Christopher Farrar
About Christopher D. Farrar
Velocity Financial’s co‑founder, Chief Executive Officer, and Director since 2004, Farrar brings deep finance and mortgage‑lending experience (credit, originations, capital raising, and operations), with prior roles including Chief Credit Officer at Worth Funding, SVP U.S. Production at Weyerhaeuser Mortgage, and VP at Namco Capital Group . He holds a B.S. in Business Administration from Pepperdine University and is a licensed (inactive) California Real Estate Broker . Under his leadership, VEL achieved its “5X25” objective of a $5B loan portfolio by 2025 and delivered record 2024 earnings; 2024 pay‑versus‑performance shows TSR value of $142.77 (base $100), net income of $68.4m, and Core Net Income Annual Growth of 36.5% (26.5% in 2023; 26.7% in 2022) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Worth Funding (mortgage banking) | Founder & Chief Credit Officer | Pre‑2004 | Led credit risk and underwriting discipline prior to co‑founding VEL |
| Weyerhaeuser Mortgage Company | SVP, U.S. Production | Pre‑2004 | Managed nationwide production; scaling originations and operations |
| Namco Capital Group, Inc. | Vice President | Pre‑2004 | Originated commercial real estate loans |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Generosity.org (non‑profit) | Director | Current | Focused on global access to clean water |
| Agoura Aquatic Foundation (non‑profit) | Director | Current | Supports youth/adult aquatic programs |
Fixed Compensation
Multi‑year reported compensation (SCT) for CEO Christopher D. Farrar:
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | $630,000 | $630,000 | $630,000 |
| Stock Awards (Grant‑date FV) | $1,136,700 | $1,417,500 | $2,205,000 |
| Option Awards | — | — | — |
| Non‑equity Incentive (Cash Bonus) | $1,228,500 | $1,830,465 | $2,520,000 |
| All Other Compensation | $21,339 | $17,840 | $19,001 |
| Total | $3,016,539 | $3,895,805 | $5,374,001 |
Notes:
- All other comp in 2024 includes 401(k) match $10,350 and medical/dental premium reimbursement $8,651 .
- Director pay: As CEO, Farrar receives no separate director compensation .
Performance Compensation
Annual Cash Incentive (FY2024 design and outcome)
| Component | Weighting | Threshold | Target | Maximum | Actual Result (2024) | Payout vs Target |
|---|---|---|---|---|---|---|
| Core Net Income Annual Growth | 50% | 15% → 25% payout | 17.5% → 50% payout | 20% → 100% payout | Exceeded 20% | 100% (metric) |
| Individual/Corporate Objectives | 50% | Did not meet → 0% | Met → 50% | Exceeded → 100% | “Exceeded Expectations” | 100% (metric) |
| Total Cash Bonus Outcome | — | — | — | — | — | 200% of target |
FY2024 CEO cash bonus target and payout:
| Item | Amount |
|---|---|
| Target Bonus | $1,260,000 |
| Formulaic Outcome | $2,520,000 |
| Actual Awarded | $2,520,000 (paid Feb‑2025) |
FY2025 forward‑look (structure unchanged): Committee approved 2025 program with Core Net Income Annual Growth and individual objectives; CEO eligible range $0 to $1,260,000 for each of the two components, subject to Committee certification post‑FY2025 .
Long‑Term Equity Incentives
| Award Type | Grant Date | Target/Units | Vesting | Performance Metric | Grant‑date Value |
|---|---|---|---|---|---|
| Restricted Stock | 1/23/2024 | 69,514 unvested at 12/31/24 | Pro‑rata over 3 years (anniversaries) | Time‑based | $1,102,500 (2024 RS value) |
| Performance Stock Units (PSUs) | 1/23/2024 | 69,514 target unearned at 12/31/24 | 3‑year cliff (vest in 2027) | 3‑yr avg Core Net Income growth; 0–200% payout; threshold 15% | $1,102,500 (2024 PSU value) |
| Stock Options (IPO‑era) | 1/16/2020 | 375,000 exercisable | Fully vested | N/A | Strike $13.00; exp. 1/16/2030 |
FY2025 equity awards approved (subject to share reserve increase): RS 77,045 shares and PSUs 77,045 target for CEO (max 231,135 shares at 200%); vesting/outcomes subject to 3‑yr program and Committee certification .
Vesting cadence (potential sell pressure):
- Time‑based RS from 1/23/2024 vest in equal tranches on each anniversary through 2027 .
- 2023 RS vest pro‑rata on 1/13 anniversaries through 2026 .
- PSUs granted in 2022 (cliff 2025), 2023 (cliff 2026), and 2024 (cliff 2027) settle 0–200% based on 3‑year average Core Net Income growth .
Equity Ownership & Alignment
| Measure | Detail |
|---|---|
| Total Beneficial Ownership | 1,054,197 shares (2.9% of outstanding) |
| Components | Includes 147,013 unvested restricted shares; 375,000 vested options; 202,916 shares in family trust |
| Options | 375,000 options at $13.00, expiring 1/16/2030 |
| Ownership Guidelines | CEO required to hold 5x salary; directors 4x annual cash retainer (within four years) |
| Hedging/Pledging | Prohibited for directors/executives; no margin or pledging permitted |
Market context: VEL year‑end 2024 stock price used for award valuations was $19.56 (NYSE close on 12/31/24) .
Employment Terms
| Topic | Terms |
|---|---|
| Employment Agreement | None for CEO/NEOs |
| Severance | No severance payments for executive officers |
| Change‑in‑Control (CIC) | 2020 Plan has no automatic single‑trigger vesting; awards may be assumed/substituted or vesting may accelerate (performance awards based on actual performance through CIC) |
| Death/Disability | Immediate vesting of RS and target PSUs; estimated value for CEO $7,128,583 at 12/31/24 (based on $19.56) |
| Clawback | Compensation recoupment policy applicable to cash/equity upon restatements or overpayment |
| Tax Gross‑ups | None |
| Deferred Comp/Pension | None |
Board Governance
| Aspect | Details |
|---|---|
| Board Role | CEO & Director since 2004; co‑founder |
| Board/Committee Structure | Independent Audit, Compensation, and Governance Committees; CEO not a member |
| Leadership | Board Chair: Alan H. Mantel; Lead Independent Director: Joy L. Schaefer |
| Attendance | All directors attended at least 75% of Board/committee meetings in 2024 |
| Independence | Board deemed all non‑employee directors independent; CEO is management (non‑independent) |
| Nomination Rights | Farrar holds right to nominate one director while he/family own ≥71,458 shares; he has nominated himself |
| Director Pay (CEO) | CEO receives no director compensation |
Director compensation program (FY2024): $75k cash retainer; $10k per committee; $10k per committee chair; $95k restricted stock grant upon re‑election; sponsor‑nominated directors and CEO receive no director pay .
Performance & Track Record
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Total Shareholder Return (Value of $100) | $70.44 | $125.69 | $142.77 |
| Net Income (USD millions) | $32.2 | $52.3 | $68.4 |
| Core Net Income Annual Growth | 26.7% | 26.5% | 36.5% |
Strategic milestone: Company achieved “5X25” $5B loan portfolio target by 2025 amid record 2024 earnings and production .
Compensation Committee Analysis and Peer Group
- Practices: No golden parachutes or tax gross‑ups; clawback; no pledging/hedging; independent consultant (Mercer) engaged to benchmark and align incentives .
- Peer Group (unchanged from 2023): Ladder Capital, Arbor Realty Trust, Dynex Capital, BrightSpire Capital, Granite Point Mortgage Trust, American Assets Trust, Main Street Capital, Walker & Dunlop, Hercules Capital, Alerus Financial, NMI Holdings, New York Mortgage Trust, WisdomTree Investments .
- Relative positioning: Company states total NEO compensation was below median of peers .
Related Party Transactions and Governance Watchpoints
- Related person policy overseen by Audit Committee; requires approval of covered transactions .
- Disclosed transaction: Kelsey Farrar (adult child of CEO) was employed as an account executive and received $391,122 in 2024 compensation (approved per policy) .
- Concentrated holders: Snow Phipps (36.6%) and PIMCO (33.1%) have nomination rights; independent determinations made despite affiliations .
Vesting Schedules and Potential Insider Selling Pressure
- Time‑based RS vesting in 2025–2027 (1/23/2024 grant) may drive periodic Form 4 activity for tax withholding/sales; 2023 RS also vest through 2026 .
- PSU cliffs in 2025 (2022 grant), 2026 (2023 grant), and 2027 (2024 grant) create lumpy settlement windows tied to Core Net Income growth outcomes (0–200%) .
- 375,000 options (strike $13.00, expiring 2030) are in‑the‑money relative to 12/31/24 closing price $19.56, representing additional potential exercise‑related activity .
Director Compensation (for completeness)
| Director | Cash Fees (2024) | Stock Awards (2024) | Total |
|---|---|---|---|
| Dorika M. Beckett | $95,000 | $95,000 | $190,000 |
| John P. Pitstick | $105,000 | $95,000 | $200,000 |
| Joy L. Schaefer | $95,000 | $95,000 | $190,000 |
| CEO (Farrar) | — | — | — |
Investment Implications
- Alignment and performance leverage: CEO pay mix is heavily at‑risk (200% bonus at max; multi‑year PSUs up to 200% of target), with metrics centered on Core Net Income growth; 2024 exceeded max on growth and individual outcomes (200% payout), and equity mix increased YoY, aligning with stronger TSR and earnings trends .
- Low parachute/severance risk: No employment agreement, severance, golden parachute, or tax gross‑ups; CIC acceleration is not single‑trigger and performance awards settle based on actual results through CIC—reducing “pay for failure” risk but potentially raising retention risk amid volatility .
- Upcoming supply windows: Pro‑rata RS vesting (2025–2027) and PSU cliffs (2025–2027), plus in‑the‑money options, could create periodic selling/withholding activity; anti‑hedging/pledging policy mitigates misalignment risks .
- Governance structure: CEO serves as director but not as Board Chair; presence of Lead Independent Director, independent committees, and explicit ownership/anti‑pledging policies support governance; nomination rights for major holders and CEO self‑nomination warrant monitoring for independence optics .
Appendix: Additional Tables
Outstanding and Unvested CEO Equity at 12/31/2024
| Grant Date | Type | Units Unvested/Unearned | Vesting Terms | Valuation Basis |
|---|---|---|---|---|
| 2/14/2022 | RS | 15,000 | 3‑year pro‑rata; vests through 2/14/2025 | — |
| 2/14/2022 | PSU | 45,000 target | 3‑yr cliff; perf FY2022–2024 | $19.56/sh (12/31/24) |
| 1/13/2023 | RS | 47,250 | 3‑year pro‑rata; vests through 1/13/2026 | — |
| 1/13/2023 | PSU | 70,875 target | 3‑yr cliff; perf FY2023–2025 | $19.56/sh (12/31/24) |
| 1/23/2024 | RS | 69,514 | 3‑year pro‑rata; vests through 1/23/2027 | — |
| 1/23/2024 | PSU | 69,514 target | 3‑yr cliff; perf FY2024–2026 | $19.56/sh (12/31/24) |
| 1/16/2020 | Options | 375,000 exercisable | Fully vested; strike $13; exp 1/16/2030 | — |
Beneficial Ownership (as of 4/3/2025)
| Holder | Shares | % of Class | Notes |
|---|---|---|---|
| Christopher D. Farrar | 1,054,197 | 2.9% | Includes 147,013 unvested RS; 375,000 vested options; 202,916 family trust |
Major Shareholders (for governance context)
| Holder | Shares | % of Class | Notes |
|---|---|---|---|
| Snow Phipps Group | 13,353,103 | 36.6% | Shared voting/dispositive per Schedule 13D |
| PIMCO (and affiliates) | 12,637,764 | 33.1% | Includes 1,673,958 warrants |
| Beach Point Capital Mgmt | 5,307,835 | 14.5% | Shared voting/dispositive per Schedule 13G |