SCHEDULE 14A
(RULE 14A-101)
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 Rule 14a-11(c) or Rule 14a-12
NEWCASTLE INVESTMENT CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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[X] No fee required
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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[NEWCASTLE INVESTMENT CORP. LOGO]
NEWCASTLE INVESTMENT CORP.
April 30, 2003
Dear Fellow Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Newcastle Investment Corp. (the "Annual
Meeting") to be held at the Four Seasons Hotel, 57 East 57th Street, New York,
New York on Thursday, May 29, 2003, at 8:00 a.m., Eastern Time. The matters to
be considered by the stockholders at the Annual Meeting are described in detail
in the accompanying materials.
IT IS IMPORTANT THAT YOU BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS
OF THE NUMBER OF SHARES YOU OWN OR WHETHER YOU ARE ABLE TO ATTEND THE ANNUAL
MEETING IN PERSON. Let me urge you to mark, sign and date your proxy card today
and to return it in the envelope provided.
Sincerely,
/s/ Wesley R. Edens
Wesley R. Edens
Chairman and Chief Executive Officer
NEWCASTLE INVESTMENT CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 2003
To the Stockholders of Newcastle Investment Corp.:
The annual meeting of stockholders of Newcastle Investment Corp., a Maryland
corporation, will be held at The Four Seasons Hotel, 57 East 57th Street, New
York, New York, on Thursday, May 29, 2003, beginning at 8:00 a.m., local time
(the "Annual Meeting"). The matters to be considered by stockholders at the
Annual Meeting, which are described in detail in the accompanying materials,
are:
(i) a proposal to elect (a) two Class I directors to serve until the
2006 annual meeting of stockholders or until their respective
successors are elected and duly qualified; and (b) one Class III
director to serve until the 2005 annual meeting of stockholders or
until his respective successor is elected and duly qualified;
(ii) a proposal to approve the appointment of Ernst & Young LLP as
independent auditors for the Company for fiscal year 2003; and
(iii) any other business that may properly come before the Annual Meeting
or any adjournment of the annual meeting.
Stockholders of record at the close of business on May 6, 2003 will be
entitled to notice of and to vote at the Annual Meeting. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS OF THE SIZE OF YOUR
HOLDINGS. A Proxy Statement, proxy card and self-addressed envelope are
enclosed. Whether or not you plan to attend the Annual Meeting in person, please
complete, date and sign the proxy card. Return it promptly in the envelope
provided, which requires no postage if mailed in the United States. If you are
the record holder of your shares and you attend the meeting, you may withdraw
your proxy and vote in person, if you so choose.
By Order of the Board of Directors,
/s/Randal A. Nardone
Randal A. Nardone
Secretary
1251 Avenue of the Americas
16th Floor
New York, New York 10020
April 30, 2003
NEWCASTLE INVESTMENT CORP.
1251 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10020
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 2003
This Proxy Statement and the accompanying proxy card and notice of annual
meeting are provided in connection with the solicitation of proxies by and on
behalf of the board of directors of Newcastle Investment Corp., a Maryland
corporation, for use at the annual meeting of stockholders to be held on
Thursday, May 29, 2003, and any adjournments or postponements thereof (the
"Annual Meeting"). "We," "our," "us," "the Company" and "Newcastle" each refers
to Newcastle Investment Corp. The mailing address of our executive office is
1251 Avenue of the Americas, 16th Floor, New York, New York 10020. This Proxy
Statement, the accompanying proxy card and the notice of annual meeting are
first being mailed to holders of our common stock, par value $0.01 per share
(the "Common Stock"), on or about May 6, 2003.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, stockholders of the Company's Common Stock will
vote upon:
(i) a proposal to elect (a) two Class I directors to serve until the
2006 annual meeting of stockholders or until their respective
successors are elected and duly qualified; and (b) one Class III
director to serve until the 2005 annual meeting of stockholders or
until his respective successor is elected and duly qualified;
(ii) a proposal to approve the appointment of Ernst & Young LLP as
independent auditors for the Company for fiscal year 2003; and
(ii) any other business that may properly come before the annual meeting
of stockholders or any adjournment of the annual meeting.
GENERAL INFORMATION ABOUT VOTING
SOLICITATION OF PROXIES
The enclosed proxy is solicited by and on behalf of our board of
directors. The expense of soliciting proxies for the Annual Meeting, including
the cost of mailing, will be borne by us. In addition to solicitation by mail,
our officers may solicit proxies from stockholders by telephone, electronic
transmission and facsimile transmission. Such persons will receive no
compensation for such services.
STOCKHOLDERS ENTITLED TO VOTE
As of the date hereof, there are outstanding and entitled to vote
23,488,517 shares of our Common Stock. Each share of our Common Stock entitles
the holder to one vote. Stockholders of record at the close of business on May
6, 2003 are entitled to vote at the Annual Meeting or any adjournment thereof.
Newcastle Investment Holdings Corp. ("Holdings") currently owns 16,488,517
shares of our Common Stock, which represents approximately 70% of our
outstanding Common Stock. We have been informed that, in connection with a plan
of liquidation approved by the board of directors and stockholders of Holdings,
the board of directors of Holdings, on April 30, 2003, declared a distribution
to be made on or about May 19, 2003 to its stockholders of record on May 8, 2003
of all the shares of our Common Stock owned by Holdings. Each stockholder of
Holdings will receive one share of our Common Stock for each share of common
stock of
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Holdings owned by such stockholder. Since only our stockholders of record at the
close of business on May 6, 2003 are entitled to vote at the Annual Meeting or
any adjournment thereof, the stockholders of Holdings who will receive shares of
our Common Stock in connection with the distribution will not be entitled to
vote at the Annual Meeting.
In addition, we have outstanding 2,500,000 shares of our 9.75% Series B
Cumulative Redeemable Preferred Stock. These shares have no voting rights,
except in limited circumstances.
REQUIRED VOTE
A quorum will be present if the holders of a majority of the outstanding
shares entitled to vote are present, in person or by proxy, at the Annual
Meeting. If you have returned a valid proxy or, if you hold your shares in your
own name as holder of record and you attend the Annual Meeting in person, your
shares will be counted for the purpose of determining whether there is a quorum.
If a quorum is not present, the Annual Meeting may be adjourned by the chairman
of the meeting or by the vote of a majority of the shares represented at the
Annual Meeting until a quorum has been obtained.
For the election of the nominees to our board of directors, the
affirmative vote of a plurality of all the votes cast at the Annual Meeting is
sufficient to elect a director if a quorum is present. For the approval of Ernst
& Young LLP, the affirmative vote of a majority of the shares of our Common
Stock cast at the Annual Meeting is required to approve the matter.
Holdings owns 16,488,517 shares, or approximately 70%, of our Common
Stock. Therefore, Holdings will control the outcome of any matter submitted to a
vote of our stockholders. Holdings has informed us that it intends to vote for
the election of each of the nominees to our board of directors and for the
approval of the appointment of Ernst & Young LLP as independent auditors for our
fiscal year 2003.
If the enclosed proxy is properly executed and returned to us in time to
be voted at the Annual Meeting, it will be voted as specified on the proxy
unless it is properly revoked prior thereto. If no specification is made on the
proxy as to any one or more of the proposals, the shares of Common Stock
represented by the proxy will be voted as follows:
(i) FOR the election of each of the nominees to our board of
directors;
(ii) FOR the approval of the appointment of Ernst & Young LLP as
independent auditors for the Company for fiscal year 2003;
and
(iii) in the discretion of the proxy holder on any other business
that properly comes before the Annual Meeting or any
adjournment or postponement thereof.
Abstentions will have no effect on the outcome of the election of our
board of directors, the appointment of Ernst & Young LLP or any other matter for
which the required vote is a majority of the votes cast. If any other matters
are properly presented at the Annual Meeting for consideration, the persons
named in the proxy will have the discretion to vote on those matters for you. As
of the date of this Proxy Statement, we are not aware of any other matter to be
raised at the Annual Meeting.
Abstentions and broker non-votes will be counted in determining the
presence of a quorum. "Broker non-votes" are instances where a broker holding
shares of record for a beneficial owner does not vote the shares because it is
precluded by rules of a stock exchange or the NASD from voting on a matter.
Abstentions and broker non-votes will have no effect on the election of
directors or the approval of the independent auditors.
Under the rules of the New York Stock Exchange, brokers who hold shares in
"street name" may have the authority to vote on certain matters when they do not
receive instructions from beneficial owners. Brokers that do not receive
instructions are entitled to vote on the election of directors and the
ratification of the
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independent auditors. In determining whether the proposal to ratify the
appointment of the independent auditors has received the requisite vote,
abstentions will be disregarded and will have no effect on the outcome of the
vote. A vote "withheld" from a director nominee will have no effect on the
outcome of the vote because a plurality of the votes cast at the Annual Meeting
is required for the election of each director.
VOTING
If you hold your shares of our Common Stock in your own name as a holder
of record, you may instruct the proxies to vote your shares by signing, dating
and mailing the proxy card in the postage-paid envelope provided. In addition,
you may vote your shares of our Common Stock in person at the Annual Meeting.
If your shares of our Common Stock are held on your behalf by a broker,
bank or other nominee, you will receive instructions from them that you must
follow to have your shares voted at the Annual Meeting.
RIGHT TO REVOKE PROXY
If you hold shares of our Common Stock in your own name as a holder of
record, you may revoke your proxy instructions through any of the following
methods:
- send written notice of revocation, prior to the Annual Meeting, to
our Secretary , Mr. Randal A. Nardone, at 1251 Avenue of the
Americas, 16th Floor, New York, New York 10020;
- sign, date and mail a new proxy card to our Secretary; or
- attend the Annual Meeting and vote your shares in person.
If shares of our Common Stock are held on your behalf by a broker, bank or
other nominee, you must contact them to receive instructions as to how you may
revoke your proxy instructions.
COPIES OF ANNUAL REPORT TO STOCKHOLDERS
A copy of our Annual Report on Form 10-K filed with the Securities and
Exchange Commission (the "SEC") for our latest fiscal year is available
without charge to stockholders upon written request to: 1251 Avenue of the
Americas, 16th Floor, New York, New York, 10020 Attention: Ms. Lilly H.
Donohue.
VOTING RESULTS
American Stock Transfer & Trust Company, our independent tabulating agent,
will count the votes and act as the Inspector of Election. We will publish the
voting results in our Quarterly Report on Form 10-Q for the fiscal quarter
ending June 30, 2003, which we plan to file with the SEC in August 2003.
CONFIDENTIALITY OF VOTING
We keep all proxies, ballots and voting tabulations confidential as a
matter of practice. We permit only our Inspector of Election, American Stock
Transfer & Trust Company, to examine these documents.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
The board of directors recommends a vote:
(i) FOR the election of each of the nominees to our board of
directors; and
(ii) FOR the approval of the appointment of Ernst & Young LLP as
independent auditors for the Company for fiscal year 2003.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The first proposal is to elect (a) two Class I directors to serve until
the 2006 annual meeting of stockholders or until their respective successors are
elected and duly qualified; and (b) one Class III director to serve until the
2005 annual meeting of stockholders or until his respective successor is elected
and duly qualified.
Our charter authorizes the number of directors to be not less than one,
nor more than fifteen. The number of directors on the board is currently fixed
at five. Our board of directors is divided into three classes. The members of
each class of directors serve staggered three-year terms.
Our current board of directors is classified as follows:
TERM
CLASS DIRECTOR EXPIRATION
------------ ------------------- ----------
Class I Stuart A. McFarland 2003
Peter M. Miller 2003
Class II David J. Grain 2004
Class III Wesley R. Edens 2005
David K. McKown 2005
In general, the term for a Class I director expires in 2003, the term for
a Class II director expires in 2004 and the term for a Class III director
expires in 2005. Mr. McKown was elected to serve as a Class III director by the
board of directors subsequent to our initial public offering to fill a vacancy
on the board of directors. Although the term of Class III directors expires in
2005, under Maryland law and our charter, a director elected by the board of
directors to fill a vacancy may only serve until the next annual meeting of
stockholders. Therefore, Mr. McKown is a nominee at this time.
The board of directors has unanimously proposed the following director
nominees for election as directors:
TERM
CLASS DIRECTOR EXPIRATION
------------ ------------------- ----------
Class I Stuart A. McFarland 2006
Peter M. Miller 2006
Class III David K. McKown 2005
INFORMATION CONCERNING THE DIRECTORS AND THE DIRECTOR NOMINEES
Set forth below is certain biographical information for the directors and
each of the director nominees, as well as the month and year each was first
elected as one of our directors and the beneficial ownership of shares of our
Common Stock as of April 30, 2003, after giving effect to outstanding options.
All of the director nominees currently serve on our board of directors. For a
description of beneficial ownership, see the "Security Ownership of Management
and Certain Beneficial Owners" section, and the footnotes thereto, included in
this proxy statement.
If any nominee becomes unable to stand for election as a director, an
event that our board of directors does not presently expect, the proxy will be
voted for a replacement nominee if one is designated by our board of directors.
The board of directors recommends a vote FOR each of the nominees.
WESLEY R. EDENS Mr. Edens has been our Chief Executive Officer
and the Chairman of our board of directors
Chief Executive Officer and since inception. Mr. Edens co-founded our
Chairman of the Board of manager, Fortress Investment Group LLC, and is
Directors its Chief Executive Officer. Mr. Edens is
since inception also Chairman and Chief Executive Officer of
Newcastle Investment Holdings Corp. Mr. Edens
was previously a Managing Director of Union
Bank of Switzerland from May 1997 to
4,494,553 shares of our Common May 1998. Prior to joining Union Bank of
Stock Switzerland, Mr. Edens was
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beneficially owned a partner and Managing Director of BlackRock
Age: 41 Financial Management, Inc. In addition, Mr.
Edens was formerly a partner and Managing
Director of Lehman Brothers, where he was head
of the Non-Agency Mortgage Trading Desk. Mr.
Edens has been Chief Executive Officer,
President and Chairman of the board of directors
of Capstead Mortgage Corporation since April
2000.
DAVID J. GRAIN Mr. Grain has been a member of our board of
directors since October 2002. Mr. Grain was a
Director since October 2002 director of Newcastle Investment Holdings
Corp. from January 2002 to October 2002. Mr.
2,000 shares of our Common Grain presently serves as the President of
Stock Pinnacle Holdings Inc., whose equity is
beneficially owned partially owned by Fortress Investment Fund
LLC, an affiliate of ours managed by our
Age: 40 manager. Prior to joining Pinnacle in
February 2003, Mr. Grain was a Senior Vice
President for AT&T Broadband's Northeast
Region. Prior to joining AT&T in June 2000,
Mr. Grain was a Principal at Morgan Stanley
from 1992 to June 2000. Mr. Grain is a
Director and member of the Investment
Committee of the Pension Reserves Investment
Management (PRIM) Board of Massachusetts and
is a Trustee of Emerson College.
STUART A. MCFARLAND Mr. McFarland has been a member of our board
of directors since October 2002 and a member
Director since October 2002 of the audit committee of our board of
directors since November 2002. Mr. McFarland
Audit Committee Member was a director of Newcastle Investment
Holdings Corp. from May 1998 until October
2,000 shares of our Common 2002. Mr. McFarland is Managing Partner of
Stock Federal City Capital Advisors, a strategic
beneficially owned advisory and corporate financial services firm
located in Washington, D.C. Previously, Mr.
Age: 56 McFarland was President and Chief Executive
Officer of Pedestal Inc., an internet
secondary mortgage market trading exchange for
the trading of spot and pooled mortgage
loans. Mr. McFarland was Executive Vice
President and General Manager of GE Capital
Mortgage Services and President and CEO of GE
Capital Asset Management Corporation from 1990
to 1995. Prior to GE Capital, Mr. McFarland
was President and CEO of Skyline Financial
Services Corp. Before joining Skyline, Mr.
McFarland was President and CEO of National
Permanent Federal Savings Bank in Washington,
D.C. Prior to that, Mr. McFarland was
Executive Vice President and Chief Financial
Officer with Fannie Mae (Federal National
Mortgage Association). From 1972 to 1981, he
was President and Director of Ticor Mortgage
Insurance Company in Los Angeles, California.
Mr. McFarland presently serves as a Director
of the Brandywine Funds, as a Director and
Member of the Executive Committee of the
Center for Housing Policy, a Trustee of the
National Building Museum and a Member of the
Board of Trustees of the Brookings Greater
Washington Research Program.
DAVID K. MCKOWN Mr. McKown has been a member of our board of
directors and a member of the audit committee
Director since November 2002 of our board of directors since November
2002. Mr. McKown has been a senior advisor to
Audit Committee Member Eaton Vance Management, an investment fund
manager located in Boston, Massachusetts,
2,000 shares of our Common since May 2000. Prior to this, Mr. McKown was
Stock a group executive of Diversified Finance of
beneficially owned BankBoston, N.A., from 1993 until April 2000.
Mr. McKown was chairman of the Domestic Senior
Age: 65 Credit Committee of BankBoston, N.A. from 1985
until 1990 and was managing director for
problem loan management of BankBoston, N.A.
from 1990 until 1993. Mr. McKown has been a
trustee of Equity Office Properties Trust
since July 1997 where he serves on the
executive, compensation and option and
conflicts committees. Mr. McKown also serves
as a director of American Investment Bank,
Friends of Post Office Square and POWDR Corp.
He holds advisory directorships with the Eiger
Fund and Alliance Energy, Inc.
PETER M. MILLER Mr. Miller has been a member of our board of
directors and a member
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Director since February 2003 of the audit committee of our board of
directors since February 2003. Mr. Miller is
Audit Committee Member a Managing Director at ING Financial Markets
LLC and Head of their Latin Debt Advisory
2,000 shares of our Common Group. Previously, he was responsible for
Stock ING's Latin American Debt Products Group. Mr.
beneficially owned Miller joined ING in 1989 following seven
years at Bankers Trust where he held various
Age: 47 positions in the Latin American Merchant
Banking Group.
COMPENSATION OF DIRECTORS
We pay a $20,000 annual director's fee to each of our directors, other
than Mr. Edens. After the first four meetings attended each year, each such
director will be paid a fee of $1,000 for each additional board meeting attended
in person by such director. All members of our board of directors are reimbursed
for their costs and expenses in attending all meetings of our board of
directors. In addition, an annual fee of $1,000 will be paid to the chair of any
committee of our board of directors other than Mr. Edens. Fees to the directors
may be made by issuance of Common Stock, based on the value of such Common Stock
at the date of issuance, rather than in cash.
In addition, the Newcastle Investment Corp. Nonqualified Stock Option and
Incentive Award Plan provides for (i) an initial grant of options to purchase
2,000 shares of our Common Stock to each independent director on the date of the
first Board of Director's meeting attended by such independent director, or, in
the case of Mr. Grain and Mr. McFarland, at the time of our initial public
offering and (ii) the automatic grant of options to purchase 2,000 shares of our
Common Stock to each of our independent directors on the first business day
after each annual meeting of the Company each year during which the option plan
is effective. These options all have an exercise price equal to 100% of the fair
market value of our Common Stock on the date of grant, subject to adjustment as
necessary to preserve the value of such options in connection with the
occurrence of certain events. The initial option grants are fully vested at the
time of grant. Annual option grants vest 25% on the date of grant and 25%
annually thereafter.
As of the date hereof, options for a total of 8,000 shares of our Common
Stock have been granted pursuant to initial option grants to our four
independent directors. To date, no annual grants have been made. No other
options have been granted to our directors to date.
BOARD AND COMMITTEE MEETINGS
During the year ended December 31, 2002, our board of directors held three
meetings. No director attended fewer than 75 percent of all meetings of our
board of directors and the committees on which such director served.
Our board of directors has established an audit committee. The audit
committee is governed by a written charter adopted by our board of directors and
is composed of three independent directors, each of whom has been determined by
our board of directors to be independent in accordance with the rules of the New
York Stock Exchange. The members of the audit committee are Messrs. McFarland,
McKown and Miller. Actions taken by the audit committee are reported to the
board of directors, usually at its next meeting. The audit committee met two
times during 2002. A copy of the charter is included in this proxy statement as
Appendix A.
The primary duties and responsibilities of the audit committee are to:
- monitor the integrity of our financial reporting process and systems
of internal controls regarding finance, accounting and legal
compliance;
- monitor the independence and performance of our outside auditors;
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- provide an avenue of communication among the outside auditors,
management and our board of directors;
- encourage adherence to, and continuous improvement of, our financial
reporting and internal control policies, procedures and practices;
and
- monitor compliance with legal and regulatory requirements.
There are currently no other committees of the board of directors.
REPORT OF THE AUDIT COMMITTEE
In accordance with and to the extent permitted by the rules of the
Securities and Exchange Commission (the "SEC"), the information contained in the
following Report of the Audit Committee shall not be incorporated by reference
into any of the Company's future filings made under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and shall not be deemed to be
"soliciting material" or to be "filed" under the Exchange Act or the Securities
Act of 1933, as amended.
The Audit Committee oversees the Company's financial reporting process on
behalf of the board of directors. It is not the duty of the Audit Committee to
prepare the Company's financial statements, to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate in
accordance with generally accepted accounting principles. Management has the
primary responsibility for the financial statements and the reporting process
including the systems of internal controls. The independent auditors are
responsible for auditing the financial statements and expressing an opinion as
to whether those audited financial statements fairly present the financial
position, results of operations and cash flows of the Company in conformity with
generally accepted accounting principles.
The Audit Committee has reviewed and discussed with management the audited
financial statements in the annual report to stockholders.
The Audit Committee has discussed with the independent auditors the
matters required to be discussed by Statement of Auditing Standards 61, as
modified or supplemented, including the auditor's judgment as to the quality,
not just the acceptability, of the accounting principles, the consistency of
their application and the clarity and completeness of the audited financial
statements.
The Audit Committee has received the written disclosures and the letter
from the independent auditors required by Independent Standards Board Standard
No. 1, as modified or supplemented, and has discussed with the independent
auditors their independence.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors (and the board agreed) that the
audited financial statements be included in the annual report on Form 10-K for
the year ended December 31, 2002 for filing with the SEC. The Audit Committee
and the board of directors also have recommended, subject to stockholder
approval, the selection of the Company's independent auditors for fiscal year
2003.
THE AUDIT COMMITTEE
Stuart A. McFarland
David K. McKown
Peter M. Miller
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EXECUTIVE OFFICERS
The following table shows the names and ages of our present executive
officers and the positions held by each individual. A description of the
business experience of each for at least the past five years follows the table.
NAME AGE POSITION
Wesley R. Edens .......................................... 41 Chief Executive Officer
Chairman of the Board of
Directors
Kenneth M. Riis ......................................... 43 President
Jonathan Ashley ......................................... 37 Vice President and Chief
Debra A. Hess ............................................ 39 Chief Financial Officer
Erik P. Nygaard .......................................... 43 Vice President and Chief
Randal A. Nardone ....................................... 47 Vice President and
For information regarding Mr. Edens see the "Information Concerning the
Directors and Director Nominees" section of this proxy statement.
KENNETH M. RIIS has been our President since our inception and a Managing
Director of our Manager since December 2001. From November 1996 to December
2001, Mr. Riis was an independent consultant for our Manager as well as other
financial companies. From 1989 to 1996, Mr. Riis was a Principal and Managing
Director of the real estate finance group at Donaldson, Lufkin & Jenrette.
JONATHAN ASHLEY has been our Chief Operating Officer since our
inception and a Managing Director of our Manager since its formation in May
1998. Mr. Ashley previously worked for Union Bank of Switzerland from May
1997 to May 1998. Prior to joining Union Bank of Switzerland, Mr. Ashley
worked for an affiliate of BlackRock Financial Management, Inc. from April
1996 to May 1997. Prior to joining BlackRock, Mr. Ashley worked at Morgan
Stanley, Inc. in its Real Estate Investment Banking Group. Prior to joining
Morgan Stanley, Mr. Ashley was in the Structured Finance Group at the law
firm of Skadden, Arps, Slate, Meagher & Flom LLP.
DEBRA A. HESS joined us as Chief Financial Officer in April 2003 and
also joined our Manager at that time. Prior to joining the Company, Ms. Hess
worked in the Fixed Income Department for Goldman, Sachs & Co. since 1998.
From 1993 to 1998, she was the head of financial reporting and accounting
policy at Goldman Sachs Group. Prior to joining Goldman, Sachs & Co., Ms.
Hess worked at Chemical Bank in the credit policy group. Prior to that, Ms.
Hess was with Arthur Andersen & Co. for five years as a senior auditor
focused on financial institutions and investment funds.
ERIK P. NYGAARD has been our Chief Information Officer since our
inception and Chief Information Officer of our Manager since its inception.
Mr. Nygaard co-founded our Manager. Mr. Nygaard was previously a Managing
Director of Union Bank of Switzerland from May 1997 to May 1998. Prior to
joining Union Bank of Switzerland, Mr. Nygaard was a principal of BlackRock
Financial Management, Inc. From April 1990 to July 1994, Mr. Nygaard was a
Director at Nomura Securities International.
RANDAL A. NARDONE has been our Secretary since our inception. Mr.
Nardone co-founded our Manager and has been Chief Operating Officer of our
Manager since its inception. Mr. Nardone was previously a Managing Director
of Union Bank of Switzerland from May 1997 to May 1998. Prior to joining
Union Bank of Switzerland in 1997, Mr. Nardone was a principal of BlackRock
Financial Management, Inc. Prior to joining BlackRock, Mr. Nardone was a
partner and a member of the executive committee at the law firm of Thacher
Proffitt & Wood.
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EXECUTIVE COMPENSATION
Because our management agreement provides that our Manager will assume
principal responsibility for managing our affairs, our officers, in their
capacities as such, do not receive compensation from us. However, in their
capacities as officers or employees of our Manager, or its affiliates, they will
devote such portion of their time to our affairs as is required for the
performance of the duties of our Manager under the management agreement. Our
Manager has informed us that, because the services performed by its officers or
employees in their capacities as such are not performed exclusively for us, it
cannot segregate and identify that portion of the compensation awarded to,
earned by or paid to our named executive officers by the Manager that relates
solely to their services to us.
Below is a summary of the fees and other amounts earned by our Manager.
The summary of fees and other amounts for the years 2000 and 2001 reflect
amounts paid by Holdings to the Manager. A portion of the fees and other amounts
for the year 2002 were paid by Holdings for the period from January 1, 2002
until our inception in June 2002.
2002 2001 2000
---- ---- ----
Management Fee (1) $4.3 million $4.8 million $5.1 million
Expense Reimbursements (2) $0.5 million $0.9 million $1.6 million
Incentive Compensation (3) $3.5 million $2.8 million --
Stock Options (4) 700,000 shares -- --
(1) We pay our Manager an annual management fee equal to 1.5% of our gross
equity, as defined in our management agreement. Our Manager uses the proceeds
from its management fee in part to pay compensation to its officers and
employees who, notwithstanding that certain of them also are our officers,
receive no cash compensation directly from us.
(2) Because our Manager's employees perform certain legal, accounting, due
diligence tasks and other services that outside professionals or outside
consultants otherwise would perform, our Manager is paid or reimbursed for the
cost of performing such tasks, provided that such costs and reimbursements are
no greater than those which would be paid to outside professionals or
consultants on an arm's-length basis. The management agreement provides that
such costs shall not be reimbursed in excess of $500,000 per annum.
We also pay all operating expenses, except those specifically required to
be borne by our Manager under the management agreement. Our Manager is
responsible for all costs incident to the performance of its duties under the
management agreement, including compensation of our Manager's employees, rent
for facilities and other "overhead" expenses. The expenses required to be paid
by us include, but are not limited to, issuance and transaction costs incident
to the acquisition, disposition and financing of our investments, legal and
auditing fees and expenses, the compensation and expenses of our independent
directors, the costs associated with the establishment and maintenance of any
credit facilities and other indebtedness of ours (including commitment fees,
legal fees, closing costs, etc.), expenses associated with other securities
offerings of ours, the costs of printing and mailing proxies and reports to our
stockholders, costs incurred by employees of our Manager for travel on our
behalf, costs associated with any computer software or hardware that is used
solely for us, costs to obtain liability insurance to indemnify our directors
and officers and the compensation and expenses of our transfer agent.
(3) Our Manager is entitled to receive annual incentive compensation pursuant to
the terms of the management agreement with us. The purpose of the incentive
compensation is to provide an additional incentive for our Manager to achieve
targeted levels of funds from operations (including gains and losses) and to
increase our stockholder value. This incentive compensation, which is calculated
on a cumulative, but not compounding, basis, is an amount equal to the product
of:
(A) 25% of the dollar amount by which
9
(1)(a) the funds from operations before the incentive return
per share of common stock, plus (b) gains (or losses) from debt
restructuring and gains (or losses) from sales of property and other
assets per share of common stock,
exceed
(2) an amount equal to (a) the weighted average of the book
value per share of the net assets transferred to us from Newcastle
Investment Holdings on or prior to July 12, 2002 and the prices per
share of our common stock in any offerings by us (adjusted for prior
capital dividends or capital distributions) multiplied by (b) a
simple interest rate of 10% per annum;
multiplied by
(B) the weighted average number of shares of common stock
outstanding.
Our board of directors may request that our Manager accept all or a
portion of its incentive compensation in shares of our Common Stock, and our
Manager may elect, in its discretion, to accept such payment in the form of
shares, subject to limitations that may be imposed by the rules of the NYSE or
otherwise.
(4) In October 2002, in connection with our initial public offering, we granted
to Fortress Principal Investment Holdings LLC, an affiliate of our Manager,
options representing the right to acquire 10% of the number of shares offered
and sold in our initial public offering, or 700,000 shares, at an exercise price
per share equal to the initial public offering price per share of the shares in
our initial public offering ($13.00 per share). The options are exercisable as
to 1/30 of the shares subject to the option on the first day of each of the 30
calendar months following the date of grant. The Manager options provide a means
of performance-based compensation in order to provide an additional incentive
for our Manager to enhance the value of our Common Stock. The beneficial owners
of Fortress Principal Investment Holdings LLC include, among others, Messrs.
Edens, Nardone and Nygaard. Fortress Investment Holdings LLC is the sole member
of the Manager. The beneficial owners of Fortress Investment Holdings LLC also
include, among others, Messrs. Edens, Nardone and Nygaard.
10
EQUITY COMPENSATION PLAN INFORMATION
We have adopted the Newcastle Investment Corp. Nonqualified Stock Option
and Incentive Award Plan, referred to in this Proxy Statement as the option
plan, to provide incentives to attract and retain the highest qualified
directors, officers, employees, advisors, consultants and other personnel. The
option plan is our only equity compensation plan.
The following table summarizes the total number of outstanding securities
in the option plan and the number of securities remaining for future issuance,
as well as the weighted-average exercise price of all outstanding securities as
of December 31, 2002.
NUMBER OF REMAINING AVAILABLE
SECURITIES TO BE WEIGHTED AVERAGE NUMBER OF SECURITIES
ISSUED UPON EXERCISE PRICE OF FOR FUTURE ISSUANCE
EXERCISE OF OUTSTANDING UNDER EQUITY
PLAN CATEGORY OUTSTANDING OPTIONS OPTIONS COMPENSATION PLANS
EQUITY COMPENSATION
PLANS APPROVED BY
SECURITY HOLDERS:
Newcastle Investment 706,000 (1) $13.00 9,294,000 (2)
Corp. Nonqualified
Stock Option and
Incentive Award Plan
EQUITY COMPENSATION
PLANS NOT APPROVED
BY SECURITY HOLDERS:
None N/A N/A N/A
(1) Includes options for (i) 700,000 shares held by Fortress Principal
Investment Holdings LLC; (ii) 2,000 shares held by Mr. Grain; (iii) 2,000
shares held by Mr. McFarland; and (iv) 2,000 shares held by Mr. McKown. In
addition to the shares reflected in the table, Mr. Miller, who was elected
to our board of directors on February 12, 2003, received an option to
purchase 2,000 shares of our Common Stock.
(2) The maximum number of shares available for issuance each year is equal to
15% of the number of outstanding equity interests, subject to a maximum of
10,000,000 shares in the aggregate over the term of the plan.
11
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on shares of our Common Stock with the cumulative total return of the S&P
500 Stock Index, the Russell 2000 Stock Index and the NAREIT All REIT Index.*
The period shown commences on October 10, 2002, the date that our Common Stock
was registered under Section 12 of the Securities Exchange Act of 1934, and ends
on December 31, 2002, the end of our last fiscal year. The graph assumes an
investment of $100 on October 10, 2002 and the reinvestment of any dividends.
The stock price performance shown on the graph is not necessarily indicative of
future price performance.
[TOTAL RETURN PERFORMANCE GRAPH]
PERIOD ENDING
-------------
INDEX 10/10/02 10/31/02 11/30/02 12/31/02
- ----- -------- -------- -------- --------
Newcastle Investment Corp. 100.00 107.20 111.60 130.92
S&P 500 100.00 110.23 116.70 109.81
Russell 2000 100.00 111.18 121.10 114.36
NAREIT All REIT Index 100.00 103.24 107.83 109.58
* Source: SNL Financial LC, Charlottesville, VA
In accordance with the rules of the SEC, this section entitled
"Performance Graph" shall not be incorporated by reference into any of our
future filings under the Securities Act or the Exchange Act, and shall not be
deemed to be soliciting material or to be filed under the Securities Act or the
Exchange Act.
12
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
For purposes of this proxy statement a "beneficial owner" means any person
who, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares:
(i) voting power, which includes the power to vote, or to direct the
voting of, shares of our Common Stock; and/or
(ii) investment power, which includes the power to dispose, or to direct
the disposition of, shares of our Common Stock.
A person is also deemed to be the beneficial owner of a security if that
person has the right to acquire beneficial ownership of such security at any
time within 60 days.
Listed in the following table and the notes thereto is certain information
with respect to the beneficial ownership of shares of our Common Stock by each
person known by us to be the beneficial owner of more than five percent of our
Common Stock, and by each of our directors and executive officers, individually
and as a group (i) actual as of April 30, 2003 and (ii) as adjusted to give
effect to the distribution by Holdings of all of its shares of our Common Stock
to its stockholders, assuming no other purchases or sales by such persons.
We have been informed that, in connection with a plan of liquidation
approved by the board of directors and stockholders of Holdings, the board of
directors of Holdings, on April 30, 2003, declared a distribution to be made on
or about May 19, 2003 to its stockholders of record on May 8, 2003 of all the
16,488,517 shares of our Common Stock owned by Holdings. Each stockholder of
Holdings will receive one share of our Common Stock for each share of common
stock of Holdings owned by such stockholder. We refer to this distribution as
the "Holdings Distribution".
We have been informed by Fortress Principal Investment Holdings LLC that
it does not currently intend to exercise its outstanding stock options in
Holdings prior to the Holdings Distribution. As a result, although the
information presented under the heading "Before Holdings Distribution" assumes
full exercise by Fortress Principal Investment Holdings LLC of all its
outstanding options in Holdings and us, the information presented under the
heading "After Holdings Distribution" assumes that Fortress Principal Investment
Holdings LLC does not exercise its outstanding stock options in Holdings and
does not receive shares of our Common Stock for each of these option shares.
BEFORE HOLDINGS DISTRIBUTION AFTER HOLDINGS DISTRIBUTION
---------------------------- ---------------------------
NAME AND ADDRESS OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER (1) SHARES OF CLASS (2) SHARES OF CLASS (3)
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED OWNED
------------------- --------- ---------- --------- ----------
Newcastle Investment 16,488,517 70.20% -- --
Holdings Corp.
Fortress Principal 4,483,453 (5) 18.94% 2,936,855 (6) 12.40%
Investment Holdings LLC
(4)
Wesley R. Edens 4,494,553 (7) 18.98% 2,947,955 (8) 12.45%
David J. Grain 2,000 * 2,000 *
Stuart A. McFarland 2,000 * 2,000 *
David K. McKown 2,000 * 2,000 *
Peter M. Miller 2,000 * 2,000 *
Jonathan Ashley 1,150 * 5,976 *
Randal A. Nardone 4,484,453 (7) 18.94% 2,937,855 (8) 12.41%
Erik P. Nygaard 4,493,453 (7) 18.98% 2,946,855 (8) 12.45%
Kenneth M. Riis 20,000 * 20,000 *
Debra A. Hess (9) -- -- -- --
13
Michael I. Wirth (10) 500 * 500 *
Wallace R. Weitz & -- -- 2,975,142 12.67%
Company (11)
All directors, nominees 4,534,703 19.15% 2,992,932 12.64%
and executive officers
as a group
(10 persons)
* Denotes less than 1%.
(1) The address of Newcastle Investment Holdings Corp., Fortress Principal
Investment Holdings LLC and all officers, directors and nominees listed above
are in the care of Fortress Investment Group LLC, 1251 Avenue of the Americas,
16th Floor, New York, New York 10020.
(2) Percentage amount assumes the exercise by such persons of all options to
acquire shares of our Common Stock and no exercise by any other person.
(3) Percentage amount assumes exercise by such persons of all options to acquire
shares of our Common Stock and no exercise by any other person. Percentage
amount also assumes no exercise by Fortress Principal Investment Holdings LLC of
its options to purchase 2,091,673 shares of the common stock of Holdings.
(4) The beneficial owners of Fortress Principal Investment Holdings LLC
include, among others, Messrs. Edens, Nardone and Nygaard. Fortress
Investment Holdings LLC is the sole member of our Manager. The beneficial
owners of Fortress Investment Holdings LLC also include, among others,
Messrs. Edens, Nardone and Nygaard.
(5) Includes options to acquire 186,666 shares of our Common Stock, which
represents the portion of the 700,000 options that are currently exercisable and
exercisable within 60 days of the date hereof beneficially owned by Fortress
Principal Investment Holdings LLC directly in us and 4,296,787 shares
beneficially owned by Fortress Principal Investment Holdings LLC as a result of
its beneficial ownership of shares in Holdings and an option to purchase
2,091,673 shares in Holdings. Messrs. Edens, Nardone and Nygaard each own a
portion of the beneficial interests in Fortress Principal Investment Holdings
LLC.
(6) Includes 2,750,189 shares of our Common Stock that Fortress Principal
Investment Holdings LLC will receive in connection with the Holdings
Distribution and options to acquire 186,666 shares of our Common Stock, which
represents the portion of the 700,000 options that are currently exercisable and
exercisable within 60 days of the date hereof. Assumes that Fortress Principal
Investment Holdings LLC does not exercise its outstanding stock option to
purchase 2,091,673 shares of common stock of Holdings. We have been informed by
Fortress Principal Investment Holdings LLC that it does not currently intend to
exercise its option prior to the Holdings Distribution.
(7) An aggregate of 4,483,453 of these shares are beneficially owned by Fortress
Principal Investment Holdings LLC, as described above in note 5.
(8) An aggregate of 2,936,855 of these shares are beneficially owned by Fortress
Principal Investment Holdings LLC as described above in note 6.
(9) Debra A. Hess joined us as our Chief Financial Officer on April 21,
2003.
(10) Michael I. Wirth was our Chief Financial Officer from inception through
April 21, 2003.
(11) The address for Wallace R. Weitz & Company is 1125 South 103rd Street,
Omaha, NE 68124. The beneficial owners are Weitz Partners III, Weitz Value Fund,
Weitz Partners Value and Weitz Hickory Fund.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
14
Section 16(a) of the Exchange Act requires directors, executive officers
and persons beneficially owning more than ten percent of a registered class of a
company's equity securities to file reports of ownership and changes in
ownership on Forms 3, 4, and 5 with the SEC and the New York Stock Exchange.
To our knowledge, based solely on review of the copies of such reports
furnished to us during the year ended December 31, 2002, all of our directors,
executive officers and greater-than-ten-percent owners were in compliance with
the Section 16(a) filing requirements, except Mr. McKown's initial report on
Form 3, relating to his becoming a director in November 2002 and his report on
Form 4 relating to the automatic grant under our stock option plan after the
first board meeting attended by Mr. McKown of an option to purchase 2,000 shares
of our Common Stock, were each filed late.
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 2002, Holdings contributed certain assets and liabilities to us in
exchange for all of the shares of our Common Stock. Our chairman and chief
executive officer also serves as chairman and chief executive officer of
Holdings. In addition, our Manager, Fortress Investment Group LLC, also serves
as manager of Newcastle Investment Corp. At the time the transfer of assets and
liabilities from Newcastle Investment Holdings to us was approved and other
organizational matters were approved for us, Holdings was our sole stockholder.
As a result, these matters were not approved at arm's length and the terms of
the transfer may not be as favorable to us as if the transfer was with an
unaffiliated third party. We may enter into future transactions with Holdings
with the approval of our independent directors.
We are party to a management agreement with Fortress Investment Group LLC,
pursuant to which Fortress Investment Group LLC provides for the day-to-day
management of our operations. The management agreement requires our Manager to
manage our business affairs in conformity with the policies and the investment
guidelines that are approved and monitored by our board of directors. Our
chairman and chief executive officer and all of our executive officers also
serve as officers of our Manager. As a result, the management agreement between
us and our Manager and the amendment to the management agreement were not
negotiated at arm's-length, and the terms, including fees payable, may not be as
favorable to us as if it had been negotiated with an unaffiliated third party.
Since our Manager also manages Holdings and other entities, it may become
subject to conflicts of interest with respect to managing our interests and the
interests of such entities.
We have not entered into any other transactions in which any other
director or officer or stockholder of ours or of our Manager had any material
interest.
Mr. Grain, a member of our board of directors, serves as President of
Pinnacle Holdings Inc., whose equity is partially owned by Fortress
Investment Fund, an affiliate of ours managed by our Manager.
Fortress Principal Investment Holdings LLC, an affiliate of our Manager,
has options to purchase 700,000 shares of our Common Stock. Fortress Principal
Investment Holdings LLC also owns 2,750,189 shares of common stock of Holdings
and has options to purchase an additional 2,091,673 shares of common stock of
Holdings. We have been informed that, in connection with a plan of liquidation
approved by the board of directors and stockholders of Newcastle Investment
Holdings Corp, its board of directors has declared a distribution to be made on
or about May 19, 2003 to its stockholders of record on May 8, 2003 of all the
shares of our Common Stock owned by Holdings. Each stockholder of Holdings will
receive one share of our Common Stock for each share of common stock of Holdings
owned by such stockholder. After such distribution, Holdings will own no shares
of our Common Stock and Fortress Principal Investment Holdings LLC will receive
2,750,189 shares of our Common Stock and will, as a result, own 2,936,855
shares, or approximately 12.40%, of our Common Stock, after giving effect to the
186,666 options that have vested of the 700,000 options it was granted, and
assuming no exercise by Fortress Principal Investment Holdings LLC of its
options in Holdings.
Fortress Investment Holdings LLC is the sole member of Fortress Investment
Group LLC, our Manager. The beneficial owners of Fortress Investment Holdings
LLC include, among others, Messrs. Edens, Nardone, and Nygaard.
16
PROPOSAL NO. 2
APPROVAL OF APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
PROPOSED INDEPENDENT AUDITOR
Ernst & Young LLP, independent certified public accountants, has served as
independent auditors for us and our subsidiaries for the fiscal year ended
December 31, 2002. The Audit Committee of the board of directors has appointed
Ernst & Young LLP to be our independent auditors for the fiscal year ending
December 31, 2003 and has further directed that the selection of the independent
auditors be submitted for approval by the stockholders at the Annual Meeting.
Representatives of Ernst & Young LLP will be present at the Annual
Meeting, will be given the opportunity to make a statement, if they so desire,
and will be available to respond to appropriate questions from stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The board of directors recommends a vote FOR the approval of the
appointment of Ernst & Young LLP as independent auditors for the Company for
fiscal year 2003.
17
INDEPENDENT AUDITORS
During the year ended 2002, we engaged Ernst & Young LLP to provide us
with audit and tax services. Services provided included the examination of
annual financial statements, limited review of unaudited quarterly financial
information, review and consultation regarding filings with the Securities and
Exchange Commission and the Internal Revenue Service, assistance with
management's evaluation of internal accounting controls, consultation on
financial and tax accounting and reporting matters, and verification procedures
as required by collateralized bond obligations. Fees for 2002 and 2001 were as
follows:
Tax-Related Fees All Other
Year Audit Fees Audit-Related Fees Fees(1)
---- ---------- ------------- ---------------- ---------
2002 $280,000 $25,000 $65,000 $1,571,000
2001 $325,000 $27,000 $234,000 $456,000
(1) Includes fees paid in connection with our initial public offering of
$1,487,000 in 2002 and $425,000 in 2001.
The audit committee has considered all fees provided by the independent
auditors to us and concluded this involvement is compatible with maintaining the
auditors' independence.
18
ADVANCE NOTICE FOR STOCKHOLDER NOMINATIONS AND PROPOSALS
FOR 2004 ANNUAL MEETING
Proposals received from stockholders are given careful consideration by
the Company in accordance with Rule 14a-8 under the Exchange Act. Stockholder
proposals are eligible for consideration for inclusion in the proxy statement
for the 2004 annual meeting of stockholders if they are received by the Company
on or before December 30, 2003. Any proposal should be directed to the attention
of the Company's Secretary at 1251 Avenue of the Americas, 16th Floor, New York,
New York 10020.
In order for a stockholder proposal submitted outside of Rule 14a-8 to be
considered "timely" within the meaning of Rule 14a-4(c), such proposal must be
received by the Company not later than the last date for submission of
stockholder proposals under the Company's Bylaws. In order for a proposal
relating to business to be conducted at our 2004 annual meeting of stockholders
to be "timely" under the Company's Bylaws, it must be received by the secretary
of the Company at our principal executive office after the close of business on
January 2, 2004 and before the close of business on February 2, 2004. However,
in the event that the date of mailing of the notice of the 2004 annual meeting
of stockholders is advanced or delayed by more than 30 days from April 30, 2004,
a proposal by the stockholders to be timely must be received not earlier than
the close of business on the 120th day before mailing of notice of such meeting
and not later than the close of business on the later of the 90th day before
mailing of notice of such meeting or the 10th day after the day on which public
announcement of the date of such meeting is first made by the Company. For
additional requirements, a stockholder may refer to our Bylaws, a copy of which
may be obtained from our Secretary. If we do not receive timely notice pursuant
to our Bylaws, the proposal my be excluded from consideration at the meeting.
OTHER MATTERS
The board of directors knows of no other business to be brought
before the Annual Meeting. If any other matters properly comes before the Annual
Meeting, including a proposal omitted from this Proxy Statement in accordance
with Rule 14a-8 under the Exchange Act, the proxies will be voted on such
matters in accordance with the judgment of the persons named as proxies therein,
or their substitutes, present and acting at the meeting.
No person is authorized to give any information or to make any
representation not contained in this proxy statement, and, if given or made,
such information or representation should not be relied upon as having been
authorized. The delivery of this proxy statement shall not, under any
circumstances, imply that there has not been any change in the information set
forth herein since the date of the proxy statement.
ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC") at 450 Fifth
Street NW, Washington, DC 20549. You may read and copy any reports, statements
or other information we file at the SEC's public reference rooms in Washington,
D.C., New York, New York. Please call the SEC at (800) SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from commercial document retrieval services and on the web site
maintained by the SEC at www.sec.gov. Such information will also be furnished
upon written request to Newcastle Investment Corp., c/o Fortress Investment
Group LLC, 1251 Avenue of the Americas, 16th Floor, New York, NY 10020,
Attention: Ms. Lilly H. Donohue.
The SEC has adopted rules that permit companies and intermediaries such as
brokers to satisfy delivery requirements for proxy statements with respect to
two or more stockholders sharing the same address by delivering a single proxy
statement addressed to those stockholders. This process, which is commonly
referred to as "householding," potentially provides extra convenience for
stockholders and cost savings for companies. The Company and some brokers
household proxy materials, delivering a single proxy statement to multiple
stockholders sharing an address unless contrary instructions have been received
from the affected stockholders.
19
Once you have received notice from your broker or the Company that they or the
Company will be householding materials to your address, householding will
continue until you are notified otherwise or until you revoke your consent. If,
at any time, you no longer wish to participate in householding and would prefer
to receive a separate proxy statement, please notify your broker if your shares
are held in a brokerage account or the Company if you hold registered shares.
You can notify the Company by sending a written request to, Newcastle Investment
Corp., 1251 Avenue of the Americas, 16th Floor, New York, New York 10020,
Attention: Ms. Lilly H. Donohue.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT
TO VOTE ON THE ELECTION OF DIRECTORS AND THE APPROVAL OF ERNST & YOUNG LLP AS
OUR INDEPENDENT AUDITORS FOR FISCAL YEAR 2003. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS
PROXY STATEMENT. THIS PROXY STATEMENT IS DATED APRIL 30, 2003. YOU SHOULD NOT
ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF
ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THIS PROXY STATEMENT
TO STOCKHOLDERS NOR THE ELECTION OF THE NOMINEES DESCRIBED HEREIN WILL CREATE
ANY IMPLICATION TO THE CONTRARY.
By Order of the Board of Directors,
/s/Randal A Nardone
Randal A Nardone
Secretary
New York, New York
April 30, 2003
20
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NEWCASTLE INVESTMENT CORP.
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD May 29, 2003, the
undersigned appoints Wesley R. Edens and Randal A. Nardone, or either of them,
with full power of substitution, to attend the Annual Meeting of Stockholders of
NEWCASTLE INVESTMENT CORP. on May 29, 2003 (the "Annual Meeting"), and any
adjournments thereof, on behalf of the undersigned and to vote all shares which
the undersigned would be entitled to vote and to take all actions which the
undersigned would be entitled to take if personally present upon the following
matters set forth in the Notice of Annual Meeting and described more fully in
the Proxy Statement:
1. Proposal to elect (a) two Class I directors to serve until the
2006 annual meeting of stockholders or until their respective
successors are elected and duly qualified; and (b) one Class
III director to serve until the 2005 annual meeting of
stockholders or until his respective successor is elected and
duly qualified.
[___] FOR the THREE nominees listed below (except as marked
to the contrary below)
[___] WITHHOLD AUTHORITY to vote for the THREE nomineeslisted
below
Stuart A. McFarland
David K. McKown
Peter M. Miller
INSTRUCTION: To withhold authority for any individual nominee,
write that nominee's name in the space provided below:
__________________________________________________________
2. Proposal to approve the appointment of Ernst & Young LLP as
the Company's independent auditors for the fiscal year 2003.
[___] FOR this appointment
[___] AGAINST this appointment
[___] ABSTAIN
3. In their discretion, upon such other business as may properly
come before the meeting and any adjournments thereof.
This proxy, when properly executed, will be voted as directed. If this proxy is
executed but no direction is indicated, this proxy will be voted FOR the
proposal to elect (a) two Class I directors to serve until the 2006 annual
meeting of stockholders or until their respective successors are elected and
duly qualified; and one Class III director to serve until the 2005 annual
meeting of stockholders or until his respective successor is elected and duly
qualified, and FOR the approval of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year 2003; and in the discretion
of the proxy holder on any other business that properly
21
comes before the Annual Meeting or any adjournment or postponement thereof. The
undersigned hereby revokes any proxy heretofore given with respect to such
meeting.
PLEASE DATE, SIGN AND RETURN
PROXY PROMPTLY
Receipt of Notice of Annual
Meeting and Proxy Statement
is hereby acknowledged
--------------------------------------
Stockholder's Signature
---------------------------------------
Joint Holder's Signature (if applicable)
Date:
NOTE: Please sign exactly as the name appears on the records of the Company and
date. If the shares are held jointly, each holder should sign. When signing as
an attorney, executor, administrator, trustee, guardian, officer of a
corporation or other entity or in another representative capacity, please give
the full title under signature(s)
22
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
OF
NEWCASTLE INVESTMENT CORP.
I. PURPOSE OF THE COMMITTEE
The Committee's purpose is to provide assistance to the Board in
fulfilling its legal and fiduciary obligations with respect to matters involving
the accounting, auditing, financial reporting, internal control and legal
compliance functions of the Corporation and its subsidiaries, including, without
limitation, (a) assisting the Board's oversight of (i) the integrity of the
Corporation's financial statements, (ii) the Corporation's compliance with legal
and regulatory requirements, (iii) the Corporation's independent auditors'
qualifications and independence, and (iv) the performance of the Corporation's
independent auditors and the Corporation's internal audit function, and (b)
preparing the report required to be prepared by the Committee pursuant to the
rules of the Securities and Exchange Commission (the "SEC") for inclusion in the
Corporation's annual proxy statement.
II. COMPOSITION OF THE COMMITTEE
The Committee shall be comprised of three or more directors as determined
from time to time by resolution of the Board. Each member of the Committee shall
be qualified to serve on the Committee pursuant to the requirements of the New
York Stock Exchange (the "NYSE") and the Sarbanes - Oxley Act of 2002 (the
"Act") and the rules and regulations promulgated by the SEC pursuant to the Act.
Director's fees (including any additional amounts paid to chairs of committees
and to members of committees of the Board) are the only compensation a member of
the Committee may receive from the Corporation.
No director may serve as a member of the Committee if such director serves
on the audit committee of more than two other public companies, unless the Board
determines that such simultaneous service would not impair the ability of such
director to effectively serve on the Committee. Any such determination must be
disclosed in the Corporation's annual proxy statement.
The chairperson of the Committee shall be designated by the Board,
provided that if the Board does not so designate a chairperson, the members of
the Committee, by a majority vote, may designate a chairperson. Each member of
the Committee must be "financially literate", as such qualification is
interpreted by the Board in its business judgment, or must become financially
literate within a reasonable period of time after his or her appointment to the
Committee. In addition, at least one member of the Committee must have
"accounting or related financial management expertise", as the Board interprets
such qualification in its business judgment. Further, either (i) at least one
member of the Committee must be a "financial expert", as such term is defined in
the rules and regulations promulgated by the SEC pursuant to the Act, or (ii) if
no member of the Committee is a "financial expert", the Committee shall so
inform the Corporation.
Any vacancy on the Committee shall be filled by majority vote of the Board
at the next meeting of the Board following the occurrence of the vacancy. No
member of the Committee shall be removed except by majority vote of the Board.
III. MEETINGS OF THE COMMITTEE
The Committee shall meet once every fiscal quarter or more frequently as
it shall determine is necessary to carry out its duties and responsibilities.
The Committee, in its discretion, may ask members of management or others to
attend its meetings (or portions thereof) and to provide pertinent information
as necessary. The Committee should meet separately on a periodic basis with (i)
management, (ii) the director of the Corporation's internal auditing department
or other person responsible for the internal audit function and (iii) the
Corporation's independent auditors, in each case to discuss any matters that the
Committee or any of the above persons or firms believe should be discussed
privately.
A majority of the members of the Committee present in person or by means
of a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other shall constitute a
quorum.
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The Committee may form subcommittees for any purpose that the Committee
deems appropriate and may delegate to such subcommittees such power and
authority as the Committee deems appropriate; provided, however, that no
subcommittee shall consist of fewer than two members; and provided further that
the Committee shall not delegate to a subcommittee any power or authority
required by any law, regulation or listing standard to be exercised by the
Committee as a whole.
The Committee shall maintain minutes of its meetings and records relating
to those meetings and provide copies of such minutes to the Board.
IV. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
In carrying out its duties and responsibilities, the Committee's policies
and procedures should remain flexible, so that it may be in a position to best
react or respond to changing circumstances or conditions. The following are
within the authority of the Committee:
(a) Select, in its sole discretion (subject, if required, to shareholder
ratification), the firm of independent auditors to audit the books and accounts
of the Corporation and its subsidiaries for each fiscal year;
(b) Review and, in its sole discretion, approve in advance the
Corporation's independent auditors' annual engagement letter, including the
proposed fees contained therein, as well as all audit and, as provided in the
Act, all permitted non-audit engagements and relationships between the
Corporation and such auditors (which approval should be made after receiving
input from the Corporation's management). Approval of audit and permitted
non-audit services may also be made by one or more members of the Committee as
shall be designated by the Committee or the chairperson of the Committee and the
person(s) granting such approval shall report such approval to the Committee at
the next scheduled meeting;
(c) Review the performance of the Corporation's independent auditors,
including the lead partner of the independent auditors, and, in its sole
discretion (subject, if required, to shareholder ratification), make decisions
regarding the replacement or termination of the independent auditors when
circumstances warrant;
(d) Obtain at least annually from the Corporation's independent auditors
and review a report describing:
(i) the independent auditors' internal quality-control
procedures;
(ii) any material issues raised by the most recent internal
quality-control review, or peer review, of the independent auditors,
or by any inquiry or investigation by any governmental or
professional authority, within the preceding five years, respecting
one or more independent audits carried out by the independent
auditors, and any steps taken to deal with any such issues; and
(iii) all relationships between the independent auditors and the
Corporation (including a description of each category of services
provided by the independent auditors to the Corporation and a list
of the fees billed for each such category);
The Committee should present its conclusions with respect to the
above matters, as well as its review of the lead partner of the independent
auditors, and its views on whether there should be a regular rotation of the
independent auditors, to the Board.
(e) Oversee the independence of the Corporation's independent auditors
by, among other things:
(i) actively engaging in a dialogue with the independent auditors
with respect to any disclosed relationships or services that may
impact the objectivity and independence of the independent auditors,
and taking appropriate action to satisfy itself of the auditors'
independence;
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(ii) ensuring that the lead audit partner and reviewing audit
partner responsible for the audit of the Corporation's financials
statements have not performed audit services for the Corporation for
more than the previous five consecutive fiscal years of the
Corporation;
(iii) ensuring that the chief executive officer, controller, chief
financial officer, chief accounting officer or other person serving
in an equivalent position of the Corporation, was not, within one
year prior to the initiation of the audit, an employee of the
independent auditor who participated in any capacity in the
Corporation's audit; and
(iv) considering whether there should be a regular rotation of
the Corporation's independent auditors;
(f) Instruct the Corporation's independent auditors that they are
ultimately accountable to the Committee and the Board, and that the Committee is
responsible for the selection (subject, if applicable, to shareholder
ratification), evaluation and termination of the Corporation's independent
auditors;
(g) Review and accept, if appropriate, the annual audit plan of the
Corporation's independent auditors, including the scope of audit activities and
all critical accounting policies and practices to be used, and monitor such
plan's progress and results during the year;
(h) Review the results of the year-end audit of the Corporation,
including any comments or recommendations of the Corporation's independent
auditors;
(i) Review with management, the Corporation's independent auditors and, if
appropriate, the director of the Corporation's internal auditing department, the
following:
(i) the Corporation's annual audited financial statements and
quarterly financial statements, including the Corporation's
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations", and any major issues related
thereto;
(ii) critical accounting policies and such other accounting policies
of the Corporation as are deemed appropriate for review by the
Committee prior to any interim or year-end filings with the SEC or
other regulatory body, including any financial reporting issues
which could have a material impact on the Corporation's financial
statements;
(iii) major issues regarding accounting principles and financial
statements presentations, including (A) any significant changes in
the Corporation's selection or application of accounting principles
and (B) any analyses prepared by management and/or the independent
auditors setting forth significant financial reporting issues and
judgments made in connection with the preparation of the financial
statements, including analyses of the ramifications and effects of
alternative generally accepted accounting principles methods on the
Corporation's financial statements;
(iv) all alternative treatments of financial information that have
been discussed by the independent auditors and management,
ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the auditors;
(v) all other material written communications between the
independent auditors and management, such as any management letter
or schedule of unadjusted differences; and
(vi) the effect of regulatory and accounting initiatives, as well
as off-balance sheet structures, on the financial statements of
the Corporation;
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(j) Review with the chief executive officer and chief financial officer
and independent auditors, periodically, the following:
(i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Corporation's
ability to record, process, summarize, and report financial data,
including any material weaknesses in internal controls identified by
the Corporation's independent auditors;
(ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Corporation's
internal controls; and
(iii) any significant changes in internal controls or in other
factors that could significantly affect internal controls, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
(k) Attempt to resolve all disagreements between the Corporation's
independent auditors and management regarding financial reporting;
(l) Review on a regular basis with the Corporation's independent auditors
any problems or difficulties encountered by the independent auditors in the
course of any audit work, including management's response with respect thereto,
any restrictions on the scope of the independent auditor's activities or on
access to requested information, and any significant disagreements with
management. In connection therewith, the Committee should review with the
independent auditors the following:
(i) any accounting adjustments that were noted or proposed by
the independent auditors but were rejected by management (as
immaterial or otherwise);
(ii) any communications between the audit team and the independent
auditor's national office respecting auditing or accounting issues
presented by the engagement; and
(iii) any "management" or "internal control" letter issued, or
proposed to be issued, by the independent auditors to the
Corporation;
(m) Confirm that the Corporation's interim financial statements included
in Quarterly Reports on Form 10-Q have been reviewed by the Corporation's
independent auditors;
(n) Review:
(i) the adequacy and effectiveness of the Corporation's accounting
and internal control policies and procedures on a regular basis,
including the responsibilities, budget and staffing of the
Corporation's internal audit function, through inquiry and
discussions with the Corporation's independent auditors and
management of the Corporation; and
(ii) the yearly report prepared by management, and attested to by
the Corporation's independent auditors, assessing the effectiveness
of the Corporation's internal control structure and procedures for
financial reporting and stating management's responsibility to
establish and maintain such structure and procedures, prior to its
inclusion in the Corporation's annual report;
(o) Review with management the Corporation's administrative, operational
and accounting internal controls, including any special audit steps adopted in
light of the discovery of material control deficiencies, and evaluate whether
the Corporation is operating in accordance with its prescribed policies,
procedures and codes of conduct;
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(p) Receive periodic reports from the Corporation's independent auditors
and management of the Corporation to assess the impact on the Corporation of
significant accounting or financial reporting developments that may have a
bearing on the Corporation;
(q) Establish and maintain free and open means of communication between
and among the Board, the Committee, the Corporation's independent auditors, the
Corporation's internal auditing department and management, including providing
such parties with appropriate opportunities to meet separately and privately
with the Committee on a periodic basis;
(r) Review the Corporation's earnings press releases (especially the use
of "pro forma" or "adjusted" information not prepared in compliance with
generally accepted accounting principles), as well as financial information and
earnings guidance provided by the Corporation to analysts and rating agencies
(which review may be done generally (i.e., discussion of the types of
information to be disclosed and type of presentations to be made), and the
Committee need not discuss in advance each earnings release or each instance in
which the Corporation may provide earnings guidance);
(s) Establish clear hiring policies by the Corporation for employees
or former employees of the Corporation's independent auditors;
(t) Discuss guidelines and policies governing the process by which senior
management of the Corporation and the relevant departments of the Corporation
assess and manage the Corporation's exposure to risk, as well as the
Corporation's major financial risk exposures and the steps management has taken
to monitor and control such exposures;
(u) Meet at least annually with the general counsel, and outside counsel
when appropriate, to review legal and regulatory matters, including any matters
that may have a material impact on the financial statements of the Corporation;
(v) Prepare the report required by the rules of the SEC to be
included in the Corporation's annual proxy statement;
(w) Review the Corporation's policies relating to the avoidance of
conflicts of interest and review past or proposed transactions between the
Corporation and members of management as well as policies and procedures with
respect to officers' expense accounts and perquisites, including the use of
corporate assets. The Committee shall consider the results of any review of
these policies and procedures by the Corporation's independent auditors;
(x) Review the Corporation's program to monitor compliance with the
Corporation's Code of Conduct, and meet periodically with the Corporation's
Compliance Officer or other appropriate person to discuss compliance with the
Code of Conduct;
(y) Obtain from the Corporation's independent auditors any
information pursuant to Section 10A of the Securities Exchange Act of 1934;
(z) Establish procedures for (i) the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal accounting
controls or auditing matters, and (ii) the confidential, anonymous submission by
employees of the Corporation of concerns regarding questionable accounting or
auditing matters;
(aa) Secure independent expert advice to the extent the Committee
determines it to be appropriate, including retaining, with or without Board
approval, independent counsel, accountants, consultants or others, to assist the
Committee in fulfilling its duties and responsibilities, the cost of such
independent expert advisors to be borne by the Corporation;
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(bb) Report regularly to the Board on its activities, as appropriate. In
connection therewith, the Committee should review with the Board any issues that
arise with respect to the quality or integrity of the Corporation's financial
statements, the Corporation's compliance with legal or regulatory requirements,
the performance and independence of the Corporation's independent auditors, or
the performance of the internal audit function;
(cc) Prepare and review with the Board an annual performance evaluation of
the Committee, which evaluation must compare the performance of the Committee
with the requirements of this charter, and set forth the goals and objectives of
the Committee for the upcoming year. The evaluation should include a review and
assessment of the adequacy of the Committee's charter. The performance
evaluation by the Committee shall be conducted in such manner as the Committee
deems appropriate. The report to the Board may take the form of an oral report
by the chairperson of the Committee or any other member of the Committee
designated by the Committee to make this report; and
(dd) Perform such additional activities, and consider such other matters,
within the scope of its responsibilities, as the Committee or the Board deems
necessary or appropriate.
* * *
While the Committee has the duties and responsibilities set forth in this
charter, the Committee is not responsible for planning or conducting the audit
or for determining whether the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles.
In fulfilling their responsibilities hereunder, it is recognized that
members of the Committee are not full-time employees of the Corporation, it is
not the duty or responsibility of the Committee or its members to conduct "field
work" or other types of auditing or accounting reviews or procedures or to set
auditor independence standards, and each member of the Committee shall be
entitled to rely on (i) the integrity of those persons and organizations within
and outside the Corporation from which it receives information, (ii) the
accuracy of the financial and other information provided to the Committee absent
actual knowledge to the contrary (which shall be promptly reported to the Board)
and (iii) statements made by management or third parties as to any information
technology, internal audit and other non-audit services provided by the auditors
to the Corporation.
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