Karen R. Pallotta
STEWART INFORMATION SERVICESAbout Karen R. Pallotta
Independent director since 2019; age 61. Pallotta is an experienced financial services and mortgage banking executive. She is President of KRP Advisory Services (2012–present) and previously served as EVP of Fannie Mae’s Single-Family Credit Guaranty Division, overseeing a $2.5 trillion guaranteed mortgage portfolio and securitization of ~$50 billion in mortgages per month (2009–2011). She chairs STC’s Compensation Committee and serves on the Nominating & Corporate Governance Committee .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| KRP Advisory Services | President | 2012–present | Business strategy and risk management consulting |
| Fannie Mae (Single-Family Credit Guaranty) | Executive Vice President; member of 8‑person executive committee | 2009–2011 | Led $2.5T guaranteed mortgages; oversaw ~$50B/month acquisitions and securitizations; enterprise strategy execution |
| Fannie Mae (prior leadership roles) | Senior leadership across risk, product, negotiated transactions, sales, marketing, customer technology, credit guaranty pricing | 1990–2009 | Broad risk and operating leadership in mortgage banking |
External Roles
| Company | Listing | Role | Tenure | Notes |
|---|---|---|---|---|
| Redwood Trust | NYSE: RWT | Director | 2014–2019 | Former public company directorship; no current public boards disclosed |
Board Governance
- Independence: Board classifies Pallotta as independent under NYSE standards .
- Committees (2025): Compensation Committee (Chair); Nominating & Corporate Governance Committee (member). 2024 meeting cadence: Compensation 6 meetings (+4 written consents); Nominating & Governance 4 meetings .
- Board structure and engagement: Independent Chair (separate from CEO); all key committees composed entirely of independent directors; annual board/committee evaluations; majority voting in uncontested elections; non‑management directors meet after each regular board meeting .
- Attendance: In 2024 the Board held 7 meetings (plus 7 consents); no director attended <75% of aggregate Board+committee meetings on which they served .
- Shareholder-friendly policies: Prohibits hedging/short sales; director and executive stock ownership guidelines; clawback policy (NYSE‑compliant) .
Fixed Compensation (Director Fees)
| Component | Amount (USD) | Basis/Notes |
|---|---|---|
| Board cash retainer (2024) | $85,000 | Standard cash retainer for non‑management directors |
| Compensation Committee Chair fee (2024) | $20,000 | Chair retainer |
| Nominating & Corporate Governance Committee member fee (2024) | $7,500 | Member retainer |
| Total cash earned (Karen R. Pallotta, 2024) | $112,500 | Sum equals cash reported for Pallotta in 2024 director comp table |
- STC reimburses reasonable Board/committee meeting expenses .
Performance Compensation (Equity; also includes metrics overseen as Comp Chair)
- Annual director equity retainer: Unrestricted stock award valued at $85,000 in 2024 (approximately $85,000 in stock, rounded to nearest whole share) .
- Karen R. Pallotta 2024 total director compensation: $197,500 (Cash $112,500; Stock $85,000) .
Key 2024 executive incentive metrics overseen by the Compensation Committee (signals of pay-for-performance rigor):
| Metric | Weight | 2024 Target | Threshold | Maximum | 2024 Result | Payout vs Target |
|---|---|---|---|---|---|---|
| Corporate Pre‑Tax Margin (STIP) | 60% (CEO/most NEOs) | 3.75%–4.25% | 1.75% | 7.25% | 4.41% | 105.3% (component) |
| Corporate Net Revenue (STIP) | 20% (CEO/most NEOs) | $1,500M | $1,300M | $1,725M | $1,612.7M | 150.1% (component) |
| Individual qualitative (STIP) | 20% (CEO/most NEOs) | Assessed vs strategic/leadership goals | Cap = higher of financial metric achievement or target | — | See CD&A narratives | Applied caps per plan |
| LTIP performance RSUs | 50% of 2024 LTI grant value | Adjusted Pre‑Tax Margin ≥4.5% achieved in ≥3 of 7 quarters (Q2’24–Q4’25) | 100% forfeit if not met | Capped at Target (no upside) | Committee certified 2024 performance hurdle met on Feb 26, 2025; vests 3rd anniversary | Design limits excessive payouts |
- Independent consultant: Mercer advised the Compensation Committee; deemed independent and provided no other services to the company .
- 2024 Say‑on‑Pay: 97.6% approval, supporting program design overseen by the Committee .
Other Directorships & Interlocks
| Type | Detail |
|---|---|
| Current public company boards | None disclosed for Pallotta |
| Prior public boards | Redwood Trust (2014–2019) |
| Interlocks | Company reports no compensation committee interlocks; none of the Compensation Committee members (including Pallotta) were officers/employees, and no reciprocal board/comp committee relationships with STC executives were disclosed . |
Expertise & Qualifications
- Domain expertise: 30+ years across financial services, risk management, and mortgage banking; deep experience leading large, complex credit portfolios and securitization operations .
- Board-level skillset: Compensation oversight (Chair), governance and nomination processes, risk management, and strategic planning .
Equity Ownership
| Holder | Shares Beneficially Owned | % of Class | Notes |
|---|---|---|---|
| Karen R. Pallotta | 8,699 | <1% | As of March 11, 2025; based on 28,026,117 shares outstanding |
| Director ownership guidelines | 5x the stock portion of annual director retainer | — | 5x equity retainer guideline; five-year accumulation period |
| Hedging/Pledging | Prohibited | — | Anti‑hedging and anti‑pledging/margin policy for directors and officers |
Related-Party Exposure (Conflicts)
- Company policy: Related-party transactions require disclosure and Audit Committee approval; directors with a conflict must recuse .
- Disclosures: 2025 proxy lists related‑party items involving others (e.g., legacy arrangements and family members of another executive), but no related‑party transactions involving Ms. Pallotta are disclosed .
Governance Assessment
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Strengths
- Independent director; chairs Compensation Committee and serves on Nominating & Governance—high leverage over pay design and board refresh .
- Compensation program shows alignment: heavy weighting on profitability (Pre‑Tax Margin), revenue growth, clawback policy, anti‑hedging/pledging, and use of independent advisor; Say‑on‑Pay support at 97.6% in 2024 .
- Engagement: Committees met regularly (Comp: 6; N&G: 4); Board met 7 times; no <75% attendance among directors .
- Ownership alignment: Director equity retainer; director ownership guideline at 5x equity retainer; beneficial ownership disclosed; anti‑hedging/pledging policy .
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Watch items / potential risks
- No specific red flags disclosed for Pallotta (no related‑party transactions or attendance shortfalls). Continue to monitor: (i) adherence to director ownership guideline progression, (ii) any future interlocks, and (iii) compensation rigor if macro conditions ease (risk of target‑easing) .
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Overall implication for investor confidence
- Pallotta’s background in mortgage credit risk and large‑scale securitization supports STC’s operating and incentive frameworks. As Compensation Chair, her oversight of profitability‑anchored metrics, capped performance RSUs, and robust policies (clawback, anti‑hedging/pledging) signal governance discipline and alignment with shareholders .