def14a
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
Filed by the Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to
§240.14a-12
ARBOR REALTY TRUST, INC.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)
and 0-11.
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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As filed with the Commission on April 6, 2010
Arbor
Realty Trust, Inc.
April 6,
2010
Dear Fellow Stockholders:
On behalf of the Board of Directors, I cordially invite you to
attend the Annual Meeting of Stockholders of Arbor Realty Trust,
Inc. to be held at the Teleconference Center on the lower level
of 333 Earle Ovington Boulevard, Uniondale, New York, on
May 18, 2010, at 1:00 p.m., local time. The matters to
be considered by the stockholders at the annual meeting are
described in detail in the accompanying materials.
It is important that you be represented at the annual meeting
regardless of the number of shares you own or whether you are
able to attend the annual meeting in person.
Let me urge you to mark, sign and date your proxy card today and
return it in the envelope provided.
Sincerely,
Ivan Kaufman
Chairman and Chief Executive Officer and President
Arbor
Realty Trust, Inc.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON MAY 18,
2010
THE PROXY STATEMENT AND ANNUAL REPORT TO SECURITY HOLDERS ARE
AVAILABLE AT:
http://www.arborrealtytrust.com/cm.htm
Notice of Annual Meeting of
Stockholders
To Be Held on May 18,
2010
To the Stockholders of Arbor Realty Trust, Inc.:
The annual meeting of stockholders of Arbor Realty Trust, Inc.,
a Maryland corporation (the Company), will be held
at the Teleconference Center on the lower level of 333 Earle
Ovington Boulevard, Uniondale, New York, on May 18, 2010,
beginning at 1:00 p.m., local time. Directions to attend
the annual meeting and vote in person are available on our
website, www.arborrealtytrust.com, under the heading
Investor Relations or can be obtained by calling our
main telephone number, 1-516-506-4200.
The matters to be considered by stockholders at the annual
meeting, which are described in detail in the accompanying
materials, are:
(1) a proposal to elect four nominees as Class I
directors, each to serve until the 2013 annual meeting of
stockholders and until their respective successors are duly
elected and qualify;
(2) a proposal to ratify the appointment of
Ernst & Young LLP as the Companys independent
registered public accounting firm for fiscal year 2010; and
(3) the transaction of any other business that may properly
come before the annual meeting or any adjournment or
postponement of the annual meeting.
Stockholders of record at the close of business on
March 30, 2010 will be entitled to notice of and to vote at
the annual meeting. It is important that your shares be
represented at the annual meeting regardless of the size of your
securities holdings. A proxy statement, proxy card,
self-addressed envelope and Annual Report to Stockholders for
the fiscal year ended December 31, 2009 accompany this
notice. Whether or not you plan to attend the annual meeting in
person, please complete, date and sign the proxy card. Return it
promptly in the envelope provided, which requires no postage if
mailed in the United States. If you are the record holder of
your shares and you attend the annual meeting, you may withdraw
your proxy and vote in person, if you so choose.
By Order of the Board of Directors,
Walter K. Horn
Corporate Secretary
April 6, 2010
Uniondale, New York
Arbor
Realty Trust, Inc.
333 Earle Ovington Boulevard
Suite 900
Uniondale, New York 11553
(516) 506-4200
PROXY
STATEMENT
FOR THE ANNUAL MEETING OF
STOCKHOLDERS
To Be Held on May 18,
2010
TABLE OF
CONTENTS
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GENERAL
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement and the accompanying proxy card and notice
of annual meeting are provided in connection with the
solicitation of proxies by and on behalf of the Board of
Directors of Arbor Realty Trust, Inc., a Maryland corporation,
for use at the annual meeting of stockholders to be held on
May 18, 2010, at 1:00 p.m., local time, and any
adjournments or postponements thereof.
We, our, us, and the
Company each refers to Arbor Realty Trust, Inc. The
Company is externally managed and advised by Arbor Commercial
Mortgage, LLC, which we refer to as our Manager.
The mailing address of our executive office is 333 Earle
Ovington Boulevard, Suite 900, Uniondale, New York, 11553.
This proxy statement, the accompanying proxy card and the notice
of annual meeting are first being mailed on or about
April 6, 2010 to holders of our common stock, par value
$0.01 per share, of record at the close of business on
March 30, 2010. Our common stock are the only securities
entitled to vote at the annual meeting and are referred to as
our voting securities. Along with this proxy statement, we are
also sending our Annual Report to Stockholders for the fiscal
year ended December 31, 2009.
A proxy may confer discretionary authority to vote with respect
to any matter presented at the annual meeting. As of the date of
this proxy statement, management has no knowledge of any
business that will be presented for consideration at the annual
meeting and that would be required to be set forth in this proxy
statement or the related proxy card other than the matters set
forth in the Notice of Annual Meeting of Stockholders. If any
other matter is properly presented at the annual meeting for
consideration, it is intended that the persons named in the
enclosed proxy card and acting thereunder will vote in
accordance with their discretion on any such matter.
Matters
to be Considered at the Annual Meeting
At the annual meeting, our stockholders will act upon:
(1) a proposal to elect four nominees as Class I
directors, each to serve until the 2013 annual meeting of
stockholders and until their respective successors are duly
elected and qualify;
(2) a proposal to ratify the appointment of
Ernst & Young LLP as the Companys independent
registered public accounting firm for fiscal year 2010; and
(3) the transaction of any other business that may properly
come before the annual meeting or any adjournment or
postponement of the annual meeting.
This proxy statement, form of proxy and voting instructions are
being mailed starting on or about April 6, 2010.
Solicitation
of Proxies
The enclosed proxy is solicited by and on behalf of our Board of
Directors. The expense of preparing, printing and mailing this
proxy statement and the proxies solicited hereby will be borne
by the Company. In addition to the use of the mail, proxies may
be solicited by officers and directors, without additional
remuneration, by personal interview, telephone, telegraph or
otherwise. The Company will also request brokerage firms,
nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of voting securities held of record at
the close of business on March 30, 2010 and will provide
reimbursement for the cost of forwarding the material. In
addition, we have engaged The Altman Group to assist in
soliciting proxies from brokers, banks and other nominee holders
of our common stock at a cost of approximately $5,500, plus
reasonable
out-of-pocket
expenses.
Stockholders
Entitled To Vote
As of the close of business on March 30, 2010, there were
25,387,410 shares of our common stock outstanding and
entitled to vote. Each share of our common stock entitles the
holder to one vote. Stockholders of record at the close of
business on March 30, 2010 are entitled to vote at the
annual meeting or any adjournment or postponement thereof.
1
Required
Quorum/Vote
A quorum will be present if stockholders entitled to cast a
majority of all the votes entitled to be cast at the annual
meeting are present, in person or by proxy. If you have returned
a valid proxy or if you hold your shares of our voting
securities in your own name as holder of record and you attend
the annual meeting in person, your shares will be counted for
the purpose of determining whether there is a quorum. If a
quorum is not present, the annual meeting may be adjourned by
the chairman of the meeting or the stockholders entitled to vote
at the annual meeting, present in person or by proxy, to a date
not more than 120 days after the record date without notice
other than announcement at the meeting.
Abstentions and broker non-votes will be counted in determining
the presence of a quorum. Broker non-votes occur
when a bank, broker or other nominee holding shares for a
beneficial owner returns a properly executed proxy but does not
vote on a particular proposal because it does not have
discretionary voting power for that particular item and has not
received instructions from the beneficial owner. Under the rules
of the New York Stock Exchange (the NYSE), banks,
brokers and other nominees who hold shares in street
name may have the authority to vote on certain matters
when they do not receive instructions from beneficial owners.
Banks, brokers and other nominees that do not receive
instructions are not entitled to vote on the election of
directors contained in Proposal No. 1, but may vote on
ratification of the appointment of the independent registered
public accounting firm contained in Proposal No. 2.
Election of each of the director nominees named in
Proposal No. 1 requires the affirmative vote of a
plurality of the votes cast in the election of directors at the
annual meeting by holders of our voting securities. The
candidates receiving the highest number of affirmative votes of
the shares entitled to be voted will be elected directors.
Shares represented by properly executed and returned proxies
will be voted, if authority to do so is not withheld, for the
election of the Board of Directors nominees named in
Proposal No. 1. Votes may be cast in favor of or
withheld with respect to all of the director nominees, or any of
them. Abstentions and broker non-votes will not be counted as
having been voted and will have no effect on the outcome of the
vote on the election of directors. Stockholders may not cumulate
votes in the election of directors. A vote withheld
from a director nominee will have no effect on the outcome of
the vote because a plurality of the votes cast at the annual
meeting is required for the election of each director.
Ratification of the appointment of Ernst & Young LLP
as the Companys independent registered public accounting
firm for fiscal year 2010, as specified in
Proposal No. 2, requires the affirmative vote of a
majority of the votes cast on the proposal at the annual meeting
by holders of our voting securities. If this selection is not
ratified by holders of our voting securities, the Audit
Committee and our Board of Directors may reconsider its
appointment and endorsement, respectively. Abstentions have the
same effect as a vote against the proposal. Even if the
selection is ratified, the Audit Committee of the Companys
Board of Directors in its discretion may direct the appointment
of a different independent registered public accounting firm at
any time during the year if it determines that such a change
would be in the best interests of the Company and its
stockholders.
If the enclosed proxy is properly executed and returned to us in
time to be voted at the annual meeting, it will be voted as
specified on the proxy unless it is properly revoked prior
thereto. If no specification is made on the proxy as to any one
or more of the proposals, the following action will be taken
with respect to each share of our voting securities represented
in the proxy:
(1) a vote will be cast FOR the election of the four
nominees as Class I directors, each to serve until the 2013
annual meeting of stockholders and until their respective
successors are duly elected and qualify;
(2) a vote will be cast FOR the ratification of the
appointment of Ernst & Young LLP as the Companys
independent registered public accounting firm for fiscal year
2010; and
(3) a vote will be cast in the discretion of the proxy
holder on any other business that properly comes before the
annual meeting or any adjournment or postponement thereof.
As of the date of this proxy statement, we are not aware of any
other matter to be presented at the annual meeting.
2
Voting
If you hold your shares of our voting securities in your own
name as a holder of record, you may instruct the proxies to vote
your shares by signing, dating and mailing the proxy card in the
postage-paid envelope provided. In addition, you may vote your
shares of our voting securities in person at the annual meeting.
If your shares are held on your behalf by a broker, bank or
other nominee, you will receive instructions from such
individual or entity that you must follow in order to have your
shares voted at the annual meeting.
Authorization of your proxy via telephone or the Internet may
also be available depending on how you hold your shares. Please
reference your proxy card for instructions on how to authorize
your proxy by these methods.
Right to
Revoke Proxy
If you hold shares of our voting securities in your own name as
a holder of record, you may revoke your proxy instructions
through any of the following methods:
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send written notice of revocation, prior to the annual meeting,
to our Corporate Secretary, at 333 Earle Ovington Boulevard,
Suite 900, Uniondale, New York 11553;
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sign and mail a new, later dated proxy card to our Corporate
Secretary at the address specified above;
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if authorization of your proxy is available via the telephone or
the Internet, by voting again via the telephone or Internet at
least 24 hours prior to the Annual Meeting; or
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attend the annual meeting and vote your shares in person.
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If your shares are held on your behalf by a broker, bank or
other nominee, you must contact it to receive instructions as to
how you may revoke your proxy instructions.
Multiple
Copies of Annual Report to Stockholders
A copy of our Annual Report to Stockholders for the fiscal year
ended December 31, 2009 will be mailed to stockholders
entitled to vote at the annual meeting with this Proxy Statement
and is also available without charge to stockholders upon
written request to: Arbor Realty Trust, Inc., 333 Earle Ovington
Boulevard, Suite 900, Uniondale, New York, 11553, Attn:
Investor Relations. You may also access our Annual Report on
Form 10-K
as filed with the Securities and Exchange Commission under the
Investor Relations SEC Filings link on
our website at www.arborrealtytrust.com.
In order to reduce printing and postage costs, we have
undertaken an effort to deliver only one Annual Report and one
Proxy Statement to multiple stockholders sharing an address.
This delivery method, called householding, will not
be used, however, if we receive contrary instructions from one
or more of the stockholders sharing an address. If your
household has received only one Annual Report and one Proxy
Statement, we will deliver promptly a separate copy of the
Annual Report and the Proxy Statement to any stockholder who
sends a written request to the Corporate Secretary, Arbor Realty
Trust, Inc., 333 Earle Ovington Boulevard, Suite 900,
Uniondale, New York, 11553. You may also contact our Corporate
Secretary at
(516) 506-4200.
You may also notify us that you would like to receive separate
copies of Arbor Realty Trusts Annual Report and Proxy
Statement in the future by writing to our Corporate Secretary.
Even if your household has received only one Annual Report and
one Proxy Statement, a separate proxy card has been provided for
each stockholder account. If you are submitting a proxy by mail,
each proxy card should be marked, signed, dated and returned in
the enclosed self-addressed envelope.
If your household has received multiple copies of Arbor Realty
Trusts Annual Report and Proxy Statement, you can request
the delivery of single copies in the future by marking the
designated box on the enclosed proxy card.
If you own shares of common stock through a bank, broker or
other nominee and receive more than one Annual Report and Proxy
Statement, contact the holder of record to eliminate duplicate
mailings.
3
Voting
Results
American Stock Transfer & Trust Company, our
independent tabulating agent, will have a representative present
at the annual meeting and count the votes and will act as the
Inspector of Election. We will publish the voting results in a
Current Report on
form 8-K
which will be filed within four business days of our 2009 Annual
Meeting of Stockholders.
Confidentiality
of Voting
We will keep all proxies, ballots and voting tabulations
confidential. We will permit only our Inspector of Election,
American Stock Transfer & Trust Company, and our
outside legal counsel to examine these documents.
Recommendations
of the Board of Directors
The Board of Directors recommends a vote:
(1) FOR the election of Mr. Bishar,
Dr. Dykes, Mr. Martello and Mr. Permut, the four
named nominees as Class I directors, each to serve until
the 2013 annual meeting of stockholders and until their
respective successors are duly elected and qualify;
(2) FOR the ratification of the appointment of
Ernst & Young LLP as the Companys independent
registered public accounting firm for fiscal year 2010; and
(3) in the discretion of the proxy holder on any other
business that properly comes before the annual meeting or any
adjournment or postponement thereof.
4
BOARD OF
DIRECTORS
General
Our Board of Directors presently consists of ten members.
Pursuant to our charter, the Board of Directors is divided into
three classes of directors, each serving for three years after
election and until his or her successor is duly elected and
qualifies, with one class up for election at each annual
meeting. At this years annual meeting, the term of our
three Class I directors will expire. Our other directors
will remain in office for the remainder of their respective
terms, as indicated below.
At the annual meeting, stockholders will vote on the election of
Mr. John J. Bishar, Jr., Dr. Archie R. Dykes,
Mr. Joseph Martello and Mr. Kyle A. Permut for a
three-year term to serve until the 2013 annual meeting of
stockholders and until their successors are duly elected and
qualify.
The following table sets forth information concerning our ten
directors, including the four Class I directors who are
nominees for reelection at this years annual meeting.
Current
Directors Who are Nominees for Reelection
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Name
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Class
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Age
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New Term to Expire at Annual Meeting in
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John J. Bishar, Jr.
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60
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2013
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Archie R. Dykes
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79
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2013
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Joseph Martello
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54
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2013
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Kyle A. Permut
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48
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2013
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Current
Directors Whose Terms are not Expiring
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Name
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Class
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Age
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Term Expires at Annual Meeting in
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Ivan Kaufman
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II
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49
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2011
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C. Michael Kojaian
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II
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48
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2011
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Melvin F. Lazar
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II
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71
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2011
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Karen K. Edwards
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III
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53
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2012
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William Helmreich
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III
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64
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2012
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Walter K. Horn
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III
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67
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2012
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Nominees
John J. Bishar, Jr. Mr. Bishar has
served as one of our directors since April 2007. In September
2009, Mr. Bishar was named General Counsel of Arbor
Commercial Mortgage, LLC and is also a member of Arbor
Commercial Mortgages executive committee. From August 2007
until December 31, 2008, he was the U.S. General
Counsel of National Grid U.S.A., a wholly-owned subsidiary of
National Grid plc, a multi-national energy delivery company.
From January 1, 2009 through July 31, 2009, he was the
Senior Advisor to National Grids current U.S. General
Counsel. At National Grid U.S.A., Mr. Bishar was
responsible for all U.S. legal matters, as well as
U.S. ethics, compliance and risk reporting. National Grid
plc acquired KeySpan Corporation, a large, diversified
U.S. energy delivery company, in August of 2007.
Mr. Bishar was Executive Vice President, General Counsel
and Chief Governance Officer of KeySpan Corporation from 2002
until the acquisition. At KeySpan Corporation, Mr. Bishar
was responsible for the Legal Services Business Unit, the
Corporate Secretarys Office and for all governance and
compliance matters. Prior to joining KeySpan in 2002,
Mr. Bishar was a partner in the law firm of Cullen and
Dykman LLP. He was the managing partner of the firm from 1993 to
2002 and a member of the firms executive committee. From
1980 to 1987, Mr. Bishar was a Vice President and the
General Counsel and Corporate Secretary of LITCO Bancorporation
of New York Inc. Mr. Bishar is a graduate of Georgetown
University and Fordham University School of Law.
5
Mr. Bishars extensive legal and business experience
at KeySpan Corporation and National Grid USA, as well as his
leadership and legal experience as the managing partner of
Cullen and Dykman LLP, provides him with expertise on legal and
corporate governance matters, which led the Board of Directors
to conclude that Mr. Bishar should serve as a director of
the Company.
Archie R. Dykes. Dr. Dykes has served as
one of our directors since April 2006. Dr. Dykes is lead
director of PepsiAmericas, Inc. He has served as chairman of
Capital City Holdings Inc., a venture capital organization, for
more than the past five years. Dr. Dykes served as Chairman
and Chief Executive Officer of the Security Benefit Group of
Companies from 1980 through 1987. He served as chancellor of the
University of Kansas from 1973 to 1980. Prior to that, he was
chancellor of the University of Tennessee. Dr. Dykes was
Chairman of the Board and Chief Executive Officer of Fleming
Companies, Inc. until September 2004. He assumed those roles at
Fleming in March 2003 following his service to Fleming as
Non-executive Chairman of the Board. He also serves as a
director of Raytech Corporation and Midas, Inc. Dr. Dykes
is a member of the board of trustees of the Kansas University
Endowment Association and the William Allen White Foundation. He
formerly served as Vice Chairman of the Commission on the
Operation of the United States Senate and as a member of the
executive committee of the Association of American Universities.
The Board of Directors has concluded that Dr. Dykes should
serve as a director of the Company due to his extensive business
and leadership experience in a variety of sectors, including
insurance, financial services, research and development,
consumer goods, automotive, non-profit and government.
Joseph Martello. Mr. Martello has served
as one of our directors since June 2003. Mr. Martello is
currently Chief Operating Officer of Arbor Management, LLC, the
managing member of Arbor Commercial Mortgage. He is responsible
for management of the investment portfolio and overseeing the
day-to-day
operations within Arbor Management. Mr. Martello is also a
member of the executive committee of Arbor Commercial Mortgage.
From 1995 to 1999, Mr. Martello was Chief Financial Officer
of Arbor Commercial Mortgage. From 1990 to 1995,
Mr. Martello was the Chief Financial Officer of Arbor
National Holdings, Inc. Prior to that, he was a senior manager
with the international accounting and consulting firm of
Ernst & Young for eleven years. Mr. Martello is a
member of the American Institute of Certified Public Accountants
and the New York State Society of Certified Public Accountants,
where he is a former executive member of the Board of Directors
of the Suffolk County chapter. Mr. Martello also serves as
a director of Citala, Ltd., a privately-owned technology firm
based in Israel.
As a senior executive within the Arbor Commercial Mortgage group
of companies for nearly 20 years, Mr. Martello brings
a breadth of knowledge about real estate matters as well as the
business and operations of the Company and its Manager. This led
the Board of Directors to conclude that Mr. Martello should
serve as a director of the Company.
Kyle A. Permut. Mr. Permut has served as
one of our directors since August 2005. Prior to becoming one of
our directors, Mr. Permut served as a managing director
from 1997 to 2005 at Canadian Imperial Bank of Commerce (CIBC),
the largest bank in Canada and one of the 10 largest in North
America. In this position, he was head of CIBC World Markets
Debt Capital Markets Group in the United States. He was a member
of the firms USA Management Committee, its executive board
and the Debt Capital Markets Management Committee.
Mr. Permut retired from CIBC in 2005.
Mr. Permuts financial and leadership experience at
CIBC, a large, complex financial organization, provides him with
insight and expertise on the banking and financial services
industries in general, which led the Board of Directors to
conclude that he should serve as a director of the Company.
Continuing
Directors
Ivan Kaufman. Mr. Kaufman has served as
our Chairman, Chief Executive Officer and President since June
2003. Mr. Kaufman has been Chief Executive Officer and
President of Arbor Commercial Mortgage, our Manager, since its
inception in 1993. Arbor Commercial Mortgage is a national
commercial real estate finance company which specializes in debt
and equity financing for multi-family and commercial real
estate. In 1983, he co-founded a predecessor of Arbor National
Holdings Inc. and its residential lending subsidiary, Arbor
National Mortgage Inc., which became a public company in 1992
and was sold to BankAmerica in 1995. Mr. Kaufman was named
regional
6
Entrepreneur of the Year by Inc. Magazine for
outstanding achievements in financial services in 1990.
Mr. Kaufman has also served on Fannie Maes regional
advisory and technology boards, as well as the board of
directors of the Empire State Mortgage Bankers Association.
As the founder and principal executive of Arbor Commercial
Mortgage, LLC and its predecessor entities since 1983,
Mr. Kaufman brings unparalleled knowledge about the real
estate sector and our business and operations, which led the
Board of Directors to conclude that he should serve as a
director of the Company.
C. Michael Kojaian. Mr. Kojaian has
served as one of our directors since June 2003. Since 1998
Mr. Kojaian has been the chief operating officer of the
Kojaian group of companies, a national multi-faceted real estate
development, investment and asset management organization.
Mr. Kojaian is the chairman of the board of
Grubb & Ellis, a commercial real estate advisory firm.
Mr. Kojaians leadership and industry experience at
the Kojaian group of companies and Grubb & Ellis, two
large, complex organizations active in the real estate market,
provide him with expertise and insights on real estate
development, investment and management, which led the Board of
Directors to conclude that Mr. Kojaian should serve as a
director of the Company.
Melvin F. Lazar. Mr. Lazar has served as
one of our directors since his appointment in November 2003.
Mr. Lazar is the founder of Lazar Levine & Felix
LLP, certified public accountants, was its managing partner from
1969 until September 2002, and is still an employee of the firm,
now known as ParenteBeard LLP. Mr. Lazar specializes in
business valuations and merger and acquisition activities.
Mr. Lazar serves on the boards of directors, and is the
Chairman of the Audit Committees, of Enzo Biochem, Inc., a
publicly-held biotechnology company, and Active Media Services,
Inc., a privately-held corporate trading company.
As the managing partner of a certified public accounting firm
for over 30 years and a member of the audit committees of a
large public biotechnology company and a private corporate
trading company, Mr. Lazar has extensive accounting and
financial expertise in a variety of industries, which led the
Board of Directors to conclude that Mr. Lazar should serve
as a director of the Company.
Karen K. Edwards. Ms. Edwards has served
as one of our directors since August 2005. She was a Senior Vice
President at GenSpring Family Offices (formerly Asset Management
Advisors), an integrated wealth management firm, from June 2004
until October 2008. From January 2001 to August 2001, she was
the Chief Operating Officer at New Vantage Group, a firm that
manages early-stage venture funds for active angel investors.
She co-founded the Investment Banking Group at Friedman,
Billings, Ramsey & Co. (FBR), where she was a managing
director from 1992 to 2000. In that role, she was responsible
for raising equity and high yield debt capital for financial
institutions and other financial services companies. She also
developed FBRs mergers and acquisitions practice.
Ms. Edwards is a Chartered Financial Analyst and a member
and former president of the CFA Society of Washington. She is a
member and former Treasurer of Women in Housing and Finance. She
currently serves on the Alumni Board of the University of
Virginias Darden Graduate School of Business.
As a CFA, investment banker and executive with several financial
services and asset management companies over the past
25 years, Ms. Edwards has gained valuable insight and
expertise in business valuation and capital markets,
specifically pertaining to financial services companies and
institutions and real estate investment trusts, leading the
Board of Directors to conclude that she should serve as a
director of the Company.
William Helmreich. Dr. Helmreich has
served as one of our directors since June 2003.
Dr. Helmreich is the founder, and since 1980, owner and
president of Byron Research and Consulting, a market research
firm specializing in financial research, political polling,
legal consulting, and issues relating to food products and real
estate. He is a professor of Sociology at City College of New
York and the CUNY Graduate Center, where he teaches sociology of
marketing and consumer behavior. Since 2000, Dr. Helmreich
has also been retained as Chairman for Academic Affairs for
North Shore Hebrew Academy. He is a director of Transaction
Inc., North Shore Hebrew Academy, North Shore Hebrew Academy
High School and NSH Affordable Housing of Indiana, Inc., as well
as other
not-for-profit
boards, and was a Senior Vice President of Good Earth Teas for
many years.
7
As the owner and president of a market research firm
specializing in financial research, legal consulting, and issues
relating to real estate, Dr. Helmreich brings a unique
perspective on real estate and finance, which led the Board of
Directors to conclude that he should serve as a director of the
Company.
Walter K. Horn. Mr. Horn has served as
one of our directors since November 2003 and our Corporate
Secretary since July 2003. Mr. Horn was also our General
Counsel and Director of Compliance until his retirement from
those positions effective January 1, 2008. Mr. Horn is
also a member of Arbor Commercial Mortgages executive
committee. Mr. Horn was General Counsel of Arbor National
Holdings from 1991 until its sale in 1995 and was General
Counsel of Arbor Commercial Mortgage until March 2005.
Mr. Horns experience also includes serving as General
Counsel with Resource One, Inc. and Long Island
Trust Company.
Mr. Horn served as a senior executive and legal advisor to
the Arbor Commercial Mortgage group of companies, including the
Company, from 1991 to 2008, which has provided him with a wealth
of knowledge relating to our corporate governance issues and
business and operations, which led the Board of Directors to
conclude that he should serve as a director of the Company.
Corporate
Governance Profile
We are committed to good corporate governance practices and, as
such, we have adopted formal corporate governance guidelines to
enhance our effectiveness. The guidelines govern, among other
things, board member qualifications, responsibilities, education
and management succession. A copy of the corporate governance
guidelines may be found at the corporate website at
www.arborrealtytrust.com under the heading Investor
Relations Corporate Governance.
The Board of Directors met on 18 occasions and acted by written
consent on six occasions during 2009. No incumbent director
attended fewer than 75 percent of all meetings of our Board
of Directors and the committees on which such director served
during 2009.
Senior
Officer Code of Ethics and Code of Business Conduct and
Ethics
We have adopted a senior officer code of ethics applicable to
our Chief Executive Officer, Chief Financial Officer, Chief
Credit Officer and Controller (or persons performing similar
functions to the aforementioned officers regardless of whether
such persons (1) are employed directly by the Company or
(2) are employed by our Manager pursuant to a management
agreement). We have also adopted a code of business conduct and
ethics applicable to all employees, officers and directors. Both
codes are available on our website at www.arborrealtytrust.com
under the heading Investor Relations Corporate
Governance. You may also obtain these documents, as well
as our corporate governance guidelines, in print free of charge
by writing the Company at 333 Earle Ovington Boulevard,
Suite 900, Uniondale, New York, 11553: Attention: Investor
Relations. Amendments to, and waivers from, the senior officer
code of ethics and the code of business conduct and ethics for a
director or officer will be disclosed at the same website
address and heading provided above. We have filed our 2009
Domestic Company Section 303A CEO Certification with the
NYSE without any qualifications. Our Sarbanes-Oxley
Section 302 Certification was filed as an exhibit to our
Annual Report on
Form 10-K
for the year ended December 31, 2009.
Combined
Principal Executive Officer and Board Chair Positions;
Independent Director Committee
Mr. Kaufman serves as both the Companys Chief
Executive Officer and Chairman of the Board of Directors, which
the Board of Directors has determined is the most appropriate
governance structure for the Company. Mr. Kaufman has
served in this capacity since the Companys formation in
June 2003. With over 25 years of experience in the real
estate finance industry, Mr. Kaufman has a breadth of
unique and specialized knowledge about our business operations.
Mr. Kaufman solicits input from the Companys board of
directors regarding the board agenda and processes. To
facilitate coordination with the independent directors and the
exercise of independent judgment by the Board of Directors,
(1) the Board has established an Independent Director
Committee (as described further below), of which Dr. Dykes
currently serves as the Chair, and (2) our non-management
directors, each of whom are independent directors under the
NYSEs Corporate Governance Standards, meet regularly in
executive session without any members of management present and
Mr. Permut currently presides at such sessions. The
director who chairs the executive sessions of the Companys
non-management directors
8
facilitates communication between the independent directors and
the Chairman of the Board, ensures appropriate information is
sent to the Board and works with the Chairman to identify agenda
and other discussion items for the Board.
Role
of the Board of Directors in the Oversight of Risk
Management
The Audit Committee takes the lead for the Board in oversight of
the Companys risk management activities. At least
quarterly the Audit Committee receives a review of the
Companys investment portfolio and its quarterly results
from the Companys Chief Financial Officer and an internal
audit report and a Sarbanes-Oxley compliance report from the
Companys internal auditor, David Landau &
Associates, LLC. The review of the Companys investment
portfolio and its quarterly results covers a wide range of
topics and potential issues that could impact the Company,
including matters such as investment performance, investment
risks, counterparty risks of its asset management activities and
balance sheet, results of operations, key financial metrics and
operational and integration risks. The internal audit plan for
the Company is approved by the Audit Committee and regular
reports on the progress and results of the internal audit
program are provided to the Audit Committee. The Companys
independent registered public accounting firm, Ernst &
Young LLP, provides the regular audit report. Aspects of these
reports are presented to the full Board at least quarterly by
either the Chairman of the Audit Committee or the member of
management responsible for the given subject area. In addition,
the entire board of directors receives reports from the General
Counsel of the Manager with respect to any legal or regulatory
matters that could materially affect the Company.
Director
Independence
Of our ten directors, six have been determined by our Board of
Directors to be independent for purposes of the NYSE listing
standards. Our independent directors are Messrs. Kojaian,
Lazar and Permut, Drs. Dykes and Helmreich and
Ms. Edwards. In determining director independence, the
Board of Directors reviewed, among other things, whether any
transactions or relationships currently exist, or have existed
in the past, between each director and the Company and its
subsidiaries, affiliates and equity investors or independent
registered public accounting firm. In particular, the board
reviewed current or recent business transactions or
relationships or other personal relationships between each
director and the Company, including such directors
immediate family and companies owned or controlled by the
director or with which the director was affiliated. The purpose
of this review was to determine whether any such transactions or
relationships failed to meet any of the objective tests
promulgated by the NYSE for determining independence or were
otherwise sufficiently material as to be inconsistent with a
determination that the director is independent.
The Board also examined whether there were any transactions or
relationships between each director and members of the senior
management of the Company or their affiliates. In reviewing the
independence of Dr. Helmreich, the board carefully reviewed
whether (1) Mr. Kaufmans and
Dr. Helmreichs current and prior participation on the
boards of North Shore Hebrew Academy, North Shore Hebrew Academy
High School and NSH Affordable Housing of Indiana, Inc., all of
which are
not-for-profit
organizations, (2) Dr. Helmreichs engagement
since the summer of 2000 as an external consultant by North
Shore Hebrew Academy in the capacity of chairman of Academic
Affairs of North Shore Hebrew Academy and
(3) Dr. Helmreichs prior receipt of consulting
fees from Arbor Management, LLC should, based upon the totality
of the circumstances, be deemed to be material so as to preclude
a finding that Dr. Helmreich is independent. The board, in
particular, reviewed the materiality of the transactions to the
parties involved, the compensation and timing of
Dr. Helmreichs advisory role with North Shore Hebrew
Academy and Arbor Management, LLC and the absence of any
employment or compensatory capacity by Dr. Helmreich with
NSH Affordable Housing of Indiana, Inc. In reviewing the
independence of Mr. Kojaian, the board carefully reviewed
whether (1) Mr. Kaufmans and
Mr. Kojaians co-investment in an operating company
and (2) Mr. Kojaians beneficial ownership of
approximately 4.4% of the Companys common stock, should,
based upon the totality of the circumstances, be deemed to be
material so as to preclude a finding that Mr. Kojaian is
independent. The board, in particular, reviewed the materiality
of the transactions to the parties involved. In reviewing the
independence of Mr. Permut, the board carefully reviewed
whether Mr. Permuts previous designation as the legal
guardian of the then minor children of Mr. Kaufman and his
wife in the event of their death and his appointments as a
secondary successor executor under the wills of Mr. Kaufman
and his wife and the initial
9
successor trustee of certain of Mr. Kaufmans estate
planning vehicles should, based upon the totality of the
circumstances, be deemed to be material so as to preclude a
finding that Mr. Permut is independent. As a result of its
review, the board affirmatively determined that
Messrs. Kojaian, Lazar and Permut, Drs. Dykes and
Helmreich and Ms. Edwards were independent under the NYSE
listing standards. In 2007, 2008 and until his appointment as
the General Counsel of Arbor Commercial Mortgage in September
2009, the Board had affirmatively determined that
Mr. Bishar was independent under the NYSE listing standards.
Board
Committees
Our board has established four standing committees, the
principal functions of which are briefly described below.
Matters put to a vote at any one of our four committees must be
approved by a majority of the directors on the committee who are
present at a meeting at which there is a quorum or by unanimous
written consent of the directors on that committee. Our Board of
Directors may from time to time establish certain other
committees to facilitate the management of the Company.
Audit
Committee
Our Board of Directors has established an Audit Committee, which
is currently composed of three of our independent directors,
Mr. Lazar, Dr. Dykes and Ms. Edwards.
Mr. Bishar served as the fourth member of the audit
committee from the beginning of 2009 until his appointment as
the General Counsel of Arbor Commercial Mortgage in September
2009. During 2009, the Audit Committee met on five occasions and
acted by written consent on one occasion. The Audit Committee
selects and appoints the Companys independent registered
public accounting firm and assists the board in overseeing
(1) the integrity of the Companys financial
statements, (2) the Companys independent registered
public accounting firms qualifications and independence,
(3) the performance of the Companys independent
registered public accounting firm and the Companys
internal audit function and (4) the Companys
compliance with legal and regulatory requirements.
Mr. Lazar currently serves as chairman of the Audit
Committee. The board has determined that Mr. Lazar
qualifies as an Audit committee financial expert as
defined by the rules of the SEC and that each member of the
Audit Committee is financially literate. The Audit
Committee is governed by a charter that has been adopted by the
Board of Directors.
Compensation
Committee
Our Board of Directors has established a Compensation Committee,
which is composed of four of our independent directors,
Messrs. Kojaian, Lazar and Permut and Dr. Helmreich.
During 2009, the Compensation Committee met on four occasions
and acted by written consent on two occasions. Mr. Kojaian
is currently the chairman of the Compensation Committee. The
principal functions of the Compensation Committee are to
(1) evaluate the performance of our officers and certain of
the most highly compensated employees of Arbor Commercial
Mortgage who provide services to us pursuant to the amended
management agreement (as described further in Executive
Compensation); (2) review the compensation payable to
our officers and non-employee directors and certain of the most
highly compensated employees of Arbor Commercial Mortgage who
provide services to us pursuant to the amended management
agreement; (3) evaluate the performance of Arbor Commercial
Mortgage; (4) review the compensation and fees payable to
Arbor Commercial Mortgage under our management agreement;
(5) review and discuss with management the compensation
discussion and analysis disclosure included in this proxy
statement; and (6) administer the issuance of any stock to
our employees or the employees of Arbor Commercial Mortgage who
provide services to us. The Compensation Committee is governed
by a charter that has been adopted by the Board of Directors.
Nominating/Corporate
Governance Committee
Our Board of Directors has established a Nominating/Corporate
Governance Committee, which is composed of three of our
independent directors, Drs. Helmreich and Dykes and
Ms. Edwards. Dr. Dykes has served as a member of this
committee since May 2009. Mr. Bishar also served as a
member of this committee from the beginning of 2009 until his
appointment as the General Counsel of Arbor Commercial Mortgage
in September 2009. During 2009, the Nominating/Corporate
Governance Committee met on two occasions and acted by written
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consent on one occasion. Dr. Helmreich currently serves as
chairman of the Nominating/Corporate Governance Committee. The
Nominating/Corporate Governance Committee is responsible for
seeking, considering and recommending to the board qualified
candidates for election as directors and recommending a slate of
nominees for election as directors at each annual meeting of
stockholders. The Nominating/Corporate Governance Committee is
also responsible for (1) preparing and submitting to the
board for adoption the committees selection criteria for
director nominees; (2) reviewing and making recommendations
on matters involving general operation of the board and our
corporate governance; and (3) annually recommending to the
board nominees for each committee of the board. In addition, the
committee annually facilitates the assessment of the Board of
Directors performance as a whole and of the individual
directors and reports thereon to the board. The
Nominating/Corporate Governance Committee is governed by a
charter that has been adopted by the Board of Directors.
Copies of the charters of the Audit Committee, the Compensation
Committee and the Nominating/Corporate Governance Committee
charter are available on our website, www.arborrealtytrust.com,
under the heading Investor Relations Corporate
Governance. You may also obtain these documents in print
free of charge by writing the Company at 333 Earle Ovington
Boulevard, Suite 900, Uniondale, New York, 11553:
Attention: Investor Relations.
Independent
Director Committee
Our Board of Directors has established an Independent Director
Committee, which is currently composed of our six independent
directors, Messrs. Kojaian, Lazar and Permut,
Drs. Helmreich and Dykes and Ms. Edwards.
Dr. Dykes currently serves as chairman of the Independent
Director Committee. The Independent Director Committee is
responsible for, among other things, considering and voting upon
matters as to which the Board of Directors determines Arbor
Commercial Mortgage or its affiliates (other than the Company or
its subsidiaries) or any of our directors (other than an
independent director) or officers has a conflict of interest,
including the approval of transactions between the Company and
Arbor Commercial Mortgage. The individual who serves as the
chair of the Independent Director Committee rotates each year
among our independent directors.
In March 2009, the Independent Director Committee formed a
subcommittee consisting of Messrs. Lazar, Bishar and Permut
to consider related party transactions proposed to be entered by
Company on the one hand and Arbor Commercial Mortgage,
Mr. Kaufman or any of their respective affiliates (other
than the Company) on the other hand, when expedient approval of
such transaction would be deemed necessary or appropriate. As of
his appointment as the General Counsel of Arbor Commercial
Mortgage in September 2009, Mr. Bishar no longer served on
this subcommittee. In September 2009, Dr. Dykes was
appointed to this subcommittee in order to replace
Mr. Bishar as the third member. In 2009, the Independent
Director Committee specifically delegated to this subcommittee
the power and authority to negotiate the terms and conditions of
the amendment and restatement of the Companys management
agreement with Arbor Commercial Mortgage, which is described
under Certain Relationships and Related
Transactions Relationships with Our
Manager Management and Services Agreements.
However, all of the Companys then-independent directors
approved the final terms of the amended management agreement in
August 2009. Since the amendment of the management agreement in
2009, the Company has agreed to reimburse Arbor Commercial
Mortgage for its actual costs incurred to manage the
Companys business and operations pursuant to the terms of
an annual budget, which is subject to the review and approval of
the Independent Director Committee of the Board on an annual
basis and is also subject to quarterly reconciliation procedures.
Non-Management
Directors
As required by the NYSEs Corporate Governance Standards,
our non-management directors, each of whom are independent
directors under the NYSEs Corporate Governance Standards,
meet regularly in executive session without any members of
management present. Mr. Permut currently presides at such
regularly scheduled executive sessions of the non-management
directors.
11
Stockholder
and Interested Party Communications with Directors
The Board of Directors has established a process to receive
communications from stockholders and other interested parties.
Interested parties and stockholders may contact any member of
the board (or all members), including non-management directors,
by mail. To communicate with the Board of Directors, any
individual director or any group or committee of directors,
correspondence should be addressed to the Board of Directors or
any such individual director or group or committee of directors
by either name or title. All such correspondence should be sent
in care of the Corporate Secretary at Arbor Realty Trust, Inc.,
333 Earle Ovington Boulevard, Suite 900, Uniondale, New
York, 11553.
All communications received as set forth in the preceding
paragraph will be opened by the office of the Companys
Corporate Secretary for the sole purpose of determining whether
the contents represent a message to our directors. Any contents
that are not in the nature of advertising, promotions of a
product or service or patently offensive material will be
forwarded promptly to the addressee. In the case of
communications to the board or any group or committee of
directors, the office of the Corporate Secretary will make
sufficient copies of the contents to send to each director who
is a member of the group or committee to which the envelope is
addressed.
Director
Nomination Procedures; Diversity
The Nominating/Corporate Governance Committee generally believes
that, at a minimum, candidates for membership on the Board of
Directors should have demonstrated an ability to make a
meaningful contribution to the Board of Directors
oversight of our business and affairs and have a record and
reputation for honest and ethical conduct. The
Nominating/Corporate Governance Committee recommends director
nominees to the Board of Directors based on, among other things,
its evaluation of a candidates experience, knowledge,
skills, expertise, integrity, ability to make independent
analytical inquiries, understanding of our business environment
and a willingness to devote adequate time and effort to board
responsibilities. In making its recommendations to the Board of
Directors, the Nominating/Corporate Governance Committee also
seeks to have the Board nominate candidates who have diverse
backgrounds and areas of expertise so that each member can offer
a unique and valuable perspective.
The Nominating/Corporate Governance Committee may identify
potential nominees by asking current directors and executive
officers to notify the committee if they become aware of persons
who meet the criteria described above, especially business and
civic leaders in the communities in which we operate. It may
also engage firms, at our expense, that specialize in
identifying director candidates. As described below, the
Nominating/Corporate Governance Committee will also consider
candidates recommended by stockholders.
The Nominating/Corporate Governance Committee anticipates that
once a person has been identified by the committee as a
potential candidate, the committee will collect and review
publicly available information regarding the person to assess
whether the person should be considered further. If the
Nominating/Corporate Governance Committee determines that the
candidate warrants further consideration, the chairman or
another member of the committee will contact the person. If the
person expresses a willingness to be considered and to serve on
the Board of Directors, the Nominating/Corporate Governance
Committee will request information from the candidate, review
the persons accomplishments and qualifications, including
in light of any other candidates that the committee might be
considering, and conduct one or more interviews with the
candidate. In certain instances, members of the
Nominating/Corporate Governance Committee may contact one or
more references provided by the candidate or may contact other
members of the business community or other persons that may have
greater first-hand knowledge of the candidates
accomplishments.
In addition to stockholder proposals of director nominees
submitted in accordance with our bylaws, as summarized below
under Stockholder Proposals for 2011, the
Nominating/Corporate Governance Committee will consider written
recommendations from stockholders of potential director
candidates. Such recommendations should be submitted to the
Nominating/Corporate Governance Committee in care of the
Corporate Secretary at
12
Arbor Realty Trust, Inc., 333 Earle Ovington Boulevard,
Suite 900, Uniondale, New York, 11553. Director
recommendations submitted by stockholders should include the
following:
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the name, age, business address and residence address of the
individual(s) recommended for nomination;
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the class, series and number of any shares of our stock that are
beneficially owned by the individual(s) recommended for
nomination;
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the date such shares of our stock were acquired by the
individual(s) recommended for nomination and the investment
intent of such acquisition; and
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all other information relating to such candidate that would be
required to be disclosed pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the
Exchange Act), including such persons written
consent to being named in the proxy statement as a nominee and
to serving as a director if elected.
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Stockholder nominations and proposals submitted in accordance
with our bylaws must be delivered to the Corporate Secretary not
earlier than the 120th day and not later than the close of
business on the 90th day prior to the first anniversary of
the date of mailing of the notice for the preceding years
annual meeting of stockholders; provided, however, that if the
date of mailing of the notice for the annual meeting is advanced
more than thirty days prior to or delayed by more than thirty
days after the anniversary of the mailing of the notice for the
preceding years annual meeting, the stockholder
recommendation and information described above must be delivered
not earlier than the 120th day prior to the mailing of the
notice for the upcoming annual meeting and not later than the
close of business on the later of (1) the 90th day
prior to the mailing of the notice for the upcoming annual
meeting of stockholders and (2) the 10th day following
the date on which public announcement of the mailing of the
notice for the upcoming annual meeting is first made.
The Nominating/Corporate Governance Committee expects to use a
similar process to evaluate candidates to the Board of Directors
recommended by stockholders as the one it uses to evaluate
candidates otherwise identified by the committee.
Director
Attendance at Annual Meeting
We do not currently maintain a policy requiring our directors to
attend the annual meeting; however, attendance by our directors
is encouraged. Nine of our directors attended the 2009 annual
meeting of stockholders.
13
AUDIT
COMMITTEE REPORT AND DISCLOSURES
The following report of the Audit Committee (the Audit
Committee) of the Board of Directors (the Board of
Directors) of Arbor Realty Trust, Inc., a Maryland
corporation (the Company), does not constitute
soliciting material and should not be considered filed or
incorporated by reference into any other filing by the Company
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, except to the extent the
Company specifically incorporates this report by reference
therein.
The Audit Committee operates under a written charter adopted by
the Board of Directors. The Board of Directors has determined
that all members of the Audit Committee meet the independence
standards established by the NYSE.
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors. The
Companys management has the primary responsibility for the
financial statements and the reporting process, including the
system of internal controls. The independent registered public
accounting firm is responsible for performing an audit of the
Companys consolidated financial statements in accordance
with generally accepted accounting principles and issuing a
report thereon. The Audit Committee reviews and oversees these
processes, including oversight of (1) the integrity of the
Companys financial statements, (2) the Companys
independent registered public accounting firms
qualifications and independence, (3) the performance of the
Companys independent registered public accounting firm and
the Companys internal audit function and (4) the
Companys compliance with legal and regulatory requirements.
In discharging its oversight role, the Audit Committee reviewed
and discussed the audited financial statements contained in the
Companys Annual Report to Stockholders for fiscal year
ended December 31, 2009 with the Companys management
and independent registered public accounting firm. Management
represented to the Audit Committee that the Companys
consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United
States. The Audit Committee also discussed with the independent
registered public accounting firm the matters required by
Statement on Auditing Standard No. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU section 380), as adopted
by the Public Company Accounting Oversight Board
(PCAOB) in rule 3200T.
In addition, the Audit Committee discussed with the independent
registered public accounting firm the registered public
accounting firms independence from the Company and its
management, and the independent registered public accounting
firm provided to the Audit Committee the written disclosures and
letter required from the independent registered public
accounting firm by PCAOB Ethics and Independence Rule 3526
Communications with Audit Committee Concerning
Independence.
The Audit Committee discussed with the Companys internal
auditors and independent registered public accounting firm the
overall scope and plans for their respective audits. The Audit
Committee met with the internal auditors and independent
registered public accounting firm, with and without management
present, to discuss the results of their examinations, the
evaluations of the Companys internal controls, and the
overall quality of the Companys financial reporting.
Based on the review and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the
audited financial statements be included in the Companys
Annual Report on
Form 10-K
for the year ended December 31, 2009 for filing with the
Securities and Exchange Commission.
Audit Committee:
Melvin F. Lazar (Chairman)
Archie R. Dykes
Karen K. Edwards
April 6, 2010
14
EXECUTIVE
OFFICERS
Our executive officers are elected annually by our Board of
Directors and serve for a term of one year and until their
respective successors are elected and qualify. Set forth below
is information regarding our executive officers, as of the date
of this proxy statement, unless otherwise indicated:
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Name
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Age
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Position
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Ivan Kaufman(*)
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49
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Chairman of the Board of Directors, Chief Executive Officer and
President
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Paul Elenio
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42
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Chief Financial Officer and Treasurer
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Gene Kilgore
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43
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Executive Vice President Structured Securitization
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Fred Weber
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49
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Executive Vice President Structured Finance
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Walter K. Horn(*)
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67
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Corporate Secretary and Director
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John Felletter
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52
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Senior Vice President Asset Management
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Biographical information is provided above under Board of
Directors. |
Paul Elenio. Mr. Elenio has served as our
Chief Financial Officer and Treasurer since September 2005.
Mr. Elenio joined Arbor National Holdings, the predecessor
company of our Manager, Arbor Commercial Mortgage, in 1991. In
1995, he was promoted to Vice President, Controller, in 2002
assumed the position of Vice President of Finance and in 2004
was further promoted to Senior Vice President, Finance.
Mr. Elenio is responsible for overseeing all aspects of our
financial operations. This includes financial reporting, tax
planning, budgeting, and the appropriate utilization of our
capital. He is also in charge of investor relations.
Mr. Elenio also serves on Arbor Commercial Mortgages
executive committee. Prior to joining Arbor Commercial Mortgage,
Mr. Elenio was employed with Ernst & Young from
1989 to 1990 in the auditing department.
Gene Kilgore. Mr. Kilgore has served as
our Executive Vice President Structured
Securitization since October 2004. Mr. Kilgore also serves
on Arbor Commercial Mortgages executive committee. From
September 2001 to September 2004, Mr. Kilgore was a
portfolio manager for ZAIS Group, LLC, a structured finance
investment advisor. From September 2000 to August 2001,
Mr. Kilgore was director of risk finance at Barclays
Capital. From September 1996 to September 2000, Mr. Kilgore
worked at Standard & Poors Ratings Service,
where he was a director in the collateralized debt obligations
group. He has also served as Vice President of Corporate Lending
and Commercial Real Estate at Wachovia Bank.
Fred Weber. Mr. Weber has served as our
Executive Vice President Structured Finance since
June 2003. He also continues to provide services to Arbor
Commercial Mortgage in his capacity as a continuing member of
Arbor Commercial Mortgages executive committee.
Mr. Weber was employed by Arbor Commercial Mortgage from
May 1999 until July 1, 2003. At Arbor Commercial Mortgage,
Mr. Weber oversaw Arbor Commercial Mortgages
structured finance and principal transaction group, where he was
responsible for origination, underwriting and closing
coordination of debt and equity financing for various asset
types and classes of commercial real estate nationwide. He has
been involved in the mortgage banking industry for more than
18 years and has extensive real estate finance and
acquisition experience. Mr. Weber is a member of the real
estate finance committee of the Real Estate Board of New York.
From July 1997 through February 1999, Mr. Weber was a
partner and co-head of the real estate department with Kronish
Lieb Weiner & Hellman LLP. Previously, Mr. Weber
was a partner with the law firm of Weil, Gotshal &
Manges LLP.
John Felletter. Mr. Felletter has served
as our Senior Vice President of Asset Management since November
2008. He was a director at UBS from 1999 to 2006. In 2006, UBS
created Dillon Read Asset Management and Mr. Felletter
served as a Director of the manager of that fund from 2006 to
August 2007. Mr. Felletter has also held portfolio/asset
management positions at Capital Trust (from 1998 to 1999),
Phoenix Realty Securities (from 1996 to 1998), with the J.E.
Roberts/Goldman Sachs Venture (from 1994 to 1996). Previously,
Mr. Felletter worked for the Resolution
Trust Corporation, Citibank, Capital Alliance, and
Connecticut National Bank. Mr. Felletter has over
27 years of commercial real estate debt and equity
experience, including acquisitions/dispositions, loan
securitizations, exposure to troubled debt restructuring,
workout and bankruptcy and oversight of portfolio monitoring,
investor reporting and loan servicing. Mr. Felletter holds
the Chartered Financial Analyst designation. Prior to his
corporate career, Mr. Felletter served as a First
Lieutenant in the United States Marine Corps.
15
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Compensation
Philosophy and Principles
The Compensation Committee acknowledges that the real estate
finance industry is highly competitive and that experienced
professionals have significant career mobility. The Company
competes for executive talent with a large number of real estate
investment companies and specialty finance companies, some of
which are privately owned and some of which have significantly
larger market capitalization than the Company. We are a
specialized company in a highly competitive industry and our
ability to attract, retain and reward our named executive
officers and other key employees is essential to
maintaining our competitive position in the real estate finance
industry. For 2009, our named executive officers are
Mr. Kaufman, our Chief Executive Officer, Mr. Elenio,
our Chief Financial Officer, and Messrs. Weber, Kilgore and
Felletter, the three most highly compensated executive officers
(other than our Chief Executive Officer and our Chief Financial
Officer) who were serving as executive officers of the Company
as of the end of 2009. All cash compensation and benefits for
Messrs. Kaufman and Elenio are paid or provided by Arbor
Commercial Mortgage, our Manager, pursuant to the amended
management agreement described below, because they are employees
of our Manager. The Company is required to reimburse Arbor
Commercial Mortgage for a portion of the base salaries and
annual cash bonuses paid to employees of Arbor Commercial
Mortgage who provide services to the Company, although the
Compensation Committee has sole discretion to approve the
Companys portion of the annual cash bonus payable to the
most highly compensated of these employees, including
Messrs. Kaufman and Elenio.
The Compensation Committees goal is to maintain
compensation programs that are competitive within our industry,
reward executives if the Company achieves its operational,
financial and strategic goals and build stockholder value. In
determining the form and amount of compensation payable by the
Company to the named executive officers, the Compensation
Committee is guided by the following objectives and principles:
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Compensation levels should be sufficiently competitive to
attract and retain key executives. The Company aims to
ensure its executive compensation program attracts, motivates
and retains high performance talent and rewards them for the
Company achieving and maintaining a competitive position in its
industry. The Compensation Committee believes that total
compensation should increase with position and responsibility.
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Compensation should relate directly to performance and
incentive compensation should constitute a substantial portion
of total compensation. The Company aims to promote a
pay-for-performance
culture, with a majority of total compensation being at
risk. Accordingly, a substantial portion of total
compensation should be tied to and vary with the Companys
operational, financial and strategic performance, as well as
individual performance. The Compensation Committee believes that
executives with greater roles and the ability to directly impact
the Companys strategic goals and long-term results should
bear a greater proportion of the risk if these goals and results
are not achieved.
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Long-term incentive compensation should align
executives interests with the Companys
stockholders. Awards of equity-based compensation encourage
executives to focus on the Companys long-term growth and
prospects and motivate executives to manage the Company from the
perspective of owners with a meaningful stake in the Company, as
well as to focus on long-term career orientation.
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The Compensation Committee does not employ a specific policy,
practice or formula regarding an allocation between cash and
non-cash compensation with respect to compensation paid to
executives by the Company.
The Compensation Committee reviews at least annually the goals
and objectives of the Companys executive compensation
plans, incentive compensation plans, equity-based plans and
other compensation and employee benefit plans. The Compensation
Committee believes that the Companys benefits are
competitive with its peers and provide adequate incentives for
strong performance.
16
Compensation
Setting Process
Managements
Role in the Compensation-Setting Process
The Compensation Committee believes the Companys Chief
Executive Officer, Mr. Kaufman, is in the best position to
determine the responsibilities of each other executive officer
and observe how well each executive performs his
responsibilities. Mr. Kaufman provides recommendations to
the Compensation Committee regarding base salary levels and the
form and amount of the annual cash incentive award and
restricted stock awards paid to all of the other executive
officers by the Company. The Compensation Committee may exercise
its discretion in modifying any of the recommendations and is
responsible for ultimately approving all compensation
arrangements payable by the Company to the named executive
officers. Mr. Kaufman does not participate in any
deliberations or approvals by the Compensation Committee with
respect to any equity-based or other incentive awards that our
Compensation Committee may grant to him. Additionally,
Mr. Kaufman and other officers of the Company will provide
compensation and other information to the Compensation Committee
upon its request.
Mr. Kaufmans recommendations are based on his
evaluation of the executive officers performance, their
contribution toward achieving operational, financial and
strategic goals, current and historical elements of each
executives compensation and the financial performance of
the Company.
Compensation
Consultant
The charter of the Compensation Committee provides the committee
with the sole authority to retain and terminate any compensation
consulting firm or other adviser as it deems appropriate. For
2009, the Compensation Committee did not engage a compensation
consulting firm.
Determining
Compensation Levels
The Compensation Committee annually determines targeted total
compensation levels, as well as the individual compensation
components payable by the Company to the named executive
officers. In making such determinations, the Compensation
Committee reviews and considers (1) recommendations of the
Companys Chief Executive Officer, (2) historical
compensation levels for each named executive officer,
(3) industry and market conditions and the Companys
future objectives and challenges, and (4) overall
effectiveness of the executive compensation program. The
Compensation Committee does not utilize specific
performance-based goals and does not engage in benchmarking
compensation, but reviews general industry trends as well as the
overall performance of the Company in determining total
compensation levels.
Based upon its own judgment, the Compensation Committee approved
the Companys allocable portion of the total compensation
payable to Mr. Kaufman with respect to his service in 2009.
Based upon discussions and recommendations of the Companys
Chief Executive Officer, and upon its own judgment, the
Compensation Committee approved (i) the base salary and
cash incentive award of each of Messrs. Weber, Kilgore and
Felletter with respect to their service in 2009, and
(ii) the Companys allocable portion of the base
salary and cash incentive award payable to Mr. Elenio with
respect to his service in 2009. The Compensation Committee
believes these approved forms and levels of compensation are
reasonable, appropriate and in line with the Companys
compensation philosophy and principles.
Forms
of Compensation
Total compensation for the named executive officers, as paid by
the Company, is comprised of one or more of the following
components:
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base salary;
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annual incentive awards;
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long-term incentive awards; and
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retirement and other benefits.
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17
Our named executive officers do not have employment, severance
or change of control agreements, although their restricted stock
award agreements provide for accelerated vesting upon our change
of control as further described under Annual
Incentive Awards Restricted Stock Awards. Our
named executive officers serve for a term of one year and until
their respective successors are elected and qualify, which
enables the Company to terminate their employment with
discretion as to the terms of any severance arrangement. This is
consistent with the Companys performance-based employment
and compensation philosophy.
Base
Salary
Salaries provide executives with a base level of income and help
achieve the objectives outlined above by attracting and
retaining strong talent. The Compensation Committee reviews and
approves (i) the base salaries of Messrs. Weber,
Kilgore and Felletter, and (ii) the Companys
allocable portion of the base salary payable to
Messrs. Kaufman and Elenio. Generally, base salaries are
not based upon specific measures of corporate performance, but
are determined by (1) tenure of service, (2) scope and
complexity of the position, including current job
responsibilities, (3) an evaluation of each officers
individual performance and contribution to the Companys
operational, financial and strategic goals and objectives, and
(4) with respect to the named executive officers other than
Mr. Kaufman, the recommendations of our Chief Executive
Officer. Consistent with compensation practices commonly applied
in the real estate finance industry, salaries generally form a
lower percentage of an executives total compensation, with
a substantial portion of total compensation coming from
incentive compensation that is tied to Company performance.
For a further description of the base salaries paid to the named
executive officers by the Company in 2009, please refer to the
Summary Compensation Table for 2009 set forth below.
Annual
Incentive Awards
The Company aims to promote a
pay-for-performance
culture, with a majority of total compensation being at
risk. The annual incentive award paid by the Company may
be in the form of cash, stock-based awards under the 2003
Omnibus Stock Incentive Plan (the Stock Incentive
Plan) or a combination thereof, at the discretion of the
Compensation Committee. The Company does not have any specific
policy, practice or formula regarding an allocation between the
cash component and the stock-based component. These awards are
designed to help achieve the objectives of the compensation
program and may vary significantly from year to year. The
Compensation Committee has not established any specific
performance-based goals that must be met in order to receive the
annual incentive award.
The Compensation Committee believes that the structure and
ultimate payout amounts of the incentive awards are appropriate
to attract, retain and reward the named executive officers, are
competitive with those offered by our peers, provide a strong,
long-term performance and retention incentive, support a
pay-for-performance
culture, and increase the applicable named executive
officers vested interest in the Company.
For 2009, the Compensation Committee determined to pay the
annual incentive awards of the named executive officers in cash,
in amounts relative to each individuals contributions and
responsibilities. Individuals with increased ability to directly
impact the Companys performance were allocated larger
awards because they bear a greater proportion of the risk that
compensation will decrease if the Company does not perform as
expected. In March 2010, the Company paid cash incentive awards
to the following executives with respect to their performance in
2009:
Mr. Weber received an annual cash incentive award of
$1,550,000 directly from the Company, and $450,000 as the
Companys allocable portion of Arbor Commercial
Mortgages bonus paid to Mr. Weber that was reimbursed
by us, for managing our loan portfolio in 2009.
Mr. Kilgore received an annual cash incentive award of
$600,000 for managing our securitization platform.
Mr. Felletter received an annual cash incentive award of
$275,000 for monitoring our portfolio.
The Companys independent directors determined to reimburse
the Manager $135,000 in cash as the Companys allocable
portion of the annual cash incentive award payable to
Mr. Elenio.
18
Long-Term
Incentive Awards
Restricted Stock Awards. Since the
Companys formation in 2003, the Compensation Committee has
granted the named executive officers (as well as other employees
of the Company, employees of the Manager who provide services to
the Company and the Companys non-management directors)
restricted stock awards, consisting of shares of the
Companys common stock that vest annually over a multi-year
period, subject to the recipients continued service to the
Company. Employees realize value as the common stock underlying
these restricted stock awards vests, with the value increasing
if the Companys stock performance increases after the date
of grant. Additionally, all of the common stock underlying these
restricted stock awards, whether or not vested, is entitled to
cash dividends paid to the Companys stockholders, although
no such dividends were paid to stockholders in 2009. All
restricted stock awards have been granted pursuant to the Stock
Incentive Plan.
The Compensation Committee believes that stock-based awards must
be sufficient in size and value to provide a strong, long-term
performance and retention incentive for named executive
officers, and to increase their vested interest in the Company.
In determining the equity component of a named executive
officers compensation, the Compensation Committee
considers all relevant factors, including the Companys
performance and relative stockholder return, the awards granted
in past years and the relative value of the awards.
Stock-Based Awards for 2009. On April 21,
2009, the Compensation Committee granted each of Messrs. Elenio,
Weber and Kilgore 30,000 shares of common stock with
respect to their 2008 performance. On April 21, 2009, the
Compensation Committee also granted 15,000 shares of common
stock to Mr. Felletter. In order to emphasize employee
retention at a critical time for the Company, and due to the
relatively low value of these grants based on the current market
value of the Companys common stock, all of these grants
were fully vested as of the date of grant. For the same reasons,
the Compensation Committee decided in April 2009 to accelerate
the vesting of all then unvested shares underlying restricted
stock awards previously granted to Messrs. Elenio, Weber
and Kilgore (as well as all other recipients of restricted stock
grants to such date). The following table sets forth each named
executive officer who owned shares subject to vesting prior to
such acceleration and the number of shares that became fully
vested in April 2009 due to such acceleration:
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Number of
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Named Executive Officer
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Shares Accelerated
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Ivan Kaufman
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Fred Weber
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130,606
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Gene Kilgore
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66,206
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Paul Elenio
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26,906
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Consistent with its historical practice of granting annual stock
based awards to the named executive officers (other than
Mr. Kaufman) with respect to their service to the Company
and performance in the most recently completed fiscal year, in
2010, the Compensation Committee may, in its sole discretion,
grant certain of our named executive officers stock-based
awards, consisting of restricted stock with a multi-year vesting
schedule and/or stock options with a multi-year vesting schedule
under our Stock Incentive Plan with respect to their service to
the Company and performance in 2009. In view of his significant
ownership of the Companys common stock, the Compensation
Committee did not grant Mr. Kaufman any stock-based awards
in 2009, and does not expect to grant Mr. Kaufman any
stock-based awards in 2010.
The Company does not have a formal policy on timing equity
compensation grants in connection with the release of material
non-public information to affect the value of compensation. The
Compensation Committee has generally granted stock-based awards
once a year in the month of April.
Future Grants of Stock Options. The
Compensation Committee has traditionally viewed restricted stock
awards as more effective than stock options in achieving the
Companys compensation objectives. However, given the
current environment, the significant dislocation in the capital
and credit markets in general and the commercial real estate
market in particular, and the significant decline in the market
value of the Companys common stock over the past year, the
Compensation Committee now considers stock options, in addition
to restricted stock awards, as a viable tool to retain key
employees on a going forward basis. To the extent that the
Compensation Committee decides to grant stock options under the
Stock Incentive Plan in the future, (i) the exercise price
for the stock options
19
will be equivalent to the market price of the underlying common
stock on the date of grant, (ii) the stock options will
vest over a multi-year period, and (iii) the stock options
will be exercisable for ten years from the date of grant. Stock
options align employee incentives with the interests of
shareholders because they have value only if the Companys
stock price increases over time. The Compensation Committee
believes that the ten-year term of the stock options will help
focus employees on the Companys long-term growth. Because
the Companys stock options will vest over a multi-year
period, stock options are intended to help retain key associates
and keep employees focused on long-term performance.
Retirement
and Other Benefits
The Company maintains a 401(k) plan through an affiliate for all
employees, including the named executive officers, as a source
of retirement income by enabling participants to save on a
pre-tax basis and by providing Company matching contributions.
All of the named executive officers participated in the 401(k)
plan in 2009. However, the Company only made matching
contributions for Messrs. Weber, Kilgore and
Mr. Felletter. Arbor Commercial Mortgage made a matching
contribution for Mr. Elenio, and the Company reimbursed the
Manager for an allocable portion of the total matching
contribution pursuant to the cost reimbursement provisions of
the amended management agreement.
The Company does not maintain any non-qualified deferred
compensation plans that would allow executives to elect to defer
receipt (and taxation) of their base salaries, bonuses or other
compensation.
The named executive officers are eligible to participate in the
Companys active employee flexible benefits plans, which
are generally available to all Company employees. Under these
plans, all employees are entitled to medical, dental, vision,
life insurance and long-term disability coverage. Additionally,
all of the Companys employees are entitled to vacation,
sick leave and other paid holidays. The Compensation Committee
believes that the Companys commitment to provide the
employee benefits described above recognizes that the health and
well-being of the Companys employees contribute directly
to a productive and successful work life that enhances results
for the Company and its stockholders.
The Company provides all named executive officers who are
Company employees, Messrs. Weber, Kilgore and Felletter,
with (1) life insurance coverage equal to their annual
salary, subject to a maximum of $250,000, and (2) long-term
disability coverage equal to 60% of their current base salary,
up to a maximum annual benefit of $120,000. Arbor Commercial
Mortgage provided similar coverage for Mr. Elenio, and the
Company reimbursed the Manager for an allocable portion of the
total coverage contribution pursuant to the cost reimbursement
provisions of the amended management agreement.
For further information regarding the premiums paid on the named
executive officers insurance policy, please refer to the
Summary Compensation Table set forth below.
Deductibility
of Executive Compensation
Section 162(m) of the Internal Revenue Code generally
limits the deductible amount of total annual compensation paid
by a public company to each covered employee (the
chief executive officer and three other most highly compensated
executive officers of the Company other than the chief financial
officer) to no more than $1 million. Excluded from total
compensation for this purpose is compensation that is
performance-based within the meaning of
Section 162(m) of the Internal Revenue Code. Unless an
exception applies, compensation otherwise deductible in
connection with awards granted under the Stock Incentive Plan
will be subject to this limit. We expect that the majority of
the compensation paid by the Company to the named executive
officers in 2009 will be deductible to the Company. The
Compensation Committee will consider various alternatives to
preserving the deductibility of compensation payments and
benefits to the extent reasonably practicable and to the extent
consistent with its other compensation objectives. The Committee
has not adopted a formal policy that requires all compensation
paid to the named executives to be fully deductible.
20
Executive
Compensation in 2010
In March 2010, the Compensation Committee approved the salaries
of Messrs. Weber, Kilgore and Felletter for 2010, which did
not increase from 2009. In March 2010, the Compensation
Committee approved the portion of the salaries of
Messrs. Kaufman and Elenio that the Company is required to
reimburse Arbor Commercial Mortgage for pursuant to the amended
management agreement, which did not increase from 2009.
The Compensation Committee intends to continue its strategy of
compensating the Companys named executive officers through
programs that emphasize incentive compensation, fostering a
pay-for-performance
culture. To that end, a majority of executive compensation will
continue to be tied to Company and individual performance, while
maintaining an appropriate balance between cash and non-cash
compensation.
Management
Agreement
We are externally managed and advised by Arbor Commercial
Mortgage pursuant to the terms of the amended management
agreement described below. We believe Arbor Commercial
Mortgages experience and reputation positions it to
originate attractive investment opportunities for us. Our
management agreement with Arbor Commercial Mortgage was
developed to capitalize on synergies with Arbor Commercial
Mortgages origination infrastructure, existing business
relationships and management expertise. Since we currently
employ only three executive officers and 29 employees in
total, we rely to a significant extent on the facilities and
resources of our Manager to conduct our operations.
Cost
Reimbursement
For performing services under the amended management agreement,
we reimburse Arbor Commercial Mortgage for its actual costs
incurred to manage the Companys business and operations
pursuant to the terms of an annual budget, which is subject to
the review and approval of the Independent Director Committee of
the Board on an annual basis and is also subject to quarterly
reconciliation procedures. The Managers annual budget
includes an allocable portion of the base salaries, annual cash
bonuses and employee benefits paid to employees of the Manager
who provide services to the Company. We paid our Manager
$8.0 million pursuant to the
agreed-upon
budget of the Manager for 2009. A portion of this amount
represented the Companys allocable portion of the base
salary and annual cash bonuses paid to Messrs. Kaufman,
Elenio and Weber with respect to their service in 2009.
Because our amended management agreement provides that Arbor
Commercial Mortgage assumes principal responsibility for
managing our affairs, certain of our executive officers, who are
employees of our Manager, do not receive cash compensation or
benefits directly from us for serving as our executive officers.
However, pursuant to the terms of the amended management
agreement, the Company reimburses the Manager for a portion of
the base salaries, annual cash bonuses and employee benefits
paid to employees of the Manager who provide services to the
Company, including our Chief Executive Officer,
Mr. Kaufman, and our Chief Financial Officer,
Mr. Elenio. Such employees of the Manager are also eligible
to receive grants of equity-based incentive awards under the
Stock Incentive Plan. In their capacities as officers or
employees of our Manager or its affiliates, they devote such
portion of their time to our affairs as is required for the
performance of the duties of our Manager under the management
agreement.
In 2009, we also made a one-time payment of $3.0 million to
our Manager for costs incurred by the Manager in 2008.
Incentive
Compensation
We also pay our Manager incentive compensation based on our
performance as described in Certain Relationships and
Related Transactions Management and Services
Agreements.
In 2009, Arbor Commercial Mortgage did not earn an incentive
compensation fee. In 2008, Arbor Commercial Mortgage did not
earn an incentive compensation fee and the overpayment of the
incentive fee for the trailing twelve months in the amount of
$2.9 million, of which $1.4 million was paid in
116,680 shares of common stock and $1.5 million paid
in cash, was recorded and included in due from related party. In
June, 2009, Arbor Commercial Mortgage repaid the
$2.9 million in accordance with the amended management
agreement described
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above. In addition, we recorded a $7.3 million deferred
management fee recorded in the second quarter of 2008 related to
the incentive compensation fee recognized from the monetization
of the POM transaction in June 2008, which subsequently closed
in the second quarter of 2009. In 2008, the $7.3 million
deferred incentive compensation fee was paid in
355,903 shares of common stock and $4.1 million paid
in cash, and was reclassified to prepaid management fees. In
accordance with the amended management agreement, installments
of the annual incentive compensation are subject to quarterly
recalculation and potential reconciliation at the end of the
fiscal year and any overpayments are required to be repaid in
accordance with the management agreement. Since no incentive fee
was earned for 2009, the prepaid management fee is to be paid
back in installments of 25% due by December 31, 2010 and
75% due by June 30, 2012, with an option to make payment in
both cash and Arbor Realty Trust, Inc. common stock provided
that at least 50% of the payment is made in cash, and will be
offset against any future incentive management fees or
success-based payments earned by our manager prior to
June 30, 2012.
We pay the annual incentive compensation in four installments,
each within 60 days of the end of each fiscal quarter. The
calculation of each installment is based on results for the
12 months ending on the last day of the fiscal quarter for
which the installment is payable. These installments of the
annual incentive compensation are subject to recalculation and
potential reconciliation at the end of such fiscal year, and any
overpayments are required to be repaid in accordance with the
amended management agreement. Subject to the ownership
limitations in our charter, at least 25% of this incentive
compensation is payable to our manager in shares of our common
stock having a value equal to the average closing price per
share for the last 20 days of the fiscal quarter for which
the incentive compensation is being paid.
The amended management agreement also provides for one-time
incentive fees to be paid to our Manager upon the completion of
specified corporate objectives and in the sole discretion of the
Companys independent directors. In the third quarter of
2009, we paid the Manager a total of $4.1 million as
one-time incentive fee payments for the restructuring of our
then outstanding trust preferred securities and Wachovia debt
facilities.
Origination
Fees
Under the terms of the amended management agreement, origination
fees paid by borrowers for loans or investments made by us, less
any payments to unaffiliated third party brokers or other
unaffiliated third party costs in connection with the
origination of these investments, are retained by us or
otherwise reduce the base management fee installment for that
month.
Term
and Termination
The amended management agreement has an initial term up to
December 31, 2010 and is renewable automatically for an
additional one year period every year thereafter, unless
terminated with six months prior written notice. If we
terminate or elect not to renew the management agreement without
cause, we are required to pay a termination fee of
$10.0 million.
Compensation
Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has
reviewed and discussed the Compensation Discussion and
Analysis with the Companys management. Based upon
this review and their discussions, the Compensation Committee
recommended that the Board of Directors include the
Compensation Discussion and Analysis in the
Companys Proxy Statement for its 2010 annual meeting of
stockholders.
Compensation Committee:
C. Michael Kojaian (Chairman)
Kyle Permut
William Helmreich
Melvin F. Lazar
April 6, 2010
22
Executive
Compensation
Summary
Compensation Table for 2009
The following table sets forth the total compensation amounts
paid to our named executive officers for the years ended
December 31, 2009, 2008 and 2007.
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All Other
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Salary
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Bonus
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Stock Awards
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)(1)
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($)
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($)
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Ivan Kaufman
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2009
|
|
|
$
|
800,000
|
(2)
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
(2)
|
|
$
|
800,000
|
|
Chief Executive Officer and
|
|
|
2008
|
|
|
$
|
0
|
(2)
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
President
|
|
|
2007
|
|
|
$
|
0
|
(2)
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
(2)
|
|
$
|
0
|
|
Paul Elenio
|
|
|
2009
|
|
|
$
|
270,000
|
(2)
|
|
$
|
135,000
|
(2)
|
|
$
|
39,300
|
|
|
$
|
18,927
|
(2)
|
|
$
|
463,227
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
$
|
0
|
(2)
|
|
$
|
0
|
(2)
|
|
$
|
333,950
|
|
|
$
|
0
|
(2)
|
|
$
|
333,950
|
|
|
|
|
2007
|
|
|
$
|
0
|
(2)
|
|
$
|
0
|
(2)
|
|
$
|
105,840
|
|
|
$
|
0
|
(2)
|
|
$
|
105,840
|
|
Fred Weber
|
|
|
2009
|
|
|
$
|
500,000
|
|
|
$
|
2,000,000
|
(2)
|
|
$
|
39,300
|
|
|
$
|
87,099
|
(3)
|
|
$
|
2,626,399
|
|
Executive Vice President
|
|
|
2008
|
|
|
$
|
500,000
|
|
|
$
|
750,000
|
|
|
$
|
1,460,090
|
|
|
$
|
4,962
|
(3)
|
|
$
|
2,715,052
|
|
Structured Finance
|
|
|
2007
|
|
|
$
|
491,667
|
|
|
$
|
200,000
|
|
|
$
|
1,512,000
|
|
|
$
|
8,262
|
(3)
|
|
$
|
2,211,929
|
|
Gene Kilgore
|
|
|
2009
|
|
|
$
|
500,000
|
|
|
$
|
600,000
|
|
|
$
|
39,300
|
|
|
$
|
45,873
|
(4)
|
|
$
|
1,185,173
|
|
Executive Vice President
|
|
|
2008
|
|
|
$
|
495,833
|
|
|
$
|
550,000
|
|
|
$
|
897,020
|
|
|
$
|
4,314
|
(4)
|
|
$
|
1,947,167
|
|
Structured Securitization
|
|
|
2007
|
|
|
$
|
394,583
|
|
|
$
|
600,000
|
|
|
$
|
604,800
|
|
|
$
|
7,518
|
(4)
|
|
$
|
1,606,901
|
|
John
Felletter(5)
|
|
|
2009
|
|
|
$
|
225,000
|
|
|
$
|
275,000
|
|
|
$
|
19,650
|
|
|
$
|
4,163
|
(6)
|
|
$
|
523,813
|
|
Senior Vice President
|
|
|
2008
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Asset Management
|
|
|
2007
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
(1) |
|
Represents the aggregate grant date fair value of restricted
common stock awards granted in 2009, 2008 and 2007, determined
in accordance with FASB ASC Topic 718. See Executive
Compensation Compensation Discussion and
Analysis Forms of Compensation
Stock-Based Awards for further information. |
|
(2) |
|
Messrs. Kaufman and Elenio do not receive cash compensation
or benefits from us for serving as our executive officers. They
are employed and compensated by our Manager, Arbor Commercial
Mortgage, who was reimbursed $800,000 and $405,000 in cash as
the Companys allocable portion of the annual compensation
payable to Messrs. Kaufman and Elenio, respectively, and
$450,000 of bonus payable to Mr. Weber. See
Compensation Discussion & Analysis
Management Agreement for further information.
Mr. Elenio also received a $15,187 reimbursement for taxes
personally paid in 2009 upon the acceleration of the vesting of
restricted stock, $3,308 for matching contributions to his
401(k) plan and $432 for basic term life insurance for 2009,
reimbursed by us. |
|
(3) |
|
Amounts for 2009 represent a $81,912 reimbursement for taxes
personally paid in 2009 upon the acceleration of the vesting of
restricted stock, $3,675 for Company matching contributions to
the 401(k) plan and $1,512 for basic term life insurance;
amounts for 2008 represent $3,450 for Company matching
contributions to the 401(k) plan and $1,512 for basic term life
insurance; and amounts for 2007 represent $6,750 for Company
matching contributions to the 401(k) plan and $1,512 for basic
term life insurance. |
|
(4) |
|
Amounts for 2009 represent a $41,334 reimbursement for taxes
personally paid in 2009 upon the acceleration of the vesting of
restricted stock, $3,675 for Company matching contributions to
the 401(k) plan and $864 for basic term life insurance; amounts
for 2008 represent $3,450 for Company matching contributions to
the 401(k) plan and $864 for basic term life insurance; and
amounts for 2007 represent $6,750 for Company matching
contributions to the 401(k) plan and $768 for basic term life
insurance. |
|
(5) |
|
Mr. Felletter was not a named executive officer with
respect to 2008 or 2007. |
|
(6) |
|
Represents $3,375 for Company matching contributions to the
401(k) plan and $788 for basic term life insurance. |
23
Grants
of Plan-Based Awards for 2009
The following shares of common stock were granted to the named
executive officers pursuant to the Stock Incentive Plan during
2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Stock
|
|
|
|
|
|
|
|
|
Awards: Number of
|
|
Grant Date Fair
|
|
|
|
|
|
|
Shares of Stock or
|
|
Value of Stock
|
Name
|
|
Grant Date
|
|
Approval Date
|
|
Units (#)(1)
|
|
Awards ($)(2)
|
|
Ivan Kaufman
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
0
|
|
|
$
|
0
|
|
Paul Elenio
|
|
|
04/21/09
|
|
|
|
04/08/09
|
|
|
|
30,000
|
|
|
$
|
39,300
|
|
Fred Weber
|
|
|
04/21/09
|
|
|
|
04/08/09
|
|
|
|
30,000
|
|
|
$
|
39,300
|
|
Gene Kilgore
|
|
|
04/21/09
|
|
|
|
04/08/09
|
|
|
|
30,000
|
|
|
$
|
39,300
|
|
John Felletter
|
|
|
04/21/09
|
|
|
|
04/08/09
|
|
|
|
15,000
|
|
|
$
|
19,650
|
|
|
|
|
(1) |
|
These shares were fully vested as of the date of grant. |
|
(2) |
|
Represents the aggregate grant date fair value of the common
shares, determined in accordance with FASB ASC Topic 718. |
Outstanding
Equity Awards at 2009 Fiscal Year-End
There were no shares of common stock held by any of our named
executive officers as of December 31, 2009 that were
subject to vesting. In April 2009, the Compensation Committee
approved the immediate vesting of all unvested restricted common
stock awards granted to date. See Compensation Discussion
and Analysis Forms of Compensation
Stock-Based Awards for 2009 for information regarding
these grants.
Options
Exercised and Stock Vested for 2009
The table below lists the number of shares of restricted common
stock for each of our named executive officers that vested
during 2009.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized
|
Name
|
|
Acquired on Vesting (#)
|
|
on Vesting
($)(1)
|
|
Ivan Kaufman
|
|
|
0
|
|
|
$
|
0
|
|
Paul Elenio
|
|
|
56,906
|
|
|
$
|
61,154
|
|
Fred Weber
|
|
|
160,606
|
|
|
$
|
145,691
|
|
Gene Kilgore
|
|
|
96,206
|
|
|
$
|
92,987
|
|
John Felletter
|
|
|
15,000
|
|
|
$
|
19,650
|
|
|
|
|
(1) |
|
Value realized equals the fair market value of the shares on the
date the shares vested. In April 2009, the Compensation
Committee approved the immediate vesting of all unvested
restricted common stock awards granted to date. See
Compensation Discussion and Analysis Forms of
Compensation Stock-Based Awards for 2009 for
information regarding these grants. |
Potential
Payments Upon Termination of Change in Control
The Company does not maintain employment, severance or change in
control agreements with any of the named executive officers and
therefore, the Company is not obligated to pay cash severance to
any of the named executive officers upon a termination of their
employment.
Director
Compensation
The Compensation Committees recommendations regarding
compensation of the Companys directors are reported to,
and approved by, the full Board of Directors. The Compensation
Committee grants restricted stock awards to new directors upon
their election to the Board of Directors on a pro rata basis.
24
Each of our independent directors is paid a directors fee
of $25,000 per year. Each independent director who serves as
chairman of the Audit Committee is paid an additional fee of
$10,000 per year, each independent director who serves as
chairman of the Compensation Committee is paid an additional fee
of $5,000 per year and each independent director who serves as
chairman of the Nominating/Corporate Governance Committee is
paid an additional fee of $3,000 per year. Each of the three
members of a
sub-committee
of Independent Directors appointed to review and approve the
amended management agreement was paid $50,000. Each
non-management director is also paid (i) a fee of $2,000
for each board or committee meeting that he or she attends in
person, and (ii) a fee of $1,000 for each telephone board
or committee meeting that he or she attends. Effective as of
January 1, 2009, non-management directors participating in
weekly telephone meetings relating to market conditions are paid
the sum of $300 per meeting. In addition, we reimburse all
directors for reasonable out of pocket expenses incurred in
connection with their services on the Board of Directors. We
also reimburse all directors up to $2,500 per year for
continuing education costs incurred in connection with their
services on the Board of Directors.
On April 21, 2009, the Compensation Committee granted all
of our directors (other than Mr. Kaufman)
10,000 shares of fully vested common stock under our Stock
Incentive Plan. The Compensation Committee granted each of our
six independent directors an award of 15,000 shares of
fully vested common stock under our Stock Incentive Plan as of
April 1, 2010.
The following table sets forth the compensation amounts paid by
us to our directors for the year ending December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
Fees Earned or Paid
|
|
Stock Awards
|
|
Compensation
|
|
|
Name
|
|
in Cash ($)
|
|
($)(1)(2)
|
|
($)(3)
|
|
Total ($)
|
|
John J. Bishar,
Jr.(4)
|
|
$
|
87,667
|
|
|
$
|
13,100
|
|
|
$
|
891
|
|
|
$
|
101,658
|
|
Archie R. Dykes
|
|
$
|
52,300
|
|
|
$
|
13,100
|
|
|
$
|
891
|
|
|
$
|
66,291
|
|
Karen K. Edwards
|
|
$
|
51,300
|
|
|
$
|
13,100
|
|
|
$
|
1,017
|
|
|
$
|
65,417
|
|
William Helmreich
|
|
$
|
47,700
|
|
|
$
|
13,100
|
|
|
$
|
1,032
|
|
|
$
|
61,832
|
|
Walter K.
Horn(5)
|
|
$
|
0
|
|
|
$
|
13,100
|
|
|
$
|
1,687
|
|
|
$
|
14,787
|
|
C. Michael Kojaian
|
|
$
|
43,100
|
|
|
$
|
13,100
|
|
|
$
|
1,032
|
|
|
$
|
57,232
|
|
Melvin F. Lazar
|
|
$
|
108,300
|
|
|
$
|
13,100
|
|
|
$
|
969
|
|
|
$
|
122,369
|
|
Joseph A.
Martello(5)
|
|
$
|
0
|
|
|
$
|
13,100
|
|
|
$
|
4,958
|
|
|
$
|
18,058
|
|
Kyle A. Permut
|
|
$
|
91,300
|
|
|
$
|
13,100
|
|
|
$
|
1,017
|
|
|
$
|
105,417
|
|
|
|
|
(1) |
|
Represents the aggregate grant date fair value of restricted
common stock awards granted in 2009, determined in accordance
with FASB ASC Topic 718. See Executive
Compensation Compensation Discussion and
Analysis Forms of Compensation
Stock-Based Awards for 2009 for further information. |
|
(2) |
|
The number of shares and grant date fair value of common stock
awards granted during 2009 are set forth below. Each of these
awards consisted of shares of common stock that were issued
without vesting restrictions as of the grant date. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair
|
|
|
Number of Shares
|
|
Value of Stock
|
Name
|
|
Granted (#)
|
|
Awards ($)
|
|
John J. Bishar, Jr.
|
|
|
10,000
|
|
|
$
|
13,100
|
|
Archie R. Dykes
|
|
|
10,000
|
|
|
$
|
13,100
|
|
Karen K. Edwards
|
|
|
10,000
|
|
|
$
|
13,100
|
|
William Helmreich
|
|
|
10,000
|
|
|
$
|
13,100
|
|
Walter K. Horn
|
|
|
10,000
|
|
|
$
|
13,100
|
|
C. Michael Kojaian
|
|
|
10,000
|
|
|
$
|
13,100
|
|
Melvin F. Lazar
|
|
|
10,000
|
|
|
$
|
13,100
|
|
Joseph Martello
|
|
|
10,000
|
|
|
$
|
13,100
|
|
Kyle A. Permut
|
|
|
10,000
|
|
|
$
|
13,100
|
|
25
|
|
|
(3) |
|
As of April 8, 2009 the Compensation Committee accelerated
the vesting of all then unvested shares underlying previously
granted restricted common stock as of such date. Amounts in this
column represent reimbursement for personal taxes paid by the
directors in 2009 upon the acceleration of the vesting of the
shares. |
|
(4) |
|
Mr. Bishar was appointed General Counsel of Arbor
Commercial Mortgage, our Manager, in September 2009 and thus did
not receive fees for his service as director thereafter. |
|
(5) |
|
Mr. Horn, who is currently our Corporate Secretary and was
our General Counsel and Director of Compliance until his
retirement from those positions effective January 1, 2008,
and Mr. Martello, the Chief Operating Officer of Arbor
Management, LLC (which is the managing member of Arbor
Commercial Mortgage) do not receive cash fees for their service
as directors. The amounts shown in the Stock Awards column of
the table above relate to restricted stock awards granted to
Messrs. Horn and Martello pursuant to the Stock Incentive
Plan in their capacities as directors of the Company. |
Additional
Grants Made Pursuant to the Stock Incentive Plan
The Compensation Committee granted each of our six independent
directors an award of 15,000 shares of fully vested common
stock under our Stock Incentive Plan as of April 1, 2010.
Consistent with its historical practice of granting annual stock
based awards to certain executive officers of the Company,
employees of the Company and the Manager with respect to their
service to the Company in the most recently completed fiscal
year, in 2010, the Compensation Committee may, in its sole
discretion, grant certain of these executives and employees
stock-based awards, consisting of restricted stock with a
multi-year vesting schedule and/or stock options with a
multi-year vesting schedule under our Stock Incentive Plan with
respect to their service to the Company in 2009.
Compensation
Committee Interlocks and Insider Participation
Messrs. Kojaian, Lazar and Permut and Dr. Helmreich
served as members of our Compensation Committee during 2009 and
to date. Dr. Helmreich has been retained as a part-time
consultant in the capacity of chairman for Academic Affairs by
North Shore Hebrew Academy since 2000. Prior to 2000,
Dr. Helmreich was the President of North Shore Hebrew
Academy. Our Chairman and Chief Executive Officer,
Mr. Kaufman, and Dr. Helmreich are both members of the
Board of Trustees of North Shore Hebrew Academy High School.
Equity
Compensation Plan Information
The following table presents information as of December 31,
2009 regarding the Stock Incentive Plan and the incentive
compensation provisions of our management agreement with Arbor
Commercial Mortgage, which are our only equity compensation
plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities to be
|
|
|
Weighted Average
|
|
|
|
|
|
|
Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Number of Securities
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Remaining Available
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
for Future Issuance
|
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
2003 Omnibus Stock Incentive
Plan(1)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
1,381,843
|
|
Incentive Compensation pursuant to Management
Agreement(2)
|
|
|
0
|
|
|
|
N/A
|
|
|
|
See Note 3
|
|
Equity compensation plans not approved by security holders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
N/A
|
|
|
|
1,381,843
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
On June 18, 2009, the shareholders authorized the issuance
of an additional 1,250,000 shares of the Companys
common stock to be used for grants under the Stock Incentive
Plan. |
26
|
|
|
(2) |
|
Pursuant to the terms of our management agreement with Arbor
Commercial Mortgage, at least 25% of the incentive compensation
earned by our Manager is payable in shares of our common stock
having a value equal to the average closing price per share for
the last twenty days of the fiscal quarter for which the
incentive compensation is being paid. Arbor Commercial Mortgage
has the right to elect to receive 100% of the incentive
compensation in shares of our common stock. See
Compensation Discussion and Analysis
Management Agreement for information regarding the terms
of our management agreement and the incentive compensation
payable to Arbor Commercial Mortgage thereunder. Our sole
stockholder immediately prior to the date we entered into the
management agreement with Arbor Commercial Mortgage approved the
issuance of shares of our common stock to Arbor Commercial
Mortgage pursuant to the incentive compensation provisions of
the management agreement. |
|
(3) |
|
The number of securities remaining available for future issuance
to Arbor Commercial Mortgage as incentive compensation pursuant
to the management agreement depends on the amount of incentive
compensation earned by Arbor Commercial Mortgage in the future
and therefore is not yet determinable. |
The Compensation Committee granted each of our six independent
directors an award of 15,000 shares of fully vested common
stock under our Stock Incentive Plan as of April 1, 2010.
Consistent with its historical practice of granting annual stock
based awards to certain executive officers of the Company and
employees of the Company and the Manager with respect to their
service to the Company in the most recently completed fiscal
year, in 2010, the Compensation Committee may, in its sole
discretion, grant certain of these executives and employees
stock-based awards, consisting of restricted stock with a
multi-year vesting schedule and/or stock options with a
multi-year vesting schedule under our Stock Incentive Plan with
respect to their service to the Company in 2009.
27
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates how many shares of our common
stock are beneficially owned by (i) each of our directors
and each nominee for director; (ii) each of our executive
officers; and (iii) all of our directors and executive
officers as a group. The following table also indicates how many
shares of our common stock are beneficially owned by each person
known to the Company to be the beneficial owner of more than
five percent (5%) of the outstanding shares of our common stock,
in each case, based solely on, and as of the date of, such
persons filing of a Schedule 13D or Schedule 13G
with the SEC. Unless otherwise indicated, the persons named in
the following table have sole voting and investment power with
respect to all shares of common stock shown as beneficially
owned by them. In accordance with SEC beneficial ownership
rules, the following table attributes to Arbor Commercial
Mortgage (and to Mr. Kaufman, as the controlling owner of
Arbor Commercial Mortgage) beneficial ownership of the
5,383,323 shares of common stock currently held by Arbor
Commercial Mortgage.
|
|
|
|
|
|
|
|
|
|
|
Shares of Common Stock
|
|
|
|
Beneficially Owned
|
|
Name and
Address(1):
|
|
Number(2)
|
|
|
Percentage(3)
|
|
|
Ivan
Kaufman(4)
|
|
|
5,507,872
|
|
|
|
21.6
|
%
|
Arbor Commercial Mortgage,
LLC(4)
|
|
|
5,383,323
|
|
|
|
21.1
|
%
|
John J. Bishar,
Jr.(5)
|
|
|
26,050
|
|
|
|
|
*
|
Archie R. Dykes
|
|
|
31,750
|
|
|
|
|
*
|
Karen K. Edwards
|
|
|
44,336
|
|
|
|
|
*
|
William Helmreich
|
|
|
105,100
|
|
|
|
|
*
|
Walter K.
Horn(6)
|
|
|
46,500
|
|
|
|
|
*
|
C. Michael
Kojaian(7)
|
|
|
1,131,500
|
|
|
|
4.4
|
%
|
Melvin F. Lazar
|
|
|
128,600
|
|
|
|
|
*
|
Joseph
Martello(8)
|
|
|
58,940
|
|
|
|
|
*
|
Kyle A. Permut
|
|
|
49,417
|
|
|
|
|
*
|
Paul
Elenio(9)
|
|
|
83,140
|
|
|
|
|
*
|
John
Felletter(10)
|
|
|
15,000
|
|
|
|
|
*
|
Gene
Kilgore(11)
|
|
|
142,090
|
|
|
|
|
*
|
Fred
Weber(12)
|
|
|
270,640
|
|
|
|
1.1
|
%
|
All directors and executive officers as a group (14 persons)
|
|
|
7,640,935
|
|
|
|
30.0
|
%
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Unless otherwise indicated in the following footnotes, the
address for each person or entity listed in the table above is
333 Earle Ovington Boulevard, Suite 900, Uniondale, New
York, 11553. |
|
(2) |
|
Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes securities over which a person
has voting or investment power and securities that a person has
the right to acquire within 60 days of the date hereof. |
|
(3) |
|
The 25,477,410 shares of our common stock outstanding at
April 5, 2010 are considered the total number of shares of
our common stock outstanding for the purpose of calculating each
persons percentage of beneficial ownership of shares of
our common stock. |
|
(4) |
|
Mr. Kaufman, together with (i) the Ivan and Lisa
Kaufman Family Trust, (ii) the Ivan Kaufman Grantor
Retained Trust and (iii) Arbor Management, LLC, the
managing member of Arbor Commercial Mortgage and an entity owned
wholly by Mr. Kaufman and his wife, beneficially own
approximately 91% of the outstanding membership interests of
Arbor Commercial Mortgage. |
|
(5) |
|
Mr. Bishar holds a 0.4% Class B membership interest in
Arbor Commercial Mortgage. For purposes of the SECs
beneficial ownership rules, the operating partnership units held
by Arbor Commercial Mortgage are not deemed to be beneficially
owned by Mr. Bishar. |
28
|
|
|
(6) |
|
Mr. Horn, through his wife, holds a 1.3% Class B
membership interest in Arbor Commercial Mortgage. For purposes
of the SECs beneficial ownership rules, the operating
partnership units held by Arbor Commercial Mortgage are not
deemed to be beneficially owned by Mr. Horn. |
|
(7) |
|
Includes 1,000,000 shares of common stock purchased by
Kojaian Ventures, L.L.C., of which the sole members are
Mr. Kojaian and Kojaian Ventures MM, Inc., of
which Mr. Kojaian is the sole stockholder. |
|
(8) |
|
Mr. Martello holds a 1.3% Class B membership interest
in Arbor Commercial Mortgage. For purposes of the SECs
beneficial ownership rules, the operating partnership units held
by Arbor Commercial Mortgage are not deemed to be beneficially
owned by Mr. Martello. |
|
(9) |
|
Mr. Elenio holds a 0.3% Class B membership interest in
Arbor Commercial Mortgage. For purposes of the SECs
beneficial ownership rules, the operating partnership units held
by Arbor Commercial Mortgage are not deemed to be beneficially
owned by Mr. Elenio. |
|
(10) |
|
Mr. Felletter holds a 0.2% Class B membership interest
in Arbor Commercial Mortgage. For purposes of the SECs
beneficial ownership rules, the operating partnership units held
by Arbor Commercial Mortgage are not deemed to be beneficially
owned by Mr. Felletter. |
|
(11) |
|
Mr. Kilgore holds a 0.3% Class B membership interest
in Arbor Commercial Mortgage. For purposes of the SECs
beneficial ownership rules, the operating partnership units held
by Arbor Commercial Mortgage are not deemed to be beneficially
owned by Mr. Kilgore. |
|
(12) |
|
Mr. Weber holds a 0.9% Class B membership interest in
Arbor Commercial Mortgage. For purposes of the SECs
beneficial ownership rules, the operating partnership units held
by Arbor Commercial Mortgage are not deemed to be beneficially
owned by Mr. Weber. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who own more than 10% of a
class of our equity securities registered pursuant to
Section 12 of the Exchange Act, to file reports of
ownership on Forms 3, 4 and 5 with the SEC. Officers,
directors and greater than 10% stockholders are required to
furnish us with copies of all Forms 3, 4 and 5 they file.
Based solely on the Companys review of the copies of such
forms received by it, or written representations from certain
reporting persons that no filings were required for those
persons, the Company believes that during and with respect to
the fiscal year ended December 31, 2009 all filings
required by Section 16(a) of the Exchange Act were timely
made, except for a Form 3 for Mr. Felletter with
respect to his appointment as an executive officer on
November 5, 2008 and a Form 4 with respect to his
acquisition of 15,000 shares of restricted common stock pursuant
to a grant under our Stock Incentive Plan on April 21,
2009, and a Form 4 for Ms. Edwards sale of 664 shares
on March 6, 2009 (which was reported on April 8, 2009).
29
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Policy
Regarding the Review, Approval or Ratification of Transactions
with Related Persons
In recognition of the fact that transactions involving related
parties can present potential or actual conflicts of interest or
create the appearance that Company decisions are based on
considerations other than the best interests of the Company and
its stockholders, the Board of Directors has adopted a written
policy, the Policy and Procedures With Respect to Related Person
Transactions, which we refer to as our Related Persons Policy,
which provides for the review and approval (or, if completed,
ratification) by the Independent Director Committee (or, in
certain circumstances, the Chair of the Independent Director
Committee) of all transactions involving the Company in which a
related party is known to have a direct or indirect interest,
including transactions required to be reported under paragraph
(a) of Item 404 of
Regulation S-K
promulgated by the SEC. All Related Persons are required to
report to our Corporate Secretary, who is required to submit to
our Independent Director Committee any such related party
transaction prior to its completion.
Our Related Persons Policy covers all transactions, arrangements
or relationships (or any series of similar transactions,
arrangements or relationships) in which the Company (including
any of its subsidiaries) was, is or will be a participant and
the amount involved exceeds $120,000, and in which any Related
Person had, has or will have a direct or indirect material
interest.
A Related Person, as defined in our Related Persons
Policy, means any person who is, or at any time since the
beginning of the Companys last fiscal year was, a director
or executive officer of the Company or a nominee to become a
director of the Company; any person who is known to be the
beneficial owner of more than 5% of any class of the
Companys voting securities; any immediate family member of
any of the foregoing persons, which means any child, stepchild,
parent, stepparent, spouse, sibling,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law
of the director, executive officer, nominee or more than 5%
beneficial owner, and any person (other than a tenant or
employee) sharing the household of such director, executive
officer, nominee or more than 5% beneficial owner; and any firm,
corporation or other entity in which any of the foregoing
persons is employed or is a general partner or principal or in a
similar position or in which such person has a 5% or greater
beneficial ownership interest.
In reviewing any related person transaction, all of the relevant
facts and circumstances must be considered, including
(i) the related persons relationship to us and his or
her interest in the transaction, (ii) the proposed
aggregate value of the transaction, or, in the case of
indebtedness, the amount of principal that would be involved,
(iii) the benefits to us, (iv) the availability of
comparable products or services that would avoid the need for a
related person transaction and (v) the terms of the
transaction and the terms available to unrelated third parties
or to employees generally.
Relationships
with Our Manager
Arbor
Commercial Mortgages Ownership Interest in the Company and
Related Registration Rights
Arbor Commercial Mortgage currently owns 5,383,323 shares
of our common stock, representing approximately 21.1% of the
voting power of our common stock. We have granted Arbor
Commercial Mortgage shelf registration rights, or, if such
rights are not available, demand registration rights with
respect to the 5,383,323 shares currently owned by it.
Arbor Commercial Mortgage is also entitled to participate in
primary or secondary offerings of our common stock with respect
to these shares. We have also agreed to certain restrictions on
the registration rights that we may grant to any other holder or
prospective holder of our securities without the prior written
consent of Arbor Commercial Mortgage so long we are still
obligated to register any of the shares currently owned by Arbor
Commercial Mortgage pursuant to the registration rights
agreement.
Common
Management
Mr. Ivan Kaufman, our Chairman and Chief Executive Officer,
is also the Chief Executive Officer of Arbor Commercial
Mortgage. Mr. Kaufman and entities controlled by
Mr. Kaufman collectively own 91% of the outstanding
membership interests in Arbor Commercial Mortgage.
Mr. Joseph Martello, one of our directors,
30
currently serves as the Chief Operating Officer of Arbor
Management, LLC, the managing member of Arbor Commercial
Mortgage. Mr. Martello owns a 1.3% interest in Arbor
Commercial Mortgage and is also the sole trustee of the Ivan and
Lisa Kaufman Family Trust for the benefit of
Mr. Kaufmans family, which owns a 35% interest in
Arbor Commercial Mortgage, and a co-trustee, along with
Mr. Kaufman, of the Ivan Kaufman Grantor Retained Annuity
Trust, which also owns an equity interest in Arbor Commercial
Mortgage. Mr. John Bishar, one of our directors, currently
serves as General Counsel to Arbor Commercial Mortgage.
Mr. Bishar, the General Counsel of Arbor Commercial
Mortgage, owns a 0.4% interest in Arbor Commercial Mortgage.
Mr. Paul Elenio, our Chief Financial Officer and Treasurer,
currently serves as the Chief Financial Officer of Arbor
Commercial Mortgage. Mr. Elenio owns a 0.3% interest in
Arbor Commercial Mortgage. Mr. Walter Horn, our Corporate
Secretary and one of our directors, served as the Corporate
Secretary of Arbor Commercial Mortgage until his retirement from
this position effective January 1, 2008. Mr. Horn owns
a 1.3% interest in Arbor Commercial Mortgage, which is held in
his wifes name. Mr. Fred Weber, our Executive Vice
President of Structured Finance, was responsible for overseeing
Arbor Commercial Mortgages structured finance and
principal transactions group from 1999 until July 1, 2003.
Mr. Weber owns a 0.9% interest in Arbor Commercial
Mortgage. Mr. Gene Kilgore, our Executive Vice
President Structured Securitization, owns an
interest in Arbor Commercial Mortgage which represents 0.3% of
the outstanding membership interests. Mr. John Felletter,
our Senior Vice President Asset Management owns a
0.2% interest in Arbor Commercial Mortgage. Each of
Messrs. Kaufman, Martello, Bishar, Elenio, Weber, Kilgore
and Horn is a member of Arbor Commercial Mortgages
executive committee.
Management
and Services Agreements
We and our operating partnership have entered into a management
agreement with Arbor Commercial Mortgage, pursuant to which
Arbor Commercial Mortgage provides for the day to day management
of our operations. Arbor Commercial Mortgage is also required to
provide us with a right of first refusal with respect to all
structured finance investment opportunities in the multi-family
and commercial real estate markets that are identified by Arbor
Commercial Mortgage or its affiliates as long as such investment
opportunities are consistent with our investment objectives and
guidelines and such investment opportunities would not adversely
affect our status as a REIT. We have agreed not to pursue, and
to allow Arbor Commercial Mortgage to pursue, any opportunity in
structured finance investment opportunities in the multi-family
and commercial real estate markets if the opportunity is
rejected by our credit committee and a majority of our
independent directors.
On August 6, 2009, we amended and restated our management
agreement with Arbor Commercial Mortgage. The amendment was
negotiated by a three-member subcommittee of the Independent
Director Committee of the Board and was approved by all of the
Companys independent directors. JMP Securities LLC served
as financial advisor to the special committee and Skadden, Arps,
Slate, Meagher & Flom LLP served as its special
counsel. The amended management agreement includes the following
new terms, effective as of January 1, 2009:
|
|
|
|
|
The previous base management fee, which was calculated as a
percentage of our equity, was replaced with an arrangement
whereby we reimburse the Manager for its actual costs incurred
in managing our business, including an allocable portion of the
base salaries and annual cash bonuses payable to employee of the
Manger who provide services to the Company. This modification
was made retroactive to January 1, 2009.
|
|
|
|
All future origination fees on investments are retained by us,
whereas under the prior agreement, origination fees up to 1% of
the loan were retained by Arbor Commercial Mortgage.
|
|
|
|
We made a $3.0 million payment to the Manager in
consideration of expenses incurred by the Manager in 2008 in
managing our business and certain other services.
|
|
|
|
The percentage hurdle for the incentive fee is applied on a per
share basis to the greater of $10.00 and the average gross
proceeds per share, whereas the previous management agreement
provided for such percentage hurdle to be applied only to the
average gross proceeds per share. In addition, only 60% of any
loan loss and other reserve recoveries are eligible to be
included in the incentive fee calculation, which are to be
spread over a three year period, whereas the previous management
agreement did not limit the inclusion of such recoveries in the
incentive fee calculation.
|
31
|
|
|
|
|
The amended management agreement provides that we may consider,
from time to time, the payment of additional fees to the Manager
for accomplishing certain specified corporate objectives.
|
|
|
|
The amended management agreement modifies and simplifies the
provisions related to the termination of the agreement and any
related fees payable in such instances, including for
internalization, with a termination fee of $10.0 million,
rather than payment based on a multiple of base and incentive
fees as previously existed.
|
|
|
|
The amended management agreement is in effect until
December 31, 2010, and is renewable automatically for
successive one-year terms thereafter.
|
We and our operating partnership have also entered into a
services agreement with Arbor Commercial Mortgage pursuant to
which our asset management group provides asset management
services to Arbor Commercial Mortgage. In the event that the
services provided by our asset management group pursuant to the
agreement exceed by more than 15% per quarter the level of
activity anticipated by our Board of Directors, we will
negotiate in good faith with our Manager an adjustment to our
Managers base management fee under the management
agreement, to reflect the scope of the services, the quantity of
serviced assets or the time required to be devoted to the
services by our asset management group. As of December 31,
2009, there have been no such adjustments pursuant to the
services agreement.
Non-Competition
Agreement
We have entered into a non-competition agreement with
Mr. Kaufman pursuant to which he has agreed not to pursue
any structured finance opportunities in the multi-family and
commercial real estate markets unless a majority of our
independent directors affirmatively approves the pursuit by
Mr. Kaufman of such opportunity that a majority of our
independent directors and our credit committee have rejected on
our behalf. Mr. Kaufman has also agreed that if he is no
longer an affiliate of Arbor Commercial Mortgage and, within the
first five years of the term of the management agreement, he is
no longer our Chief Executive Officer other than because of
certain reasons specified in the non-competition agreement, he
will not engage in the structured finance lending business for a
period of one year after the earlier of his departure from us or
the regular expiration of the one year origination period
described in the management agreement. Mr. Kaufmans
non-competition agreement also prohibits Mr. Kaufman from
soliciting our customers or employees during its term.
Benefits
Participation Agreement
We have also entered into a benefits participation agreement
with Arbor Commercial Mortgage, pursuant to which our employees
are able to participate in any employee benefit plans maintained
by Arbor Management for the benefit of Arbor Commercial Mortgage
employees. Arbor Management charges us an amount equal to its
cost of providing benefits to each of our employees.
Related
Party Loans and Investments
Due from related party was $15.2 million at
December 31, 2009 and consisted of $7.0 million for a
loan paydown received by Arbor Commercial Mortgage in December
2009, which was repaid in the first quarter of 2010,
$0.9 million of escrows due from Arbor Commercial Mortgage
related to 2009 real estate asset transactions and
$7.3 million reclassified from prepaid management
fee related party, related to a Prime Outlets
Member, LLC transaction that closed in 2009. In accordance with
the August 2009 amended management agreement, since no incentive
fee was earned for 2009, the prepaid management fee is to be
paid back in installments of 25% due by December 31, 2010
and 75% due by June 30, 2012, with an option to make
payment in both cash and Arbor Realty Trust, Inc. common stock
provided that at least 50% of the payment is made in cash, and
will be offset against any future incentive management fees or
success-based payments earned by our manager prior to
June 30, 2012. Due to related party was $2.0 million
and consisted primarily of base management fees due to Arbor
Commercial Mortgage, which will be remitted by the Company in
2010. See Executive
Compensation Compensation Discussion and
Analysis Management
Agreement Incentive compensation for
further details.
32
During 2009, we purchased from Arbor Commercial Mortgage,
approximately $20.0 million of our investment grade rated
bonds originally issued by two of its three collateralized debt
obligation issuing entities and approximately $9.4 million
of junior subordinated notes originally issued by a wholly-owned
subsidiary of our operating partnership for $9.1 million.
Arbor Commercial Mortgage had purchased the collateralized debt
obligation notes from third party investors for
$8.2 million in 2008, and the junior subordinated notes
from third party investors for 1.3 million in 2009.
General
Every transaction entered into between us and an entity in which
Arbor Commercial Mortgage holds equity interests raises a
potential conflict of interest. Conflicts of interest with
respect to these investments include, among others, decisions
regarding (1) whether to waive defaults of such borrower,
(2) whether to foreclose on the investment and
(3) whether to permit additional financing on the
properties securing our investments other than financing
provided by us.
Arbor Commercial Mortgage may from time to time provide
permanent mortgage loan financing to clients of ours, which will
be used to refinance bridge financing provided by us. We and
Arbor Commercial Mortgage may also make loans to the same
borrower or to borrowers that are under common control.
Additionally, our policies and those of Arbor Commercial
Mortgage may require us to enter into intercreditor agreements
in situations where loans are made by us and Arbor Commercial
Mortgage to the same borrower.
In addition, we may enter into future transactions with Arbor
Commercial Mortgage with the approval of our independent
directors.
Other
Relationships and Related Transactions
Mr. Fred Weber, our executive vice president of structured
finance, continues to serve on Arbor Commercial Mortgages
executive committee and provide services to Arbor Commercial
Mortgage. Mr. Weber does not receive a salary from Arbor
Commercial Mortgage but may receive production payments from
Arbor Commercial Mortgage for originating loans on its behalf.
Mr. Walter Horn, our Corporate Secretary and one of our
directors, served as the Corporate Secretary of Arbor Commercial
Mortgage until his retirement from this position effective
January 1, 2008. Mr. Horn has an agreement with the
Company pursuant to which he is paid $150,000 per year plus
employee benefits for his service as our Corporate Secretary.
The terms of this agreement ends on December 31, 2010.
Arbor Management LLC, the managing member of Arbor Commercial
Mortgage, has made loans during the past few years to several of
our executive officers in order for them to finance their
Class B membership interests of Arbor Commercial Mortgage.
The largest aggregate outstanding principal balance to
Mr. Elenio during the two year period ended
December 31, 2009 was $29,279 and the outstanding balance
as of December 31, 2009 was $10,412. Mr. Elenio made
principal payments totaling $18,867 and $18,578 during the years
ended December 31, 2009, and 2008, respectively. The
interest rate on the loans is prime and interest payments
totaled $509 and $1,931 during the years ended December 31,
2009 and 2008, respectively. There were no loans outstanding to
Mr. Weber as of December 31, 2009 or 2008. The largest
aggregate outstanding principal balance to Mr. Kilgore
during the two year period ended December 31, 2009 was
$132,143 and the outstanding balance as of December 31,
2009 was $110,714. Mr. Kilgore made principal payments
totaling $21,429 and $7,143 during the years ended
December 31, 2009 and 2008, respectively. The interest rate
on the loans is prime and interest payments totaled $3,827 and
$5,513 during the years ended December 31, 2009 and 2008,
respectively. The largest aggregate outstanding principal
balance to Mr. Horn during the two year period ended
December 31, 2009 was $14,571 and the outstanding balance
as of December 31, 2009 was $4,571. Mr. Horn made a
principal payment of $10,000 during the year ended
December 31, 2009. The interest rate on the loan is prime
and interest payments totaled $356 and $805 during the years
ended December 31, 2009 and 2008, respectively. Our current
policies and procedures, as well as those of Arbor Commercial
Mortgage, do not allow for the lending of funds to any of our
directors, officers or employees.
33
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
The Board of Directors, following the recommendation of the
Nominating/Corporate Governance Committee, has recommended that
Mr. John J. Bishar, Dr. Archie R. Dykes,
Mr. Joseph Martello and Mr. Kyle A. Permut, each be
elected to serve on the Board of Directors, each until the
Companys annual meeting of stockholders for 2013 and until
their respective successors are duly elected and qualify.
Each nominee has consented to being named in this proxy
statement and to serve if elected. If, prior to the annual
meeting, any nominee should become unavailable to serve, the
shares of voting securities represented by a properly executed
and returned proxy will be voted for such additional nominee as
shall be designated by the Board of Directors, unless the Board
of Directors determines to reduce the number of directors in
accordance with the Companys charter and bylaws.
Election of each of the director nominees named in this
Proposal No. 1 requires the affirmative vote of a
plurality of the shares of our voting securities cast in the
election of directors at the annual meeting. Shares represented
by executed proxies will be voted, if authority to do so is not
withheld, for the election of the Board of Directors
nominees. Votes may be cast in favor of or withheld with respect
to all of the director nominees, or any of them.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF THE NOMINEES FOR DIRECTORS IDENTIFIED
ABOVE.
34
PROPOSAL NO. 2
RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
FISCAL YEAR 2010
The Audit Committee of our Board of Directors has appointed
Ernst & Young LLP as the Companys independent
registered public accounting firm for fiscal year ending
December 31, 2010. The board has endorsed this appointment.
Ernst & Young audited our consolidated financial
statements for fiscal years ended December 31, 2009 and
December 31, 2008. A representative of Ernst &
Young is expected to be present at the annual meeting and will
be available to respond to appropriate questions from our
stockholders and will be given an opportunity to make a
statement if he or she desires to do so.
Stockholder ratification of the appointment of Ernst &
Young LLP as our independent registered public accounting firm
is not required by our bylaws or otherwise. However, the Board
of Directors is submitting the appointment of Ernst &
Young to the stockholders for ratification as a matter of good
corporate governance. Ratification of the selection of
Ernst & Young as our independent registered public
accounting firm for fiscal year 2010 requires the affirmative
vote of a majority of the shares of our voting securities cast
on the proposal at the annual meeting.
If this appointment is not ratified by our stockholders, the
Audit Committee and the board may reconsider its recommendation
and endorsement, respectively. Abstentions will not be counted
as having been voted and will have no effect on the outcome of
the vote for this proposal. Even if the appointment is ratified,
the Audit Committee in its discretion may direct the appointment
of a different independent registered public accounting firm at
any time during the year if it determines that such a change
would be in the best interests of the Company and its
stockholders.
Independent
Accountants Fees
Aggregate fees for professional services rendered for us by
Ernst & Young and its affiliates for fiscal years
ended December 31, 2009 and December 31, 2008 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
1,411,587
|
|
|
$
|
1,286,000
|
|
Audit-Related Fees
|
|
|
84,268
|
|
|
|
80,461
|
|
Tax Fees
|
|
|
0
|
|
|
|
0
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,495,855
|
|
|
$
|
1,366,461
|
|
|
|
|
|
|
|
|
|
|
The Audit Fees billed were for professional services rendered
for the audit of our consolidated financial statements for
fiscal years ended December 31, 2009 and December 31,
2008 and for other services, including compliance with the
Sarbanes-Oxley Act of 2002, review of financial statements
included in
Form 10-Q,
issuance of comfort letters, consents and review of the
Companys registration statements under the Securities Act
that were filed with the SEC in those fiscal years.
The Audit-Related Fees were for professional services rendered
relating to (i) due diligence and
agreed-upon
procedures for 2009, and (ii) due diligence and
agreed-upon
procedures for 2008.
35
Audit
Committee Pre-Approval Policy
In accordance with applicable laws and regulations, the Audit
Committee reviews and pre-approves any non-audit services to be
performed by Ernst & Young to ensure that the work
does not compromise its independence in performing audit
services. The Audit Committee also reviews and pre-approves all
audit services. In some cases, pre-approval of a particular
category or group of services, such as tax consulting services
and audit services, is provided by the full Audit Committee for
up to a year and is subject to a specific budget. In other
cases, the chairman of the Audit Committee has the delegated
authority from the full Audit Committee to pre-approve
additional services, and such pre-approvals are then
communicated to the full Audit Committee.
The policy contains a de minimis provision that operates to
provide retroactive approval for permissible non-audit services
under certain circumstances. No services were provided by
Ernst & Young during 2009 and 2008 under such
provision.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
FOR FISCAL YEAR 2010.
36
STOCKHOLDER
PROPOSALS FOR 2011
Proposals received from stockholders in accordance with
Rule 14a-8
under the Exchange Act are given careful consideration by our
Nominating/Corporate Governance Committee and our Board of
Directors. If a stockholder intends to present a proposal at the
Companys 2011 annual meeting of stockholders pursuant to
Rule 14a-8
under the Exchange Act, in order for such stockholder proposal
to be included in the Companys proxy statement for that
meeting, the stockholder proposal must be received by the
Company at its corporate headquarters, located at 333 Earle
Ovington Boulevard, Suite 900, Uniondale, New York 11553,
Attention: Secretary, on or before December 7, 2010.
In order for a stockholder proposal submitted outside of
Rule 14a-8
to be considered at the Companys 2011 annual meeting of
stockholders, such proposal must contain the information
required by the Companys bylaws and be received by the
Company in accordance with the Companys bylaws. Pursuant
to the Companys current bylaws, stockholder proposals made
outside of
Rule 14a-8
under the Exchange Act must be submitted not later than
January 6, 2011 and not earlier than December 7, 2010;
provided, however, in the event that mailing of the notice for
the 2011 annual meeting of stockholders is advanced more than
30 days prior to or delayed more than 30 days after
April 6, 2011, a proposal by a stockholder to be timely
must be delivered not earlier than the 120th day prior to
the date that mailing of the notice for such meeting is first
made and not later than the close of business on the later of
(1) the 90th day prior to the date that mailing of the
notice for such meeting is first made and (2) the tenth day
following the date on which public announcement of the date of
the 2011 annual meeting of stockholders is first made.
OTHER
MATTERS
Our Board of Directors knows of no other matters that have been
submitted for consideration at this annual meeting. If any other
matters properly come before our stockholders at this annual
meeting, the persons named on the enclosed proxy card intend to
vote the shares they represent in accordance with their
discretion.
By Order of the Board of Directors,
Walter K. Horn
Secretary
April 6, 2010
Uniondale, New York
37
ANNUAL MEETING OF STOCKHOLDERS OF
ARBOR REALTY TRUST, INC.
May 18, 2010
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement, Proxy Card
are available at http://www.arborrealtytrust.com/cm.htm
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
â Please detach along
perforated line and mail in the envelope provided. â
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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The Board of Directors recommends a vote FOR Proposal 1.
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The Board of Directors recommends a vote FOR Proposal 2.
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FOR
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AGAINST
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ABSTAIN |
Proposal 1. Election of four Class I
directors to serve on the
Board of Directors of Arbor Realty Trust, Inc.
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Proposal 2. |
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Ratification of the appointment of Ernst &
Young LLP as the independent registered public accounting
firm of Arbor Realty Trust, Inc. for fiscal year 2010.
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NOMINEES: |
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FOR ALL NOMINEES
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John J. Bishar, Jr. Archie R. Dykes
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Proposal 3. |
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To vote and otherwise represent the undersigned on any
other matter that properly comes before the meeting or any adjournment
or postponement thereof in the discretion of the proxy holder.
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WITHHOLD AUTHORITY FOR ALL NOMINEES
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Joseph Martello
Kyle A. Permut
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FOR ALL EXCEPT (See instructions below)
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This proxy, when properly executed, will be voted in the manner
directed below. If this proxy is executed but no instruction is given,
this proxy will be voted FOR all nominees listed in Proposal 1 and
FOR Proposal 2. The proxies are hereby authorized to vote in their
discretion upon such other matters as may properly come before the
meeting or any postponements or adjournments thereof.
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The undersigned hereby acknowledges receipt of Arbor Realty Trust,
Inc.s Annual Report to Stockholders for the fiscal year ended December
31, 2009 and the accompanying Notice of Annual Meeting and Proxy
Statement and hereby revokes any proxy or proxies heretofore given with
respect to the matters set forth above.
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INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT and fill in the circle next to each
nominee you wish to withhold, as shown here: = |
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To change the address on your account, please check the
box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be submitted
via this method.
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Signature
of Stockholder
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Date:
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Signature
of Stockholder
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
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ANNUAL MEETING OF STOCKHOLDERS OF
ARBOR REALTY TRUST, INC.
May 18, 2010
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PROXY VOTING INSTRUCTIONS
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INTERNET - Access www.voteproxy.com and follow the on-screen
instructions. Have your proxy card available when you access the
web page, and use the Company Number and Account Number shown on
your proxy card.
TELEPHONE -
Call toll-free 1-800-PROXIES (1-800-776-9437) in the
United States or 1-718-921-8500 from foreign countries from any
touch-tone telephone and follow the instructions. Have your proxy
card available when you call and use the Company Number and
Account Number shown on your proxy card.
Vote online/phone until 11:59 PM EST the day before the meeting.
MAIL -
Sign, date and mail your proxy card in the envelope
provided as soon as possible.
IN PERSON - You may vote your shares in person by attending the Annual Meeting.
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COMPANY NUMBER
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ACCOUNT NUMBER
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NOTICE OF
INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of meeting, proxy statement and proxy
card are available at http://www.arborrealtytrust.com/cm.htm
â Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. â
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
x
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The Board of Directors recommends a vote FOR Proposal 1. |
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The Board of Directors recommends a vote FOR Proposal 2.
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FOR
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AGAINST
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ABSTAIN |
Proposal 1.
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Election of four Class I directors to serve on the
Board of Directors of Arbor Realty Trust, Inc. |
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Proposal 2. |
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Ratification of the appointment of Ernst &
Young LLP as the independent registered public accounting
firm of Arbor Realty Trust, Inc. for fiscal year 2010. |
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NOMINEES: |
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FOR ALL NOMINEES |
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John J. Bishar, Jr. Archie R. Dykes |
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Proposal 3. |
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To vote and otherwise represent the undersigned on any
other matter that properly comes before the meeting or any adjournment
or postponement thereof in the discretion of the proxy holder.
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WITHHOLD AUTHORITY FOR ALL NOMINEES |
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Joseph Martello Kyle A. Permut |
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FOR ALL EXCEPT (See instructions below) |
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This proxy, when properly executed, will be voted in the manner
directed below. If this proxy is executed but no instruction is given,
this proxy will be voted FOR all nominees listed in Proposal 1 and
FOR Proposal 2. The proxies are hereby authorized to vote in their
discretion upon such other matters as may properly come before the
meeting or any postponements or adjournments thereof.
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The undersigned hereby acknowledges receipt of Arbor Realty Trust,
Inc.'s Annual Report to Stockholders for the fiscal year ended December
31, 2009 and the accompanying Notice of Annual Meeting and Proxy
Statement and hereby revokes any proxy or proxies heretofore given with
respect to the matters set forth above. |
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark
FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here:
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To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.
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Signature
of Shareholder
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Date:
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Signature
of Shareholder
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Date:
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Note: |
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
n
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ARBOR REALTY TRUST, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2010
The undersigned stockholder of Arbor Realty Trust, Inc., a Maryland corporation (the Company),
hereby appoints Paul Elenio and Walter K. Horn, and each of them, the proxy or proxies of the
undersigned, with full power of substitution in each of them, to attend the Annual Meeting of
Stockholders of the Company to be held on May 18, 2010 at 1:00 p.m., local time, at The
Teleconference Center on the lower level of 333 Earle Ovington Boulevard, Uniondale, New York and
any postponements or adjournments thereof, to cast on behalf of the undersigned all votes that the
undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the
meeting with all proxies possessed by the undersigned if personally present at the meeting.
This proxy, when properly executed, will be voted in the manner directed on the reverse side. If
this proxy is executed but no instruction is given, this proxy will be voted FOR all nominees
listed in Proposal 1 and FOR Proposal 2. The proxies are hereby authorized to vote in their
discretion upon such other matters as may properly come before the meeting or any adjournment or
postponement thereof.
(Continued and to be signed on the reverse side)