Company: TWO-PC
Filing Date: 2025-04-02
Form Type: DEF 14A
Source: 0001465740-25-000090
Chunk: 32

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-04-02
Form: DEF 14A
Chunk 32
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 Long-Term Incentive Compensation
Our Compensation Committee believes that equity incentive compensation is an important component of our executive compensation package and is critical in attracting, motivating and retaining outstanding employees. Equity incentive compensation closely aligns the long-term interests of our executive officers with those of our stockholders, while at the same time, promoting long-term employee retention and driving sustained long-term value creation for our stockholders.

Our Compensation Committee has established a long-term incentive framework that emphasizes performance-based compensation through the use of performance share units (“PSUs”) as well as time-based restricted stock units (“RSUs”) granted pursuant to our 2021 Equity Incentive Plan. The Compensation Committee believes that using a mix of PSUs and RSUs encourages our executives to focus on long-term company financial performance measures that are important to the continued success of our company and our stockholders while promoting the retention of our executive officers through the establishment of long-term vesting horizons embedded in the RSUs.

Long-Term Award Mix . Our Compensation Committee awards our executive officers with long-term incentive compensation that is comprised of a mix of PSUs and RSUs, with at least 50% in PSUs:

• Performance Share Units : PSUs are designed to reward the creation of long-term economic returns for our stockholders on an absolute and relative basis. To ensure that they incentivize and motivate meaningful long-term performance, PSUs generally vest following the end of a three-year performance period based on company financial performance metrics, and entitle the recipient to receive dividend equivalents that will accrue in the form of additional PSUs during the vesting period and are subject to the same vesting conditions as the underlying PSU award. The PSUs are earned based on absolute and relative total stockholder return (“TSR”), equally split, with relative metrics assessed against a predetermined performance peer group approved by the Compensation Committee at the start of the three-year performance period. In using three-year absolute and relative TSR for the long-term incentive performance metrics, the Compensation Committee believes that the mix of absolute and relative financial performance metrics provides a balanced assessment of the company’s overall performance. In addition, given half of the total payout opportunity is tied to absolute TSR performance, which must be positive to be earned, the PSU structure automatically caps the total payouts at target if absolute TSR is negative.

• Restricted Stock Units : RSUs are designed to promote the retention of our executive officers over a long-term vesting horizon and encourage their significant ownership of our common stock, which serves to align their interests with that of our stock