NEW YORK MORTGAGE TRUST INC (Form: 8-K, Received: 05/29/2015 17:14:32)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 29, 2015 (May 28, 2015)

NEW YORK MORTGAGE TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	001-32216	47-0934168
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

275 Madison Avenue

New York, New York 10016

(Address and zip code of

principal executive offices)

Registrant’s telephone number, including area code: (212) 792-0107

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Approval of 2015 Performance Share Award

On May 28, 2015, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of New York Mortgage Trust, Inc. (the “Company”) approved a performance share award (“PSA”) pursuant to the Company’s 2010 Equity Incentive Plan to Steven R. Mumma, the Company’s Chairman, Chief Executive Officer and President (the “Recipient”). The PSA is a performance-based equity award under which the number of underlying shares of the Company’s common stock that can be earned will generally range from 0% to 200% of the target number of PSA granted, with the target number of PSA granted increased to reflect the value of the reinvestment of any dividends declared on Company common stock during the measurement period (as further described below). The PSA generally will be earned at the end of three years (on April 30, 2018) based on three-year total common stockholder return (“TSR”), as follows:

●

if three-year TSR is less than 33%, then 0% of the target number of PSA will vest;

●

if three-year TSR is greater than or equal to 33% and the TSR is not in the bottom quartile of the identified peer group, then 100% of the target number of PSA will vest;

●

if three-year TSR is greater than or equal to 33% and the TSR is in the top quartile of the identified peer group then 200% of the target number of PSA will vest; and

●

if three-year TSR is greater than or equal to 33% and the TSR is in the bottom quartile of an identified peer group then 50% of the target number of PSA will vest.

Subject to vesting, shares of the Company’s common stock, equal in number to the product of the applicable percentage (0%, 50%, 100% or 200%) times the target number of PSA, will be distributed to the Executive not later than May 15, 2018 (or, if earlier, the date of a Change in Control (as defined in the 2010 Stock Incentive Plan)). The value of any dividends declared during the measurement period will be reflected in the target number of PSA by increasing the target number of PSA granted by an amount corresponding to the incremental number of shares of Company common stock that a stockholder would have acquired during the three-year TSR measurement period had all dividends during that period been reinvested in the Company’s common stock.

If a Change in Control occurs before April 30, 2018, the Recipient will earn the PSA and be entitled to receive shares of Company common stock based on achievement of the TSR objectives set forth above (measured from May 1, 2015 until the control change), pro-rated based on the period from May 1, 2015 until the Change in Control.

The Recipient generally will vest in the earned PSA if employment continues until April 30, 2018 or, if earlier, the date of a Change of Control. A Recipient whose employment ends before April 30, 2018 and before a Change in Control, for a reason other than death, disability, a termination without cause or a resignation with good reason, will forfeit all of the PSA. If the Recipient’s employment ends before April 30, 2018 and before a Change in Control, on account of death or disability, the PSA will remain outstanding and the Recipient (or beneficiary) will receive the number of shares of common stock issuable on account of the TSR performance during the three-year measurement period or until a Change in Control, as applicable. If the Recipient’s employment ends before April 30, 2018 and before a change in control, on account of a termination without cause or a resignation with good reason, the PSA will remain outstanding and the Recipient will receive the number of shares of common stock issuable on account of the TSR performance during the three-year measurement period or a Change in Control, as applicable, but pro-rated for the period of employment on and after May 1, 2015 (or the date of the Change in Control).

The PSA granted on May 28, 2015 consisted of 89,629 shares of common stock and had a grant date fair value of $711,654, which was determined in accordance with FASB Accounting Standards Codification Topic 718 at the time the grant was made and based on the closing sale price of the Company’s common stock on May 28, 2015. The terms of the PSA include, without limitation, provisions relating to forfeiture and mandatory net settlement for income tax withholding purposes, and change-in-control that are set forth in the above-referenced Performance Share Award Agreement and 2010 Stock Incentive Plan, but which are not summarized above.

The terms of the PSA are set forth in the copy of the Performance Share Award Agreement (which is included as Exhibit 10.1 to this Current Report on Form 8-K). The foregoing description of the Performance Share Award Agreement and PSA is not complete and is qualified in its entirety by reference to the entire Performance Share Award Agreement, a copy of which is filed herewith as Exhibit 10.1 and incorporated by reference herein.

Approval of Changes to Incentive Plan for Fiscal Year 2015

On May 28, 2015, the Board, upon the recommendation of the Committee, also reviewed the Company’s 2013 Incentive Compensation Plan (the “Incentive Plan”), a performance-based incentive compensation plan established in 2013 that serves as a means of linking annual incentive compensation both to the Company’s overall performance and to objective and subjective performance criteria that are within the control of the Company’s named executive officers, and approved changes to the performance measures and hurdle requirements under the quantitative component of the Incentive Plan, as well as a changes to the incentive bonus payout structure under the Incentive Plan, all of which is effective under the Incentive Plan for the 2015 fiscal year.

For fiscal year 2015, the amount of the incentive compensation payable under the quantitative component of the Incentive Plan will be based on the average of three company performance measures, adjusted return on equity (“AROE”), total economic return (“TER”) and total common stockholder return (“TSR” and together with AROE and TER, the “Quantitative Company Performance Measure”). The ultimate amount of the payout under the quantitative component of the Incentive Plan will be contingent on the Company exceeding specified return hurdles under the Quantitative Company Performance Measure for the 2015 fiscal year. Previously, the quantitative component had been based solely on AROE.

For purposes of the Incentive Plan for fiscal year 2015:

●

AROE is defined as (A) GAAP net income, as reported in the Company’s annual financial statements for the 2015 fiscal year, excluding unrealized gains and losses related to the consolidated multi-family loans held in securitization trusts, divided by (B) the Company’s annual average GAAP common stockholders’ equity for the 2015 fiscal year, as adjusted to exclude the impact of unrealized gains and losses reported in other comprehensive income on GAAP common stockholders’ equity and cumulative unrealized gains and losses from acquisition date related to the consolidated multi-family loans held in securitization trusts (“Adjusted Stockholders’ Equity”). The Company’s annual average Adjusted Stockholders’ Equity is calculated by averaging our Adjusted Stockholders’ Equity for each of the four quarters in the year, with the respective quarterly amounts calculated by averaging (1) Adjusted Stockholders’ Equity for the previous quarter end and (2) Adjusted Stockholders’ Equity for the current quarter end. In its discretion, the Committee may elect to adjust the average Adjusted Stockholders’ Equity for capital raises that occurred during the measurement period to properly reflect the weighted average amount outstanding during the period.

●

TER is defined as (A) the sum of (i) the Company’s book value per common share at December 31, 2015 and (ii) the aggregate dividends per common share declared by the Company during 2015, divided by (B) the Company’s book value per common share at December 31, 2014.

●

TSR is defined as (A) the sum of (i) the closing per share sales price of the Company’s common stock on December 31, 2015 and (ii) the aggregate dividends per common share declared by the Company during 2015, divided by (B) the closing per share sales price of the Company’s common stock on December 31, 2014.

The following table sets forth the Quantitative Company Performance Measure hurdles and corresponding incentive bonus payouts under the quantitative component of the Incentive Plan for each of the Company’s named executive officers for fiscal year 2015:

Executive	Quantitative Company Performance Measure Hurdle ⁽¹⁾⁽²⁾	Payout as a % of Base Salary Upon Achievement of Hurdle ⁽¹⁾
Steven R. Mumma	Less than 8%	0%
	8%	100%
	11%	200%
	14%	300%
	Greater than 14%	300% ⁽³⁾
Kristine R. Nario	Less than 8%	0%
	8%	50%
	11%	75%
	14%	125%
	Greater than 14%	125% ⁽³⁾
Nathan R. Reese	Less than 8%	0%
	8%	50%
	11%	100%
	14%	150%
	Greater than 14%	150% ⁽³⁾

___________________

(1) Payout percentages will be pro-rated based on achievement of average economic measure between specified hurdles. Actual incentive bonus earned under the quantitative component is calculated by multiplying, (i) in the case of Mr. Mumma, 80% by the product of the applicable payout percentage and Mr. Mumma’s base salary, (ii) in the case of Ms. Nario, 25% by the product of the applicable payout percentage and Ms. Nario’s base salary and (iii) in the case of Mr. Reese, 65% by the product of the applicable payout percentage and Mr. Reese’s base salary.

(2) For fiscal year 2013 and 2014, the Incentive Plan provided for hurdle rates of 10% (minimum), 14% (target) and 18% (maximum).

(3) At the discretion of the Committee, payout percentages may exceed the stated payout percentage for achievement of the Quantitative Company Performance Measure in excess of 14%.

As noted above, the Board also modified the incentive bonus payout structure under the Incentive Plan. The following table sets forth the percentage of compensation earned under the Incentive Plan at various payout levels for fiscal year 2015 that will be required to be paid in restricted common stock:

Percentage of Bonus Under Incentive Plan Required to be Paid in Restricted Common Stock ⁽¹⁾

Named Executive Officer	Minimum	Target	Maximum
Steven R. Mumma	25%	38%	50%
Nathan R. Reese	25%	25%	25%
Kristine R. Nario	25%	25%	25%

__________

(1) Shares of restricted stock issued as part of the compensation earned under the Incentive Plan will be issued from the Company’s 2010 Stock Incentive Plan and will vest ratably on an annual basis over a three-year period. The named executive officers may elect, subject to the approval of the Committee, to have a greater percentage of the bonus compensation earned under the Incentive Plan to be paid in restricted common stock. The balance of any bonus compensation payable to a named executive officer for fiscal year 2015 under the Incentive Plan not paid in restricted stock will be paid in cash.

All other terms contained in the Incentive Plan remain unchanged. The foregoing summary of the material changes to the Incentive Plan (effective for fiscal year 2015) is qualified in its entirety by reference to the Incentive Plan (effective for fiscal year 2015), which is being filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are being filed herewith this Current Report on Form 8-K.

10.1	Performance Share Award Agreement between Steven R. Mumma and New York Mortgage Trust, Inc., dated as of May 28, 2015.
10.2	New York Mortgage Trust, Inc. 2013 Incentive Compensation Plan (effective for fiscal year 2015).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NEW YORK MORTGAGE TRUST, INC. (Registrant)


Date: May 29, 2015	By:	/s/ Steven R. Mumma
		Steven R. Mumma
		Chief Executive Officer and President

EXHIBIT INDEX

Exhibit	Description

10.1	Performance Share Award Agreement between Steven R. Mumma and New York Mortgage Trust, Inc., dated as of May 28, 2015.

10.2	New York Mortgage Trust, Inc. 2013 Incentive Compensation Plan (effective for fiscal year 2015).

Exhibit 10.1

NEW YORK MORTGAGE TRUST, INC.

Performance Share Award Agreement

THIS PERFORMANCE SHARE AWARD AGREEMENT (this “Agreement”), dated the 28th day of May, 2015, between NEW YORK MORTGAGE TRUST, INC. (the “Company”) and Steven R. Mumma (the “Participant”), is made pursuant and subject to the provisions of the Company’s 2010 Stock Incentive Plan (the “Plan”), a copy of which has been made available to the Participant. All terms used herein that are defined in the Plan have the meaning given them in the Plan.

1. Award. Pursuant to the Plan, the Company, on May 28, 2015 (the “Date of Grant”) granted to the Participant, subject to the terms and conditions of the Plan, and subject further to the terms and conditions of this Agreement, an award of 89,629 Performance Shares.

2. Terms and Conditions. No Common Stock will be issued, no payment will be made hereunder, and the Participant’s interest in the Performance Shares granted hereunder shall be forfeited except to the extent that the requirements of the following paragraphs are satisfied.

3. Earning the Award. The Participant shall earn the Applicable Percentage of the Target Performance Shares as provided in paragraph 3(a) or 3(b), as applicable.

(a) During the Measurement Period. If a Change in Control does not occur before April 30, 2018, the Applicable Percentage of the Target Performance Shares earned by the Participant shall be determined as follows, based on the Company’s TSR for the Measurement Period and, as applicable, the Peer Group’s TSR for the Measurement Period:

(i) If the Company’s TSR for the Measurement Period is less than 33%, then the Applicable Percentage shall be 0%.

(ii) If the Company’s TSR for the Measurement Period is at least 33% and the Company’s TSR is not in the bottom quartile of the Peer Group’s TSR, then the Applicable Percentage shall be 100%.

(iii) If the Company’s TSR for the Measurement Period is at least 33% and the Company’s TSR is in the top quartile of the Peer Group’s TSR, then the Applicable Percentage shall be 200%.

(iv) If the Company’s TSR for the Measurement Period is at least 33% and the Company’s TSR is in the bottom quartile of the Peer Group’s TSR, then the Applicable Percentage shall be 50%.

(b) Change in Control. Paragraph 3(a) to the contrary notwithstanding, the Applicable Percentage shall be determined under this Paragraph 3(b) if a Change in Control occurs before April 30, 2018. In that event, the Applicable Percentage shall be determined in the manner described in paragraph 3(a) except that the percentage objectives for the Company’s TSR, i.e. , the minimum 33% TSR, shall be pro rated based on the period elapsed from May 1, 2015 until the Control Change Date relative to the Measurement Period.

4. Vesting. The Participant shall be vested in the Performance Shares earned in accordance with paragraph 3 as provided in the applicable provisions of paragraph 4(a), 4(b) or 4(c) below:

(a) Continued Employment. The Participant shall be vested in all of the Performance Shares earned in accordance with paragraph 3(a), i.e. , the Participant shall be vested in the Applicable Percentage of the Target Performance Shares, if the Participant remains in the continuous employ of the Company or an Affiliate from the Date of Grant until April 30, 2018 or, if earlier, the date that the Participant’s employment with the Company and its Affiliates ends on account of death or Disability. The Participant shall be vested in all of the Performance Shares earned in accordance with paragraph 3(b), i.e. , the Participant shall be vested in the Applicable Percentage of the Target Performance Shares, if the Participant remains in the continuous employ of the Company or an Affiliate from the Date of Grant until the Control Change Date or if the Participant remains in the continuous employ of the Company and its Affiliates until the date, preceding a Control Change Date, on which such employment ends on account of death or Disability.

(b) Certain Terminations. The Participant shall be vested in a pro rata amount of the Performance Shares earned in accordance with paragraph 3(a), i.e. , the Participant shall be vested in a pro rata amount of the Applicable Percentage of the Target Performance Shares, if the Participant remains in the continuous employ of the Company or an Affiliate from the Date of Grant until the date that such employment ends on account of a termination without Cause by the Company or an Affiliate or the Participant’s resignation with Good Reason. The Participant shall be vested in a pro rata amount of the Performance Shares earned in accordance with paragraph 3(b), i.e. , the Participant shall be vested in a pro rata amount of the Applicable Percentage of the Target Performance Shares, if the Participant remains in the continuous employ of the Company or an Affiliate from the Date of Grant until the date that such employment ends on account of a termination without Cause by the Company or an Affiliate or the Participant’s resignation with Good Reason. The pro rata amount of the Applicable Percentage of Target Performance Shares shall be determined on the basis of the period of the Participant’s employment on and after May 1, 2015, relative to the Measurement Period or, if a Change in Control occurs before April 30, 2018, the period beginning on May 1, 2015 and ending on the Control Change Date.

(c) Forfeiture. The Participant cannot vest in any Performance Shares that are not earned in accordance with paragraph 3. Except as provided in paragraphs 4(a) and 4(b), the Participant cannot vest in any Performance Shares that are earned in accordance with paragraph 3(a) if the Participant’s employment with the Company and its Affiliates terminates or is terminated before April 30, 2018 and all of such earned Performance Shares shall be forfeited on the date such employment ends. Except as provided in paragraphs 4(a) and 4(b), the Participant cannot vest in any Performance Shares that are earned in accordance with paragraph 3(b) if the Participant’s employment with the Company and its Affiliates terminates or is terminated before a Control Change Date and all such earned Performance Shares shall be forfeited on the date such employment ends.

5. Settlement. The Performance Shares that are earned in accordance with paragraph 3(a) and that become vested in accordance with paragraph 4 shall be settled by the issuance of shares of Common Stock on May 15, 2018. The Performance Shares that are earned in accordance with paragraph 3(b) and that become vested in accordance with paragraph 4 shall be settled by the issuance of shares of Common Stock on the Control Change Date. The number of shares of Common Stock issuable to the Participant pursuant to this paragraph 5 shall equal the Applicable Percentage of the Target Performance Shares. Only whole shares of Common Stock shall be issued pursuant to this paragraph 5 and if the Participant is entitled to a fractional share of Common Stock, such fractional share shall be disregarded.

6. Definitions. For purposes of this Agreement, the terms Applicable Percentage, Cause, Disability, Good Reason, Measurement Period, Peer Group, Target Performance Shares and TSR shall have the following meanings:

(a) “Applicable Percentage” shall be the percentage determined in accordance with paragraph 3.

(b) “Cause” shall have the same meaning as the definition of such term in the employment agreement between the Participant and the Company as in effect on the Date of Grant.

(c) “Disability” shall have the same meaning as the definition of such term in the employment agreement between the Participant and the Company as in effect on the Date of Grant.

(d) “Good Reason” shall have the same meaning as the definition of such term in the employment agreement between the Participant and the Company as in effect on the Date of Grant.

(e) “Measurement Period” means the period beginning on May 1, 2015 and ending on April 30, 2018.

(f) “Peer Group” means Arlington Asset Investment Corp., Apollo Residential Mortgage, Inc., Chimera Investment Corporation, Dynex Capital, Inc., Ellington Financial LLC, Invesco Mortgage Capital Inc., Javelin Mortgage Investment Corp., MFA Financial, Inc., AG Mortgage Investment Trust, Inc., American Capital Mortgage Investment Corp., Five Oaks Investment Corp., Two Harbors Investment Corp. and Western Asset Mortgage Capital Corporation. If the common stock of any of these companies ceases to be publicly traded before April 30, 2018 (for purposes of paragraph 3(a)) or a Control Change Date (for purposes of paragraph 3(b)), such company shall be excluded from the calculation of the Peer Group’s TSR.

(g) “Target Performance Shares” means the sum of (i) the number of Performance Shares specified in paragraph 1 plus (ii) the number of notional shares determined in accordance with the two following sentences. On each date, after the Date of Grant and before the date of settlement under paragraph 5, on which the Company pays cash dividends on Common Stock, the then number of Target Performance Shares shall be increased by the number of notional shares determined by (y) multiplying the cash dividend per share times the then number of Target Performance Shares and (z) dividing that product by the Fair Market Value of the Common Stock on the dividend payment date. For the avoidance of doubt, the application of the preceding sentence on the second and subsequent cash dividend payment dates shall take into consideration the increases in the number of Target Performance Shares attributable to prior payments of cash dividends.

(h) “TSR” means, with respect to the Company and each member of the Peer Group, as applicable, the average annual total shareholder return (common stock price appreciation/depreciation during the Measurement Period or until a Control Change Date, whichever first occurs, plus the value, on the last day of the Measurement Period (for paragraph 3(a)) or the Control Change Date (for paragraph 3(b)), of common shares if all cash dividends declared on a common share during such period were reinvested in additional common shares.

7. Transferability. The Participant’s rights under this Agreement may not be alienated, pledged, assigned or otherwise transferred other than by will or the laws of descent and distribution.

8. Shareholder Rights. The Participant shall not have any rights as a shareholder of the Company with respect to the Performance Shares or under this Agreement except until, and then to the extent that, shares of Common Stock are issued to the Participant in accordance with the terms of this Agreement.

9. No Right to Continued Employment. This Agreement does not confer upon the Participant any right with respect to continuance of employment by the Company or an Affiliate; nor shall it interfere in any way with the right of the Company or an Affiliate to terminate the Participant’s employment at any time.

10. Change in Capital Structure. The terms of this Agreement, including the number of Performance Shares subject to this Agreement, the then number of Target Performance Shares and the other terms of this Agreement shall be adjusted as the Board determines is equitably required in the event the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization.

11. Participant Bound by Plan; Conflicts. The Participant hereby acknowledges that a copy of the Plan has been made available to the Participant and agrees to be bound by all the terms and provisions thereof. In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of this Agreement, the Participant agrees that the terms of the Plan shall govern.

12. Governing Law. This Agreement shall be governed by the laws of the State of Maryland.

13. Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon the Participant and the Participant’s successors in interest and the Company and any successor to the Company.

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer and the Participant has affixed his signature hereto.

	NEW YORK MORTGAGE TRUST, INC.	STEVEN R. MUMMA


By:	/s/ Nathan R. Reese	/s/ Steven R. Mumma
Name: Nathan R. Reese
Title: Vice President and Secretary

Exhibit 10.2

NEW YORK MORTGAGE TRUST, INC.

2013 INCENTIVE COMPENSATION PLAN AS AMENDED FOR

THE YEAR ENDING DECEMBER 31, 2015

New York Mortgage Trust, Inc.’s 2013 Incentive Compensation Plan as amended for the year ending December 31, 2015 (the “ Plan ”) is a plan under which New York Mortgage Trust, Inc. (the “ Company ”) intends to pay discretionary bonus awards (“ Bonus Awards ”) to eligible employees. Bonus Awards under the Plan will be paid annually. The amount of a Bonus Award will be based upon the Company’s and the employee’s performance during the fiscal year. The portion of the Plan payable under the Quantitative Component (as defined below) is intended to provide employees with “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code.

I. Purposes . The Plan is a component of the Company’s overall strategy to pay its employees for performance. The purposes of the Plan are to: (i) attract and retain top performing employees; (ii) motivate employees by tying compensation to the Company’s financial performance and (iii) reward exceptional individual performance that supports the Company’s overall objectives.

II. Effective Date . All eligible employees of the Company may participate in the Plan, except for employees who commence employment pursuant to an offer letter that excludes participation in the Plan. Those employees who are determined to be eligible for Bonus Awards under the Plan are called “ Participants .” An employee must commence employment or otherwise become eligible to participate in the Plan no later than July 1 of the Plan year; provided , however that the Compensation Committee of the Board of Directors of the Company, or its delegate (the “ Compensation Committee ”), may make exceptions to this requirement in its sole discretion as it deems appropriate. Being a Participant does not entitle the individual to receive a Bonus Award.

III. Plan Year . The Plan operates on a fiscal year basis, January 1st through December 31 ^st (the “ Fiscal Year ”), commencing on January 1, 2015.

IV. Bonus Awards . Bonus Awards are discretionary payments. A Participant must be an active employee in good standing and on the Company’s payroll on the day the Bonus Award is paid to receive any portion of the bonus payment. A Participant who is not actively employed or on an approved payroll for whatever reason on the date a Bonus Award is paid is not entitled to a partial or pro rata Bonus Award. Notwithstanding the foregoing, a Participant may be eligible to receive a Bonus Award pursuant to his or her employment agreement even if such Participant is not actively employed or on an approved payroll on the date a Bonus Award is paid. Additionally, the Compensation Committee may make exceptions to the foregoing in its sole discretion as it deems appropriate. There is no minimum award or guaranteed payment. Bonus Awards will be paid within 60 days of the Fiscal Year end. A Bonus Award is calculated at the discretion of the Compensation Committee after considering the Company’s performance, the Participant’s minimum, target and maximum bonus opportunities in light of the Company’s performance and the employee’s performance for the Fiscal Year.

V. Components of the Plan . The Plan shall be divided into two components, a quantitative component (the “ Quantitative Component ”) and a qualitative component (the “ Qualitative Component ”). The Quantitative Component will be based on the average of the following three Company performance measures, each as defined below: (i) adjusted return on equity (“ AROE ”); (ii) total economic return (“ TER ”); and (iii) total common stockholder return (“ TSR ” and together with AROE and TER, the “ Quantitative Company Performance Measure ”). The amount of each Participant’s bonus will be contingent on the Quantitative Company Performance Measure meeting certain performance levels (as described below).

a. Quantitative Component . The size of the Quantitative Component shall be contingent upon the Quantitative Company Performance Measure exceeding specified hurdle rates for the Fiscal Year set by the Compensation Committee. The size of the Quantitative Component of each Participant’s Bonus Award shall be based on the Participant’s responsibilities at the Company. The percentages of his or her quantitative component will be as follows:

	Quantitative Percentage of Bonus Award
Name
Steven R. Mumma	80%
Nathan R. Reese	65%
Kristine R. Nario	25%
All Other Employees	Will vary based on employee

i. Adjusted Return on Equity . AROE is defined as (A) GAAP net income, as reported in the Company’s annual financial statements for the 2015 fiscal year, excluding unrealized gains and losses related to the consolidated multi-family loans held in securitization trusts, divided by (B) the Company’s annual average GAAP common stockholders’ equity for the 2015 fiscal year, as adjusted to exclude the impact of unrealized gains and losses reported in other comprehensive income on GAAP common stockholders’ equity and cumulative unrealized gains and losses from acquisition date related to the consolidated multi-family loans held in securitization trusts (“ Adjusted Stockholders’ Equity ”). The Company’s annual average Adjusted Stockholders’ Equity is calculated by averaging the Company’s Adjusted Stockholders’ Equity for each of the four quarters in the year, with the respective quarterly amounts calculated by averaging (1) Adjusted Stockholders’ Equity for the previous quarter end and (2) Adjusted Stockholders’ Equity for the current quarter end. In its discretion, the Committee may elect to adjust the average Adjusted Stockholders’ Equity for capital raises that occurred during the measurement period to properly reflect the weighted average amount outstanding during the period.

ii. Total Economic Return. TER is defined as (A) the sum of (i) the Company’s book value per common share at December 31, 2015 and (ii) the aggregate dividends per common share declared by the Company during 2015, divided by (B) the Company’s book value per common share at December 31, 2014.

iii. Total Common Stockholder Return. TSR is defined as (A) the sum of (i) the closing per share sales price of the Company’s common stock on December 31, 2015 and (ii) the aggregate dividends per common share declared by the Company during 2015, divided by (B) the closing per share sales price of the Company’s common stock on December 31, 2014.

The Quantitative Component payout amount shall be determined by Participant as follows:

Executive	Quantitative Company Performance Measure Hurdle	Payout as a % of Base Salary Upon Achievement of Hurdle
Steven R. Mumma	Less than 8%	0%
	8%	100%
	11%	200%
	14%	300%
	Greater than 14%	300% ⁽¹⁾
Kristine R. Nario	Less than 8%	0%
	8%	50%
	11%	75%
	14%	125%
	Greater than 14%	125% ⁽¹⁾
Nathan R. Reese	Less than 8%	0%
	8%	50%
	11%	100%
	14%	150%
	Greater than 14%	150% ⁽¹⁾

________________________

(1) At the discretion of the Compensation Committee, payout percentages may exceed the stated payout percentage for achievement of the Quantitative Company Performance Measure in excess of 14%.

For all other Participants, the payout percentages will vary based on the employee. Payout percentages will be pro-rated based on achievement of specified return hurdles under the Quantitative Company Performance Measure for the Fiscal Year. Actual Bonus Award earned under the Quantitative Component is calculated by multiplying the product of the applicable payout percentage by the Participant’s base salary. Notwithstanding the table above, the Compensation Committee may decide to increase or decrease the percentage payout based on the Company’s performance relative to its peers.

b. Qualitative Component . The percentage of the Qualitative Component for the Bonus Award by Participant shall be determined by subtracting the Participant’s Quantitative Component percentage from 100%. The Qualitative Component for each Participant can range from zero up to 3 times their respective base salary multiplied by the Qualitative Component percentage.

The Compensation Committee may consider the following qualitative performance factors when determining the amount of the Qualitative Component in addition to any other factors that the Compensation Committee deems to be appropriate: (i) for the Chief Executive Officer (the “ CEO ”): (A) leadership of the Company, (B) investor relations, shareholder communications and capital raising, (C) the Company’s performance relative to its budget and (D) risk management and capital preservation, and (ii) for all other Participants, qualitative performance objectives determined annually by the CEO and the Board, which may include criteria such as: (A) business unit/functional area performance and (B) leadership and organizational development.

VI. Form of Bonuses . Bonus Awards under the Plan will be paid in a combination of cash and restricted stock. Shares of restricted stock issued as payment of all or a portion of the Bonus Awards under the Plan will be issued pursuant to the Company’s 2010 Stock Incentive Plan (or successor plan) and will vest ratably on an annual basis over a three-year period or such other period as may be determined by the Compensation Committee. The following table sets forth the percentage of Bonus Award payable in restricted stock for each Participant at various payout levels:

Named Executive Officer	Minimum	Target	Maximum
Steven R. Mumma	25%	38%	50%
Nathan R. Reese	25%	25%	25%
Kristine R. Nario	25%	25%	25%

The named executive officers may elect, subject to the approval of the Compensation Committee, to have a greater percentage of the bonus compensation earned under the Plan to be paid in restricted common stock. The balance of any bonus compensation payable to an individual under the Plan not paid in restricted stock will be paid in cash.