Hello, and welcome to
the Annual Meeting of Stockholders of Dynex Capital Incorporated. Please note that today's meeting is being recorded. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the message icon. It is now my pleasure to turn today's meeting over to Mr.
Byron Boston, President and CEO. Mr. Boston, the floor is yours.
Good morning. Will the meeting please come to order? Thank you. I extend a warm welcome to each of you. This is the first year we're holding our annual meeting in an all virtual format.
We believe this virtual format will facilitate expanded shareholder access and participation. In addition, due to the ongoing public health concerns associated with the COVID-nineteen pandemic, we believe that a virtual meeting format will help protect the health, safety and well-being of our employees, shareholders and community at large. I am Byron Boston, Chief Executive Officer, President and Co Chief Investment Officer of Dynex Capital, and I will serve as Chairman of this meeting. On behalf of the Board of Directors and officers of Dynex, I would like to thank you for attending our twenty twenty Annual Meeting of Shareholders. With that, I will now turn the meeting over to Allison Griffin, our Vice President, Investor Relations to conduct the formal business of the meeting.
Thank you, Mr. Chairman. First, while the meeting is virtual only, we welcome questions from our shareholders. If you are a shareholder and wish to ask a question, you can submit your question at any time via the text box provided on the Ping website. When we come to the Q and A portion of the meeting, we will read and answer the questions that have been submitted online.
Next, I offer to this meeting the notice of Internet availability of proxy materials dated 04/28/2020, the notice of annual meeting and proxy statement dated 04/28/2020, in the form of proxy as well as the annual report of the company for the year 2019. Links to the proxy statement and annual report are also available on the meeting website. I have been appointed judge of election for this meeting to certify the results of the voting and have taken the oath of office. As indicated in the proof of mailing affidavit from Computershare, either the notice of Internet availability of proxy materials or the notice of the annual meeting of shareholders and accompanying material commenced mailing on 04/28/2020, to each shareholder of record as of 04/20/2020. As of the record date of 04/20/2020, there were 22,981,978 shares of common stock of the company issued and outstanding and entitled to notice of and to vote at this meeting of shareholders.
As the judge of election, I reported that at least 20,217,367 shares of common stock or approximately 88% of all common shares outstanding are presented or represented by proxy at this meeting. Therefore, a quorum is present and the meeting may proceed. As the Judge of Election, I have a list of the shareholders of record of the company as of the record date entitled to receive notice of this meeting. This list has been available for inspection at the principal offices of the company during normal business hours since April 30 and is available for inspection throughout this meeting. Any shareholder requesting to review the list should e mail his
name
for verification purposes to dxinfodynexcapital dot com. We also have available minutes of the twenty nineteen Annual Meeting of Shareholders. I move that the reading of the minutes of the twenty nineteen Annual Meeting of Shareholders be dispensed with? Is there a second?
Yes. This is Steve Benedetti, and I second that motion.
Thank you. The minutes of the twenty nineteen Annual Meeting of Shareholders will not be read. It is now 10:04 a. M. And the polls for each matter to be voted upon at this meeting are open.
As a reminder, shareholders can vote online at any time during this meeting prior to the closing of the polls. If you are a shareholder entitled to vote and have not yet voted or if you want to change your previously cast vote, please do so by clicking on the voting link on the meeting website. If you have already voted by proxy, it is not necessary to vote again. The first item of business is the election of five directors by holders of the company's common stock. The individuals nominated to serve until the twenty twenty one Annual Meeting and until the election and qualification of their successors are Byron L.
Boston Michael R. Hughes, Barry A. Iglooff, Robert A. Salcede and David H. Stephens.
The Secretary of the company has advised the company that no other nominations have been received. The second item of business today is to approve in an advisory and nonbinding vote the compensation of the company's named executive officers as disclosed in the proxy statement. The third item of business today is to approve the Dynex Capital 2020 Stock and Incentive Plan. The fourth and last item of business today is the ratification of the selection of BDO USA LLP as the company's independent auditors for the 2020 fiscal year. The matters to be voted on have been formally presented.
The polls are now closed at 10:06 a. M. All proxies and votes should now have been submitted. As judge of elections, I certify that each director nominee received a majority of the common shares voted in favor of his election. At least 88% of the common shares voted on the proposal have been voted for approval of the named executive officers' compensation as disclosed in the proxy statement.
At least 93% of the common shares voted on the proposal have been voted for approval of the Dynex Capital 2020 Stock and Incentive Plan. At least 97% of the common shares voted on the proposal have been voted for ratification of the selection of BDO USA LLP as the company's independent auditors for 2020. I declare Mr. Boston, Hughes, Ixilos, Salsetti and Stephens are now elected directors. The shareholders have approved the compensation of the company's named executive officers as described in the proxy statement.
The shareholders have approved the Dynex Capital 2020 Stock and Incentive Plan and the selection of BDO USA LLP is ratified. My written report as the Judge of Election with the final vote count for matters voted on today will be filed with the permanent records of the company. A representative of BDO, Tracy Lewis, is attending the meeting today and will be available to answer questions during the Q and A portion of the meeting. There is no other business to come before the meeting. I now turn the meeting back over to Byron for an update on our company.
Byron, you may go ahead.
Thank you, Allison. A little over thirty years ago, Dynex was founded on the idea of providing equity investors as tax efficient means of investing in The U. S. Real estate housing markets. What started as that simple idea expanded over the last thirty years in ways that many of us take for granted.
For example, Zynix was one of the first private investors in mortgage loans financing low income multifamily housing properties, helping to support and then expand that market to where it is today. In addition, the company was a pioneer in non agency securitization, helping to develop housing markets that provide capital to hundreds of thousands of non conforming borrowers. Since the great financial crash in two thousand and eight, we have continued to invest our capital in support of affordable housing and The U. S. Housing finance system.
Over my long career, I have witnessed The U. S. Financial markets change in many dramatic ways. And as I look across the landscape today, I see even greater change on the horizon. I am as excited today about the opportunities for this company as I was when I first joined in 02/2008.
I am also excited because we have built an experienced team of professionals throughout the company in addition to management that have successfully navigated multiple business cycles and market disruptions. In my experience, successfully managing a mortgage REIT for the long term takes a seasoned management team and Board that understand the unique challenges of a leveraged public company. It requires a healthy respect for risk and skill to identify opportunities and skepticism of what can appear to be an attractive return, but has significant hidden risk. It requires carefully building and managing relationships with business partners, creditors, employees and shareholders. It also importantly requires a strong ethical culture and an organizational structure that appropriately aligns management and the company's interests with its stakeholders.
Company culture is a key element to long term business success. In my opinion, one of the best attributes of Dynex is that we have always operated our company in line with the elements identified in the business roundtable statement of the purpose of a corporation. These elements have been an innate part of our business since I've been here. Is unique in that 70% of our senior leadership identifies as female or minority as do nearly half of the employees of the company. We have always valued the insight that comes from having varied backgrounds as we make decisions, And this remains a core view for Dynex.
On this solid foundation, I've set a goal of continuing to build a durable, thriving company for the next thirty years. We continue to believe that there are very strong tailwinds that support our business model for the long term. Demographic, macroeconomic and secular housing finance trends in our view support a robust outlook for the future of our business. Population growth and household formation in The United States should continue to bolster the need for residential housing. Furthermore, as the government reduces its role in housing finance and reduces taxpayer risk to the housing market, the need for entities with capital and expertise in managing housing finance assets such as IMAX will be critical to filling this void.
Our experienced team is in position to understand complexities posed by the interplay between government policy and technology on the cash flow impacts of defaults and prepayments. And finally, fundamental fault lines in the global economy, such as income inequality and global debt, coupled with the events of March and the Fed's rapid monetary policy response to these events, they mean low interest rates could be here for years, driving a massive global search for yield. As a tax efficient dividend payer, it is our view that over time we will see a strong demand for our equity, driving down our cost of capital over the long term and allowing us to expand our footprint in the marketplace. In the near term, we continue to believe that our investment strategy of up in credit and up in liquidity is appropriate given the underlying risk in the marketplace. Longer term, our macroeconomic opinions have not changed.
The global economy is fragile and it's supported by central banks and an enormous amount of debt and it remains vulnerable to sudden shocks. Finally, I want to remind you of three things, the power of dividends over the long term, the favorable business environment driving the future for mortgage REITs and our commitment to an internal management stakeholder friendly structure with strong insider ownership. We're excited about the opportunities in front of us and we continue to manage capital with our disciplined long term approach. At this point, Allison, we can take questions.
At this time, we would like to take any questions you might have for us today.
Byron, this is Steve. We just got a question in from Jay Weinstein. With spreads tightening even considerably since your last update call, are you still seeing opportunities to reinvest capital?
Thank you, Jay. The spreads have not tightened in as much as you might think. They have tightened in because you saw spreads fall to such wide levels. But in the in certain sectors, especially in the thirty year well, actually, if we look across multiple categories, even in corporate bonds, spreads have not come back into their tightest levels. So in the thirty year in some other agency residential mortgage backed security space, where it still remains very attractive, and providing us an opportunity to invest our money.
So we mentioned in our last update call that we were in a phased approach of investing our capital and increasing our leverage. We have moved our leverage up. We've invested our capital because we do believe that there is potential for spreads to continue to tighten given the Fed's presence in the agency mortgage backed securities space. There's even been some spread tightening in some non agency asset classification, but there still continues to be a lot of questions around non agency credit and ultimately, as Smriti would always say, flow disruption. So I'll summarize.
There are opportunities. Spreads are still attractive, and we've moved our equity up to I mean, leverage up to take advantage of it.
Jay is asking a follow-up, Byron, around whether there's been a meaningful change in book value since the last update call. And I think at this point, we're not really giving an update on our book value at this point.
At this time, there are no other questions. Byron, would you like to adjourn?
If there are no further questions, the meeting is now adjourned, and we thank you all for attending. And I'll turn it back over to the operator to terminate the call. Thank you.
This concludes the meeting. You may now disconnect.