DEF 14A of PennyMac Mortgage Investment Trust
Filed Apr 19, 2024 · FY20230001193125-24-102959
Class III Trustees – Term to Expire in 2024
Class III Trustees – Term to Expire in 2024
Class III Trustees – Term to Expire in 2024
| DAVID A. SPECTOR | Mr. Spector has been a member of our Board since our formation in May 2009 and has been our Chairman and Chief Executive Officer since February 2021 and prior thereto as our President and Chief Executive Officer since January 2017. He served as our executive managing director, president and chief operating officer from February 2016 through December 2016 and, prior thereto, as president and chief operating officer since May 2009. Mr. Spector has also served in a variety of similar executive positions at PFSI and its affiliates from its founding in January 2008. Prior to joining PFSI and its affiliates, Mr. Spector was co-head of global residential mortgages for Morgan Stanley, a global financial services firm, based in London. Before joining Morgan Stanley in September 2006, Mr. Spector was the senior managing director, secondary marketing, at Countrywide, where he was employed from May 1990 to August 2006. Mr. Spector holds a B.A. from the University of California, Los Angeles. We believe Mr. Spector is qualified to serve on our Board because of his experience as a member of our executive management team and as an experienced executive with broad mortgage banking expertise in portfolio investments, interest rate and credit risk management, and capital markets activity that includes pricing, trading and hedging. | | | | | Board Member Since: 2009 Age: 61 | |
Class III Trustees – Term to Expire in 2024
| DOUG JONES | Mr. Jones has been a member of our Board since March 2023 and has been our President and Chief Mortgage Banking Officer since March 2021. Prior thereto, he served as the Company’s Senior Managing Director and Chief Mortgage Banking Officer from January 2017, as well as in a number of key executive positions since 2012. Mr. Jones also serves as Director, President and Chief Mortgage Banking Officer of PFSI and has served in a variety of similar executive positions at PFSI and its affiliates since June 2011. Mr. Jones is responsible for all business activities relating to mortgage banking operations. Prior to joining PFSI and its affiliates, Mr. Jones worked in several executive positions, including senior vice president, mortgage banking at Countrywide (and Bank of America Corporation, as its successor) from 1997 until 2011, where he was responsible for managing and overseeing mortgage banking and correspondent and warehouse lending operations among other roles. Mr. Jones earned a B.A. in economics from California State University, Sacramento. We believe Mr. Jones is qualified to serve on our Board because he is an experienced mortgage banking executive with significant experience in the correspondent production and warehouse lending businesses. | | | | | Board Member Since: 2023 Age: 67 | |
Class III Trustees – Term to Expire in 2024
| 20 | | 2024 Proxy Statement |
Class III Trustees – Term to Expire in 2024
| CATHERINE A. LYNCH | Ms. Lynch has been a member of our Board since April 2022. From 2003 to 2016, Ms. Lynch served in a variety of executive positions at the National Railroad Retirement Investment Trust, including as its chief executive officer and chief investment officer from 2008 until her retirement in 2016. From 1999 to 2002, Ms. Lynch served as the first investment officer for the George Washington University endowment. Ms. Lynch serves as a board member and Audit chair for certain BlackRock fixed income mutual funds and also serves as the chair of the Investment Advisory Committee for the New York State Common Retirement Fund. Ms. Lynch holds a B.A. from Yale University and she earned the Chartered Financial Analyst credential in 1986. We believe Ms. Lynch is qualified to serve on our Board because she is a seasoned business executive with deep knowledge of investments and capital markets and significant experience in financial services, particularly in investment portfolio management. | | | | | Board Member Since: 2022 Age: 62 | | | Committees: • Audit • Nominating and Corporate Governance • Related Party Matters | |
Continuing Trustees
Continuing Trustees
Class I Trustees – Term to Expire in 2025
Class I Trustees – Term to Expire in 2025
Class I Trustees – Term to Expire in 2025
| SCOTT W. CARNAHAN | Mr. Carnahan has been a member of our Board since August 2009. Mr. Carnahan is a Senior Advisor to FTI Consulting, Inc., a global advisory firm, since April 2023 and had served as Senior Managing Director at FTI Consulting, Inc. from May 2014 through March 2023. Prior thereto, Mr. Carnahan had provided financial and accounting consulting services to various financial institutions since April 2007. From 1992 to 1998 and from 2000 to March 2007, Mr. Carnahan was an audit and consulting partner at the professional services firm of KPMG LLP. Mr. Carnahan holds a B.A. and an M.B.A. from the University of California, Irvine and is a CPA. We believe Mr. Carnahan is qualified to serve on our Board because he has both accounting and financial expertise, due to his experience at KPMG LLP, as well as a fundamental understanding of the mortgage lending business. | | | | | Board Member Since: 2009 Age: 70 | | | Committees: • Audit • Finance • Related Party Matters (Chair) | |
Class I Trustees – Term to Expire in 2025
| | 2024 Proxy Statement | 21 |
Class I Trustees – Term to Expire in 2025
| DONNA M. CORLEY | Ms. Corley has been a member of our Board since June 2023. Ms. Corley served as Executive Vice President and Head of Single-Family Business at Freddie Mac from 2019 to 2022, where she was responsible for client relationships, asset acquisitions, managing credit and servicing performance, compliance and operational risks of a nearly $3 trillion portfolio of mortgage assets. Ms. Corley previously served as the Chief Risk Officer for Single-Family Business from 2014 to 2019, Senior Vice President of Credit Pricing, Risk Transfer and Securitization from 2011 to 2014, along with other roles during her 27 years at Freddie Mac. Ms. Corley serves as a board member of Bite Me Cancer since 2018, where she is the co-chair of their Operations Committee. Ms. Corley holds a B.S. in business administration from The American University and earned a Chartered Financial Analyst designation in 1999. We believe Ms. Corley is qualified to serve on our Board because she is an experienced financial services executive with a strong background in mortgage operations, financial and risk management and extensive regulatory experience. | | | | | Board Member Since: 2023 Age: 50 | | | Committees: • Finance (Chair) • Risk | |
Class I Trustees – Term to Expire in 2025
| RENEE R. SCHULTZ | Ms. Schultz has been a member of our Board since May 2021. Ms. Schultz served as senior vice president of capital markets at Fannie Mae from May 2012 to April 2021, where she managed Fannie Mae’s capital markets pricing and sales desk, credit risk transfer programs, structured transactions, and the whole loan conduit. She also oversaw the Fannie Mae securitization policy team, which ensures proper administration of matters related to the strategy and business value of Fannie Mae securities. Ms. Schultz served as vice president of capital markets at Fannie Mae from March 2006 to 2012, along with other leadership roles during her 22 years at Fannie Mae. Ms. Schultz is a former trustee at Saint Mary’s College Notre Dame, Indiana and the Board of Governors for Big Brothers Big Sisters of Martin and Palm Beach Counties. Ms. Schultz is a founding member and director of ALICE, a not-for-profit dedicated to the advancement of women in the mortgage finance industry. Ms. Schultz holds a B.A. from Saint Mary’s College, Notre Dame, Indiana. We believe Ms. Schultz is qualified to serve on our Board because she is an experienced executive with a strong background in capital markets and housing finance and extensive regulatory experience. | | | | | Board Member Since: 2021 Age: 55 | | | Committees: • Compensation (Chair) • Finance • Related Party Matters | |
Class I Trustees – Term to Expire in 2025
| 22 | | 2024 Proxy Statement |
Class II Trustees – Term to Expire in 2026
Class II Trustees – Term to Expire in 2026
Class II Trustees – Term to Expire in 2026
| PRESTON DUFAUCHARD Independent Lead Trustee | Mr. DuFauchard has been a member of our Board since November 2012. Mr. DuFauchard is also our independent lead trustee. Mr. DuFauchard served as the chief executive officer of West Oakland Health Council from August 2018 until 2021. From April 2016 until February 2017, he served as general counsel of Robertson Stephens, a global investment advisory firm for high net worth individuals, family offices, institutions and corporations. Prior thereto, Mr. DuFauchard had served as an independent consultant since January 2012. From 2006 through December 2011, Mr. DuFauchard served as the commissioner of the California Department of Corporations. From 1997 to 2006, Mr. DuFauchard was employed at Bank of America Corporation, a diversified financial services firm, where he held the title of assistant general counsel. Mr. DuFauchard currently serves on the board of directors of First Federal of San Rafael. Mr. DuFauchard holds a B.A. from Stanford University and a J.D. from the University of California, Berkeley School of Law. We believe Mr. DuFauchard is qualified to serve on our Board because of his strong business experience and leadership as the chief executive officer of a state agency, his extensive legal and regulatory background, and his understanding of the mortgage banking business. | | | | | Board Member Since: 2012 Age: 67 | | | Committees: • Nominating and Corporate Governance • Related Party Matters • Risk | |
Class II Trustees – Term to Expire in 2026
| NANCY MCALLISTER | Ms. McAllister has been a member of our Board since November 2012. Ms. McAllister has served as a senior advisor of Star Mountain Capital, LLC and Star Mountain Stimulus Fund, L.P., private equity firms that invest in small and medium size businesses, since April 2013. From November 2008 through May 2011, Ms. McAllister served as a managing director in the financial institutions group of Credit Suisse Securities (USA) LLC, a diversified financial services firm. From 1991 to September 2008, Ms. McAllister was employed by Lehman Brothers, Inc., where she held a variety of executive positions, including managing director and co-head of the depository institutions and debt capital markets groups. Ms. McAllister served on the board of directors of People’s United Financial, Inc., a diversified financial services company, from September 2013 until April 2022. Ms. McAllister holds a B.A. from the University of Virginia. We believe Ms. McAllister is qualified to serve on our Board because she is a seasoned business executive with deep knowledge of the capital markets and significant experience in financial services, including investment banking. | | | | | Board Member Since: 2012 Age: 64 | | | Committees: • Compensation • Finance • Risk (Chair) | |
Class II Trustees – Term to Expire in 2026
| | 2024 Proxy Statement | 23 |
Class II Trustees – Term to Expire in 2026
| STACEY D. STEWART | Ms. Stewart has been a member of our Board since August 2009. Ms. Stewart has served as the Chief Executive Officer of Mothers Against Drunk Driving (MADD) since January 2023. She has served as a board member of Hologic, Inc. since January 2023. From November 2016 to November 2022, she served as president of the March of Dimes, a leading nonprofit organization. From June 2009 to November 2016, Ms. Stewart served in a variety of executive positions, including president of United States operations and executive vice president for Community Impact Leadership and Learning, at United Way Worldwide, the world’s largest charitable organization. From February 2007 to April 2009, Ms. Stewart was a senior vice president of Fannie Mae, a government-sponsored enterprise that supports liquidity and stability in the secondary mortgage market. Ms. Stewart holds an A.B. from Georgetown University and an M.B.A. from the University of Michigan. We believe Ms. Stewart is qualified to serve on our Board because of her strong experience in the mortgage sector and proven leadership of charitable organizations, the primary focus of which is housing and homeownership within underprivileged communities. | | | | | Board Member Since: 2009 Age: 60 | | | Committees: • Compensation • Nominating and Corporate Governance (Chair) | |
Class II Trustees – Term to Expire in 2026
| 24 | | 2024 Proxy Statement |
2023 Trustee Compensation Table
| Name(1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | Total ($) | | Scott W. Carnahan | 125,780 | 105,000 | 230,780 | | Donna M. Corley | 69,486 | 78,247 | 147,733 | | Preston DuFauchard | 145,030 | 105,000 | 250,030 | | Randall D. Hadley | 119,280 | 105,000 | 224,280 | | Catherine A. Lynch | 111,794 | 105,000 | 216,794 | | Nancy McAllister | 126,508 | 105,000 | 231,508 | | Renee R. Schultz | 122,544 | 105,000 | 227,544 | | Stacey D. Stewart | 118,030 | 105,000 | 223,030 | | Marianne Sullivan | 52,302 | 105,000 | 157,302 |
Compensation Discussion and Analysis
| 2023 Named Executive Officers | 34 | | Executive Compensation Highlights | 35 | | Executive Summary of 2023 Compensation | 36 | | 2023 Say-On-Pay Vote and Engagement with Shareholders | 36 | | Executive Compensation Paid by PFSI | 37 | | 2023 Compensation Program Overview | 40 | | Compensation Decisions Made in Fiscal 2023 | 40 | | Executive Compensation Decision Making Process | 44 | | Peer Group and Benchmarking | 46 | | Executive Share Ownership Guidelines | 47 | | Clawback Provisions | 47 | | Trading Controls and Anti-Pledging and Anti-Hedging Policies | 48 |
Executive Compensation Highlights
| What We Do | What We Don’t Do | | ✓ Bias toward performance-based equity: Our Board seeks to ensure that our long-term incentive awards are weighted toward performance-based equity vehicles. We design our compensation program in a manner that is biased toward performance-based compensation with multiple performance metrics. | ✗ No minimum levels of annual equity awards: Our executive officers are not guaranteed any minimum levels of annual equity award grants. | | ✓ Clawback Policy: Our Board maintains clawback policies regarding the recoupment of incentive compensation that apply to all of our Section 16 officers and any other officer whose title is Senior Managing Director. | ✗ No compensation from us other than equity awards for our named executive officers: Our named executive officers do not receive annual base salaries or cash bonuses from us. | | ✓ Double-trigger vesting: We require that our equity awards have a “double trigger” to initiate accelerated vesting upon a change in control. | ✗ No severance provisions: We do not provide cash severance to our executives. | | ✓ Minimum vesting periods: Our equity incentive plan provides that our equity awards are subject to a minimum vesting period of no less than one year on 95% of equity awards granted and our grants generally vest over three years, with approximately equal annual installments on the first, second and third anniversaries of the grant date. | ✗ No excessive risk taking: We do not encourage our officers and employees (if any) to engage in excessive risk taking. Our compensation program is designed to encourage long-term decision making in alignment with the interests of our shareholders. | | ✓ Robust share ownership guidelines: We impose robust share ownership guidelines on our trustees and executive officers to ensure that their interests are aligned with those of our shareholders. | ✗ No perquisites or excise tax gross-ups: We do not provide perquisites or related excise tax gross-ups to our executive officers. | | ✓ Consideration of Say-On-Pay Vote and proxy advisory and shareholder feedback: We engage in careful consideration of the annual Say-On-Pay results and feedback from shareholders and proxy advisory firms. | ✗ No stock option re-pricing: Our equity incentive plan prohibits the re-pricing of stock options. | | ✓ Shareholder engagement: We engage in active discussions with our shareholders on a variety of topics throughout the year to ensure that we are addressing their concerns. | ✗ No speculative or short-term trading: We prohibit our officers, employees (if any) and trustees from engaging in speculative and short-term trading of our securities. | | ✓ Comprehensive review of peer group: On an annual basis, we engage in a comprehensive review to assess and identify a relevant peer group of companies in our or a related industry. | ✗ No hedging, pledging, short sales, or margin trading: We restrict our officers, employees (if any) and trustees from engaging in hedging, pledging, short sales, trading in publicly traded put or call options or trading on margin involving our securities. | | ✓ Independent compensation consultant: We utilize the services of Pearl Meyer, which is engaged directly by the Compensation Committee as an outside independent compensation consultant to advise on executive compensation matters. | ✗ No supplemental executive retirement plans: We do not maintain any supplemental executive retirement plans for named executive officers. |
Executive Summary of 2023 Compensation
Executive Summary of 2023 Compensation Although our named executive officers are generally compensated by their employer, PFSI and its affiliates, our Compensation Committee has granted, and may continue to grant, from time to time, equity-based awards designed to align the interests of employees of PFSI and its affiliates who provide services to us with those of our shareholders, by allowing such employees, including our named executive officers, an opportunity to share in the creation of value for our shareholders through capital appreciation and dividends. Currently, these equity-based awards are in the form of performance-based restricted share units, or PSUs, and restricted share units, or RSUs, and are granted by our Compensation Committee in its discretion under our 2019 Plan. In order to ensure that our executive compensation program aligns with the interests of our shareholders and focuses on long-term performance, we grant PSUs that vest upon our Company’s satisfaction of performance measures tied to return on equity, or ROE, and a relative total shareholder return, or TSR. PSU and RSU awards granted to our named executive officers are designed to align their interests with those of our shareholders by providing each named executive officer providing services to us through PFSI and its affiliates with an ownership or ownership-based interest in our Company and a stake in our long-term success. Our PSU and RSU awards are also designed to further motivate our named executive officers to achieve exceptional Company and individual performance and reward them for such performance through a long-term incentive structure that does not encourage excessive risk taking. We also believe that providing equity compensation to our named executive officers is appropriate given the risks and liability they undertake as named executive officers of a public company. We believe that our executive compensation program objectives have resulted in decisions regarding executive compensation that have appropriately encouraged growth in our businesses and the achievement of financial goals without excessive risk taking, thus benefiting our shareholders and generating long-term shareholder value.
2023 Say-On-Pay Vote and Engagement with Shareholders
| • | PSU performance awards contain two performance metrics, ROE and relative total shareholder return (“Relative TSR”). We believe including a Relative TSR performance metric aligns management incentives with shareholder goals of relative outperformance against our peer group; |
PFSI’s Executive Compensation Objectives and Philosophy
| • | Align the interests of our executives with those of our shareholders with a significant emphasis on equity incentives and performance based compensation; |
PFSI’s Executive Compensation Objectives and Philosophy
| • | Assess executive compensation against market compensation benchmarks prepared by our independent board consultant; |
PFSI’s Executive Compensation Objectives and Philosophy
| • | Facilitate the attraction, motivation and retention of highly talented executives who will be crucial to our long-term success and sustainability; |
PFSI’s Executive Compensation Objectives and Philosophy
| • | Encourage executives to focus on achieving our annual and long-term business goals; and |
PFSI’s 2023 Executive Compensation Decisions
PFSI’s 2023 Executive Compensation Decisions In setting compensation for its executives, including our named executive officers, PFSI takes into consideration a number of factors in determining the total compensation payable to its employees including the type, scope and level of responsibility of the executive, competitive market dynamics, and the individual contributions made by the executive to the success of PFSI. In making its determinations regarding compensation arrangements with our named executive officers, PFSI does not take into account the amount of the management fee we pay to our Manager. This is because a whole team of professionals at our Manager, our Servicer and their affiliates (including our named executive officers) supports our Company and these professionals not only support our management efforts, but also work on activities for us that are unrelated to the management agreement (e.g., mortgage loan servicing and mortgage loan fulfillment), as well as a broad range of other activities unrelated to us entirely. Many of these activities are for PFSI’s own account or the accounts of other third party stakeholders. To put this into context, the base management fees and performance incentive fees paid by us to our Manager represented approximately 2.1% of the $1.4 billion in total net revenues of our Manager and its affiliates during Fiscal 2023. No portion of such fees was directly allocated to the compensation paid by PFSI to any of our named executive officers. Furthermore, we do not believe that base management fees and performance incentive fees as a percentage of PFSI’s total net revenues is an accurate or appropriate reflection of the portion of total compensation paid by PFSI to our named executive officers that is attributable to the services they provide our Company under the management agreement. Based on that approach and using the same percentage, however, we estimate that approximately $373,353, or 2.1%, of the $17.8 million of total compensation paid by PFSI to our named executive officers during Fiscal 2023 would be deemed attributable to such services. Of the total compensation paid to our Chief Executive Officer by PFSI in Fiscal 2023, we estimate that approximately 15% was fixed (e.g., annual base salary) and approximately 85% was variable or incentive pay (e.g., performance-incentive and equity awards). Of the total compensation paid to our other named executive officers by PFSI in Fiscal 2023, we estimate that approximately 18% was fixed (e.g., annual base salary) and approximately 82% was variable or incentive pay (e.g., performance-incentive and equity awards).
2023 Annual Performance-Based Incentives Paid by PFSI
2023 Annual Performance-Based Incentives Paid by PFSI The annual performance-based incentives paid to our named executive officers by PFSI included a performance component equal to 70% of the annual target incentive based on achieving ROE and a strategic award component equal to 30% of the annual target incentive based on individual strategic objectives set at the beginning of the year. To determine annual performance-based incentive amounts, PFSI’s Compensation Committee first sets a target level of performance-based incentive for each named executive officer for the fiscal year based on competitive market data. Each named executive officer’s potential performance-based incentive payout varies based on such individual’s level of responsibility and position within our organization. PFSI believes that ROE is an appropriate measure for annual performance-based incentives because it provides our named executive officers with an incentive to achieve favorable current results, while also producing sustainable long-term shareholder value. Each named executive officer’s target annual incentive was contingent on meeting the annual financial and strategic goals. Failure to meet the minimum ROE financial performance threshold would result in no ROE incentive payout, while exceeding the ROE financial performance target would result in incentive payouts over target, subject to a maximum payout cap of 300% for the financial performance component and 150% for the strategic award component. The total maximum annual incentive payable in Fiscal 2023 was 255% of target assuming all goals were achieved at maximum. In Fiscal 2023, PFSI’s management delivered net income of $144.7 million and ROE of 4%, on net revenues of $1.4 billion, which was down from Fiscal 2022, primarily due to the smaller origination market resulting from higher interest rates, and a nonrecurring unadjusted pretax legal accrual of $158.4 million. PFSI’s ROE of 4% was below the minimum ROE financial performance threshold and resulted in no ROE incentive payout. The PFSI Compensation Committee also considered management’s execution of strategic objectives for the PFSI named executive officers and concluded that these objectives were achieved at the maximum payout of 150%. Based on the overall assessment of PFSI’s Fiscal 2023 performance and the Chairman’s recommendations, PFSI’s Compensation Committee approved the annual performance-based incentive amounts for the PFSI named executive officers at an overall payout percentage of 45%.
2023 Long-Term Equity Awards Granted by PFSI
2023 Long-Term Equity Awards Granted by PFSI In determining the equity awards granted to the PFSI named executive officers in Fiscal 2023, the PFSI Compensation Committee considered, among other factors, the recommendations of management and various reports provided by our independent compensation consultant. The PFSI Compensation Committee also considered (i) the value of the proposed equity awards; (ii) the historical equity awards previously granted to each named executive officer and the corresponding values at the time of the consideration of the 2023 grants; (iii) the value of share grants to the PFSI named executive officers providing comparable services at our industry and sector peers; (iv) the anticipated contribution by our named executive officer in future fiscal years, taking into account the role, responsibility and scope of each position and the PFSI Compensation Committee’s perception regarding the quality of the services provided by each named executive officer in carrying out those responsibilities; (v) PFSI’s financial and operating performance in the past year and its perceived future prospects; (vi) the mix of equity awards to total compensation; and (vii) general market practices. The PFSI Compensation Committee considered these multiple factors in determining whether to increase or decrease the target amounts from the prior year’s equity award grants. There was no formulaic approach in the use of these various factors in determining the number of shares to award to each named executive officer. The share amounts were determined on a subjective basis, using the various factors, in the PFSI Compensation Committee’s sole discretion. The PFSI Compensation Committee provided long-term equity incentives for Fiscal 2023 to the PFSI named executive officers through the following target value mix of performance-based restricted stock units, time-based restricted stock units and stock options:
2023 Long-Term Equity Awards Granted by PFSI
| PFSI Long-Term Equity Incentives | Target Mix Percentage | | Performance-Based Restricted Stock Units | 50% | | Time-Based Restricted Stock Units | 25% | | Stock Options | 25% |
2023 Long-Term Equity Awards Granted by PFSI
| | 2024 Proxy Statement | 39 |
2023 Summary Compensation Paid by PFSI (1)
| Name | Year | Salary ($) | Non-equity Incentive Plan Compensation ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | David A. Spector | 2023 | 1,000,000 | 1,631,250 | 3,374,957 | 1,184,278 | 67,998 | 7,258,483 | | Doug Jones | 2023 | 600,000 | 1,125,000 | 1,874,922 | 657,935 | 61,750 | 4,319,607 | | Daniel S. Perotti | 2023 | 400,000 | 630,000 | 937,400 | 328,968 | 48,536 | 2,344,904 | | William Chang | 2023 | 387,500 | 450,000 | 749,851 | 259,660 | 19,895 | 1,866,906 |
2023 Summary Compensation Table*
2023 Summary Compensation Table* We do not provide any of our named executive officers with any cash compensation or bonus, nor do we provide any named executive officers with pension benefits or nonqualified deferred compensation plans. We have not entered into any employment agreements with any person, and are not obligated to make any cash payments upon termination of employment or a change in control of the Company. During Fiscal 2023, our named executive officers were granted long-term equity compensation in the form of RSUs and PSUs pursuant to our 2019 Plan. The “2023 Summary Compensation Table” below summarizes the annual compensation received by our named executive officers during Fiscal 2023, Fiscal 2022 and Fiscal 2021.
2023 Summary Compensation Table*
| Name and Principal Position(1) | Year | Salary ($)(2) | Stock Awards ($)(2) | Total ($) | | David A. Spector Chairman and Chief Executive Officer and Trustee | 2023 | - | 999,987 | 999,987 | | | 2022 | - | 999,985 | 999,985 | | | 2021 | - | 999,981 | 999,981 | | Doug Jones Trustee, President and Chief Mortgage Banking Officer | 2023 | - | 499,987 | 499,987 | | | 2022 | - | 499,977 | 499,977 | | | 2021 | - | 449,972 | 449,972 | | Vandad Fartaj Former Senior Managing Director and Chief Investment Officer | 2023 | - | 499,987 | 499,987 | | | 2022 | - | 499,977 | 499,977 | | | 2021 | - | 499,990 | 499,990 | | Daniel S. Perotti Senior Managing Director and Chief Financial Officer | 2023 | | 499,987 | 499,987 | | | 2022 | - | 399,988 | 399,988 | | | 2021 | - | 299,975 | 299,975 | | William Chang Senior Managing Director and Chief Investment Officer | 2023 | - | 499,991 | 499,991 | | Derek W. Stark Senior Managing Director, Chief Legal Officer and Secretary | 2023 | - | 174,980 | 174,980 | | | 2022 | - | 174,984 | 174,984 |
2023 Summary Compensation Table*
| * The columns for “Bonus,” “Option Awards,” “Non-Equity Incentive Plan Compensation,” “Change in Pension Value and Nonqualified Deferred Compensation Earnings,” and “All Other Compensation” have been omitted because they are not applicable. |
2023 Summary Compensation Table*
| (1) Named executive officer titles are as of December 31, 2023. |
2023 Summary Compensation Table*
| (2) The amounts in this column represent the full grant date fair value, as determined in accordance with ASC 718, of the PSUs and/or RSUs granted to our named executive officers in Fiscal 2023, Fiscal 2022 and Fiscal 2021 pursuant to our 2019 Plan. For Fiscal 2023, the amount shown for PSUs is based on the probable outcome of the applicable performance conditions on the grant date and includes PSUs awarded on March 20, 2023 and February 28, 2023. PSUs awarded on March 20, 2023 were in the target amount of 4,321 to Mr. Chang. PSUs awarded on February 28, 2023 were in the target amounts of 42,210 shares for Mr. Spector, 21,105 shares for Mr. Jones, 21,105 shares for Mr. Fartaj, 21,105 shares for Mr. Perotti, 8,442 shares for Mr. Chang and 7,386 shares for Mr. Stark. The value of the PSUs awarded on February 28, 2023, assuming that the highest level of performance conditions will be achieved, is $962,487 for Mr. Spector, $481,237 for Mr. Jones, $481,237 for Mr. Fartaj, $481,237 for Mr. Perotti, $192,492 for Mr. Chang and $168,413 for Mr. Stark. The value of the PSUs awarded on March 20, 2023, assuming that the highest level of performance conditions will be achieved is $164,999 for Mr. Chang. For more information on the assumptions used in our estimates of value, please refer to Note 22—Share-Based Compensation in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 22, 2024. |
2023 Summary Compensation Table*
| | 2024 Proxy Statement | 49 |
2023 Grants of Plan-Based Awards*
2023 Grants of Plan-Based Awards* The following table provides information about plan-based awards granted under our 2019 Plan to our named executive officers in Fiscal 2023.
2023 Grants of Plan-Based Awards*
| Name | Grant Date | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | Grant Date Fair Value of Equity Awards ($)(3) | | | | Threshold (#) | Target (#) | Maximum (#) | | | | David A. Spector | | | | | | | | RSU | 2/28/2023 | | | | 34,535 | 449,991 | | PSU | 2/28/2023 | 21,105 | 42,210 | 73,867 | | 549,996 | | Doug Jones | | | | | | | | RSU | 2/28/2023 | | | | 17,267 | 224,989 | | PSU | 2/28/2023 | 10,552 | 21,105 | 36,933 | | 274,998 | | Vandad Fartaj | | | | | | | | RSU | 2/28/2023 | | | | 17,267 | 224,989 | | PSU | 2/28/2023 | 10,552 | 21,105 | 36,933 | | 274,998 | | Daniel S. Perotti | | | | | | | | RSU | 2/28/2023 | | | | 17,267 | 224,989 | | PSU | 2/28/2023 | 10,552 | 21,105 | 36,933 | | 274,998 | | William Chang | | | | | | | | RSU | 3/20/2023 | | | | 11,698 | 134,995 | | PSU | 3/20/2023 | 7,149 | 14,298 | 25,021 | | 164,999 | | RSU | 2/28/2023 | | | | 6,907 | 89,998 | | PSU | 2/28/2023 | 4,221 | 8,442 | 14,773 | | 109,999 | | Derek W. Stark | | | | | | | | RSU | 2/28/2023 | | | | 6,043 | 78,740 | | PSU | 2/28/2023 | 3,693 | 7,386 | 12,925 | | 96,240 |
2023 Grants of Plan-Based Awards*
| * The columns for “Estimated Future Payouts Under Non-Equity Incentive Plan Awards,” “All Other Option Awards: Number of Securities Underlying Options,” and “Exercise or Base Price of Option Awards” have been omitted because they are not applicable. |
2023 Grants of Plan-Based Awards*
| (1) Represents the potential payout range of PSUs granted in Fiscal 2023. Awards vest based on our ROE and Relative TSR for the fiscal year that ended immediately before such vesting date. Target was 100% of the granted Fiscal 2023 PSU and the maximum award amount was 175% of the granted Fiscal 2023 PSU. In addition to the performance conditions, our named executive officers must satisfy a time-based service condition in order for the award to vest. |
2023 Grants of Plan-Based Awards*
| (2) Reflects the number of RSUs granted to our named executive officer on February 28, 2023. These RSUs vest in equal annual installments for a three-year period commencing on the one-year anniversary of the grant date. |
2023 Grants of Plan-Based Awards*
| (3) The grant date fair value of an RSU shown in this column is determined in accordance with ASC 718. The amounts reported in this column with respect to PSUs are based on the probable outcome of the applicable performance conditions. |
2023 Grants of Plan-Based Awards*
| 50 | | 2024 Proxy Statement |
2023 Outstanding Equity Awards at Fiscal Year-End*
2023 Outstanding Equity Awards at Fiscal Year-End* The following table provides information about outstanding equity awards held by our named executive officers as of the end of Fiscal 2023.
2023 Outstanding Equity Awards at Fiscal Year-End*
| | | Stock Awards | | | | | Name | Grant Date | Number of Shares or Units of Stock Granted That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock Granted That Have Not Vested ($)(2) | Equity Incentive Plan Awards; Number of Unearned Shares or Units of Stock Granted That Have Not Vested (#) | Equity Incentive Plan Awards; Market Value of Unearned Shares or Units of Stock Granted That Have Not Vested ($)(2) | | David A. Spector | 2/28/2023 | 34,535 | 516,298 | | | | | 2/28/2023 | | | 42,210(3) | 631,040 | | | 2/25/2022 | 19,157 | 286,397 | | | | | 2/25/2022 | | | 23,414(4) | 350,039 | | | 2/17/2021 | 7,878 | 117,776 | | | | | 2/17/2021 | | | 9,629(5) | 143,954 | | Doug Jones | 2/28/2023 | 17,267 | 258,142 | | | | | 2/28/2023 | | | 21,105(3) | 315,520 | | | 2/25/2022 | 9,578 | 143,191 | | | | | 2/25/2022 | | | 11,707(4) | 175,020 | | | 2/17/2021 | 3,545 | 52,998 | | | | | 2/17/2021 | | | 4,333(5) | 64,778 | | Vandad Fartaj | 2/25/2022 | 9,578 | 143,191 | | | | | 2/25/2022 | | | 11,707(4) | 175,020 | | | 2/17/2021 | 3,939 | 58,888 | | | | | 2/17/2021 | | | 4,815(5) | 71,984 | | Daniel S. Perotti | 2/28/2023 | 17,267 | 258,142 | | | | | 2/28/2023 | | | 21,105(3) | 315,520 | | | 2/25/2022 | 7,663 | 114,562 | | | | | 2/25/2022 | | | 9,366(4) | 140,022 | | | 2/17/2021 | 2,364 | 35,342 | | | | | 2/17/2021 | | | 2,889(5) | 43,191 | | William Chang | 3/20/2023 | 11,698 | 174,885 | | | | | 3/20/2023 | | | 14,298(3) | 213,755 | | | 2/28/2023 | 6,907 | 103,260 | | | | | 2/28/2023 | | | 8,442(3) | 126,208 | | | 2/25/2022 | 3,832 | 57,288 | | | | | 2/25/2022 | | | 4,683(4) | 70,011 | | Derek W. Stark | 2/28/2023 | 6,043 | 90,343 | | | | | 2/28/2023 | | | 7,386(3) | 110,421 | | | 2/25/2022 | 3,352 | 50,112 | | | | | 2/25/2023 | | | 4,098(4) | 61,265 | | | 2/17/2021 | 1,182 | 17,671 | | | | | 2/17/2021 | | | 1,444(5) | 21,588 |
2023 Outstanding Equity Awards at Fiscal Year-End*
| * The columns for “Option Awards,” “Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options—Exercisable,” “Number of Securities Underlying Unexercised Options—Unexercisable,” “Option Exercise Price,” and “Option Expiration Date” have been omitted because they are not applicable. |
2023 Outstanding Equity Awards at Fiscal Year-End*
| (1) Reflects RSUs granted to each named executive officer, which units vest in equal annual installments for a three-year period commencing on the one-year anniversary of the respective grant date for awards granted in Fiscal 2021, Fiscal 2022 and Fiscal 2023. |
2023 Outstanding Equity Awards at Fiscal Year-End*
| (2) Per share value of stock awards is $14.95 based on the closing price of the common shares on the NYSE on December 29, 2023. |
2023 Outstanding Equity Awards at Fiscal Year-End*
| (3) The indicated number of unearned units consists entirely of the PSUs with a performance period that ends on December 31, 2025 and is described above under the heading “—Compensation Decisions Made in 2023.” The number of PSUs is shown at target. |
2023 Outstanding Equity Awards at Fiscal Year-End*
| (4) The indicated number of unearned units consists entirely of the PSUs with a performance period that ends on December 31, 2024 and is described above under the heading “—Compensation Decisions Made in 2023.” The number of PSUs is shown at target. |
2023 Outstanding Equity Awards at Fiscal Year-End*
| (5) The indicated number of unearned units consists entirely of the PSUs with a performance period that ends on December 31, 2023 and is described above under the heading “—Compensation Decisions Made in 2023.” The number of PSUs is shown at target. |
2023 Outstanding Equity Awards at Fiscal Year-End*
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2023 Stock Vested*
2023 Stock Vested* The following table sets forth certain information with respect to our named executive officers regarding the vesting of RSUs and PSUs during Fiscal 2023.
2023 Stock Vested*
| | Stock Awards(1) | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | David A. Spector | 81,004 | 1,139,080 | | Doug Jones | 38,480 | 541,772 | | Vandad Fartaj | 21,480 | 298,558 | | Daniel S. Perotti | 31,504 | 443,713 | | William Chang | 17,674 | 250,221 | | Derek W. Stark | 13,554 | 190,520 |
2023 Stock Vested*
| * The columns for “Option Awards” have been omitted because they are not applicable. |
2023 Stock Vested*
| (1) Amounts reported in these columns consist of vested RSUs. If the named executive officer sold a portion of the common shares acquired upon vesting of RSUs to satisfy the tax obligation with respect to such vesting, the number of common shares acquired is less than the amount shown. The number of common shares acquired and the value realized on vesting as reflected in this column have not been reduced to reflect the sale of common shares to satisfy any tax obligations. The following table shows the allocation of RSUs and PSUs that vested in Fiscal 2023. |
2023 Stock Vested*
| | PSUs(a) | | RSUs(b) | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(c) | | David A. Spector | 58,353 | 833,281 | 22,651 | 305,799 | | Doug Jones | 28,410 | 405,695 | 10,070 | 136,077 | | Vandad Fartaj | 10,668 | 152,339 | 10,812 | 146,219 | | Daniel S. Perotti | 23,921 | 341,592 | 7,583 | 102,121 | | William Chang | 15,759 | 225,039 | 1,915 | 25,182 | | Derek W. Stark | 9,828 | 140,344 | 3,726 | 50,176 |
2023 Stock Vested*
| (a) The payout percentages for PSUs earned as of March 12, 2024 for the Fiscal 2023 performance period under the PSUs granted to our named executive officers in each of Fiscal 2021, Fiscal 2022 and Fiscal 2023 were 158.9%, 187.5% and 150%, respectively. |
2023 Stock Vested*
| (b) Amounts reported in this column represent RSU awards that vested on February 17, 2023, February 25, 2023 and March 3, 2023 for Messrs. Spector, Jones, Fartaj, Perotti, Chang and Stark. |
2023 Stock Vested*
| (c) The value realized on vesting is calculated by multiplying the number of common shares received upon vesting of RSUs by the fair market value of our common shares on the respective vesting dates. |
2023 Pension Benefits
2023 Pension Benefits The table for “Pension Benefits” has been omitted because it is not applicable. We do not provide any of our named executive officers with any pension plans or benefits.
2023 Nonqualified Deferred Compensation
2023 Nonqualified Deferred Compensation The table for “Nonqualified Deferred Compensation” has been omitted because it is not applicable. We do not provide any of our named executive officers with any nonqualified deferred compensation plans or benefits.
2023 Nonqualified Deferred Compensation
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Potential Payments upon Termination of Employment or Change-in-Control
Potential Payments upon Termination of Employment or Change-in-Control None of our named executive officers has the right to receive severance payments from us and we are not required to make payments to a named executive officer upon a change in control of the Company. However, all unvested RSUs and PSUs granted under our 2019 Plan will vest immediately upon a termination of service other than for cause or due to death or disability or upon the termination of our management agreement between us and our Manager other than for cause (as defined in our management agreement). In addition, in the event of a change in control, any unvested RSUs and PSUs will become fully vested if the executive officer’s service is terminated by us (other than for cause) as a result of or in connection with such change in control; provided, however, that if our shares cease to be publicly traded on an established securities market in connection with such change in control, then any RSUs not previously vested will become fully vested irrespective of any such termination of service. The term of our management agreement expires on June 30, 2025, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement. Assuming that the triggering event took place on December 31, 2023, the value of the RSUs and PSUs that vest for each named executive officer would be the same as the respective values set forth in the table presented in the section entitled “2023 Outstanding Equity Awards at Fiscal Year-End.”
Compensation Committee Interlocks and Insider Participation
| CEO PAY RATIO |
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. David A. Spector, our Chairman and Chief Executive Officer. For Fiscal 2023:
CEO Pay Ratio
| • | the median of the annual total compensation of all employees of our Company (other than our CEO) was $54,055; and |
CEO Pay Ratio
| • | the annual total compensation of our CEO paid by our Company, as reported in our Summary Compensation Table included in this Proxy Statement, was $999,987. |
CEO Pay Ratio
| Based on this information, our Fiscal 2023 ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 19 to 1. |
CEO Pay Ratio
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
CEO Pay Ratio
| 1. | We determined that, as of December 31, 2023, our employee population consisted of seven full-time individuals, who are located in the United States. In determining whether a worker is an employee, we applied widely recognized employment and tax laws. All seven employees were transferred into PMT effective in July 2023. Prior to July, PMT did not have any employees. |
CEO Pay Ratio
| 2. | In order to identify the median employee during Fiscal 2023, we compared the amount of salary, wages, overtime and other compensation of our employees as reflected in our payroll records. In making that determination, we annualized the compensation of our full-time employees. |
CEO Pay Ratio
| 3. | We combined all of the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $54,055 on an annualized basis. |
CEO Pay Ratio
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
CEO Pay Ratio
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Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “Compensation Actually Paid” and the financial performance of our Company. This disclosure does not necessarily align with how we view the relationship between the Company’s performance and named executive officer compensation. The below table shows Compensation Actually Paid to our CEO and other named executive officers as calculated by adjusting the Summary Compensation Table total amounts for the applicable year.
Pay Versus Performance
| Year | Summary Compensation for CEO (1) | Compensation Actually Paid to CEO (2) | Average Summary Compensation for Other Named Executive Officers (3) | Average Compensation Actually Paid to Other Named Executive Officers (4) | Value of Initial Fixed $100 Investment Based On: | | Net Income | Return on Equity (6) | | | | | | | PMT Total Shareholder Return (5) | Peer Group Total Shareholder Return (5) | | | | 2023 | $999,987 | $1,678,774 | $434,986 | $694,272 | $105.1 | $79.2 | $ 157.8 Million | 11.1% | | 2022 | $999,985 | $649,981 | $393,732 | $262,972 | $77.2 | $69.2 | ($115.1) Million | -7.2% | | 2021 | $999.981 | $158,201 | $424,977 | $110,650 | $94.4 | $91.5 | $25.9 Million | 1.3% | | 2020 | $747,987 | ($254,463) | $520,606 | ($104,919) | $86.9 | $77.8 | $27.4 Million | 1.4% |
Pay Versus Performance
| (1) Mr. Spector was our principal executive officer (“CEO”) for all years shown. The amounts reported are the amounts of total compensation reported for our CEO for each corresponding year in the “Total” column of the Summary Compensation Table in each applicable year. |
Pay Versus Performance
| (2) The amount reported represent the Compensation Actually Paid to our CEO, computed in accordance with Item 402(v) of Regulation S-K, but do not reflect the actual amount of compensation earned by or paid to our CEO in the applicable year. Compensation Actually Paid is calculated by making the following adjustments to the Summary Compensation Table amounts for our CEO: |
Adjustments to Determine Compensation “Actually Paid” for the CEO
| (4) The amounts reported represent the average Compensation Actually Paid to the other named executive officers other than our CEO as a group, computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual average amount in compensation earned by or paid to such other named executive officers as a group in the applicable year. Compensation Actually Paid is calculated by making the following adjustments to the Summary Compensation Table amounts for the Other Named Executive Officers: |
Compensation Actually Paid Compared to Financial Performance Measures
Compensation Actually Paid Compared to Financial Performance Measures The graphs demonstrate the relationship between Compensation Actually Paid compared to TSR, Net Income and ROE.
Compensation Actually Paid and Company and Peer Group TSR
Compensation Actually Paid and Company and Peer Group TSR (1)
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income
Compensation Actually Paid and ROE
Compensation Actually Paid and ROE
Compensation Actually Paid and ROE
| (1) TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end of each fiscal year shown and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. The beginning of the measurement period for each year is the closing price on December 31, 2019. |
Compensation Actually Paid and ROE
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Compensation Actually Paid and ROE
| PROPOSAL III—ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION |