Jeffrey B. Lown II
About Jeffrey B. Lown II
Jeffrey B. Lown II is President and Chief Executive Officer of Cherry Hill Mortgage Investment Corporation (CHMI) and a director; he has served as President and director since CHMI’s IPO in October 2013 and as CEO since March 2017. He is 61 and has over 25 years of mortgage and capital markets experience spanning Salomon Brothers/Citigroup, UBS, the Office of Thrift Supervision (OTS), New Oak Capital, Green Lake Investment Partners, Avenue Capital, and Freedom Mortgage/CHMM prior to CHMI’s November 14, 2024 internalization when he became a direct employee of CHMI . Pay-versus-performance data disclosed by CHMI shows total shareholder return indices of 84.75 (2022), 67.66 (2023), and 62.32 (2024), with GAAP net income of $22.189 million (2022), $(35.455) million (2023), and $12.210 million (2024) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Salomon Brothers (now Citigroup) | Mortgage Trading; Mortgage Finance Group (investment banking and mortgage finance roles) | 1991–2002 | Developed credit, contract finance, and securitization skills supporting mortgage finance execution . |
| UBS Securities LLC | Mortgage Trading; Managed internal origination platform (Alt‑A), oversaw sales, capital markets, operations | 2002–2008 | Built and ran an origination platform; comprehensive oversight of production-to-capital-markets chain . |
| Office of Thrift Supervision (OTS) | Fellow; Advisor to Senior Deputy Director | 2008–2009 | Contributed to “Making Home Affordable” design; reviewed TARP Capital Purchase Program applications; supported troubled-institution examinations . |
| New Oak Capital LLC | Head of Residential Mortgage Loan Business; Bank Advisory Group member | 2009–2010 | Led RMBS loan initiatives and bank advisory engagements . |
| Green Lake Investment Partners, LLC | Co‑founder and Principal | Fall 2010 | Built investment platform; principal role in residential assets . |
| Avenue Capital Group | Portfolio Manager | 2011–2012 | Managed strategies in structured credit/mortgage sectors . |
| Freedom Mortgage / CHMM (external manager to CHMI) | EVP Strategic Funding & Capital Markets (to July 2016); full-time on CHMI thereafter via CHMM | 2012–Nov 14, 2024 | Led strategic funding; transitioned to full‑time management of CHMI before internalization . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| U.S. Treasury/OTS | Fellow; Policy adviser (Making Home Affordable, TARP) | 2008–2009 | Policy and supervisory impact on U.S. mortgage programs and thrift oversight . |
| Avenue Capital Group | Portfolio Manager | 2011–2012 | Institutional investing in mortgage/structured products . |
| Green Lake Investment Partners | Co‑founder/Principal | 2010 | Entrepreneurial leadership in mortgage investments . |
Fixed Compensation
Multi-year compensation (company-reported; CHMI became internally managed Nov 14, 2024):
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | — | — | $303,000 (Aurora $138,000; CHMI $165,000) |
| Stock Awards (ASC 718 grant-date fair value) | $105,000 | $115,746 | $45,864 |
| Total | $105,000 | $115,746 | $348,864 |
Current salary terms through December 31, 2025:
- CEO annual base salary: $1,235,000; NEO cash levels maintained in 2025 to ensure retention during internalization transition .
- Perquisites: none provided to NEOs .
Performance Compensation
Compensation design and 2024 outcomes:
| Component | Metric | Weighting | Target/Design | Actual | Payout Basis |
|---|---|---|---|---|---|
| Equity Pool Design (Dec 2023) | Strategic & Operational Goals | 30% | Goals set by Compensation Committee | Earned at 100% | Contributed to pool sizing |
| Equity Pool Design (Dec 2023) | Company‑specific Financial Metrics | 70% | Company performance metrics (absolute/relative) | Achieved at 70% (weighted avg) | Contributed to pool sizing |
| 2024 LTIP Unit Pool | Total Pool Size | — | 80% of 2023 pool | $436,668 based on Jan 16, 2024 close $3.92 | Pool authorized; allocation by CEO, approved by Committee |
Plan‑based awards (2024 grants):
| Name | Grant Date | Instrument | Units/Shares | Grant-Date Fair Value (USD) | Vesting Schedule |
|---|---|---|---|---|---|
| Jeffrey B. Lown II | 1/16/2024 | LTIP Units | 11,700 | $45,864 | Ratable over 3 years, beginning first anniversary, subject to continued employment . |
Outstanding and vesting:
| Metric | Value |
|---|---|
| Unvested LTIP Units (12/31/2024) | 28,599 units; market value $75,501 at $2.64/share . |
| 2025–2027 Scheduled Vest Dates | Jan 3, 2025; Jan 10, 2025; Jan 16, 2025; Jan 10, 2026; Jan 16, 2026; Jan 16, 2027 . |
| 2024 Vesting Realized | 10,533 units vested; $42,305 value at vest dates . |
Design notes:
- Historically, CHMI has used time‑based LTIP Units as the exclusive executive equity vehicle; the Committee may consider other instruments going forward based on consultant advice .
- Beginning in January 2026, NEOs will be eligible for equity and non‑equity incentive plans and discretionary annual cash bonuses; payments contingent on employment at payout date and plan terms .
Equity Ownership & Alignment
| Ownership Item | Detail |
|---|---|
| Beneficial ownership (CEO) | 124,242 common shares beneficially owned; includes 84,114 vested LTIP units economically equivalent to common shares; excludes 28,599 unvested LTIP units . |
| Shares outstanding denominator | 32,658,449 common shares outstanding (as of April 7, 2025) . |
| Ownership % of outstanding | ~0.38% computed (124,242 / 32,658,449); proxy denotes “<1%” . |
| Vested vs. unvested | Vested: 84,114 LTIP units; Unvested: 28,599 LTIP units . |
| Pledging/Hedging policy | CHMI prohibits hedging and pledging transactions by directors/officers . |
| Director compensation for Lown | No cash or equity compensation for service as director . |
Employment Terms
| Term | Provision |
|---|---|
| Employment status | At‑will; no individual employment agreement; became employee of CHMI upon internalization Nov 14, 2024 . |
| Base salary (2025) | $1,235,000 through Dec 31, 2025 . |
| Severance Plan (adopted Mar 2025) | Lump‑sum = severance multiple × (salary + target bonus) + 12 months COBRA premiums; CEO multiple 2.5×; others 1.5×; one‑year non‑compete from separation; payable within 60 days of separation for qualifying termination (without cause or for good reason) . |
| Change‑of‑Control (CoC) | No severance solely for CoC; all LTIP Units vest immediately upon CoC if service continues at time of event; estimated accelerated LTIP value at 12/31/2024 close ~$300k for Lown (total NEO acceleration ~$700k) . |
| Clawback | Exchange Act Rule 10D‑1 compliant clawback policy adopted in 2023; recovers erroneously awarded incentive compensation after restatements regardless of fault . |
| Excise/tax gross‑ups | None; company does not provide golden parachute excise/tax gross‑ups . |
| Perquisites | None provided to NEOs . |
Board Governance
- Board/role: Lown serves as CEO and director; CHMI’s board has strong independent leadership with a lead independent director (Murin), annual elections, and committees composed solely of independent directors; 80% of the board is independent .
- Committees:
- Audit: Mercer (Chair), Murin, Cook; eight meetings in 2024; both Mercer and Murin designated “financial experts” .
- Compensation: Cook (Chair), Murin, Hoffman; five meetings in 2024; engaged Ferguson Partners Consulting (FPC) for 2026 design .
- Nominating & Corporate Governance: Murin (Chair and Lead Independent Director), Mercer, Hoffman; four meetings in 2024 .
- Attendance: In 2024, all directors attended all board meetings; independent directors attended all committee meetings; nine executive sessions of independent directors without management .
- Dual‑role implications: CEO/director structure mitigated by lead independent director, fully independent committees, and regular executive sessions; Lown receives no director compensation, supporting separation of pay streams .
Director Compensation
| Item | Amount |
|---|---|
| Annual cash retainer (CEO as director) | $0 |
| Equity retainer (CEO as director) | $0 |
| Meeting/committee fees (CEO as director) | $0 |
Context (independent directors): Cash retainer $70,000; additional chair/member retainers vary (e.g., Audit Chair $10,000; Comp Chair $5,000; Lead Independent $10,000); 18,568 restricted shares granted June 14, 2024 (become non‑forfeitable June 14, 2025) .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay approval was ~65% of votes cast (excl. abstentions/broker non‑votes), up from ~61% prior year; CHMI initiated targeted investor outreach and engaged FPC to advise on 2026 compensation program design .
Investment Implications
- Near‑term pay mix is heavily fixed cash ($1.235 million CEO base in 2025) with time‑based LTIP Units; performance plans and discretionary bonuses do not start until 2026, limiting current pay‑for‑performance alignment but aiding retention during internalization .
- Severance economics are significant (2.5× salary+target bonus, plus 12 months health/dental premiums) and include a one‑year non‑compete; LTIP awards accelerate on CoC, which could incentivize continuity through a transaction but also create event‑driven vesting value; absence of gross‑ups and presence of a clawback and anti‑hedging/pledging policies mitigate governance risk .
- Equity ownership is modest (<1% of outstanding; ~0.38% computed), with meaningful vested LTIP exposure and scheduled vesting through 2027; lack of pledging and prohibition of hedging support alignment, but modest stake may limit downside sensitivity; director compensation separation reduces potential conflicts from dual roles .
- Historical TSR and net income volatility underscore execution risk in CHMI’s mortgage/servicing strategy; the Compensation Committee’s move to formalize performance metrics and peer benchmarking for 2026 is a positive signal for future alignment .