SEC Form DEF 14A filed by PennyMac Mortgage Investment Trust

Pennymac Mortgage Investment Trust 2025 Notice of Annual Meeting and Proxy Statement

April 29, 2025

Dear Shareholder:

You are cordially invited to attend the 2025 Annual Meeting of Shareholders, or the Annual Meeting, of PennyMac Mortgage Investment Trust to be held on Tuesday, June 24, 2025, at 11:00 a.m. Pacific Time. The Annual Meeting will be conducted online via live webcast at www.virtualshareholdermeeting.com/PMT2025.

The Notice of 2025 Annual Meeting of Shareholders and Proxy Statement are attached to this letter and contain information about the matters on which you will be asked to vote at the Annual Meeting. We will transact no other business at the Annual Meeting, except for business properly brought before the Annual Meeting or any postponement or adjournment thereof by our Board of Trustees. Only our common shareholders of record at the close of business on April 28, 2025, the record date, are entitled to vote at the Annual Meeting.

Your vote is very important. Please carefully read the Notice of 2025 Annual Meeting of Shareholders and Proxy Statement so that you will know the matters on which we plan to vote at the Annual Meeting, and then vote your shares by proxy by mail, by Internet or by telephone as soon as possible to make sure that your shares are represented at the Annual Meeting.

ONLINE ANNUAL MEETING: To participate in the online Annual Meeting, you will need to log-in to www.virtualshareholdermeeting.com/PMT2025 using the 16-digit control number found on the proxy card, voting instruction form, notice of internet availability of proxy materials or email, as applicable, previously sent or made available to shareholders entitled to vote at the Annual Meeting. Please read “INFORMATION CONCERNING VOTING AND SOLICITATION—Who can attend the Annual Meeting?” in the accompanying Proxy Statement. If it is determined the Annual Meeting will be held at a different time or in a different location or format, an announcement of any such updates will be provided by means of a press release, which will be posted on our website pennymacmortgageinvestmenttrust.com and filed with the Securities and Exchange Commission (SEC) via its EDGAR system.

On behalf of our Board of Trustees, we look forward to your participation in our upcoming online Annual Meeting.

Sincerely,

DAVID A. SPECTOR

Chairman and Chief Executive Officer

Notice of 2025 Annual Meeting of Shareholders

By Order of the Board of Trustees,

DEREK W. STARK

Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF

SHAREHOLDERS TO BE HELD ON JUNE 24, 2025:

This Notice of 2025 Annual Meeting of Shareholders, Proxy Statement and 2024 Annual Report to Shareholders, which includes our Annual Report on

Form 10-K for the fiscal year ended December 31, 2024, are available at www.proxyvote.com.

Table of Contents

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Proxy Statement Summary

This summary contains highlights about our Board of Trustees and our upcoming 2025 Annual Meeting of Shareholders, or Annual Meeting. References in this Proxy Statement to “we,” “us,” “our,” or “the Company,” refer to PennyMac Mortgage Investment Trust unless the context otherwise requires. This summary does not contain all of the information that you should consider in advance of the Annual Meeting and we encourage you to read the entire Proxy Statement before voting.

2025 Annual Meeting of Shareholders

Voting Matters and Board Recommendations

Trustee Nominees

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Corporate Governance Highlights

We continuously monitor developments, trends and best practices in corporate governance and consider feedback from shareholders and proxy advisory firms, as appropriate, when enhancing our governance, policies and structure.

We believe our Board possesses deep and broad skill sets and specific experience and expertise that facilitate strong oversight and strategic direction for us as a leading residential mortgage real estate investment trust, or REIT.

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Trustee Skills and Qualifications

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2024 Business Highlights⁽¹⁾

Strong returns to shareholders compared to the

broader mortgage REIT industry

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Corporate Governance

Trustee Qualification, Board Refreshment and Selection Criteria

The Nominating and Corporate Governance Committee is responsible for developing the general criteria, subject to approval by the full Board, for use in identifying, evaluating and selecting qualified candidates for election or re-election to our Board. The Nominating and Corporate Governance Committee periodically reviews with our Board the appropriate skills and characteristics required of Board members in the context of the current composition of our Board. Final approval of trustee candidates is determined by the full Board, and invitations to join our Board are extended by our Chairman on behalf of the entire Board.

Randall A. Hadley did not stand for re-election in 2024. On June 12, 2024, the Board elected Setareh (SiSi) Pouraghabagher as a Class III trustee. The Nominating and Corporate Governance Committee and the Board determined that Ms. Pouraghabagher should be elected as a trustee because of her leadership and operational experience as a financial executive at public financial service corporations, private technology companies, public accounting firms, and her role in higher education. In addition, Ms. Pouraghabagher is an experienced financial services executive with a strong background in banking, insurance, consulting and accounting with financial risk management and regulatory experience. The Nominating and Corporate Governance Committee did not retain an independent third party to assist in identifying Ms. Pouraghabagher.

The Nominating and Corporate Governance Committee, in accordance with our Corporate Governance Guidelines, seeks to create a board that is strong in its collective knowledge and has skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, risk management, corporate governance, and knowledge of the mortgage and REIT sectors and the global markets. In its efforts to support a Board with a wide range of skills and perspectives, the Nominating and Corporate Governance Committee considers various factors, including personal and professional backgrounds, which can contribute to diverse viewpoints, enhancing overall Board composition and effectiveness. In considering candidates for our Board, the Nominating and Corporate Governance Committee considers the entirety of each candidate’s credentials in the context of these standards and in light of the needs of our Board and our Company at that time, given the then current mix of trustee attributes. The Nominating and Corporate Governance Committee also considers a candidate’s accessibility and availability to serve effectively on our Board, and it conducts inquiries into the background and qualifications of potential candidates. With respect to the nomination of continuing trustees for re-election, the individual’s past contributions to our Board are also considered.

The Nominating and Corporate Governance Committee uses a variety of methods for identifying and evaluating nominees for trustee. The Nominating and Corporate Governance Committee assesses the appropriate size of our Board and whether any vacancies on our Board are expected due to retirement or otherwise. In the event that a vacancy is anticipated, or otherwise arises, the Nominating and Corporate Governance Committee considers whether to fill any such vacancy and, if so, identifies various potential candidates for trustee. These candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee, and may be considered at any point during the year.

Candidates may come to the attention of the Nominating and Corporate Governance Committee through current members of our Board, professional search firms or other persons. The Nominating and Corporate Governance Committee will also consider recommendations for nominees properly submitted by our shareholders. These recommendations should be submitted in writing to our Secretary at our principal executive offices located at 3043 Townsgate Road, Westlake Village, California 91361. If any materials are provided by a shareholder in connection with a recommendation for a trustee nominee, such materials are forwarded to the Nominating and Corporate Governance Committee. Following verification of the shareholder status of persons proposing candidates, recommendations are aggregated and considered by the Nominating and Corporate Governance Committee, in the same manner as other recommendations, at its next regularly scheduled or special meeting.

Independence of Our Trustees

The New York Stock Exchange, or NYSE, rules require that at least a majority of our trustees be independent of our Company and management. The rules also require that our Board affirmatively determine that there are no material relationships between a trustee and us (either directly or as a partner, shareholder or officer of an organization that has a relationship with us) before such trustee can be deemed independent. We have adopted independence standards consistent with NYSE and SEC rules. Our Board has reviewed both direct and

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indirect transactions and relationships that each of our trustees has or had with us and our management. In addition, during Fiscal 2024, our independent trustees also included Randall A. Hadley, who did not stand for re-election in 2024.

As a result of this review, our Board, based upon the fact that none of our non-management trustees have any material relationships with us other than as trustees and holders of our common shares, affirmatively determined that 80% of our current trustees are independent trustees under NYSE rules. Our independent trustees are Messrs. Carnahan and DuFauchard and Mmes. Corley, Lynch, McAllister, Pouraghabagher, Schultz and Stewart.

Board of Trustees Leadership and Independent Lead Trustee

Our Chairman and the independent lead trustee provide leadership to and work with our Board to define its structure and activities in the fulfillment of its responsibilities. The Board determined in March 2025 that the position of Chairman of the Board should continue to be held by David A. Spector. Mr. Spector has served as a key executive since our formation in 2009 and through our growth into one of the leading public mortgage REITs. The Board believes Mr. Spector’s past experience has made him uniquely positioned to lead and oversee the Board and identify and execute our future strategic initiatives. In addition, Mr. Spector has proven himself capable of leading Board discussions on new initiatives and strategic priorities, facilitating internal Board communication and ensuring proper Board oversight of key issues.

This determination is based, in part, on our belief that independent trustees and management have different perspectives and roles in strategy development. Our independent trustees bring experience, oversight and expertise from outside our Company and industry, while the Chief Executive Officer brings company-specific experience and expertise. We believe our Chief Executive Officer is thus better situated to serve as Chairman of the Board because he is able to utilize the in-depth focus and perspective gained in running our Company to effectively and efficiently lead our Board. As the trustee most familiar with our business and industry, he is capable of identifying new initiatives and businesses, strategic priorities and other critical and/or topical agenda items for discussion by our Board and then leading the discussion to ensure our Board’s proper oversight of these issues. Our Board believes that the combined role of Chairman of the Board and Chief Executive Officer promotes strategy development and execution, and facilitates information flow between management and our Board, all of which are essential to effective governance.

This determination is also based on what we consider to be a strong governance structure already in place, including the appointment of an influential independent lead trustee with a strong voice. The independent lead trustee works with our Chairman of the Board and other trustees to provide informed, independent oversight of our management and affairs. Among other things, the independent lead trustee reviews and provides input on Board meeting agendas and materials, coordinates with committee chairs to ensure the committees are fulfilling the responsibilities set forth in their respective charters, serves as the principal liaison between our Chairman of the Board and the independent trustees, and chairs an executive session of the independent trustees at each regularly scheduled Board meeting. On March 19, 2024, the independent trustees of our Board re-elected Preston DuFauchard as our independent lead trustee for an additional three-year term.

Succession Planning

Our Board oversees management’s succession plan for the Chairman and Chief Executive Officer and other key positions at the executive officer level. Our Board annually reviews succession plans for the Chairman and Chief Executive Officer and executive management. In addition, the Chairman and Chief Executive Officer annually provides to our Board his assessment of executive leaders and their potential to succeed at key executive management positions.

Trustee Education

New trustees receive an orientation upon joining the Board, including the opportunity to meet with members of management, which is designed to familiarize new trustees with the Company’s purpose, business, operations, strategic direction, financial matters, risk management, corporate governance practices and other key policies and practices. The Board also believes in the importance of continuing trustee education to enhance the performance of the Board and its committees. All trustees are offered membership with the National Association of Corporate Directors, a nationally recognized organization providing corporate governance and director and trustee education. In addition, trustees receive ongoing internal education from management and the Company’s advisors on matters relevant to the Company’s business, industry trends and developments, corporate governance and other appropriate subjects to assist the trustees in discharging their duties.

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The Role of the Board in Risk Oversight

Our senior management is responsible for designing, implementing and maintaining an effective and appropriate approach for managing enterprise risk. Our Board and each of its committees, and in particular the Audit and Risk Committees, have an active role in overseeing our enterprise risk management process, while supporting organizational objectives, improving long-term organizational performance and creating shareholder value. A fundamental part of risk management oversight is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for our Company. The involvement of the full Board in determining our business strategy is a key part of its assessment of management’s appetite for risk and determination of what constitutes an appropriate level of risk for our Company.

Our Board encourages senior management to promote a culture that incorporates risk management into the Company’s corporate strategy and day-to-day business operations. Our Board continually works, with the input of the Company’s senior management, to assess and analyze the most likely areas of future risk. While our Board has the ultimate oversight responsibility for the risk management process, particularly with respect to those risks inherent in the operation of our businesses, the committees of our Board also share responsibility for overseeing specific areas of risk management as follows:

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While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about the nature of all such risks.

The Role of the Board in Cybersecurity

Our Board oversees our cybersecurity risks by periodically evaluating cybersecurity reports from senior management, including the Chief Information Officer and the Chief Information Security Officer, as well as reports from the Board committees and third-party consultants. The Risk Committee oversees our enterprise risk management framework, including risk and controls associated with data security, cybersecurity, IT infrastructure, and data privacy. The Audit Committee oversees the internal and external auditors’ review of the effectiveness of our internal controls to mitigate cybersecurity risks.

Committees of the Board of Trustees

Our Board has established six principal committees: the Audit Committee, the Compensation Committee, the Finance Committee, the Nominating and Corporate Governance Committee, the Related Party Matters Committee and the Risk Committee. In addition to the standing committees described above, our Board may also establish ad hoc committees for limited periods of time in order to address particular matters. Our Board committees have also adopted written charters that govern their conduct, each of which is available on our website at pennymacmortgageinvestmenttrust.com.

Current Board chairs and committee members are identified in the following table:

† – Chairman of the Board

* – Independent Lead Trustee

CC – Committee Chair

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The primary responsibilities, membership and meeting information for the Board committees are summarized below:

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Board of Trustees and Committee Meetings

During Fiscal 2024, our Board held five meetings. All trustees are expected to make every effort to attend all meetings of the Board and meetings of the committees of which they are members. Each trustee attended at least 75% of the aggregate number of meetings held in Fiscal 2024 for the period during which such trustee served with respect to meetings of our Board and each committee on which such trustee served.

Executive Sessions of the Independent Trustees

Our Corporate Governance Guidelines require that our Board hold at least four regularly scheduled meetings each year and that our independent trustees meet in executive session without management on a regularly scheduled basis. These executive sessions, which are designed to promote unfettered discussions among our independent trustees, are presided over by the independent lead trustee, Mr. DuFauchard.

Board of Trustee Attendance at the 2024 Annual Meeting of Shareholders

We expect each member of the Board to attend our annual meetings of shareholders except for absences due to causes beyond the reasonable control of the trustee. All trustees attended the 2024 annual meeting of shareholders.

Board Evaluations

The charters of each of the Audit Committee, Compensation Committee, Finance Committee, Nominating and Corporate Governance Committee, Related Party Matters Committee and Risk Committee require an annual performance evaluation. The Nominating and Corporate Governance Committee oversees the annual Board assessment process and the implementation of the annual committee assessments. The performance evaluations may be conducted by the Chair of the Nominating and Corporate Governance Committee or by engaging an external evaluator. The key areas of focus for the evaluation are Board operations, Board accountability and committee performance. The results of the evaluation are reviewed with each respective committee and the full Board. Below is an example of a typical external board evaluation led by an external evaluator.

Codes of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics, which sets forth the basic principles and guidelines for resolving various legal and ethical questions that may arise in the workplace and in the conduct of our business. The Code of Business Conduct and Ethics is applicable to all of our employees, officers and trustees.

In addition, we have adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, which sets forth specific policies to guide these individuals in the performance of their duties. The Code of Business Conduct and Ethics and the Code of Ethics for the Chief

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Executive Officer and Senior Financial Officers are available on our website at pennymacmortgageinvestmenttrust.com. Our employees, officers and trustees are also encouraged to anonymously report suspected violations of the Code of Business Conduct and Ethics through various means, including a toll-free hotline available 24 hours a day, seven days a week.

Corporate Governance Guidelines

We have adopted Corporate Governance Guidelines, available on our website at pennymacmortgageinvestmenttrust.com, which, in conjunction with the charters and key practices of the committees of our Board, provide the framework for the governance of our Company. Pursuant to the majority voting standard in our Second Amended and Restated Bylaws, our Corporate Governance Guidelines also provide that if any nominee for trustee in an uncontested election fails to receive a majority vote for election or re-election, if so required, the trustee will promptly tender to the Board for its consideration his or her offer to resign from the Board.

Communications with our Board of Trustees

Our shareholders and other interested persons may send written communications to the Board, committees of the Board and individual trustees (including our independent lead trustee or the independent/non-management trustees as a group) by mailing those communications to:

Board of Trustees / Board Committee / Trustee(s)

c/o PennyMac Mortgage Investment Trust

Attn: Corporate Secretary

3043 Townsgate Road

Westlake Village, California 91361

Generally, these communications are sent by us directly to the specified addressee. Any communication that is primarily commercial, offensive, illegal or otherwise inappropriate, or does not substantively relate to the duties and responsibilities of our Board, may not be forwarded.

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Corporate Sustainability

Stakeholder Engagement

Our corporate sustainability approach starts with acknowledging that our stakeholders and those of our manager are the beneficiaries of our growth and success as an enterprise.

Our DNA

Our core values and DNA are centered around being the most trusted partner to our stakeholders.

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Corporate Sustainability Priorities Aligned with our Strategic Objectives

With oversight from our Board and its various committees, we are committed to being responsive to our stakeholders as it relates to managing the impacts of our business activities and continuously improving our corporate sustainability and related disclosures. Our Board believes that it is important to establish a robust corporate sustainability program and framework that will support our corporate initiatives. Our corporate sustainability report is prepared by our Senior Managing Director and Chief Human Resources Officer and our Managing Director, Corporate Sustainability. We maintain a corporate sustainability policy, which defines the framework requirements and governing platform for how we identify and manage corporate sustainability impacts of our operations in furtherance of our strategic plans.

Board and Management Oversight   Policies and Procedures   Monitoring and Evaluation   Sustainability Reporting

We maintain a pay-for-performance culture but we also acknowledge that our core business centered on the essential public good of homeownership serves a broader purpose. Mortgage banking-related investments and production activities allow us to help fund and facilitate home purchases and refinancing activity that make homes more affordable. We also encourage and support our corporate sustainability objectives through our Board governance, our employees and operations and through our community commitments. Our corporate sustainability priorities promote our long-term growth that benefits all of our investors, employees, housing industry customers and other stakeholders. We hold ourselves accountable for managing the corporate sustainability impact of our business activities through a number of operational initiatives.

We and our Manager seek to operate our facilities in an environmentally sustainable manner that manages our impact on the environment by investing in sustainable products and services, committing to increased waste recycling, focusing on energy efficiency and engaging in conservative water consumption practices. We and our Manager are committed to environmental sustainability and energy conservation and recognize the importance of being a responsible steward of the environment.

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Corporate Sustainability and Board Committee Oversight

Our Board has established a set of principles, guidelines and practices that support sustainable financial performance and long-term value creation for our stakeholders supported by Board committee oversight:

Board and Workforce Composition

Six women serve as trustees representing 60% of our total Board members. In addition, we have three trustees who self-identify as representing underrepresented communities, including two trustees of African-American heritage, and one trustee of gay, lesbian, bisexual or transgender orientation. Our Board maintains a policy regarding the evaluation of trustee candidates which states that the Board in its selection of trustee candidates will consider the overall Board balance of a broad spectrum of viewpoints, backgrounds and experiences. Our Board has also established trustee selection criteria which provides that the Board in its selection of trustee candidates may consider a number of factors that contribute to a wide range of skills and perspectives, including personal and professional backgrounds that contribute to a broad range of viewpoints on the Board.

All of our senior officers are employees of PFSI or its affiliates and we had six employees as of the end of Fiscal 2024. Our business is highly dependent upon PFSI’s and our employees, as well as their and our ability to maintain a workplace representing a broad spectrum of backgrounds, ideas, perspectives and experiences. PFSI had approximately 4,100 domestic employees as of the end of fiscal year 2024. As of the end of Fiscal 2024, PFSI’s workforce was 51.3% female and 48.7% male, and the ethnicity of our workforce was 43.8% White, 23.4% Hispanic or Latino, 13.9% Black or African American, 14.5% Asian and 4.4% other (which includes American Indian or Alaska Native, Native Hawaiian or Other Pacific Islander, Two or More Races, or Not Specified as defined in our EE0-1 Report filed with the Department of Labor).

PFSI’s Workforce Composition – Fiscal 2024

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Employee Retention and Development

We and PFSI believe in attracting, developing and retaining highly skilled talent, while providing a supportive work environment that prioritizes the safety and wellness of PFSI’s and our employees. Talent development is a critical component of the employee experience and ensures that all employees have career growth opportunities, including establishing development networks and relationships and fostering continued growth and learning. Employees receive regular business and compliance training to help further enhance their career development objectives. PFSI also actively manages enterprise-wide and divisional mentoring programs and has partnered with an external vendor to establish a comprehensive, fully integrated wellness program designed to enhance employee productivity.

Compensation and Succession Planning

PFSI’s and our compensation programs are designed to motivate and reward employees who possess the necessary skills to support our business strategy and create long-term value for our shareholders. Employee compensation may include base salary, annual cash incentives, and long-term equity incentives, as well as life insurance and 401(k) plan matching contributions. We and PFSI also offer a comprehensive selection of health and welfare benefits to PFSI’s and our employees including emotional well-being support and paid parental leave programs. Succession planning is also critical to our operations and we have established ongoing evaluations of our leadership depth and succession capabilities.

Workplace Engagement

We and PFSI believe that building a high-performing, talented and engaged workforce where our employees bring varied perspectives and experiences to work every day creates a positive influence in our workplace, business operations and the communities we serve. We and PFSI prioritize several initiatives that strengthen our workplace culture, including our leadership standards, mentorship programs, business resource groups, and on-site and division-based culture and engagement teams. We and PFSI actively monitor trends in our workforce and prioritize programs to ensure that employees have an opportunity to learn, grow, and thrive. Our Board and board committees also oversee human capital resource programs and initiatives.

Community Involvement

PFSI’s corporate philanthropy program is governed by a philosophy of giving that prioritizes the support of causes and issues of importance in our local communities, and drives a culture of employee engagement and collaboration throughout our and PFSI’s organizations. We and PFSI empower our employees to be a positive influence in the community, which we believe cultivates a sense of purpose and connection that boosts employee productivity and engagement, increases job satisfaction, and ultimately improves employee retention.

PFSI’s philanthropy program consists of a number of key components: an employee matching gifts program, a volunteer grants program, a charitable grants program and a corporate sponsorship program. PFSI’s five philanthropic focus areas are: community development and affordable housing, financial literacy and economic inclusion, human and social services, health and medical research, and environmental sustainability.

PFSI has established a separate donor advised fund to facilitate donations to various local and national charitable organizations and has provided funding to several charitable organizations located near its office sites and national organizations that support missions such as sustainable homeownership, mortgage and rental assistance, food insecurity, disaster relief, family and child advocacy, and community empowerment. We and PFSI also manage our environmental impact by focusing on improving our waste reduction, energy efficiency and water conservation.

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Proposal 1 – Election of Trustees

We have ten trustees. Setareh (SiSi) Pouraghabagher was elected as an independent Class III trustee on June 12, 2024. In addition, Randall A. Hadley did not stand for re-election in 2024 and we are grateful for his past services to the Company. We have three classes of trustees. The Board has nominated Scott W. Carnahan, Donna M. Corley and Renee R. Schultz for election as Class I trustees, and each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. If our Class I trustees are elected at this year’s Annual Meeting, they will serve until our annual meeting of shareholders in 2028 and until their successors have been duly elected and qualified. Our Class II trustees will serve until our annual meeting of shareholders in 2026 and until their successors have been duly elected and qualified. Our Class III trustees will serve until our annual meeting of shareholders in 2027 and until their successors have been duly elected and qualified. Our Board is considered a staggered board, which means that our trustees are classified into three classes with staggered three-year terms.

Majority Voting Standard in an Uncontested Election of Trustees

Because this is considered an uncontested election under our Company’s Second Amended and Restated Bylaws, a nominee for trustee is elected to the Board if he or she receives a majority of the votes cast for his or her election, meaning the number of shares voted for such nominee’s election exceeds the number of shares voted against such nominee’s election. Abstentions and broker non-votes will not affect the election of trustees. In tabulating the voting results for the election of trustees, only “FOR” and “AGAINST” votes are counted. If an incumbent trustee receives a greater number of votes against his or her election than votes for such election, such trustee shall tender his or her resignation as provided in our Company’s Corporate Governance Guidelines. The Nominating and Corporate Governance Committee of the Board will then act on an expedited basis to determine whether to accept the trustee’s tendered resignation and will submit such recommendation for prompt consideration by the Board. In considering whether to accept or reject the tendered resignation, the Nominating and Corporate Governance Committee and the Board will consider any factors they deem relevant.

OUR BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR OUR CLASS I TRUSTEE NOMINEES TO SERVE UNTIL OUR 2028 ANNUAL MEETING OF SHAREHOLDERS AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFIED.

The following paragraphs provide the name, age and business experience of each trustee nominee up for election at the Annual Meeting and each continuing trustee up for election at our annual meeting of shareholders in 2026 or 2027. Immediately following the description of each trustee’s business experience is a description of the particular experience, skills and qualifications that were instrumental in the Nominating and Corporate Governance Committee’s determination that the trustee should serve on our Board.

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Trustee Nominees

Class I Trustees – Term to Expire in 2025

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Continuing Trustees

Class II Trustees – Term to Expire in 2026

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Class III Trustees – Term to Expire in 2027

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Non-Management Trustee Compensation

The Compensation Committee reviews and recommends to our Board the form and level of trustee compensation and seeks outside advice from Pearl Meyer & Partners, or Pearl Meyer, its independent compensation consultant, on market practices when changes are contemplated.

Trustee compensation was reviewed in 2024 by the independent compensation consultant relative to certain peer companies and selected companies within the S&P 500 and Russell 3000 indexes and, in connection with such review, the independent compensation consultant indicated that an increase in compensation was warranted based on market studies, however, our Compensation Committee recommended no changes in non-management trustee compensation from the prior year.

The compensation program for our non-management trustees is intended to be competitive and fair so that we can attract the best talent to our Board, and recognize the time and effort required of a trustee given the size and complexity of our operations. In addition to cash compensation, we provide equity grants and have share ownership guidelines to further align the trustees’ interests with our shareholders’ interests and to motivate our trustees to focus on our long-term growth and success. Any management trustee who is an executive officer of our Manager or its affiliates is not paid any fees for serving on our Board or for attending Board meetings.

The following table summarizes the annual retainer fees of our non-management trustees as of the end of Fiscal 2024.

In addition, our trustees are eligible to receive certain types of equity-based awards under our 2019 Equity Incentive Plan, or 2019 Plan. On March 12, 2024, each of Messrs. Carnahan, DuFauchard and Hadley and Mmes. Corley, Lynch, McAllister, Schultz, and Stewart received a grant of 7,660 time-based restricted share units, or RSUs, with a grant date fair value of approximately $110,000. Ms. Pouraghabagher received a grant, prorated for her time in service to the Board during the year, of 5,996 time-based RSUs on June 12, 2024 with a grant date fair value of approximately $82,265.

Non-management trustee RSUs granted in Fiscal 2024 will vest on the first anniversary of the grant date and entitle the recipient to receive any cash distributions during the vesting period. Prior to the vesting of an RSU, such RSU is generally subject to forfeiture upon termination of service to us. In addition, each independent trustee newly elected or appointed to our Board generally is entitled to receive a one-time initial RSU grant with a grant date fair value of approximately $110,000 in RSUs prorated for the portion of the annual equity award cycle for which the trustee served on the Board. Further, all members of our Board will be reimbursed for their reasonable out-of-pocket costs and expenses in attending all meetings of our Board and its committees and certain other Company-related functions.

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Policy Regarding Receipt of Shares in Lieu of Cash Trustee Fees. During 2014, our Board adopted a policy whereby non-management trustee fees may be paid in cash or common shares at the election of each non-management trustee. The number of common shares delivered in lieu of any cash payment of trustee fees will be equivalent in value to the amount of forgone trustee fees divided by the fair market value (as defined in our 2019 Plan) of a common share on the day on which the trustee fees otherwise would have been paid in cash to the non-management trustee, rounded down to the nearest whole share. None of our trustees has elected to be paid in common shares.

Accelerated Vesting. Prior to vesting, an RSU granted to a non-management trustee is generally subject to forfeiture upon termination of service to us if such termination is for cause. Upon a termination of service to us other than for cause, a change in control or the termination of our management agreement other than for cause (as defined in our management agreement), any RSU held by non-management trustees not previously vested may become fully or pro rata vested, depending on the circumstances of the termination, and settled in our common shares. The term of our management agreement expires on December 31, 2029, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement.

2024 Trustee Compensation Table

The table below summarizes the compensation earned by each non-management trustee who served on our Board during Fiscal 2024.

Non-Management Trustee Share Ownership Guidelines

Non-management trustees are subject to robust share ownership guidelines that require each such trustee to hold common shares and unvested RSUs with an aggregate market value equal to at least five times the base annual retainer. Non-management trustees are expected to meet the ownership guidelines within five years from the date of appointment or election to our Board. Each non-management trustee who has been on the Board for five years is in compliance with our share ownership guidelines. The Nominating and Corporate Governance Committee will annually review each trustee’s compliance with or progress toward meeting the share ownership guidelines based on share ownership calculated as of the average closing share price over the prior year.

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Audit Matters

Report of the Audit Committee

The Board of Trustees has determined that all of the members of the Audit Committee meet the independence and experience requirements of The New York Stock Exchange, or the NYSE, and that Ms. Lynch, Mr. Carnahan and Ms. Pouraghabagher are “audit committee financial experts” within the meaning of the applicable rules of the Securities and Exchange Commission, or the SEC, and the NYSE.

The Audit Committee met 12 times in 2024. The Audit Committee’s agenda is established by the Chairman of the Audit Committee. The Audit Committee engaged Deloitte & Touche LLP, or Deloitte, as the Company’s independent registered public accounting firm and reviewed with the Company’s Chief Financial Officer and Deloitte the overall audit scope and plans, the results of the external audit examination, evaluations by the independent registered public accounting firm of the Company’s internal controls and the quality of its financial reporting.

The Audit Committee has reviewed and discussed the audited financial statements with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also discussed with Deloitte other matters required to be discussed by a registered public accounting firm with the Audit Committee under applicable standards of the Public Company Accounting Oversight Board, or the PCAOB. The Audit Committee received and discussed with Deloitte its annual written report on its independence from the Company and its management, which is made pursuant to applicable requirements of the PCAOB, and considered with Deloitte whether the provision of non-audit services is compatible with its independence.

In performing all of these functions, the Audit Committee acts only in an oversight capacity and, necessarily in its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for financial statements and reports, and of the Company’s independent registered public accounting firm, which in its reports expresses an opinion on the conformity of the Company’s annual financial statements to generally accepted accounting principles and on the effectiveness of its internal control over financial reporting as of year-end.

In reliance on these reviews and discussions, and the reports of Deloitte, the Audit Committee recommended to the Board of Trustees, and the Board of Trustees approved, the inclusion of the Company’s audited financial statements in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 20, 2025.

The foregoing report has been furnished by the following current members of the Audit Committee:

Catherine Lynch, Chair

Scott W. Carnahan

Setareh (SiSi) Pouraghabagher

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Independent Registered Public Accounting Firm Fees for 2024 and 2023

In addition to performing the audits of our financial statements in Fiscal 2024 and Fiscal 2023, Deloitte has provided audit-related, tax and other services for us as reflected in the following table that shows the fees billed to us by Deloitte for these services.

Pre-Approval Policies and Procedures

The Audit Committee approved all services performed by Deloitte during Fiscal 2024 in accordance with applicable SEC requirements. The Audit Committee has also pre-approved the use of Deloitte for certain audit-related services, setting a specific limit on the amount of such services that we may obtain from Deloitte before additional approval is necessary. In addition, the Audit Committee has delegated to the chair of the Audit Committee the authority to approve audit and non-audit services provided by Deloitte, provided that the chair will present any pre-approval decisions to the Audit Committee at its next scheduled meeting.

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Proposal 2—Ratification of Appointment of

Independent Registered Public Accounting Firm

The Audit Committee is responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our financial statements. The Audit Committee conducts a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence, and takes into account the insight provided to the Audit Committee and the quality of information provided on accounting issues, auditing issues and regulatory developments. The Audit Committee also considers whether, in order to ensure continuing auditor independence, there should be periodic rotation of the independent registered public accounting firm, taking into consideration the advisability and potential costs and impact of selecting a different firm.

The Audit Committee appointed Deloitte to serve as our independent registered public accounting firm for the 2025 fiscal year. Deloitte has served as our independent registered public accounting firm since 2009.

The Audit Committee exercises sole authority to approve all audit engagement fees and terms associated with the retention of Deloitte. In addition to ensuring the regular rotation of the lead audit partner as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit partner.

The Audit Committee evaluated Deloitte’s institutional knowledge and experience, quality of service, sufficiency of resources and quality of the team’s communications and interactions as well as the team’s objectivity and professionalism. As a result, the Audit Committee believes that the continued retention of Deloitte to serve as our independent registered public accounting firm is in the best interests of the Company and its shareholders. Accordingly, we are asking shareholders to ratify the appointment of Deloitte.

The Board is submitting the appointment of Deloitte to our shareholders for ratification because we value our shareholders’ views on this appointment and as a matter of good corporate governance. In the event that shareholders fail to ratify the appointment, it will be considered a recommendation to the Board and the Audit Committee to consider the selection of a different firm. Even if the appointment is ratified, the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

Representatives of Deloitte are expected to be present at the Annual Meeting and will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.

OUR BOARD OF TRUSTEES AND OUR AUDIT COMMITTEE UNANIMOUSLY RECOMMEND A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2025.

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Security Ownership Information

Security Ownership of Officers and Trustees

The following table sets forth certain information as of March 31, 2025 relating to the beneficial ownership of our common shares by (1) each of our named executive officers, (2) each of our trustees, and (3) all of our current trustees and executive officers as a group. Unless otherwise indicated, all shares are owned directly and the indicated person has sole voting and investment power.

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Security Ownership of Other Beneficial Owners

The following table sets forth certain information relating to the beneficial ownership of our common shares by each person or entity known to our Company to be the beneficial owner of more than five percent of our common shares, based on our review of publicly available statements of beneficial ownership filed with the SEC.

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Our Executive Officers

The following sets forth certain information with respect to our current executive officers:

Biographical information for Mr. Spector and Mr. Jones is provided above under the caption “Proposal 1 - Election of Trustees.” Certain biographical information for the other executive officers is set forth below.

Mark Elbaum. Mr. Elbaum has served as our Senior Managing Director and Chief Capital Markets Officer since February 2025. Previously, he was Senior Managing Director, Strategic Initiatives and assumed the interim role of Chief Capital Markets Officer in October 2024. Mr. Elbaum has also served in a variety of similar executive positions at PFSI and its affiliates since 2023. Mr. Elbaum is responsible for capital markets activities, including the development and execution of investment strategies, secondary marketing, servicing asset valuation, hedging activities and capital markets execution strategies with the government-sponsored enterprises. Prior to joining PFSI, he was Chief Financial Officer at Home Point Financial from 2020 to 2023, Chief Financial Officer at Marlette Funding, LLC from 2018 to 2020, and Chief Financial Officer of Merrill Lynch, Bank of America’s Wealth Management division, from 2011 to 2017. Mr. Elbaum also served as Chief Financial Officer of Bank of America’s mortgage lending division and Chief Financial Officer of the Residential Lending Division at Countrywide Financial Corporation. Mr. Elbaum earned an M.A. in accounting from the University of Southern California and is a Certified Public Accountant. Mr. Elbaum is an experienced mortgage banking executive with significant experience in mortgage financing and administration.

James Follette. Mr. Follette has been Senior Managing Director and Chief Digital Officer since November 2023. Mr. Follette previously served as Senior Managing Director and Chief Mortgage Operations Officer from October 2022 to November 2023, and Senior Managing Director and Chief Mortgage Fulfillment Officer from February 2018 to October 2022 among other executive positions at the Company since 2011. Mr. Follette has also served in a variety of similar executive positions at PFSI and its affiliates since 2011. Mr. Follette is responsible for the Company’s technology and servicing operations. Prior to joining PFSI and its affiliates, Mr. Follette worked in several executive positions, including managing director, risk management, at Countrywide Financial Corporation (and Bank of America Corporation, as its successor) from 2003 until 2011, where he led operations and risk management and was responsible for all aspects of operational management, transactional risk management and business development. Mr. Follette earned a B.B.A. in Accounting from the University of Notre Dame and an M.B.A. in Finance from the University of Chicago. Mr. Follette is an experienced mortgage banking executive with significant experience in risk mitigation and technology strategies across various mortgage lending channels.

Daniel S. Perotti. Mr. Perotti has been our Senior Managing Director and Chief Financial Officer since January 1, 2021. Prior thereto, he served as the Company’s Deputy Chief Financial Officer from January 2017 to December 2020, and served as the Company’s Chief Asset and Liability Management Officer, among other positions at the Company since 2009. Mr. Perotti has also served in a variety of similar executive positions at PFSI and its affiliates since 2009. Mr. Perotti is responsible for overseeing the Company’s accounting and financial reporting, treasury operations, investor relations, financial planning and analysis, tax analysis, and Sarbanes-Oxley program. Prior to joining PFSI and its affiliates, Mr. Perotti was employed at BlackRock and served as the head of the quantitative research team within its BlackRock Solutions business as well as in various other roles at BlackRock, Inc. from 2002 to 2008. Mr. Perotti earned a B.A. in economics and computer science from Columbia University. Mr. Perotti is an experienced financial services executive with substantial experience in corporate finance and mortgage banking.

Derek W. Stark. Mr. Stark has been our Senior Managing Director, Chief Legal Officer and Secretary since February 2018. Mr. Stark previously served as the Managing Director, General Counsel and Secretary among other executive positions at the Company since September 2009. Mr. Stark has also served in a variety of similar executive positions at PFSI and its affiliates since 2009. Mr. Stark is responsible for overseeing all of the Company’s legal management, including securities, corporate governance, corporate transactions, litigation and regulatory compliance, and he serves as the primary legal contact for the Board. Prior to joining PFSI and its affiliates, and after leaving private practice, Mr. Stark served in a variety of executive positions, including Executive Vice President and Deputy General

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Counsel, from 1999 to 2008, at Countrywide. Mr. Stark earned a B.A. in Political Science from the University of California, Berkeley, and a J.D. from Loyola Law School, Los Angeles. Mr. Stark is an experienced legal executive with significant experience in corporate and securities law, litigation and mortgage banking.

Abbie Tidmore. Ms. Tidmore has been our Senior Managing Director and Chief Revenue Officer since October 2022. Ms. Tidmore previously served as Senior Managing Director, PennyMac Correspondent Group Sales from January 2021 to October 2022. Ms. Tidmore has also served in a variety of similar executive positions at PFSI and its affiliates since 2011. Ms. Tidmore has been pivotal in building and leading the correspondent lending division and she serves as a role model and co-founder of wEMRG, an empowering program for women at PFSI. Prior to joining PFSI and its affiliates, Ms. Tidmore served as the Vice President and Sales Manager for Bank of America from 1999 to 2011. She holds a B.A. from The University of Texas at Austin. Ms. Tidmore is an experienced mortgage banking executive with significant experience in mortgage banking and correspondent production.

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Report of the Compensation Committee

Our Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on such review and discussions, the Compensation Committee recommended that our Board of Trustees include the Compensation Discussion and Analysis in this Proxy Statement and our 2024 Annual Report on Form 10-K.

The Compensation Committee

Renee R. Schultz, Chair

Nancy McAllister

Stacey D. Stewart

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Compensation Discussion and Analysis

Table of Contents

This compensation discussion and analysis provides a detailed description of our executive compensation program and policies, the material compensation decisions made under such program and policies with respect to our named executive officers, and the material factors that were considered in making those decisions. This narrative discussion should be read together with the compensation tables and related disclosures set forth below.

2024 Named Executive Officers

Our “named executive officers” consisting of our Chief Executive Officer, our Chief Financial Officer, our next three most highly compensated executive officers and one former executive officer during Fiscal 2024, were:

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Executive Compensation Highlights

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Executive Summary of 2024 Compensation

Although our named executive officers are generally compensated by their employer, PFSI and its affiliates, our Compensation Committee has granted, and may continue to grant, from time to time, equity-based awards designed to align the interests of employees of PFSI and its affiliates who provide services to us with those of our shareholders, by allowing such employees, including our named executive officers, an opportunity to share in the creation of value for our shareholders through capital appreciation and dividends. Currently, these equity-based awards are in the form of performance-based restricted share units, or PSUs, and restricted share units, or RSUs, and are granted by our Compensation Committee in its discretion under our 2019 Plan. In order to help ensure that our executive compensation program aligns with the interests of our shareholders and focuses on long-term performance, we grant PSUs that vest upon our Company’s satisfaction of performance measures tied to return on equity, or ROE, and relative total shareholder return, or TSR. PSU and RSU awards granted to our named executive officers are designed to align their interests with those of our shareholders by providing each named executive officer providing services to us through PFSI and its affiliates with an ownership or ownership-based interest in our Company and a stake in our long-term success. Our PSU and RSU awards are also designed to further motivate our named executive officers to achieve exceptional Company and individual performance and reward them for such performance through a long-term incentive structure that does not encourage excessive risk taking. We also believe that providing equity compensation to our named executive officers is appropriate given the risks and liability they undertake as named executive officers of a public company. We believe that our executive compensation program objectives have resulted in decisions regarding executive compensation that have appropriately encouraged growth in our businesses and the achievement of financial goals without excessive risk taking, thus benefiting our shareholders and supporting long-term shareholder value.

2024 Say-On-Pay Vote

At our 2024, 2023 and 2022 annual meetings of shareholders, approximately 98% of the votes cast by our shareholders supported our Say-On-Pay advisory vote on executive compensation. We believe the positive Say-On-Pay voting results reflect our commitment to maintain a pay for performance culture that aligns with our stakeholder interests. Following our 2024 shareholder meeting, the Compensation Committee and our Board closely reviewed the shareholder vote on our Say-On-Pay proposal and the differences in voting results between our 2024 annual meeting results and prior years, including the recommendations made by certain proxy advisory firms. As a result of our ongoing shareholder engagement and recommendations of certain proxy advisory firms, we have established a number of compensation disclosure and governance best practices over the past several years, including:

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2024 Stakeholder Interactions

We have established and have maintained a robust investor relations program that includes constant and proactive outreach with our shareholders, bondholders, the rating agencies, and other stakeholders. Members of our executive management team and members of our investor relations team constantly meet with current and prospective investors in live settings, such as in-office and at conferences and non-deal roadshows, and virtually via fireside chats or virtual meetings. Not only do these meetings enable investors to better understand our businesses and the mortgage industry in general, but they provide us with valuable feedback and insights, including with respect to their views on our executive compensation, which are in turn, presented to and considered by our Compensation Committee and Board.

Transparency is important:

In addition to required SEC filings, earnings webcasts and press releases, we strive to publish in a timely fashion, materials that effectively illustrate the drivers of our financial performance. This includes earnings presentations and supplemental financial schedules, which can be found on our corporate website at pmt.pennymac.com.

Consistent messaging:

Regardless of whether the stakeholder is a prospective or current bondholder or shareholder, rating agency or a corporate sustainability focused institution, we strive to tell a consistent story, adhering to our founding principles of being Accountable, Reliable and Ethical (A.R.E.).

Executive Compensation Paid by PFSI

We utilize an external management structure and we currently have six employees of our own; therefore, the management of our business and execution of our operations is performed on our behalf by our Manager and Servicer pursuant to a management agreement and other related party agreements. This external management structure allows us to operate with more limited infrastructure, which reduces overhead costs and provides predictability regarding the operating expenses required to run our business. Through PFSI, we have access to greater infrastructure and resources than we might otherwise have if we were to internalize our operations.

Pursuant to the terms of our management agreement as further defined under the heading “Management Agreement” in the “Certain Relationships and Related Transaction” section in this Proxy Statement, our Manager earns a base management fee equal to the sum of (a) 1.5% per year of shareholders’ equity up to $2 billion, (b) 1.375% per year of shareholders’ equity in excess of $2 billion, up to

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$5 billion, and (c) 1.25% per year of shareholders’ equity in excess of $5 billion. Our Manager may also earn a performance incentive fee calculated annually that escalates as net income (stated as a percentage of return on common shareholder equity) increases over certain thresholds. On each calculation date, the threshold amount represents a stated return on common shareholder equity, plus or minus a high watermark adjustment. The performance fee payable for any quarter is equal to: (a) 10% of the amount by which net income for the quarter exceeds (i) an 8% return on common shareholder equity plus the high watermark, up to (ii) a 12% return on common shareholder equity; plus (b) 15% of the amount by which net income for the quarter exceeds (i) a 12% return on common shareholder equity plus the high watermark, up to (ii) a 16% return on common shareholder equity; plus (c) 20% of the amount by which net income for the quarter exceeds a 16% return on common shareholder equity plus the high watermark.

Our Manager earned approximately $28.6 million in base management fees, zero in performance incentive fees and we reimbursed our Manager for $29.4 million of expenses incurred on our behalf in Fiscal 2024.

Our executive officers are employed by PFSI and, therefore, receive compensation from PFSI. While PFSI may use a portion of our management fee to compensate its executive officers, we do not specifically allocate any portion of the management fee to such compensation and our management agreement does not require any such allocation related to PFSI’s compensation arrangements with our named executive officers.

The following information relating to these compensation arrangements have been provided to us by PFSI and its affiliates.

PFSI’s Executive Compensation Objectives and Philosophy

PFSI, through its executive compensation program, seeks to:

PFSI aims to position the total compensation of its named executive officers at a level commensurate with the total compensation paid to other executives holding comparable positions at companies similar in industry, size, structure, scope and sophistication with which PFSI competes for executive talent.

PFSI’s 2024 Executive Compensation Decisions

In setting compensation for its executives, including our named executive officers, PFSI takes into consideration a number of factors in determining the total compensation payable to its employees including the type, scope and level of responsibility of the executive, competitive market dynamics, and the individual contributions made by the executive to the success of PFSI. In making its determinations regarding compensation arrangements with our named executive officers, PFSI does not take into account the amount of management fees we pay to our Manager. This is because a whole team of professionals at our Manager, our Servicer and their affiliates (including our named executive officers) supports our Company and these professionals not only support our management efforts, but also work on activities for us that are unrelated to our management agreement (e.g., mortgage loan servicing and mortgage loan fulfillment), as well as a broad range of other activities unrelated to us entirely. Many of these activities are for PFSI’s own account or the accounts of other third party stakeholders. To put this into context, the base management fees and performance incentive fees paid by us to our Manager represented approximately 1.8% of the $1.6 billion in total net revenues of our Manager and its affiliates during Fiscal 2024. No portion of such fees was directly allocated to the compensation paid by PFSI to any of our named executive officers.

Furthermore, we do not believe that base management fees and performance incentive fees as a percentage of PFSI’s total net revenues is an accurate or appropriate reflection of the portion of total compensation paid by PFSI to our named executive officers that is attributable to the services they provide our Company under our management agreement. Based on that approach and using the same percentage,

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however, we estimate that approximately $453,698 or 1.8% of the $25.3 million of total compensation paid by PFSI to our named executive officers during Fiscal 2024 would be deemed attributable to such services. Of the total compensation paid to our Chief Executive Officer by PFSI in Fiscal 2024, we estimate that approximately 11% was fixed (e.g., annual base salary) and approximately 89% was variable or incentive pay (e.g., performance-incentive and equity awards). Of the total compensation paid to our other named executive officers by PFSI in Fiscal 2024, we estimate that approximately 13% was fixed (e.g., annual base salary) and approximately 87% was variable or incentive pay (e.g., performance-incentive and equity awards).

2024 Annual Performance-Based Incentives Paid by PFSI

The annual performance-based incentives paid to our named executive officers by PFSI included a performance component equal to 70% of the annual target incentive based on achieving ROE and a strategic award component equal to 30% of the annual target incentive based on individual strategic objectives set at the beginning of the year. To determine annual performance-based incentive amounts, PFSI’s Compensation Committee first sets a target level of performance-based incentive for each named executive officer for the fiscal year based on competitive market data. Each named executive officer’s potential performance-based incentive payout varies based on such individual’s level of responsibility and position within our organization. PFSI believes that ROE is an appropriate measure for annual performance-based incentives because it provides our named executive officers with an incentive to achieve favorable current results, while also producing sustainable long-term shareholder value.

Each named executive officer’s target annual incentive was contingent on meeting the annual financial and strategic goals. Failure to meet the minimum ROE financial performance threshold would result in no ROE incentive payout, while exceeding the ROE financial performance target would result in incentive payouts over target, subject to a maximum payout cap of 300% for the financial performance component and 150% for the strategic award component. The total maximum annual incentive payable in Fiscal 2024 was 255% of target, assuming all goals were achieved at maximum.

In Fiscal 2024, PFSI’s management delivered net income of $311.4 million and ROE of 8.5%, primarily driven by higher inflation and interest rates negatively impacting the housing and mortgage loan market. PFSI’s ROE of 8.5% resulted in an ROE performance incentive payout of 52.6%. PFSI’s Compensation Committee also considered management’s execution of strategic objectives for the PFSI named executive officers and concluded that these objectives were achieved at the maximum payout of 150%. Based on the overall assessment of PFSI’s Fiscal 2024 performance and the Chairman’s recommendations, PFSI’s Compensation Committee approved the annual performance-based incentive amounts for the PFSI named executive officers at an overall payout percentage of 81.8%.

2024 Long-Term Equity Awards Granted by PFSI

In determining the equity awards granted to the PFSI named executive officers in Fiscal 2024, PFSI’s Compensation Committee considered, among other factors, the recommendations of management and various reports provided by its independent compensation consultant. PFSI’s Compensation Committee also considered (i) the value of the proposed equity awards; (ii) the historical equity awards previously granted to each named executive officer and the corresponding values at the time of the consideration of the 2024 grants; (iii) the value of share grants to the PFSI named executive officers providing comparable services at our industry and sector peers; (iv) the anticipated contribution by PFSI’s named executive officers in future fiscal years, taking into account the role, responsibility and scope of each position and PFSI’s Compensation Committee’s perception regarding the quality of the services provided by each named executive officer in carrying out those responsibilities; (v) PFSI’s financial and operating performance in the past year and its perceived future prospects; (vi) the mix of equity awards to total compensation; and (vii) general market practices. PFSI’s Compensation Committee considered these multiple factors in determining whether to increase or decrease the target amounts from the prior year’s equity award grants. There was no formulaic approach in the use of these various factors in determining the number of shares to award to each named executive officer. The share amounts were determined on a subjective basis, using the various factors, in PFSI’s Compensation Committee’s sole discretion.

PFSI’s Compensation Committee provided long-term equity incentives for Fiscal 2024 to the PFSI named executive officers through the following target value mix of performance-based restricted stock units, time-based restricted stock units and stock options:

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2024 Summary Compensation Paid by PFSI ⁽¹⁾

The following table presents compensation paid by PFSI, the parent company of our Manager, as of the end of Fiscal 2024 utilizing the methodology required by the SEC to report compensation in the “Summary Compensation Table.”