Derek W. Stark
Senior Managing Director, Chief Legal Officer and Secretary at PennyMac Mortgage Investment Trust
Executive
About Derek W. Stark
Senior Managing Director, Chief Legal Officer and Secretary of PennyMac Mortgage Investment Trust (PMT) since February 2018; previously Managing Director, General Counsel and Secretary since September 2009. Age 57; education: B.A. Political Science, University of California, Berkeley; J.D., Loyola Law School, Los Angeles . In 2024 performance share programs measured ROE and Relative TSR delivered ROE of 8.4% and TSR of 33.3%, driving an 80.1% payout for 2023 and 2024 PSU cycles and 110.2% for the 2022 cycle . Say‑on‑pay support has been ~98% in 2022–2024, signaling strong shareholder alignment with the compensation framework .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| PMT | Senior Managing Director, Chief Legal Officer and Secretary | 2018–present | Oversees all legal management (securities, governance, transactions, litigation, regulatory compliance) and serves as primary legal contact for the Board . |
| PMT | Managing Director, General Counsel and Secretary (and other exec roles) | 2009–2018 | Built PMT’s in‑house legal framework during growth and external management structure with PFSI . |
| Countrywide | Executive Vice President and Deputy General Counsel | 1999–2008 | Senior legal leadership across corporate and securities law within a major mortgage platform . |
External Roles
No public company board roles or external directorships are disclosed for Mr. Stark in PMT’s 2025 proxy .
Fixed Compensation
PMT pays no cash compensation to NEOs; compensation is equity‑only at PMT . Mr. Stark’s cash compensation is paid by PFSI (PMT’s external manager’s parent), summarized below.
| Component | 2024 (PFSI) |
|---|---|
| Base Salary ($) | 400,000 |
| Non‑Equity Incentive ($) | 817,955 |
| Stock Awards ($) | 701,182 |
| Option Awards ($) | 257,106 |
| All Other Compensation ($) | 49,690 |
| Total ($) | 2,225,933 |
Notes:
- PMT does not pay salaries/bonuses or provide pension/deferred comp; PMT equity is granted under the 2019 Plan .
Performance Compensation
PFSI Annual Incentive (Design and 2024 Outcome)
| Metric | Weight | Target | Actual (2024) | Payout |
|---|---|---|---|---|
| Return on Equity (PFSI) | 70% | Not disclosed | 8.5% ROE | 52.6% component payout |
| Strategic Objectives | 30% | Not disclosed | Achieved | 150% component payout |
| Overall Annual Incentive Payout | — | — | — | 81.8% of target |
PMT Long‑Term Equity Program (PSUs)
- Structure: 55% PSUs, 45% RSUs for PMT long‑term incentives to executives; PSUs weighted 50% ROE and 50% Relative TSR with three one‑year performance periods and annual/cumulative vesting mechanics (max 200% in any year) .
- 2024 PSU Goalposts:
- ROE: <6% = 0%; 6% = 50%; 8% = 100%; 12%+ = 200% (linear between points); cumulative lookback allowed once .
- Relative TSR: <20th percentile = 0%; 20th–40th = 50%; 40th–60th = 100%; 60th–80th = 150%; 80th–100th = 200% vs defined mREIT peer group .
| PSU Cycle | ROE Target | ROE Actual (2024) | TSR Target | TSR Actual (2024) | Payout (2024) |
|---|---|---|---|---|---|
| 2022 PSU (FY22–24) | 8% | 8.4% | <50% TSR modifier | 33.3% | 110.2% |
| 2023 PSU (FY23–25) | 8% | 8.4% | 40–60% | 33.3% | 80.1% |
| 2024 PSU (FY24–26) | 8% | 8.4% | 40–60% | 33.3% | 80.1% |
PMT 2024 Grants to Derek W. Stark
| Award Type | Grant Date | Quantity | Grant Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| PSUs (target) | 3/12/2024 | 6,702 | 96,241 | Performance‑ and service‑based over three years per plan |
| RSUs | 3/12/2024 | 5,483 | 78,736 | Ratable over three years, beginning one‑year after grant; dividend equivalents during vesting |
2024 Vesting Activity
| Shares Vested in 2024 | Quantity | Value Realized ($) |
|---|---|---|
| PSUs | 6,017 | 84,659 |
| RSUs | 4,872 | 67,198 |
| Total | 10,889 | 151,857 |
Equity Ownership & Alignment
| Ownership Detail | Data |
|---|---|
| Beneficial Ownership (3/31/2025) | 36,665 common shares |
| Shares Outstanding (for calc) | 87,010,608 (3/31/2025) |
| Ownership % | ~0.042% (36,665 ÷ 87,010,608) |
| Pledged Shares | None of the shares have been pledged as security |
| Unvested RSUs at 12/31/2024 | 11,188 (1,676 from 2/25/2022; 4,029 from 2/28/2023; 5,483 from 3/12/2024) |
| Unearned PSUs at 12/31/2024 | 13,883 (2,257 from 2022 cycle; 4,924 from 2023 cycle; 6,702 from 2024 cycle; values shown at target/actual basis per footnotes) |
| Ownership Guidelines | Executives other than CEO: $500,000 ownership guideline; executives 5+ years are in compliance |
| Hedging/Pledging Policy | Hedging and pledging of company stock prohibited; pre‑clearance and trading windows required |
Vesting schedules:
- RSUs: Vest ratably in three equal annual installments beginning on the one‑year anniversary of each grant date (e.g., 3/12/2024 grant) .
- PSUs: Three one‑year performance periods with annual and cumulative vest mechanics; up to 200% max per year; continued service required unless qualifying termination/change‑in‑control triggers apply .
Employment Terms
- Contracts/Severance: PMT provides no cash severance to executive officers; compensation at PMT is equity‑only and governed by the 2019 Plan .
- Change‑in‑Control: Equity awards are double‑trigger for accelerated vesting upon a change in control (with special treatment if PMT shares cease public trading) .
- Termination Provisions:
- PSUs: Retirement (9+ months outstanding) may continue on original terms; death/disability pro‑rata up to 100%; termination other than for cause or termination of management agreement not for cause → full vesting with performance deemed met; other terminations → forfeit .
- RSUs: Retirement (9+ months outstanding) pro‑rata vest; death/disability or termination other than for cause or termination of management agreement not for cause → full vesting; other terminations → forfeit .
- Management agreement term: Expires December 31, 2029, with automatic 18‑month renewals unless earlier terminated per agreement .
Compensation Structure Analysis
- Bias to performance equity: PMT long‑term incentives emphasize PSUs (ROE and Relative TSR) with increased ROE max hurdle to 12% and max payout to 200% in 2024 vs 2023—raising difficulty in a challenging macro backdrop .
- No cash severance, no perquisites or excise tax gross‑ups, no stock option re‑pricing; robust clawback policy (Dodd‑Frank compliant, plus 2018 policy) .
- Independent oversight: Compensation Committee (independent trustees) with Pearl Meyer as independent advisor; annual peer group benchmarking across mortgage REITs (peer group refreshed to include AGNC, Annaly, Dynex) .
Compensation Peer Group (for benchmarking and Relative TSR)
AGNC Investment; Annaly Capital Management; Apollo Commercial Real Estate Finance; Arbor Realty Trust; ARMOUR Residential REIT; Blackstone Mortgage Trust; Chimera Investment; Dynex Capital; Ellington Financial; Invesco Mortgage Capital; KKR Real Estate Finance Trust; Ladder Capital; MFA Financial; Rithm Capital; New York Mortgage Trust; Redwood Trust; Starwood Property Trust; Two Harbors Investment .
Say‑On‑Pay & Shareholder Feedback
- Say‑on‑pay support ~98% in 2022, 2023, 2024; PMT cites shareholder engagement and enhancements including dual performance metrics (ROE and Relative TSR), robust disclosures, clawbacks, majority vote standard, and shareholder bylaw amendment rights .
Risk Indicators & Red Flags
- Anti‑hedging/pledging policy; no loans/related perquisites disclosed for executives; no tax gross‑ups; no option re‑pricing; clawbacks in place; strong ownership guidelines—indicators of governance discipline .
- None of Mr. Stark’s shares are pledged; beneficial ownership is de minimis vs outstanding, but material unvested/uneaned equity aligns retention with performance .
Investment Implications
- Alignment: High proportion of at‑risk equity (PSUs with ROE/Relative TSR) ties Mr. Stark’s economics to book value return and shareholder returns; governance practices (clawbacks, anti‑hedging/pledging) reduce risk of misalignment .
- Retention risk vs selling pressure: Significant unvested RSUs (11,188) and unearned PSUs (13,883) scheduled to vest/settle over 2025–2027 create retention hooks; settlement could create periodic selling pressure upon vesting windows absent 10b5‑1 plans .
- Pay‑for‑performance: 2024 outcomes (ROE 8.4%, Relative TSR 33.3%, PMT PSU payout 80.1%) show balanced payouts below target on TSR and at/near target on ROE, consistent with mixed sector conditions; continued emphasis on higher ROE thresholds should further tighten pay‑performance linkage .
- Governance/Say‑on‑Pay: ~98% support and independent committee oversight/consultant usage reduce external compensation risk and suggest low probability of shareholder pushback driving abrupt comp changes .