Nicholas Letica
About Nicholas Letica
Nicholas Letica, age 62, is Vice President and Chief Investment Officer of Two Harbors Investment Corp. (TWO), serving in this capacity since August 2022. He holds a B.S. in Chemical Engineering from The Johns Hopkins University and previously held senior roles at TD Securities (Co-Head of Securitized Products Sales & Trading, led MBS trading), Cello Capital Management (Managing Director/Senior Portfolio Manager), Citigroup Global Markets (Mortgage Sales Group), and leadership roles at Deutsche Bank, Bank of America Securities, and Bear Stearns . TWO’s executive pay design ties incentives to economic returns: 2024 total economic return on common book value was 7.0% (dividends plus change in book value), while annual incentives emphasized absolute and relative total economic return (TER); long-term PSUs for the 2022–2024 period paid at 39.4% of target driven by negative absolute TSR and below-median relative TSR .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| TD Securities | Managing Director; Co-Head of Securitized Products Sales & Trading; led MBS trading | Not disclosed | Led MBS trading and securitized products sales/trading, directly relevant to TWO’s MSR/RMBS strategy |
| Cello Capital Management | Managing Director / Senior Portfolio Manager | Not disclosed | Asset allocation and trading/hedging for MBS hedge fund portfolios |
| Citigroup Global Markets | Managing Director – Mortgage Sales Group | Not disclosed | Mortgage sales leadership; market coverage for RMBS/ABS |
| Deutsche Bank; Bank of America Securities; Bear Stearns | Senior leadership roles | Not disclosed | Broad mortgage/structured finance leadership experience |
External Roles
None disclosed in the proxy biography .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $227,309 | $600,000 | $588,461 |
| Target Bonus % of Base | Not disclosed | Not disclosed | 190% |
| Actual Discretionary Bonus ($) | $1,140,000 (guaranteed upon appointment) | — | — |
| Annual Incentive Paid ($) | — | $1,675,000 | $1,045,608 |
- Effective February 1, 2025, Mr. Letica’s base salary increased from $600,000 to $650,000 .
Performance Compensation
Annual Cash Incentive – 2024 Performance Framework and Outcomes
| Component | Weighting | Threshold | Target | Maximum | 2024 Actual | Payout vs Target |
|---|---|---|---|---|---|---|
| Absolute TER | 50% | 1.0% | 9.0% | >15.0% | 8.9% | 99% |
| Relative TER (vs performance peer group) | 50% | 25th percentile | 50th percentile | 80th percentile | 17.8th percentile | 0% |
| Resulting Annual Incentive Paid to Mr. Letica | — | — | Target $1,140,000 | Cap 200% (program feature) | $1,045,608 | — |
- Strategic/operational goals (30% of annual incentive) support earnings power, process/control enhancements, risk management, and stakeholder communications; these informed the qualitative component of payouts .
Long-Term Incentives – 2024 Target Awards
| Award Type | Target Value ($) | Vesting | Performance Metrics |
|---|---|---|---|
| PSUs | $600,000 (50% of LTI) | After 3-year performance period | 3-year absolute TSR and relative TSR (split 50/50) vs pre-set peer group |
| RSUs | $600,000 (50% of LTI) | Time-based, ratable over 3 years | N/A (time-based) |
- 2024 grants (January 8, 2024): RSUs 42,342 shares (grant date fair value $599,986); PSUs target 42,692 units (grant date fair value $691,183; Monte Carlo price $16.19) .
PSU Payout – 2022–2024 Performance Period
| Metric | Weighting | Threshold | Target | Maximum | Actual | Payout vs Target |
|---|---|---|---|---|---|---|
| 3-year Absolute TSR | 50% | 3.0% | 27.0% | 45.0% | -24.2% | 0% |
| 3-year Relative TSR (vs peer group) | 50% | 25th percentile | 50th percentile | 80th percentile | 39.4th percentile | 78.9% |
| Weighted PSU Payout | — | — | — | — | — | 39.4% |
Equity Ownership & Alignment
Beneficial Ownership
- Shares beneficially owned as of March 19, 2025: 40,902 (less than 1% of outstanding) .
Outstanding Equity Awards (as of December 31, 2024)
| Grant Date | RSUs Not Vested (shares) | RSUs Market Value ($) | PSUs Target Not Vested (units) | PSU Payout Value Basis (Monte Carlo) ($) |
|---|---|---|---|---|
| Jan 8, 2024 | 42,342 | $500,906 (at $11.83) | 42,692 | $691,183 |
| Jan 13, 2023 | 22,949 | $271,487 (at $11.83) | 34,423 | $773,485 |
| Aug 15, 2022 | 17,308 | $204,754 (at $11.83) | 14,506 | $321,453 |
- RSUs vest in three equal annual installments from the grant date anniversary; PSUs vest after three years based on performance; dividend equivalents accrue in PSUs/RSUs subject to vesting conditions .
Ownership Guidelines, Hedging/Pledging
- Stock ownership guideline: 3x base salary (for named executive officers), equating to $1.8 million for Mr. Letica; total stock ownership value as of 12/31/2024 was $1,246,046; expects to reach within the five-year achievement period .
- Hedging and pledging of company stock are prohibited; insider trading policy requires pre-clearance and prohibits short sales/derivatives for monetization .
Insider Transactions and Selling Pressure (last 12 months)
| Trade Date | Action | Shares | Price | Proceeds | Notes |
|---|---|---|---|---|---|
| 2025-01-08 | Sale | 9,996 | $11.16 | $111,572 | Reported on Form 4; part of 10b5-1 trading plan established Aug 18, 2022 |
| 2025-01-14 | Sale | 5,737 | $11.28 | $64,720 | Reported on Form 4; ongoing 10b5-1 plan |
| 2025-08-18 | Sale | 8,654 | $10.02 | $86,713 | Form 4 states sale to cover RSU vesting tax liabilities under 10b5-1 plan dated Aug 18, 2022 |
- A Form 144 for proposed sale was filed on 08/15/2025 .
Employment Terms
- No individual employment agreement; standard employee confidentiality agreement with confidentiality, inventions assignment, non-disparagement, and non-solicitation provisions .
- Severance Benefits Plan (double-trigger with change of control):
- Involuntary termination without cause or resignation for good reason: 1.5x base salary for named executive officers (2.0x CEO) plus pro rata target annual incentive (company metrics at actuals), up to 18 months company-paid welfare/insurance benefits, and up to $25,000 outplacement for six months; installment payments over 18 months (24 months for CEO); contingent on release and covenant compliance .
- Equity: RSUs fully vest upon termination without cause; PSUs vest pro rata at the end of the performance period based on achieved performance; change-of-control acceleration is double-trigger unless awards are not assumed, in which case vesting occurs immediately prior to change-of-control .
- Retirement, death, disability: RSUs continue or fully vest; PSUs vest at target on death/disability and continue on retirement if criteria met .
- Clawback: Mandatory recovery upon accounting restatement; discretionary recovery for misconduct causing material harm; 3-year look-back; policy updated December 1, 2023 to comply with NYSE standards .
- No option grants policy in 2024; company currently does not grant stock options/SARs and has no option repricing without stockholder approval .
- No single-trigger severance or vesting on change-of-control; no tax gross-ups; no excessive perquisites .
Compensation Context
- 2024 say-on-pay approval: ~95.6% of votes cast in favor .
- Executive compensation peer group includes mortgage REITs and financials (e.g., AGNC, Dynex, MFA, Rithm, Mr. Cooper, Redwood Trust), sized by assets and market cap; performance peer group for relative metrics includes Annaly, AGNC, Dynex, PennyMac Mortgage Investment Trust, Rithm, etc. .
Performance Compensation – Detailed Table (2024 Annual Incentive)
| Metric | Weighting | Target | Actual | Payout | Vesting/Payment |
|---|---|---|---|---|---|
| Absolute TER (12 months to Sept 30, 2024) | 50% | 9.0% | 8.9% | 99% of target | Paid Q1 2025 |
| Relative TER (vs peer group) | 50% | 50th percentile | 17.8th percentile | 0% of target | Paid Q1 2025 |
| Strategic & Operational goals | 30% | Company-set goals | Achieved multiple objectives in earnings power, controls, risk, stakeholder engagement | Committee determined payout within 0%–200% continuum | Paid Q1 2025 |
Investment Implications
- Pay-for-performance alignment: Annual incentive ties 70% to TER and 30% to strategic/operational execution; 2024 outcomes show quantitative linkage with 99% payout on absolute TER and 0% on relative TER, while qualitative achievements supported the remaining payout .
- Long-term accountability: The 2022–2024 PSU cycle paid 39.4% of target due to negative absolute TSR and sub-median relative TSR, limiting realized LT equity value; future PSU vesting remains contingent on 3-year TSR metrics .
- Ownership alignment and selling pressure: As of 12/31/2024, Mr. Letica’s measured ownership was below the 3x salary guideline but expected to reach within the five-year window; recent Form 4 sales were pursuant to an established 10b5-1 plan, with at least one sale disclosed as tax-withholding for RSU vesting, tempering concerns of opportunistic selling pressure .
- Governance safeguards: Double-trigger change-of-control, clawback policy (restatement and misconduct), prohibition on hedging/pledging, and no tax gross-ups or single-trigger terms reduce misalignment risk and headline governance issues .
- Program support: Strong say-on-pay approval (~95.6%) and independent consultant (Pay Governance) peer benchmarking indicate investor-supported compensation design and market competitiveness .