Scott Kavanaugh
About Scott Kavanaugh
Independent director of NexPoint Residential Trust, Inc. (NXRT) since March 2015; age 64. Core credentials span bank/financial services leadership (former CEO of First Foundation Inc.), investment management, trading, and public company governance; currently serves as NXRT’s Lead Independent Director and qualifies as an “audit committee financial expert.” Independence affirmed by the Board under NYSE rules. Tenure: on NXRT board since March 2015.
Past Roles
| Organization | Role | Tenure/Timing | Committees/Impact |
|---|---|---|---|
| First Foundation Inc. (FFI) | Chief Executive Officer; Vice Chair; previously President/COO | CEO Dec 2009–Nov 2024; President/COO Jun 2007–Dec 2009; Vice Chair Jun 2007–Nov 2024 | Led banking/wealth platform; concurrently Chair/CEO of First Foundation Bank 2007–Nov 2024 |
| Commercial Capital Bancorp/Mortgage | EVP & CAO; EVP & COO; Director | 1999–2003; 1998–2003 | Bank/mortgage operations leadership |
| Great Pacific Securities | Partner; Head of Trading (fixed income & equity) | 1993–1998 | Trading, capital markets expertise |
External Roles
| Organization | Role | Tenure/Timing | Notes |
|---|---|---|---|
| Colorado Federal Savings Bank & Silver Queen Financial Services, Inc. | Director | Since 2009 | Ongoing banking directorships |
| NexPoint Real Estate Finance, Inc. (NREF) | Director | Since Feb 2020 | NXRT affiliate |
| VineBrook Homes Trust, Inc. | Director | Since Dec 2018 | NXRT affiliate |
| NexPoint Homes Trust, Inc. (NXHT) | Director | Since Jun 2022 | NXRT affiliate |
| NexPoint Diversified Real Estate Trust (NXDT) | Trustee | Since Jul 2022 | NXRT affiliate |
Board Governance
- Roles: Lead Independent Director; Audit Committee member; Compensation Committee member; Chair, Nominating & Corporate Governance (NCG) Committee. Audit Committee “financial expert.” Independent under NYSE rules.
- Lead Independent Director responsibilities include approving agendas/materials/schedules, presiding over executive sessions, liaison to Chair, calling meetings of independents, and shareholder availability.
- Attendance: Board met 5 times in 2024; all directors met ≥75% attendance except Mr. Dondero (Kavanaugh met the ≥75% threshold).
- Committee activity: Audit (met 5x in 2024); Compensation (met 5x); NCG (met 5x).
Fixed Compensation (Non-Employee Director, 2024)
| Component | Amount (USD) | Notes |
|---|---|---|
| Annual Cash Retainer | $20,000 | Standard non-management director cash fee |
| Chair Fee (NCG Chair) | $7,500 | Additional cash for committee chair |
| Lead Independent Director Fee | $10,000 | Additional cash for lead role |
| Total Cash Fees (2024) | $37,500 | Matches Director Compensation Table |
Performance Compensation (Equity Awards as Director)
| Grant Type | Grant Date | Units | Grant-Date Fair Value (USD) | Vesting Terms |
|---|---|---|---|---|
| RSUs | Mar 13, 2024 | 4,117 | $127,174 | Vested on Mar 13, 2025 (1-year) |
- Policy and plan safeguards: 2025 LTIP includes minimum 1-year vesting, annual non-employee director cap of $350,000 (cash+equity), prohibition on repricing/discounted options/SARs, no dividends on unvested awards, double-trigger CoC vesting, no excise tax gross-ups, and clawback provisions.
Other Directorships & Interlocks
| Company | Relationship to NXRT | Role | Governance Note |
|---|---|---|---|
| NREF, VineBrook, NXHT, NXDT | Affiliates within NexPoint platform | Director/Trustee | Cross-board service; Board concluded multi-audit committee service (more than three) does not impair audit effectiveness for these members, including Kavanaugh. |
Expertise & Qualifications
- Financial expert designation (audit); capital markets, banking, and investment management experience; real estate/REIT exposure across multiple NexPoint platforms.
Equity Ownership
| Metric | Amount |
|---|---|
| Total Beneficial Ownership (shares) | 30,363 (less than 1%) |
| RSUs vesting within 60 days (included above) | 4,117 |
| Shares pledged as collateral | None disclosed for Kavanaugh (pledging disclosed for others; not for Kavanaugh) |
Related-Party Exposure & Conflicts (Context)
- External management with Adviser fees (advisory and administrative), expense caps, and renewal (renewed Feb 24, 2025). Potential conflicts typical of externally managed REITs (AUM-based fees, allocation of opportunities, cross/principal transactions). Oversight includes RPT policy requiring disinterested Audit Committee approval.
- Specific 2024–2025 RPT examples: Fiber Internet Agreements with entities under common control (including one controlled by NXRT officer); “Old Farm” asset sold Mar 1, 2024 to NexBank Capital, Inc., an Adviser affiliate; normal banking at NexBank (no fees in 2024).
- Hedging: Insider trading policy prohibits directors and certain employees from hedging/short transactions.
Compensation Structure Analysis (Director)
- Mix: Cash retainers plus time-based RSUs; no meeting fees beyond structure disclosed. 2025 LTIP adds annual non-employee cap and retention of best-practice features (minimum vesting, clawback, no repricing).
- Signals: Equity is time-based rather than performance-based for directors (alignment via share exposure; not tied to operational metrics).
Say-on-Pay & Shareholder Feedback (Context for Compensation Committee Member)
- 2024 Say-on-Pay support: 83% of votes cast in favor.
Governance Assessment
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Strengths
- Lead Independent Director with defined authorities; independent under NYSE; high engagement (committee leadership across Audit/Comp/NCG; financial expert).
- Director compensation structure modest (cash retainer + limited chair/lead fees) and equity with 1-year vest; 2025 LTIP includes shareholder-friendly features (no repricing, double-trigger CoC, clawback, no gross-ups, director cap).
- Attendance met ≥75% threshold in 2024 (Board-level).
-
Watch items / potential red flags
- Extensive cross-board roles within NexPoint complex and multiple audit committee memberships; Board concluded no impairment, but capacity and interlock risk remain a consideration for investors.
- Externally managed structure with material related-party activity (e.g., affiliate fiber agreements; NexBank asset sale). Mitigants include RPT policy and Audit Committee oversight by disinterested members.
- No disclosed director stock ownership guideline; ownership is <1% (alignment mainly via annual RSUs).
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Additional context
- Board held 5 meetings; independent directors meet in executive session; policy restricts hedging by directors, reinforcing alignment.