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Compensation Committee

Edward Resendez Thomas F. Robards Ronald I. Simon
  • Member
  • Chair
  • Financial Expert
  • Independent Director

ELLINGTON FINANCIAL INC.
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
ADOPTED AS OF OCTOBER 31, 2019

The following shall constitute the Charter (the “Charter”) of the Compensation
Committee of the Board of Directors (the “Board”) of Ellington Financial Inc. (the
“Company”).

I. ORGANIZATION

There shall be constituted a standing committee of the Board to be known as the
Compensation Committee (the “Committee”).

II. COMPOSITION AND SELECTION

The Committee shall be comprised of three or more directors. It is intended that each
member of the Committee satisfy the requirements of a “non-employee director” for
purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

In addition, the Board shall affirmatively determine that each member of the Committee
meets the independence standards of the New York Stock Exchange (the “NYSE”) as then
in effect. In affirmatively determining the independence of any director who will serve on
the Committee, the Board must consider all factors specifically relevant to determining
whether a director has a relationship with the Company that is material to that director’s
ability to be independent from management in connection with the duties of a member of
the Committee, including, but not limited to:

  • the source of compensation of such director, including any consulting, advisoryor other compensatory fee paid by the Company to such director; and
     
  • whether such director is affiliated with the Company, any subsidiary of the Company or any affiliate of any subsidiary of the Company.

The members of the Committee shall be appointed by the Board annually on the
recommendation of the Nominating and Corporate Governance Committee and may be
removed only by the majority of independent directors of the full Board. The members of
the Committee shall serve until their successors are duly elected and qualified. The Board
shall designate the Committee Chairman.

The duties and responsibilities of Committee members contained herein shall be in
addition to those duties otherwise required for members of the Board.

III. STATEMENT OF PURPOSE

The Committee is appointed by the Board to assist the Board in discharging its
responsibilities relating to (i) compensation of the Company’s directors and officers, (ii)
review, approval and administration of compensation plans and programs and other
benefit plans, including the 2017 Equity Incentive Plan, for directors and officers of the
Company, the Company’s external manager and its affiliates and their respective officers
and employees who perform services for the Company, and consultants and other third
parties who perform services for the Company (collectively, the “Plans”), and (iii)
compensation of Ellington Financial Management, LLC, the Company’s external
manager (the “Manager”). The Committee has overall responsibility for evaluating and
recommending changes to the director and officer compensation plans, policies and
programs of the Company and approving and recommending to the Board for its approval
awards under the Plans and amendments to the Plans.

IV. COMMITTEE AUTHORITY AND RESPONSIBILITIES

The Committee shall have full access to any relevant records of the Company and shall
have the sole authority to retain consultants to advise the Committee and shall have sole
authority to approve such consultants’ fees and other retention terms.

The Committee may form and delegate authority to subcommittees comprised entirely of
independent directors or its chair when appropriate. Among its specific duties and
responsibilities, the Committee shall:

1. Review the Company’s overall director and officer compensation philosophy,
structure, policies and programs;

2. Make recommendations to the Board with respect to the Plans and any other
incentive-compensation plans and equity-based plans with respect to the management
agreement by and between the Company and the Manager (the “Management
Agreement”);

3. Review and approve any employment, severance or termination agreement with
any executive officer of the Company who is paid by the Company, review perquisites or
other personal benefits of such executive officers, and recommend any changes to the
Board;

4. Review the fees payable to the Manager under the Management Agreement;

5. Make recommendations to the Board regarding the compensation of the
Company’s officers and of the officers and employees of the Manager and its affiliates
who perform services for the Company and administer the issuance of any incentive
stock awards to the Manager, the Company’s officers and the officers and employees of
the Manager and its affiliates who perform services for the Company;

6. Annually review the compensation of directors for service on the Board and its
committees and recommend changes in compensation to the Board;

7. Oversee the Company’s submissions to shareholders on executive compensation
matters, including advisory votes on executive compensation and the frequency of such
votes, incentive and other executive compensation plans and amendments to such plans
(to the extent required under NYSE listing standards);

8. Review and discuss with the Company’s management the Compensation
Discussion and Analysis (“CD&A”) to be included in the Company’s annual proxy
statement and determine whether to recommend to the Board that the CD&A be included
in the proxy statement;

9. Issue the Committee Report for inclusion in the Company’s proxy statement that
complies with the rules and regulations of the Securities and Exchange Commission
(“SEC”);

10. Oversee the evaluation of risk associated with the Company’s total compensation
strategy and compensation programs;

11. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval, and annually review the Committee’s
performance based upon, among other things, an assessment of the Committee’s
fulfillment of its obligations pursuant to this Charter. The Committee’s findings shall be
reported to the Board, and such review shall seek to identify specific areas, if any, in need
of improvement or strengthening; and

12. When required by rules of a national securities exchange or the SEC, prepare any
annual or other compensation report as may be required of the Committee by any
applicable rules and regulations and submit it to the Board for inclusion in the
Company’s proxy statement or other treatment as may be required.
The Committee may, in its sole discretion, retain or obtain the advice of a compensation
consultant, independent legal counsel, accounting or other adviser. The Committee shall
be directly responsible for the appointment, compensation and oversight of the work of
any such consultant, counsel, accountant or other adviser so retained by the Committee.
The Company must provide for appropriate funding, as determined by the Committee, for
payment of reasonable compensation to a consultant, counsel, accountant or other adviser
retained by the Committee. The Committee may select a consultant, counsel, accountant
or other adviser to the Committee only after taking into consideration all factors relevant
to that entity’s or person’s independence from management, including the following:

  • the provision of other services to the Company by the entity or person that employs the consultant, counsel, accountant or other adviser;
  • the amount of fees received from the Company by the entity or person that employs the consultant, counsel, accountant or other adviser, as a percentage of the total revenue of the entity or person that employs the consultant, counsel, accountant or other adviser;
  • the policies and procedures of the entity or person that employs the consultant, counsel, accountant or other adviser that are designed to prevent conflicts of interest;
  • any business or personal relationship of the consultant, counsel, accountant or other adviser with a member of the Committee;
  • any stock of the Company owned by the consultant, counsel, accountant or other adviser; and
  • any business or personal relationship of the consultant, counsel, accountant or other adviser or the entity or person employing the consultant, counsel, accountant or adviser with an executive officer of the Company.
The Committee is required to conduct the above independence assessment with respect to any compensation consultant, legal counsel, accounting or other adviser that provides advice to the Committee, other than (i) in-house legal counsel and (ii) any compensation
consultant, legal counsel, accounting or other adviser whose role is limited to the following
activities:
  • consulting on any broad-based plan that does not discriminate in scope, termsor operation in favor of executive officers or directors of the Company and thatis available generally to all salaried employees; or
     
  • providing information that either is not customized for a particular company or that is customized based on parameters that are not developed by the compensation consultant and about which the compensation consultant does not provide advice.

V. MEETINGS AND PROCEDURES OF THE COMMITTEE

The Committee shall meet as often as it deems necessary or appropriate in its judgment to
carry out its duties and responsibilities and report its findings to the Board, but in no
event less than once a year. The chair or a majority of the members of the Committee
may call meetings of the Committee. The Committee will be governed by the same rules
regarding meetings, action without meetings, notice, waiver of notice, and quorum and
voting requirements as applicable to the Board. The Committee may adopt its own rules
of procedure not inconsistent with (i) any provision of this Charter; (ii) any provision in
the Company’s Second Amended and Restated Operating Agreement, dated July 1, 2009,
as amended (the “Operating Agreement”); or (iii) any applicable federal or state law.

VI. CONSISTENCY WITH COMPANY’S OPERATING AGREEMENT

To the extent that any provision or section of this Charter may be inconsistent with any
article, provision or section of the Operating Agreement, the Operating Agreement shall
fully control.

Copyright © 2019 by Ellington Financial Inc.