Robert E. Cauley
About Robert E. Cauley
Robert E. Cauley, CFA, age 66, has served as Orchid Island Capital’s Chairman, President and Chief Executive Officer since August 2010; he is also President, Chairman and CEO of the Company’s external Manager. Earlier, he co-founded Bimini Capital Management in 2003 and has been its CEO and Chairman since April 2008; prior roles include Vice-Chairman, CFO and CIO at Bimini, vice president/portfolio manager at Federated Investors (1996–2003), ABS/MBS structuring at Lehman Brothers (1994–1996), and credit analyst at Barclays Bank (1992–1994); he is a CPA (inactive) and served four years in the U.S. Marine Corps . Pay-versus-performance disclosures show ORC’s cumulative total shareholder return (TSR) and net income trajectory during his tenure: 2024 TSR value of $62.76 (vs $100 base at 12/31/2019) and 2024 net income of $37.8 million, after losses in 2021–2023, indicating improved results in 2024 within a volatile mortgage REIT cycle .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Orchid Island Capital, Inc. | Chairman, President & CEO | Since Aug 2010 | Leads externally managed Agency RMBS REIT with risk emphasis on book value preservation . |
| Bimini Capital Management, Inc. | Co‑founder; CEO & Chairman (since Apr 2008); prior Vice‑Chairman, CFO, CIO | 2003–present | Co‑founded and leads parent of ORC’s Manager; RMBS portfolio management and management services to ORC . |
| Federated Investors | Vice President & Portfolio Manager | 1996–2003 | Managed MBS portfolios; foundational RMBS investing experience . |
| Lehman Brothers | ABS/MBS Structuring Desk | 1994–1996 | Structured mortgage/asset‑backed securities . |
| Barclays Bank PLC | Credit Analyst | 1992–1994 | Credit underwriting/analysis . |
| U.S. Marine Corps | Service member | 4 years | Leadership and discipline; notable credential . |
External Roles
| Organization | Role | Years | Notes / Interlocks |
|---|---|---|---|
| Bimini Capital Management, Inc. | CEO & Chairman; director | Since 2008 | Owns 13.4% of Bimini; Bimini wholly owns ORC’s Manager; Bimini owned 0.7% of ORC as of 12/31/2024 . |
| Orchid Island Capital Manager (wholly‑owned by Bimini) | President, Chairman & CEO | Current | Dual role (CEO/Chair of ORC and CEO/Chair of Manager) underscores related‑party governance considerations . |
Fixed Compensation
| Component | 2022 | 2023 | 2024 | Notes |
|---|---|---|---|---|
| Company‑paid base salary to Mr. Cauley | N/A | N/A | N/A | ORC is externally managed; Company does not pay CEO salary; NEOs are employees of Bimini/Manager . |
| Company‑paid cash bonus to Mr. Cauley | N/A | N/A | N/A | ORC may grant incentive awards; no Company cash salary/bonus reported for CEO in 2022–2024 . |
Context: ORC reimburses the Manager for a portion of the CFO’s compensation (approx. $0.7 million in 2024), but not the CEO’s; ORC paid the Manager $9.4 million in management fees in 2024 and ~$3.4 million of overhead/trading services reimbursements .
Performance Compensation
Summary Compensation (Company equity awards to Mr. Cauley)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock Awards (grant‑date fair value) | $512,074 | $615,621 | $220,000 |
| Total (per SCT) | $512,074 | $615,621 | $220,000 |
2024 Grants (payout for 2019 LTICP performance)
| Grant Date | Award Type | Shares/Units | Grant‑Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| Mar 19, 2024 | Performance Units | 12,761 | $110,000 | 10% per quarter beginning the first ten quarters starting Mar 26, 2025, subject to continued service; dividend equivalent rights; subject to performance‑based adjustments . |
| Mar 19, 2024 | Fully Vested Common Stock | 12,761 | $110,000 | Immediately vested; 4,209 shares withheld to satisfy tax withholding . |
Vested/Realized in 2024
| Item | Quantity | Value |
|---|---|---|
| Performance Units vested in 2024 | 15,014 | $125,669 (market value on vest dates) |
Long‑Term Incentive Plan (LTICP) Structure and Targets
| Measurement Period | Peer‑Relative Financial Performance (max pool) | Agency RMBS Rate Relative Performance (max pool) | Peer‑Relative Book Value Performance (max pool) | Total Max Pool (as % of average management fees) |
|---|---|---|---|---|
| 1‑year | 9.00% | 6.00% | 5.00% | 20.00% |
| 3‑year | 15.75% | 10.50% | 8.75% | 35.00% |
| 5‑year | 20.25% | 13.50% | 11.25% | 45.00% |
- Key metrics and thresholds: Peer‑relative total economic return (dividends plus book value change), absolute performance vs Agency RMBS rate plus 400 bps (9.3175% per year baseline), and peer‑relative book value change; maximums require exceeding thresholds by 5%/10%/15% (1/3/5 years) for the first two metrics and 2%/4%/6% for book value .
- Adjustment mechanics on outstanding Performance Units: 15% reduction upon “Book Value Impairment” events; +5 bps per 1 bp of “Extraordinary Book Value Preservation”; +10% if “Outperform All Peer Companies” in a quarter .
- 2025 decisions: No equity awards were earned for 2024 performance under the 2020, 2022 or 2024 LTICPs; none granted to Mr. Cauley for 2024 service .
- 2025 LTICP approved with same construct; Mr. Cauley participates .
Equity Ownership & Alignment
Beneficial Ownership (as of April 10, 2025)
| Holder | Shares Beneficially Owned | % of Class |
|---|---|---|
| Robert E. Cauley | 137,951 (includes 50 shares owned by son; disclaimed) | <1% |
- Pledging/Hedging: Prohibited for officers/directors; policy bars pledging, margin accounts, and hedging transactions .
- Ownership Guidelines: Executives must retain at least 66% of net shares from Company equity plans; directors must hold 3x annual cash retainer (all directors in compliance as of Apr 28, 2025) .
Outstanding Performance Units (as of December 31, 2024)
| Grant Date | Units Outstanding | Market/Payout Value (at $7.78) |
|---|---|---|
| Mar 19, 2024 | 12,761 | $99,281 |
| Apr 13, 2023 | 14,508 | $112,876 |
| Mar 28, 2022 | 1,900 | $14,780 |
- Book value impairment events in 2022 and 2023 triggered 15% reductions to outstanding PUs per event; Mr. Cauley forfeited 6,757 PUs in 2022 and 5,545 PUs in 2023 under plan rules .
- Settlement cadence creates potential, modest ongoing share issuance: PUs vest 10% per quarter for 10 quarters per grant, after a one‑year lag from measurement period end; dividend equivalents accrue until vesting .
Employment Terms
- Severance/CoC Economics: No cash severance or Company‑paid termination benefits for Mr. Cauley; all unvested PUs vest upon change in control, death, or disability (value as of 12/31/2024 estimated at ~$226,937 for Mr. Cauley) .
- Clawback: NYSE Rule 10D‑1 compliant policy adopted Oct 11, 2023; applies to current/former executive officers; mandatory recovery of incentive‑based compensation on accounting restatement for three years regardless of misconduct .
- Insider Trading and Pledging/Hedging Policies: Pre‑clearance, blackout periods, prohibition on short‑selling, pledging, hedging; exhibits filed with 2024 10‑K .
- External Management Agreement: ORC pays management fees based on stockholders’ equity (not performance); 2024 fees ~$9.4 million plus ~$3.4 million in overhead/trading/admin reimbursements (includes ~$0.7 million of CFO salary allocation); termination without cause triggers a fee equal to 3x average annual management fee .
- Related‑Party Interests: Mr. Cauley is CEO/Chair of Bimini (Manager’s parent) and owns 13.4% of Bimini; Bimini owned ~0.7% of ORC common at 12/31/2024 .
Performance & Track Record
Net Income and TSR Context
| Year | Net Income ($000s) | Value of $100 Invested (TSR basis) |
|---|---|---|
| 2020 | $2,125 | $105.25 |
| 2021 | $(64,760) | $105.40 |
| 2022 | $(258,453) | $58.89 |
| 2023 | $(39,209) | $57.09 |
| 2024 | $37,784 | $62.76 |
- Governance/Operations: Company internalized certain repo trading/clearing/admin services, enhancing control and risk oversight .
- Say‑on‑Pay: 84% approval at 2024 annual meeting; Company cited this support in maintaining compensation approach .
Board Governance
- Role: Combined Chairman & CEO; Board cites Mr. Cauley’s experience/knowledge base as rationale; mitigated by Lead Independent Director (Frank P. Filipps) and fully independent committee chairs .
- Independence: 4 of 6 directors are independent; Mr. Cauley is not independent due to affiliation with Manager/Bimini; all committees (Audit, Compensation, Nominating/Governance) are composed solely of independent directors .
- Committee Leadership: Audit (Chair: Paula Morabito; two audit committee financial experts), Compensation (Chair: W. Coleman Bitting), Nominating/Governance (Chair: Ava L. Parker) .
- Board Process: 16 Board meetings in 2024; independent director executive sessions held; each director attended >75% of meetings; Lead Independent Director responsibilities include agenda input, executive sessions, coordination and shareholder engagement .
Compensation Structure Analysis
- Mix and Risk: Company’s management fee to the Manager is equity‑based (not performance‑based), which can dilute pay‑for‑performance alignment; however, Company equity awards to executives are tied to multi‑year performance vs peers, market benchmarks, and book value preservation with explicit downside adjustments (book value impairment) and vesting over 2.5 years post‑measurement, promoting retention and capital preservation .
- Discipline: No awards earned for 2024 performance under multiple LTICPs; prior book value impairment reductions caused forfeitures, demonstrating the framework’s downward sensitivity to adverse book value outcomes .
- Peer Group and Benchmarking: LTICP peer group (AGNC, Annaly, ARMOUR, Cherry Hill, Dynex, Invesco; Arlington removed after acquisition) emphasizes relative performance versus closest Agency mREIT competitors .
Risk Indicators & Red Flags
- Dual Role: CEO also serves as Board Chair and as CEO/Chair of the Manager’s parent (Bimini); mitigants include Lead Independent Director and fully independent committees .
- External Management: Fees based on equity rather than performance; termination fee equals 3x average annual management fee if ORC terminates without cause .
- Book Value Events: Multiple book value impairment events in 2022 and 2023 that reduced outstanding PUs by plan design, reflecting stress in Agency RMBS conditions and emphasizing book value risks .
- Pledging/Hedging: Prohibited (positive); robust clawback compliant with Rule 10D‑1 (positive) .
- Say‑on‑Pay: 84% approval in 2024 (generally supportive) .
Compensation Committee Analysis
- Composition: Independent directors only (Bitting, Filipps, Parker); no interlocks or insider participation disclosed .
- Consultants: Neither Company nor Manager retained a compensation consultant for NEO compensation in 2024 .
- Philosophy: Multi‑horizon (1/3/5‑year) measures, emphasize risk‑adjusted returns, dividends plus book value change, and relative performance against Agency RMBS rate and peers .
Say‑on‑Pay & Shareholder Feedback
- 2024 Say‑on‑Pay support ~84% of votes cast; Company maintained approach while noting ongoing outreach and governance enhancements .
Investment Implications
- Alignment/Retention: CEO’s Company‑paid compensation is exclusively equity‑based and subject to stringent multi‑year performance and book value preservation tests with meaningful downside risk (forfeitures on impairment), aligning incentives to dividend sustainability and book value protection; however, the external management fee remains non‑performance‑based and features a sizable termination fee, diluting alignment at the entity level .
- Insider Selling Pressure: Mr. Cauley had 29,169 PUs outstanding at 12/31/2024 across 2022–2024 grants with scheduled 10% quarterly vesting and dividend equivalents; while vesting can create periodic share issuance, the structure’s prior impairment reductions and no‑award outcome for 2024 performance temper near‑term overhang; tax withholding can absorb part of deliveries (e.g., 4,209 shares withheld on 2024 stock award) .
- Governance: Dual CEO/Chair and related‑party structure (Bimini ownership and management agreement) elevate governance risk; mitigants include independent committees, a Lead Independent Director, anti‑pledging/hedging, and a Dodd‑Frank‑compliant clawback .
- Performance Signal: No 2024 performance awards and historical book value impairment adjustments signal management and board willingness to constrain pay in weak periods, a positive for pay discipline; 2024 net income recovery provides a counter‑trend improvement to watch for momentum and potential LTICP accrual in future periods .