumin, Fred Perpall, Fred S. Ridley, Barry S. Sternlicht and Strauss Zelnick, as nominees for election as directors of the Company, each to serve for a one-year term expiring at our 2022 Annual Meeting of Shareholders, and with each elected director holding office until his or her successor has been elected and qualified or until his or her earlier resignation or removal.
The Board recommends a vote FOR the election of each of the nominees for director named above. The experience and qualifications of the nominees are described further in the following table and below:
Experience/
Qualifications
Richard Bronson
Jeffrey Dishner
Camille Douglas
Solomon Kumin
Fred Perpall
Fred Ridley
Barry Sternlicht
Strauss Zelnick
Business Leadership

Corporate Governance
Strategy & Operations
REIT/Real Estate
Legal/ Regulatory
Financial/ Accounting
Risk Oversight/ Management
Digital/ Technology
2  STARWOOD PROPERTY TRUST

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BOARD NOMINEES —
WHO WE ARE 
The biographical information below summarizes each director’s age, term, tenure as a director of the Company, board committee memberships, principal occupation, positions with the Company and business experience, including the experiences, qualifications, skills and attributes that led to the Nominating and Corporate Governance Committee’s conclusion that the nominee should stand for election as a director. The information presented below has been confirmed by each nominee for purposes of its inclusion in this Proxy Statement.

 
 
 

  
RICHARD D. BRONSON

Chairman, The Bronson Companies

Lead Independent Director  

Age: 76  

Director since 2009

Committee Membership

• Audit Committee

• Compensation Committee (Chair)

• Nominating and Corporate Governance Committee
EXPERIENCE

• Chairman of The Bronson Companies, LLC, a real estate development, investment and advisory company based in Beverly Hills, California (2000-present)

• Former President of New City Development, an affiliate of Mirage Resorts, Development, where he oversaw the company’s new business initiatives and activities outside of Nevada

• For over 30 years, he has been involved in the development of myriad commercial properties throughout the United States including the creation of more than 100 real estate projects

QUALIFICATIONS

Mr. Bronson’s experience and knowledge in the real estate industry enable him to provide valuable insight into potential investments and the current state of the commercial real estate markets

OTHER  

CURRENT PUBLIC BOARDS

• Starwood Real Estate Income Trust, Inc., a public non-listed real estate investment trust focused on acquiring stabilized, income-oriented commercial real estate and debt secured by commercial real estate in both the U.S. and Europe, in which an affiliate of the Company is a shareholder

• Invitation Homes Inc., a publicly traded REIT focused on the single-family residential business based in Dallas, Texas

FORMER PUBLIC BOARDS

•  Mirage Resorts

• TRI Pointe Group, Inc., a homebuilding and design company based in Irvine, California, in which an affiliate of the Company was a shareholder and which, after a 2015 reorganization, became the successor issuer to TRI Pointe Homes, Inc.

Miscellaneous

• Serves on the Advisory Board of the Neurosurgery Division at UCLA Medical Center in Los Angeles, where he and his wife, Edie Baskin Bronson, were the recipients of the department’s 2018 “Visionary Award”

• Served as a Trustee and Vice President of the International Council of Shopping Centers, an association representing more than 70,000 industry professionals in 100 countries

•  Former member of the Board of Trustees of The Forman School in Litchfield, CT

• Former Chairman of the Board of Trustees of The Archer School for Girls in Los Angeles, CA
2021  Proxy Statement  3

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JEFFREY G. DISHNER

Senior Managing Director and Global Head of Real Estate Acquisitions, Starwood Capital Group

Age: 56

Director since 2009

Committee Membership

• Investment Committee
EXPERIENCE

• Executive Vice President of SPT Management, LLC, our manager and an affiliate of the Company (the “Manager”) (August 2009-present)

• Senior Managing Director and the Global Head of Real Estate Acquisitions of Starwood Capital Group, a privately-held global investment management firm and an affiliate of the Company (March 2009-present); member of the Executive and Investment Committees; joined firm in 1994

• Commercial Mortgage Finance Group of J.P. Morgan & Co., where he focused on whole-loan dispositions and securitizations for various thrift institutions (1993-1994)

•  Member of the Acquisitions Group at JMB Realty Corporation (1987-1991)

QUALIFICATIONS

Mr. Dishner’s experience in the commercial real estate markets enables him to provide important perspectives on the Company’s investments and the current state of the global commercial real estate markets

EDUCATION

• BS, Economics, Wharton School of the University of Pennsylvania  

•  MBA, Amos Tuck School at Dartmouth College
 
 
 

  
CAMILLE J. DOUGLAS

Senior Managing Director, Acquisitions and Capital Markets, LeFrak

Age: 69

Independent Director since 2010

Committee Membership

• Audit Committee

• Nominating and Corporate Governance Committee
EXPERIENCE

• Senior Managing Director, Acquisitions and Capital Markets, at LeFrak, a family owned real estate company which owns, develops and manages properties in the New York, Miami and Los Angeles metropolitan areas, among others (present); was previously a Managing Director and Senior Advisor; joined 2010

• Adjunct Professor in Finance and Economics at Columbia Business School (2005-present)

• Founder and Principal of Mainstreet Capital Partners, a private firm focusing on global real estate financial advisory services and transactions for clients in the United States, the U.K., Brazil and India (1999-2010)

•  Senior Vice President, Finance, at Olympia & York (US) (1982-1994)

•  Vice President at Morgan Stanley & Co (1977-1982)

QUALIFICATIONS

Ms. Douglas’s over 40 years of experience in commercial real estate investment, development and finance enables her to provide important perspectives on the Company’s investments as well as potential financings for the Company’s investments

EDUCATION

•  BA, Smith College

•  MCRP, Urban Planning, Harvard University Graduate School of Design
4  STARWOOD PROPERTY TRUST

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SOLOMON J. KUMIN

Co-President, Leucadia Asset Management

Age: 45

Independent Director since 2014

Committee Membership

• Compensation Committee

• Investment Committee
EXPERIENCE

• Co-President at Leucadia Asset Management, an asset management firm (2020-present), was previously the Chief Strategic Officer; joined 2018  

• Chief Executive Officer of Folger Hill Asset Management, which merged with Schonfeld Strategic Advisors LLC, a hedge fund, in 2018 (2015-2018)

• Chief Operating Officer, S.A.C. Capital Advisors, a hedge fund (2005-2010), joined 2005

• Vice President, Institutional Sales at Sanford C. Bernstein, a subsidiary of AllianceBernstein LP (2001-2005)

•  Started his career at Lazard Asset Management as a Marketing Associate in 1999

QUALIFICATIONS

Mr. Kumin’s experience and knowledge in the asset management industry enable him to provide valuable insight on the Company’s operations, management, capital markets and portfolio allocation.

EDUCATION

• BA, Political Science, The Johns Hopkins University

OTHER

• Member of the Boards of Trustees of The Johns Hopkins University, the Fessenden School in West Newton, MA and the Thoroughbred Owners and Breeders Association

• Member of the Boards of Directors of Team Impact and the US Lacrosse Foundation, for which he is the Chairman

• Member of the Trust Board of Boston Children’s Hospital and the Johns Hopkins Lacrosse Advisory Board
 
 
 

  
  FRED PERPALL

Chief Executive Officer, The Beck Group

Age: 46

Independent Director since 2020

Committee Membership

• Audit Committee

• Investment Committee
EXPERIENCE

• Chief Executive Officer of The Beck Group, one of the world’s largest integrated design-build firms (2013- Present); Has served in various other roles with The Beck Group since 1999

• Alumnus of the 183rd class of Harvard Business School’s Advanced Management Program

•  Former Americas Fellow at The Baker Institute at Rice University

QUALIFICATIONS

Mr. Perpall brings deep leadership and public company experience as well as real estate acumen to the Board.

EDUCATION

• B.S., Architecture, University of Texas at Arlington

• M. Arch., University of Texas at Arlington

OTHER

• Former Chairman of the Dallas Citizens Council

•  Member of the Board of Directors of Triumph Bancorp

•  Member of the Board of Councilors for The Carter Center

• Member of the United States Golf Association Executive Committee

•  Co-Chair of Dallas’ COVID-19 Economic Recovery Task Force
2021  Proxy Statement  5

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FRED S. RIDLEY

Partner, Foley & Lardner LLP

Age: 68

Independent Director since 2018

Committee Membership

• Nominating and Corporate Governance Committee
EXPERIENCE

• Partner at Foley & Lardner LLP (“Foley”), an international law firm (2001-present); former national chair of Foley’s Real Estate Practice, a member and former co-chair of the Hospitality & Leisure Team, a member of the Sports Industry Team and a former member of Foley’s Management Committee

• Partner at Annis Mitchell Cockey Edwards & Roehn, P.A., a law firm that was based in Tampa, FL (1986-2001); Associate (1984-1986)

• Partner at Bucklew, Ramsey & Ridley, P.A., a law firm that was based in Tampa, FL (1982-1984); Associate (1980-1982)

•  Worked at IMG, a sports management firm based in Cleveland, OH (1977-1980)

QUALIFICATIONS

Mr. Ridley has over 35 years of experience and knowledge in the legal and real estate industries enabling him to provide valuable insight into the current state of the commercial real estate markets and potential new investments

EDUCATION

•  BA, Business Administration, University of Florida

•  JD, Stetson University College of Law

OTHER

• Has over 35 years of experience in representing financial institutions and developers of single-family and multifamily real estate projects, including coordination of acquisition and financing issues, environmental and coastal permitting, and negotiations of entitlements with local and state governmental entities

• Recognized by Chambers and Partners for his work in real estate law in its annually published Chambers USA: America’s Leading Business Lawyers each year from 2004 to 2020 and has been selected for inclusion in the 2006 — 2019 Florida Super Lawyers lists

• Recognized by The Legal 500 in the area of real estate and has been selected for inclusion in The Best Lawyers in America© 2006 — 2020
6  STARWOOD PROPERTY TRUST

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BARRY S. STERNLICHT

Chairman of the Board and Chief Executive Officer of the Company

Age: 60

Director since 2009

Committee Membership

• Investment Committee (Chair)

Other Public Boards

Present

• Estée Lauder Companies

• Vesper Healthcare Acquisition Corp.

• Jaws Acquisition Corp.

• Jaws Spitfire Acquisition Corporation

• Jaws Mustang Acquisition Corporation

Former

• Invitation Homes

• Restoration Hardware

• Co-Chairman of Starwood Waypoint Homes, a predecessor company of Invitation Homes

• Chairman of the Board of TRI Pointe Group

• Chairman of the Board of Baccarat S.A., a crystal maker headquartered in Baccarat, France.
EXPERIENCE

• Starwood Property Trust Chairman of the Board and Chief Executive Officer since its inception (2009-present)

• Chairman of the Board and Chief Executive Officer of Starwood Capital Group, a privately-held global investment firm with over $75 billion in assets under management and an affiliate of the Company, since its formation (1991-present)

• Chairman and Chief Executive Officer of Starwood Capital Group Management, LLC, a registered investment advisor and an affiliate of the Company (present)

•  Chairman of the Board of Starwood Real Estate Income Trust, Inc. (2017-present)

• Founder, Chairman and Chief Executive Officer of SH Group, a hotel management company that owns and manages the Baccarat Hotels & Resorts, 1 Hotels and Treehouse brands (present)

• Founder and Chairman of Jaws Acquisition Corp., Jaws Spitfire Acquisition Corporation, and Jaws Mustang Acquisition Corporation, special purpose acquisition companies listed on the New York Stock Exchange

• Founder, Chairman and Chief Executive Officer of Starwood Hotels & Resorts Worldwide, Inc. (1995-2005)

QUALIFICATIONS

Mr. Sternlicht’s extensive experience in both the commercial real estate markets and as a senior executive and director of other publicly traded corporations enables him to provide the Board with leadership and financial expertise as well as insight into the current status of the global financial and real estate markets

EDUCATION

•  BA, magna cum laude, with honors, Brown University

•  MBA, with distinction, Harvard Business School  

OTHER

• Over the past 29 years, Mr. Sternlicht has structured investment transactions with an aggregate asset value in excess of $110 billion

• Board Member of Real Estate Roundtable, the Dreamland Film & Performing Arts Center and the Executive Advisory Board of Americans for the Arts

• Former Chairman of the Board and current Board member of The Robin Hood Foundation

•  Member of the U.S. Olympic and Paralympic Foundation Trustee Council, the World
Presidents Organization and the Urban Land Institute
2021  Proxy Statement  7

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STRAUSS ZELNICK

Chief Executive Officer and Chairman of the Board of Directors of Take-Two Interactive Software

Age: 63

Independent Director since 2009

Committee Membership

• Audit Committee (Chair)

• Nominating and Corporate Governance Committee (Chair)

• Compensation Committee

• Investment Committee
EXPERIENCE

• Take-Two Interactive Software, a video game holding company, Chief Executive Officer (2011-present) and Chairman of the Board of Directors (2007-present)

• Founder of Zelnick Media Capital (“ZMC”), a media enterprise which manages and holds interests in an array of businesses in the United States and Canada (2001-present)

• BMG Entertainment, a music and entertainment company, President and Chief Executive Officer of (1998-2000), President and Chief Executive Officer of North America (1995-1998)

• President and Chief Executive Officer of Crystal Dynamics, a producer and distributor of interactive entertainment software

• President and Chief Operating Officer of 20th Century Fox, where he managed all aspects of Fox Inc.’s worldwide motion picture production and distribution business

•  President and Chief Operating Officer of Vestron Inc.

•  Vice President, International Television, at Columbia Pictures

QUALIFICATIONS

Mr. Zelnick’s experience as a director and senior executive of publicly traded corporations enables him to provide the Company with leadership and financial expertise

EDUCATION

• BA, Wesleyan University

• MBA, Harvard Business School  

• JD, Harvard Law School

OTHER

• Represents ZMC as a director of Education Networks of America, Inc., a private company

• Previously served as Chairman and Chief Executive Officer of Columbia Music Entertainment, Chairman of ITN Networks and Chairman of Direct Holdings Worldwide and OTX

•  CBS Corp., Non-Executive Interim Chairman of the Board (2018-2019)
8  STARWOOD PROPERTY TRUST

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HOW DIRECTORS ARE SELECTED, ELECTED AND EVALUATED
The Nominating and Corporate Governance Committee, as well as the full Board, examines a number of qualifications, attributes and criteria when identifying and selecting candidates to serve as a director. These include a candidate’s experience, skills, expertise, diversity, age, personal and professional integrity, character, business judgment, time availability, dedication, independence from management and the Company, potential conflicts of interest and such other factors that the Nominating and Corporate Governance Committee considers appropriate in the context of the needs of the Board, as discussed in the section of this Proxy Statement entitled “Our Board—How the Board is Structured and Operates—Board and Committee Meetings—Nominating and Corporate Governance Committee.”
The Company’s Amended and Restated Bylaws (the “Bylaws”) provide that a majority of the entire Board may increase or decrease the number of directors, provided that the number of directors shall never be less than the minimum required by the Maryland General Corporation Law nor more than 15. The Board is currently comprised of eight members.
At the Annual Meeting, eight directors will be elected to serve on the Board, each to serve for a one-year term expiring at our 2022 Annual Meeting of Shareholders, and with each elected director holding office until his or her successor has been elected and qualified or until his or her earlier resignation or removal. Each nominee has agreed to serve as a director if elected, and the Board expects that each nominee will be available for election as a director. However, if any nominee becomes unavailable or is unwilling to serve as a director for any reason, the proxies may exercise their discretion to vote your shares for such other person as the Board may nominate.
Election of each nominee for one of the eight director positions requires the affirmative FOR vote of a plurality of all votes cast at the Annual Meeting. This means that the director nominee with the most votes for a particular seat is elected for that seat. However, pursuant to our Corporate Governance Guidelines, any nominee in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election will, within five days following the certification of the shareholder vote, tender his or her written resignation to the Chairman of the Board for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will then review the director’s continuation on the Board and recommend to the Board whether the Board should accept such tendered resignation. The Board, after giving due consideration to the best interests of the Company and its shareholders, will make a decision on whether to accept the tendered resignation and promptly disclose its decision and, if applicable, the reasons for rejecting the tendered resignation.
2021  Proxy Statement  9

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Determination of Director Independence
Pursuant to the Company’s Corporate Governance Guidelines, the Board must be comprised of a majority of directors who qualify as independent directors under the listing standards of the New York Stock Exchange (the “NYSE”) (such directors, “Independent Directors”). The Board reviews annually the relationships that each director has with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). Following such annual review, only those directors who the Board affirmatively determines have no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) will be considered Independent Directors, subject to additional qualifications prescribed under the listing standards of the NYSE or under applicable law. The Board may adopt and disclose categorical standards to assist it in determining director independence. In the event that a director becomes aware of any change in circumstances that may result in such director no longer being considered independent under the listing standards of the NYSE or under applicable law, the director must promptly inform the Chair of the Nominating and Corporate Governance Committee.
The Board considered all relevant facts and circumstances in assessing director independence and has determined that Mr. Bronson, Ms. Douglas, Mr. Kumin, Mr. Perpall, Mr. Ridley and Mr. Zelnick are each Independent Directors. Mr. Sternlicht is not an Independent Director due to his position as Chief Executive Officer of the Company, among other positions. Mr. Dishner is not independent due to his position as Executive Vice President of SPT Management, LLC, our Manager and Senior Management Director and Global Head of Real Estate Acquisitions of Starwood Capital Group, an affiliate of our Manager.
In making these independence determinations, the Board took into account the following relationships:
With respect to Mr. Bronson, the Board took into account the relationships between the Company and each of SREIT and Invitation Homes, in which, with respect to each entity, an affiliate of the Company is a shareholder and of which Mr. Bronson is a director. In addition, Mr. Sternlicht serves as the Chairman of the Board of SREIT and as a former director of Invitation Homes. The Board also took into account Mr. Bronson’s investment in Mustang Sponsor LLC, the special purpose acquisition company sponsor vehicle to Jaws Mustang Acquisition Corp., in which Mr. Bronson owns less than a 1% equity interest. Mr. Sternlicht serves as the Founder and Chairman of Jaws Mustang Acquisition Corp.
With respect to Ms. Douglas, the Board took into account certain investments by Starwood Capital Group, an affiliate of the Company, and LeFrak, for which Ms. Douglas is a Senior Managing Director, Acquisitions and Capital Markets. The investments include (i) a joint venture that developed a hotel in Miami, Florida that was subsequently sold in February 2019, and (ii) a minority investment by LeFrak in a hotel management company that is affiliated with Starwood Capital Group.
With respect to Mr. Ridley, the Board took into account the provision of legal services by Foley & Lardner LLP, a law firm of which Mr. Ridley is a partner, to the Company and commercial mortgage backed securities (“CMBS”) trusts for which a subsidiary of the Company has been appointed to act as the special servicer. For additional details regarding such legal services and legal fees, which were also considered by the Board, see the section of this Proxy Statement entitled “Certain Relationships and Related Transactions—Disclosure Regarding Fred Ridley.” The Board also took into account Mr. Ridley’s investment in Mustang Sponsor LLC, the special purpose acquisition company sponsor vehicle to Jaws Mustang Acquisition Corp., in which Mr. Ridley owns less than a 1% equity interest. Mr. Sternlicht serves as the Founder and Chairman of Jaws Mustang Acquisition Corp.
With respect to Mr. Zelnick, the Board took into account investments of Mr. Sternlicht, our Chairman of the Board and Chief Executive Officer, in three ZMC-sponsored funds, of which Mr. Zelnick is the founder and managing partner, each of which is equal to less than 1% of such funds, as well as Mr. Sternlicht’s service on an advisory board of an affiliate of ZMC.
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Board Evaluation Process
The Nominating and Corporate Governance Committee coordinates an annual self-assessment of the Board’s performance as well as the performance of each committee of the Board. The full Board and each committee discuss the results. The assessment includes a review of any areas in which the Board or management believes the Board can make a better contribution to the Company. The Nominating and Corporate Governance Committee utilizes the results of this self-evaluation process in assessing and determining the characteristics and critical skills required of prospective candidates for election to the Board and making recommendations to the Board with respect to assignments of Board members to various committees.
CORPORATE GOVERNANCE HIGHLIGHTS
We are proud of our strong corporate governance practices, including:
Strong independent leadership of the Board with a Lead Independent Director and six of eight directors being independent
Regular executive sessions of independent directors
Annual election of directors
Resignation policy if any director receives a greater number of votes “withheld” from his or her election than votes “for” his or her election
Shareholder right to call special meetings
Single voting class stock
Shareholders can amend the Bylaws
No poison pill
Annual “say-on-pay” vote
Regular succession planning
The Company maintains a corporate governance section on its website to provide relevant information to shareholders and other interested parties. Corporate governance information available on the Company’s website includes the charters of the Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee of the Board, the Corporate Governance Guidelines of the Company, the Company’s Code of Business Conduct and Ethics and the Company’s Code of Ethics for the Principal Executive Officer and Senior Financial Officers of the Company. See: www.starwoodpropertytrust.com, under the heading “Investor Relations” and the subheading “Corporate Governance.” The information is also available in print, mailed without charge, to any shareholder upon written request to the Company’s Secretary at Starwood Property Trust, Inc., 591 West Putnam Avenue, Greenwich, Connecticut 06830.
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HOW THE BOARD IS STRUCTURED AND OPERATES
Board Leadership Structure
Mr. Sternlicht serves as Chief Executive Officer and as Chairman of the Board. The Board believes that this leadership structure is appropriate and has enabled the Company to attract and retain a strong Chief Executive Officer. This structure results in a leader of the Board with greater substantive knowledge of the Company and the industry in which it operates than would otherwise be the case. The Board believes the Company’s overall corporate governance policies and practices, combined with the strength of the Company’s Independent Directors, minimize any potential conflicts that may result from combining the roles of Chief Executive Officer and Chairman of the Board.
Our Corporate Governance Guidelines contemplate that, if the Chairman of the Board is not an Independent Director, the Independent Directors will designate one of the Independent Directors to serve as Lead Independent Director. Mr. Bronson currently serves as Lead Independent Director. The Lead Independent Director works with the Chief Executive Officer and Chairman of the Board to ensure that the Board discharges its responsibilities, has structures and procedures in place to enable it to function independently of management and clearly understands the respective roles and responsibilities of the Board and management. In addition, the Lead Independent Director’s duties include facilitating communication with the Board and presiding over all meetings of the Board at which the Chairman is not present, including regularly conducted executive sessions of the Independent Directors. It is the role of the Lead Independent Director to review and approve matters such as meeting agendas, meeting schedule sufficiency and, where appropriate, other information provided to the other directors. The Lead Independent Director serves as the liaison between the Chairman and the Independent Directors; however, all directors are encouraged to, and in fact do, consult with the Chairman on each of the above topics. The Lead Independent Director and each of the other directors communicate regularly with the Chairman regarding appropriate agenda topics and other matters related to the Board. The Lead Independent Director has the authority to call meetings of the Independent Directors and is available for consultation and direct communication with interested parties. In performing these duties, the Lead Independent Director consults with the Chairs of the appropriate committees of the Board and solicits their participation in order to avoid diluting the authority or responsibilities of such committee Chairs.
Board and Committee Meetings
The Board has four standing committees: an Audit Committee, a Nominating and Corporate Governance Committee, a Compensation Committee and an Investment Committee. The current charters for each of the Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee are available on the Company’s website, www.starwoodpropertytrust.com, under the heading “Investor Relations” and the subheading “Corporate Governance.” Further, the Company will provide copies of these charters, without charge, to any shareholder upon written request to the Company’s Secretary at Starwood Property Trust, Inc., 591 West Putnam Avenue, Greenwich, Connecticut 06830.
The following descriptions of the functions performed by the committees of the Board are general in nature and are qualified in their entirety by reference to the committees’ respective charters.
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Audit Committee
The Audit Committee, presently comprised of Mr. Zelnick (Chair), Mr. Bronson, Ms. Douglas and Mr. Perpall, is responsible for the selection, evaluation and oversight of the Company’s independent auditors, as well as oversight of the financial reporting process and internal controls of the Company. Each Audit Committee member is “independent” as defined in the NYSE listing standards. The Board has determined that Mr. Zelnick qualifies as an “audit committee financial expert” as defined in the applicable SEC rules, and the Board has determined that Mr. Zelnick has accounting and related financial management expertise and that each member of the Audit Committee is financially literate within the meaning of the listing standards of the NYSE. The Audit Committee met four times during 2020.
The primary purposes of the Audit Committee are to provide assistance to the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions of the Company and its subsidiaries, including, without limitation, (a) assisting the Board’s oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the Company’s independent auditors’ qualifications and independence, and (iv) the performance of the Company’s independent auditors and the Company’s internal audit function, and (b) preparing the report required to be prepared by the Audit Committee pursuant to the rules of the SEC for inclusion in the Company’s annual proxy statement.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee, presently comprised of Mr. Zelnick (Chair), Mr. Bronson, Ms. Douglas and Mr. Ridley, identifies and recommends to the Board individuals qualified to serve as directors of the Company and on committees of the Board, advises the Board with respect to the Board’s composition, procedures and committees, advises the Board with respect to the corporate governance principles applicable to the Company and oversees the evaluation of the Board and the Company’s management. Each Nominating and Corporate Governance Committee member is “independent” as defined in the NYSE listing standards. The Nominating and Corporate Governance Committee met two times during 2020.
The Bylaws provide certain procedures that a shareholder must follow to nominate persons for election to the Board. Director nominations at an annual shareholder meeting must be submitted in writing to the Company’s Secretary at Starwood Property Trust, Inc., 591 West Putnam Avenue, Greenwich, Connecticut 06830. The Secretary must receive the notice of a shareholder’s intention to introduce a nomination at an annual shareholder meeting:
not earlier than the 120th day nor later than the 90th day prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting of shareholders; or
in the event that the date of the mailing of the notice for the annual meeting of shareholders is advanced or delayed by more than 30 days from the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting of shareholders, not earlier than the 120th day prior to the date of mailing of the notice for such annual meeting of shareholders and not later than the close of business on the later of the 90th day prior to the date of mailing of the notice for such annual meeting of shareholders or the tenth day following the day on which disclosure of the date of mailing of the notice for such meeting is first made by the Company.
The deadline for such notice of a shareholder nomination is the same as the deadline for notice of a shareholder proposal submitted outside of Rule 14a-8 with respect to the 2022 annual meeting of shareholders, which is discussed in the section of this Proxy Statement entitled “Shareholder Proposals for the 2022 Annual Meeting.” The Bylaws also provide that the shareholder nomination notice must contain all information relating to such nominee that is required to be disclosed in solicitations of proxies for elections of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serve as director if elected).
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As to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is being made, the notice must include:
the name and address of the shareholder, as they appear on the Company’s stock ledger and, if different, the current name and address of such beneficial owner; and
the class and number of shares of each class of stock of the Company which are owned beneficially and of record by such shareholder and owned beneficially by such beneficial owner.
In considering the qualifications, attributes and criteria for serving as a director of the Company, the Nominating and Corporate Governance Committee examines a candidate’s experience, skills, expertise, diversity attributes, age, personal and professional integrity, character, business judgment, time availability, dedication, independence from management and the Company, potential conflicts of interest and such other relevant factors that the committee considers appropriate in the context of the needs of the Board. The Nominating and Corporate Governance Committee does not have a formal policy regarding diversity, although diversity is taken into account when evaluating director candidates. Twenty-five percent of our Board identifies as diverse in terms of gender identity or ethnicity.
The Nominating and Corporate Governance Committee identifies potential nominees by seeking input from fellow directors, executive officers, professional firms and shareholders and stakeholders. The Nominating and Corporate Governance Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a shareholder. However, in addition to taking into consideration the needs of the Board and the qualifications of the candidate, the committee may also consider the number of shares held by the recommending shareholder and the length of time that such shares have been held by such shareholder.
Once a person has been identified by the Nominating and Corporate Governance Committee as a potential candidate, the Nominating and Corporate Governance Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Nominating and Corporate Governance Committee determines that the potential candidate warrants further consideration, a member of the Board will contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the Nominating and Corporate Governance Committee requests information from the candidate and reviews the person’s accomplishments and qualifications. Mr. Perpall, who is standing for election at the Annual Meeting for the first time, was first recommended as a candidate by a non-employee director.
Compensation Committee
The Compensation Committee, presently comprised of Mr. Bronson (Chair), Mr. Kumin and Mr. Zelnick, oversees the Company’s compensation and employee benefit plans and practices, including its executive compensation plans, and its incentive compensation and equity-based plans. The Compensation Committee also oversees the annual review of the Management Agreement, dated as of August 17, 2009, by and between the Company and the Manager, as the same may be amended from time to time (the “Management Agreement”), and oversees the annual review of the Company’s equity compensation plans.
The primary responsibilities of the Compensation Committee additionally include reviewing and discussing with management the Company’s compensation discussion and analysis (the “CD&A”) to be included in the Company’s annual proxy statement or annual report on Form 10-K filed with the SEC and preparing the Compensation Committee Report as required by the rules of the SEC. The Compensation Committee further oversees the review and approval of general compensation pools and plans for the employees of the Company. Each Compensation Committee member is “independent” as defined in the NYSE listing standards. The Compensation Committee met two times during 2020.
The Compensation Committee has the authority to determine the compensation payable to the Company’s directors and to grant awards under the Company’s equity incentive plans and from time to time may
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solicit recommendations from the Company’s executive officers and/or outside compensation consultants in determining the amount or form of such director compensation or awards. The Compensation Committee also has the authority to review and, where applicable, approve base salary and bonus levels to be paid by an affiliate of the Manager and equity-based compensation to be made to the Company’s named executive officers. In determining the amount and form of such compensation, the Compensation Committee seeks recommendations from time to time from the Company’s Chairman of the Board and Chief Executive Officer and/or outside compensation consultants. The Compensation Committee also oversees risk when it considers granting equity awards to the Manager under the Management Agreement, including with respect to the review of performance-related factors when granting such awards. For example, in evaluating investments and other management strategies, the opportunity to earn incentive compensation based on net income may lead the Manager to place undue emphasis on the maximization of net income at the expense of other criteria, such as the preservation of capital, maintaining sufficient liquidity and/or management of credit risk or market risk, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative. As a result, the Compensation Committee evaluates performance-related factors (such as net income) in conjunction with other key risk exposure factors in making grants to the Manager. The Compensation Committee also has the authority to form subcommittees consisting of at least two directors for any purpose that the Compensation Committee deems appropriate and may delegate to such subcommittees such power and authority as it deems appropriate, except any power or authority required by any law, regulation or NYSE listing standard to be exercised by the Compensation Committee as a whole.
Compensation Committee Interlocks and Insider Participation
There were no compensation committee interlocks required to be disclosed during the calendar year ended December 31, 2020. The directors who were members of the Compensation Committee during the calendar year ended December 31, 2020 were Mr. Bronson, Mr. Kumin and Mr. Zelnick, none of whom are, or have been, officers or employees of the Company and none of whom had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K.
Investment Committee
The Investment Committee, currently comprised of Mr. Sternlicht (Chair), Mr. Dishner, Mr. Kumin, Mr. Perpall and Mr. Zelnick, is responsible for the supervision of our Manager’s compliance with our investment guidelines and conducting periodic reviews of our investment portfolio at least quarterly when such portfolios are also reviewed by the full Board. In addition, with respect to investments made by the Company, (a) any proposed investment valued at $250 million up to $400 million of our equity capital will require the separate review and approval of the Investment Committee of the Board and the Investment Committee of the Manager and (b) any proposed investment valued at $400 million or more will require the approval of the full Board and the Investment Committee of the Manager.
Disclosure Committee
We maintain a disclosure committee (the “Disclosure Committee”) consisting of members of our executive management and senior staff. The purpose of the Disclosure Committee is to oversee our system of disclosure controls and assist and advise our chief executive officer and chief financial officer in making required certifications in SEC reports. The Disclosure Committee was established to bring together on a regular basis representatives from our core business lines and employees involved in the preparation of our financial statements to discuss any issues or matters of which the members are aware that should be considered for disclosure in our public SEC filings and review our draft periodic reports prior to filing them with the SEC. The Disclosure Committee reports to our chief executive officer and, as appropriate, to our Audit Committee. The Disclosure Committee meets quarterly and otherwise as needed. The Disclosure Committee has adopted a written charter to memorialize its purpose and procedures, a copy of which may be found on our website at www.ir.starwoodpropertytrust.com under the “Governance Documents” subtab of the “Corporate Governance” tab.
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Succession Planning
The Board, led by the Compensation Committee with input from the Chief Executive Officer, regularly engages in succession planning for the position of the Chief Executive Officer and other senior officers. Such succession planning involves both short-term and long-term succession planning and talent management.
Board and Role in Risk Oversight
The members of the Nominating and Corporate Governance Committee, the Audit Committee and the Compensation Committee of the Board, including their respective Chairs, are comprised entirely of Independent Directors who serve in oversight roles. Through these committees, the Board is actively involved in the oversight of risk, compliance, possible conflicts of interest and related party transactions, and business results. Members of the Board have access to management and outside advisors.
Oversight of cybersecurity is a joint responsibility of the Board and the Audit Committee. The Board and the Audit Committee each receive periodic updates (at least quarterly) from management on the Company’s cybersecurity program, including measures taken to address cybersecurity risks and significant cyber security incidents. Additionally, the Audit Committee reviews IT risk as part of its quarterly internal oversight of cybersecurity risk. The Company’s cybersecurity program is comprised of various controls and activities performed in order to identify, protect, detect and respond to cybersecurity threats. As part of the cybersecurity program, the Company provides training to employees on an annual basis that include cybersecurity risk management awareness. The Company also maintains a cybersecurity insurance policy.
The Manager is responsible for the day-to-day management of the risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. To do this, the Chairman of the Board meets regularly with management to discuss strategy and risks facing the Company. Senior management attends the Board’s meetings and is available to address any questions or concerns raised by the Board on risk management and any other matters. The Chairman of the Board and non-executive members of the Board work together to provide strong, independent oversight of the Company’s management and affairs through its standing committees and, when necessary, special meetings of Independent Directors.
Executive Sessions of Non-Executive and Independent Directors
Executive sessions of the non-executive directors occur regularly during the course of the year. “Non-executive directors” include all Independent Directors and any other non-management directors. Mr. Bronson, our Lead Independent Director, is responsible for presiding over executive sessions of the non-executive directors. In addition, in the event that the non-executive directors include any director who is not an Independent Director, an executive session of only the Independent Directors will occur at least once a year.
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Number of Meetings of the Board and Attendance in 2020
The Board met twelve times during 2020, including both regularly scheduled and special meetings. Each director attended at least 75% of the meetings of the Board and of the committees of the Board on which such director served during the calendar year ended December 31, 2020. The Company expects each director serving on its Board to regularly attend meetings of the Board and the committees on which such director serves, and to review, prior to meetings, material distributed in advance of such meetings. A director who is unable to attend a meeting is expected to notify the Chairman of the Board or the Chair of the appropriate committee in advance of such meeting. Additionally, the Company expects each director to attend the annual meetings of shareholders, and a director who is unable to attend such a meeting (which it is understood will occur on occasion) is expected to notify the Chairman of the Board in advance of such meeting. Each director then in office attended our 2020 annual meeting of shareholders.
Anti-Hedging Policy
Pursuant to the Company’s Code of Business Conduct and Ethics, directors, employees and their immediate families may not purchase, sell, acquire or dispose of any securities issued by Starwood Capital Group and/or its affiliated companies (including, without limitation, the Company), including any derivative instruments relating to these securities, without prior approval from the Company’s legal counsel.
How to Communicate with the Board
The Board casts a wide net for information and values input from a variety of stakeholders, including shareholders. We have therefore created a variety of means for our shareholders to communicate with us. These include:
writing to us via mail (as described below);
writing to the Board’s dedicated email address (provided below);
attending our annual meeting;
voting your proxies;
calling our Investor Relations Department (203-422-7788);
taking part in our shareholder engagement discussions; and
attending our periodic investor days.
Any interested party may initiate communications with the Board, the Chairman of the Board, the Lead Independent Director, the Independent Directors as a group, any committee of the Board or any individual director or directors by writing to our Secretary at the address set forth above. You should indicate on the outside of the envelope the intended recipient of your communication (i.e., the full Board, the Independent Directors as a group or any individual director or directors). In addition, interested parties may contact the Board, the Chairman of the Board, the Lead Independent Director, the Independent Directors as a group, any committee of the Board or any individual director or directors electronically via email to the Board’s designated email address: BoardofDirectors@stwdreit.com. The Board has instructed our Secretary to review such mail and email correspondence and, at his discretion, not to forward items if he deems them to be of a commercial or frivolous nature or otherwise inappropriate for the recipient’s consideration.
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NON-EMPLOYEE DIRECTOR COMPENSATION 
Executive directors do not receive compensation for serving on the Board. For these purposes, an “executive director” is a member of the Board who is also an employee of Starwood Capital Group or an affiliate thereof, including the Company. For 2020, each non-executive director was entitled to receive a $100,000 cash retainer, payable in quarterly installments in conjunction with quarterly meetings of the Board. In addition, directors serving in the following roles were entitled to receive these additional cash retainers: our Lead Independent Director: $40,000; our Audit Committee Chair: $20,000; each member of the Audit Committee: $10,000; our Compensation Committee Chair: $15,000; each member of the Compensation Committee: $7,500; our Nomination and Corporate Governance Committee Chair: $10,000; each member of the Nominating and Corporate Governance Committee: $2,500; and each member of the Investment Committee: $2,500.
In addition, in 2020 each non-executive director was entitled to an equity award of $130,000, payable in the form of restricted shares of common stock that vest on the one-year anniversary of the date of grant, subject to the director’s continued service on the Board, calculated based on the closing price of a share of common stock on the day preceding the date of grant, under the Starwood Property Trust, Inc. 2017 Equity Plan (the “2017 Equity Plan”); and reimbursement of reasonable travel expenses incurred in connection with attending Board and committee meetings.
The table below summarizes the compensation paid by the Company to its non-executive directors for the calendar year ended December 31, 2020.
Name
Fees Earned
or Paid in
Cash ($)
Stock
Awards ($)(1)(2)
Option
Awards
Non-Equity
Incentive Plan
Compensation
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
All Other
Compensation
Total ($)
Richard D. Bronson
167,500
123,080
290,580
Camille J. Douglas
112,500
123,080
235,580
Solomon J. Kumin
110,000
123,080
233,080
Fred Perpall
56,250
123,080
179,330
Fred S. Ridley
102,500
123,080
225,580
Strauss Zelnick
140,000
123,080
263,080
(1)
On September 29, 2020, each of the non-executive directors was granted an annual equity award equal to 8,151 restricted shares of common stock. The amounts reported in this column for such awards are based on a closing price of $15.10 per share of common stock on the date of grant.
(2)
As of December 31, 2020, each of the non-executive directors held 8,151 unvested restricted stock awards, for a total unvested share count of 48,906.
The Compensation Committee and the Board aim to provide and maintain competitive director compensation levels and minimize the complexity of the Company’s fee structure. For 2021, each non-executive director is contemplated to be entitled to receive the same levels of compensation, on the same terms, for service as a member of the Board and as a member of the committees of the Board as for 2020, except that the annual cash retainer to be paid to non-employee directors is contemplated to be increased to $110,000, payable in quarterly installments in conjunction with quarterly meetings of the Board.
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The Board has adopted a guideline for equity ownership equal to at least three times the value of the annual Board membership cash retainer. When this guideline was implemented in 2011, directors had (i) five years from the time of the implementation of this guideline in 2011, or (ii) five years from the time of their election to the Board, whichever is later, to obtain this level of equity ownership. Restricted stock awards made by the Company in connection with service on the Board and its committees may be counted toward achieving the equity ownership guidelines. As of March 1, 2021, 3,909,798 shares of common stock were available for issuance under the 2017 Equity Plan (determined on a combined basis with the 2017 Manager Equity Plan (defined below)) and 48,906 shares of common stock were subject to unvested awards granted to non-executive directors under the 2017 Equity Plan or its predecessor plan.
We have also entered into an indemnification agreement with each of our directors that provides for indemnification, to the fullest extent permitted by applicable law and subject to certain conditions, with respect to certain expenses and claims that such director incurs or becomes party to by reason of the fact that such director is or was an officer, director, trustee, employee or agent of the Company or any of our subsidiaries or affiliates. Pursuant to such indemnification agreements, our directors may also obtain advancement of certain of such expenses. Such indemnification will be reduced to the extent that such directors are indemnified under the directors’ and officers’ liability insurance maintained by the Company. A copy of the form of such indemnification agreements is an exhibit to the Company’s Annual Report on Form 10-K for the calendar year ended December 31, 2015, as filed with the SEC.
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OUR COMPANY  
We are a leading diversified real estate finance company—and the largest commercial mortgage real estate investment trust in the United States based on market capitalization. We are passionate about our business and want to share a summary of accomplishments of which we are proud. We also believe it is important to provide insight into how we think of ourselves and our larger purpose as a corporate citizen, which supports our ability to create value for our shareholders. We utilize a multi-cylinder investment platform that enables us to collaborate with Starwood Capital Group’s over 4,000 employees across its 16 global offices to find investment opportunities in our core focus areas of real estate and infrastructure. A few highlights regarding our Company are provided below:
STWD
30 Years
We have shares publicly
traded on the NYSE
We have the ability to leverage the platform of Starwood Capital Group, a leading private investment firm with over 30 years of experience and broad operating expertise across virtually every real estate asset class
+$66B
+$18B
Capital deployed since our inception in August 2009
Portfolio across our Commercial and Residential Lending,
Infrastructure Lending, Investing & Servicing and Property
Business Segments
~300
    
    
Employees and ~50 additional people employed by the Manager or other providers that are fully dedicated to the Company’s business and operations
We have the size and expertise to successfully execute large, complex real estate transactions
We are one of the largest commercial mortgage special servicing businesses in the United States
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We also provide solutions to important environmental and social challenges, both through our property and infrastructure investments and via our residential lending portfolio. Here are some of the environmental and societal benefits that are inextricably linked to our core operations:
~1/2
Roughly half of our approximately $2.3 billion owned real estate portfolio is invested in rent-restricted multi-family properties. This makes us one of the largest providers and owners of affordable housing in the U.S.

As of December 2020, we owned approximately 15,057 apartment units that provide housing to approximately 35,000 people, 98% of whom represent households earning around 60% of the median household income for each property’s region.

In every one of our communities, we have preserved all in-place affordability restrictions on our properties. We provide support services to residents such as Soldiers to Scholars program, which offers free rent, utilities, and maintenance to military veterans who are obtaining a college degree and free transportation to medical and retail destinations at seniors-only communities.

Since the purchase of our infrastructure lending platform in 2018, we have financed $820 million of renewable energy assets, including wind, hydro, solar and geothermal projects.

Since 2018, our renewable portfolio generated over 7,900 gigawatt hours of energy, avoiding approximately 7.4M tons of CO2 emissions.

As of year-end 2020, the Company’s Commercial Real Estate Lending portfolio included $4.3 billion of loans where the underlying asset has or is seeking an energy certification. This represents 42% of our Commercial Real Estate Lending portfolio.

Our residential lending business has deployed over $5.3 billion since 2016, advancing financial inclusion by providing mortgages to many high-quality borrowers who might otherwise struggle to secure access to housing credit.

In our owned real estate portfolio, we run several initiatives focused on energy efficiency and cost savings, such as:
a utility tracking program that enables efficient monitoring of water and electric use across portfolios; and
water conservation programs that invest in more efficient kitchen and bathroom fixtures, reducing water usage by approximately 37% on average and realizing average water bill savings of approximately 43%. In 2020, the value of these savings was approximately $15 million.
Through our commercial real estate lending business, we evaluate environmental risks associated with our investments.
• We utilize a Phase I environmental site assessment to identify environmental conditions that may have a material impact on the property being assessed.

• We assess a property’s sustainability and marketability by reviewing characteristics including LEED certification, tenant amenities (such as bike storage and repair facilities), neighborhood walkability ratings and electric car charging stations.

• We conduct periodic property site visits which include physical inspection of
the assets that include environmental considerations.
We are, in other words, a company that is:



Investing in renewable energy projects and integrating environmental due diligence into our lending practices.
Making affordable housing available for thousands of families.
Advancing financial inclusion by helping to make home ownership possible for people who can’t get traditional bank loans.
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SHAREHOLDER ENGAGEMENT
On a regular basis throughout the year, our management team—including our Chairman of the Board—attends investor conferences and holds one-on-one meetings and calls with investors to gain a better understanding of the issues that are important to existing and potential shareholders. We also interact with our shareholders’ stewardship and proxy voting teams and our directors remain open to engagements where valuable and appropriate. Due to the COVID-19 pandemic, our shareholder engagement in 2020 was conducted virtually.
During 2020, our management team held 208 individual and group meetings with shareholders representing approximately 31% of our outstanding shares to discuss, among other topics, our business, financial and operating performance; our capital allocation priorities and our corporate governance and executive compensation. We use the information gathered in these meetings to help inform our governance and decision-making and ensure our interests remain aligned with those of our shareholders.
OUR PEOPLE
We have approximately 300 employees across offices located in Greenwich, New York, Miami Beach, Los Angeles, Charlotte and Stamford. We strive to be an employer of choice, and are therefore highly focused on creating and maintaining best in class recruitment, retention and compensation programs and a culture designed to encourage performance, integrity and well-being.
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OUR EXECUTIVE OFFICERS
The following chart lists the names, ages and positions of the executive officers of the Company. For additional information on Mr. Sternlicht see the section of this Proxy Statement entitled “Our Board—Proposal 1: Election of Directors.”
Name
Age
Position(s)
Barry S. Sternlicht
60
Chairman of the Board and Chief Executive Officer
Jeffrey F. DiModica, CFA
53
President
Andrew J. Sossen
44
Chief Operating Officer, General Counsel, Chief Compliance Officer, Secretary and Executive Vice President
Rina Paniry
47
Chief Financial Officer, Treasurer, Principal Financial Officer and Chief Accounting Officer
 
 
 


JEFFREY F. DIMODICA,
CFA

President of the Company

EXPERIENCE

•  President of the Company since September 2014

•  Managing Director of an affiliate of the Manager since July 2014

•  Director of the Company from its inception in 2009 until July 2014

• Managing Director and the Head of MBS/ABS/CMBS Sales and Strategy, where Mr. DiModica was responsible for the distribution of mortgage-backed securities (“MBS”), asset-backed securities (“ABS”) and CMBS to institutional clients, including banks, hedge funds, insurance companies and money managers, Royal Bank of Scotland (2007-2014); joined 2001

• Sold derivative and MBS products to institutional clients for Merrill Lynch in Boston (1993-2001)

• Chemical Bank, Merchant and Investment Banking Group of the Commercial Real Estate Department (1989-1991)

EDUCATION

•  BS/BA, with a concentration in Finance, Boston University

•  MBA, Amos Tuck School at Dartmouth College

•  Chartered Financial Analyst

OTHER

•  Member of the Young Presidents Organization

• Serves on the Board of Virtual Enterprises International, a non-profit focused on teaching career and entrepreneurial skills to inner city high school students

• Founding President of MitoAction, a non-profit organization that provides education, support and advocacy for patients and families affected by mitochondrial disease
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ANDREW J. SOSSEN

Chief Operating Officer, General Counsel, Chief Compliance Officer, Secretary and Executive Vice President of the Company

EXPERIENCE

• Chief Operating Officer of the Company since July 2011; General Counsel, Chief Compliance Officer, Secretary and Executive Vice President since January 2010

• General Counsel of KKR & Co.’s asset management business and of KKR Financial Holdings LLC, a publicly traded specialty finance company, where Mr. Sossen was a member of senior management and was integrally involved in the policy and strategic decision-making, as well as the day-to-day operations, of the businesses (2006-2009)

• Began career at Simpson Thacher & Bartlett LLP, where Mr. Sossen was a member of the firm’s corporate department, specializing in capital markets and mergers and acquisitions

EDUCATION

•  BA, University of Pennsylvania

•  JD, University of Pennsylvania

OTHER

• Former Trustee of Starwood Waypoint Residential Trust, a publicly traded REIT that is a predecessor company of Invitation Homes
 
 
 


RINA PANIRY

Chief Financial Officer, Treasurer, Principal Financial Officer and Chief Accounting Officer of the Company

EXPERIENCE

• Chief Financial Officer, Treasurer, Principal Financial Officer and Chief Accounting Officer of the Company since May 2014

•  Employee of Starwood Capital Operations, LLC since May 2014

• Chief Financial Officer (2013-2014) of LNR Property LLC, a wholly-owned subsidiary of the Company that was acquired by the Company in 2013; previously Chief Accounting Officer (2006-2013)

• Spent 11 years at Deloitte & Touche in various roles, principally in the real estate industry and in the functional areas of audit and mergers and acquisitions

EDUCATION

•  BAcc/BA in Management Information Systems, Florida International University

•  MAcc, Florida International University

• Certified Public Accountant in Florida
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EMPLOYMENT PRACTICES
We believe that our competitive compensation, outstanding benefits, training opportunities and stimulating work environment help us attract and retain people with exceptional financial and real estate skills. These benefits and opportunities include:
Exceptional Employee Benefits
Medical, prescription, dental and vision insurance for all employees and their families;
401(k) plan with company match incentive;
Subsidized life and disability insurance;
Paid time off for holidays, personal days and vacation;
Gym subsidies, annual health screenings and flu shots;
Matching charitable contributions;
Education assistance programs; and
Commuter subsidy programs.
Employee Retention
and Satisfaction
Diversity and Inclusion
• Regular review and monitoring of employee turnover and reasons behind it;

• Regular review and monitoring of employee demographic data;

• Conduct regular Pulse Surveys to “take the pulse” of a large segment of employees to see how they feel about the Company, their work, our improvement progress and more; and

• Approximately 20% of employees have a tenure of 15+ years.
• Our Employee Handbook includes a discrimination, harassment and retaliation prevention policy.

• Programs to support diverse talent include:

  • Mentoring initiatives;

  • Affinity groups; and

  • Targeted college recruitment programs.

44%
of employees identify as female

49%
of employees identify as racially diverse.
Employee Training, Talent Management
Management and leadership training opportunities, including women in leadership training;
1-on-1 coaching;
Professional designations;
On average, 10-20% of employees participate in some form of management and leadership training programs each year; and
Approximately 25% of job openings are filled internally.
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OUR SHAREHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth the beneficial ownership of our common stock as of March 1, 2021 with respect to:
each of the Company’s directors and director nominees;
each of the Company’s named executive officers; and
all of the Company’s directors, director nominees and executive officers as a group.
Except as indicated in the table below, the business address of each person listed in the table below is the address of our principal executive offices, Starwood Property Trust, Inc., 591 West Putnam Avenue, Greenwich, Connecticut 06830.
Directors and Named Executive Officers
Amount and Nature of
Beneficial Ownership
Percent of
Class (%)
Richard D. Bronson(1)(2)
72,560
*
Jeffrey F. DiModica
967,316
*
Jeffrey G. Dishner
482,158
*
Camille J. Douglas(1)
44,060
*
Solomon J. Kumin(1)
38,268
*
Rina Paniry
265,921
*
Fred S. Ridley(1)
18,040
*
Fred Perpall(1)
8,151
*
Andrew J. Sossen
207,613
*
Barry S. Sternlicht(3)
11,174,610
3.9
Strauss Zelnick(1)(4)
65,560
*
Directors and Executive Officers as a Group (11 persons)
13,344,257
4.7
*
Less than 1%
(1)
Includes 8,151 shares of unvested restricted common stock granted to each of the non-executive directors pursuant to the 2017 Equity Plan.
(2)
Includes 15,000 shares owned by Mr. Bronson’s spouse.
(3)
Includes 253,421 shares owned in a trust of which Mr. Sternlicht is the trustee and 296,342 shares issuable upon the vesting on March 31, 2021 of restricted stock units granted to the Manager.
(4)
Includes 11,800 shares owned in trusts of which Mr. Zelnick is the trustee and 2,600 shares owned by Mr. Zelnick’s spouse.
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The following table sets forth certain information relating to the beneficial ownership of our common stock by each person, entity or group known to the Company to be the beneficial owner of more than five percent of our common stock based on a review of publicly available statements of beneficial ownership filed with the SEC on Schedules 13D and 13G.
Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent of
Class (%)
The Vanguard Group(1)
100 Vanguard Boulevard Malvern,
Pennsylvania 19355
23,455,132
8.24%
BlackRock, Inc.(2)
55 East 52nd Street
New York, New York 10055
18,537,320
6.5%
(1)
Based on information as of December 31, 2020 set forth in Schedule 13G/A filed with the SEC on February 10, 2021 by The Vanguard Group, which has sole voting power with respect to no shares of common stock, shared voting power with respect to 185,559 shares of common stock, sole dispositive power with respect to 23,042,068 shares of common stock and shared dispositive power with respect to 413,064 shares of common stock.
(2)
Based on information as of December 31, 2020 set forth in Schedule 13G/A filed with the SEC on February 1, 2021 by BlackRock, Inc., which has sole voting power with respect to 17,568,668 shares of common stock and sole dispositive power with respect to 18,537,320 shares of common stock. BlackRock, Inc. did not report any shared voting or dispositive power with respect to shares of common stock.
Unless otherwise indicated, all shares set forth in the tables above are owned directly and the indicated person has sole voting and investment power with respect thereto. Unless otherwise indicated, the percentage of beneficial ownership is calculated based on 285,782,701 shares of common stock outstanding as of March 1, 2021. In accordance with SEC rules, each listed person’s beneficial ownership includes:
all shares of our common stock the investor actually owns beneficially or of record;
all shares of our common stock over which the investor has or shares voting or dispositive control (such as in the capacity as a general partner of an investment fund); and
all shares of our common stock the investor has the right to acquire within 60 days.
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HOW OUR EXECUTIVES ARE PAID
EXECUTIVE COMPENSATION 
Compensation Discussion and Analysis
None of the named executive officers of the Company is currently an employee of the Company. We are managed by the Manager, pursuant to the terms of the Management Agreement, and all of our named executive officers are employees of an affiliate of the Manager. Because the Management Agreement provides that the Manager is responsible for managing the Company’s affairs, each of the Company’s Chief Executive Officer and its other current executive officers (other than Ms. Paniry), each of whom is also an executive of Starwood Capital Group or an affiliate thereof, does not receive cash compensation from the Company for serving as one of the Company’s executive officers. Instead, the Company pays the Manager management fees and reimbursement amounts, as described in the section of this Proxy Statement entitled “Certain Relationships and Related Transactions—Management Agreement,” and, at the discretion of the Compensation Committee of the Board, the Company may also grant equity-based awards directly to our executive officers or to the Manager, as described in the section of this Proxy Statement entitled “Certain Relationships and Related Transactions—Grants of Equity Compensation to the Manager.” Mr. Sternlicht, our Chairman of the Board and Chief Executive Officer, does not receive any direct compensation from the Manager or the Company for his services as Chairman of the Board or Chief Executive Officer of the Company, and the Company does not reimburse Starwood Capital Group or any of its affiliates for compensation paid to Mr. Sternlicht. Mr. Sternlicht is, however, the controlling equityholder of the parent of the Manager and, accordingly, has an interest in the fees paid and equity awards granted to the Manager.
Shareholder Engagement
The Board believes in regular interaction with shareholders on a broad variety of topics. We use the information gathered in these meetings to help inform our decision-making and ensure our interests remain aligned with those of our shareholders. For a description of our engagement efforts in 2020, please see “Our Company—Shareholder Engagement.”
Cash Compensation
We have not paid directly, and do not intend to pay directly, any cash compensation to our named executive officers (other than Ms. Paniry). Mr. Sossen, the Company’s Chief Operating Officer, General Counsel, Chief Compliance Officer, Secretary and Executive Vice President has been seconded to the Company by an affiliate of the Manager under the terms of a Secondment Agreement, effective as of January 1, 2014 (the “Sossen Secondment Agreement”), between such affiliate of the Manager and the Company, pursuant to which the Company reimburses such affiliate of the Manager for certain of its expenses incurred in connection with his service in these roles, including annual base salary and annual cash bonus (as well as employee benefit costs and any related employee withholding taxes). Ms. Paniry, the Company’s Chief Financial Officer, Treasurer, Principal Financial Officer and Chief Accounting Officer, has similarly been seconded to the Company by an affiliate of the Manager under the terms of a Secondment Agreement, effective as of January 1, 2014 (the “Paniry Secondment Agreement”), among such affiliate of the Manager, the Company and LNR Property, but the Company and certain of its subsidiaries directly pay the expenses incurred in connection with her service in these roles, including annual base salary and annual cash bonus (as well as employee benefit costs and any related employee withholding taxes). For additional details, see the section of this Proxy Statement entitled “Certain Relationships and Related Transactions—Management Agreement—Reimbursement of Expenses.”
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The annual base salary for 2020 of Mr. DiModica, the Company’s President, was $450,000 and his cash bonus for 2020 was $2,250,000. Mr. Sossen’s annual base salary for 2020 was $400,000 and his cash bonus for 2020 was $1,500,000. Ms. Paniry’s annual base salary for 2020 was $600,000 and her cash bonus for 2020 was $1,325,000.
Messrs. DiModica’s and Sossen’s and Ms. Paniry’s annual base salaries were recommended by the Chairman of the Board and Chief Executive Officer in consultation with the Manager, with the assistance of Meridian, the Compensation Committee’s independent outside compensation consultant, based on a general understanding of compensation practices in our industry and a comparison against our peers, as well as anticipated salary requirements of other candidates who could potentially fill the positions. The Compensation Committee reviewed and approved Messrs. DiModica’s and Sossen’s and Ms. Paniry’s annual base salaries for 2020. Messrs. DiModica’s and Sossen’s and Ms. Paniry’s cash bonuses for 2020 were recommended by the Chairman of the Board and Chief Executive Officer in consultation with the Manager, with the assistance of Meridian, based upon a review of compensation paid by the Compensation Peer Group (as defined below) for comparable positions as well as broader industry compensation levels (including an evaluation of industry survey data provided by Meridian), as described below under “—Independent Compensation Consultant.” The Compensation Committee reviewed and approved Messrs. DiModica’s and Sossen’s and Ms. Paniry’s cash bonuses for 2020. In approving Messrs. DiModica’s and Sossen’s and Ms. Paniry’s cash bonuses, the Compensation Committee targeted amounts between the fiftieth and seventy-fifth percentile of the market data reviewed by the committee, including Compensation Peer Group and survey data.
Approximately 22% of the cash compensation paid to our named executive officers was for fixed pay (i.e., base salary) and approximately 78% was for incentive pay (i.e., cash bonus). The Compensation Committee did not apply any fixed metrics in determining the amount of the applicable cash bonuses to be paid for 2020. Rather, it took into consideration a range of factors, including the performance of the price per share of the common stock, profitability of the Company, operations of the Company, risk management policies and practices of the Company, investment activity of the Company, management of the Company’s capital structure and completed acquisitions and dispositions.
In addition to his regular cash compensation, in 2021, Mr. DiModica received a cash dividend equivalent payment in the amount of $960,000 relating to a restricted stock award that was granted to him on January 11, 2021, but that provided for cash dividend equivalents to be paid to Mr. DiModica in an amount equal to the dividends that would have accrued on such award between January 1, 2020 and the date of grant if the award had instead been granted on January 1, 2020. Similarly, Ms. Paniry received a cash dividend equivalent payment in 2020 in the amount of $87,832, relating to a restricted stock award that was granted to her on July 30, 2018, but that provided for cash dividend equivalents to be paid to Ms. Paniry in an amount equal to the dividends that would have accrued on such award between September 18, 2017 and the date of grant if the award had instead been granted on September 18, 2017, with such payment conditioned on Ms. Paniry's employment through September 18, 2020.
Equity-Based Compensation
The Compensation Committee may grant our named executive officers certain equity-based awards. Where appropriate, these awards are designed to align the interests of our named executive officers with those of our shareholders by allowing our named executive officers to share in the creation of value for our shareholders through capital appreciation and dividends. These equity awards are generally subject to vesting requirements over a number of years, and are designed to promote the retention of management and to achieve strong performance for the Company. These awards provide a further benefit to us by enabling our Manager to attract, motivate and retain talented individuals to serve as our executive officers.
In 2020, the Company granted 161,551, 48,645 and 65,994 restricted shares of common stock to Messrs. DiModica and Sossen and Ms. Paniry, respectively, which, in each case, vest annually in equal amounts over a three-year period, with the first vesting having occurred upon the first anniversary of the
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effective date (March 15, 2021), subject to such grantee’s continued service to the Company, pursuant to the 2017 Equity Plan. In determining each of these equity-based awards for 2020, the Compensation Committee did not apply any fixed metrics. Rather, the Compensation Committee took into consideration a range of factors, including the performance of the common stock, profitability of the Company, operations of the Company, risk management policies and practices of the Company, investment activity of the Company, management of the Company’s capital structure and completed acquisitions and dispositions. Messrs. DiModica’s and Sossen’s and Ms. Paniry’s equity-based awards for 2020 were recommended by our Chairman of the Board and Chief Executive Officer. The Compensation Committee also considered input from Meridian, its independent outside compensation consultant, as described below under “—Independent Compensation Consultant.”
Indemnification
We have also entered into an indemnification agreement with each of our named executive officers that provides for indemnification, to the fullest extent permitted by applicable law and subject to certain conditions, with respect to certain expenses and claims that such named executive officer incurs or becomes party to by reason of the fact that such named executive officer is or was an officer, director, trustee, employee or agent of the Company or any of our subsidiaries or affiliates. Pursuant to such indemnification agreements, our named executive officers may also obtain advancement of certain of such expenses. Such indemnification will be reduced to the extent that such directors are indemnified under the directors’ and officers’ liability insurance maintained by the Company. A copy of the form of such indemnification agreements is an exhibit to the Company’s Annual Report on Form 10-K for the calendar year ended December 31, 2015, as filed with the SEC.
Role of Compensation Committee
The Compensation Committee reviews and, where applicable, approves base salary and target bonus levels as well as any equity-based awards to be made to our named executive officers based on recommendations from the Company’s Chairman of the Board and Chief Executive Officer and outside compensation consultants. Information on the Compensation Committee’s processes and procedures for consideration of executive compensation is set forth in the section of this Proxy Statement entitled “Our Board—How the Board is Structured and Operates—Board and Committee Meetings—Compensation Committee.”
Independent Compensation Consultant
Meridian provides executive compensation consulting services to the Compensation Committee. Among other things, Meridian:
participates in the design of the Company’s executive compensation programs;
provides and reviews market data and advises the Compensation Committee on setting executive compensation levels and the competitiveness and reasonableness of the Company’s executive compensation program;
reviews and advises the Compensation Committee regarding the elements of the Company’s executive compensation program, including as relative to the Company’s peers; and
reviews and advises the Compensation Committee regarding director compensation.
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In 2020, as part of the review of Messrs. DiModica’s and Sossen’s and Ms. Paniry’s compensation, Meridian assisted the Compensation Committee with comparing previous executive compensation levels to (a) the executive compensation levels at eighteen other publicly traded diversified REITs, mortgage REITs and retail REITs that have characteristics that are similar to those of the Company (collectively, the “Compensation Peer Group”) and (b) executive compensation levels in the broader industry (based on general industry survey data provided by Meridian). The companies that comprised the Compensation Peer Group are:
Diversified REITs
Mortgage REITs
Retail REITs
Colony Capital, Inc.
AGNC Investment Corp.
Realty Income Corporation
iStar Inc.
Annaly Capital Management, Inc.
Spirit Realty Capital, Inc.
VEREIT, Inc.
Apollo Commercial Real Estate Finance, Inc.
W. P. Carey Inc.
Blackstone Mortgage Trust, Inc.
Captstead Mortgage Corporation
Chimera Investment Corporation
KKR Real Estate Finance Trust Inc.
Ladder Capital Corp.
MFA Financial, Inc.
New York Mortgage Trust, Inc.
Redwood Trust, Inc.
TPG RE Finance Trust, Inc.
Meridian does not, and did not in the calendar year ended December 31, 2020, provide any other services to the Company or the Manager.
Role of Chief Executive Officer
As noted above, the Compensation Committee is responsible for reviewing and, where applicable, approving compensation for our named executive officers. Our Chairman of the Board and Chief Executive Officer, Mr. Sternlicht, annually reviews the performance of each member of senior management (other than his own performance). Recommendations based on these reviews, including salary adjustments, annual bonuses and equity-based awards, if any, are presented by Mr. Sternlicht to the Compensation Committee. All compensation decisions for 2020 made by the Compensation Committee with respect to the named executive officers (other than Mr. Sternlicht) were made after deliberation with Mr. Sternlicht. As noted elsewhere in this Proxy Statement, Mr. Sternlicht does not receive any direct compensation for his services as Chairman of the Board and Chief Executive Officer of the Company, and the Company does not reimburse Starwood Capital Group or any of its affiliates for compensation paid to Mr. Sternlicht. Mr. Sternlicht is, however, the controlling equityholder of the parent of the Manager and accordingly has an interest in the fees paid and equity awards granted to the Manager.
In addition, at various times during the year at the request of the Compensation Committee, Mr. Sternlicht attends Compensation Committee meetings, or portions of Compensation Committee meetings, to provide the Compensation Committee with information regarding the Company’s operational performance, financial performance or other topics requested by the Compensation Committee to assist the Compensation Committee in making its compensation decisions.
Role of Manager
As noted elsewhere in this Proxy Statement, the Company does not pay any cash compensation to our named executive officers (other than Ms. Paniry). Rather, cash compensation is paid to such named executive officers, other than Mr. Sternlicht, by the Manager or its affiliates. Mr. Sternlicht receives no cash compensation for his
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service as our Chairman of the Board and Chief Executive Officer, although, as the controlling equityholder of the parent of the Manager, he has an interest in the fees paid and equity awards granted to the Manager. The Company reimburses an affiliate of the Manager for Mr. Sossen’s cash compensation. No reimbursement is made for Mr. DiModica’s cash compensation (other than for dividend equivalents relating to equity-based compensation awards that are paid by the Manager or one of its affiliates). In addition, from time to time (but not in 2020), equity awards have been granted to Mr. DiModica by the Manager or its affiliates. No portion of the management fee is allocated to compensation paid by the Manager or its affiliates to our named executive officers.
The Manager provides the day-to-day management of the Company’s operations. This arrangement enables the Company to have access to the Manager’s over 4,000 employees around the globe to provide transaction flow and insight into economic and local market trends. In addition, this arrangement gives the Company access to the Manager’s seasoned executive team, which has an average of 30 years of industry experience. We believe that this arrangement has contributed significantly to our success. The management fee compensates the Manager for these services that it provides to the Company.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the CD&A (as defined below) included in this Proxy Statement with management. Based on that review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement.
Respectfully submitted by the Compensation Committee of the Board.
Richard D. Bronson (Chair)
Solomon J. Kumin
Strauss Zelnick
Pay Ratio Disclosure
As noted elsewhere in this Proxy Statement, Mr. Sternlicht does not receive any direct compensation from the Company or the Manager for his services as Chairman of the Board and Chief Executive Officer of the Company, and the Company does not reimburse Starwood Capital Group or any of its affiliates for compensation paid to Mr. Sternlicht. Because the Company does not pay, or provide reimbursement for, any direct compensation to Mr. Sternlicht, the Company is not able to calculate and provide a ratio of the median employee’s annual total compensation to the total annual compensation of Mr. Sternlicht.
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Summary Compensation Table
The following table provides information regarding compensation earned by each of the Company’s named executive officers for the calendar year ended December 31, 2020, as well as for the calendar years ended December 31, 2019 and 2018. As described in the CD&A included in this Proxy Statement, none of the named executive officers of the Company are employees of the Company and the Company did not directly pay any cash compensation to the named executive officers (other than Ms. Paniry) for or in such calendar years. The cash amounts shown for Mr. Sossen include the amounts of his compensation paid by an affiliate of the Manager for which the Company reimbursed such affiliate of the Manager for his services for the year in question. The Company does not pay or make any reimbursement with respect to Mr. DiModica’s compensation (other than for dividend equivalents paid by the Manager or one of its affiliates on equity-based compensation awards).
Name and Principal Position
Calendar
Year
Salary ($)
Bonus ($)
Stock
Awards
($)(1)
Non-Equity
Incentive Plan
Compensation
($)
All Other
Compensation
($)(3)
Total ($)
Barry S. Sternlicht
Chairman and Chief
Executive Officer(2)
2020
2019
2018
Jeffrey F. DiModica
President
2020
450,000
2,250,000
2,085,623
960,000
5,745,623
2019
450,000
2,550,000
1,554,809
4,554,809
2018
450,000
2,500,000
1,449,405
4,399,405
Andrew J. Sossen
Chief Operating Officer, General Counsel, Chief Compliance Officer, Secretary and Executive Vice President
2020
400,000
1,500,000
501,128
2,401,128
2019
400,000
1,500,000
579,990
2,479,990
2018
400,000
1,425,000
573,209
2,398,209
Rina Paniry
Chief Financial Officer, Treasurer, Principal Financial Officer and
Chief Accounting Officer
2020
600,000
1,325,000
682,378
87,832
2,695,210
2019
600,000
1,300,000
774,991
2,674,991
2018
600,000
1,225,000
1,734,822
3,559,822
(1)
Represents the aggregate grant date fair value of awards of restricted shares of common stock calculated under the Financial Accounting Standard Board’s Accounting Codification Topic 718. Each grant date fair value is calculated using the closing price of our common stock on the date of grant as reported by the NYSE. With respect to 2020, on March 27, 2020, Mr. DiModica received an award of 161,551 restricted shares of common stock. The amount reported in this column is based on a closing price of $12.91 per share of common stock on the date of grant as reported by the NYSE. On March 20, 2020, Mr. Sossen received an award of 48,465 restricted shares of common stock. The amount reported in this column is based on a closing price of $10.34 per share of common stock on the date of grant as reported by the NYSE. On March 20, 2020, Ms. Paniry received an award of 65,994 restricted shares of common stock, and the amount reported in this column with respect to such award is based on a closing price of $10.34 per share of common stock on the date of grant as reported by the NYSE.
(2)
Mr. Sternlicht does not receive any direct compensation from the Manager or the Company for his services as the Chairman of the Board and Chief Executive Officer of the Company, and the Company does not reimburse Starwood Capital Group or any of its affiliates for compensation paid to Mr. Sternlicht. Mr. Sternlicht is, however, the controlling equityholder of the parent of the Manager and accordingly has an interest in the fees paid and equity awards granted to the Manager.
(3)
Mr. DiModica received a cash dividend equivalent payment in 2021 in the amount of $960,000 relating to a restricted stock award that was granted to him on January 11, 2021, but that provided for cash dividend equivalents to be paid to Mr. DiModica in an amount equal to the dividends that would have accrued on such award between January 1, 2020 and the date of grant if the award had instead been granted on January 1, 2020. Ms. Paniry received a cash dividend equivalent payment in 2020 in the amount of $87,832, relating to a restricted stock award that was granted to her on July 30, 2018, but that provided for cash dividend equivalents to be paid to Ms. Paniry in an amount equal to the dividends that would have accrued on such award between September 18, 2017 and the date of grant if the award had instead been granted on September 18, 2017, with such payment conditioned on Ms. Paniry's employment through September 18, 2020.
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Grants of Plan-Based Awards During Calendar Year Ended December 31, 2020
The following table provides information regarding plan-based awards granted to the Company’s named executive officers during the calendar year ended December 31, 2020.
Name
Grant Date
All Other Stock
Awards: Number of
Shares of Stock or Units
(#)
Grant Date Fair Value
of Stock or Unit
Awards ($)
Barry S. Sternlicht
N/A
Jeffrey F. DiModica
Restricted Stock Award
March 27, 2020
161,551(1)
2,085,623
Andrew J. Sossen
Restricted Stock Award
March 20, 2020
48,465(1)
501,128
Rina Paniry
Restricted Stock Award
March 20, 2020
65,994(1)
682,378
(1)
The restricted shares received pursuant to this award vest in annual installments over a three-year period with the first vesting having occurred on March 15, 2021.
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Outstanding Equity Awards At December 31, 2020
The following table provides information regarding outstanding equity awards of the Company’s named executive officers as of December 31, 2020.
Stock Awards
Name
Number of Shares or Units of Stock
That Have Not Vested (#)
Market Value of Shares or Units of Stock
That Have Not Vested ($)(10)
Barry S. Sternlicht
Jeffrey F. DiModica
Restricted Stock Award
23,062(1)
445,097
Restricted Stock Award
45,764(2)
883,245
Restricted Stock Award
161,551(3)
3,117,934
Andrew J. Sossen
Restricted Stock Award
9,069(4)
175,032
Restricted Stock Award
17,124(5)
330,493
Restricted Stock Award
48,465(6)
935,375
Rina Paniry
Restricted Stock Award
10,945(7)
211,239
Restricted Stock Award
22,882(8)
441,623
Restricted Stock Award
65,994(9)
1,273,684
(1)
Reflects a restricted stock award granted to Mr. DiModica, which vests in annual installments over a three-year period that began on March 29, 2018. The remaining 23,062 unvested restricted shares as of December 31, 2020 vested on March 15, 2021.
(2)
Reflects a restricted stock award granted to Mr. DiModica, which vests in annual installments over a three-year period that began on May 28, 2019. The number of restricted shares that had not vested as of December 31, 2020 and the vesting dates for such restricted shares are as follows: 22,881 on March 15, 2021 and 22,883 on March 15, 2022.
(3)
Reflects a restricted stock award granted to Mr. DiModica, which vests in annual installments over a three-year period that began on March 27, 2020. The number of restricted shares that had not vested as of December 31, 2020 and the vesting dates for such restricted shares are as follows: 53,850 on March 15, 2021, 53,850 on March 15, 2022 and 53,851 on March 15, 2023.
(4)
Reflects a restricted stock award granted to Mr. Sossen, which vests in annual installments over a three-year period that began on April 4, 2018. The remaining 9,069 unvested restricted shares as of December 31, 2020 vested on March 15, 2021.
(5)
Reflects a restricted stock award granted to Mr. Sossen which vests in annual installments over a three-year period that began on March 15, 2019. The number of restricted shares that had not vested as of December 31, 2020 and the vesting dates for such restricted shares are as follows: 8,562 on March 15, 2021 and 8,562 on March 15, 2022.
(6)
Reflects a restricted stock award granted to Mr. Sossen which vests in annual installments over a three-year period that began on March 20, 2020. The number of restricted shares that had not vested as of December 31, 2020 and the vesting dates for such restricted shares are as follows: 16,155 on March 15, 2021, 16,155 on March 15, 2022 and 16,155 on March 15, 2023.
(7)
Reflects a restricted stock award granted to Ms. Paniry which vests in annual installments over a three-year period that began on March 27, 2018. The remaining 10,945 unvested restricted shares as of December 31, 2020 vested on March 15, 2021.
(8)
Reflects a restricted stock award granted to Ms. Paniry which vests in annual installments over a three-year period that began on March 15, 2019. The number of restricted shares that had not vested as of December 31, 2020 and the vesting dates for such restricted shares are as follows: 11,440 on March 15, 2021 and 11,442 on March 15, 2022.
(9)
Reflects a restricted stock award granted to Ms. Paniry which vests in annual installments over a three-year period that began on March 20, 2020. The number of restricted shares that had not vested as of December 31, 2020 and the vesting dates for such restricted shares are as follows: 21,998 on March 15, 2021, 21,998 on March 15, 2022 and 21,998 on March 15, 2023.
(10)
The amount reported in this column is based on a closing price of $19.30 per share of common stock on December 31, 2020.
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Stock Vested in Calendar Year Ended December 31, 2020
The following table provides information for each named executive officer with respect to the vesting of stock awards during the calendar year ended December 31, 2020 and the value realized upon such vesting.
Name
Number of Shares
Acquired on Vesting (#)(1)
Value Realized
on Vesting ($)(2)
Barry S. Sternlicht
Jeffrey F. DiModica
64,679
1,161,635
Andrew J. Sossen
26,624
478,167
Rina Paniry
77,873
1,313,054
(1)
Represents the vesting of restricted stock awards under the 2017 Equity Plan or its predecessor plan.
(2)
Value realized on vesting of restricted stock awards is the aggregate fair market value on the date(s) of vesting. Fair market value is based on the closing price of the Company’s common stock as reported by the NYSE.
Potential Post-Employment Payments and Payments upon Change in Control
The Company does not have employment or severance agreements with any of its named executive officers and is not obligated to make any payments to any of its named executive officers upon termination of employment or change in control of the Company. In the event that any named executive officer’s service to the Company is terminated either by the Company for Cause or by such named executive officer for any reason, any and all unvested awards of restricted shares of common stock and restricted stock units that the Company has granted to such named executive officer under the 2017 Equity Plan or its predecessor plan will be immediately forfeited by the named executive officer.
However, any and all unvested awards of restricted shares of common stock and restricted stock units that the Company has granted to a named executive officer under the 2017 Equity Plan or its predecessor plan will vest immediately upon (a) the termination of such named executive officer’s service to the Company by the Company without Cause, (b) in the case of Ms. Paniry, the termination of such named executive officer’s service to the Company due to death or disability or (c) a Change in Control prior to the termination of such named executive officer’s service to the Company. Assuming, for the sake of analysis, that a termination of service without Cause or a Change in Control took place on the last business day of the calendar year ended December 31, 2020, the value of the vested awards of restricted shares of common stock and restricted stock units of each named executive officer would be the same as the respective value set forth in the third column, “Market Value of Shares or Units of Stock That Have Not Vested,” of the table presented in the section of this Proxy Statement entitled “—Outstanding Equity Awards at December 31, 2020.” Under both the 2017 Equity Plan and its predecessor plan: (i) “Cause” generally means (A) any actions or omissions by the named executive officer representing a fraud or willful misconduct against the Company or an affiliate of the Company, (B) any commission by the named executive officer of any felony, (C) any violation by the named executive officer of any material written policy of the Company, (D) any failure by the named executive officer to perform or satisfy any of his or her duties or obligations to the Company or any affiliate of the Company or any grossly negligent or reckless disregard of any such duties or obligations or (E) any failure by the named executive officer to devote his or her full working-time and attention (other than due to physical or mental incapacity or customary and reasonable time off for vacations and holidays) to the performance of his or her duties to the Company and any affiliates of the Company, provided, however, that upon written notice from the Company of any matter in the foregoing clauses (D) or (E), the named executive officer will be given 15 days from the delivery of such notice to cure such matter to the satisfaction of the Company; and (ii) “Change in Control” generally means a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, provided, however, that a transaction or series of
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transactions effected with the Manager and/or any affiliates of the Manager through the acquisition of common stock or other securities of the Company (regardless of the form of such transaction or series of transactions) or changes to the membership of the Board will not constitute a Change in Control.
We have not included tables for pension benefits or nonqualified deferred compensation because, due to the limited nature of our compensation program, we have nothing to report with respect to these items.
Equity Compensation Plan Information
The following table provides information regarding the number of shares of our common stock that may be issued under the Company’s equity compensation plans as of December 31, 2020.
(a)
(b)
(c)
Plan Category
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
Equity compensation plans approved by security holders
2,286,896
N/A
4,709,531
Equity compensation plans not approved by security holders
Total
2,286,896
N/A
4,709,531
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PROPOSAL 2:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to Section 14A of the Exchange Act, we are providing shareholders with an opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement. The advisory vote on executive compensation described in this proposal is commonly referred to as a “say-on-pay vote.” In accordance with the preference expressed by our shareholders, we hold this advisory vote to approve the compensation of our named executive officers on an annual basis.
As described in the CD&A included in this Proxy Statement, none of the named executive officers of the Company are employees of the Company and the Company has not directly paid, and does not intend to directly pay, any cash compensation to the named executive officers (other than Ms. Paniry). However, we are charged by an affiliate of the Manager for certain of its expenses incurred in employing certain of our named executive officers. Additionally, from time to time we may grant to our named executive officers equity-based awards pursuant to the 2017 Equity Plan, which we believe serve to align the interests of our named executive officers with the interests of our shareholders in receiving attractive risk-adjusted dividends and growth.
This proposal gives our shareholders the opportunity to express their views on the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. For the reasons discussed above, we are asking our shareholders to indicate their support for our named executive officer compensation by voting FOR the following resolution at the Annual Meeting:
“RESOLVED, that Starwood Property Trust, Inc.’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Proxy Statement pursuant to the compensation disclosure rules of the U.S. Securities and Exchange Commission, which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures.”
The say-on-pay vote is an advisory vote and, therefore, it will not bind the Company or the Board. However, the Board and the Compensation Committee will consider the voting results as appropriate when making decisions regarding executive compensation.
Recommendation of the Board
The Board recommends a vote FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement.

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OUR AUDITORS
PROPOSAL 3:
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Proposed Independent Registered Public Accounting Firm
Deloitte & Touche LLP, independent certified public accountants, served as the independent registered public accounting firm of the Company and its subsidiaries for the calendar year ended December 31, 2020. The Audit Committee has appointed Deloitte & Touche LLP to be the Company’s independent registered public accounting firm for the calendar year ending December 31, 2021 and has further directed that the appointment of the independent registered public accounting firm be submitted for ratification by the shareholders at the Annual Meeting.
Although there is no requirement that Deloitte & Touche LLP’s appointment be terminated if the ratification fails, the Audit Committee will consider, as appropriate, the appointment of other independent registered public accounting firms if the shareholders choose not to ratify the appointment of Deloitte & Touche LLP. The Audit Committee may terminate the appointment of Deloitte & Touche LLP as our independent registered public accounting firm without the approval of the shareholders whenever the Audit Committee deems such termination appropriate.
Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting. The representatives of Deloitte & Touche LLP will be given the opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions from shareholders.
Recommendation of the Board and its Audit Committee
The Board and its Audit Committee recommend a vote FOR the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the calendar year ending December 31, 2021.

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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Deloitte & Touche LLP to serve as the Company’s independent registered public accounting firm for the calendar year ending December 31, 2021. The Audit Committee considered the non-audit services provided by Deloitte & Touche LLP and determined that the provision of such services was compatible with maintaining Deloitte & Touche LLP’s independence.
The following table presents fees for professional audit services rendered by Deloitte & Touche LLP with respect to the Company’s annual financial statements for the calendar years ended December 31, 2020 and 2019 and fees billed for other services rendered by Deloitte & Touche LLP during those periods.
2020 ($)
2019 ($)
Audit Fees(1)
2,445,000
2,505,500
Audit Related Fees(2)
3,790
3,790
Tax Fees(3)
48,850
47,750
All Other Fees(4)
10,000
Total Fees
2,507,640
2,557,040
(1)
Audit Fees primarily represent, for the calendar years ended December 31, 2020 and 2019, fees for the audits and quarterly reviews of the consolidated financial statements filed with the SEC in annual reports on Form 10-K and quarterly reports on Form 10-Q, as well as work generally only the independent registered public accounting firm can be reasonably expected to provide, such as statutory audits and issuances of consent and comfort letters included in documents filed with the SEC.
(2)
Audit Related Fees primarily represent, for the calendar years ended December 31, 2020 and 2019, fees for the Company’s subscription to Deloitte & Touche LLP’s online accounting and reporting technical library.
(3)
Tax Fees primarily represent, for the calendar years ended December 31, 2020 and 2019, fees for professional services for tax compliance, tax advice and tax planning.
(4)
All Other Fees primarily represent, for the calendar years ended December 31, 2020 and 2019, fees in connection with due diligence, agreed upon procedures and transactions completed or contemplated during those years.
Pre-Approval Policies for Services of Independent Registered Public Accounting Firm
In accordance with Audit Committee policy and requirements of law, the Audit Committee pre-approves all services to be provided by the independent registered public accounting firm, including all audit services, audit-related services, tax services and other services. In some cases, the full Audit Committee provides pre-approval of certain services for up to a year, such as those related to a particular defined task or scope of work, subject to a specific budget. The Audit Committee has authorized its Chair to pre-approve additional services and, if the Chair of the Audit Committee pre-approves a service pursuant to this authority, he or she reviews the matter with the full Audit Committee at its next regularly scheduled meeting. To avoid potential conflicts of interest, the law prohibits a publicly traded company from obtaining certain non-audit services from its independent registered public accounting firm. The Company obtains these services from other firms as needed.
For the calendar years ended December 31, 2020 and 2019, all services provided by Deloitte & Touche LLP were pre-approved by the Audit Committee pursuant to such policies.
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Report of the Audit Committee
The Board has appointed an Audit Committee consisting of four directors. All of the members of the Audit Committee are “independent” as defined in the NYSE listing standards.
The Audit Committee’s job is one of oversight, as set forth in its charter. It is not the duty of the Audit Committee to prepare the Company’s financial statements, to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles (“GAAP”). The independent registered public accounting firm engaged by the Company is responsible for auditing the financial statements and expressing an opinion as to whether those audited financial statements fairly present the financial position, results of operations and cash flows of the Company in conformity with GAAP.
The Audit Committee has reviewed and discussed the Company’s audited financial statements with management and with Deloitte & Touche LLP, the Company’s independent registered public accounting firm for the calendar year ended December 31, 2020. The Audit Committee has also discussed with Deloitte & Touche LLP the other matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board and the SEC.
The Audit Committee has received from Deloitte & Touche LLP the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte & Touche LLP’s communications with the Audit Committee concerning independence, has discussed Deloitte & Touche LLP’s independence with Deloitte & Touche LLP and has considered the compatibility of non-audit services with the independence of the independent registered public accounting firm.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the calendar year ended December 31, 2020 for filing with the SEC.
Respectfully submitted by the Audit Committee of the Board.
Strauss Zelnick (Chair)
Richard D. Bronson
Camille J. Douglas
Fred Perpall
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Agreement
The Company is party to the Management Agreement with the Manager, pursuant to which the Manager provides the day-to-day management of the Company’s operations. The Management Agreement requires the Manager to manage the Company’s business affairs in conformity with the policies and the investment guidelines that are approved and monitored by the Board. The Management Agreement had an initial three-year term and is now renewed for one-year terms unless terminated by either the Company (upon payment of a termination fee if terminated without cause per the terms of the Management Agreement) or the Manager. The terms of the Management Agreement, as amended, are reflected in the below descriptions of the base management fee and incentive fee calculations.
Base Management Fee
The Company pays the Manager a base management fee in an amount equal to 1.5% of the Company’s shareholders’ equity, per annum, calculated and payable quarterly in arrears in cash. For purposes of calculating the base management fee, the Company’s shareholders’ equity means: (a) the sum of (i) the net proceeds from all issuances of the Company’s equity securities since inception and equity securities of subsidiaries issued in exchange for properties (allocated on a pro rata basis for such issuances during the fiscal quarter of any such issuance), plus (ii) the Company’s retained earnings and income to non-controlling interests with respect to equity securities of subsidiaries of the Company issued in exchange for properties at the end of the most recently completed calendar quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (b) any amount that the Company has paid to repurchase its common stock since inception. It also excludes (1) any unrealized gains and losses and other non-cash items that have impacted shareholders’ equity as reported in the Company’s financial statements prepared in accordance with GAAP, and (2) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between the Manager and the Independent Directors and approval by a majority of the Independent Directors. As a result, the Company’s shareholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of shareholders’ equity shown on the Company’s financial statements. The Manager uses the proceeds from its management fee, in part, to pay compensation to its officers and personnel who, notwithstanding that certain of them also are the Company’s officers, receive no cash compensation directly from the Company. The management fee is payable independent of the performance of the Company’s portfolio.
The management fee of the Manager is calculated within 30 days after the end of each quarter and such calculation is promptly delivered to the Company. The Company is obligated to pay the management fee in cash within five business days after delivery to the Company of the written statement of the Manager setting forth the computation of the management fee for such quarter.
Incentive Fee
The Company pays the Manager an incentive fee with respect to each calendar quarter (or any part thereof that the Management Agreement is in effect) in arrears. The Manager is entitled to be paid the incentive fee with respect to each calendar quarter if (a) the Company’s Core Earnings (as defined below) for the previous twelve-month period exceeds an 8% threshold and (b) the Company’s Core Earnings for the twelve most recently completed calendar quarters is greater than zero. The incentive fee is an amount, not les