Michael Schwartz
NewtekOneAbout Michael Schwartz
Michael A. Schwartz, 64, is Chief Legal Officer and Corporate Secretary of NewtekOne, Inc. since January 2015 and of Newtek Bank, N.A. since January 2023; he joined Newtek as Senior Counsel in November 2013 and previously spent 22 years in private practice specializing in complex litigation across securities, M&A, corporate governance, commercial law, employment, consumer protection, and antitrust; he served on Newtek’s Board from 2005–2009 . Company performance context during his executive tenure shows 5-year TSRs of -1.5% (2024), -11.1% (2023), -50.2% (2022), 55.5% (2021), and -1.5% (2020) alongside Net Income of $50.9M (2024), $47.3M (2023), $32.3M (2022), $84.1M (2021), and $33.6M (2020) with EPS of $1.97 (2024), $1.89 (2023), $1.34 (2022), $3.69 (2021), and $1.59 (2020) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| NewtekOne, Inc. | Senior Counsel | Nov 2013–Jan 2015 | Supported legal strategy during transition phases; foundation for later CLO role |
| NewtekOne, Inc. | Chief Legal Officer & Corporate Secretary | Jan 2015–Present | Oversight of legal, governance, and disclosure; continuity through BDC-to-FHC conversion |
| Newtek Bank, N.A. | Chief Legal Officer & Corporate Secretary | Jan 2023–Present | Bank legal governance post conversion; regulatory alignment |
| NewtekOne, Inc. | Director | 2005–2009 | Board-level oversight during growth period |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Private Legal Practice | Complex litigation attorney | ~22 years prior to Nov 2013 | Deep expertise in securities/M&A/governance; informs risk management at Newtek |
Fixed Compensation
| Year | Salary ($) | Bonus ($) | Stock Awards – Grant Date Fair Value ($) |
|---|---|---|---|
| 2022 | 400,000 | 200,000 | 300,000 |
| 2023 | 450,000 | 250,000 | — |
| 2024 | 500,000 | 150,000 | 268,000 |
- 2025 renewal: Employment Agreement renewed April 22, 2025 with base salary increased to $625,000 through March 31, 2026 .
Performance Compensation
| Incentive Type | Metric(s) Tied to Pay | Weighting | Target | Actual | Payout ($) | Vesting |
|---|---|---|---|---|---|---|
| Annual Cash Bonus (2024) | Profitability/EPS growth; deposit and loan growth; operating plan execution; dividends; regulatory/compliance support | Discretionary | Not disclosed | Qualitative assessment by CEO/Nominating Committee | 150,000 | N/A |
| RSAs – Jul 1, 2024 (9,944 shares) | Company and individual performance; retention | Discretionary | Not disclosed | Not disclosed | 124,000 fair value | Vests Jul 15, 2025 |
| RSAs – Oct 4, 2024 (11,326 shares) | Company and individual performance; retention | Discretionary | Not disclosed | Not disclosed | 144,000 fair value | Vests Oct 15, 2025 |
| Prior RSAs – Aug 2022 (14,124 shares) | Company and individual performance; retention | Discretionary | Not disclosed | Not disclosed | Not disclosed | Vests Aug 15, 2025 |
- Clawback policy adopted Nov 16, 2023, effective Dec 1, 2023, covering incentive-based comp received during the three fiscal years preceding an accounting restatement (post Oct 2, 2023 Nasdaq rule effective date) .
Equity Ownership & Alignment
| Category | Detail |
|---|---|
| Total Beneficial Ownership | 61,540 shares; less than 1% of outstanding |
| Unvested RSAs (12/31/2024) | 39,846 shares; market value $508,833 at $12.77/share |
| Option Holdings | None outstanding (company-wide) at 12/31/2024 |
| Future Vesting Schedule | 9,944 (Jul 15, 2025); 11,326 (Oct 15, 2025); 14,124 (Aug 15, 2025) |
| Hedging/Pledging | Prohibited for directors/executives; also short sales and derivatives prohibited |
| Ownership Guidelines | Executives encouraged to hold a meaningful number of shares; no specific multiple disclosed |
Detailed Vesting Schedule
| Grant Date | Shares | Scheduled Vest Date |
|---|---|---|
| Aug 2022 | 14,124 | Aug 15, 2025 |
| Jul 1, 2024 | 9,944 | Jul 15, 2025 |
| Oct 4, 2024 | 11,326 | Oct 15, 2025 |
Employment Terms
| Element | Key Terms |
|---|---|
| Role & Tenure | CLO & Corporate Secretary since Jan 2015; CLO & Secretary of Newtek Bank since Jan 2023 |
| Current Agreement | Renewed Apr 22, 2025; term through Mar 31, 2026; base salary $625,000 |
| 2024 Agreement | Term through Mar 31, 2025; base salary $500,000; annual salary review; eligible for discretionary bonus; standard benefits |
| Non-Compete/Outside Roles | Devote substantially full business time; may serve on other boards/roles if no conflicts; passive/minority investments allowed |
| Severance – Termination w/o Cause | 1.0x current base + prior-year cash bonus; installments over 12 months |
| Severance – Non-Renewal | 0.5x current base + prior-year cash bonus; installments over 6 months |
| Change-in-Control (CIC) | 1.15x current base + prior-year cash bonus; equity awards accelerate |
| Equity Acceleration | Unvested equity accelerates upon termination w/o cause, non-renewal, or CIC |
| Clawback | Restatement-driven recovery for incentive comp; effective Dec 1, 2023 |
| Perquisites/Benefits | NEOs generally receive benefits available to all employees; 401(k) match policy in 2024 (aggregate ~$533,433 across company) |
| Deferred Comp/Pension | No nonqualified deferred comp; no pension obligations |
Compensation Structure Analysis
- Year-over-year shifts: 2024 base salary rose to $500,000 from $450,000, with lower discretionary bonus vs. 2023 and resumption of RSA grants after no grants in 2023; overall cash/equity mix rebalanced toward equity alignment in 2024 .
- Discretionary design: Company does not set individual quantitative targets for NEOs; bonuses and RSA awards are discretionary, tied to holistic performance factors (EPS/profitability, deposits/loans growth, dividends, execution) .
- Governance/Shareholder feedback: Say-on-pay received ~96% approval in 2024, indicating strong investor support for pay practices .
- Risk controls: Hedging/pledging prohibited; clawback in place; no options outstanding (reduces repricing risk) .
Track Record, Value Creation, and Execution Risk
- Performance linkage: Company discloses “Pay Versus Performance” with multi-year TSR and Net Income/EPS, providing transparency on alignment; 2024 TSR (-1.5%) with Net Income $50.9M and EPS $1.97 contextualizes 2024 awards .
- Strategic execution: Schwartz’s long tenure across the corporate conversion to a financial holding company and bank subsidiary governance implies continuity in legal/regulatory execution .
- Red flags: No disclosed related-party transactions involving Schwartz; insider policy restricts hedging/pledging; compensation largely discretionary but supported by say-on-pay outcomes .
Investment Implications
- Near-term selling pressure: Three 2025 vesting events totaling 35,394 RSAs may incrementally increase tradable float and create potential selling windows; monitor post-vesting Form 4s for disposition patterns .
- Alignment: Hedging/pledging prohibitions, equity acceleration provisions, and renewed agreement at $625,000 base suggest retention and alignment, though discretionary metrics reduce strict pay-for-performance precision; strong say-on-pay support mitigates governance concerns .
- Retention and CIC economics: Severance multiples are moderate (1.0x/0.5x; 1.15x CIC) with full acceleration upon certain events, balancing retention against potential change-in-control outcomes; equity-heavy 2024 grants enhance skin-in-the-game but are time-based .
- Monitoring focus: Watch 2025 vesting dates (Jul 15, Oct 15, Aug 15) and any renewed grant cadence; track company performance drivers used in CD&A (EPS, deposits/loans growth, dividends) to assess future bonus/award trajectory .