Redwood Trust, Inc. · NYSE:RWT
Redwood Trust — Proxy Contest (May 2018)
16 slides from Redwood Trust's proxy contest presentation, May 11, 2018
Slide 1: Performance-Based Executive Compensation at Redwood Trust, Inc.
1 Performance - Based Executive Compensation at Redwood Trust, Inc. (NYSE: RWT ) 1 May 2018
Slide 2: Performance-Based Compensation Philosophy
2 ▪ Redwood’s compensation program is administered by an independent Compensation Committee of the Board Independently incentivize attainment of both short - term and long - term business and stockholder return objectives by: • Achieving stable and attractive ROEs to support the payment of regular
Slide 3: Consistent Philosophy and Program – Consistently Supported by Stockholders
3 ▪ The philosophy and key elements of the program have remained consistent in recent years, based on the: Compensation Committee’s annual review of the structure and results of application of the program, which is conducted in consultation with the Committee’s independent compensation consultant
Slide 4: Elements of the Compensation Program
4 ▪ Base Salary and Standard Benefits Base salary and standard benefits together generally represent less than 25% of an executive’s target compensation ▪ Annual Bonus 75% earned based on ROE - based performance metric • Performance target must at least represent earnings equal to regular annual
Slide 5: Redwood's 2017 Performance
5 Redwood’s 2017 Performance ▪ Strong 2017 Operating Performance 2017 earnings per share of $1.60 (fully diluted, as reported under GAAP) 2017 ROE of 11.9% (based on 2017 GAAP financial results) GAAP book value per share increased by $0.87 per share during 2017, or 5.82%, after paying cumulati
Slide 6: ROE Performance Relative to Other Publicly-Traded Mortgage REITs
6 ROE Performance Relative to Other Publicly - Traded Mortgage REITs ▪ Redwood’s one - and five - year ROE performance compares favorably to other publicly - traded mortgage REITs Redwood has regularly compared its financial performance to these other publicly - traded mortgage REITs because their
Slide 7: Redwood's Long-Term Performance
7 Redwood’s Long - Term Performance ▪ Solid Long - Term Results Five - year average annual ROE of 10.9% (based on annual GAAP financial results) Five - year TSR of 23% Over the 2013 - 2017 five - year period, GAAP book value per share increased by $1.88 per share, or 13.4%, after paying cumula
Slide 8: Value Realized From Equity Awards Tracks with TSR Over Multi-Year Periods
8 ▪ Realization of the value of prior years’ long - term equity awards (or the partial or total forfeiture of that value) is a key component of Redwood’s performance - based compensation program The overall target value of these awards is only realized when stockholders experience attractive long
Slide 9: Compensation Program Incorporates Best Practices
9 Compensation Program Incorporates Best Practices
Slide 10: APPENDIX – Compensation Benchmarking Peer Group
10 APPENDIX – Compensation Benchmarking Peer Group Focus Topic : Redwood’s Compensation Benchmarking Peer Group
Slide 11: APPENDIX – Compensation Benchmarking Peer Group
11 APPENDIX – Compensation Benchmarking Peer Group ▪ The Compensation Committee uses of a compensation benchmarking peer group in connection with market - based compensation analysis and validating competitive positioning in attracting and retaining executives This benchmarking peer group is deter
Slide 12: APPENDIX – Compensation Benchmarking Peer Group (cont.)
12 APPENDIX – Compensation Benchmarking Peer Group (cont.) ▪ The key steps the Committee follows, and the objective criteria used, in determining the compensation benchmarking peer group are outlined below:
Slide 13: Peer group financial metrics comparison
13 Latest Available Four Quarters ($ Millions) Total Assets Market Capitalization ($ Millions) Gross Revenues Net Income as of Latest Quarter ($M) as of 2/28/17 12-Month Average Stifel Financial $2,570 Chimera Investment $552 Nationstar Mortgage $19,593 Stifel Financial $3,677 Chimera Investment $3,
Slide 14: APPENDIX – Setting Performance Targets
14 APPENDIX – Setting Performance Targets Focus Topic : Setting Performance Targets
Slide 15: APPENDIX – Setting Performance Targets: Annual Bonuses
15 APPENDIX – Setting Performance Targets Performance Target for Annual Bonuses ▪ 75% of target annual bonuses are earned based on achievement of a target level of Adjusted ROE established by the Compensation Committee The target Adjusted ROE threshold is established based on a risk - free interes
Slide 16: APPENDIX – Setting Performance Targets (cont.): PSUs
16 APPENDIX – Setting Performance Targets (cont.) Performance Target for Performance Stock Units (PSUs) ▪ It is the Compensation Committee’s practice for performance - based equity awards to comprise 50% of year - end long - term equity awards 50% of executives’ 2017 long - term equity - based awa