Christopher J. Abate
About Christopher J. Abate
Christopher J. Abate, age 45, is Chief Executive Officer of Redwood Trust, Inc. (RWT) since May 2018 and a director since December 2017; he joined Redwood in April 2006 and previously served as President (July 2016–May 2018), Chief Financial Officer (March 2012–August 2017), and Controller (January 2009–March 2013) . He holds a B.A. in accounting and finance from Western Michigan University and an M.B.A. from the University of California at Berkeley and Columbia University . 2024 firm performance indicators central to pay design: ROE 4.1%, Non‑GAAP EAD ROE 6.4%, book value TSR 5.7%, and $0.67 per share in common dividends (Q4 dividend raised to $0.18) . Over multi-year horizons, the company notes three-year TSR lagged peers while four-year TSR exceeded most peers; a pay-versus-performance table shows a $63 value of a $100 investment measured from 1/1/2020 to 12/31/2024, underscoring volatility in sector returns .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Redwood Trust, Inc. | Chief Executive Officer | May 2018–present | Oversight of mortgage banking (Sequoia, CoreVest) and portfolio; focus on ROE/Adjusted EAD ROE and bvTSR metrics embedded in incentive design . |
| Redwood Trust, Inc. | Director | Dec 2017–present | Executive (non-independent) director; not on standing committees (committees are independent) . |
| Redwood Trust, Inc. | President | Jul 2016–May 2018 | Led operating businesses and capital markets execution . |
| Redwood Trust, Inc. | Chief Financial Officer | Mar 2012–Aug 2017 | Finance, risk, capital markets; balance-sheet and risk management experience highlighted by Board . |
| Redwood Trust, Inc. | Controller | Jan 2009–Mar 2013 | Financial reporting and controls foundation . |
| PricewaterhouseCoopers LLP | Professional staff | Pre-2006 | Audit/finance experience . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Structured Finance Association | Chair of the Board | Oct 2019–Dec 2021 | Industry leadership in structured finance policy and markets . |
Fixed Compensation
| Metric | 2024 | 2025 (set in Dec-2024) |
|---|---|---|
| Base salary | $950,000 | $975,000 |
| Benefits value (CEO) | $94,917 (reported) | ~$125,000 estimated in 2025 target mix disclosure |
Notes: CEO target bonus increased to 215% of base for 2025 (from 200% in 2024) .
Performance Compensation
Annual Bonus Structure and Outcomes (2024)
| Component | Weight | Target calibration | 2024 outcome |
|---|---|---|---|
| Company performance (Adjusted ROE) | 37.5% of total bonus | Target 11.5%; threshold >2.875% | 39% of this component earned |
| Company performance (Adjusted EAD ROE) | 37.5% of total bonus | Target 6.5%; threshold >1.625% | 95% of this component earned |
| Individual performance | 25.0% of total bonus | Pre-set strategic/operational goals; up to 200% factor | 130% factor → $617,500 for CEO |
| CEO total outcome | — | Target $1,900,000 (200% of salary) | $1,573,696 (82.8% of target) |
2024 performance context used for payout: ROE 4.1%, Non‑GAAP EAD ROE 6.4%, book value TSR 5.7%, dividends $0.67 per share, with below-target absolute financial performance but above-target individual achievements tied to capital/liquidity actions, business growth initiatives, and efficiency gains .
Long‑Term Incentive Awards (granted 12/19/2024; part of 2025 target pay mix)
| Instrument | Grant date | Units | Grant date fair value | Vesting / performance |
|---|---|---|---|---|
| Performance Stock Units (PSUs) | 12/19/2024 | 318,893 | $2,392,495 | 3-year performance (1/1/2025–12/31/2027); 66.7% bvTSR tranche (0–250% vesting across 12.5%/25%/37.5%+ cumulative bvTSR grid), 33.3% rTSR tranche (0–250% vesting across 27.5th/55th/82.5th percentile grid); absolute TSR negative cap at 100% if aggregate >100% . |
| Deferred Stock Units (DSUs) | 12/19/2024 | 98,268 | $652,500 | 4-year vest (25% on 1/31/2026; then 6.25% quarterly), distribution in Dec 2028; mandatory holding while employed . |
| Cash‑settled RSUs (csRSUs) | 12/19/2024 | 196,536 | $1,304,999 | 25% annually on 12/18 each year through 2028; cash-settled at vest . |
Realized long‑term pay in 2024 (from prior grants): CEO PSUs granted in 2021 vested at ~35% of target; combined DSU/csDSU/csRSU vestings resulted in long-term pay realization equal to 53% of target for those tranches, aligning with three-year TSR underperformance and modest four-year TSR .
Performance Metrics Reference (2024 actuals vs targets)
| Metric | Target | Actual |
|---|---|---|
| Adjusted ROE (bonus metric) | 11.5% | Below target; component paid at 39% |
| Adjusted EAD ROE (bonus metric) | 6.5% | Below target; component paid at 95% |
| Book value TSR (bvTSR) | — | 5.7% (disclosed KPI) |
| GAAP ROE | — | 4.1% (disclosed KPI) |
| Dividends per common share | — | $0.67 in 2024; Q4 increased to $0.18 |
Compensation governance guardrails: bonus cap reduced to 3.0x target for 2024+ (from 3.5x); no single‑trigger CIC; no excise tax gross-ups; clawback updated to NYSE/SEC standards; hedging/margin/pledging prohibited .
Equity Ownership & Alignment
| As of March 27, 2025 | Shares | Notes |
|---|---|---|
| Total beneficial ownership (CEO) | 641,238 | Includes 444,170 common and 197,068 DSUs; <1% of class . |
| Ownership guidelines (executives) | CEO: 6.25x salary | Five years to comply; counts vested/unvested DSUs; all executives in compliance or within allowed time . |
| Pledging/hedging | Prohibited | Insider Trading Policy bans margin, pledging, and hedging . |
Upcoming vesting (potential supply over next 12 months; CEO)
| Date (2025) | DSUs vesting (#) | csDSUs vesting (#) | csRSUs vesting (#) |
|---|---|---|---|
| 1/1/2025 | 7,113 | 7,113 | — |
| 1/31/2025 | 29,606 | — | — |
| 4/1/2025 | 14,515 | 7,113 | — |
| 7/1/2025 | 14,515 | 7,113 | — |
| 10/1/2025 | 14,515 | 7,113 | — |
| 12/13–12/18/2025 | 7,113 (12/13) | 7,113 (12/14) | 29,605 (12/14) and 49,134 (12/18) |
| 2025 totals | 87,377 | 35,565 | 78,739 |
Note: PSUs granted in 2024 have a performance period through 12/31/2027, with vest determination on 1/1/2028 .
Deferred compensation (liquidity management): CEO deferred $2,750,809 in 2024 (includes vested equity distributions), received $2,829,799 in distributions, and had a $1,305,073 aggregate plan balance at 12/31/2024; Redwood matches deferred cash up to plan limits, with interest at 120% of long-term AFR .
Employment Terms
| Provision | Key terms |
|---|---|
| Agreement structure | One-year term ending Dec 31; auto-renewing annually . |
| Severance (no change of control) | 1.5x (Base + Target Bonus) plus pro‑rated target bonus; time‑based equity vests; performance awards continue to vest based on actual performance; benefits continue (periods vary by role) . |
| Severance (post change of control) | 2.0x (Base + Target Bonus) plus pro‑rated target bonus (capped so cash severance+pro‑rated target ≤$7.5M for CEO); double trigger required; time‑based equity vests; PSUs vest per performance through CIC date; benefits continue . |
| Payments timing | 75% lump sum at six months post-termination; 25% in monthly installments over next six months . |
| Tax treatment | No excise tax gross‑ups; “best‑net” cutback if beneficial after taxes . |
| Post‑termination covenants | Non‑solicitation for one year where severance is paid; customary release required . |
Illustrative values (termination as of 12/31/2024): CEO ~ $10.1M without CIC (cash + accelerated time‑based equity + benefits) and ~$18.5M with CIC, reflecting caps and treatment of equity per agreements .
Board Governance and Director Service
- Director since December 2017; not independent due to executive status .
- Board leadership is separated: independent Chair (Greg H. Kubicek); all Audit, Compensation, and Governance & Nominating Committees are fully independent; Abate is not listed on any committee .
- Executive sessions: non‑employee directors meet in executive session at each regular quarterly meeting .
- Attendance: in 2024, no director attended fewer than 75% of Board/committee meetings; all directors attended the 2024 annual meeting .
- Director compensation: employee directors receive no Board fees; non‑employee director program detailed separately .
Governance note on dual role: While Abate serves as both CEO and director, RWT structurally separates the Chair and CEO roles and maintains independent committees, mitigating typical CEO/Chair concentration concerns .
Say‑on‑Pay and Shareholder Feedback
- 2024 Say‑on‑Pay support: 91.3%; company notes average ~90% support since inception excluding low 2022 vote; the Compensation Committee conducts active shareholder outreach .
Compensation Structure Analysis
- Mix emphasizes at‑risk pay: approximately 85% of CEO target compensation at outset of 2024 and 2025 was performance‑based and/or equity‑linked (PSUs/DSUs/csRSUs and annual bonus), with fixed pay ~15% .
- YoY changes: Base salary increased from $900,000 (2023) to $950,000 (2024) and to $975,000 (2025) ; 2024 bonus outcome declined to 82.8% of target from 2023’s higher realization (context in summary comp table) .
- LTI calibration: 2024 year‑end grant value was $4.35M (55% PSUs; 15% DSUs; 30% csRSUs) with three-year TSR/bvTSR constructs and a negative absolute TSR cap at 100%—a shareholder‑friendly governor .
- Risk mitigants: Bonus cap lowered to 3.0x target; no single‑trigger CIC; no tax gross‑ups; updated clawback; mandatory ownership; hedging/pledging/margin prohibited .
Risk Indicators and Related‑Party Review
- Hedging/pledging: Prohibited by policy (reduces misalignment risk) .
- Options: None outstanding as of 12/31/2024 (limits option‑related repricing risk); equity is in units/PSUs/RSUs .
- Related‑party transactions: None requiring disclosure in 2024 .
- Committee independence and financial expertise: Committees fully independent; Audit Committee includes designated financial experts .
Investment Implications
- Alignment and downside governors: High ownership requirement (6.25x salary) with compliance, three‑year PSUs tied to bvTSR/rTSR, and negative absolute TSR cap help tether realized pay to shareholder outcomes (helps mitigate pay‑for‑performance risk) .
- Retention and transition risk: Robust double‑trigger CIC protection and 1.5x (non‑CIC) / 2.0x (CIC) cash severance multiples, plus full vesting of time‑based equity and performance‑based continuation, indicate moderate‑to‑high retention value; potential separation costs should be considered in change‑of‑control modeling .
- Near‑term supply from vesting: 2025 scheduled vestings for Abate total 87,377 DSUs, 35,565 csDSUs, and 78,739 csRSUs; while insider transactions remain subject to blackout/pre‑clearance and hedging/pledging bans, these settlement events can add mechanical supply around listed dates .
- Pay outcomes track performance: Below‑target 2024 bonus (82.8% of target) and sub‑target vesting for 2021 PSU cohort (35% of target) confirm sensitivity of realized compensation to ROE/EAD ROE and TSR outcomes—supportive of alignment, but implying lower realized leadership pay when sector conditions compress returns .
- Shareholder sentiment: Strong 2024 Say‑on‑Pay (91.3%) and committee’s outreach posture reduce governance overhang, though investors should monitor future target setting for Adjusted ROE/EAD ROE amid changing rate/credit regimes .
Key data sources: Redwood Trust, Inc. 2025 DEF 14A (filed April 1, 2025). Citations provided inline.