DYNEX CAPITAL, INC. (NYSE:DX) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
On December 8, 2016, Dynex Capital, Inc. (the Company) entered
into a new employment agreement with Chief Executive Officer
Byron L. Boston (the New Agreement). The New Agreement is
effective as of December 1, 2016, and supersedes in their
entirety the July 31, 2009 employment agreement between the
Company and Mr. Boston and the September 7, 2011 relocation
agreement between the Company and Mr. Boston (collectively, the
Old Agreement).
into a new employment agreement with Chief Executive Officer
Byron L. Boston (the New Agreement). The New Agreement is
effective as of December 1, 2016, and supersedes in their
entirety the July 31, 2009 employment agreement between the
Company and Mr. Boston and the September 7, 2011 relocation
agreement between the Company and Mr. Boston (collectively, the
Old Agreement).
As discussed in the Companys proxy statement for its 2016 Annual
Meeting of Shareholders, filed with the Securities and Exchange
Commission on April 6, 2016, the Compensation Committee of the
Companys Board of Directors (the Board) authorized management to
engage in a shareholder outreach effort with the Companys largest
shareholders during 2015 to better understand shareholders
perspectives on the Companys executive compensation program
following the Companys 2015 Annual Meeting of Shareholders. While
investors had varying perspectives, a few common themes emerged
from the discussions. These themes included a desire to see (1) a
greater link between CEO pay and Company performance, (2) less
Compensation Committee discretion with respect to incentive
awards for executives, (3) longer performance periods for
performance-based awards and (4) performance metrics that are
viewed to more closely link executive pay with shareholder value,
such as total shareholder return. The Compensation Committee
carefully considered the feedback received during this outreach
effort and incorporated it into the new Executive Incentive Plan
that was adopted in December 2015, to provide even greater
alignment of management compensation with shareholder interests.
This alignment of interests is also reflected in the significant
amount of management compensation that is paid in stock and in
dividends on unvested restricted stock.
Meeting of Shareholders, filed with the Securities and Exchange
Commission on April 6, 2016, the Compensation Committee of the
Companys Board of Directors (the Board) authorized management to
engage in a shareholder outreach effort with the Companys largest
shareholders during 2015 to better understand shareholders
perspectives on the Companys executive compensation program
following the Companys 2015 Annual Meeting of Shareholders. While
investors had varying perspectives, a few common themes emerged
from the discussions. These themes included a desire to see (1) a
greater link between CEO pay and Company performance, (2) less
Compensation Committee discretion with respect to incentive
awards for executives, (3) longer performance periods for
performance-based awards and (4) performance metrics that are
viewed to more closely link executive pay with shareholder value,
such as total shareholder return. The Compensation Committee
carefully considered the feedback received during this outreach
effort and incorporated it into the new Executive Incentive Plan
that was adopted in December 2015, to provide even greater
alignment of management compensation with shareholder interests.
This alignment of interests is also reflected in the significant
amount of management compensation that is paid in stock and in
dividends on unvested restricted stock.
The Compensation Committee also considered the feedback that was
received during the outreach effort in negotiating the New
Agreement with Mr. Boston. The primary areas of shareholder
concern regarding the Old Agreement have been changed in the New
Agreement as follows: (1) the single trigger provision for
severance in connection with a Change in Control (as defined in
the New Agreement) has been eliminated; and (2) the New Agreement
does not provide for any tax gross-ups.
received during the outreach effort in negotiating the New
Agreement with Mr. Boston. The primary areas of shareholder
concern regarding the Old Agreement have been changed in the New
Agreement as follows: (1) the single trigger provision for
severance in connection with a Change in Control (as defined in
the New Agreement) has been eliminated; and (2) the New Agreement
does not provide for any tax gross-ups.
The New Agreement provides for Mr. Boston to serve as Chief
Executive Officer of the Company with an initial term through
December 31, 2019. The term will be automatically extended for an
additional year on December 31, 2019, unless either the Company
or Mr. Boston gives written notice of non-renewal at least 90
days prior to the renewal date.
Executive Officer of the Company with an initial term through
December 31, 2019. The term will be automatically extended for an
additional year on December 31, 2019, unless either the Company
or Mr. Boston gives written notice of non-renewal at least 90
days prior to the renewal date.
The New Agreement provides for Mr. Boston to receive an annual
base salary of at least $675,000, subject to annual increases or
decreases by the Board, provided that the annual base salary may
only be decreased below $675,000 with Mr. Bostons consent and may
not be decreased following a Change in Control. Under the New
Agreement, Mr. Boston is eligible to receive equity compensation
awards to the extent determined by the Board and is eligible to
participate in the Companys Executive Incentive Plan (or any
successor plan), with a minimum target incentive opportunity each
year of 200% of his base salary. Mr. Boston is also entitled to
participate in the employee and executive benefit plans and
programs offered by the Company in which other senior executives
of the Company are eligible to participate, including medical,
dental, life and disability insurance and retirement, deferred
compensation and savings plans, in accordance with the terms and
conditions of such plans. Under the New Agreement, Mr. Boston
will be provided with a cell phone and personal data assistant
for his use, and the Company will pay for any business-related
usage fees for such items. Mr. Boston will also be entitled to
reimbursement for the cost of an annual executive medical
services program.
base salary of at least $675,000, subject to annual increases or
decreases by the Board, provided that the annual base salary may
only be decreased below $675,000 with Mr. Bostons consent and may
not be decreased following a Change in Control. Under the New
Agreement, Mr. Boston is eligible to receive equity compensation
awards to the extent determined by the Board and is eligible to
participate in the Companys Executive Incentive Plan (or any
successor plan), with a minimum target incentive opportunity each
year of 200% of his base salary. Mr. Boston is also entitled to
participate in the employee and executive benefit plans and
programs offered by the Company in which other senior executives
of the Company are eligible to participate, including medical,
dental, life and disability insurance and retirement, deferred
compensation and savings plans, in accordance with the terms and
conditions of such plans. Under the New Agreement, Mr. Boston
will be provided with a cell phone and personal data assistant
for his use, and the Company will pay for any business-related
usage fees for such items. Mr. Boston will also be entitled to
reimbursement for the cost of an annual executive medical
services program.
Under the New Agreement, Mr. Boston may be terminated by the
Company with or without Cause (as defined in the New Agreement).
If Mr. Boston resigns for Good Reason (as defined in the New
Agreement) or his employment is terminated without Cause not in
connection with a Change in Control, Mr. Boston will be entitled
to receive a lump sum severance payment equal to two times the
sum of (i) his annual base salary at the time of termination and
(ii) the average of his Annual Incentive Award (as defined in the
New Agreement) paid for each of the prior three years. Mr. Boston
will also be entitled to receive any amounts already earned but
not yet paid (the Accrued Obligations); continued medical,
dental, life and disability insurance coverage for 24 months;
prorated incentive awards for the year of termination and other
open performance periods (prorated for time through the date of
termination and for performance at the greater of target or
actual performance in the case of financial goals and at maximum
in the case of non-financial and individual goals) (the Prorated
Incentive Awards); and full vesting of any unvested equity
awards.
Company with or without Cause (as defined in the New Agreement).
If Mr. Boston resigns for Good Reason (as defined in the New
Agreement) or his employment is terminated without Cause not in
connection with a Change in Control, Mr. Boston will be entitled
to receive a lump sum severance payment equal to two times the
sum of (i) his annual base salary at the time of termination and
(ii) the average of his Annual Incentive Award (as defined in the
New Agreement) paid for each of the prior three years. Mr. Boston
will also be entitled to receive any amounts already earned but
not yet paid (the Accrued Obligations); continued medical,
dental, life and disability insurance coverage for 24 months;
prorated incentive awards for the year of termination and other
open performance periods (prorated for time through the date of
termination and for performance at the greater of target or
actual performance in the case of financial goals and at maximum
in the case of non-financial and individual goals) (the Prorated
Incentive Awards); and full vesting of any unvested equity
awards.
The New Agreement contains a double trigger provision for
severance in a Change in Control context, by redefining Good
Reason, and makes one of the thresholds for triggering a Change
in Control harder to satisfy. Under this double trigger
provision, if Mr. Boston resigns for Good Reason or his
employment is terminated without Cause on or within two years
after a Change in Control, he will be entitled to receive a lump
sum severance payment equal to 2.99 times the sum of (i)
severance in a Change in Control context, by redefining Good
Reason, and makes one of the thresholds for triggering a Change
in Control harder to satisfy. Under this double trigger
provision, if Mr. Boston resigns for Good Reason or his
employment is terminated without Cause on or within two years
after a Change in Control, he will be entitled to receive a lump
sum severance payment equal to 2.99 times the sum of (i)
his annual base salary at the time of termination and (ii) the
average of his Annual Incentive Award paid for each of the prior
three years. Mr. Boston will also be entitled to receive his
Accrued Obligations; continued medical, dental, life and
disability insurance coverage for 36 months; the Prorated
Incentive Awards for the year of termination and other open
performance periods; and full vesting of any unvested equity
awards.
average of his Annual Incentive Award paid for each of the prior
three years. Mr. Boston will also be entitled to receive his
Accrued Obligations; continued medical, dental, life and
disability insurance coverage for 36 months; the Prorated
Incentive Awards for the year of termination and other open
performance periods; and full vesting of any unvested equity
awards.
If Mr. Bostons employment terminates due to death, the New
Agreement provides for a lump sum payment to his estate of the
Accrued Obligations plus an amount equal to the sum of (i) Mr.
Bostons annual base salary at the time of his death and (ii) the
average of his Annual Incentive Award paid for each of the prior
three years. His estate will also be entitled to the Prorated
Incentive Awards for the year of death and other open performance
periods and full vesting of his unvested equity awards. If Mr.
Bostons employment terminates due to disability, he will be
entitled to receive his Accrued Obligations, incentive awards for
the year of termination and other open performance periods
(prorated for performance at the greater of target or actual
performance in the case of financial goals and at maximum in the
case of non-financial and individual goals) and full vesting of
any unvested equity awards.
Agreement provides for a lump sum payment to his estate of the
Accrued Obligations plus an amount equal to the sum of (i) Mr.
Bostons annual base salary at the time of his death and (ii) the
average of his Annual Incentive Award paid for each of the prior
three years. His estate will also be entitled to the Prorated
Incentive Awards for the year of death and other open performance
periods and full vesting of his unvested equity awards. If Mr.
Bostons employment terminates due to disability, he will be
entitled to receive his Accrued Obligations, incentive awards for
the year of termination and other open performance periods
(prorated for performance at the greater of target or actual
performance in the case of financial goals and at maximum in the
case of non-financial and individual goals) and full vesting of
any unvested equity awards.
If the Company determines not to renew the New Agreement on
December 31, 2019 or does not offer Mr. Boston a comparable
replacement employment agreement to be effective on December 31,
2020, in each case other than for Cause, Mr. Boston will be
entitled to receive the same payments discussed above for
termination without Cause or resignation for Good Reason, either
not in connection with a Change in Control or on or within two
years after a Change in Control, as applicable depending on when
the non-renewal or termination occurs.
December 31, 2019 or does not offer Mr. Boston a comparable
replacement employment agreement to be effective on December 31,
2020, in each case other than for Cause, Mr. Boston will be
entitled to receive the same payments discussed above for
termination without Cause or resignation for Good Reason, either
not in connection with a Change in Control or on or within two
years after a Change in Control, as applicable depending on when
the non-renewal or termination occurs.
Except for the Accrued Obligations, payment of all of the
severance payments discussed above (other than in the event of
death) is contingent on Mr. Bostons signing a release in favor of
the Company.
severance payments discussed above (other than in the event of
death) is contingent on Mr. Bostons signing a release in favor of
the Company.
The New Agreement eliminates the right to receive any gross-up
payment on any tax imposed on Mr. Boston and provides for Change
in Control severance benefits on a best net approach, under which
the Change in Control severance benefits will be reduced to avoid
the golden parachute excise tax under Section 280G of the
Internal Revenue Code only if such a reduction would cause Mr.
Boston to receive more after-tax compensation than without a
reduction.
payment on any tax imposed on Mr. Boston and provides for Change
in Control severance benefits on a best net approach, under which
the Change in Control severance benefits will be reduced to avoid
the golden parachute excise tax under Section 280G of the
Internal Revenue Code only if such a reduction would cause Mr.
Boston to receive more after-tax compensation than without a
reduction.
The New Agreement also provides for a clawback of any incentive
compensation by the Company, including both equity and cash
compensation, to the extent required by federal or state law or
regulation or stock exchange requirement. Under the New
Agreement, Mr. Boston is also subject to certain restrictive
covenants in favor of the Company, including (i) a
confidentiality covenant that applies during and following his
employment, (ii) a non-solicitation covenant that applies during
and for 12 months following his employment, and (iii) a
non-competition covenant that applies during his employment and
for 90 days following his employment if he does not receive
severance benefits and for 6 months following his employment if
he receives severance benefits.
compensation by the Company, including both equity and cash
compensation, to the extent required by federal or state law or
regulation or stock exchange requirement. Under the New
Agreement, Mr. Boston is also subject to certain restrictive
covenants in favor of the Company, including (i) a
confidentiality covenant that applies during and following his
employment, (ii) a non-solicitation covenant that applies during
and for 12 months following his employment, and (iii) a
non-competition covenant that applies during his employment and
for 90 days following his employment if he does not receive
severance benefits and for 6 months following his employment if
he receives severance benefits.
The full text of Mr. Bostons employment agreement is attached as
Exhibit 10.30 to this Current Report on Form 8-K and is
incorporated herein by reference.
Exhibit 10.30 to this Current Report on Form 8-K and is
incorporated herein by reference.
Item 8.01 Other Events.
On December 9, 2016, Dynex Capital, Inc. (the Company) issued a
press release announcing that the Companys Board of Directors
authorized the repurchase of up to $40 million of the Companys
outstanding shares of common stock through December 31, 2018.
This new authorization replaces the Companys prior share
repurchase program, which was to expire on December 31, 2016. A
copy of the press release is attached as Exhibit 99.1 to this
Current Report on Form 8-K and is incorporated herein by
reference.
press release announcing that the Companys Board of Directors
authorized the repurchase of up to $40 million of the Companys
outstanding shares of common stock through December 31, 2018.
This new authorization replaces the Companys prior share
repurchase program, which was to expire on December 31, 2016. A
copy of the press release is attached as Exhibit 99.1 to this
Current Report on Form 8-K and is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.>
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Exhibit No.
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Description
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10.30
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Employment Agreement, dated as of December 8, 2016,
between Dynex Capital, Inc. and Byron L. Boston |
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99.1
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Press Release dated December 9, 2016
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About DYNEX CAPITAL, INC. (NYSE:DX)
Dynex Capital, Inc. is an internally managed mortgage real estate investment trust, which invests in residential and commercial mortgage securities on a leveraged basis. The Company’s objective is to provide attractive risk-adjusted returns to its shareholders over the long term that is reflective of a leveraged fixed income portfolio with a focus on capital preservation. It seeks to provide returns to its shareholders through regular quarterly dividends and through capital appreciation. It invests in Agency and non-Agency mortgage-backed securities (MBS). MBS consists of residential MBS (RMBS), commercial MBS (CMBS) and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the United States Government or a government-sponsored entity (GSE), such as Fannie Mae and Freddie Mac. Its primary source of income is net interest income, which is the excess of the interest income earned on its investments over the cost of financing these investments. DYNEX CAPITAL, INC. (NYSE:DX) Recent Trading Information
DYNEX CAPITAL, INC. (NYSE:DX) closed its last trading session up +0.01 at 7.05 with 451,693 shares trading hands.
