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:
[ X ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only ( as permitted by Rule
14a-6 (e) (2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material 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:
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THORNBURG MORTGAGE ASSET CORPORATION
(DBA THORNBURG MORTGAGE, INC.)
March 27, 2000
To Our Shareholders:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
(the "Annual Meeting") of Thornburg Mortgage Asset Corporation (dba Thornburg
Mortgage, Inc.) (the "Company") to be held at La Posada Hotel, 330 East Palace,
Canyon Room, Santa Fe, New Mexico 87501, on Thursday, April 27, 2000, at 9:00
a.m. Mountain Standard Time ("MST").
The purpose of the meeting is to elect three nominees to the Board of
Directors and to approve an amendment to the Company's Articles of Incorporation
to change the name of the Company to Thornburg Mortgage, Inc. Information about
the nominees for election as directors and the proposal to change the name of
the Company is in the enclosed proxy statement.
Only shareholders of record of the Company's common stock, $.01 par value,
at the close of business on March 17, 2000 will be entitled to notice of and to
vote at the Annual Meeting.
While we hope that 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.
Your vote, regardless of the number of shares you own, is important.
Accordingly, we urge you to please vote your proxy.
Sincerely,
/S/ Larry A. Goldstone
-------------------------
Larry A. Goldstone
President and Chief Operating Officer
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THORNBURG MORTGAGE ASSET CORPORATION
(DBA THORNBURG MORTGAGE, INC.)
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
(dba Thornburg Mortgage, Inc.) (the "Company") will be held at La Posada Hotel
in the Canyon Room, 330 East Palace, Santa Fe, New Mexico 87501, on Thursday,
April 27, 1999, at 9:00 a.m. MST, to consider and act upon the following
matters:
1. The election of three Class III Directors to serve for three-year terms and
until their successors are duly elected and qualified. The proxy statement
accompanying this notice includes the names of the nominees to be presented
by the Board of Directors for election.
2. The proposal to amend the Company's Articles of Incorporation to change the
name of the Company to Thornburg Mortgage, Inc.; and
3. Such other business as may properly come before the Annual Meeting of
Shareholders, or any and all adjournments thereof.
Only shareholders of record of the Company's common stock, $.01 par value,
at the close of business on March 17, 2000, 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 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 27, 2000
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY DATE, SIGN AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE.
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<PAGE>
THORNBURG MORTGAGE ASSET CORPORATION
(DBA THORNBURG MORTGAGE, INC.)
119 East Marcy Street
Santa Fe, New Mexico 87501
(505) 989-1900
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 27, 2000
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Thornburg Mortgage Asset Corporation (dba
Thornburg Mortgage, Inc.), a Maryland corporation (the "Company") for use at the
Annual Meeting of Shareholders of the Company to be held at La Posada Hotel in
the Canyon Room, 330 East Palace, Santa Fe, New Mexico 87501, on Thursday, April
27, 2000, 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 27,
2000.
GENERAL INFORMATION
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of the Company
(the "Board of Directors" or the "Board"). 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 nominally holding shares of the
Company's common stock, $.01 par value (the "Common Stock") will be requested to
forward the proxy soliciting material to the beneficial owners of such Common
Stock 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 the 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 Common Stock at the close of business on March 17,
2000 (the "Record Date"), are entitled to notice of, and to vote at, the Annual
Meeting. On that date, approximately 21,489,663 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 Common Stock held of record on the Record Date and
entitled to vote constitutes a quorum for the transaction of business at the
Annual Meeting. The election of directors requires the affirmative vote of
holders representing a majority of the shares of Common Stock present at a
meeting at which a quorum is present. Under Maryland law, the amendment to the
Articles of Incorporation requires the affirmative vote of two-thirds of all the
outstanding shares of Common Stock.
Shares of Common Stock represented by all properly executed proxies
received in time for the Annual Meeting will be voted, unless revoked, 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 and FOR the
proposal to amend the Articles of Incorporation to change the name of the
Company. Representatives of the Company's transfer agent will assist the
Company in the tabulation of the votes. Abstentions and broker non-votes are
<PAGE>
counted as shares represented at the meeting and entitled to vote for purposes
of determining a quorum. Abstentions will have the same legal effect as a vote
"against" election of the directors and amendment of the Articles. With respect
to any proposal that a broker has discretion to act upon in the absence of
voting instructions from the beneficial owner, the broker may vote such shares
absent specific voting instructions. Therefore, with respect to Proposals 1 and
2 described herein, with respect to which brokers have the discretionary power
to vote, brokers may vote such shares absent specific voting directions from the
beneficial owners of such shares.
DISSENTERS' RIGHTS
Under Maryland law, shareholders are not entitled to any dissenters' rights
with respect to the approval of any of the proposals described in this proxy
statement.
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.
PROPOSAL NO. 1: 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, during the time that the Company seeks to qualify
as a real estate investment trust, a majority of the Board of Directors shall be
unaffiliated, directly or indirectly, with any person or entity responsible for
directing and performing the day-to-day business affairs of the Company (the
"Unaffiliated Directors"). The Board of Directors has determined that seven (7)
directors is an appropriate number, five (5) of whom are currently 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 2001, 2002, and 2000, respectively.
Three Class III 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. Garrett Thornburg, Mr. Joseph H. Badal and Mr.
Stuart C. Sherman have been nominated by the Board of Directors as Class III
Directors for election to the Board at the Annual Meeting. 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 that any 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 majority of the
Common Stock present in person or proxy at a meeting at which a quorum is
present. Biographical information regarding each nominee is set forth below
along with biographical information for each continuing director.
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INFORMATION REGARDING DIRECTOR NOMINEES AND CONTINUING DIRECTORS
CLASS III NOMINEES - TERMS EXPIRING IN 2000
GARRETT THORNBURG, 54, 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 Thornburg Mortgage Advisory Corporation (the "Manager") which is
responsible for the day-to-day operations of the Company, subject to the
supervision of the Board of Directors. Mr. Thornburg is also Chairman, Chief
Executive Officer and a director of Thornburg Investment Management, Inc.
("TIM"), an investment advisory firm organized in 1982 and of Thornburg
Securities Corporation ("TSC"), a registered broker-dealer that acts as a
distributor of mutual funds managed by TIM and also has participated as an
underwriter in previous public offerings of the Common Stock. Mr. Thornburg
owns a majority of the voting shares of TIM, TSC, and the Manager. Mr.
Thornburg is also Chief Executive Officer and co-founder of Thornburg Foundation
Realty, Inc. ("TFRI"), a real estate investment trust, structured to assist
non-profit organizations in their acceptance of charitable gifts of commercial
real estate. TIM is advisor to the ten 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 eight 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 two equity funds currently have assets of $2.9 billion. TIM also
acts as a subadvisor to the New England Investment Company's Daily Tax Free
Income Fund with assets of $663 million and as placement agent to six of their
tax-free money funds with assets of $1.6 billion. Mr. Thornburg is a graduate
of Williams College, B.A., and Harvard University, MBA.
JOSEPH H. BADAL, 55, 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.
STUART C. SHERMAN, 61, 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., both
commercial real estate development firms, since 1978. S. C. Sherman & Company,
Inc. is also a real estate brokerage company. 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.
CLASS I AND II DIRECTORS - TERMS EXPIRING IN 2001 AND 2002
DAVID A. ATER, 55, 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
Northwest, also a real estate development entity. Mr. Ater is also a Trustee of
Thornburg Investment Trust, an open-end management investment company, which has
eight portfolios consisting of six bond funds and two equity funds, and of TFRI.
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.
3
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LARRY A. GOLDSTONE, 45, 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 the Manager. 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 where he 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.
OWEN M. LOPEZ, 59, 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.
JAMES H. LORIE, 78, 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., and the Board of Directors of Elsinore Corporation, Merrill Lynch & Co.,
Inc., the Square D Company and the Vulcan Materials Company.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors held four (4) meetings and acted by unanimous
written consent one (1) time during 1999. 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 1999.
Audit Committee
----------------
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
it deems 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 three (3) times during 1999.
In December 1999, the Securities and Exchange Commission ("SEC") and the
New York Stock Exchange ("NYSE") adopted new guidelines regarding the expanded
responsibilities of audit committees. At a meeting held on January 25, 1999,
the audit committee and the Board of Directors endorsed the principles set forth
in the guidelines and the Board authorized and directed the preparation of a
charter for the audit committee and the taking of all other appropriate action
in full compliance with the guidelines. A charter is in the process of being
prepared and, upon completion, will be presented to the Board for approval and
adoption at its next regularly scheduled meeting.
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Nominating Committee
---------------------
The Board of Directors 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 1999.
Stock Option Committee
------------------------
The Board of Directors has a stock option committee (the "Committee")
consisting of Mr. Ater, Mr. Badal, Mr. Lopez, Mr. Lorie and Mr. Sherman. The
Committee administers the Amended and Restated 1992 Stock Option and Incentive
Plan (the "Plan") of the Company and has exclusive discretion to make stock
option grants and other awards under the Plan. Officers, directors (other than
members of the Committee) and employees of the Company and other persons
expected to provide significant services to the Company are eligible to receive
awards of stock options, Dividend Equivalent Rights ("DERs"), Phantom Stock
Rights ("PSRs") and stock appreciation rights ("SARs"). Under the Plan,
Non-Statutory Stock Options to purchase 13,333 shares of Common Stock are
granted under a formula to each Unaffiliated Director who is a member of the
Committee as of the date of such member's appointment to the committee, and
thereafter options to purchase Common Stock are granted to each such 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 Stock sold by the
Company or Common Stock into which the Company's Series A 9.68% Cumulative
Convertible Preferred Stock, $.01 par value (the "Preferred Stock") sold by the
Company may be converted as of the pricing date of a firm commitment public
offering or direct placement of the Common Stock or Preferred Stock (including
shares of Common Stock sold under 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). In addition to the
formula grants to members of the Committee, the committee may also make
additional grants of stock options and other awards to members of the Committee,
provided the recipient does not participate in the determination of, or vote on,
the award. The Committee met two (2) times and acted by unanimous written
consent one (1) time during 1999.
During 1999, the members of the Committee received, as a group, options to
purchase 31,021 shares of Common Stock at an exercise price of $9.06 and 13,960
DERs. In lieu of $21,000 of dividends earned on DERs and PSRs outstanding
during 1999, the Committee members chose to receive 2,304 PSRs, as a group. As
of December 31, 1999, the Unaffiliated Directors, as a group, held 162,389
options with exercise prices that range from $9.0625 to $22.625. 134,789 of
these options are exercisable.
Compensation Committee
-----------------------
The Board of Directors does not have a compensation committee since the
Company has no paid officers or employees.
Executive Committee
--------------------
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
two (2) times during 1999.
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 for each meeting for their services as members of the
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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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO RE-ELECT THE CLASS III DIRECTORS TO THE BOARD OF DIRECTORS. PROXIES
SOLICITED BY THE BOARD WILL BE VOTED FOR SUCH APPROVAL UNLESS A VOTE AGAINST THE
PROPOSAL OR ABSTENTION IS SPECIFICALLY INDICATED IN THE PROXY.
PROPOSAL NO. 2: AMENDMENT OF ARTICLES OF INCORPORATION TO CHANGE NAME
The Board recommends that the Company's name be changed from "Thornburg
Mortgage Asset Corporation" to "Thornburg Mortgage, Inc.", a name that the
Company has been using as a fictitious business name since October 14, 1999.
The name change is being undertaken in order to broaden and better define the
businesses in which the Company is engaged. This change is anticipated to
enhance the marketing of Thornburg mortgage products by increasing investor and
market awareness of such products. The approval of the name change will not
affect in any way the validity of currently outstanding stock certificates and
will not require the Company's shareholders to surrender or exchange any stock
certificates that they currently hold. The Articles of Incorporation will be
amended to reflect the new change. Under Maryland law, amendments to the
Articles of Incorporation require the affirmative vote of two-thirds of all the
outstanding shares of Common Stock.
The Company, therefore, seeks shareholder approval of the following new
Article Second which will replace the current Article Second.
"SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
THORNBURG MORTGAGE, INC."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO APPROVE THE AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE THE
COMPANY'S NAME TO THORNBURG MORTGAGE, INC. THE AFFIRMATIVE VOTE OF SIXTY-SIX
AND TWO-THIRDS (66 2/3) PERCENT OF THE OUTSTANDING SHARES OF THE COMMON STOCK IS
REQUIRED TO APPROVE THIS PROPOSAL. PROXIES SOLICITED BY THE BOARD WILL BE VOTED
FOR SUCH APPROVAL UNLESS A VOTE AGAINST THE PROPOSAL OR ABSTENTION IS
SPECIFICALLY INDICATED IN THE PROXY.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 15, 2000,
relating to the beneficial ownership of the Common Stock and the Preferred Stock
by each director of the Company, each executive officer, 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 either the outstanding
shares of the Common Stock or Preferred Stock. Unless otherwise indicated, each
person listed has sole voting and investment power over the shares beneficially
owned by him.
<TABLE>
<CAPTION>
Percent of
Number Voting Shares
Name of Security Holder of Shares Outstanding (1)
- ---------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Garrett Thornburg (2) 793,648 3.18%
David A. Ater (3) 55,729 *
Joseph H. Badal (4) 54,855 *
Larry A. Goldstone (5) 302,500 1.21%
Owen M. Lopez (6) 31,947 *
James H. Lorie (7) 51,790 *
Stuart C. Sherman (8) 41,366 *
Richard P. Story (9) 143,603 *
All Executive Officers and Directors as a Group (8 persons) (10) 1,475,438 5.92%
<FN>
* less than 1% of the outstanding shares.
(1) Based on 24,928,501 shares of Common Stock (including 678,838 shares which
can be acquired within 60 days from the date of this proxy statement upon
the exercise of options granted pursuant to the Plan and 2,760,000 shares
of Preferred Stock that are convertible into shares of Common Stock on a
one-to-one basis) issued and outstanding, as of the date of this proxy
statement.
(2) Mr. Thornburg is Chairman of the Board and the Chief Executive Officer.
Includes 283,507 shares of Common Stock which can be acquired within 60
days from the date of this proxy statement upon the exercise of options.
(3) Mr. Ater is a director. Includes 20,093 shares of Common Stock which can be
acquired within 60 days from the date of this proxy statement upon the
exercise of options.
(4) Mr. Badal is a director. Includes 51,790 shares of Common Stock which can
be acquired within 60 days from the date of this proxy statement upon the
exercise of options and 500 shares of Preferred Stock that are convertible
into shares of Common Stock on a one-to-one basis. The holdings of Common
Stock reported for Mr. Badal exclude 643 shares of Common Stock held by Mr.
Badal's wife.
(5) Mr. Goldstone is the President, Chief Operating Officer and a director.
Includes 179,167 shares of Common Stock which can be acquired within 60
days from the date of this proxy statement upon the exercise of options.
(6) Mr. Lopez is a director. Includes 30,672 shares of Common Stock which can
be acquired within 60 days from the date of this proxy statement upon the
exercise of options.
(7) Mr. Lorie is a director. Includes 20,093 shares of Common Stock which can
be acquired within 60 days from the date of this proxy statement upon the
exercise of options.
(8) Mr. Sherman is a director. Includes 39,741 shares of Common Stock which can
be acquired within 60 days from the date of this proxy statement upon the
exercise of options.
(9) Mr. Story is the Chief Financial Officer and the Treasurer. Includes 53,775
shares of Common Stock which can be acquired within 60 days from the date
of this proxy statement upon the exercise of options. The holdings of
Common Stock reported for Mr. Story include 89,828 shares of Common Stock
held jointly with his wife.
(10) Includes 678,838 shares of Common Stock which can be acquired within 60
days from the date of this proxy statement upon the exercise of options and
500 shares of Preferred Stock that are convertible into shares of Common
Stock on a one-to-one basis.
</TABLE>
7
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MANAGEMENT OF THE COMPANY
The executive officers of the Company and their position are as follows:
<TABLE>
<CAPTION>
Name Age Positions Held
- -------------------- ---- -----------------------------------------------------------
<S> <C> <C>
Garrett Thornburg 54 Chairman of the Board, Director and Chief Executive Officer
Larry A. Goldstone 45 Director, President and Chief Operating Officer
Richard P. Story 47 Chief Financial Officer and Treasurer
</TABLE>
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 and a Managing Director of the Manager since December 1998.
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 Common Stock,
Dividend Equivalent Rights ("DERs"), Phantom Stock Rights ("PSRs") and Stock
Appreciation Rights ("SARs") to the executive officers and directors pursuant to
the Plan.
The following table presents the total number of stock options granted to
the executive officers of the Company during the fiscal year ended December 31,
1999.
STOCK OPTIONS GRANTED DURING FISCAL YEAR ENDED DECEMBER 31, 1999
<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>
Garrett Thornburg 36,979 19.80% $ 9.063 4/15/2009 $ 34,021
Larry A. Goldstone 36,979 19.80% 9.063 4/15/2009 34,021
Richard P. Story 18,490 9.90% 9.063 4/15/2009 17,011
10,000 5.35% 8.375 12/10/2009 9,600
<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 1999: dividend yield of 10%; expected
volatility of 30.1%; risk-free interest rate of 5.48%; and expected lives
of 7 years.
</TABLE>
The following table presents the total number of stock options exercised
during 1999 and held as of December 31, 1999 by the executive officers of the
Company and the year-end value of these options.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN 1999 AND OPTION VALUES DURING FISCAL YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Number of Number of Securities Value of
Shares Underlying Unexercised Unexercised In-the-Money
Acquired Value Stock Options at 12/31/99 Stock Options at 12/31/99 (2)
-------------------------- ----------------------------
on Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Garrett Thornburg 0 $0 253,007 30,500 $0 $0
Larry A. Goldstone 0 0 148,667 30,500 0 0
Richard P. Story 0 0 38,525 25,250 0 0
<FN>
(1) The value realized is based on the market value of the underlying
securities on the exercise date, less the exercise price.
(2) The value of unexercised options is calculated using the closing price of
$8.25 on the NYSE of the Common Stock on December 31, 1999.
</TABLE>
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 the executive officers during 1999.
DERS GRANTED AND OUTSTANDING DURING FISCAL YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
- - 1999 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/PSRs Dividends (2) Outstanding Outstanding(3)
--------- --------------- ------------ ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Garrett Thornburg 16,641 27,490 $ 23,395 2,526 3,870 $ 31,928
Larry A. Goldstone 16,641 27,490 23,395 2,526 3,870 31,928
Richard P. Story 12,820 18,247 11,699 1,263 1,935 15,964
<FN>
(1) DERs granted in connection with the Preferred Stock are not vested until
and unless shares of the Preferred Stock are converted to shares of Common
Stock.
(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
$8.25 on the NYSE of the Common Stock on December 31, 1999.
</TABLE>
9
<PAGE>
TOTAL RETURN COMPARISON
The following graph presents a total return comparison of the Common Stock
for the five year period from December 31, 1994 through December 31, 1999, to
the Bloomberg Mortgage REIT Index, the National Association of Real Estate
Investment Trusts, Inc. ("NAREIT") All REIT Index and the Lehman Long-Term Bond
Index. The total return reflects stock price appreciation and the value of
dividends for the 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 Common Stock and each index was $100 on
December 31, 1994, 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 FROM DECEMBER 31, 1994
THROUGH DECEMBER 31, 1999
[GRAPHIC OMITED]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Thornburg Mortgage Asset Corp. $ 100.00 $ 226.17 $ 324.81 $ 285.42 $ 177.36 $ 198.31
Bloomberg Mortgage REIT Index 100.00 160.26 227.06 185.95 140.37 111.54
NAREIT All REIT Index 100.00 118.31 160.61 190.90 154.97 144.93
Lehman Long-term Bond Index 100.00 130.69 129.55 149.09 169.25 155.20
</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 a Managing
Director and 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 Net Invested Assets" as defined in the Management Agreement
between the Company and the Manager dated July 15, 1999 (the "Management
10
<PAGE>
Agreement")) payable monthly in arrears as follows: 1.1% of the first $300
million of Average Net Invested Assets, plus 0.8% of that portion above $300
million. In addition, during 1999, the two wholly-owned REIT qualified
subsidiaries of the Company entered into separate management agreements with the
Manager for additional management services for a combined amount of $1,250 per
calendar quarter, paid in arrears. For the year ended December 31, 1999, the
Company paid the Manager $4,088,000 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 1999, the Company did not pay the Manager any performance based
compensation because the Company's net income, as measured by Return on Equity,
did not exceed the required performance measure.
Pursuant to the terms of the Management Agreement, in the event a person or
entity obtains 20% or more of the 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 of Common Stock 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.
Beginning in August 1999, the Company's two wholly-owned REIT qualified
subsidiaries entered into separate lease agreements with the Manager for office
space in Santa Fe. During 1999, the combined amount of rent paid to the Manager
was $10,000.
Mr. Goldstone, Mr. Story, Mr. Ater and Mr. Lorie have 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 5.47% 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 15, 2000, the outstanding balances on the notes receivable
entered into by Mr. Goldstone, Mr. Story, Mr. Ater and Mr. Lorie were
$1,643,790, $1,340,364, $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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and certain of its officers, and persons who beneficially 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%
shareholders 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 5s
were required for those persons, the Company believes that during the year ended
11
<PAGE>
December 31, 1999, all filing requirements applicable to its executive officers
and directors were complied with during the fiscal year.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP ("PwC"),
independent certified public accountants, to examine the financial statements of
the Company for the year ended December 31, 2000. McGladrey & Pullen, LLP
("McGladrey") had been the Company's independent certified public accountants
since the Company commenced operations in June 1993. On August 30, 1999,
McGladrey resigned as independent auditors of the Company upon the sale of their
investment management practice to PwC. Three partners and twenty-two
professionals, including the partner and staff previously serving the Company,
joined PwC. The audit reports provided by McGladrey of the Company's financial
statements for the fiscal years ended December 31, 1997 and 1998 did not contain
any adverse opinion or disclaimer of opinion, nor were such reports qualified or
modified as to uncertainty, audit scope or accounting principles. During those
two fiscal years and the subsequent interim period preceding the termination of
McGladrey, there were no disagreements between the Company's management and
McGladrey on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which if not resolved to
the satisfaction of McGladrey, would have caused it to make reference to the
subject matter of the disagreement in connection with its report for the year in
question.
On August 30, 1999, upon the recommendation of the audit committee and
approval by the Board, the Company appointed PwC to examine the financial
statements of the Company for the year ended December 31, 1999. Prior to the
Company's engagement of PwC, there were no consultations by the Company and PwC
relating to (i) disclosable disagreements with McGladrey, (ii) how accounting
principles would be applied by PwC to a specified transaction either completed
or proposed, or (iii) the type of audit opinion PwC might render on the
Company's financial statements. A representative of PwC is expected to be
available by teleconference 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 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 proxyholders 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 2001 Annual
Meeting of shareholders must be received in writing by the Secretary of the
Company prior to November 24, 2000, in accordance with the provisions of Rule
14a-8 under the Securities Exchange Act of 1934. 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 1999 Annual Report to shareholders including financial statements for
the fiscal year ended December 31, 1999, 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 FISCAL
YEAR ENDED DECEMBER 31, 1999, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO, WHICH THE COMPANY HAS FILED WITH THE SECURITIES AND EXCHANGE
12
<PAGE>
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
President and Chief Operating Officer
March 27, 2000
Santa Fe, New Mexico
13
<PAGE>
THORNBURG MORTGAGE ASSET CORPORATION
(DBA THORNBURG MORTGAGE, INC.)
119 EAST MARCY ST.
SANTA FE, NM 87501
505-989-1900
PROXY - ANNUAL MEETING OF SHAREHOLDERS - THURSDAY, APRIL 27, 2000
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 (dba Thornburg Mortgage, Inc.) (the
"Company") held of record by the undersigned on March 17, 2000 at the Annual
Meeting of Shareholders to be held on Thursday, April 27, 2000 or at any
adjournment thereof.
1. ELECTION OF DIRECTORS. The election of three Class III Directors to serve
for three years, each until his successor is duly elected and qualified.
FOR all nominees listed AGAINST ABSTAIN [ ]
(except as marked to the all nominees listed
contrary below) [ ] below [ ]
INSTRUCTIONS: TO VOTE AGAINST AN INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE
NOMINEE'S NAME IN THE LIST BELOW.
Garrett Thornburg, Joseph H. Badal, Stuart C. Sherman
2. AMENDMENT OF ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME. The
name of the Company to be changed to Thornburg Mortgage, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. 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)
<PAGE>
THORNBURG MORTGAGE ASSET CORPORATION
(DBA THORNBURG MORTGAGE, INC.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO VOTE IS INDICATED HEREIN, THIS
PROXY WILL BE VOTED IN FAVOR OF ALL NOMINEES LISTED FOR ELECTION AS DIRECTORS,
IN FAVOR OF AMENDING THE ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME,
AND IN ACCORDANCE WITH THE PROXIES' BEST JUDGMENT UPON OTHER MATTERS PROPERLY
COMING BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
Please sign, exactly as your name appears below. When shares are held 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.
<PAGE>