Craig Knutson
About Craig Knutson
Craig L. Knutson (age 65) is MFA’s Chief Executive Officer and a director (director since 2017; CEO since August 2017; previously President and COO) with more than three decades in mortgage finance and capital markets. He holds an MBA from Harvard and an AB (magna cum laude) from Hamilton College . Under his leadership, MFA reported 2024 GAAP net income of approximately $119.3 million, raised asset yields to 6.64% while holding cost of funds near ~4.5%, executed eight securitizations totaling $2.4 billion UPB, maintained low recourse leverage (1.7x) and liquidity of ~$339 million, and paid $1.40/share in dividends . For the 2024 performance period, Adjusted GAAP ROAE was ~13.73% and Adjusted Distributable Earnings ROAE was ~12.53%, supporting above-target annual incentive payouts; Say‑on‑Pay support in 2024 was 92.6% .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| MFA Financial, Inc. | CEO; previously President & COO; EVP | CEO since Aug 2017; President & COO 2014–2017; EVP 2008–2013 | Led portfolio construction, hedging, securitizations; oversaw operational transition and capital allocation . |
| CBA Commercial, LLC | Senior EVP | 2004–2007 | Acquirer/securitizer of small‑balance commercial mortgages; securitization expertise . |
| ARIASYS Inc. | President & COO | 2001–2004 | Led software solutions firm operations; management/tech exposure . |
| First Boston (Credit Suisse), Smith Barney, Morgan Stanley | Mortgage trading/finance roles | 1986–1999 | Deep MBS and mortgage finance expertise . |
| E.F. Hutton & Co. | Investment Banking (Analyst/Associate) | Early career | Foundational IB/finance skills . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | No current public company directorships disclosed | — | Knutson’s MFA biography lists prior operating/finance roles; no other public board seats disclosed . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 800,000 | 800,000 | 800,000 |
| Discretionary Annual Bonus (IRM) ($) | 750,000 | 625,000 | 500,000 |
| Perquisites | None beyond standard employee benefits (no executive perqs) | — | — |
Notes:
- CEO pay structure is heavily at‑risk (approx. 89.9% in 2024), with ~49.5% delivered in equity (TRSUs/PRSUs) .
Performance Compensation
Annual Incentive Plan – 2024 Outcomes (Performance Period: Dec 1, 2023 – Nov 30, 2024)
| Component | Weight of Target Formulaic | Target | Actual | Payout (% Target) | Payout ($) |
|---|---|---|---|---|---|
| Adjusted GAAP ROAE Bonus | 30% of Formulaic | 9.25% | 13.73% | 166.4% | 748,800 |
| Adjusted Distributable Earnings ROAE Bonus | 30% of Formulaic | 9.25% | 12.53% | 181.9% | 818,550 |
| Relative DE ROAE Bonus vs REM peer group | 40% of Formulaic | 50th percentile (target) | 81.8th percentile | 200.0% | 1,200,000 |
| Total Formulaic Bonus | — | $1,500,000 target | — | — | 2,767,350 |
| IRM (discretionary) | — | $500,000 target | — | 100% | 500,000 |
Plan mechanics:
- Formulaic bonus is 75% of overall target; allocations: 30% Adjusted GAAP ROAE, 30% Adjusted Distributable Earnings ROAE, 40% Relative DE ROAE . Threshold/Target/Max performance curves were disclosed for each component .
Long‑Term Incentives – 2024 Grants (awarded Jan 2, 2024)
| Award | Units | Grant Date Value ($) | Vesting | Performance metric/details |
|---|---|---|---|---|
| TRSUs | 142,223 | 1,600,009 | Cliff vest 12/31/2026; dividend equivalents paid in cash during vesting . | Service‑based . |
| PRSUs (target) | 230,721 | 2,400,008 | Performance period 1/1/2024–12/31/2026; 1‑year settlement deferral; dividend equivalents accrue, paid in shares if vested . | 50% Absolute TSR vs 8% p.a. simple TSR target grid; 50% Relative TSR vs designated REM peer group (0–200% payout; cap at 100% if absolute TSR < 0) . |
2024 realized outcomes for earlier cycles:
- 2022 TRSUs vested at 55.5% of grant-date value due to stock price decline; 2022 PRSUs vested at ~47.5% of target (30.2% of grant-date value) .
Peer frameworks:
- Compensation benchmarking peer set spans mortgage REITs and real estate finance firms; FW Cook is the independent consultant .
- Relative TSR and Relative DE ROAE peer group is the iShares Mortgage REIT ETF (REM) constituents (Appendix A) .
Equity Ownership & Alignment
| Category | Amount | Dates/Notes |
|---|---|---|
| Common Stock Beneficially Owned | 543,781 shares | <1% of outstanding (Company denotation) ; MFA had 102,652,862 shares outstanding 4/8/2025 . |
| Fully‑Vested RSUs (beneficially owned) | 81,818 units | Settles in stock one‑for‑one . |
| Unvested TRSUs | 157,481 (vest 12/31/2025); 142,223 (vest 12/31/2026) | Market value at 12/31/2024: $1,604,731 and $1,449,252 respectively (based on $10.19) . |
| Unvested PRSUs (target) | 301,882 (2023 grant, vest 12/31/2025); 230,721 (2024 grant, vest 12/31/2026) | Market value at 12/31/2024: $3,076,178 and $2,351,047 respectively (target basis) . |
Alignment/controls:
- Officer stock retention/ownership: cannot sell/transfer shares from equity awards during employment or for 6 months after termination unless total holdings ≥4x base salary .
- Hedging/pledging prohibited; no margin accounts; robust insider trading policy (trading windows) .
- No stock options outstanding; equity largely full‑value RSUs; no option repricing permitted under plan .
Vesting/calendar supply considerations:
- Material vesting dates: 12/31/2025 (TRSUs and 2023 PRSUs) and 12/31/2026 (TRSUs and 2024 PRSUs), with one‑year settlement deferral on PRSUs; dividend equivalents on PRSUs paid in shares at settlement .
Employment Terms
| Term | Provision |
|---|---|
| Agreement & Term | Amended/restated employment agreement effective Jan 1, 2021; amended May 3, 2022 and Feb 21, 2024; auto‑renews annually unless 90‑day notice; current term through Dec 31, 2025 . |
| Base Salary | $800,000 (2024) . |
| Annual Bonus Design | Overall target bonus $2,000,000; 75% formulaic (Adjusted GAAP ROAE; Adjusted Distributable Earnings ROAE; Relative DE ROAE); 25% discretionary IRM; each component 0–200% of target; paid in cash . |
| LTI Awards | Annual TRSUs and PRSUs (50% Absolute TSR / 50% Relative TSR) with three‑year performance/vesting; PRSUs subject to 1‑year settlement deferral; dividend equivalents accrue for PRSUs and are paid in shares if vested . |
| Notice/Garden Leave | 90‑day notice by either party (outside CIC); three months’ base salary garden leave on voluntary resignation/retirement (for Knutson) . |
| Severance (No CIC) | If terminated without Cause/Good Reason resignation: 200% of (base salary + Median Bonus); partial acceleration of time‑based awards (12 months look‑forward) and pro‑rata PRSUs at “target” for modeling; health benefits not specified for Knutson; see table for amounts . |
| Change‑in‑Control | Double‑trigger only: if terminated (not for Cause) or resigns for Good Reason within 12 months after CIC: 200% of (base salary + Median Bonus); immediate vesting of all equity at “target” for PRSUs; 18 months company‑paid health coverage . |
| CIC/Tax | No tax gross‑ups; Section 280G best‑net approach (cutback if beneficial) . |
| Clawback | Dodd‑Frank/SEC Rule 10D‑1 compliant recoupment policy (restatement‑based); award‑level forfeiture/recoupment for covenants breaches . |
| Restrictive Covenants | Post‑termination non‑compete (services to/interest in other mortgage REITs limited), non‑solicit and confidentiality . |
Selected modeled payments as of 12/31/2024 (illustrative per proxy):
- Without Cause/Good Reason: total incremental ~$10.54 million (severance + equity acceleration; see proxy table) .
- CIC double‑trigger: total incremental ~$14.64 million (severance + full equity vesting + benefits) .
Board Governance (Director Service, Committees, Independence)
- Director since 2017; not independent due to CEO role .
- Board leadership separated: independent Chair (Laurie S. Goodman); enhances oversight and mitigates CEO/Chair dual‑role risk .
- Committee memberships (Audit, Compensation, Nominating & Governance) include only independent directors; Knutson is not listed on these committees .
- Board/committee attendance: each director attended ≥75% of meetings in 2024; Board met 10x with 12 unanimous written consents .
- Executive sessions of independent directors held at least four times per year .
- Director compensation: employee‑directors (currently only Knutson) receive no additional director pay .
Say‑on‑Pay, Peer Groups, and Shareholder Feedback
- Say‑on‑Pay (2024): 92.6% approval, indicating strong shareholder support .
- Benchmarking peer group spans mortgage REITs and real estate finance (e.g., AGNC, ABR, CIM, DX, LADR, NYMT, RWT, TWO; see full list) .
- Relative TSR/Relative DE ROAE peer group: constituents of iShares Mortgage REIT ETF (REM) (Appendix A) .
- Independent compensation consultant: FW Cook; no conflicts identified .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; no loans to executives; robust insider trading policy; blackout communications observed .
- No related‑party transactions over $120,000 reported; Section 16(a) compliance reported as timely .
- Equity plan forbids repricing; no options outstanding; equity overhang/burn rate transparently disclosed .
- Pay‑versus‑performance disclosed; compensation “actually paid” tracks company performance metrics (Adjusted Distributable Earnings ROAE, TSR) .
Equity Plan Supply and Potential Selling Pressure
| Item | Amount/Rate | Notes |
|---|---|---|
| Shares outstanding (Record Date 4/8/2025) | 102,652,862 | Proxy record date . |
| CEO beneficial ownership | 543,781 shares common; 81,818 fully‑vested RSUs | <1% of class . |
| Upcoming CEO vesting (selected) | TRSUs (157,481) 12/31/2025; PRSUs (target 301,882) 12/31/2025; TRSUs (142,223) 12/31/2026; PRSUs (target 230,721) 12/31/2026 | PRSUs have 1‑year settlement deferral; share retention policy limits sales before 4x salary ownership . |
Performance & Track Record Highlights (2024 and recent)
- 2024: GAAP net income ~$119.3m; interest income ~$724.0m; added ~$3.6b target assets; eight securitizations totaling $2.4b UPB; yield on interest‑earning assets +48 bps to 6.64%; cost of funds ~4.5%; recourse leverage 1.7x; overall leverage 5.0x; unrestricted cash ~$339m; dividends $1.40/share .
- 2024 incentives aligned to above performance; Formulaic components paid above target; IRM paid at 100% target .
- Pay vs Performance: TSR translation of $100 investment shown; Adjusted Distributable Earnings ROAE emphasized as Company‑Selected Measure .
Compensation Structure Analysis
- Mix and risk: ~89.9% of CEO 2024 pay at‑risk; 60% of 2024 LTI grant date value performance‑based (TSR) .
- Metrics rigor: 2024 ROAE targets were raised vs 2023; threshold for Adjusted GAAP ROAE set at 0% and Distributable Earnings ROAE at 5.5% with clearly defined curves up to 200% payout .
- Discretion usage: IRM component reserved for qualitative outcomes (risk management, strategic execution), paid at target for CEO .
- Plan hygiene: Clawback, no gross‑ups, double‑trigger CIC, prohibition on repricing; independent consultant; strong Say‑on‑Pay support .
Investment Implications
- Alignment: High at‑risk, TSR‑linked LTI and ROAE‑based annual incentives align CEO pay with book value/earnings and market outcomes; retention/ownership and anti‑pledging policies reduce forced selling risk .
- Near‑term supply: Material RSU vesting at year‑end 2025 and 2026 could add sellable shares, but one‑year deferral on PRSU settlement and 4x‑salary ownership/retention restrictions mitigate immediate selling pressure .
- Governance: Independent Chair, CEO not on key committees, regular executive sessions—reduces dual‑role governance concerns .
- Downside protections: No tax gross‑ups; CIC benefits are double‑trigger; 280G cutback to best‑net outcome; robust clawback—limits shareholder‑unfriendly optics in adverse scenarios .
- Pay support and consultant: 92.6% Say‑on‑Pay and independent consultant usage indicate investor and committee discipline; changes to targets year‑over‑year suggest responsiveness to macro and performance context .