Carlos Pelayo
Maverick Merger Sub 2About Carlos Pelayo
Carlos Pelayo is Executive Vice President & Chief Legal Officer at Mr. Cooper Group, serving since February 2023 and bringing 25+ years of legal experience across financial services, regulatory compliance, litigation, capital markets and transactional work. He is 56 years old . Company performance during his tenure has been strong: total shareholder return rose from $521 to $767 on a $100 base in 2023–2024, with net income increasing from $500 million to $669 million and tangible book value from $4,113 million to $4,553 million . His 2024 scorecard was weighted toward financial outcomes, with the EMIP payout at 163.3% of target, reflecting company outperformance on Adjusted EBT and functional expense controls .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Merrill Lynch Wealth Management (Bank of America) | Managing Director and Legal Executive | Dec 2014 – Feb 2023 | Led legal for wealth management; extensive regulatory compliance and transactional oversight . |
| Barclays (Americas private banking) | Managing Director and General Counsel | May 2007 – Dec 2014 | General counsel for investment-driven private banking in the Americas . |
| Davis Polk & Wardwell LLP | Senior Associate | 2001 – May 2007 | Complex capital markets and transactional legal work . |
| U.S. District Court, E.D. Pa. | Judicial Law Clerk (Hon. Jan E. DuBois) | 1999 – 2000 | Federal clerkship; legal research and drafting . |
| Lehman Brothers | Senior Vice President, Legal | — | Senior legal role prior to Barclays acquisition . |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $353,923 (partial year; started Feb 21, 2023) | $430,000 |
| Target Bonus % of Salary (EMIP) | 90% | 90% |
| Target Bonus ($) | $387,000 | $387,000 |
| Actual Non-Equity Incentive Paid ($) | $553,656 | $631,971 |
| Sign-on/Retention Cash ($) | $250,000 sign-on (2023) | — |
Performance Compensation
| Component | Metric | Target | Actual/Result | Payout Mechanics | Payout Outcome |
|---|---|---|---|---|---|
| Annual EMIP (Financial portion, 70% weight) | Adjusted EBT | $710M target; $887M max | $901.6M achieved | 200% payout for metric | Contributes to Pelayo’s 118.3% financial payout |
| Annual EMIP (Financial portion) | Corporate Finance Functional Expense | ($43.53M) target | ($44.94M) achieved | 69.2% payout for metric | Included in Pelayo’s scorecard |
| Annual EMIP (Financial portion) | Legal Functional Expense | ($29.28M) target | ($29.39M) achieved | 96.4% payout for metric | Included in Pelayo’s scorecard |
| Annual EMIP (Strategic portion, 30% weight) | Strategic objectives | N/A | N/A | Committee-assessed; combined with financial results | 45% strategic score used in payout |
| Annual EMIP – Total | Weighted Financial + Strategic | N/A | N/A | Weighted financial 118.3% + strategic 45% → total EMIP 163.3% of target | Final payment $631,971 |
| Long-Term Incentive (RSUs) | Time-based RSUs | $387,000 target (2024) | $387,050 grant-date fair value (2024 grant) | Vests one-third on each of the first three anniversaries | 2024 vesting realized: 4,568 shares; $325,607 value |
| Long-Term Incentive (PSUs) | PSUs (TBV + Relative TSR) | Not granted to Pelayo in 2024 | N/A | 3-year cliff; 50% TBV and 50% Relative TSR; negative TSR cap at target | N/A |
Equity Ownership & Alignment
- Policies: No short sales, hedging, or pledging; double-trigger equity acceleration default on change of control; clawback of incentive compensation under specified circumstances .
- RSU vesting terms: Time-based RSUs vest one-third annually over three years; unvested RSUs accelerate upon death, disability, or change-in-control followed by a qualified termination within a specified window .
Beneficial Ownership
| Holder | Shares Beneficially Owned | % of Shares Outstanding |
|---|---|---|
| Carlos Pelayo | 6,520 | Less than 1% |
Outstanding Equity Awards (as of Dec 31, 2024; close price $96.01)
| Grant Date | Unvested RSUs (#) | Market Value ($) |
|---|---|---|
| Mar 1, 2023 | 9,153 | $878,780 |
| Mar 1, 2024 | 5,430 | $521,334 |
Stock Vested in 2024
| Name | Shares Acquired on Vesting (#) | Value Realized ($) |
|---|---|---|
| Carlos Pelayo | 4,568 | $325,607 |
Insider Selling Pressure Outlook
- Near-term vesting cadence creates periodic tradable flow: Pelayo’s time-based RSUs from 2023 and 2024 grants vest in equal one-third tranches on each anniversary of the grant dates (e.g., Mar 1, 2025/2026/2027 for the 2024 grant), maintaining steady vest-related supply over the next two years absent 10b5-1 plans .
- Merger conversion: On Oct 1, 2025, all outstanding RSUs were converted into Rocket Class A RSUs at an 11.00 exchange ratio, with identical vesting schedules; performance conditions on PSUs were determined pre-closing by the Compensation Committee (Pelayo’s awards are time-based) .
Employment Terms
| Scenario | Cash Severance (Salary) | Cash Severance (Bonus) | Equity Acceleration | Other Benefits | Notes |
|---|---|---|---|---|---|
| Death | — | — | RSUs $1,400,114 | Life Insurance $1,360,000 | As of 12/31/2024 |
| Disability | — | — | RSUs $1,400,114 | — | As of 12/31/2024 |
| Termination Without Cause | — | — | — | — | No scheduled cash severance disclosed beyond initial period |
| Retirement | — | — | — | — | Not applicable in table for Pelayo |
| Change in Control + Qualified Termination | — | — | RSUs $1,400,114 | — | Double-trigger equity acceleration policy |
- Initial employment protections (historical): During his first 12 months, Pelayo’s offer letter provided 12 months base salary and a pro-rated bonus at target if terminated without cause or for good reason (initial employment window only) .
Compensation Structure Analysis
- Pay-for-performance alignment: 2024 EMIP paid at 163.3% of target, driven by strong Adjusted EBT, while functional expense controls contributed variably; Pelayo’s financial payout factor was 118.3% and strategic 45% .
- Equity mix shift: Pelayo received time-based RSUs only in 2024, consistent with program design that allocates PSUs to CEO/CFO/President and RSUs to all NEOs; RSUs vest ratably and align to retention with market value at vest .
- Year-over-year grant values: Stock awards declined from $637,066 (2023) to $387,050 (2024), while cash incentive increased to $631,971, modestly increasing cash’s share of total compensation in 2024 .
Investment Implications
- Retention and alignment are solid: Prohibition on pledging/hedging, clawbacks, and double-trigger equity acceleration mitigate misalignment and retention risk; RSU-heavy mix provides consistent vesting-based retention incentives .
- Near-term supply from vesting: Scheduled RSU tranches from 2023/2024 grants imply periodic vest-related delivery over the next 24 months; monitor Form 4s for sales post-vesting to gauge selling pressure and any 10b5‑1 plan adoption .
- Change-of-control mechanics: RSUs converted to Rocket stock at fixed exchange ratio with vesting intact; PSUs settled pre-close on performance. Equity value continuity reduces transition risk but introduces new parent equity dynamics for future compensation outcomes .
- Performance linkage: Company TSR and net income improved in 2024 vs 2023, supporting above-target incentive outcomes; continued focus on Adjusted EBT and functional expense discipline should sustain pay-for-performance linkage .