UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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[ ] Preliminary Proxy Statement
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NEWCASTLE INVESTMENT CORP.
(Name of Registrant as Specified In Its Charter)
____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(NEWCASTLE INVESTMENT CORP. LOGO)
NEWCASTLE INVESTMENT CORP.
April 18, 2006
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 18, 2006, at 10:00 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 vote today by Internet, by telephone, or
by completing, signing, and returning your proxy card in the envelope provided.
Sincerely,
/s/ Wesley R. Edens
----------------------------------------
Wesley R. Edens
Chairman and Chief Executive Officer
NEWCASTLE INVESTMENT CORP.
NOTICE OF THE 2006 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 18, 2006
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 18, 2006, beginning at 10:00 a.m.,
Eastern 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 one Class II director to serve until the 2007
annual meeting of stockholders and two Class I directors to serve
until the 2009 annual meeting of stockholders or until their
respective successors are elected and duly qualified;
(ii) a proposal to approve the appointment of Ernst & Young LLP as
independent registered public accounting firm for the Company for
fiscal year 2006; 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 April 11, 2006, 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. Return the proxy card promptly in the envelope provided, which
requires no postage if mailed in the United States. You can also now vote by
telephone or by the Internet by logging onto the site provided on the proxy
card. Whether or not you plan to attend the Annual Meeting in person, please
vote by one of the three methods. 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
1345 Avenue of the Americas
46th Floor
New York, New York 10105
April 18, 2006
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NEWCASTLE INVESTMENT CORP.
1345 AVENUE OF THE AMERICAS, 46TH FLOOR, NEW YORK, NEW YORK 10105
PROXY STATEMENT
FOR THE 2006 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 18, 2006
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 18, 2006, 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
1345 Avenue of the Americas, 46th Floor, New York, New York 10105. 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 April 18, 2006.
A proxy may confer discretionary authority to vote with respect to any
matter presented at the Annual Meeting. At the date hereof, management has no
knowledge of any business that will be presented for consideration at the Annual
Meeting and which would be required to be set forth in this proxy statement or
the related proxy card other than the matters set forth in the Notice of Annual
Meeting of Stockholders. If any other matter is properly presented at the Annual
Meeting for consideration, it is intended that the persons named in the enclosed
form of proxy and acting thereunder will vote in accordance with their best
judgment on such matter.
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 one Class II director that was appointed during
2005 to fill a vacancy on the board of directors to serve until the
2007 annual meeting of stockholders and two Class I directors to serve
until the 2009 annual meeting of stockholders or until their
respective successors are elected and duly qualified;
(ii) a proposal to approve the appointment of Ernst & Young LLP as
independent registered public accounting firm for the Company for
fiscal year 2006; and
(iii) 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 preparing, printing and mailing this proxy statement and the
proxies solicited hereby will be borne by the Company. In addition, to the use
of the mail, proxies may be solicited by officers and directors, without
additional remuneration, by personal interview, telephone, telegraph or
otherwise. The Company will also request brokerage firms, nominees, custodians
and fiduciaries to forward proxy materials to the beneficial owners of shares
held of record on April 11, 2006 and will provide reimbursement for the cost of
forwarding the material.
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STOCKHOLDERS ENTITLED TO VOTE
As of the date hereof, there are outstanding and entitled to vote
43,967,409 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 April
11, 2006, are entitled to vote at the Annual Meeting or any adjournment thereof.
A stockholder list will be available for examination by Newcastle stockholders
at the Annual Meeting and at the office of the Company at 1345 Avenue of the
Americas, 46th Floor, New York, New York 10105, during ordinary business hours
during the ten-day period prior to the Annual Meeting for any purpose germane to
the meeting.
We also have outstanding 2,500,000 shares of our 9.75% Series B Cumulative
Redeemable Preferred Stock and 1,600,000 shares of our 8.05% Series C 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 the 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.
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 the nominees to our board of directors;
(ii) FOR the approval of the appointment of Ernst & Young LLP as
independent registered public accounting firm for the Company for
fiscal year 2006; 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 (and broker non-votes) will be disregarded and 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.
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 independent registered public accounting firm. In
determining whether the proposal to ratify the
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appointment of the independent registered public accounting firm 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 telephone, by the
Internet or 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 1345 Avenue of the
Americas, 46th Floor, New York, New York 10105;
- sign, date and mail a new proxy card to our Secretary;
- dial the number provided on the proxy card and vote again;
- log onto the Internet site provided on the proxy card and vote
again; 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 will be mailed to
stockholders entitled to vote at the Annual Meeting with these proxy materials
and is also available without charge to stockholders upon written request to:
Newcastle Investment Corp., 1345 Avenue of the Americas, 46th Floor, New York,
New York 10105, Attention: Investor Relations. You can also find an electronic
version on the Investor Relations section of the Newcastle website
(www.newcastleinv.com).
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, 2006, which we plan to file with the SEC in August 2006.
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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 the nominees to our board of directors; and
(ii) FOR the approval of the appointment of Ernst & Young LLP as
independent registered public accounting firm for the Company for
fiscal year 2006.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The first proposal is to elect one Class II director to serve until the
2007 annual meeting of stockholders and two Class I directors to serve until the
2009 annual meeting of stockholders or until his 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 2006
Peter M. Miller 2006
Class II Kevin J. Finnerty 2007
Class III Wesley R. Edens 2008
David K. McKown 2008
In general, the term for a Class I director expires in 2006, the term for a
Class II director expires in 2007 and the term for a Class III director expires
in 2008.
The board of directors has unanimously proposed Stuart A. McFarland and
Peter M. Miller as director nominees for election as Class I directors and Kevin
J. Finnerty as a director nominee for election as a Class II director. The
director nominees currently serve on our board of directors. Mr. Finnerty was
unanimously appointed to our board of directors on August 1, 2005, upon Mr.
David Grain's resignation. If elected at the Annual Meeting, each of Mr.
McFarland and Mr. Miller will hold office until the 2009 annual meeting of
stockholders and Mr. Finnerty will hold office until the 2007 annual meeting of
stockholders or until their successors are duly elected and qualified, subject
to earlier retirement, resignation or removal. If any of the nominees become
unavailable to serve, an event that the Board of Directors does not presently
expect, we will vote the shares represented by proxies for the election of
directors for the election of such other person(s) as the Board of Directors may
recommend. Unless otherwise instructed, we will vote all proxies we receive FOR
Mr. McFarland, Mr. Miller and Mr. Finnerty.
The Board of Directors recommends that you vote FOR the election of each of
Mr. McFarland and Mr. Miller to serve as our directors until the 2009 annual
meeting of stockholders or until their successors are duly elected and qualified
and FOR the election of Mr. Finnerty to serve as our director until the 2007
annual meeting of the stockholders or until his successor is duly elected and
qualified.
TERM
CLASS DIRECTOR EXPIRATION
- ----- -------- ----------
Class I Stuart A. McFarland 2009
Class I Peter M. Miller 2009
Class II Kevin J. Finnerty 2007
If any of the nominees 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.
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INFORMATION CONCERNING OUR DIRECTORS, INCLUDING THE DIRECTOR NOMINEES
Set forth below is certain biographical information for our directors,
including 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 11, 2006, after giving effect to outstanding options.
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.
WESLEY R. EDENS Mr. Edens has been our Chief Executive Officer
and Chairman of our Board of Directors since
Chief Executive Officer and inception. Mr. Edens has been a Principal and
Chairman of the Board of the Chairman of the Management Committee of
Directors since inception Fortress Investment Group LLC since co-founding
the firm in May 1998. He is the Chairman of the
2,312,620 shares of our Common Board of Directors and Chief Executive Officer
Stock beneficially owned of Global Signal, an affiliate of Fortress and
a real estate investment trust ("REIT") listed
Age: 44 on the New York Stock Exchange. He is a
director and Chief Executive Officer of
Eurocastle Investment Limited, an affiliate of
Fortress, which is listed on the Euronext
Amsterdam Exchange. Mr. Edens is the Chairman
of the Board of Directors for Brookdale Senior
Living Inc. and Mapeley Limited, affiliates of
Fortress and are listed on the New York Stock
Exchange and London Stock Exchange,
respectively. Mr. Edens serves on the boards of
Fortress Registered Investment Trust and
Fortress Investment Trust II. In addition, Mr.
Edens served as a director of Capstead Mortgage
Corporation beginning in December 1999 and
assumed the title of Chairman of the Board,
Chief Executive Officer and President in April
2000 until July 2003 when he resigned from all
positions. Mr. Edens was previously a Managing
Director of Union Bank of Switzerland from May
1997 to May 1998. Prior to joining Union Bank
of Switzerland, Mr. Edens was a Partner and a
Managing Director of BlackRock Financial
Management Inc. from October 1993 to May 1997.
In addition, Mr. Edens was a Partner and
Managing Director of Lehman Brothers, where he
was head of the Non-Agency Mortgage Trading
Desk from April 1987 to October 1993.
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KEVIN J. FINNERTY Mr. Finnerty has been a member of our board of
directors and a member of the Audit Committee,
Director since August 2005 Nominating and Corporate Governance Committee
and Compensation Committee of our board of
202,000 shares of our Common directors since August 2005. Mr. Finnerty has
Stock beneficially owned been a director of Newcastle Investment
Holdings LLC (formerly Newcastle Investment
Age: 51 Holdings Corp.) since its inception in 1998.
Mr. Finnerty is a founder and the Managing
Partner of F.I. Capital Management, an
investment company focused on mortgage related
strategies. Previously, Mr. Finnerty was a
Managing Director at J.P. Morgan Securities
Inc., where he headed the Residential Mortgage
Securities Department. Mr. Finnerty joined
Chase Securities Inc. in December of 1999.
Prior to joining Chase Securities Inc., Mr.
Finnerty worked at Union Bank of Switzerland
from November 1996 until February 1998, where
he headed the Mortgage Backed Securities
Department, and at Freddie Mac from January
1999 until June 1999, where he was a Senior
Vice President. Between 1986 and 1996, Mr.
Finnerty was with Bear Stearns & Co. Inc.,
where he was a Senior Managing Director and
ultimately headed the MBS Department and served
as a member of the board of directors from 1993
until 1996. Mr. Finnerty was Co-Chair of the
North American People Committee at
JPMorganChase and Chairman of the Mortgage and
Asset-Backed Division of the Bond Market
Association for the year 2003.
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STUART A. MCFARLAND Mr. McFarland has been a member of our board of
directors since October 2002 and a member of
Director since October 2002 the Audit Committee and Nominating and
Corporate Governance Committee of our board of
5,424 shares of our Common directors since November 2002. Mr. McFarland
Stock beneficially owned was a director of Newcastle Investment Holdings
LLC (formerly Newcastle Investment Holdings
Age: 59 Corp.) from May 1998 until October 2002. Mr.
McFarland is Chairman and Chief Executive
Officer of Federal City Bancorp, Inc. and
American Partners Bank (formerly Assurance
Partners Bank) and a Managing Partner of
Federal City Capital Advisors. Previously, Mr.
McFarland was President and Chief Executive
Officer of Pedestal Inc., an internet secondary
mortgage market trading exchange. 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.
Mr. McFarland also serves as a Director and
Member of the Executive Committee of the Center
for Housing Policy, a Trustee of the National
Building.
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 and Nominating and Corporate Governance
Committee of our board of directors since
5,424 shares of our Common November 2002. Mr. McKown has been a senior
Stock beneficially owned advisor to Eaton Vance Management, an
investment fund manager located in Boston,
Age: 68 Massachusetts, since May 2000. From 1993 until
April 2000, Mr. McKown was a group executive of
Diversified Finance of BankBoston, N.A., a
commercial bank. Mr. McKown was chairman of the
Domestic Senior 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. and Safety Insurance Group. Mr.
McKown holds advisory directorships with Eiger
Fund and Alliance Energy, Inc.
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PETER M. MILLER Mr. Miller has been a member of our board of
directors and a member of the Audit Committee
Director since February 2003 and Nominating and Corporate Governance
Committee of our board of directors since
17,632 shares of our Common February 2003. Mr. Miller is a Managing
Stock beneficially owned Director at Dresdner Kleinwort Wasserstein
Securities LLC and the Head of Latin American
Age: 50 Proprietary Trading in New York. Previously, he
was at ING Financial Markets LLC for 15 years,
where he was a Managing Director and Head of
their Latin Debt Advisory Group. Mr. Miller
joined ING after seven years at Bankers Trust
where he held various positions in the Latin
American Merchant Banking Group.
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LEGAL PROCEEDINGS INVOLVING DIRECTORS, OFFICERS AND AFFILIATES
There are no legal proceedings ongoing as to which any director, officer or
affiliate of the Company, or, to the knowledge of the Company, any owner of
record or beneficially of more than five percent of any class of voting
securities of the Company, or any associate of any such director, officer,
affiliate of the Company, or security holder is a party adverse to us or any of
our subsidiaries or has a material interest adverse to us or any of our
subsidiaries.
COMPENSATION OF DIRECTORS
We pay a $30,000 annual director's fee to each of our directors who are not
officers or employees (that is, other than Mr. Edens). All members of our board
of directors are reimbursed for their costs and expenses in attending all
meetings of our board of directors. Fees to the directors may be paid in cash or
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, pursuant to the Newcastle Investment Corp.'s Nonqualified
Stock Option and Incentive Award Plan (referred to herein, as amended, the Stock
Incentive Plan), each of our directors who are not officers or employees receive
effective on the first business day after our annual meeting of stockholders
automatic annual awards of our common stock valued at $15,000, based on the
closing price of our shares on the NYSE on the date of grant; in 2005, these
directors (other than Mr. Finnerty, who was not a director at the time of our
2005 annual stockholders' meeting, but including Mr. David Grain, who was a
director at that time but thereafter resigned from the Board) each received,
accordingly, a grant of 502 shares. In addition, new directors receive a
one-time grant of fully-vested options for 2,000 shares of our common stock with
an exercise price equal to the fair market value of our common stock on the date
of grant; Mr. Finnerty who was appointed to the Board in 2005 received such a
grant.
Affiliated directors (Mr. Edens) are not separately compensated by the
Company.
DETERMINATION OF DIRECTOR INDEPENDENCE
At least a majority of the directors serving on the board of directors must
be independent directors. For a director to be considered independent, the board
must determine that the director does not have any direct or indirect material
relationship with the Company. The board of directors has established
categorical standards to assist it in determining director independence, which
conform to the independence requirements under the New York Stock Exchange
listing rules. Under the categorical standards, a director will be independent
unless:
(a) within the preceding five years: (i) the director was employed by the
Company or its manager; (ii) an immediate family member of the
director was employed by the Company or its manager as an officer;
(iii) the director or an immediate family member of the director
received more than $100,000 per year in direct compensation from the
Company, its manager or any controlled affiliate of its manager (other
than director or committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent on continued service)); (iv) the director was employed by
or affiliated with the independent registered public accounting firm
of the Company or its manager; (iv) an immediate family member of the
director was employed by the independent registered public accounting
firm of the Company or its manager as a partner, principal or manager;
or (v) an executive officer of the Company or its manager was on the
compensation committee of a company which employed the
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director, or which employed an immediate family member of the director
as an executive officer; or
(b) he or she: (i) is an executive officer of another company that does
business with the Company and the annual sales to, or purchases from,
the Company is the greater of $1 million, or two percent of such other
company's consolidated gross annual revenues; (ii) is an executive
officer of another company which is indebted to the Company, or to
which the Company is indebted, and the total amount of either
company's indebtedness is greater than five percent of the total
consolidated debt of the company of which such director is an
executive officer; or (iii) serves as an officer, director or trustee
of a charitable organization, and the Company's charitable
contributions to the organization are greater than one percent of that
organization's total annual operating budget.
In addition, the board of directors annually reviews all commercial and
charitable relationships of our directors.
Whether directors meet these categorical independence tests will be
reviewed and will be made public annually prior to their standing for
re-election to the board. The board may determine, in its discretion, that a
director is not independent notwithstanding qualification under the categorical
standards. The board has determined that each of Messrs. Finnerty, McFarland,
McKown and Miller are independent for purposes of New York Stock Exchange Rule
303A and each such director has no material relationship with the Company. In
making such determination, the Board took into consideration, in the case of Mr.
Finnerty, that Mr. Finnerty is an independent director and shareholder of
Newcastle Investment Holdings LLC, an entity managed by the Company's manager,
and that certain directors have invested in the securities of private investment
funds or companies managed by the Company's manager.
STATEMENT ON CORPORATE GOVERNANCE
Overview. We emphasize the importance of professional business conduct and
ethics through our corporate governance initiatives. Our board of directors
consists of a majority of independent directors (in accordance with the rules of
the New York Stock Exchange). Our Audit Committee, Nominating and Corporate
Governance Committee and Compensation Committee are each composed exclusively of
the independent directors.
We have adopted corporate governance guidelines and a code of business
conduct and ethics, which delineate our standards for our officers and
directors, and employees of our manager, Fortress Investment Group LLC. Our
internet address is http://www.newcastleinv.com. We make available, free of
charge through a link on our site, our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to such
reports, if any, as filed with the SEC as soon as reasonably practicable after
such filing. Our site also contains our code of business conduct and ethics,
code of ethics for officers, corporate governance guidelines, and the charters
of the Audit Committee, Nominating and Corporate Governance Committee and
Compensation Committee of our board of directors. You may also obtain these
documents by writing the Company at 1345 Avenue of the Americas, 46th Floor, New
York, New York 10105, Attention: Investor Relations.
The board of directors has adopted a Code of Business Conduct and Ethics
that applies to all employees of our external manager who provide services to
us, and each of our directors and officers, including our principal executive
officer and principal financial officer. The purpose of the Code of Business
Conduct and Ethics is to promote, among other things, honest and ethical
conduct, full, fair, accurate, timely and understandable disclosure in public
communications and reports and documents that
14
the Company files with, or submits to, the SEC, compliance with applicable
governmental laws, rules and regulations, accountability for adherence to the
code and the reporting of violations thereof.
The Company has also adopted a Code of Ethics for Principal Executive
Officers and Senior Financial Officers which sets forth specific policies to
guide the Company's senior officers in the performance of their duties. This
code supplements the Code of Business Conduct and Ethics described above.
BOARD AND COMMITTEE MEETINGS
During the year ended December 31, 2005, our board of directors held 10
meetings. No director attended fewer than 75 percent of all meetings of our
board of directors and the committees on which such director served. The board
has three standing committees: the Audit Committee, the Compensation Committee
and the Nominating and Corporate Governance Committee. During 2005, the Audit
Committee met 8 times, the Compensation Committee met once and the Nominating
and Corporate Governance Committee met once. Although director attendance at the
Company's annual meeting each year is encouraged, the Company does not have an
attendance policy. One director attended the 2005 annual meeting.
Audit Committee. The members of the Audit Committee are Messrs. Finnerty,
McFarland (Chairman), McKown and Miller. The Audit Committee is governed by a
written charter adopted by our board of directors and is composed of four
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), and, as a result, no member has any relationship with the Company
that may interfere with the exercise of his independence from the Company and
the Company's management. The board has determined that each member of the Audit
Committee has the ability to read and understand fundamental financial
statements. The board has determined that Mr. McFarland qualifies as an "Audit
Committee Financial Expert" as defined by the rules of the SEC. Actions taken by
the Audit Committee are reported to the board of directors, usually at its next
meeting.
The purpose of the Audit Committee 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 Company and its subsidiaries, including, without
limitation, assisting the board's oversight of (a) the integrity of the
Company's financial statements; (b) the Company's compliance with legal and
regulatory requirements; (c) the Company's independent registered public
accounting firm's qualifications and independence; and (d) the performance of
the Company's independent registered public accounting firm and the Company's
internal audit function. The Audit Committee is responsible for pre-approval of
audit and, subject to de minimis exceptions, permitted non-audit services.
Compensation Committee. The members of the Compensation Committee are
Messrs. Finnerty, McFarland, McKown (Chairman) and Miller, each an independent
director (in accordance with the rules of the New York Stock Exchange). It is
responsible for overseeing the annual review of the management agreement with
the Company's manager, to administer and approve the grant of awards under any
incentive compensation plan, including any equity-based plan, of the Company and
to make recommendations to the board regarding director compensation. During
2005, the Company did not pay any cash compensation to its executive officers,
and there was no grant (or assignment by the Manager) of stock options to the
Company's executive officers during the fiscal year ended December 31, 2005. The
Compensation Committee met once in 2005 and conducted its annual review of the
management agreement after which it advised the full board of directors that, in
its view, there was no contractual basis
15
for the independent directors to recommend a termination of the management
agreement and that the management fees earned by the manager are fair.
Nominating and Corporate Governance Committee. The Company has a Nominating
and Corporate Governance Committee (the "Nominating and Corporate Governance
Committee"). The members of the Nominating and Corporate Governance Committee
are Messrs. Finnerty, McFarland, McKown and Miller (Chairman), each an
independent director (in accordance with the rules of the New York Stock
Exchange). The Nominating and Corporate Governance Committee met once during
2005. The functions of the Nominating and Corporate Governance Committee include
the following: (a) recommending to the board individuals qualified to serve as
directors of the Company and on committees of the board; (b) advising the board
with respect to board composition, procedures and committees; (c) advising the
board with respect to the corporate governance principles applicable to the
Company; and (d) overseeing the evaluation of the board. Mr. Finnerty was
appointed to the Board in 2005 following a recommendation by the Committee to
the Board.
The Nominating and Corporate Governance Committee is governed by a charter,
a current copy of which is available on our corporate website at
www.newcastleinv.com under the heading "Investor Relations and Corporate
Governance." A copy of the charter is also available in print to stockholders
upon request, addressed to the Company at 1345 Avenue of the Americas, 46th
Floor, New York, New York 10105, Attention: Investor Relations.
The Nominating and Corporate Governance Committee, as required by the
Company's By-Laws, will consider director candidates recommended by
stockholders. In considering candidates submitted by stockholders, the
Nominating and Corporate Governance Committee will take into consideration the
needs of the board of directors and the qualifications of the candidate and may
take into consideration the number of shares held by the recommending
stockholder and the length of time that such shares have been held.
The Company's By-Laws provide certain procedures that a stockholder must
follow to nominate persons for election to the board of directors. Nominations
for director at an annual stockholder meeting must be submitted in writing to
the Company's Secretary at Newcastle Investment Corp., 1345 Avenue of the
Americas, 46th Floor, New York, New York 10105. The Secretary must receive the
notice of a stockholder's intention to introduce a nomination at an annual
stockholders meeting (together with certain required information set forth in
the Company's By-Laws) not later than the close of business on the 90th day nor
earlier than the close of business on the 120th day prior to the first
anniversary of the preceding year's annual meeting; or in the event that the
date of the annual meeting is advanced or delayed by more than 30 days from such
anniversary date, not earlier than the close of business on the 120th day prior
to the date of mailing of the notice for such annual meeting and not later than
the close of business on the later of the 90th day prior to the date of mailing
of the notice for such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made by the Company.
The Nominating and Corporate Governance Committee will identify potential
nominees by asking current directors and executive officers to notify the
Committee if they become aware of suitable candidates. The Nominating and
Corporate Governance Committee also may, from time to time, engage firms that
specialize in identifying director candidates. As described above, the Committee
will also consider candidates recommended by stockholders.
The Nominating and Corporate Governance Committee believes that the
qualifications for serving as a director of the Company are possession, taking
into account such person's familiarity with the Company, of such knowledge,
experience, skills, expertise, integrity and diversity as would enhance
16
the board's ability to manage and direct the affairs and business of the
Company, including, when applicable, the ability of committees of the board to
fulfill their duties and/or to satisfy any independence requirements imposed by
law, regulation or NYSE listing requirement.
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS
The Company provides the opportunity for stockholders and interested
parties to communicate with the members of the Board. You can contact
Newcastle's Board of Directors to provide comments, to report concerns, or to
ask a question, at the following address.
Write to Newcastle's Board:
Newcastle Investment Corp.
c/o Ms. Lilly Donohue
Director, Investor Relations
1345 Avenue of the Americas, 46th Floor
New York, New York 10105
Stockholders can contact the non-management Directors (including the
director that presides over the executive sessions of non-management directors,
or the non-management directors as a group, or the Audit Committee as a group),
at the address above or at the following email address:
NonManagementDirectors@newcastleinv.com.
All communications received as set forth in the preceding paragraph will be
opened by the Corporate Communications and Legal and Compliance Departments of
the Manager, for the sole purpose of determining whether the contents represent
a message to the directors. Any contents that are not in the nature of
advertising, promotions of a product or service, or patently offensive material
will be forwarded promptly to the addressee. In the case of communications to
the Board of Directors or any group or committee of directors, sufficient copies
of the contents will be made for each director who is a member of the group or
committee to which the envelope or e-mail is addressed. Concerns relating to
accounting, internal controls or auditing matters are brought to the attention
of the Chairman of the Audit Committee and handled in accordance with procedures
established by the Audit Committee with respect to such matters.
AUDIT COMMITTEE REPORT
The report of our Audit Committee is provided below.
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.
We operate under a written charter approved by the Board, consistent with
the corporate governance rules issued by the SEC and the NYSE. Our charter is
available on the Company's website at http://www.newcastleinv.com.
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
17
for the financial statements and the reporting process including the systems of
internal controls. The independent registered public accounting firm is
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 and the
independent registered public accounting firm the Company's internal controls
over financial reporting, including a review of management's and the independent
registered public accounting firm's assessments of and reports on the
effectiveness of internal controls over financial reporting and any significant
deficiencies or material weaknesses.
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 registered public
accounting firm the matters required to be discussed by Statement of Auditing
Standards 61, as modified or supplemented, other standards of the Public Company
Accounting Oversight Board (United States), rules of the Securities and Exchange
Commission, and other applicable regulations, 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 registered public accounting firm required by Independent
Standards Board Standard No. 1, as modified or supplemented, and has discussed
with the independent registered public accounting firm 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, 2005, 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 registered public
accounting firm for fiscal year 2006.
THE AUDIT COMMITTEE
Kevin J. Finnerty
Stuart A. McFarland
David K. McKown
Peter M. Miller
EXECUTIVE SESSIONS OF NON-MANAGEMENT DIRECTORS
Executive sessions of the non-management directors will occur during the
course of the year. "Non-management directors" include all directors who are not
officers of the Company or employees of the Company's manager. The
non-management director presiding at those sessions will rotate from meeting to
meeting among the chair of each of the Nominating and Corporate Governance
Committee, the Audit Committee and the Compensation Committee, to the extent the
director is present at the executive session.
EXECUTIVE OFFICERS
The following table shows the names and ages of our present executive
officers and certain other corporate 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.
18
NAME AGE POSITION
---- --- -------------------------------------------
Wesley R. Edens..... 44 Chief Executive Officer and Chairman of the
Board of Directors
Kenneth M. Riis..... 46 President
Debra A. Hess....... 42 Chief Financial Officer and Treasurer
Jonathan Ashley..... 40 Vice President and Chief Operating Officer
Randal A. Nardone... 50 Vice President and Secretary
WESLEY R. EDENS For information regarding Mr. Edens, see the "Information
Concerning Our Directors, Including the Director Nominees" section of this proxy
statement.
KENNETH M. RIIS has been our President since our inception and a Managing
Director of our manager, Fortress Investment Group LLC, since December 2001. Mr.
Riis is also the President of Newcastle Investment Holdings LLC (formerly
Newcastle Investment Holdings Corp.). 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.
DEBRA A. HESS has been our Chief Financial Officer since April 2003 and is
a Managing Director of our manager. Prior to joining the Company, Ms. Hess
worked in the Fixed Income Department of 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.
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 is also a Vice President and the Chief Operating Officer of Newcastle
Investment Holdings LLC (formerly Newcastle Investment Holdings Corp.). 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.
RANDAL A. NARDONE has been our Secretary since our inception. Mr. Nardone
is also a Vice President and the Secretary of Newcastle Investment Holdings LLC
(formerly Newcastle Investment Holdings Corp.). 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.
19
EXECUTIVE COMPENSATION
We are party to a management agreement with Fortress Investment Group,
pursuant to which Fortress Investment Group, our manager, 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 manager's management of us
is under the direction of our board of directors. Our manager is responsible for
(i) the purchase and sale of real estate securities, real estate-related loans
and other real estate-related assets, (ii) the financing of such investments,
(iii) management of our real estate, including arranging for purchases, sales,
leases, maintenance and insurance, (iv) the purchase, sale and servicing of
loans for us, and (v) investment advisory services. Our manager is responsible
for our day-to-day operations and performs (or causes to be performed) such
services and activities relating to our assets and operations as may be
appropriate.
We pay our manager an annual management fee equal to 1.5% of our gross
equity, as defined in the management agreement.
To provide an incentive for our manager to enhance the value of our common
stock, our manager is entitled to receive an annual incentive return (the
"Incentive Compensation") on a cumulative, but not compounding, basis in an
amount equal to the product of (A) 25% of the dollar amount by which (1) (a) our
funds from operations, as defined (before the Incentive Compensation) per share
of common stock (based on the weighted average number of shares of common stock
outstanding) plus (b) gains (or losses) from debt restructuring and from sales
of property per share of common stock (based on the weighted average number of
shares of common stock outstanding), exceed (2) an amount equal to (a) the
weighted average of the book value per share of common stock of the net assets
transferred to us on or prior to July 12, 2002, by Newcastle Investment Holdings
Corp., and the price per share of common stock in any of our subsequent
offerings (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 during such
period.
The management agreement provides for automatic one-year extensions. Our
independent directors review our manager's performance annually and the
management agreement may be terminated annually upon the affirmative vote of at
least two-thirds of our independent directors, or by a vote of the holders of a
majority of the outstanding shares of our common stock, based upon
unsatisfactory performance that is materially detrimental to us or a
determination by our independent directors that the management fee earned by our
manager is not fair, subject to our manager's right to prevent such a
termination by accepting a mutually acceptable reduction of fees. Our manager
would be provided with 60 days' prior notice of any such termination and paid a
termination fee equal to the amount of the management fee earned by our manager
during the twelve-month period preceding such termination which may make it more
difficult for us to terminate the management agreement. Following any
termination of the management agreement, we have the option to purchase our
manager's right to receive the Incentive Compensation at a cash price equal to
the amount of the Incentive Compensation that would be paid to the manager if
our assets were sold for cash at their then current fair market value (as
determined by an appraisal, taking into account, among other things, the
expected future value of the underlying investments) or otherwise we may
continue to pay the Incentive Compensation to our manager. In addition, were we
to not purchase our manager's Incentive Compensation, our manager may require us
to purchase the same at the price discussed above. In addition, the management
agreement may be terminated by us at any time for cause.
20
The principals of our manager are Messrs. Wesley R. Edens, Peter L. Briger,
Jr., Robert I. Kauffman, Randal A. Nardone and Michael E. Novogratz.
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 directly from us. However, in
their capacities as officers or employees of our manager, or its affiliates,
they 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, and no equity interests in us were granted to
our officers or assigned by our manager to our officers during 2005. The Company
may, from time to time, at the discretion of the Compensation Committee of the
Board of Directors, grant options to purchase shares of the Company's Common
Stock to the Company's officers pursuant to the Stock Incentive Plan.
Below is a summary of the fees and other amounts earned by our manager in
connection with services performed for us. A portion of the fees and other
amounts for the year 2002 were paid by Newcastle Investment Holdings Corp. for
the period from January 1, 2002 until our formation in June 2002.
2005 2004 2003 2002
--------------- --------------- --------------- ---------------
Management Fee (1) $ 12.8 million $ 10.1 million $ 6.0 million $ 4.3 million
Expense Reimbursements (2) $ 0.5 million $ 0.5 million $ 0.5 million $ 0.5 million
Incentive Compensation (3) $ 7.6 million $ 8.0 million $ 6.2 million $ 3.5 million
Stock Options (4) 330,000 shares 837,500 shares 788,227 shares 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) The management agreement provides that we will reimburse our manager
for various expenses incurred by our manager or its officers, employees and
agents on our behalf, including costs of legal, accounting, tax, auditing,
administrative and other similar services rendered for us by providers retained
by our manager or, if provided by our manager's employees, in amounts which are
no greater than those which would be payable to outside professionals or
consultants engaged to perform such services pursuant to agreements negotiated
on an arm's-length basis; certain of such services are provided by our manager.
The management agreement provides that such costs shall not be reimbursed in
excess of $500,000 per annum. We also pay all of our 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
21
associated with any computer software or hardware that is used solely for us,
costs to obtain liability insurance to indemnify our directors and officers, the
compensation and expenses of our transfer agent and fees payable to the New York
Stock Exchange.
(3) Our manager is entitled to receive the 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. 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) This reflects the number of options granted to our manager or an
affiliate of our manager pursuant to our Stock Incentive Plan during each of our
last four fiscal years. In 2005, no options were granted or assigned to any our
officers by our manager.
In 2005, a single grant of 330,000 options, with an exercise price of
$29.60, was granted to an affiliate of our manager pursuant to our Stock
Incentive Plan. Our manager has the right to assign or grant these options to
our executive officers, its employees or its affiliates. Our manager did not
grant or assign any equity interests in us during 2005. Since we have no
employees, the options assigned to our manager are not calculable as a
percentage of options granted to employees. The beneficial owners of our manager
and the affiliate to whom this option was granted include, among other persons,
Messrs. Edens and Nardone, executive officers of the Company.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information regarding outstanding options to
purchase our common stock held by the named executive officers at the end of
2005, including the number of securities with respect to which the options were
exercised during 2005 and the aggregate dollar value realized upon exercise.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES AT FISCAL YEAR-END FISCAL YEAR-END ($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Wesley R. Edens(3) 670,620 $9,956,000 949,520 243,919 497,800 N/A
Randal A. Nardone(3) 670,620 $9,956,000 949,520 243,919 497,800 N/A
Kenneth M. Riis 0 0 267,866 43,866 1,479,000 35,000
Debra A. Hess 5,000 $ 42,500 21,920 7,502 35,300 6,000
Jonathan Ashley 15,400 $ 262,000 61,840 15,004 151,600 12,000
(1) The value realized is calculated by multiplying (i) the number of
shares being exercised by (ii) the difference between (x) the closing price of
the stock on the date of exercise and (y) the exercise price.
22
(2) Based on $24.85, which was the closing price of our common stock on the
New York Stock Exchange on December 30, 2005.
(3) Represents options held as of December 31, 2005 by and options
exercised during 2005 by Fortress Investment Holdings LLC ("FIH"). Mr. Edens and
Mr. Nardone, as beneficial owners of each of FIH, may be considered to have,
together with the other beneficial owners of FIH, shared voting and investment
power with respect to the shares issuable upon the exercise of options held by
FIH. Each of Mr. Edens and Mr. Nardone disclaims beneficial ownership of the
options held by and of the shares received upon the exercise of options held by
FIH except, in each case, to the extent of his pecuniary interest therein.
NEWCASTLE INVESTMENT CORP. NONQUALIFIED STOCK OPTION AND INCENTIVE AWARD PLAN
We have adopted the Newcastle Investment Corp. Nonqualified Stock Option
and Incentive Award Plan, referred to herein as the Incentive Stock Plan, to
provide incentives to attract and retain the highest qualified directors,
officers, employees, advisors, consultants and other personnel. The Incentive
Stock Plan is administered by our Compensation Committee. The maximum number of
shares of our common stock reserved and available for issuance for our first
fiscal year was 5,000,000 shares. For each year thereafter, the maximum number
of shares available for issuance under the incentive plan is that number of
shares equal to 15% of the number of our outstanding equity interests, but in no
event more than 10,000,000 shares in the aggregate over the term of the plan. No
stock option may be granted to our manager (or its designee) in connection with
any issuance by us of equity securities in excess of ten percent (10%) of the
number of equity securities then being issued.
The Incentive Stock Plan permits the granting of options to purchase common
stock that do not qualify as incentive stock options under section 422 of the
Internal Revenue Code. The exercise price of each option will be determined by
the committee and may be less than 100% of the fair market value of our common
stock subject to such option on the date of grant.
The terms of each option will be fixed by the committee. The committee will
determine at what time or times each option may be exercised and, subject to the
provisions of the incentive plan, the period of time, if any, after retirement,
death, disability or termination of employment during which options may be
exercised. Options become vested and exercisable in installments, and the
exercisability of options may be accelerated by the committee. Upon exercise of
options, the option exercise price must be paid in full either in cash or by
certified or bank check or other instrument acceptable to the committee or, if
the committee so permits, by delivery of shares of common stock already owned by
the optionee or, to the extent permitted by applicable law, by delivery of a
promissory note. The exercise price may also be delivered to us by a broker
pursuant to irrevocable instructions to the broker from the optionee.
At the discretion of the committee, stock options granted under the
incentive plan may include a "re-load" feature pursuant to which an optionee
exercising an option by the delivery of shares of common stock would
automatically be granted an additional stock option (with an exercise price
equal to the fair market value of the common stock on the date the additional
stock option is granted) to purchase that number of shares of common stock equal
to the number delivered to exercise the original stock option. The purpose of
this feature is to enable participants to exercise options using previously
owned shares of common stock while continuing to maintain their previous level
of equity ownership in us.
The committee may also grant stock appreciation rights, restricted stock,
performance awards, tandem awards and other stock and non-stock-based awards
under the incentive plan. These awards will be subject to such conditions and
restrictions as the committee may determine, which may include the achievement
of certain performance goals or continued employment with us through a specific
period.
23
As of December 31, 2005, our manager, through affiliates, had been granted
options to purchase 2,655,727 shares which were issued in connection with our
equity offerings from 2002 through December 2005. In each case, these options
covered a number of shares equal to 10% of the shares offered in the applicable
offering and 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 the grant.
Portions of these options have been and may be assigned from time to time to
employees of our manager who are our officers; in addition, we may grant tandem
options to our officers which correspond on a one to one basis with the options
granted to our manager, such that exercise by an officer of the option would
result in the corresponding option held by our manager being cancelled.
These manager options, which were granted to an affiliate of our manager in
connection with the manager's efforts related to our offerings, 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. We have no ownership
interest in our manager. Fortress Investment Holdings LLC is the sole member of
our manager. The beneficial owners of Fortress Investment Holdings LLC are
Messrs. Wesley R. Edens, Peter L. Briger, Jr., Robert I. Kauffman, Randal A.
Nardone and Michael E. Novogratz. Mr. Edens and Mr. Nardone are executive
officers of the Company.
The Incentive Stock Plan provides for automatic annual awards of shares of
our common stock valued at $15,000, based on the closing price of our shares on
the NYSE on the date of grant, to our non-officer or non-employee directors. In
addition, each new independent member of the Board is granted an initial
one-time grant of an option for 2,000 shares with an exercise price equal to
fair market value on the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
Compensation decisions during the year ended December 31, 2005, pertaining
to the compensation of David Grain, President of Global Signal Inc., an
affiliate, and a member of our board of directors until August 1, 2005, were
made by our Chairman and Chief Executive Officer, Wesley R. Edens, who served
during 2005 as Chairman and Chief Executive Officer of Global Signal Inc.
24
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on shares of our Common Stock with the comparable cumulative total return
of the S&P 500 Stock Index*, the Russell 2000 Stock Index, the NAREIT All REIT
Index and the NAREIT Mortgage 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, 2005, 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.
(PERFORMANCE GRAPH)
PERIOD ENDING
-------------------------------------------------------------------------------------
INDEX 10/10/02 12/31/02 06/30/03 12/31/03 06/30/04 12/31/04 06/30/05 12/31/05
- ----- -------- -------- -------- -------- -------- -------- -------- --------
Newcastle Investment Corp. 100.00 130.92 164.82 243.45 273.97 308.38 304.94 263.34
S&P 500 100.00 109.92 122.95 141.49 146.55 157.00 155.71 164.68
Russell 2000 100.00 114.35 134.80 168.39 179.78 199.26 196.76 208.33
NAREIT All REIT Index 100.00 109.15 125.55 151.14 158.95 197.10 206.77 213.44
NAREIT Mortgage REIT Index 100.00 121.30 157.05 190.91 193.10 226.09 209.31 173.67
* Source: Standard & Poor's.
** 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.
25
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 as of
April 11, 2006, 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.
NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF PERCENT OF
OWNER (1) BENEFICIALLY OWNERSHIP CLASS (2)
------------------------------ ---------------------- ----------
Cohen & Steers (3)................... 5,508,176 12.5%
Morgan Stanley (4)................... 4,252,140 9.7%
Fidelity Management & Research (5)... 2,324,271 5.3%
Wesley R. Edens (6)(9)............... 2,312,620 5.2%
Kevin J. Finnerty (7)................ 202,000 *
Stuart A. McFarland (7).............. 5,424 *
David K. McKown (7).................. 5,424 *
Peter M. Miller (7).................. 17,632 *
Jonathan Ashley (7).................. 123,320 *
Debra A. Hess (7).................... 37,304 *
Randal A. Nardone (8)(9)............. 2,260,255 5.0%
Kenneth M. Riis (7).................. 354,275 *
All directors, nominees and executive
officers as a group (9 persons)... 3,363,999 7.4%
- ----------
* Denotes less than 1%.
(1) The address of all officers and directors listed above are in the care of
Fortress Investment Group LLC, 1345 Avenue of the Americas, 46th Floor, New
York, New York 10105.
(2) Percentage amount assumes the exercise by such persons of all options to
acquire shares of our Common Stock that are exerciseable within 60 days of
April 11, 2006 and no exercise by any other person.
(3) The address for Cohen & Steers Capital Management is 775 Third Avenue, New
York, New York 10017. The beneficial owners are Cohen & Steers REIT and
Preferred Income Fund, Cohen & Steers Equity Income Fund and Cohen & Steers
Total Return Realty Fund.
26
(4) The address for Morgan Stanley is 1585 Broadway, New York, New York 10036.
(5) The address for Fidelity Management & Research is One Federal Street,
Boston, MA 02110. The beneficial owners are Fidelity Real Estate Investment
Fund, Fidelity Real Estate Investors Fund, Fidelity Real Estate High Income
Fund, Fidelity Advisor Real Estate Fund, VIP Real Estate Investment Fund
and Fidelity Spartan Total Market Index Fund.
(6) Includes 358,365 shares held by Mr. Edens, 1,025,729 shares held by
Fortress Principal Investment Holdings II LLC ("FPIH II") and 928,526
shares issuable upon the exercise of options held by Fortress Investment
Holdings LLC ("FIH"). Mr. Edens disclaims beneficial ownership of the
shares held by FPIH II and of the shares issuable upon the exercise of
options held by FIH except, in each case, to the extent of his pecuniary
interest therein. Does not include 100,000 shares held by a charitable
trust of which Mr. Edens's spouse is sole trustee and Mr. Edens disclaims
beneficial ownership of the shares held by this charitable trust; does
include 100,000 shares held by a charitable trust of which Mr. Edens is a
trustee in respect of which, however, Mr. Edens disclaims beneficial
ownership. Mr. Edens also disclaims beneficial ownership of the shares held
by FPIH II and of the shares issuable upon the exercise of options held by
FIH except, in each case, to the extent of his pecuniary interest therein.
(7) Includes with respect to each of these individuals the following number of
shares issuable upon the exercise of options that are currently exercisable
and exercisable within 60 days of the date hereof: Ashley - 72,609;
Finnerty - 2,000; Hess - 22,304; Riis - 299,275; Grain - 500; McFarland -
4,000; McKown - 4,000; Miller - 4,000.
(8) Includes 306,000 shares held by Mr. Nardone, 1,025,729 shares held by FPIH
II and 928,526 shares issuable upon the exercise of options held by FIH.
Mr. Nardone disclaims beneficial ownership of the shares held by FPIH II
and of the shares issuable upon the exercise of options held by FIH except,
in each case, to the extent of his pecuniary interest therein.
(9) Mr. Edens and Mr. Nardone, as beneficial owners of each of FIH and FPIH II,
may be considered to have, together with the other beneficial owners of FIH
and FPIH II, shared voting and investment power with respect to the shares
held by FPIH II and the shares issuable upon the exercise of options held
by FIH.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 2005, all of our directors,
executive officers and greater-than-ten-percent owners were in compliance with
the Section 16(a) filing requirements, except for a report on Form 4 of one of
our directors, relating to the reinvestment of dividends in the Company's stock,
was filed late.
27
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 2003, we and a private investment fund managed by an affiliate
of our manager co-invested and each indirectly own an approximately 38% interest
in a limited liability company that acquired a pool of franchise loans from a
third party financial institution. Our investment in this entity, reflected as
an investment in an unconsolidated subsidiary on our consolidated balance sheet,
was approximately $17.8 million at December 31, 2005. The remaining
approximately 24% interest in the limited liability company is owned by the
above referenced third party financial institution.
As of December 31, 2005, we owned an aggregate of approximately $48.5
million of securities of Global Signal Trust I and II, special purpose vehicles
established by Global Signal Inc., which were purchased in private placements
from underwriters in January 2004 and April 2005. One of our directors is the
CEO, chairman of the board, and President of Global Signal, Inc. and private
equity funds managed by an affiliate of our manager own a significant portion of
Global Signal Inc.'s common stock. In February 2006, we purchased from an
underwriter $91.0 million face amount of BBB- and BB+ rated securities of Global
Signal Trust III, a special purpose vehicle established by Global Signal, Inc.
Pursuant to an underwritten 144A offering, approximately $1,550.0 million of
Global Signal Trust III securities were issued in 8 classes, rated AAA through
BB+, of which the BBB- and BB+ classes aggregated $188.3 million. The balance of
the BBB- and BB+ securities were sold on identical terms to third parties. A
portion of the proceeds were used to repay Global Signal, Inc. debt, including
$31.5 million of the Global Signal Trust I securities we owned, and to fund the
prepayment penalty associated with this debt.
In March 2004, we and a private investment fund managed by an affiliate of
our manager co-invested and each indirectly own an approximately 49% interest in
two limited liability companies that have acquired, in a sale-leaseback
transaction, a portfolio of convenience and retail gas stores from a public
company. The properties are subject to a number of master leases, the initial
term of which in each case is a minimum of 15 years. This investment was
financed with nonrecourse debt at the limited liability company level and our
investment in this entity, reflected as an investment in an unconsolidated
subsidiary on our consolidated balance sheet, was approximately $12.2 million at
December 31, 2005. In March 2005, the property management agreement related to
these properties was transferred to an affiliate of our manager from a third
party servicer; our allocable portion of the related fees, approximately $20,000
per year for three years, was not changed.
In December 2004, we and a private investment fund managed by an affiliate
of our manager each made an initial investment in a new real estate related loan
with a maximum loan amount of $128 million, subject to being drawn down under
certain conditions. The loan is secured by a mezzanine loan on one of the phases
and a first mortgage on the remaining phases of a large development project and
related assets. We own a 27.3% interest in the loan and the private investment
fund owns a 72.7% interest in the loan. Major decisions require the unanimous
approval of holders of interests in the loan, while other decisions require the
approval of a majority of holders of interests in the loan, based on their
percentage interests therein. We and our affiliated investment fund are each
entitled to transfer all or any portion of our respective interests in the loan
to third parties. Our investment in this loan was approximately $22.4 million at
December 31, 2005.
In January 2005, we entered into a servicing agreement with a portfolio
company of a private equity fund advised by an affiliate of our manager for them
to service a portfolio of manufactured housing loans, which was acquired at the
same time. As compensation under the servicing agreement, the portfolio company
will receive, on a monthly basis, a net servicing fee equal to 1.00% per annum
on the unpaid principal balance of the loans being serviced. The outstanding
unpaid principal balance of this portfolio
28
was approximately $284.9 million at December 31, 2005. In January 2006, we
closed on a new term financing of this portfolio. In connection with this term
financing, we renewed our servicing agreement at the same terms.
In each instance described above, affiliates of our manager have an
investment in the applicable affiliated fund and receive from the fund, in
addition to management fees, incentive compensation if the fund's aggregate
investment returns exceed certain thresholds.
We are party to a management agreement with Fortress Investment Group,
dated as of June 6, 2002, as amended on March 4, 2003, pursuant to which
Fortress Investment Group, our manager, 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 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, who was a member of our board of directors until August 1, 2005,
served as President of Global Signal Inc., whose equity is partially owned by
Fortress Investment Fund, an affiliate of ours managed by our manager and Mr.
Edens, our Chairman and Chief Executive Officer serves as Chairman and Chief
Executive Officer of Global Signal Inc.
As of the date hereof, Fortress Investment Holdings LLC, an affiliate of
our manager, has options to purchase 1,193,349 shares of our Common Stock.
Fortress Principal Investment Holdings II LLC owns 1,025,729 shares of our
common stock. The beneficial owners of each of Fortress Investment Holdings LLC
and Fortress Principal Investment Holdings II LLC are Messrs. Wesley R. Edens,
Peter L. Briger, Jr., Robert I. Kauffman, Randal A. Nardone and Michael E.
Novogratz. Mr. Edens is our Chairman and Chief Executive Officer and Mr. Nardone
is our Vice President and Secretary.
Fortress Investment Holdings LLC is the sole member of Fortress Investment
Group LLC, our manager. The beneficial owners of Fortress Investment Holdings
LLC are Messrs. Wesley R. Edens, Peter L. Briger, Jr., Robert I. Kauffman,
Randal A. Nardone and Michael E. Novogratz.
29
PROPOSAL NO. 2
APPROVAL OF APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PROPOSED INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, independent registered public accountants, has served as
the independent registered public accounting firm for us and our subsidiaries
for the fiscal year ended December 31, 2005. The Audit Committee of the board of
directors has appointed Ernst & Young LLP to be our independent registered
public accounting firm for the fiscal year ending December 31, 2006 and has
further directed that the selection of the independent registered public
accounting firm 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 registered public accounting
firm for the Company for fiscal year 2006.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
During the years ended 2005 and 2004, 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
2005 and 2004 were as follows:
YEAR AUDIT FEES AUDIT-RELATED FEES TAX-RELATED FEES
- ---- ---------- ------------------ ----------------
2005 $ 955,600 $131,500 $ 82,500
2004 $1,213,700 $180,750 $132,100
Audit Fees. Audit fees are fees billed for the consolidated financial
statements as well as required audits of certain subsidiaries, consultation on
audit related matters and required review of SEC filings.
Audit-Related Fees. Audit-related fees principally included attest services
not required by statute or regulation.
Tax Fees. Tax fees for the years ended December 31, 2005 and 2004 related
to tax planning and compliance and return preparation.
All Other Fees. None.
The Audit Committee has considered all services provided by the independent
registered public accounting firm to us and concluded this involvement is
compatible with maintaining the auditors' independence.
30
The Audit Committee is responsible for appointing the Company's independent
registered public accounting firm and approving the terms of the independent
registered public accounting firm's services. All engagements for services in
2005 were pre-approved by the Audit Committee. The Audit Committee has a policy
for the pre-approval of all audit and permissible non-audit services to be
provided by the independent registered public accounting firm.
This policy is subject to certain guidelines and pre-approved services
that, in the judgment of management and the auditor, would not violate the
auditor's independence. At the end of each quarter, or at any time cumulative
fees not previously reported to the Audit Committee aggregate $125,000,
management reports the services performed to the Audit Committee to review and
approve.
31
ADVANCE NOTICE FOR STOCKHOLDER NOMINATIONS AND PROPOSALS
FOR 2007 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 2007 annual meeting of stockholders if they are received by the Company
on or before December 20, 2006. Any proposal should be directed to the attention
of the Company's Secretary at 1345 Avenue of the Americas, 46th Floor, New York,
New York 10105.
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 2007 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
December 20, 2006 and before the close of business on January 19, 2007. However,
in the event that the date of mailing of the notice of the 2007 annual meeting
of stockholders is advanced or delayed by more than 30 days from April 18, 2007,
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 may 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 come 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 SEC at 100 F Street, N.E., Washington, D.C. 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. and 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., 1345 Avenue of the Americas, 46th Floor, New York, New York
10105, Attention: Investor Relations and can also be accessed through our
website at www.newcastleinv.com.
32
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. 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., 1345 Avenue of the Americas, 46th Floor,
New York, New York 10105, Attention: Investor Relations.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT
TO VOTE ON THE ELECTION OF ONE DIRECTOR AND THE APPROVAL OF ERNST & YOUNG LLP AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2006. 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
18, 2006. 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 18, 2006
33
ANNUAL MEETING OF STOCKHOLDERS OF
NEWCASTLE INVESTMENT CORP.
MAY 18, 2006
PROOF # 2
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Proposal to elect one Class II director to serve until the 2007 annual
meeting of stockholders and two Class I directors to serve until the 2009
annual meeting of stockholders or until their respective successors are
elected and duly qualified.
NOMINEES:
[ ] FOR THE NOMINEES O Kevin J. Finnerty
O Stuart A. McFarland
[ ] WITHHOLD AUTHORITY O Peter M. Miller
FOR THE NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: O
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
[ ]
FOR AGAINST ABSTAIN
2. Proposal to approve the appointment of Ernst & Young LLP as [ ] [ ] [ ]
the Company's independent auditors for the fiscal year 2006.
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 Kevin J. Finnerty as a Class II director and Stuart A.
McFarland and Peter M. Miller as Class I directors to serve until the 2009
annual meeting of stockholders or until their respective successors are elected
and duly qualified, FOR the approval of the appointment of Ernst & Young LLP as
the Company's independent auditors for the fiscal year 2006; and in the
discretion of the proxy holder on any other business that properly comes before
the Annual Meeting or any adjournment or postponement thereof. The undersigned
hereby revokes any proxy heretofore given with respect to such meeting.
Signature of Stockholder ________ Date: _____
Signature of Stockholder ________ Date: _____
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
PROOF # 1
NEWCASTLE INVESTMENT CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD May 18, 2006, 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 18, 2006 (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:
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
14475
ANNUAL MEETING OF STOCKHOLDERS OF
NEWCASTLE INVESTMENT CORP.
MAY 18, 2006
PROOF # 2 PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card in the envelope provided as soon as
possible.
- OR -
TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) from any touch-tone
telephone and follow the instructions. Have your proxy card available when you
call.
- OR -
INTERNET - Access "WWW.VOTEPROXY.COM" and follow the on-screen instructions.
Have your proxy card available when you access the web page.
COMPANY NUMBER
ACCOUNT NUMBER
You may enter your voting instructions at 1-800-PROXIES or www.voteproxy.com up
until 11:59 PM Eastern Time the day before the cut-off or meeting date.
Please detach along perforated line and mail in the envelope provided IF you are
not voting via telephone or the Internet.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Proposal to elect one Class II director to serve until the 2007 annual
meeting of stockholders and two Class I directors to serve until the 2009
annual meeting of stockholders or until their respective successors are
elected and duly qualified.
NOMINEES:
[ ] FOR ALL NOMINEES O Kevin J. Finnerty
O Stuart A. McFarland
[ ] WITHHOLD AUTHORITY O Peter M. Miller
FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: O
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
[ ]
FOR AGAINST ABSTAIN
2. Proposal to approve the appointment of Ernst & Young LLP as [ ] [ ] [ ]
the Company's independent auditors for the fiscal year 2006.
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 Kevin J. Finnerty as a Class II director and Stuart A.
McFarland and Peter M. Miller as Class I directors to serve until the 2009
annual meeting of stockholders or until their respective successors are elected
and duly qualified, FOR the approval of the appointment of Ernst & Young LLP as
the Company's independent auditors for the fiscal year 2006; and in the
discretion of the proxy holder on any other business that properly comes before
the Annual Meeting or any adjournment or postponement thereof. The undersigned
hereby revokes any proxy heretofore given with respect to such meeting.
Signature of Stockholder ________ Date: _____
Signature of Stockholder ________ Date: _____
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.