Exhibit 10.2

PENNYMAC MORTGAGE INVESTMENT TRUST

2009 EQUITY INCENTIVE PLAN

 

PERFORMANCE SHARE UNIT

AWARD AGREEMENT

 

THIS PERFORMANCE SHARE UNIT AWARD AGREEMENT (the “Agreement”), effective as of
February 23, 2017 (the “Grant Date”), is made by and between PennyMac Mortgage
Investment Trust, a Maryland real estate investment trust (the “Trust”), and
_______________ (the “Grantee”).

 

WHEREAS, the Trust has adopted the PennyMac Mortgage Investment Trust 2009
Equity Incentive Plan (the “Plan”), pursuant to which the Trust may grant awards
representing the right to receive Shares or cash after the lapse of such
forfeiture restrictions and the satisfaction of such performance goals as may be
determined by the Board (such rights hereinafter referred to as “Performance
Share Units”);

 

WHEREAS, the Grantee is providing bona fide services to the Trust on the date of
this Agreement;

 

WHEREAS, the Trust desires to grant to the Grantee the number of Performance
Share Units provided for herein;

 

NOW, THEREFORE, in consideration of the recitals and mutual agreement herein
contained, the parties hereto agree as follows:

 

Section 1.Grant of Performance Share Unit Award

 

(a)Grant of Performance Share Units.  The Trust hereby grants to the Grantee
_________ Performance Share Units (or such greater or lesser amount as may
result based on the application of the performance vesting provisions in
Appendix A) on the terms and conditions set forth in this Agreement and as
otherwise provided in the Plan.  The Trust shall establish a book account in the
Grantee’s name with respect to the Award granted hereby.

 

(b)Incorporation of Plan.  The provisions of the Plan are hereby incorporated
herein by reference.  Except as otherwise expressly set forth herein, this
Agreement shall be construed in accordance with all provisions of the Plan and
any capitalized terms not otherwise defined in this Agreement shall have the
definitions set forth in the Plan.  The Board shall have final authority to
interpret and construe the Plan and this Agreement and to make any and all
determinations under them, and its decisions shall be binding and conclusive
upon the Grantee and his legal representative in respect of any questions
arising under the Plan or this Agreement.

 

Section 2.Terms and Conditions of Award

 

The grant of Performance Share Units provided in Section 1(a) shall be subject
to the following terms, conditions and restrictions:

 

(a)Restrictions.  The Performance Share Units may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of

 

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descent and distribution prior to the lapse of restrictions set forth in this
Agreement applicable thereto, as set forth in Section 2(b).  The Board may in
its discretion, cancel all or any portion of any outstanding restrictions prior
to the expiration of the periods provided under Section 2(b).  The period from
the date of grant of a Performance Share Unit to the date it becomes vested and
payable shall be referred to herein as the “Restricted Period.”

 

(b)Lapse of Restriction.  Except as may otherwise be provided herein, the
restrictions on transfer set forth in Section 2(a) shall lapse with respect to
up to thirty-three and one-third percent (33-1/3%) of the Performance Share
Units granted hereunder (as set forth on Appendix A attached hereto) on each of
the first three anniversaries of the Grant Date, to the extent that the Trust
has satisfied the relevant performance goals, and provided that the Grantee is
providing services to the Trust or an Affiliate as of the relevant date.

 

(c)Form of Payment.  Each Performance Share Unit granted hereunder shall
represent the right to receive one Share upon the date on which the restrictions
applicable to such Performance Share Unit lapse.

 

(d)Distribution Equivalents.  The Performance Share Units held by the Grantee on
a distribution payment date will not be credited with distribution equivalents
at such time as distributions, whether in the form of cash, Shares or other
property, are paid with respect to the Shares.  However, if the performance
goals set forth on Appendix A cease to apply to the vesting of any of the
Performance Share Units as provided in clause (ii) of the last sentence of
Section 2(g), below, then, from and after such cessation, any such Performance
Share Units held by the Grantee on a distribution payment date will be credited
with distribution equivalents at such time as distributions, whether in the form
of cash, Shares or other property, are paid with respect to the Shares.  Any
such distribution equivalents shall be paid on the distribution payment date to
the Grantee as though such Performance Share Units were outstanding Shares.

 

(e)Issuance of Certificate. Upon any lapse of restrictions relating to the
Performance Share Units, the Trust shall issue to the Grantee or the Grantee’s
personal representative a share certificate representing such Shares.

 

(f)Termination of Service.  In the event that the Grantee’s service with the
Trust and its Affiliates is terminated prior to the lapsing of restrictions with
respect to any portion of the Performance Share Unit Award granted hereunder,
such portion of the Award held by the Grantee shall become free of such
restrictions or be forfeited as follows:

 

(i)If such termination of service is (1) because of the Grantee’s death or
Permanent disability or (2) due to a termination of the Grantee’s services by
the Trust or one of its Affiliates (other than for Cause), any Performance Share
Units granted hereunder which have not become free of transfer restrictions
shall as of the date of such termination of service become fully vested and free
of such transfer restrictions; and

 

(ii)If such termination of service is for any reason (including without
limitation a voluntary termination of service by the Grantee) other than as
provided in clause (i) above, and Performance Share Units granted hereunder
which have not become free of transfer restrictions shall as of the date of such
termination of service be immediately forfeited.

 

 

 

 

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Performance Share Units forfeited pursuant to this Agreement shall be
transferred to, and reacquired by, the Trust without payment of any
consideration by the Trust, and neither the Grantee nor any of the Grantee’s
successors, heirs, assigns or personal representatives shall thereafter have any
further rights or interests in such Performance Share Units.

 

(g)Change in Control.  Notwithstanding Section 8(b) of the Plan, the Performance
Share Unit Award granted hereunder shall not become free of restrictions solely
upon the occurrence of a Change in Control; however, if the Grantee’s service is
terminated by the Trust and its Affiliates for any reason (other than for Cause)
as a result of or in connection with such Change in Control, then any
Performance Share Units granted hereunder which have not become free of transfer
restrictions shall as of the date of such termination of service become fully
vested and free of such transfer restrictions.  In addition, if the Shares cease
to be readily tradable on an established securities market or exchange as a
result of or in connection with such Change in Control, then any Performance
Share Units granted hereunder which have not become free of transfer
restrictions shall as of the date of such Change in Control become fully vested
and free of such transfer restrictions.  If the Shares will continue to be
readily tradable on an established securities market or exchange following a
Change in Control, and if a pro rata portion of any of the performance goals set
forth on Appendix A have been satisfied with respect to any of the outstanding
Performance Share Units granted hereunder as of the effective date of such
Change in Control, as determined by the Board in its sole discretion, then a
corresponding pro rata portion of such Performance Share Units shall become free
of restrictions as of such Change in Control.  With respect to all other
Performance Share Units outstanding following such Change in Control, (i) if the
Board, in its sole discretion, can determine comparable new performance goals
based upon the business of the acquiring or surviving entity, then Appendix A
shall thereupon be revised to incorporate such new performance goals, and (ii)
if the Board, in its sole discretion, cannot determine comparable new
performance goals, then Appendix A shall thereupon no longer be applicable, and
the restrictions on transfer set forth in Section 2(a) shall thereafter lapse
with respect to such Performance Share Units, which shall become fully vested
and free of such transfer restrictions based solely upon the Grantee continuing
to provide services to the Trust or an Affiliate.

 

(h)Income Taxes.  The Grantee shall pay to the Trust promptly upon request, and
in any event at the time the Grantee recognizes taxable income in respect of the
Performance Share Units, an amount equal to the taxes the Trust determines it is
required to withhold under applicable tax laws with respect to the Performance
Share Units.  Such payment shall be made in the form of cash, Shares already
owned by the Grantee, Shares otherwise then currently issuable under this
Agreement, or in a combination of such methods.

 

Section 3.Miscellaneous

 

(a)Notices.  Any and all notices, designations, consents, offers, Acceptances
and any other communications provided for herein shall be given in writing and
shall be delivered either personally or by registered or certified mail, postage
prepaid, which shall be addressed in the case of the Trust to the Secretary of
the Trust at the principal office of the Trust and, in the case of the Grantee,
to the Grantee’s address appearing on the books of the Trust or to the Grantee’s
residence or to such other address as may be designated in writing by the
Grantee.

 

(b)No Right to Continued Service.  Nothing in the Plan or in this Agreement
shall confer Upon the Grantee any right to continue in the service of the Trust
or any subsidiary or

 

 

 

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Affiliate of the Trust or shall interfere with or restrict in any way the right
of the Trust, which is hereby expressly reserved, to remove, terminate or
discharge the Grantee at any time for any reason whatsoever, with or without
Cause.

 

(c)Bound by Plan.  By signing this Agreement, the Grantee acknowledges receipt
of a copy of the Plan and has had an opportunity to review the Plan and agrees
to be bound by all the terms and provisions of the Plan.

 

(d)Successors.  The terms of this Agreement shall be binding upon and inure to
the benefit of the Trust, its successors and assigns, and of the Grantee and the
beneficiaries, executors, administrators, heirs and successors of the Grantee.

 

(e)Invalid Provisions.  The invalidity or unenforceability of any particular
provision hereof shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provision had been omitted.

 

(f)Modifications.  No change, modification or waiver of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
parties hereto.

 

(g)Entire Agreement. This Agreement and the Plan contain the entire agreement
and understanding of the parties hereto with respect to the subject matter
contained herein and therein and supersede all prior communications,
representations and negotiations in respect thereto.

 

(h)Governing Law.  This Agreement and the rights of the Grantee hereunder shall
be construed and determined in accordance with the laws of the State of Maryland
without giving effect to the conflict of laws principles thereof.

 

(i)Headings.  The headings of the Sections hereof are provided for convenience
only and are not to serve as a basis for interpretations or construction, and
shall not constitute a part of this Agreement.

 

(j)Counterparts.  This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

IN WITNESS WHEREOF, the Recipient and the Company have entered into this Award
Agreement as of the Grant Date.

 

PENNYMAC MORTGAGE INVESTMENT TRUST

 

 

 

 

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Appendix A

Performance Goals

 

 

 

Component

Comments

Target

% of Total

Award
Components

1. Pre-Tax Return on Equity (ROE)

Return on equity (ROE) is the amount of net income attributable to common
shareholders expressed as a percentage of common shareholders’ average equity.
ROE = Net Income attributable to common shareholders for a fiscal year ÷ Average
Common Shareholders' Equity.  The performance measurement periods are 2017, 2018
and 2019.  ROE payout opportunity exists annually and cumulatively.  A 7% ROE
generates a 50% payout and an 11% ROE generates a 150% payout with a linear
progression between those two endpoints. If ROE in year 1 or year 2 is less than
9% and cumulative ROE in years 1 and 2 is greater than 14%, or in years 1-3 is
greater than 21%, cumulative ROE over the applicable 2 or 3 year period may be
utilized to determine the award. The annual award is the greater of the amount
determined under the annual approach or the cumulative approach.  The cumulative
approach may only be applied once during the three years.  There is no lookback
to a year that generated equal to or more than a 100% payout.

9%
cumulative,
annualized ROE

100%

2.  Distressed    Mortgage Loans

For years 1 & 2 only, if the overall ROE described in Component 1 is 7% or
larger in the related year, a payout for distressed mortgage loans is available
if the ROE of distressed loans also exceeds 7%. The payout will be 25% of the
Component 1 target and is incremental to the component 1 payout.  In each year,
the combined payout of Components 1 & 2 cannot exceed 150% of the annual target
payout established in Component 1. There is no cumulative feature associated
with this Component. Performance is measured on the portfolio of distressed
mortgage loans held by PMT on January 1, 2017.

ROE of distressed loans >= 7%

25%

3.  Distressed Mortgage Loans

For year 3 only, if the year 3 overall ROE described in Component 1 is 7% or
larger, a payout for distressed mortgage loans will occur if the year 3 average
equity invested in distressed mortgage loans is equal to or less than $100
million. The payout will be 25% of the Component 1 target and is incremental to
the component 1 payout.  The combined payout of Components 1 & 3 cannot exceed
150% of the annual target payout established in Component 1. There is no
cumulative feature associated with this Component. Performance is measured on
the portfolio of distressed mortgage loans held by PMT on January 1, 2017.

Average equity invested in distressed mortgage loans =< $100 million

25%

 

Component 1 Pay-Out Scale

Achievement

Factor

11%

150%

10%

125%

9%

100%

8%

75%

7%

50%

Less than 7%

0%

 

 

 

 

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