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Editor's Note: Following publication of this article, NMP determined that the two executives did not receive raises. Rather, their pay in 2021 was prorated based because loanDepot did not go public until mid-February 2021.
At the same time that loanDepot reduced its funding capacity by $1 billion, the company approved raises for two of its top executives.
In a filing with the Securities & Exchange Commission on Sept. 23, the nation’s second-largest retail mortgage lender said it was reducing its funding capacity by $500 million based “on current and projected mortgage loan originations.” That followed a similar filing in August. Combined, the two filings reduced its funding capacity by a combined $1 billion.
Just a day earlier, however, the company notified the SEC it was updating compensation agreements with three company executives. In a filing dated Sept. 22, loanDepot said it entered into new, three-year executive employment agreements with Chief Financial Officer Patrick Flanagan, Chief Revenue Officer and Senior Executive Vice President Jeff Walsh, and Chief Capital Markets Officer Jeff DerGurahian.
When compared with previous proxy filing in 2021, both Walsh and DerGurahian received raises in their base salaries.
Walsh’s new agreement provides for a base salary of $750,000, a $34,615 (or 5%) increase from the $715,385 base salary he received in 2021. The employment agreement also includes a target annual bonus of 200% of base salary, with a maximum annual bonus of up to 300% of target.
DerGurahian’s new agreement provides for a base salary of $600,000, a $31,154 (or 5.5%) increase from his $568,846 base salary. His new agreement includes a target annual bonus of 150% of base salary (with a maximum annual bonus of up to 300% of target).
Flanagan’s agreement provides for a base salary of $600,000 and a target annual bonus of 150% of base salary (with a maximum annual bonus of up to 200% of target).
Each agreement also provides for two retention bonuses:
- A $1 million retention bonus, subject to continued employment through Dec. 31, 2022, and payable within 30 days thereafter, and
- A $1.5 million retention bonus, subject to continued employment through Dec. 31, 2023, and payable within 30 days thereafter, which may be earned as a prorated amount in the event of a termination without cause after June 30 but before Dec. 31, 2023.
According to Salary.com, Walsh received total compensation in 2021 of $7,123,948, including $715,385 in salary, $1.5 million as a bonus, $4,899,863 as stock and $8,700 from “other types of compensation.”
DerGurahian, meanwhile, received total compensation of $5,860,953, according to Salary.com. Of that, $568,846 was salary, $900,000 was received as a bonus, $4,384,088 was awarded as stock, and $8,019 came from other types of compensation.
The raises and funding capacity reductions come after loanDepot announced on Aug. 9 that it would exit the wholesale lending business. That decision was announced the same day it released its earnings for the second quarter of 2022, which showed a net loss of $223.8 million, or 66 cents per diluted share, its second-consecutive quarterly loss.
The company said loan origination volume in the quarter totaled just under $16 billion, down nearly 26% from the first quarter and down nearly 54% from the second quarter of last year. Purchase volume increased to 59% of total originations, the company said.
The company has also eliminated nearly 4,000 positions since the end of last year.