Serena Wolfe
About Serena Wolfe
Serena Wolfe is Annaly Capital Management’s Chief Financial Officer (CFO), age 45, serving since December 2019 after 20+ years at Ernst & Young (EY), including leadership of EY’s Central Region Real Estate Hospitality & Construction practice; she holds a Bachelor of Commerce in Accounting from the University of Queensland and is a CPA in New York and California, and serves on the board of Lennar Corporation . During her tenure, Annaly’s Tangible Economic Return (TER) has been volatile but improved in 2024: 2020: 1.6%, 2021: 0.1%, 2022: (23.7)%, 2023: 6.1%, 2024: 11.9% . The company emphasizes TER and Earnings Available for Distribution (EAD) Return on Equity as core performance measures in incentive design, with dividend-driven TSR features integrated into long-term equity governance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Annaly Capital Management, Inc. | Chief Financial Officer | Dec 2019–present | Oversees firm financial condition, reporting, treasury and financing capacity; supports buildout of Residential Credit and MSR controls; reduced weighted average repo rate and expanded warehouse financing . |
| Ernst & Young LLP (EY) | Partner; Central Region RHC Leader; Global RHC Assurance Leader | 2011–2019 (Partner), 2017–Nov 2019 (RHC Leader) | Led sector go-to-market and client relationships; multi-jurisdiction practice across U.S. and Australia . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Lennar Corporation (NYSE: LEN) | Director | Not disclosed | Public company board service adds housing cycle insight; governance experience . |
Fixed Compensation
Multi-year compensation (SEC Summary Compensation Table):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Salary ($) | 750,000 | 750,000 | 750,000 |
| Bonus ($) | 1,781,250 | 2,348,400 | 2,723,200 |
| Stock Awards ($) | 749,992 | 1,781,232 | 2,348,400 |
| All Other Compensation ($) | 13,032 | 14,250 | 11,750 |
| Total ($) | 3,294,274 | 4,893,882 | 5,833,350 |
2024 incentive targets (set at start of year):
| Component | Target Amount ($) |
|---|---|
| Target Cash Incentive | 2,250,000 |
| Target RSUs | 1,125,000 |
| Target PSUs | 1,125,000 |
| Target Total Incentive | 4,500,000 |
Performance Compensation
Corporate scorecard (2024) and individual/overall outcomes:
| Metric | Weight | Threshold | Target | Maximum | Actual | Payout Multiplier |
|---|---|---|---|---|---|---|
| Relative Tangible Economic Return | 50% | 5th percentile | 55th percentile | 100th percentile | 89th percentile | 129% |
| Operating Efficiency (OpEx/Equity, Absolute) | 30% | 1.60% | 1.45% | 1.30% | 1.47% | 92% |
| Market Risk (Total Assets Available for Financing / Equity) | 10% | 40% | 45% | 50% | 56% | 150% |
| Operational Risk (KRIs achieved) | 10% | 10/12 | 12/12 | N/A | 12/12 | 100% |
| Weighted Corporate Multiplier | 117% |
| Individual Assessment | Weight | Individual Multiplier | Absolute TER Modifier | Final Multiplier |
|---|---|---|---|---|
| Serena Wolfe | 25% | 125% | +2% (12% Absolute TER) | 121.00% |
Award outcomes for 2024 performance (granted/payed early 2025):
| Component | Amount ($) |
|---|---|
| Cash Incentive Paid | 2,723,200 |
| RSUs Granted (Value) | 1,361,600 |
| PSUs Granted (Target Value) | 1,361,600 |
| Total Annual Incentive (Cash + Equity) | 5,446,400 |
PSU (2025–2027) performance design:
| Metric | Weight | Threshold | Target | Above Target | Maximum | TSR Governor |
|---|---|---|---|---|---|---|
| Relative Tangible Economic Return | 50% | 25th pct: 50% | 55th pct: 100% | 75th pct: 125% | >90th pct: 150% | Payout capped at 100% if 3-year TSR is negative |
| Average EAD ROE | 50% | 10.50%: 50% | 11.50%: 100% | 12.50%: 125% | 13.50%: 150% | N/A |
Equity Ownership & Alignment
Ownership and outstanding equity (as of applicable dates):
- Beneficial ownership: 58,460 shares; percent of class “*” (<1%) .
- Stock ownership guideline: 3× base salary for executive officers; required holding of net shares until later of 1 year post vest/exercise or meeting guideline .
- Hedging/pledging: Prohibited for directors, executive officers, and employees .
Outstanding awards at 12/31/2024:
| Grant Date | Type | Unvested/Unearned (#) | Market/Payout Value ($) |
|---|---|---|---|
| 2/1/2022 | RSUs | 5,829 | 106,671 |
| 2/1/2023 | RSUs | 31,385 | 574,346 |
| 2/1/2023 | PSUs (unearned) | 70,613 | 1,292,209 |
| 2/1/2024 | RSUs | 66,302 | 1,213,327 |
| 2/1/2024 | PSUs (unearned) | 99,456 | 1,820,045 |
2024 vesting realized:
| Metric | 2024 |
|---|---|
| Shares acquired on vesting (#) | 46,566 |
| Value realized ($) | 911,288 |
2024 award grants (for 2024 performance, granted on 2/1/2025):
| Type | Value ($) | Units (#) | Vesting |
|---|---|---|---|
| RSUs | 1,361,600 | 66,712 | 3 equal annual installments starting 2/1/2026 |
| PSUs (target) | 1,361,600 | 66,712 | 3-year performance period 1/1/2025–12/31/2027 with metric thresholds as above |
Employment Terms
| Provision | Term |
|---|---|
| Severance (without cause, non-CIC) | 1.25× base salary + 1.25× target cash bonus (lump sum), plus prorated cash bonus if termination after March 31 based on prior-year bonus; subject to release and clawback . |
| Change-in-Control Cash Severance | No enhanced cash severance; no single-trigger cash severance . |
| Equity – Qualifying Termination | RSUs continue to vest per schedule; PSUs continue to vest based on actual performance (not prorated); subject to release and covenants . |
| Equity – CIC + Involuntary Termination/Good Reason | Immediate vesting of all unvested RSUs; immediate vesting of PSUs at greater of target or actual (measured at last fiscal quarter-end before CIC) . |
| Clawbacks | Two policies: (1) No-fault recoupment for accounting restatements (3 fiscal years), and (2) misconduct-based recoupment for “detrimental conduct”; covers cash and all equity . |
| Prohibitions | No hedging or pledging of Company stock . |
| Tax Gross-ups | No tax gross-ups for CIC excise taxes or perquisites (other than non-cash relocation benefits) . |
Quantified potential payments (assuming termination at 12/31/2024):
| Scenario | Severance ($) | Bonus ($) | Accelerated/Continued Equity ($) | Total ($) |
|---|---|---|---|---|
| Without Cause (non-CIC) | 3,750,000 | 2,723,200 | 5,006,596 | 11,479,796 |
| Without Cause (within 2 years of CIC) | 3,750,000 | 2,723,200 | 5,006,596 | 11,479,796 |
| Death | 0 | 0 | 3,969,179 | 3,969,179 |
| Disability | 0 | 0 | 5,006,596 | 5,006,596 |
Performance & Track Record
Tangible Economic Return (companywide) during Wolfe’s tenure:
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Tangible Economic Return (%) | 1.6 | 0.1 | (23.7) | 6.1 | 11.9 |
2024 highlights cited in MDC review: improved liquidity and leverage, growth in Residential Credit and MSR portfolios, capital raising via ATM program, and operating expense below mREIT peer average .
Compensation Peer Group and Performance Peer Group
- Compensation Peer Group includes diversified financials and mREITs (e.g., AMG, AMP, BEN, JEF, LAZ, RJF, VOYA; mREITs like AGNC, MFA, CIM, NYMT, RWT, RITM, PFSI, CG) .
- Performance Peer Group used for scorecard and PSUs includes agency and hybrid mREIT peers (AGNC, ARR, CIM, DX, EFC, IVR, MFA, NYMT, ORC, RWT, TWO, RITM) .
Say‑on‑Pay & Shareholder Feedback
The 2024 advisory vote on executive compensation received ~63% support versus a prior five-year average ~88%, prompting enhanced engagement and program changes to increase equity weighting, simplify scorecard, rebalance absolute vs relative metrics, and apply scorecard only to cash incentives from 2025 onward .
Related Party Transactions and Governance Red Flags
No related person transactions requiring disclosure since the beginning of 2024; governance policies include prohibition on hedging/pledging, robust clawbacks, and no option repricing without shareholder approval .
Equity Program Design Notes
- RSUs vest over three years; dividend equivalents accrue and are paid only upon vesting .
- PSUs use 3-year performance against Relative TER and Average EAD ROE; a TSR governor caps Relative TER payouts if TSR is negative .
- 2022 PSU cohort paid out at 125% of target based on 58th percentile Relative TER (capped at 100% due to negative TSR) and 14.44% Average EAD ROE (150%) .
Investment Implications
- Alignment: Strong pay-for-performance architecture centered on TER and EAD ROE, robust clawbacks, and prohibitions on hedging/pledging support investor alignment; equity is 50% of total incentive for NEOs, with PSUs at 50% (moving to 60% target in 2025) .
- Execution signals: 2024 corporate scorecard above target (117%) and Wolfe’s above-target individual multiplier (125%) led to a 121% final payout, consistent with improved TER and liquidity—suggesting reduced compensation risk and credible operational execution .
- Retention/change-in-control: Cash severance is modest (1.25× salary+bonus) with double-trigger equity treatment and no CIC cash enhancements or tax gross-ups—lowering payout tail risk while providing continuity incentives .
- Selling pressure: RSUs vest annually and PSUs cliff after three years; 2024 saw 46,566 shares vest for Wolfe, and sizable unearned PSUs remain outstanding, creating periodic settlement events but with governance limits on pledging/hedging .
- Governance watch: The 63% 2024 say‑on‑pay result is a caution flag; however, program changes for 2025 (greater equity/PSU mix, simplified cash scorecard with more absolute metrics) should mitigate future vote risk and tighten pay-performance linkage .