Company: RWT-PA
Filing Date: 2025-04-01
Form Type: DEF 14A
Source: 0000930236-25-000012
Chunk: 61

Company: REDWOOD TRUST INC
Filing Date: 2025-04-01
Form: DEF 14A
Chunk 61
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 in analyzing Redwood’s financial performance and help facilitate comparisons to

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industry peers and how those adjustments can also supplement analysis of the Redwood’s ability to pay a sustainable and growing level of dividends. After consideration of the foregoing, as well as the alternative line-of-sight that this financial performance metric provides into fundamental Company performance and key metrics that drive stockholder value creation, the Committee believes it set the Adjusted EAD ROE target at an appropriate level for the market environment the Company expected to operate in during 2024 and thereby established an important incentive for executives to achieve attractive Adjusted EAD ROE financial performance for Redwood, without exposing Redwood to inappropriate risk.

Other Aspects of 2024 Annual Bonus Methodology . Following this process for determining the financial performance targets to be used in the methodology for determining Company performance bonuses, the Committee also established how above- and below-target bonus amounts would be formulaically determined based on these financial performance targets, as follows: (i) with respect to the portion of the financial performance component of annual bonus determined based on Adjusted ROE, no bonus amounts would be earned if Adjusted ROE was 2.875% or less; bonus amounts below or at the target bonus amounts would be earned if Adjusted ROE was between 2.875% and 11.5%; and bonus amounts in excess of the target bonus amounts would not be earned unless Adjusted ROE was more than 11.5%; and (ii) with respect to the portion of the financial performance component of annual bonus determined based on Adjusted EAD ROE, no bonus amounts would be earned if Adjusted EAD ROE was 1.625% or less; bonus amounts below or at the target bonus amounts would be earned if Adjusted EAD ROE was between 1.625% and 6.5%; and bonus amounts in excess of the target bonus amounts would not be earned unless Adjusted EAD ROE was more than 6.5%. Additional detail regarding the formulaic determination of above- and below-target bonus amounts based on these financial performance targets – i.e., the formulaic “leverage” of this annual bonus methodology – is set forth within Annex B to this Proxy Statement.

The use of an initial performance threshold of greater than 2.875% Adjusted ROE and greater than 1.625% Adjusted EAD ROE for the payment of any of portion of target Company performance bonuses based on