D.C. Sauter

About D.C. Sauter

D.C. (Dennis Charles) Sauter, Jr. is General Counsel of NexPoint Residential Trust (NXRT) since February 2020 and Corporate Secretary since January 2025; he also serves as General Counsel/Secretary across affiliated NexPoint REITs and the Sponsor. He holds a BA from the University of Texas at Austin and a JD from SMU Dedman School of Law; licensed in Texas since 2001; age 50 as of March 28, 2025 . NXRT’s pay-versus-performance disclosure shows no formal linkage between executive “compensation actually paid” and company performance; 2024 TSR indexed value was 107, with net income of $1.1 million for 2024 .

• Current roles: General Counsel (Feb 2020–present), Corporate Secretary (Jan 2025–present) .
• Education: BA (UT Austin); JD (SMU Dedman); Texas Bar since 2001 .
• NXRT performance context (pay-versus-performance table): 2024 net income $1,114k; TSR index to $100: 2020=94; 2021=191; 2022=102; 2023=84; 2024=107 .
• Compensation governance: NXRT’s externally managed model pays no cash salary/bonus directly to NEOs; equity grants are generally time-based RSUs; the committee does not use financial performance measures to link pay and performance .

Past Roles

External Roles

Fixed Compensation

• NXRT pays no cash salary or bonus directly to named executive officers; compensation is paid by the external Adviser and affiliates. NXRT does not disclose individual base/bonus amounts for NEOs and has no executive cash compensation agreements .

Performance Compensation

Time-based RSUs are the primary instrument; grants vest in equal tranches over multi-year schedules and are not tied to revenue/FFO/AFFO targets or TSR percentile. The compensation committee typically grants annually after filing the 10‑K, avoiding periods with material nonpublic information .

Performance metric linkage and weighting: Not used (awards are service/time-based RSUs; committee does not link compensation to performance metrics) .

Equity Ownership & Alignment

Vesting schedule detail (unvested tranches as of 12/31/2024):

• 2021 grant: 2,872 RSUs; vest 1/2 on 2/18/2025 and 1/2 on 2/18/2026 .
• 2022 grant: 2,984 RSUs; vest 1/3 on 2/17/2025, 2/17/2026, 2/17/2027 .
• 2023 grant: 8,290 RSUs; vest 1/4 on 3/28/2025, 2026, 2027, 2028 .
• 2024 grant: 12,389 RSUs; vest 1/5 on 3/13 annually from 2025–2029 .

Employment Terms

• No cash severance or pension/SERP; no deferred comp; no perquisites disclosed .
• Equity acceleration on termination:
  • Death, disability, retirement, or change-in-control (CIC) without assumption into a replacement award: all outstanding RSUs vest; estimated value for Sauter at 12/31/2024: $1,143,491 (at $41.75) .
  • CIC with replacement award, followed by involuntary termination without cause or for good reason within two years: full vesting .
  • Termination without cause (non-CIC) for awards granted in/after 2022: RSUs scheduled to vest in the 12 months following termination will vest; estimated value $351,452 at 12/31/2024 .
  • Termination for good reason (non-CIC): estimated value $119,906 at 12/31/2024 .
• Definitions: Good reason includes material diminution of duties, pay reduction, or relocation >50 miles; Cause includes felony, gross negligence/misconduct, material breach .
• LTIP governance includes minimum 1-year vesting, double-trigger CIC vesting, clawbacks (Section 10D), prohibition on repricing options/SARs, and no tax gross-ups .

Compensation Structure Analysis

• Mix shift: Sauter’s grant-date RSU values declined from $417k (2022) to $411k (2023) to $383k (2024), indicating lower equity grant intensity year-over-year .
• Instrument choice: NXRT does not grant options; awards are primarily time-based RSUs (lower risk than PSUs/options) .
• At-risk vs guaranteed pay: NXRT pays no cash salary/bonus; equity vests over multi-year schedules, with limited acceleration only in defined events; no guaranteed severance multiples .
• Performance metrics: No disclosed weighting or targets; committee states it does not link compensation to performance; pay-versus-performance table shows CAP adjustments not used for decisions .
• Clawback/recapture: Present in the 2025 LTIP, referencing Exchange Act Section 10D and detrimental activity provisions .

Equity Ownership & Alignment (detail)

Say-on-Pay & Shareholder Feedback

• 2024 Say-on-Pay approval: 83% of votes cast .
• Committee practice: does not benchmark executive equity award levels in externally managed REIT context .

Risk Indicators & Red Flags

• Hedging is prohibited; pledging is not uniformly prohibited, but no pledges disclosed for Sauter specifically .
• No tax gross-ups; double-trigger CIC vesting; clawback present; no cash severance arrangements—generally shareholder-friendly .
• Related-party fiber agreements involve another officer; none disclosed specific to Sauter .

Investment Implications

• Alignment: Sauter’s equity alignment comes through unvested RSUs (~$1.14M mark-to-market at 12/31/2024), with small direct beneficial ownership (<1%); absence of executive ownership guidelines reduces hard alignment targets .
• Selling pressure: Multi-year vesting cadence (Feb/Mar tranches each year 2025–2029) and RSUs vesting within 60 days post-record date suggest periodic incremental supply for tax-liquidity—monitor Form 4s around February/March vest dates .
• Retention: No cash severance; limited non-CIC acceleration (12 months scheduled vest for post‑2022 grants) and double-trigger CIC terms provide retention incentive while capping windfalls .
• Pay-for-performance risk: With time-based RSUs and no metric-weighted plans or options, incentive sensitivity to operating metrics (e.g., FFO/AFFO growth, TSR) is modest; committee explicitly does not link compensation to performance .
• Governance: Clawbacks and minimum vesting standards mitigate downside risk; say-on-pay passed with 83%, indicating acceptable investor sentiment despite the externally managed model .

Note: NXRT is externally managed; NEO cash compensation, target bonus and related plan details reside at the Adviser and are not disclosed by NXRT. Equity awards and governance terms above reflect NXRT’s disclosed plans and practices .

Appendix: Key RSU Vesting Schedules (as of 12/31/2024)