Franklin BSP Realty Trust, Inc DEF 14A, filed Apr 17, 2024

About this DEF 14A

Franklin BSP Realty Trust, Inc. (FBRT)

DEF 14A 2024-04-17 For: 2024-05-29

View Original

Added on June 12, 2026

Board
Recommendation

Page
Number

Proposal 1: Election of Directors

FOR each nominee

Proposal 2: Amendment to the Articles of Amendment and Restatement of the Company (the “Charter”) to eliminate supermajority voting requirements

Proposal 3: Ratification of the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for the year ending December 31, 2024

Proposal 4: Advisory vote on the compensation of the Company’s named executive officers

Franklin BSP Realty Trust, Inc filed this DEF 14A on April 17, 2024.

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


		Date and Time: Wednesday, May 29, 2024 at 11:00 a.m. Eastern Time

		Place: Virtual Format Only www.virtualshareholdermeeting.com/FBRT2024

		Record Date: Close of Business April 8, 2024

☑		Voting: Stockholders of record date are able to vote by internet at www.proxyvote.com/FBRT; telephone at 1-800-690-6903; mail by completing and returning their proxy card; and online at the Annual Meeting.


Voting Stockholders may vote by:


Internet www.proxyvote.com/FBRT


Telephone 1-800-690-6903


Mail complete, sign and return proxy card


			Page

Q&A			2

Corporate Governance Overview			7

Proposal No. 1 - Election Of Directors			9

Director Compensation			14

Board of Directors And Committees			15

Information About the Board of Directors and its Committees			15

How Directors are Selected, Elected and Evaluated			15

Director Independence			16

Director Skills			17

Leadership Structure of the Board of Directors			18

Oversight of Risk Management			19

Committee Membership			20

Audit Committee			20

The Compensation Committee			21

Nominating and Corporate Governance Committee			21

Corporate Governance Principles			22

Stock Ownership Guidelines			22

Environmental Sustainability			22

Political and Charitable Contributions			23

Legal Proceedings			23

Director Continuing Education			23

Director Time Commitments			23



Majority Vote Standard and Director Resignation Policy			24

Board Evaluation Process			24

Executive Sessions			24

Stockholder Engagement			25

Communications with the Board of Directors			26

Code of Ethics			26

Hedging and Pledging Policy			26

Executive Officers			27

Compensation Committee Report			28

Executive Compensation			29

Stock Ownership by Directors, Officers and Certain Stockholders			41

Certain Relationships and Related Transactions			43

Audit Committee report			45

Proposal No. 2 - Approval of an Amendment to our Charter to Eliminate Supermajority Voting Requirements			46

Proposal No. 3 - Ratification of Appointment of Independent Registered Public Accounting firm			48

Proposal No. 4 - Advisory Vote on the Compensation of our Named Executive Officers			50

Other Matters Presented for Action at the 2024 Annual Meeting			51

Stockholder Proposals for the 2025 Annual Meeting			52

Appendix			A-1


ISG Principles		FBRT Practice

Principle 1: Boards are accountable to stockholders		All directors stand for election annually Majority voting standard in uncontested director elections, with mandatory resignation policy Stockholders are entitled to recommend director candidates to the Nominating and Corporate Governance Committee Stock ownership requirements for directors

Principle 2: Stockholders should be entitled to voting rights in proportion to their economic interest		No dual-class share structure One vote per share structure

Principle 3: Boards should be responsive to stockholders and be proactive in order to understand their perspectives		Regular stockholder engagement on business, governance, and ESG matters Annual Say on Pay proposal Added a qualified director from an underrepresented community to our Board of Directors In 2023 and again in 2024, proposing a charter amendment to eliminate supermajority voting requirements Board considers annual voting results and regular investor engagement in setting company policies and strategy

Principle 4: Boards should have a strong, independent leadership structure		Lead Independent Director with clearly defined responsibilities All Committees are chaired by Independent Directors and are 100% independent Independent Director-only executive session at every regular Board meeting



Principle 5: Boards should adopt structures and practices that enhance their effectiveness		Annual Board and Committee evaluation process Directors possess deep and diverse set of skills and experience relevant to oversight of our strategy Board composition reflects broad range of relevant perspectives, skills and knowledge including gender, racial and ethnic diversity: 43% of our Board nominees are gender or racially diverse 86% of the Board nominees are independent In 2023, each director attended at least 75% of the meetings of the Board and the Committees on which he or she served

Principle 6: Boards should develop management incentive structures that are aligned with the long-term strategy of the company		Annual Say on Pay proposal The Compensation Committee oversees and reports to the Board on the assessment and mitigation of risks associated with the Company’s and the Advisor’s compensation policies and practices and incentive compensation arrangements Equity awards granted to executive officers subject to three-year vesting periods Stock ownership requirements for executive officers Advisor’s incentive fee tied directly to stockholder returns


Name*	Age	Position

Richard J. Byrne	63	Chairman of the Board of Directors and Chief Executive Officer

Pat Augustine	61	Director

Joe Dumars	60	Director

Jamie Handwerker	63	Director, Compensation Committee Chair

Peter J. McDonough	65	Director, Nominating and Corporate Governance Committee Chair

Buford H. Ortale	62	Director, Audit Committee Chair

Elizabeth K. Tuppeny	63	Lead Independent Director


Name	Fees Paid in Cash		Stock Awards⁽¹⁾			Total

Pat Augustine	$	130,000		85,000		$	215,000

Joe Dumars		130,000		105,835			235,835

Jamie Handwerker		150,000		85,000			235,000

Gary Keiser⁽²⁾		50,000		—	⁽²⁾		50,000

Peter J. McDonough		150,000		85,000			235,000

Buford H. Ortale		150,000		85,000			235,000

Elizabeth K. Tuppeny		170,000	$	85,000			255,000



Annual Director Cash Retainer		$110,000

Committee Fees (Cash)		$20,000 for the chairs of the Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee; and $10,000 for each member of a committee who is not serving as a chair.

Lead Independent Director Supplemental Fee (Cash)		$30,000

Annual Equity Award		On the date of the annual meeting of stockholders, each non-management director receives an annual grant of $85,000 in restricted shares of Common Stock based on the closing price of our Common Stock on the date of grant. The restricted shares vest on the anniversary of the grant date.

Expense Reimbursement		All non-management directors also receive reimbursement of reasonable out of pocket expenses incurred in connection with attendance at meetings of our Board of Directors.



Audit Committee • Oversees management’s programs and policies to identify, assess, manage, mitigate and monitor significant business risks of the Company, including financial, operational, cybersecurity and information technology, business continuity, legal, regulatory and reputational risks. • Oversees management’s risk assessment, management, mitigation and monitoring decisions, practices and activities, including the steps management has taken to monitor and control the Company’s major financial risk exposures.	Compensation Committee • Oversees and reports to the Board on the assessment and mitigation of risks associated with the Company’s and the Advisor’s compensation policies and practices. • Administers the Company’s annual equity award program for executive officers and Advisor employees who provide substantial services to the Company. • Appoints and oversees the work of its compensation consultants and other advisors retained by it.	Nominating and Corporate Governance Committee • Reviews and approves any transactions with affiliated parties and addresses other conflicts of interest between the Company and its subsidiaries, on the one hand, and the Advisor or its respective affiliates, on the other hand. • Assists our Board with assessing risks associated with board organization, membership and structure, succession planning and corporate governance.


ESG Oversight Our Nominating and Corporate Governance Committee oversees corporate social responsibility, sustainability and related matters and evaluates best practices. In 2022, we released our Corporate Environmental Policy, which outlines our commitment to operate in an environmentally responsible manner that promotes energy conservation and waste reduction. In 2023, we released our inaugural ESG report. We have also instituted Director and Executive Officer Stock Ownership Guidelines and Political and Charitable Contribution Guidelines.


Director	Audit Committee	Compensation Committee	Nominating and Corporate Governance Committee
Richard J. Byrne
Pat Augustine		✓	✓
Joe Dumars	✓		✓
Jamie Handwerker	✓	Chair	✓
Peter J. McDonough	✓	✓	Chair
Buford H. Ortale	Chair	✓	✓
Elizabeth K. Tuppeny	✓	✓	✓


Name	Age	Position(s)

Richard J. Byrne	63	Chairman of the Board of Directors and Chief Executive Officer

Michael Comparato	47	President

Jerome S. Baglien	47	Chief Financial Officer and Chief Operating Officer



What We Do		What We Don’t Do
✓ Robust stockholder engagement on compensation practices ✓ Clawback policy in line with NYSE guidelines ✓ Annual Say-on-Pay proposal ✓ Management’s incentive fee has a performance hurdle aligned with stockholder interests ✓ Stock ownership requirements ✓ Independent Compensation Consultant ✓ Consider peer pay practices ✓ Award Restricted Stock Units (RSUs) to executives with a three-year vesting period		× No hedging, pledging or short selling of our Company stock by directors, officers, employees or their immediate families × No excise tax gross-up provisions × No “single-trigger” or excessive change-of-control severance benefits × The Board/Compensation Committee has no influence over the compensation paid to executives by the Advisor




What We Heard from Stockholders		Board’s Response to Stockholders

Stockholders requested additional clarity around the portion of FBRT’s management fee allocated to NEO compensation paid by BSP.		We provided enhanced disclosure around FBRT’s relationship with our external Advisor. We described how the Advisor performs our day-to-day management functions through its employees, including those employees that serve as our NEOs. As a result, our NEOs are compensated by the Advisor and not by FBRT. The only compensation that FBRT issues to its NEOs and other employees of the Advisor is in the form of discretionary equity grants approved by the Board’s Compensation Committee. For additional information, please see Our Advisor’s Compensation of our NEOs, which begins on pg. 33.

Stockholders expressed a desire for more information regarding FBRT’s structure as an externally-managed REIT and our relationship with Benefit Street Partners.		In this year’s proxy, we included a graphic depicting the structure FBRT has as an externally-managed REIT, including our relationship with the Advisor and the role our Board plays in oversight of FBRT. As our external manager, the Advisor is responsible for identifying, originating, acquiring, and asset managing investments on our behalf. In return, we pay the Advisor an annual asset management fee which is structured as 1.5% of equity and a subordinated performance fee of 15% of Total Return over a 6% per annum hurdle. Meanwhile, our Board, comprised of 7 highly qualified Directors with diverse experiences and skillsets, provides direct oversight of FBRT. Please see Overview of FBRT’s Structure as an Externally Managed REIT, which is on pg. 30, for a graphic that more fully depicts the structure FBRT has as an externally managed REIT.

Stockholders requested additional information around the results of FBRT’s retention efforts for its management team.		We recognize that a key component of our compensation program is to help attract, motivate and retain non-employee executive officers. In our disclosures in this proxy statement, we have highlighted the fact that we have seen zero turnover among our non-employee executive officers since FBRT’s listing on the NYSE, at least partially driven by our efforts to use our equity incentive plan to motivate and retain key individuals. We are proud of this track record to date and believe retention of key individuals is beneficial to the success of FBRT. For additional information, see The Company’s Compensation Practices on pg. 30.


FRANKLIN BSP REALTY TRUST				2024 PROXY STATEMENT


FRANKLIN BSP REALTY TRUST				2024 PROXY STATEMENT



PROXY SUMMARY


FRANKLIN BSP REALTY TRUST		1		2024 PROXY STATEMENT


Name and Principal Position	Year ($)		Salary⁽¹⁾ ($)		Bonus⁽¹⁾ ($)		Stock Awards⁽²⁾ ($)			Non-Equity Incentive Plan Compensation⁽¹⁾ ($)		All Other Compensation⁽¹⁾ ($)		Total ($)
Richard J. Byrne
Chief Executive Officer		2023 2022		— —		— —		$ $	1,039,506 1,164,379		— —		— —		$ $	1,039,506 1,164,379
Michael Comparato President		2023		—		—		$	974,401		—		—		$	974,400
Jerome S. Baglien Chief Financial Officer and Chief Operating Officer		2023 2022		— —		— —		$ $	756,002 846,820		— —		— —		$ $	756,002 846,820


Name	Grant Date		All Other Stock Awards: Number of Shares of Stock or Units⁽¹⁾	Grant Date Fair Value of Stock and Option Awards⁽²⁾
Richard J. Byrne		1/27/2023	72,999	$	1,039,506
Michael Comparato		1/27/2023	68,427	$	974,400
Jerome S. Baglien		1/27/2023	53,090	$	756,002


	Grant Date		Number of Shares or Units of Stock That Have Not Vested⁽¹⁾ (#)	Market Value of Shares or Units of Stock That Have Not Vested⁽²⁾ ($)
Richard J. Byrne		1/27/2023	72,999		$ 986,216
		1/27/2022	54,132		731,323
Michael Comparato		1/27/2023	68,427		$ 924,449
		1/27/2022	50,741		685,511
Jerome S. Baglien		1/27/2023	53,090		$ 717,246
		1/27/2022	39,368		531,861


	Number of Shares acquired on vesting (#)	Value realized on vesting⁽¹⁾ ($)
Richard J. Byrne	27,066	$ 385,420
Michael Comparato	25,371	$ 361,283
Jerome S. Baglien	19,685	$ 280,314


	Termination⁽¹⁾⁽²⁾ ($)	Death/Disability⁽²⁾⁽³⁾ ($)	Change of Control⁽²⁾⁽⁴⁾ ($)
Richard J. Byrne	—	1,717,540	1,717,540
Michael Comparato	—	1,609,960	1,609,960
Jerome S. Baglien	—	1,249,107	1,249,107


Year	Summary Compensation Table Total for CEO (1)(2)	CAP to CEO (3)	Average Summary Compensation Table Total for Other NEOs (1)(2)	Average CAP to Other NEOs (1)(3)	Value of Initial Fixed $100 Investment Based on:		GAAP Net Income (5)	Distributable Earnings (5)(6)
Year	Summary Compensation Table Total for CEO (1)(2)	CAP to CEO (3)		Average CAP to Other NEOs (1)(3)	TSR (4)	Peer Group TSR (4)	GAAP Net Income (5)	Distributable Earnings (5)(6)
2023	$1,039,506	$1,236,031	$865,201	$1,028,773	$100.1	$80.34	$144,509	$189,510
2022	$1,164,379	$1,128,652	$846,820	$ 820,837	$85.93	$71.69	$ 14,215	$116,076


	SCT Total Comp		Minus SCT Equity Awards		Plus Value of New Unvested Awards	Plus Change in Fair Value of Outstanding Unvested Awards from Prior Years		Plus Change in Fair Value of Awards from Prior Years that Vested During Covered Year		Plus Dividends on Unvested Awards	Equals CAP
2023		$1,039,506		$1,039,506	$ 986,216		$33,021		$36,268	$180,526		$1,236,031
2022		$1,164,379		$1,164,379	$1,042,176		—		—	$ 86,476		$1,128,652


	SCT Total Comp	Minus SCT Equity Awards	Plus Value of New Unvested Awards	Plus Change in Fair Value of Outstanding Unvested Awards from Prior Years		Plus Change in Fair Value of Awards from Prior Years that Vested During Covered Year		Plus Dividends on Unvested Awards	Equals CAP
2023	$865,201	$865,201	$820,847		$27,483		$30,188	$150,254		$1,028,773
2022	$846,820	$846,820	$757,945		—		—	$ 62,892		$ 820,837


Beneficial Owner(1)	Number of Shares of Common Stock Beneficially Owned			Percent of Class

Pat Augustine		17,350	⁽²⁾		*

Jerome S. Baglien		38,417			*

Richard J. Byrne		188,301			*

Michael Comparato		167,991			*

Joe Dumars		7,730	⁽³⁾		-

Jamie Handwerker		28,567	⁽²⁾		*

Peter J. McDonough		28,549	⁽²⁾		*

Buford H. Ortale		41,974	⁽²⁾⁽⁴⁾		*

Elizabeth K. Tuppeny		31,030	⁽²⁾		*

All directors and executive officers as a group (9 persons)		549,909	⁽⁵⁾		*


Beneficial Owner	Number of Shares of Common Stock Beneficially Owned		Percent of Class			Number of Shares of Series H Preferred Stock Beneficially Owned		Percent of Class

BlackRock, Inc.(1)		14,062,648		17.2	%

The Vanguard Group(2)		8,925,303		10.9	%

Security Benefit Life Insurance Company(4)		-		-			17,950		100	%



PROPOSAL NO. 2—APPROVAL OF AN AMENDMENT TO OUR CHARTER TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS



PROPOSAL NO. 3—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


	2023		2022

Audit Fees⁽¹⁾	$	3,072,655	$	3,600,000

Audit-Related Fees⁽²⁾	$	0	$	566,528

Tax Fees⁽³⁾	$	492,056	$	854,079

All Other Fees⁽⁴⁾	$	972	$	0


Total	$	3,565,683	$	5,020,607



PROPOSAL NO. 4—ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS



OTHER MATTERS PRESENTED FOR ACTION AT THE 2024 ANNUAL MEETING


	Year Ended December 31,
	2023

GAAP Net Income		$ 144,509

Adjustments:

Depreciation and amortization		7,128

Impairment of Acquired Assets		-

CLO amortization acceleration⁽¹⁾		(5,521	)

Unrealized (gain)/loss on financial instruments⁽²⁾		7,185

Unrealized (gain)/loss - ARMs		415

Subordinated performance fee⁽³⁾		6,171

Non-Cash Compensation Expense		4,762

(Reversal of)/Provision for credit losses		33,738

Loan workout charges/(loan workout recoveries)⁽⁴⁾		(5,105	)

Realized (gain)/loss on debt extinguishment / CLO call		(2,201	)

Realized trading and derivatives (gain)/loss on ARMs		677


Realized trading and derivatives gain/(loss) on ARMs		(677	)

Realized cash gain/(loss) adjustment on REO⁽⁵⁾		(1,571	)


Distributable Earnings		$ 189,510

7.5% Cumulative Redeemable Preferred Stock, Series E Dividend		$ (19,367	)

Non-controlling interests in joint ventures net (income)/loss		(602	)

Depreciation and amortization attributed to non-controlling interests of joint ventures		(31	)


Distributable Earnings to Common		169,510

Average Common Stock and Common Stock Equivalents		1,403,558

GAAP Net Income/(Loss) ROE		8.9	%

Distributable Earnings ROE		12.1	%

GAAP Net Income/(Loss) Per Share, Diluted		$ 1.42

GAAP Net Income/(Loss) Per Share, Fully Converted⁽⁶⁾		$ 1.42

Distributable Earnings Per Share, Fully Converted⁽⁶⁾		$ 1.92