PHILADELPHIA-Ten top executive officers of locally based RAIT Financial Trust have voluntarily forfeited equity incentive awards that were valued at slightly more than $11.8 million when they were granted on this Jan. 23, according to a filing with the SEC. The awards are phantom stock units, which is a form of deferred compensation, and were subject to vesting periods of between four or five years, beginning in January 2008.
The value is calculated on the fair value of RAIT common shares at the time the awards were granted. According to the SEC document, $2.1 million of the total was expensed through this Sept. 30, and the remaining $9.7 million will expense as a non-cash compensation expense during the quarter ended this Dec. 31.
The largest, valued at nearly $3.7 million, was granted to Betsy Cohen, chairman, followed by nearly $2.8 million of forfeited awards to Daniel Cohen, CEO. Another award, valued at nearly $1.6 million, was for Plamen Mitrikov, EVP of asset management. The others, forfeited by seven officers, range in value from $917,750 to $220,260.
In the filing, Betsy Cohen says, "the action of our senior executives reflects their commitment to aligning their long-term incentive compensation with our shareholders' interests." The forfeitures have no net effect on RAIT's shareholders' equity, adjusted earnings or REIT taxable income.
In this year's third quarter, which was reported on Nov. 6, RAIT posted a $243.6-million loss, attributed to its borrowers in the residential mortgage and homebuilder sectors, which caused RAIT nearly $343 million in impairments. Shares of RAIT common stock, which trades as RAS on the NYSE, began a precipitous decline when the company held a conference call concerning the potential impact of what Daniel Cohen described as "catastrophic results among homebuilders and mortgage REITS."
The stock dropped from a 52-week high of $38.25 a share on Feb. 7 to $4.82 a share on Aug. 6. The trading range has since lifted to between about $10 and $12 a share, and it opened at $10.50 a share on Dec. 12.
During the third-quarter conference call, Betsy Cohen told analysts the company was "developing new programs and alternative structures" and said additional clarity on these measures would be announced in this year's closing quarter. Meanwhile, RAIT has declared a fourth-quarter cash dividend of $0.46 per common share.
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