Company: TWO-PC
Filing Date: 2025-04-02
Form Type: DEF 14A
Source: 0001465740-25-000090
Chunk: 30

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-04-02
Form: DEF 14A
Chunk 30
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 framework for performance measures, weightings, and goals and objectives that will motivate our executive officers to achieve the company’s financial, strategic and operational business objectives and deliver stockholder value. For 2024, the Compensation Committee established the following framework for the annual cash incentive targets:

| 2024 Annual Incentive Performance Framework                |     |     |
| Financial Performance Metrics                              |     | 70% |
| •50% Absolute Total Economic Return                        |     |     |
| •50% Relative Total Economic Return                        |     |     |
| Strategic and Operational Performance Goals and Objectives |     | 30% |

In establishing the specific performance metrics, the Compensation Committee’s focus on total economic return (“TER”) as a key measure of financial performance emphasizes the company’s commitment as a residential mortgage REIT to generating earnings efficiently against our capital base and returning those earnings to our stockholders, primarily in the form of dividends. TER reflects the overall economic return we generate and is comprised of our dividends paid and the change in the book value per share of common stock over a 12-month performance period. As such, it incorporates all aspects of our investment activity, including interest received on our investments, net of borrowing costs, and realized and unrealized gains and losses on our investments, hedging instruments, and other assets and liabilities. Additionally, we have observed that most investors and research analysts active in the residential mortgage REIT sector utilize this metric as a primary factor in analyzing residential mortgage REIT performance. Accordingly, it is the Committee’s view that the use of both absolute TER and relative TER (as compared to our performance peer group) provides a balanced assessment of our financial performance during the performance period.

The Committee believes that this performance framework places an appropriate emphasis on financial results (70%), while acknowledging the critical importance that strategic and operational performance (30%) as well as the contributions that our executive officers play in contributing to our company’s overall performance and success.

Financial Performance . The following table sets forth the company’s financial performance metrics and actual performance for 2024, along with the metric weightings and the performance continuum against which company performance was measured for purposes of determining the annual incentive compensation payouts for our executive officers.

|               |     |                                                 |     | Performance Continuum |     |           |     |           |     |           |     |                  |
| Metric Weight |     | Financial Performance Metrics                   |     | Below Threshold       |     | Threshold |     | Target    |     | Maximum   |     | 2024 Actual