1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6 (e) (2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
THORNBURG MORTGAGE ASSET CORPORATION
--------------------------------------------
(Name of Registrant as Specified in Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $0
2) Form, Schedule or Registration No.:
3) Filing Party:
4) Date Filed:
<PAGE>
THORNBURG MORTGAGE ASSET CORPORATION
March 30, 1998
To Our Shareholders:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
(the "Annual Meeting") of Thornburg Mortgage Asset Corporation to be held at the
Eldorado Hotel, De Vargas Room, 309 West San Francisco Street, Santa Fe, New
Mexico 87501, on Thursday, April 30, 1998, at 9:00 a.m.
Mountain Standard Time ("MST").
The business of the meeting is to elect two nominees to the Board of
Directors. Information about the nominees for election is in the enclosed proxy
statement.
Only shareholders of record at the close of business on March 13, 1998 will
be entitled to notice of and to vote at the Annual Meeting.
While we hope many shareholders will exercise their right to vote their
shares in person, we recognize that many shareholders may not be able to attend
the Annual Meeting. Accordingly, we have enclosed a proxy which will enable you
to vote your shares on the issues to be considered at the Annual Meeting even if
you are unable to attend. All you need to do is mark the proxy to indicate your
vote, date and sign the proxy, and return it in the enclosed postage-paid
envelope as soon as conveniently possible. If you desire to vote in accordance
with management's recommendations, you need not mark your votes on the proxy but
need only sign, date and return the proxy in the enclosed postage-paid envelope
in order to record your vote.
Sincerely,
/s/ Larry A. Goldstone
Larry A. Goldstone
President and Chief Operating Officer
<PAGE>
THORNBURG MORTGAGE ASSET CORPORATION
119 East Marcy Street
Santa Fe, New Mexico 87501
(505) 989-1900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The Annual Meeting of Shareholders of Thornburg Mortgage Asset Corporation
will be held at the Eldorado Hotel, De Vargas Room, 309 West San Francisco
Street, Santa Fe, New Mexico 87501, on Thursday, April 30, 1998, at 9:00 a.m.
MST, to consider and act upon the following matters:
1. The election of two Class I Directors to serve for three-year terms and
until their successors are duly elected and qualified;
2. Such other business as may properly come before the Annual Meeting of
Shareholders, or any and all adjournments thereof.
Only shareholders of record at the close of business on March 13, 1998, the
record date, will be entitled to vote at the Annual Meeting.
Management desires to have maximum representation of shareholders at the
Annual Meeting. In order that your shares may be represented at the Annual
Meeting, management respectfully requests that you date, execute and promptly
mail the enclosed proxy in the accompanying postage-paid envelope. A proxy may
be revoked by a shareholder by notice in writing to the Secretary of the Company
at any time prior to its use, by presentation of a later-dated proxy, or by
attending the Annual Meeting and voting in person.
By order of the Board of Directors
/s/ Michael B. Jeffers
Michael B. Jeffers
Secretary
Dated: March 30, 1998
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY DATE, SIGN AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
THORNBURG MORTGAGE ASSET CORPORATION
119 East Marcy Street
Santa Fe, New Mexico 87501
(505) 989-1900
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 30, 1998
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Thornburg Mortgage Asset Corporation, a
Maryland corporation, (the "Company") for use at the Annual Meeting of
Shareholders of the Company to be held at the Eldorado Hotel, De Vargas Room,
309 West San Francisco Street, Santa Fe, New Mexico 87501, on Thursday, April
30, 1998, at 9:00 a.m. MST and any and all adjournments thereof (collectively
the "Annual Meeting"). The Annual Meeting is being held for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders. This proxy
statement, the accompanying proxy card and the Notice of Annual Meeting of
Shareholders are being provided to shareholders beginning on or about March 30,
1998.
GENERAL INFORMATION
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of the Company. The
costs of this solicitation will be borne by the Company. Proxy solicitations
will be made by mail, and also may be made by personal interview, telephone,
facsimile transmission and telegram on behalf of the Company by directors and
officers of the Company. Banks, brokerage houses, nominees and other fiduciaries
will be requested to forward the proxy soliciting material to the beneficial
owners and to obtain authorization for the execution of proxies. The Company
will, upon request, reimburse such parties for their reasonable expenses in
forwarding proxy materials to their beneficial owners. The Company does not
expect to engage an outside firm to solicit votes.
RECORD DATE, QUORUM AND VOTING REQUIREMENTS
Holders of shares of the Company's common stock ("Common Stock") at the close
of business on March 13, 1998, the record date, are entitled to notice of, and
to vote at, the Annual Meeting. On that date, 21,107,131 shares of Common Stock
were outstanding. Each share of Common Stock outstanding on the record date is
entitled to one vote on each matter presented at the Annual Meeting. The
presence, in person or by proxy, of shareholders representing 50% or more of the
issued and outstanding stock entitled to vote constitutes a quorum for the
transaction of business at the Annual Meeting.
Shares of Common Stock represented by all properly executed proxies received
in time for the Annual Meeting will be voted in accordance with the choices
specified in the proxy. Unless contrary instructions are indicated on the proxy,
the shares will be voted FOR the election of the nominees named in this proxy
statement as directors.
Representatives of the Company's transfer agent will assist the Company in
the tabulation of the votes. Abstentions and broker non-votes are counted as
shares represented at the meeting for purposes of determining a quorum. An
abstention has the effect of a vote "withheld" with respect to the election of
directors. Broker non-votes are not entitled to vote because they indicate the
withholding of power to vote on a specific matter and therefore have no effect
on the outcome of a proposal.
<PAGE>
REVOCABILITY OF PROXY
The giving of the enclosed proxy does not preclude the right to vote in
person should the shareholder giving the proxy so desire. A proxy may be revoked
at any time prior to its exercise by delivering a written statement to the
Secretary of the Company that the proxy is revoked, by presenting to the Company
a later-dated proxy executed by the person executing the prior proxy, or by
attending the Annual Meeting and voting in person.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 13, 1998,
relating to the beneficial ownership of the Company's Common Stock by each
director of the Company and all executive officers and directors of the Company
as a group. To the company's knowledge, there are no beneficial owners who hold
more than 5% of the outstanding shares of the Company's Common Stock.
<TABLE>
<CAPTION>
Percent of
Number Voting Shares
Name of Security Holder of Shares Outstanding (1)
- ----------------------------------------------- --------- ---------------
<S> <C> <C>
Garrett Thornburg (2) ........................ 526,971 2.43%
David A. Ater (3)............................. 43,141 *
Joseph H. Badal (4) .......................... 45,756 *
Larry A. Goldstone (5) ....................... 245,553 1.13%
Owen M. Lopez (6) ............................ 26,052 *
James H. Lorie (3) ........................... 46,141 *
Stuart C. Sherman (7)......................... 32,422 *
Richard P. Story (8).......................... 119,918 *
All Executive Officers and Directors as a
Group (8 persons) (9)..................... 1,085,954 5.01%
<FN>
* less than 1% of the outstanding shares.
(1) Based on 21,697,110 Common Shares (including 589,979 shares which can be
acquired within 60 days from the date of this Proxy Statement upon the
exercise of options granted pursuant to the Stock Option Plan) issued and
outstanding, as of the date of this Proxy Statement.
(2) Includes 238,171 Common Shares which can be acquired within 60 days from
the date of this Proxy Statement upon the exercise of options.
(3) Includes 11,444 Common Shares which can be acquired within 60 days from the
date of this Proxy Statement upon the exercise of options.
(4) Includes 43,141 Common Shares which can be acquired within 60 days from the
date of this Proxy Statement upon the exercise of options.
(5) Includes 157,711 Common Shares which can be acquired within 60 days from
the date of this Proxy Statement upon the exercise of options.
(6) Includes 24,777 Common Shares which can be acquired within 60 days from the
date of this Proxy Statement upon the exercise of options.
(7) Includes 31,092 Common Shares which can be acquired within 60 days from the
date of this Proxy Statement upon the exercise of options.
(8) Includes 72,199 Common Shares which can be acquired within 60 days from the
date of this Proxy Statement upon the exercise of options.
(9) Includes 589,979 Common Shares which can be acquired within 60 days from
the date of this Proxy Statement upon the exercise of options. None of the
Executive Officers or Directors own any Preferred Shares of the Company.
</FN>
</TABLE>
ELECTION OF DIRECTORS
The Company's bylaws provide that the number of directors which shall
constitute the entire Board of Directors shall be fixed from time to time by
resolutions adopted by the Board of Directors, but shall not be less than three
(3) persons nor greater than nine (9). The Company's Bylaws also provide for a
classified Board of Directors comprised of Classes I, II and III. The Company's
bylaws further provide that a majority of the Board of Directors shall be
unaffiliated (the "Unaffiliated Directors"), directly or indirectly, with any
person or entity responsible for directing and performing the day-to-day
business affairs of the Company. The Board of Directors has determined that
seven (7) directors is an appropriate number, five (5) of whom are unaffiliated,
with two directors in Class I and Class II and three directors in Class III. The
terms are staggered to provide for the election of one class each year. The
Class I, Class II and Class III directors of the Company are serving for terms
expiring in 1998, 1999, and 2000, respectively. Two Class I directors of the
Company are to be elected at the Annual Meeting to serve for three-year terms
and until their successors are duly elected and qualified. Mr. David A. Ater,
Jr. and Mr. Larry A. Goldstone have been nominated by the Board of Directors as
Class I Directors for election to the Board at the Annual Meeting. Except where
authority to do so is withheld, the accompanying Proxy will be voted FOR the
election of Mr. Ater and Mr. Goldstone, each to serve as Class I directors of
the Company for a term of three years and until their successors are duly
elected and qualified. The proxies cannot be voted for a greater number of
persons than the number of nominees named herein. The nominees are currently
members of the Board of Directors and have agreed to continue to serve if
elected. In the event either of the nominees shall unexpectedly be unable to
serve, the proxyholders will vote for such other person as the Board of
Directors may designate. The election of each nominee as a director requires the
affirmative vote of the holders of a plurality of the shares of Common Stock
cast in the election of the directors. Votes that are withheld and shares held
in street name that are not voted in the election of the directors will not be
included in determining the number of votes cast. Biographical information
regarding each nominee is set forth below along with biographical information
for each continuing director:
INFORMATION REGARDING DIRECTOR NOMINEES AND CONTINUING DIRECTORS
CLASS I NOMINEES - TERMS EXPIRING IN 1998
MR. ATER, 53, has been a director of the Company since March of 1995. Mr.
Ater is the President of Ater & Associates, an owner/broker of various
commercial and residential real estate development projects, as well as a
planning and management consulting firm. Mr. Ater is a principal in
Zeckendorf Oregon Ventures, also a real estate development entity. Mr. Ater
is also a Trustee of Thornburg Investment Trust, an open-end management
investment company, which has six portfolios: five bond funds and one equity
fund. Mr. Ater is actively involved with a number of charitable and
community organizations, and is currently a member of GBAC, the New Mexico
Governor's Business Advisory Council, and the New Mexico Amigos, the state's
official goodwill ambassadors. Mr. Ater has been involved in a variety of
real estate development projects since 1980, and from 1970 to 1980, was
employed by First National Bank of Santa Fe where he was President and Chief
Executive Officer from 1978 to 1980. Mr. Ater is a graduate of Stanford
University.
MR. GOLDSTONE, 43, is the President and Chief Operating Officer and has been
a director of the Company since the Company commenced operations in June of
1993. Mr. Goldstone is also a Managing Director of Thornburg Mortgage Advisory
Corporation (the "Manager"). The Manager is responsible for the day-to-day
operations of the Company, subject to the supervision of the Board of Directors.
From November 1991 until August 1992, Mr. Goldstone was employed at Downey
Savings and Loan Association, where he was a Senior Vice President and
Treasurer. While employed by Downey Savings and Loan, Mr. Goldstone was
primarily responsible for cash and liquidity management, mortgage portfolio
management, wholesale funding and interest rate risk management. Prior to his
employment at Downey Savings, Mr. Goldstone was employed by Great American Bank,
a federal savings bank, for a period of eight years. Mr. Goldstone held a
variety of increasingly responsible positions, including manager in the Treasury
Department and in the Mortgage Portfolio Management Department. Mr. Goldstone
was responsible for the management and trading of a $3 billion mortgage-backed
securities portfolio and was instrumental in structuring over $1 billion of
privately and publicly issued adjustable and variable-rate mortgage-backed
securities. Additionally, Mr. Goldstone has extensive experience in all facets
of mortgage finance, interest rate risk management and hedging. Mr. Goldstone
resigned from Great American in October 1991, having held the title of Senior
Vice President.
CLASS II AND III DIRECTORS - TERMS EXPIRING IN 1999 AND 2000
MR. THORNBURG, 52, is the Chairman of the Board, Chief Executive Officer and
has been a director of the Company since the Company commenced operations in
June of 1993. He is also Chairman, Chief Executive Officer and a director of the
Manager and Thornburg Management Company ("TMC"), an investment advisory firm
organized in 1982 and Thornburg Securities Corporation ("TSC"), a registered
broker-dealer that acts as a distributor of mutual funds managed by TMC and also
has participated as an underwriter in previous public offerings of the Company's
common stock. Mr. Thornburg owns a majority of the voting shares of TMC, TSC,
and the Manager. TMC is advisor to the nine Thornburg Mutual Funds. Mr.
Thornburg is also the President and a trustee of Thornburg Investment Trust, a
regulated investment company organized as a Massachusetts business trust, that
is the issuer of seven of the Thornburg Mutual Funds. Mr. Thornburg is also
Chairman of the Board and a director of Limited Term Municipal Fund, Inc., a
regulated investment company organized as a Maryland corporation. The eight
Thornburg bond funds and one equity fund currently have assets of $2.0 billion.
TMC also acts as a subadvisor to the New England Investment Company's Daily Tax
Free Income Fund with assets of $598 million and as placement agent to six of
their tax-free money funds with assets of $1.4 billion. Mr. Thornburg is a
graduate of Williams College, B.A. and Harvard University, MBA.
MR. BADAL, 53, has been a director of the Company since it commenced
operations in June of 1993. He is currently Senior Vice President of
Residential Loan Production with Charter Mortgage Company, headquartered in
Albuquerque, New Mexico. From 1980 through 1994, Mr. Badal was the President
of Merit Southwest Development Company, Inc., a consulting and commercial and
industrial real estate development firm in Albuquerque, New Mexico. Mr.
Badal is a former member of the New Mexico House of Representatives and
former Chairman of the New Mexico Mortgage Finance Authority. Mr. Badal is a
graduate of Temple University, B.S. and the University of New Mexico, MBA.
MR. LOPEZ, 57, was elected to the Board of Directors on December 18,
1996. Mr. Lopez has been the Executive Director of the McCune Charitable
Foundation in Santa Fe, New Mexico since 1994 and before that he was the
Managing Partner of the Hinkle Law Firm, Santa Fe, New Mexico, from 1982 to
1993. Mr. Lopez is actively involved with a number of charitable and
community organizations, and was formerly a trustee of the International Folk
Art Foundation, a board member of the Santa Fe Chamber Music Festival, a
regent of New Mexico Tech, a commissioner of the National Museum of American
Art of Smithsonian, a board member of St. John's College in Santa Fe and a
trustee of the Rocky Mountain Mineral Law Foundation. Mr. Lopez is a
graduate of Stanford University, B.A. and Notre Dame University, J.D.
MR. LORIE, 76, has been a director of the Company since it commenced
operations in June of 1993. He currently is Eli B. and Harriet B. Williams
Professor Emeritus of Business Administration in the Graduate School of Business
at the University of Chicago. Mr. Lorie has been Director of Research, Associate
Dean and Acting Dean of the Graduate School of Business, University of Chicago.
He is presently on the Board of Directors of the Acorn Fund. He has been a
consultant to SRI on the future of the securities industry and has been a member
of the National Market Advisory Board, the Board of the Chicago Board Options
Exchange, the Board of the National Association of Securities Dealers, Inc., the
Board of Directors of Elsinore Corporation, Merrill Lynch & Co., Inc., the
Square D Company and the Vulcan Materials Company.
MR. SHERMAN, 59, has been a director of the Company since it commenced
operations in June of 1993. He has been the President of S. C. Sherman &
Company, Inc. and American Southwest Development Company, Inc. since 1978,
both commercial real estate development firms. From April 1991 until
September 1994, Mr. Sherman was also Executive Vice President of The Royce
Company, a commercial real estate brokerage firm and an affiliate of Great
Western Financial Corporation.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors held four meetings and acted by unanimous written
consent five times during 1997. Each of the directors attended at least 75% of
the meetings of the Board of Directors and of the committees on which each
served during 1997.
The Board of Directors has an audit committee which consists of Mr. Ater, Mr.
Badal, and Mr. Sherman. The audit committee meets with the Company's independent
certified public accountants at least twice a year, once before and once after
the annual audit, to review the scope of and to discuss the results of the
annual audit. The audit committee may also meet at such other times as they
shall deem appropriate and the Company's independent certified public
accountants have been instructed to inform the audit committee at any time of
any information concerning the Company that they consider appropriate. The audit
committee met twice during 1997.
The Board of Directors also has a nominating committee consisting of Mr.
Ater, Mr. Badal, Mr. Lopez, Mr. Lorie and Mr. Sherman. The nominating
committee was established for the sole purpose of having the Unaffiliated
Directors recommend to the entire Board of Directors future nominees for
election as Unaffiliated Directors of the Company. The nominating committee
met once during 1997.
The Board of Directors does not have a compensation committee since the
Company has no paid officers or employees. However, the Board of Directors does
have a stock option committee consisting of Mr. Ater, Mr. Badal, Mr. Lopez, Mr.
Lorie and Mr. Sherman. The stock option committee administers the Amended and
Restated 1992 Stock Option Plan (the "Plan") of the Company and has exclusive
discretion to make stock option grants and other awards under the Plan. The
stock option committee members can only receive grants of stock options under a
predetermined formula which is defined in the Plan. Under the Plan,
Non-Qualified Options for 13,333 shares are granted under a formula to each
unaffiliated director as of the date of election to office, and thereafter
options are granted to each director for 0.2% of the Common Stock sold by the
Company during the previous fiscal quarter as part of a continuous offering or
0.2% of the Common and Preferred Stock sold by the Company on the pricing date
of a firm commitment public offering or direct placement (including shares
issued through the waiver provision of the Optional Cash Purchase feature of the
Company's Dividend Reinvestment and Stock Purchase Plan (the "DRP"), but
excluding other shares issued under the DRP and shares issued pursuant to the
exercises of options under the Plan).
The stock option committee met four times during 1997.
The Board of Directors has an executive committee comprised of Mr.
Thornburg, Mr. Ater and Mr. Sherman. The executive committee meets to
consider various matters delegated by the Board of Directors and to make
recommendations to the Board of Directors regarding such matters. The
executive committee met once during 1997.
In addition, the Unaffiliated Directors annually review the Company's
contract with the Manager to determine whether the contracted fee schedule is
reasonable in relation to the nature and quality of services performed by the
Manager under the contract.
The Unaffiliated Directors receive an annual fee of $15,000 per year plus
$1,000 for each meeting of the Board of Directors. The members of the audit
committee receive $1,000 per year for their services as members of the audit
committee. The members of the nominating committee and the stock option
committee do not receive compensation for service on those respective
committees. The unaffiliated members of the executive committee receive $1,000
per meeting for their services as members of the executive committee.
Unaffiliated Directors are reimbursed for expenses related to their attendance
at Board of Directors and committee meetings.
In accordance with a predetermined formula, during 1997 each member of the
stock option committee received options to purchase 11,444 shares of Common
Stock at exercise prices that ranged from $19.50 to $22.625 and 2,861 Dividend
Equivalent Rights (DERs). In lieu of $956 of dividends earned on DERs and
Phantom Stock Rights (PSRs) outstanding during 1997, each committee member chose
to receive 230 PSRs. Of the options and DERs each member of the stock option
committee received in 1997, 5,520 of the options are not exercisable and 1,380
of the DERs are not vested until and unless the Company's Series A preferred
shares are converted to Common Shares. As of December 31, 1997, the Unaffiliated
Directors, as a group, held 153,595 options with exercise prices that range from
$9.375 to $22.625, 104,995 of these options are exercisable.
MANAGEMENT OF THE COMPANY
The executive officers of the Company and their position are as follows:
Name Age Position(s) Held
------------------------- ----- ---------------------------------
H. Garrett Thornburg, Jr. 52 Chairman of the Board, Director
and Chief Executive Officer
Larry A. Goldstone 43 Director, President and Chief
Operating Officer
Richard P. Story 45 Chief Financial Officer and
Treasurer
The executive officers serve at the discretion of the Company's Board of
Directors. Biographical information regarding Mr. Thornburg and Mr.
Goldstone is provided above. Biographical information regarding Mr. Story is
set forth below.
Mr. Story has been the Chief Financial Officer of the Company and the Chief
Accounting Officer of the Manager since May 1993 and Treasurer of the Company
since June 1994. From April 1992 until April 1993, he was the Controller of
Sharp HealthCare, a health care company in San Diego, California. As Controller,
Mr. Story was responsible for financial statement preparation and reporting,
accounts payable, payroll, fixed assets and corporate tax. From 1976 until April
1992, Mr. Story was employed at Great American Bank, a federal savings bank in
San Diego, and from 1988 until 1992 held the position of Controller at that
institution. As Controller, he was responsible for financial reporting,
budgeting and planning, financial analysis, loan portfolio reporting and
analysis, insurance risk management, corporate tax, accounts payable, fixed
assets and payroll.
EXECUTIVE COMPENSATION
The Company has not paid, and does not intend to pay, any annual compensation
to the Company's executive officers for their services as executive officers.
However, the Company may from time to time, at the direction of the stock option
committee, grant options to purchase shares of the Company's Common Stock,
Dividend Equivalent Rights ("DERs"), Phantom Stock Rights ("PSRs") and Stock
Appreciation Rights ("SARs") to the executive officers and directors pursuant to
the Company's Plan.
The following table presents the total number of stock options granted to
executive officers of the Company during the year ended December 31, 1997.
STOCK OPTIONS GRANTED DURING YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Number of % of
Shares Total
Underlying Options Value
Options Granted to Exercise Expiration on Date
Granted Employees Price Date of Grant (1)
----------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
H. Garrett Thornburg, Jr. 30,500 17.77% $ 20.000 1/20/2007 $ 1,976
9,515 5.54% 19.500 5/15/2007 45,818
22,176 12.92% 22.625 7/14/2007 2,963
Larry A. Goldstone 30,500 17.77% 20.000 1/20/2007 1,976
9,515 5.54% 19.500 5/15/2007 45,818
22,176 12.92% 22.625 7/14/2007 2,963
Richard P. Story 15,250 8.88% 20.000 1/20/2007 988
4,758 2.77% 19.500 5/15/2007 22,916
11,088 6.46% 22.625 7/14/2007 1,486
<FN>
(1)The value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1996: dividend yield of 10%; expected
volatility of 23.3%; risk-free interest rate of 6.52%; and expected lives of
7 years.
</FN>
</TABLE>
The following table presents the total number of stock options exercised
during 1997 and held as of December 31, 1997 by the executive officers of the
Company and the year-end value of these options.
AGGREGATED OPTION EXERCISES IN 1997 AND OPTION VALUES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Number of Securities Value of
Number of Underlying Unexercised Unexercised In-the-Money
Shares Stock Options at 12/31/97 Stock Options at 12/31/97 (1)
Acquired Value --------------------------- -----------------------------
on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------- ---------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
H. Garrett Thornburg, Jr. 0 $ 0 185,495 52,676 $ 2,903,670 $ 0
Larry A. Goldstone 80,460 1,281,000 105,035 52,676 1,576,080 0
Richard P. Story 46,896 741,000 45,861 26,338 678,200 0
<FN>
(1) The value of unexercised options is calculated using the closing price of
$16.50 on the New York Stock Exchange (the "NYSE") of the Company's Common
Stock on December 31, 1997.
</FN>
</TABLE>
<PAGE>
The following table presents the total number of DERs granted, the value of
dividends earned on DERs and the number of PSRs issued in lieu of cash dividends
on DERs and PSRs to executive officers during 1997 .
DERS GRANTED AND OUTSTANDING AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
1997 Number of
Number of Dividends PSRs Issued Number of Value of
DERs Vested DERs Earned on In Lieu of PSRs PSRs
Granted Outstanding (1) DERs Dividends (2) Outstanding Outstanding (3)
--------- --------------- --------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
H. Garrett Thornburg, Jr. 15,548 7,923 $ 5,127 248 248 $ 4,092
Larry A. Goldstone 15,548 7,923 5,127 248 248 4,092
Richard P. Story 7,773 3,961 2,563 124 124 2,046
<FN>
(1) DERs granted in connection with the Company's Series A preferred shares are
not vested until and unless the Company's Series A preferred shares are
converted to Common Shares.
(2) PSRs are issued in lieu of cash dividends for DERs and PSRs at the
discretion of the holders of DERs and PSRs.
(3) The value of outstanding PSRs is calculated using the closing price of
$16.50 on the NYSE of the Company's Common Stock on December 31, 1997.
</FN>
</TABLE>
TOTAL RETURN COMPARISON
The following graph presents a total return comparison of the Company's
Common Stock, since the commencement of the Company's operations on June 25,
1993 through December 31, 1997, to the S&P Composite-500 Stock Index, the
National Association of Real Estate Investment Trusts, Inc. ("NAREIT") All REIT
Index and NAREIT Mortgage REIT Index. The total return reflects stock price
appreciation and the value of dividends for the Company's Common Stock and for
each of the comparative indices. The information herein has been obtained from
sources believed to be reliable, but neither its accuracy nor its completeness
is guaranteed. The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 on June 25, 1993, the
commencement of the Company's operations, and that all dividends were
reinvested. The total return performance shown on the graph is not necessarily
indicative of future total return performance.
TOTAL RETURN COMPARISON SINCE COMMENCEMENT OF OPERATIONS
THROUGH DECEMBER 31, 1997
[GRAPHICS EXCLUDED, PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
6/25/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
--------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thornburg Mortgage Asset Corp. $ 100.00 $ 111.93 $ 57.77 $ 119.80 $ 168.30 $ 148.93
S&P Composite-500 Index 100.00 104.93 106.31 146.09 179.63 239.58
NAREIT Mortgage REIT Index 100.00 107.85 81.64 133.41 201.28 208.97
NAREIT All REIT Index 100.00 102.40 103.22 122.12 165.79 197.05
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In addition to being Chairman of the Board, Chief Executive Officer and a
director of the Company, Mr. Thornburg is Chairman of the Board, President
and a director of the Manager and owns a controlling interest in the
Manager. Mr. Goldstone, in addition to being the President, Chief Operating
Officer and a director of the Company, is a managing director of the
Manager. Mr. Story, the Treasurer and Chief Financial Officer of the
Company, is also the Chief Accounting Officer of the Manager. As such, Mr.
Thornburg, Mr. Goldstone and Mr. Story are paid employees of the Manager.
Mr. Goldstone and Mr. Story own minority interests in the Manager.
The Company pays the Manager an annual base management fee based on average
shareholders' equity, adjusted for liabilities that are not incurred to finance
assets ("Average Shareholders' Equity" or "Average Net Invested Assets" as
defined in the Agreement) payable monthly in arrears as follows: 1.1% of the
first $300 million of Average Shareholders' Equity, plus 0.8% of the portion
above $300 million. For the year ended December 31, 1997, the Company paid the
Manager $3,664,000 in base management fees in accordance with the terms of the
Agreement.
The Manager is also entitled to earn performance based compensation in an
amount equal to 20% of the Company's annualized net income, before performance
based compensation, above an annualized Return on Equity equal to the ten year
U.S. Treasury Rate plus 1%. For purposes of the performance fee calculation,
equity is generally defined as proceeds from issuance of common stock, before
underwriter's discount and other costs of issuance, plus retained earnings. For
the year ended December 31, 1997, the Company paid the Manager $3,363,000 in
performance based compensation in accordance with the terms of the Agreement.
Pursuant to the terms of the Management Agreement, in the event a person or
entity obtains more than 20% of the Company's Common Stock, if the Company is
combined with another entity, or if the Company terminates the Management
Agreement other than for cause, the Company is obligated to acquire
substantially all of the assets of the Manager through an exchange of shares
with a value based on a formula tied to the Manager's net profits.
The Bylaws of the Company provide that the Board of Directors shall evaluate
the performance of the Manager before entering into or renewing any management
arrangement and that the Unaffiliated Directors shall determine at least
annually that the Manager's compensation is reasonable in relation to the nature
and quality of services performed.
During December 1997 and January 1998, Mr. Goldstone, Mr. Story, Mr. Ater and
Mr. Lorie all entered into full-recourse, interest-bearing notes receivable,
pursuant to a program approved by the Board of Directors in December 1997, which
were used to purchase Common Stock of the Company pursuant to the exercise of
stock options under the Plan. The notes have maturity terms ranging from 3 years
to 9 years and accrue interest at rates that range from 5.70% to 6.00% per
annum. In addition, the notes are secured by a pledge of the shares of the
Common Stock acquired. Interest is payable quarterly, with the balance due at
the maturity of the notes. The payment of the notes will be accelerated only
upon the sale of the shares of Common Stock pledged for the notes. The notes may
be prepaid at any time at the option of each borrower.
As of March 13, 1998, the outstanding balances on the notes receivable
entered into by Mr. Goldstone, Mr. Story, Mr. Ater and Mr. Lorie were
$1,307,978, $762,353, $508,143 and $470,700, respectively.
The Company does not intend to purchase any mortgage securities or enter into
any servicing or administrative agreements (other than the Management Agreement)
with any entities affiliated with the Manager.
Thornburg Securities Corporation, an affiliate of the Manager, was an
underwriter in the January 1997 public offering of the Company's Preferred
Stock. Thornburg Securities Corporation was not the lead underwriter and did not
participate in any negotiations of the underwriters' compensation or the terms
of this offering.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and certain of its officers, and persons who own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Executive officers, directors and greater than 10% stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
There are no beneficial owners of 10% or more of the Company's equity
securities. Based solely on its review of the copies of such forms received by
it, or written representations from certain reporting persons that no Form 5's
were required for those persons, the Company believes that during the year ended
December 31, 1997, all filing requirements applicable to its executive officers
and directors were complied with during the fiscal year, except for one filing
for a purchase of 10,000 shares by Mr. Thornburg that was filed late.
APPOINTMENT OF AUDITORS
The Board of Directors has appointed McGladrey & Pullen, LLP, independent
certified public accountants, to examine the financial statements of the Company
for the year ended December 31, 1998. McGladrey & Pullen, LLP has been the
Company's independent certified public accountants since the Company commenced
operations in June 1993. A representative of McGladrey & Pullen, LLP is expected
to be available by tele-conference at the Annual Meeting and will be provided
with an opportunity to make a statement and to respond to appropriate questions
from shareholders.
OTHER MATTERS
The management and the Board of Directors of the Company know of no other
matters to come before the Annual Meeting other than those stated in the Notice
of the Annual Meeting. To date, no shareholder proposals have been received by
the Company. However, if any other matters are properly presented to the
shareholders for action, it is the intention of the proxy holders named in the
enclosed proxy to vote in their discretion on all matters on which the shares
represented by such proxy are entitled to vote.
SHAREHOLDER PROPOSALS
Any proposal that a shareholder may desire to present to the 1999 Annual
Meeting of shareholders must be received in writing by the Secretary of the
Company prior to December 4, 1998. Such written notice must set forth (i) a
brief description of the business desired to be brought before the meeting; (ii)
the shareholder's name and address as they appear on the Company's books; (iii)
the number of shares of Common Stock beneficially owned by the shareholder; and
(iv) any material interest of the shareholder in such business.
ANNUAL REPORT
The 1997 Annual Report to shareholders including financial statements for the
year ended December 31, 1997, which is being mailed to shareholders together
with this Proxy Statement, contains financial and other information about the
activities of the Company, but is not incorporated into this Proxy Statement and
is not to be considered a part of these proxy soliciting materials.
A COPY OF THE FORM 10-K ANNUAL REPORT (WITHOUT EXHIBITS) FOR THE YEAR ENDED
DECEMBER 31, 1997, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, WHICH
THE COMPANY HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS AVAILABLE
UPON REQUEST, WITHOUT CHARGE. THE REQUEST SHOULD BE DIRECTED TO RICHARD P.
STORY, CHIEF FINANCIAL OFFICER, AT 119 MARCY STREET, SANTA FE, NEW MEXICO,
87501.
By the order of the Board of Directors
/s/ Larry A. Goldstone
Larry A. Goldstone
March 30, 1998 President and Chief Operating Officer
<PAGE>
==============================================================================
Thornburg Mortgage Asset Corporation
119 East Marcy St.
Santa Fe, NM 87501
505-989-1900
PROXY - Annual Meeting of Shareholders - Thursday, April 30, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Garrett Thornburg and Larry A. Goldstone as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the Common Shares of
Thornburg Mortgage Asset Corporation held of record by the undersigned on March
13, 1998 at the Annual Meeting of Shareholders to be held on Thursday, April 30,
1998 or at any adjournment thereof.
1. ELECTION OF DIRECTORS. The election of two Class I Directors to serve
for three years, each until his successor is duly elected and qualified.
FOR all nominees listed WITHOLD AUTHORITY to
(except as marked to the vote for all nominees listed
contrary below) [ ] below [ ]
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
David A. Ater, Larry A. Goldstone
2. Such other business as may properly come before the Annual Meeting of
Shareholders, or at any and all adjournments thereof.
(Continued, and to be signed, on Reverse Side)
===============================================================================
Thornburg Mortgage Asset Corporation
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF ALL NOMINEES LISTED FOR ELECTION AS DIRECTORS AND IN ACCORDANCE WITH
THE PROXIES' BEST JUDGEMENT UPON OTHER MATTERS PROPERLY COMING BEFORE THE
MEETING AND ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears below. When shares are hold by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Date_______________________________
-----------------------------------
Signature
-----------------------------------
Signature, if held jointly.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
===============================================================================
