Company: MFAN
Filing Date: 2025-04-18
Form Type: DEF 14A
Source: 0001140361-25-014577
Chunk: 49

Company: MFA FINANCIAL, INC.
Filing Date: 2025-04-18
Form: DEF 14A
Chunk 49
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 cost of capital and debt leverage, and ultimately, how efficient we are in generating earnings against our capital base. The Compensation Committee, with the assistance of FW Cook, periodically reviews the overall structure of the annual incentive component of our most senior executives’ compensation. The Compensation Committee continues to believe that it is appropriate to use, in large part, a formulaic approach for the determination of our most senior executives’ bonuses (which approach was first adopted in 2014) with a methodology continuing to be based on measures of return on common equity. This belief is premised in large part on the nature of MFA’s business model, which has historically focused on investing in residential mortgages, mortgage-related debt instruments and other mortgage-related assets, and more recently, on the origination and servicing of business purpose mortgage loans on residential properties. Returns that MFA can earn on new real estate-related debt investments are, to a certain extent, correlated with the market-driven interest rates for these and other types of debt instruments (which rates depend, among other factors, on the perceived risk of these investments). These market-driven interest rates are typically analyzed as the risk-free interest rate for investment in U.S. Treasury obligations (or other debt backed by the full faith and credit of the United States) with a comparable duration (which is a measure of the price sensitivity of an asset to changes in interest rates) plus an incremental risk premium above the risk-free rate. Formulaic Bonus for 2024. In an effort to address year-to-year changes in our operating environment and changes in our business and the mix of our investment assets, as well as to retain flexibility to refine the use of ROAE to respond to changes in financial conditions, the Compensation Committee sets performance goals and targets on an annual basis, which may include performance goals based on ROAE as well as other objective performance measures. For the 2024 Performance Period, the Compensation Committee, in consultation with FW Cook, determined that it was appropriate, similar to 2023, to base Mr. Knutson’s and Mr. Wulfsohn’s Formulaic Bonus not only on the achievement of performance goals with respect to Adjusted GAAP ROAE (which has been the measure historically used by the Compensation Committee), but also to base a portion of the Formulaic Bonus on the achievement of performance goals with respect to Adjusted Distributable Earnings ROAE. Further, for the 2024 Performance Period, the Compensation Committee introduced a relative component to each of Mr. Knutson’s and Mr. Wulf