40
Related Party Transactions We have adopted policies and procedures whereby our Audit Committee is responsible for reviewing and approving transactions between us or any of our subsidiaries and any related person (defined to include our executive officers, directors or director nominees, any stockholder beneficially owning in excess of 5% of our stock or securities exchangeable for our stock, and any immediate family member of any of the foregoing persons) in which one or more of such related persons has a direct or indirect material interest. In reviewing and approving related person transactions, our Audit Committee considers the relevant facts and circumstances available. Any member of the Audit Committee who is a related person with respect to a transaction under review will not be permitted to participate in the deliberations or vote on approval or disapproval of the transaction. In addition, our general code of ethics requires that all of our employees and directors inform the Company of any material transaction or relationship that comes to their attention that could reasonably be expected to create a conflict of interest. Further, at least annually, each director and executive officer will complete a detailed questionnaire that asks questions about any business relationship that may give rise to a conflict of interest and all transactions in which we are involved and in which the executive officer, a director or a related person has a direct or indirect material interest. Other than the transactions described below, there have been no other related party transactions that require disclosure under the SEC rules since the beginning of our last two completed fiscal years. Reorganization Transactions Prior to the IPO, we completed a reorganization by changing our equity structure to create a single class of equity units in LD Holdings (the “Reorganization Transactions”). Prior to the Reorganization Transactions, our capital structure consisted of different classes of membership interests held by the members of LD Holdings (including the Trilogy Entities). The equity interests of LD Holdings were then equitably adjusted and exchanged for Holdco Units and LDI issued an equal number of Class C common stock to the holders of Holdco Units. The Continuing Members through their ownership of TMI Units have the right to cause the applicable Trilogy Entity to exchange on their behalf both one Holdco Unit and one share of Class B common stock or Class C common stock, as applicable, for cash or one LDI Class A Share at our election, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications. In addition, in connection with the IPO and the Reorganization Transactions, our private equity sponsor, Parthenon Capital Partners exchanged their equity interest in LD Holdings for shares of LDI’s Class D common stock. Registration Rights and Stockholders Agreements We are party to a Registration Rights Agreement, dated February 11, 2021, under which we may be required to register the sale of shares of our Class A common stock held by the Hsieh Stockholders and the Parthenon Stockholders. The registration rights agreement also requires us to make available and keep effective shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, the Hsieh Stockholders and the Parthenon Stockholders have the ability to exercise certain demand registration rights and/or piggyback registration rights in connection with registered offerings requested by any of such holders or initiated by us. TABLE OF CONTENTS Related Party Transactions
Additionally, we are party to a Stockholders Agreement, amended as of April 21, 2022, with the Hsieh Stockholders and the Parthenon Stockholders (and their respective permitted transferees thereunder party thereto from time to time). Pursuant to the Stockholders Agreement, the Parthenon Stockholders have (i) the right to designate two nominees for election to the Board so long as such group owns at least 15% of the total voting power of our common stock, and (ii) otherwise one nominee for election to the Board so long as such group owns at least 5% of the total voting power of our common stock. Additionally, the Hsieh Stockholders, have (i) the right to designate two nominees for election to the Board so long as such group owns at least 5% of the total voting power of our common stock, and (ii) upon the Parthenon Stockholders’ ceasing to own more than 15% of the total voting power of our common stock, the Hsieh Stockholders shall have the right to designate an additional nominee to the Board so long as (a) such nominee is independent under the NYSE listing standards and (b) the Hsieh Stockholders own greater than 25% of the total voting power of our common stock. The Hsieh Stockholders and the Parthenon Stockholders each additionally agreed to take all necessary action, including voting their respective shares of common stock, to cause the election of the directors nominated by such other group in accordance with the terms of the Stockholders Agreement, and will each be entitled to propose the replacement for any of its Board designees whose Board service ceases for any reason. Subject to having the right to designate at least one director for nomination under the Stockholders Agreement, the Hsieh Stockholders have certain designation rights with respect to the Compensation Committee and the Nominating and Corporate Governance Committee, and the Parthenon Stockholders have certain designation rights with respect to any mergers and acquisition, capital markets or similar committee. The Stockholders Agreement also provides that, as long as the Hsieh Stockholders have the right to designate at least one director for nomination under the Stockholders Agreement, Mr. Hsieh shall be the Chairman of the Board and a Class III director, and there shall be no lead independent director without the prior written approval of the Hsieh Stockholders. Pursuant to the Stockholders Agreement, the Company also agreed to provide the Hsieh Stockholders with certain preemptive rights on the issuance of additional common stock, or other equity securities of the Company convertible into, exercisable for or exchangeable into common stock, subject to certain exceptions. In connection with the Cooperation Agreement (as defined below), the Hsieh Stockholders and the Parthenon Stockholders each agreed to waive the limitation on the size of the Board provided in the Stockholders Agreement, to the extent necessary to permit the Board to appoint Mr. Ozonian as provided in the Cooperation Agreement. Hsieh Settlement and Cooperation Agreements We are party to a settlement and cooperation agreement, dated as of April 4, 2023, with the Hsieh Stockholders (the “Cooperation Agreement”). Pursuant to the Cooperation Agreement, the Board was increased from eight directors to nine, Steven Ozonian was appointed to our Board on April 4, 2023, and Mr. Ozonian is being nominated for re-election at the Annual Meeting along with Mr. Dodson and Ms. Patenaude. Pursuant to the Cooperation Agreement, if, as of the record date for the 2024 annual meeting of stockholders, the Hsieh Stockholders have not directly or indirectly sold more than 5% of the aggregate number of Class A common stock and Class C common stock beneficially owned by the Hsieh Stockholders as of the date of the Cooperation Agreement (subject to certain exceptions), the Board will (i) decrease the size of the Board from nine to eight directors effective as of the 2024 annual meeting of stockholders and (ii) nominate for election at the 2024 annual meeting of stockholders as Class III directors, with terms expiring at the 2027 annual meeting of stockholders, Anthony Hsieh and Brian TABLE OF CONTENTS Related Party Transactions
Golson (or any other designee of the Parthenon Stockholders, unless the Company (by vote of a majority of the entire Board) and Hsieh mutually agree in writing to maintain the size of the Board at nine directors beyond the 2024 annual meeting of stockholders. If Mr. Ozonian is unable or unwilling to serve as director at any time prior to the 2024 annual meeting of stockholders, the Board will promptly reduce its size from nine to eight. As part of the Cooperation Agreement, the Hsieh Stockholders agreed, among other things, (i) to customary standstill provisions until 30 days prior to the deadline for the submission of stockholder nominations for directors for the Company’s 2025 annual meeting of stockholders pursuant to the Company’s Bylaws and (ii) to vote their shares in favor of the Board’s slate of directors at the 2023 annual meeting of stockholders and 2024 annual meeting of stockholders. In connection with the Cooperation Agreement, the Company and Anthony Hsieh also entered into a settlement agreement and release, dated April 4, 2023, pursuant to which the Company agreed to pay Hsieh $857,000 and certain other amounts conditioned upon Hsieh providing the Company a general release of claims. Tax Receivable Agreement The members of LD Holdings (excluding LD Investment Holdings, Inc.) prior to our initial public offering (the “Continuing Members”) may from time to time (subject to the terms of the Holdings LLC Agreement regarding exchange rights) exchange an equal number of Holdco Units and shares of Class B and Class C common stock for cash or for shares of Class A common stock of loanDepot, Inc. on a one-for-one basis, at our election. LD Holdings (and each of its subsidiaries classified as a partnership for federal income tax purposes) made an election under Section 754 of the Code effective for the 2021 taxable year and each subsequent taxable year in which an exchange of Holdco Units and shares of Class B and Class C common stock for shares of Class A common stock occurs. Our purchase of Holdco Units, in connection with our initial public offering, from certain owners of Holdco Units (the “Exchanging Members”) and the exchanges of Holdco Units and shares of Class B and Class C common stock for shares of Class A common stock are expected to result, with respect to loanDepot, Inc., in increases in the tax basis of the assets of LD Holdings that otherwise would not have been available. These increases in tax basis may reduce the amount of tax that loanDepot, Inc. would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. We are part to a tax receivable agreement with the Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing Members, as part of the consideration received by such Continuing Members in exchange for the sale of Holdco Units to loanDepot, Inc., that will provide for the payment from time to time by loanDepot, Inc. to such parties or their permitted assignees of 85% of the amount of the tax benefits, if any, that loanDepot, Inc. realizes or under certain circumstances (such as a change of control) is deemed to realize as a result of (i) the aforementioned increases in tax basis, (ii) any incremental tax basis adjustments attributable to payments made pursuant to the tax receivable agreement and (iii) any deemed interest deductions arising from payments made by us under the tax receivable agreement. These payment obligations are obligations of loanDepot, Inc. and not of LD Holdings. For purposes of the tax receivable agreement, subject to certain exceptions noted below, the benefit deemed realized by loanDepot, Inc. generally will be computed by comparing the actual income tax liability of loanDepot, Inc. (calculated with certain assumptions) to the amount of such taxes that loanDepot, Inc. would have been required to pay had there been no increase to the tax basis of the TABLE OF CONTENTS Related Party Transactions
assets of LD Holdings as a result of our purchase of Holdco Units from the Exchanging Members in connection with our initial public offering and the exchanges of Holdco Units and had loanDepot, Inc. not derived any tax benefits in respect of payments made under the tax receivable agreement. The term of the tax receivable agreement will continue until all such tax benefits have been utilized or deemed utilized or expired, unless we materially breach any of our material obligations under the agreement, elect an early termination of the agreement or undergo a change of control. Estimating the amount of payments that may be made under the tax receivable agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including: the timing of any subsequent exchanges of Holdco Units – for instance, the increase in any tax deductions will vary depending on the fair value, which may fluctuate over time, of the depreciable or amortizable assets of LD Holdings at the time of each exchange; the price of shares of our Class A common stock at or around the time of the exchange—the increase in any tax deductions, as well as the tax basis increase in other assets, of LD Holdings is affected by the price of shares of our Class A common stock at the time of the exchange; the extent to which such exchanges are taxable – if an exchange is not taxable for any reason, increased deductions will not be available; the amount and timing of our income – loanDepot, Inc. generally will be required to pay 85% of the deemed benefits as and when deemed realized; and the allocation of basis increases among the assets of LD Holdings and certain tax elections affecting depreciation. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreement, we expect that the tax savings associated with the purchase of Holdco Units from the Exchanging Members in connection with future exchanges of Holdco Units and Class B Common Stock as described above would aggregate to approximately $223.8 million over the 15 years ending on December 31, 2037 assuming that all future exchanges of Holdco Units occurred on December 31, 2022 based on the Class A Common stock price on that date. Under such scenario, we would be required to pay to the Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing LLC Members or their permitted assignees approximately 85% of such amount, or approximately $190.2 million, over the 15 years ending on December 31, 2037. We note, however, that the analysis set forth above assumes no material changes in the relevant tax law. We are not able to predict the specific effect of such future tax legislation on this analysis. If LD Holdings does not have taxable income, loanDepot, Inc. generally is not required to make payments under the tax receivable agreement for that taxable year because no benefit actually will have been realized. Nevertheless, any tax benefits that do not result in realized benefits in a given tax year likely will generate tax attributes that may be utilized to generate benefits in previous or future tax years and the utilization of such tax attributes will result in payments under the tax receivable agreement. We expect that the payments that we may make under the tax receivable agreement will be substantial. There may be a material negative effect on our liquidity if, as a result of timing discrepancies or otherwise, (a) the payments under the tax receivable agreement exceeded the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement and/or (b) distributions to loanDepot, Inc. by TABLE OF CONTENTS Related Party Transactions
LD Holdings are not sufficient to permit loanDepot, Inc. to make payments under the tax receivable agreement after it has paid its taxes and other obligations. loanDepot, Inc.’s obligations pursuant to the tax receivable agreement will rank pari passu with its other general trade credit obligations. The payments under the tax receivable agreement are not conditioned upon any recipient’s continued ownership of us or LD Holdings. The Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing Members will receive payments under the tax receivable agreement until such time that they validly assign or otherwise transfer their rights to receive such payments. The effects of the tax receivable agreement on our consolidated balance sheet upon purchase or exchange of Holdco Units are as follows: we will record an increase in deferred tax assets for the estimated income tax effects of the increase in the tax basis of the assets owned by loanDepot, Inc. based on enacted federal, state and local income tax rates at the date of the exchange or purchase. To the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis of expected future earnings, we will reduce the deferred tax asset with a valuation allowance; we will record an increase in liabilities for 85% of the estimated realizable tax benefit resulting from (i) the increase in the tax basis of the purchased or exchanged interests as noted above and (ii) certain other tax benefits subject to the tax receivable agreement; and we will record an increase to additional paid-in capital in an amount equal to the difference between the increase in deferred tax assets and the increase in liability due to the Parthenon Stockholders and certain of the Continuing Members under the tax receivable agreement. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the tax receivable agreement have been estimated. All of the effects of changes in any of our estimates after the date of the exchange or purchase will be included in our net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. Payments under the tax receivable agreement will be based on the tax reporting positions that we determine in accordance with the tax receivable agreement. Although we do not currently anticipate that the IRS would have a basis for a successful challenge with respect to a tax basis increase, we will not be reimbursed for any payments previously made under the tax receivable agreement if the IRS subsequently disallows part or all of the tax benefits that gave rise to such prior payments, although future payments under the tax receivable agreement will be reduced on account of such disallowances. As a result, in certain circumstances, payments could be made under the tax receivable agreement that are significantly in excess of the benefits that we actually realize in respect of (a) the increases in tax basis resulting from our purchases or exchanges of Holdco Units (b) any incremental tax basis adjustments attributable to payments made pursuant to the tax receivable agreement and (c) any deemed interest deductions arising from our payments under the tax receivable agreement. Decisions made by the Parthenon Stockholders and the Continuing Members in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that we are required to make under the tax receivable agreement. For example, the earlier disposition of assets following an exchange or acquisition transaction generally will accelerate payments under the tax receivable agreement and increase the present value of such payments, and the disposition of assets before an exchange or acquisition transaction will increase the Parthenon Stockholders’ and the Continuing Members’ tax liability without giving rise to any obligations to make payments under the tax receivable agreement. Payments generally TABLE OF CONTENTS Related Party Transactions
are due under the tax receivable agreement within a specified period of time following the filing of our tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of LIBOR (or, in the absence of LIBOR, the Secured Overnight Financing Rate) plus 100 basis points from the due date (without extensions) of such tax return. Additionally the tax receivable agreement provides that (1) in the event that we materially breach any of our material obligations under the agreement, whether as a result of failure to make any payment, failure to honor any other material obligation required thereunder or by operation of law as a result of the rejection of the agreements in a bankruptcy or otherwise, (2) if, at any time, we elect an early termination of the agreement, or (3) upon a change of control of the Company, our (or our successor’s) obligations under the agreements (with respect to all Holdco Units, whether or not such units have been exchanged or acquired before or after such election) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions. These assumptions will include the assumptions that (i) we (or our successor) will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits subject to the tax receivable agreement, (ii) we (or our successor) will utilize any loss carryovers generated by the increased tax deductions as quickly as allowable by law, and (iii) LD Holdings and its subsidiaries will sell certain nonamortizable assets (and realize certain related tax benefits) no later than a specified date. As a result of the foregoing, if we materially breach a material obligation under the agreement, experience a change of control, or if we elect to terminate the agreement early, we would be required to make an immediate lump sum payment equal to the present value of the anticipated future tax savings, which payment may be made significantly in advance of the actual realization of such future tax savings. In these situations, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity. There can be no assurance that we will be able to fund or finance our obligations under the tax receivable agreement. Additionally, the obligation to make tax receivable payments based on these assumptions upon a change of control may deter potential acquirors, which could negatively affect our stockholders’ potential returns. Limited Liability Company Agreement of LD Holdings loanDepot, Inc. holds a significant equity interest in LD Holdings and is entitled to appoint the board of managers of LD Holdings. Accordingly, loanDepot, Inc. operates and controls all of the business and affairs of LD Holdings and, through LD Holdings and its operating entity subsidiaries, conducts our business. The LD Holdings LLC Agreement provides for Holdco Units. Under the Holdings LLC Agreement, the board of managers of LD Holdings has the right to determine when distributions (other than tax distributions) will be made to unitholders of LD Holdings and the amount of any such distributions. If a distribution with respect to Holdco Units is authorized, such distribution will be made to the holders of Holdco Units pro rata based on their holdings of Holdco Units. The holders of Holdco Units, including loanDepot, Inc., will incur U.S. federal, state and local income taxes on their proportionate share of any taxable income of LD Holdings. Net profits and net losses of LD Holdings will generally be allocated to the holders of Holdco Units (including loanDepot, Inc.) pro rata in accordance with their respective share of the net profits and net losses of LD Holdings. The Holdings LLC Agreement will provide for cash distributions, which we refer to as “tax distributions,” based on certain assumptions, to the holders of Holdco Units (including loanDepot, Inc.) pro rata based on their TABLE OF CONTENTS Related Party Transactions
Holdco Units. Generally, these tax distributions to holders of Holdco Units will be an amount equal to our estimate of the taxable income of LD Holdings, net of taxable losses, allocable per Holdco Unit multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporation resident in California (based on the character and source of the taxable income actually recognized). However, because tax distributions will be determined based on the holder of Holdco Units who is allocated the largest amount of taxable income on a per unit basis, LD Holdings may be required to make tax distributions that, in the aggregate, may exceed the amount of taxes that LD Holdings would have paid if it were taxed on its net income at the assumed rate. Any distributions will be subject to available cash and applicable law. In addition, in certain circumstances, to the extent that tax distributions made to loanDepot, Inc. exceed the actual tax liability to which loanDepot, Inc. is subject from time to time, such “excess” tax distributions will be contributed to and used by LD Holdings and its operating entity subsidiaries for working capital, liquidity and other operating needs. Under the Holdings LLC Agreement, the Continuing Members (or certain permitted transferees thereof) will have the right, subject to the terms of the Holdings LLC Agreement, to exchange their Holdco Units (together with a corresponding number of shares of Class B common stock or Class C common stock, as applicable) for cash or shares of our Class A common stock on a one-for-one basis (at our election), subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. The Holdings LLC Agreement will provide that as a general matter a Continuing LLC Member will not have the right to exchange Holdco Units if we determine that such exchange would be prohibited by law or regulation or would violate other agreements with us to which the Continuing LLC Member may be subject. We may impose additional restrictions on exchange that we determine to be necessary or advisable so that LD Holdings is not treated as a “publicly traded partnership” for U.S. federal income tax purposes. As a Continuing LLC Member exchanges Holdco Units for shares of Class A common stock, the number of Holdco Units held by loanDepot, Inc. is correspondingly increased as it acquires the exchanged Holdco Units, and a corresponding number of shares of Class B common stock or Class C common stock, as applicable, are cancelled. Aircraft and Boat Arrangements with North American Charters and JLSSAA LLC The Company chartered a private aircraft and a boat owned by North American Charters, Inc. (“NA Charters”) and JLSSAA LLC (“JLSSAA”), companies controlled by the Company’s Chairman of the Board, which from time-to-time also leased the boat to third parties unaffiliated with us. The Company used the charter services mainly for the purposes of business travel for our executive officers and directors. The Company incurred expenses to NA Charters and JLSSAA of $0.2 million for the year ended December 31, 2021. These charges included only allocated costs based on business usage. The Company’s Chairman of the Board paid for all unallocated expenses and any expenses related to his personal travel or mixed-use travel (travel in which a non-business passenger is also on the aircraft or boat). TABLE OF CONTENTS Related Party Transactions
Other Related Party Transactions The Company paid management fees to PCP Managers, L.P., an affiliate of Parthenon Capital Partners, of $0 and $0.2 million to a shareholder of the Company during the years ended December 31, 2022 and 2021. The Company employed certain individuals who provided services to a shareholder whose salaries totaled $0.2 million and $0.4 million for the years ended December 31, 2022 and 2021, respectively. In connection with the merger of a previous holding entity, LD Investment Holdings, Inc. (“Parthenon Blocker”), with loanDepot, Inc. as part of loanDepot’s reorganization concurrent with its initial public offering on February 11, 2021, the Company agreed to pay affiliates of Parthenon Capital, who owned the stock of Parthenon Blocker, certain tax refunds to Parthenon Blocker, which are expected to consist of up to $3.5 million of excess federal and state income tax payments previously paid by Parthenon Blocker. The Company paid $3.1 million for the year ended December 31, 2022. TABLE OF CONTENTS Management, internal audit, and EY are invited to attend meetings and present on these topics as well as internal and external audit plans and budget forecasts. The Audit Committee regularly meets in separate executive sessions at which only Audit Committee members are present and in separate private sessions with each of management, internal auditors, and the independent registered public accounting firm. During fiscal 2021, the Audit Committee held four (4) executive sessions.
 Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm Our Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Although stockholder ratification of the appointment of Ernst & Young LLP is not required by law, we are submitting the appointment to our stockholders for ratification as a matter of good corporate governance. If stockholders do not ratify the appointment of Ernst & Young LLP, the audit committee will reconsider the appointment. Even if stockholders ratify the appointment of Ernst & Young LLP, the audit committee retains the discretion to appoint a different independent auditor at any time if it determines that such a change would be in the best interests of the Company and its stockholders. Representatives of Ernst & Young LLP are expected to attend the Annual Meeting, will have an opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. Selection and Oversight of External Auditor The Audit Committee appoints, compensates, oversees, and manages loanDepot’s relationship with its independent registered public accounting firm, which reports directly to the Audit Committee. EY has served as loanDepot’s independent registered public accounting firm since our inception in February 2021. In selecting loanDepot’s independent registered public accounting firm, the Audit Committee assesses the firm’s qualifications and performance; the quality and candor of their communications with the Audit Committee and the Company; their independence; their objectivity and professionalism; the benefits of audit firm or lead partner rotations; and the comprehensiveness of evaluations of internal controls. Each year, the Audit Committee considers the relative costs, benefits, challenges, and other potential impacts of selecting a different independent public accounting firm. In accordance with SEC rules, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our Company. For lead audit partners, the Audit Committee requires a regular rotation of the lead audit partner at the Company’s independent auditor and consideration of the regular rotation of the accounting firm serving as loanDepot’s independent auditor. The process for consideration and selection of loanDepot’s lead audit partner pursuant to this rotation policy involves a comprehensive review process in which management and the chair of the Audit Committee participate. The board of directors recommends that you vote “FOR” the ratification of Ernst & Young LLP. | | | 41
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TABLE OF CONTENTS
Audit Review
| | | Report of the Audit Committee of the Board of Directors49Our management is primarily responsible for loanDepot’s internal control and financial reporting process. Our independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of loanDepot’s consolidated financial statements and issuing opinions on the conformity of those audited financial statements with United States generally accepted accounting principles and the effectiveness of loanDepot’s internal control over financial reporting. The Audit Committee monitors loanDepot’s financial reporting process and reports to the Board on its findings. In this context, the Audit Committee hereby reports as follows:
1.
| The Audit Committee has reviewed and discussed the audited financial statements with loanDepot’s management. |
2.
| The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission. |
3.
| The Audit Committee has received from the independent registered public accounting firm the written disclosures and the letter required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm its independence. |
4.
| Based on the review and discussions referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in loanDepot’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the Securities and Exchange Commission. |
AUDIT COMMITTEE
John Dorman (Chair)
Dawn Lepore
TABLE OF CONTENTS Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm
Principal Accounting Fees and Services The following table shows the fees billed to loanDepot for services rendered by Ernst & Young LLP during the years ended December 31, 2022 and 2021. | | Audit fees | | | $2,096,800 | | | $2,519,178 | | | | Audit-related fees | | | 492,500 | | | 345,000 | | | | Pamela Patenaude | | | 125,263 | | | 0.2% | | | — | | | —% | | | — | | | —% 42
| | | * | | | | Executive Officers and Directors as a Group (16 persons)(5)(6)(9) | | | 24,440,726 | | | 32.0% | | | 148,977,545 | | | 100.0% | | | 97,026,671 | | | 100.0% | | | 95.8% | | | |
(1)
| Each holder of Class C common stock and Class D common stock is entitled to 5 votes per share and each holder of Class A common stock and Class B common stock is entitled to one vote per share on all matters submitted to our stockholders for a vote. Our Class B common stock and Class C common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) associated with our Class A common stock and Class D common stock. No shares of Class B common stock are currently issued and outstanding. |
(2)
| Percentage of voting power represents voting power with respect to all shares of our Class A common stock, Class B common stock, Class C common stock and Class D common stock voting together as a single class (subject to class-specific weightings) and as calculated on a fully diluted basis. Mr. Hsieh’s Combined Voting Power (as reported in the table above) reflects Mr. Hsieh’s right to vote the shares held by the Trilogy Entities in his role as manager of each Trilogy Entity, resulting in Voting Power in excess of his share count (which includes shares held directly and indirectly in the Company). |
(3)
| This information is based on the latest information available to the Company. Includes 4,028,789 shares of Class A and 97,026,671 shares of Class D common stock owned by the Parthenon Stockholders and 3,388,886 shares of Class C common stock owned by PCP Managers, L.P. Parthenon Capital Partners Fund II, L.P., Parthenon Capital Partners Fund, L.P., PCP Partners IV LP, Parthenon Investors IV, L.P., PCap Partners III LLC, and Parthenon Investors III, L.P. are collectively referred to herein as the “Parthenon Stockholders.” PCP Managers GP, L.P. has voting and investment power over the shares of loanDepot, Inc. stock owned by the Parthenon Stockholders by virtue of its role as general partner of PCP Managers, L.P. which is the general partner or managing member of Parthenon Capital Partners Fund II, L.P., Parthenon Capital Partners Fund, L.P., PCP Partners IV LP which is also the general partner of Parthenon Investors IV, L.P., and PCap Partners III LLC which is also the general partner of Parthenon Investors III, L.P. Brian P. Golson is a Managing Partner of PCP Managers GP, LLC and also serves as a Co-CEO and a Managing Partner at Parthenon Capital, an affiliate of each of the Parthenon Stockholders and PCP Managers, L.P. Andrew C. Dodson serves as Managing Partner at Parthenon Capital. Each of the above listed persons may be deemed to beneficially own the securities owned of record by the Parthenon Stockholders and PCP Managers, L.P. Each of the above listed persons may be deemed to beneficially own the securities owned of record by the Parthenon Stockholders and PCP Managers, L.P. However, each expressly disclaims beneficial ownership of such securities, except to the extent of his or its pecuniary interest therein. The address for the foregoing persons is c/o Parthenon Capital Partners, Four Embarcadero Center, Suite 3610, San Francisco, California 94111. |
TABLE OF CONTENTS Stock Ownership Information of Certain Beneficial Owners and Management
Proposals
Proposal No. 1: Election(4)
| This information is as of December 30, 2022, based on information provided in a Schedule 13G/A filed on February 9, 2023. The Vanguard Group has sole voting power with respect to none of the reported shares, shared voting power with respect to none of the reported shares, sole investment power with respect to the 3,690,668 of the reported shares, and shared investment power with respect to 15,615 of the reported shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(5)
| Except for affiliates of Anthony Hsieh, shares of Class IC common stock held for the benefit of certain Executive Officers and DirectorsOn are done so through intermediate holding entities, TMI 6, TMI 7, and TMI 8. The Trilogy Entities are controlled and managed by Mr. Hsieh, who holds an economic interest in TMI 6 only.
|
(6)
| Excludes shares of Class C common stock held by the recommendationTrilogy Entities for the benefit of the Nominatingfollowing individuals who have a right to direct the conversion of shares of Class C common stock and Corporate Governance Committee,issuance of an equal number of LDI Class A Shares to such individual, subject to Board approval: Mr. Walsh – 497,214, Mr. DerGurahian – 1,598,390, Ms. Lepore – 147,130, and other Officers totaling 1,288,149. |
(7)
| Mr. Hsieh’s holdings consist of (i) 4,244,205 shares of Class A common stock, (ii) 8,114,521 shares of Class C common stock held by The JLSSAA Family Trust, (iii) 4,310,497 shares of Class C common stock held by JLSA, LLC, (iv) 48,945,633 shares of Class C common stock held by Trilogy Mortgage Holdings, Inc., (v) 72,559,056 shares of Class C common stock held by TMI 6, (vi) 10,239,267 shares of Class C common stock held by TMI 7 and (vii) 1,419,685 shares of Class C common stock held by TMI 8. Mr. Hsieh is deemed to have beneficial ownership and voting and investment power over the Board has nominatedsecurities held by JLSA, LLC, The JLSSAA Family Trust, Trilogy Mortgage Holdings, Inc. and the persons named below for electionTrilogy Entities. |
(8)
| Mr. Golson and Mr. Dodson serve as Class I directors this year, each to serve for a three-year term or until the director’s successor is elected and qualified or until their earlier resignation, death, retirement, disqualification or removal.Director Nominee Experience and QualificationsThe Board annually reviews the appropriate skills and characteristics required of directors in the contextDirectors of the current compositioncompany in their capacity as representatives of Parthenon Capital and its affiliates. See footnote 3 for further detail.
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(9)
| Within sixty (60) days of the Board, our operating requirements,record date, Mr. Martell is expected to vest 250,000 RSUs and the long-term interests of our stockholders. The Board believes that its members should possess a variety of skills, professional experience,250,000 NQSOs, Mr. DerGurahian is expected to vest 53,290 TMI units, Mr. Walsh is expected to vest 35,526 TMI units, Mr. Flanagan is expected to vest 35,526 TMI units, and backgroundsMr. Binowitz is expected to effectively oversee our business. In addition, the Board believes that each director should possess certain attributes, as reflected in the Board membership criteria described below.Although the Board uses the criteria described in “Identifying and Evaluating Candidates for Directors” starting on page 7 to evaluate potential nominees, it has no stated minimum criteria for nominees. The Board believes that all the nominees named below are highly qualified and have the skills and experience required for effective service on the Board. All the nominees have indicated to us that they will be available to serve as directors. In the event that any nominee should become unavailable, the proxy holder, Peter MacDonald, will vote for a nominee or nominees designated by the Board or the Board may decrease the size of the Board. There are no family relationships among our executive officers and directors.
TABLE OF CONTENTS
Class I Director NomineesThe following provides a snapshot of the diversity, skills, and experience of our directors who are standing for election at the Annual Meeting, followed by summary information about each individual nominee.
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Dawn Lepore
Independent Director
| | | Age: 67
Public Directorships:
Accolade, Inc.
RealNetworks, Inc.
Committee Memberships:
Nominating and Corporate Governance (Chair);
Compensation (Chair);
Audit
Director Since: February 2021
Skills and Qualifications:
Executive Leadership
Public Company Governance
Financial and Audit
Technology and Innovation
Risk and Compliance
Entrepreneurial Development and Strategy
Human Resource Management
Social
| vest 7,722 TMI units. | | Dawn Lepore has served as a director of the Company or its affiliate, loanDepot.com, LLC, since July 2015. Ms. Lepore previously served as Interim Chief Executive Officer of Prosper Marketplace, Inc., an online peer-to-peer lending platform, from March 2012 to January 2013, and as Chair and Chief Executive Officer of drugstore.com, inc., an online retailer of health and beauty care products, from October 2004 until its sale to Walgreen Co. in June 2011. Prior to joining drugstore.com, Ms. Lepore held various leadership positions during her 21 years with The Charles Schwab Company, an investment services firm that provides brokerage, banking and investment-related services to consumers and businesses. Ms. Lepore previously served on the boards of directors of Coupons.com, AOL Inc., The TJX Companies, Inc., eBay Inc., The New York Times Company, drugstore.com, inc. and Wal-Mart Stores Inc. Ms. Lepore earned a B.A. from Smith College. Ms. Lepore’s extensive operational background and experience as an executive and director at a diverse range of online consumer, internet technology and retail companies qualify her to serve as a member of our Board of Directors.
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Delinquent Section 16(a) Reports TABLE OF CONTENTS
Proposals
Section 16(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), requires loanDepot’s directors, certain officers and persons who own more than 10% of a registered class of loanDepot’s equity securities, to file reports of securities ownership and changes in such ownership with the SEC. To our knowledge, based solely on our review of Forms 3, 4 and 5 filed with the SEC or written representations that no Form 5 was required, during the year ended December 31, 2022, we believe that our directors, officers and persons who beneficially own more than 10% of a registered class of our equity securities timely filed all reports required under Section 16(a) of the Exchange Act, except that: (i) one Form 3 reporting John Lee’s beneficial ownership was filed late due to a delay in obtaining EDGAR codes; (ii) one Form 3 was filed late for Dan Binowitz due to an administrative oversight; PCP Managers GP, LLC, Brian P. Golson and Andrew C. Dodson amended a Form 4 to correct the number of shares that vested to include both Messrs. Golson and Dodson.; (iii) Anthony Hsieh’s Form 4 that reported multiple purchases that were timely reported was later amended to include an additional purchase that was inadvertently omitted due to an administrative error; and (iv) one Form 4 was filed late for Jeff Walsh reporting the conversion of Class C common stock and the related issuance of Class A common stock. |
John Lee
Non-Independent
Director
| | | Age: 53
Public Directorships: None
Committee Memberships: Compensation and Nominating and Corporate Governance
Director Since: April 2022
Skills and Qualifications:
Executive Leadership
Financial and Audit
Technology and Innovation
Risk and Compliance
Entrepreneurial Development and Strategy
Human Resource Management
| | | John Lee has served as a director of the Company since April 2022. Previously, Mr. Lee has served as the Company’s Chief Analytics Officer, leading financial modeling and analytics across all lending channels, between July 2014 and March 2021. Prior to that, Mr. Lee was loanDepot’s first Chief Financial Officer, serving between September 2009 and July 2014.
| | | Prior to loanDepot, Mr. Lee served in a variety of financial capacities for key lending firms. From June 2007 to September 2009, Mr. Lee served as Chief Financial Officer at Grander Inc., where he directed the company’s financial operations in addition to managing corporate development and acquisition activities. From September 2002 to May 2007, Mr. Lee held the role of Executive Vice President and Chief Financial Officer at Home Loan Center (later to become LendingTree). From 1998 to 2001, Mr. Lee managed the west coast office of CIBC World Markets (CIBC Oppenheimer) as director – Investment Banking, Financial Institutions Group (FIG), where he oversaw e-financial services, mortgage banking, specialty finance and community banking, and advised both public and private companies on merger and acquisitions and private equity. From 1995 to 1998, Mr. Lee managed mergers and acquisitions and joint venture and affinity deal analysis as Vice President, Corporate Development and M&A at Countrywide Home Loans. Mr. Lee holds a Bachelor of Arts in Economics from the University of Rochester in New York with a certificate of Management in Accounting & Finance from the university’s Simon School of Business. He also holds a Masters of Business Administration in Finance from Ohio State University where he was recognized as a Weidler Scholar and Beta Gamma Sigma honors graduate. Mr. Lee’s extensive knowledge of our business and leadership experience qualify him to serve as a member of our Board of Directors.TABLE OF CONTENTS Related Party Transactions We have adopted policies and procedures whereby our Audit Committee is responsible for reviewing and approving transactions between us or any of our subsidiaries and any related person (defined to include our executive officers, directors or director nominees, any stockholder beneficially owning in excess of 5% of our stock or securities exchangeable for our stock, and any immediate family member of any of the foregoing persons) in which one or more of such related persons has a direct or indirect material interest. In reviewing and approving related person transactions, our Audit Committee considers the relevant facts and circumstances available. Any member of the Audit Committee who is a related person with respect to a transaction under review will not be permitted to participate in the deliberations or vote on approval or disapproval of the transaction. In addition, our general code of ethics requires that all of our employees and directors inform the Company of any material transaction or relationship that comes to their attention that could reasonably be expected to create a conflict of interest. Further, at least annually, each director and executive officer will complete a detailed questionnaire that asks questions about any business relationship that may give rise to a conflict of interest and all transactions in which we are involved and in which the executive officer, a director or a related person has a direct or indirect material interest. Other than the transactions described below, there have been no other related party transactions that require disclosure under the SEC rules since the beginning of our last two completed fiscal years. Reorganization Transactions Prior to the IPO, we completed a reorganization by changing our equity structure to create a single class of equity units in LD Holdings (the “Reorganization Transactions”). Prior to the Reorganization Transactions, our capital structure consisted of different classes of membership interests held by the members of LD Holdings (including the Trilogy Entities). The equity interests of LD Holdings were then equitably adjusted and exchanged for Holdco Units and LDI issued an equal number of Class C common stock to the holders of Holdco Units. The Continuing Members through their ownership of TMI Units have the right to cause the applicable Trilogy Entity to exchange on their behalf both one Holdco Unit and one share of Class B common stock or Class C common stock, as applicable, for cash or one LDI Class A Share at our election, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications. In addition, in connection with the IPO and the Reorganization Transactions, our private equity sponsor, Parthenon Capital Partners exchanged their equity interest in LD Holdings for shares of LDI’s Class D common stock. Registration Rights and Stockholders Agreements We are party to a Registration Rights Agreement, dated February 11, 2021, under which we may be required to register the sale of shares of our Class A common stock held by the Hsieh Stockholders and the Parthenon Stockholders. The registration rights agreement also requires us to make available and keep effective shelf registration statements permitting sales of shares into the market from time to time over an extended period. In addition, the Hsieh Stockholders and the Parthenon Stockholders have the ability to exercise certain demand registration rights and/or piggyback registration rights in connection with registered offerings requested by any of such holders or initiated by us. TABLE OF CONTENTS Related Party Transactions
Additionally, we are party to a Stockholders Agreement, amended as of April 21, 2022, with the Hsieh Stockholders and the Parthenon Stockholders (and their respective permitted transferees thereunder party thereto from time to time). Pursuant to the Stockholders Agreement, the Parthenon Stockholders have (i) the right to designate two nominees for election to the Board so long as such group owns at least 15% of the total voting power of our common stock, and (ii) otherwise one nominee for election to the Board so long as such group owns at least 5% of the total voting power of our common stock. Additionally, the Hsieh Stockholders, have (i) the right to designate two nominees for election to the Board so long as such group owns at least 5% of the total voting power of our common stock, and (ii) upon the Parthenon Stockholders’ ceasing to own more than 15% of the total voting power of our common stock, the Hsieh Stockholders shall have the right to designate an additional nominee to the Board so long as (a) such nominee is independent under the NYSE listing standards and (b) the Hsieh Stockholders own greater than 25% of the total voting power of our common stock. The Hsieh Stockholders and the Parthenon Stockholders each additionally agreed to take all necessary action, including voting their respective shares of common stock, to cause the election of the directors nominated by such other group in accordance with the terms of the Stockholders Agreement, and will each be entitled to propose the replacement for any of its Board designees whose Board service ceases for any reason. Subject to having the right to designate at least one director for nomination under the Stockholders Agreement, the Hsieh Stockholders have certain designation rights with respect to the Compensation Committee and the Nominating and Corporate Governance Committee, and the Parthenon Stockholders have certain designation rights with respect to any mergers and acquisition, capital markets or similar committee. The Stockholders Agreement also provides that, as long as the Hsieh Stockholders have the right to designate at least one director for nomination under the Stockholders Agreement, Mr. Hsieh shall be the Chairman of the Board and a Class III director, and there shall be no lead independent director without the prior written approval of the Hsieh Stockholders. Pursuant to the Stockholders Agreement, the Company also agreed to provide the Hsieh Stockholders with certain preemptive rights on the issuance of additional common stock, or other equity securities of the Company convertible into, exercisable for or exchangeable into common stock, subject to certain exceptions. In connection with the Cooperation Agreement (as defined below), the Hsieh Stockholders and the Parthenon Stockholders each agreed to waive the limitation on the size of the Board provided in the Stockholders Agreement, to the extent necessary to permit the Board to appoint Mr. Ozonian as provided in the Cooperation Agreement. Hsieh Settlement and Cooperation Agreements We are party to a settlement and cooperation agreement, dated as of April 4, 2023, with the Hsieh Stockholders (the “Cooperation Agreement”). Pursuant to the Cooperation Agreement, the Board was increased from eight directors to nine, Steven Ozonian was appointed to our Board on April 4, 2023, and Mr. Ozonian is being nominated for re-election at the Annual Meeting along with Mr. Dodson and Ms. Patenaude. Pursuant to the Cooperation Agreement, if, as of the record date for the 2024 annual meeting of stockholders, the Hsieh Stockholders have not directly or indirectly sold more than 5% of the aggregate number of Class A common stock and Class C common stock beneficially owned by the Hsieh Stockholders as of the date of the Cooperation Agreement (subject to certain exceptions), the Board will (i) decrease the size of the Board from nine to eight directors effective as of the 2024 annual meeting of stockholders and (ii) nominate for election at the 2024 annual meeting of stockholders as Class III directors, with terms expiring at the 2027 annual meeting of stockholders, Anthony Hsieh and Brian TABLE OF CONTENTS Related Party Transactions
Golson (or any other designee of the Parthenon Stockholders, unless the Company (by vote of a majority of the entire Board) and Hsieh mutually agree in writing to maintain the size of the Board at nine directors beyond the 2024 annual meeting of stockholders. If Mr. Ozonian is unable or unwilling to serve as director at any time prior to the 2024 annual meeting of stockholders, the Board will promptly reduce its size from nine to eight. As part of the Cooperation Agreement, the Hsieh Stockholders agreed, among other things, (i) to customary standstill provisions until 30 days prior to the deadline for the submission of stockholder nominations for directors for the Company’s 2025 annual meeting of stockholders pursuant to the Company’s Bylaws and (ii) to vote their shares in favor of the Board’s slate of directors at the 2023 annual meeting of stockholders and 2024 annual meeting of stockholders. In connection with the Cooperation Agreement, the Company and Anthony Hsieh also entered into a settlement agreement and release, dated April 4, 2023, pursuant to which the Company agreed to pay Hsieh $857,000 and certain other amounts conditioned upon Hsieh providing the Company a general release of claims. Tax Receivable Agreement The members of LD Holdings (excluding LD Investment Holdings, Inc.) prior to our initial public offering (the “Continuing Members”) may from time to time (subject to the terms of the Holdings LLC Agreement regarding exchange rights) exchange an equal number of Holdco Units and shares of Class B and Class C common stock for cash or for shares of Class A common stock of loanDepot, Inc. on a one-for-one basis, at our election. LD Holdings (and each of its subsidiaries classified as a partnership for federal income tax purposes) made an election under Section 754 of the Code effective for the 2021 taxable year and each subsequent taxable year in which an exchange of Holdco Units and shares of Class B and Class C common stock for shares of Class A common stock occurs. Our purchase of Holdco Units, in connection with our initial public offering, from certain owners of Holdco Units (the “Exchanging Members”) and the exchanges of Holdco Units and shares of Class B and Class C common stock for shares of Class A common stock are expected to result, with respect to loanDepot, Inc., in increases in the tax basis of the assets of LD Holdings that otherwise would not have been available. These increases in tax basis may reduce the amount of tax that loanDepot, Inc. would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. We are part to a tax receivable agreement with the Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing Members, as part of the consideration received by such Continuing Members in exchange for the sale of Holdco Units to loanDepot, Inc., that will provide for the payment from time to time by loanDepot, Inc. to such parties or their permitted assignees of 85% of the amount of the tax benefits, if any, that loanDepot, Inc. realizes or under certain circumstances (such as a change of control) is deemed to realize as a result of (i) the aforementioned increases in tax basis, (ii) any incremental tax basis adjustments attributable to payments made pursuant to the tax receivable agreement and (iii) any deemed interest deductions arising from payments made by us under the tax receivable agreement. These payment obligations are obligations of loanDepot, Inc. and not of LD Holdings. For purposes of the tax receivable agreement, subject to certain exceptions noted below, the benefit deemed realized by loanDepot, Inc. generally will be computed by comparing the actual income tax liability of loanDepot, Inc. (calculated with certain assumptions) to the amount of such taxes that loanDepot, Inc. would have been required to pay had there been no increase to the tax basis of the TABLE OF CONTENTS Related Party Transactions
assets of LD Holdings as a result of our purchase of Holdco Units from the Exchanging Members in connection with our initial public offering and the exchanges of Holdco Units and had loanDepot, Inc. not derived any tax benefits in respect of payments made under the tax receivable agreement. The term of the tax receivable agreement will continue until all such tax benefits have been utilized or deemed utilized or expired, unless we materially breach any of our material obligations under the agreement, elect an early termination of the agreement or undergo a change of control. Estimating the amount of payments that may be made under the tax receivable agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including: the timing of any subsequent exchanges of Holdco Units – for instance, the increase in any tax deductions will vary depending on the fair value, which may fluctuate over time, of the depreciable or amortizable assets of LD Holdings at the time of each exchange; the price of shares of our Class A common stock at or around the time of the exchange—the increase in any tax deductions, as well as the tax basis increase in other assets, of LD Holdings is affected by the price of shares of our Class A common stock at the time of the exchange; the extent to which such exchanges are taxable – if an exchange is not taxable for any reason, increased deductions will not be available; the amount and timing of our income – loanDepot, Inc. generally will be required to pay 85% of the deemed benefits as and when deemed realized; and the allocation of basis increases among the assets of LD Holdings and certain tax elections affecting depreciation. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreement, we expect that the tax savings associated with the purchase of Holdco Units from the Exchanging Members in connection with future exchanges of Holdco Units and Class B Common Stock as described above would aggregate to approximately $223.8 million over the 15 years ending on December 31, 2037 assuming that all future exchanges of Holdco Units occurred on December 31, 2022 based on the Class A Common stock price on that date. Under such scenario, we would be required to pay to the Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing LLC Members or their permitted assignees approximately 85% of such amount, or approximately $190.2 million, over the 15 years ending on December 31, 2037. We note, however, that the analysis set forth above assumes no material changes in the relevant tax law. We are not able to predict the specific effect of such future tax legislation on this analysis. If LD Holdings does not have taxable income, loanDepot, Inc. generally is not required to make payments under the tax receivable agreement for that taxable year because no benefit actually will have been realized. Nevertheless, any tax benefits that do not result in realized benefits in a given tax year likely will generate tax attributes that may be utilized to generate benefits in previous or future tax years and the utilization of such tax attributes will result in payments under the tax receivable agreement. We expect that the payments that we may make under the tax receivable agreement will be substantial. There may be a material negative effect on our liquidity if, as a result of timing discrepancies or otherwise, (a) the payments under the tax receivable agreement exceeded the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement and/or (b) distributions to loanDepot, Inc. by TABLE OF CONTENTS Related Party Transactions
LD Holdings are not sufficient to permit loanDepot, Inc. to make payments under the tax receivable agreement after it has paid its taxes and other obligations. loanDepot, Inc.’s obligations pursuant to the tax receivable agreement will rank pari passu with its other general trade credit obligations. The payments under the tax receivable agreement are not conditioned upon any recipient’s continued ownership of us or LD Holdings. The Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing Members will receive payments under the tax receivable agreement until such time that they validly assign or otherwise transfer their rights to receive such payments. The effects of the tax receivable agreement on our consolidated balance sheet upon purchase or exchange of Holdco Units are as follows: we will record an increase in deferred tax assets for the estimated income tax effects of the increase in the tax basis of the assets owned by loanDepot, Inc. based on enacted federal, state and local income tax rates at the date of the exchange or purchase. To the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis of expected future earnings, we will reduce the deferred tax asset with a valuation allowance; we will record an increase in liabilities for 85% of the estimated realizable tax benefit resulting from (i) the increase in the tax basis of the purchased or exchanged interests as noted above and (ii) certain other tax benefits subject to the tax receivable agreement; and we will record an increase to additional paid-in capital in an amount equal to the difference between the increase in deferred tax assets and the increase in liability due to the Parthenon Stockholders and certain of the Continuing Members under the tax receivable agreement. The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the tax receivable agreement have been estimated. All of the effects of changes in any of our estimates after the date of the exchange or purchase will be included in our net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. Payments under the tax receivable agreement will be based on the tax reporting positions that we determine in accordance with the tax receivable agreement. Although we do not currently anticipate that the IRS would have a basis for a successful challenge with respect to a tax basis increase, we will not be reimbursed for any payments previously made under the tax receivable agreement if the IRS subsequently disallows part or all of the tax benefits that gave rise to such prior payments, although future payments under the tax receivable agreement will be reduced on account of such disallowances. As a result, in certain circumstances, payments could be made under the tax receivable agreement that are significantly in excess of the benefits that we actually realize in respect of (a) the increases in tax basis resulting from our purchases or exchanges of Holdco Units (b) any incremental tax basis adjustments attributable to payments made pursuant to the tax receivable agreement and (c) any deemed interest deductions arising from our payments under the tax receivable agreement. Decisions made by the Parthenon Stockholders and the Continuing Members in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that we are required to make under the tax receivable agreement. For example, the earlier disposition of assets following an exchange or acquisition transaction generally will accelerate payments under the tax receivable agreement and increase the present value of such payments, and the disposition of assets before an exchange or acquisition transaction will increase the Parthenon Stockholders’ and the Continuing Members’ tax liability without giving rise to any obligations to make payments under the tax receivable agreement. Payments generally TABLE OF CONTENTS Related Party Transactions
are due under the tax receivable agreement within a specified period of time following the filing of our tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of LIBOR (or, in the absence of LIBOR, the Secured Overnight Financing Rate) plus 100 basis points from the due date (without extensions) of such tax return. Additionally the tax receivable agreement provides that (1) in the event that we materially breach any of our material obligations under the agreement, whether as a result of failure to make any payment, failure to honor any other material obligation required thereunder or by operation of law as a result of the rejection of the agreements in a bankruptcy or otherwise, (2) if, at any time, we elect an early termination of the agreement, or (3) upon a change of control of the Company, our (or our successor’s) obligations under the agreements (with respect to all Holdco Units, whether or not such units have been exchanged or acquired before or after such election) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions. These assumptions will include the assumptions that (i) we (or our successor) will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits subject to the tax receivable agreement, (ii) we (or our successor) will utilize any loss carryovers generated by the increased tax deductions as quickly as allowable by law, and (iii) LD Holdings and its subsidiaries will sell certain nonamortizable assets (and realize certain related tax benefits) no later than a specified date. As a result of the foregoing, if we materially breach a material obligation under the agreement, experience a change of control, or if we elect to terminate the agreement early, we would be required to make an immediate lump sum payment equal to the present value of the anticipated future tax savings, which payment may be made significantly in advance of the actual realization of such future tax savings. In these situations, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity. There can be no assurance that we will be able to fund or finance our obligations under the tax receivable agreement. Additionally, the obligation to make tax receivable payments based on these assumptions upon a change of control may deter potential acquirors, which could negatively affect our stockholders’ potential returns. Limited Liability Company Agreement of LD Holdings loanDepot, Inc. holds a significant equity interest in LD Holdings and is entitled to appoint the board of managers of LD Holdings. Accordingly, loanDepot, Inc. operates and controls all of the business and affairs of LD Holdings and, through LD Holdings and its operating entity subsidiaries, conducts our business. The LD Holdings LLC Agreement provides for Holdco Units. Under the Holdings LLC Agreement, the board of managers of LD Holdings has the right to determine when distributions (other than tax distributions) will be made to unitholders of LD Holdings and the amount of any such distributions. If a distribution with respect to Holdco Units is authorized, such distribution will be made to the holders of Holdco Units pro rata based on their holdings of Holdco Units. The holders of Holdco Units, including loanDepot, Inc., will incur U.S. federal, state and local income taxes on their proportionate share of any taxable income of LD Holdings. Net profits and net losses of LD Holdings will generally be allocated to the holders of Holdco Units (including loanDepot, Inc.) pro rata in accordance with their respective share of the net profits and net losses of LD Holdings. The Holdings LLC Agreement will provide for cash distributions, which we refer to as “tax distributions,” based on certain assumptions, to the holders of Holdco Units (including loanDepot, Inc.) pro rata based on their TABLE OF CONTENTS Related Party Transactions
Holdco Units. Generally, these tax distributions to holders of Holdco Units will be an amount equal to our estimate of the taxable income of LD Holdings, net of taxable losses, allocable per Holdco Unit multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporation resident in California (based on the character and source of the taxable income actually recognized). However, because tax distributions will be determined based on the holder of Holdco Units who is allocated the largest amount of taxable income on a per unit basis, LD Holdings may be required to make tax distributions that, in the aggregate, may exceed the amount of taxes that LD Holdings would have paid if it were taxed on its net income at the assumed rate. Any distributions will be subject to available cash and applicable law. In addition, in certain circumstances, to the extent that tax distributions made to loanDepot, Inc. exceed the actual tax liability to which loanDepot, Inc. is subject from time to time, such “excess” tax distributions will be contributed to and used by LD Holdings and its operating entity subsidiaries for working capital, liquidity and other operating needs. Under the Holdings LLC Agreement, the Continuing Members (or certain permitted transferees thereof) will have the right, subject to the terms of the Holdings LLC Agreement, to exchange their Holdco Units (together with a corresponding number of shares of Class B common stock or Class C common stock, as applicable) for cash or shares of our Class A common stock on a one-for-one basis (at our election), subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. The Holdings LLC Agreement will provide that as a general matter a Continuing LLC Member will not have the right to exchange Holdco Units if we determine that such exchange would be prohibited by law or regulation or would violate other agreements with us to which the Continuing LLC Member may be subject. We may impose additional restrictions on exchange that we determine to be necessary or advisable so that LD Holdings is not treated as a “publicly traded partnership” for U.S. federal income tax purposes. As a Continuing LLC Member exchanges Holdco Units for shares of Class A common stock, the number of Holdco Units held by loanDepot, Inc. is correspondingly increased as it acquires the exchanged Holdco Units, and a corresponding number of shares of Class B common stock or Class C common stock, as applicable, are cancelled. Aircraft and Boat Arrangements with North American Charters and JLSSAA LLC The Company chartered a private aircraft and a boat owned by North American Charters, Inc. (“NA Charters”) and JLSSAA LLC (“JLSSAA”), companies controlled by the Company’s Chairman of the Board, which from time-to-time also leased the boat to third parties unaffiliated with us. The Company used the charter services mainly for the purposes of business travel for our executive officers and directors. The Company incurred expenses to NA Charters and JLSSAA of $0.2 million for the year ended December 31, 2021. These charges included only allocated costs based on business usage. The Company’s Chairman of the Board paid for all unallocated expenses and any expenses related to his personal travel or mixed-use travel (travel in which a non-business passenger is also on the aircraft or boat). TABLE OF CONTENTS Related Party Transactions
Other Related Party Transactions The Company paid management fees to PCP Managers, L.P., an affiliate of Parthenon Capital Partners, of $0 and $0.2 million to a shareholder of the Company during the years ended December 31, 2022 and 2021. The Company employed certain individuals who provided services to a shareholder whose salaries totaled $0.2 million and $0.4 million for the years ended December 31, 2022 and 2021, respectively. In connection with the merger of a previous holding entity, LD Investment Holdings, Inc. (“Parthenon Blocker”), with loanDepot, Inc. as part of loanDepot’s reorganization concurrent with its initial public offering on February 11, 2021, the Company agreed to pay affiliates of Parthenon Capital, who owned the stock of Parthenon Blocker, certain tax refunds to Parthenon Blocker, which are expected to consist of up to $3.5 million of excess federal and state income tax payments previously paid by Parthenon Blocker. The Company paid $3.1 million for the year ended December 31, 2022. TABLE OF CONTENTS |
Frank Martell
Non-Independent Director
and President and CEO
| | | Age: 62
Public Directorships:
Compass, Inc.
Committee Memberships:
Director Since: April 2022
Skills and Qualifications:
Executive Leadership
Public Company Governance
Financial and Audit
Technology and Innovation
Risk and Compliance
Entrepreneurial Development and Strategy
Human Resource Management
| | | Frank Martell has served as a director of the Company and its President and CEO since April 2022. From March 2017 to January 2022, Mr. Martell served as President and Chief Executive Officer of CoreLogic, Inc. a global property information, analytics and data-enabled solutions provider. Prior to that, he served as CoreLogic’s Chief Financial Officer from August 2011 to April 2016 and Chief Operating Officer from July 2014 to March 2017. Before joining CoreLogic, Mr. Martell served as the President and Chief Executive Officer of the Western Institutional Review Board from 2010 to 2011, a leading provider of review, approval and oversight for clinical research studies involving human subjects, and before that as Chief Financial Officer of Information Services Group, Inc. from 2007 to 2009 and Advantage Solutions from 2009 to 2010. From 1996 to 2006, Mr. Martell held various leadership positions at ACNielsen Corporation, including President of Asia Pacific and Emerging Markets, Executive Vice President of the Marketing Information Group, and Chief Operating Officer of ACNielsen and president of Europe, Middle East and Africa. Mr. Martell spent the initial 15 years of his business career in a variety of financial leadership roles at General Electric. Mr. Martell currently serves on the board of Bank of the West, a wholly-owned subsidiary of BNP Paribas. Mr. Martell also serves on the board of Operation HOPE, a provider of financial literacy empowerment for youth and financial capability for communities, and on the national board of Marine Corps Scholarship Foundation (MCSF), the largest and oldest group supporting the education of the sons and daughters of active and prior service Marines. Mr. Martell’s extensive operational background and experience as an executive and director at various companies qualify him to serve as a member of our Board of Directors.
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Recommendation of the Board of DirectorsOur Board recommends a vote FOR each of Dawn Lepore, John Lee and Frank Martell to be elected as loanDepot, Inc.’s Class I directors.
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Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting FirmThe
Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm Our Audit Committee of the Board has appointed and as a matter of good corporate governance is requesting ratification by the stockholders of the appointment of, Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Although stockholder ratification of the appointment of Ernst & Young LLP is not required by law, we are submitting the appointment to our stockholders for ratification as a matter of good corporate governance. If stockholders do not ratify the appointment of Ernst & Young LLP, the audit committee will reconsider the appointment. Even if stockholders ratify the appointment of Ernst & Young LLP, the audit committee retains the discretion to appoint a different independent auditor at any time if it determines that such a change would be in the best interests of the Company and its stockholders. Representatives of Ernst & Young LLP are expected to attend the Annual Meeting, will have an opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. Selection and Oversight of External Auditor The Audit Committee appoints, compensates, oversees, and manages loanDepot’s relationship with its independent registered public accounting firm, which reports directly to the Audit Committee. EY has served as loanDepot’s independent registered public accounting firm since our inception in February 2021. In selecting loanDepot’s independent registered public accounting firm, the Audit Committee assesses the firm’s qualifications and performance; the quality and candor of their communications with the Audit Committee and the Company; their independence; their objectivity and professionalism; the benefits of audit firm or lead partner rotations; and the comprehensiveness of evaluations of internal controls. Each year, the Audit Committee considers the relative costs, benefits, challenges, and other potential impacts of selecting a different independent public accounting firm. In accordance with SEC rules, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to our Company. For lead audit partners, the Audit Committee requires a regular rotation of the lead audit partner at the Company’s independent auditor and consideration of the regular rotation of the accounting firm serving as loanDepot’s independent auditor. The process for consideration and selection of loanDepot’s lead audit partner pursuant to this rotation policy involves a comprehensive review process in which management and the chair of the Audit Committee participate. The board of directors recommends that you vote “FOR” the ratification of Ernst & Young LLP. TABLE OF CONTENTS Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm
Principal Accounting Fees and Services The following table shows the fees billed to loanDepot for services rendered by Ernst & Young LLP during the years ended December 31, 2022 and 2021. | | Audit fees | | | $2,096,800 | | | $2,519,178 | | | | Audit-related fees | | | 492,500 | | | 345,000 | | | | Tax Fees | | | 1,534,006 | | | 2,424,725 | | | | All Other Fees | | | — | | | — | | | | Total | | | $4,123,306 | | | $5,288,903 | |
Audit Fees Audit fees consist of fees billed to the Company and its consolidated subsidiaries by EY for the audits of the Company’s annual consolidated financial statements, reviews of the Company’s consolidated interim financial statements, and services that are normally provided by Ernst & Young in connection with statutory and regulatory filings or engagements. Audit Related Fees Audit-related fees consist of fees billed to the Company and its consolidated subsidiaries by EY for permissible advisory services related to the Company’s servicing and securitization transactions. Tax Fees Tax fees consist of fees billed to the Company and its consolidated subsidiaries by Ernst & Young LLP for professional services rendered by Ernst & Young LLP for corporate tax compliance, planning and advisory services. Tax compliance fees totaled $1.5 million and $1.8 million for 2022 and 2021, respectively. Tax planning and advisory fees totaled $42,000 and $633,000 for 2022 and 2021, respectively. Audit Committee Pre-Approval In accordance with its written charter, the Audit Committee is responsible for the pre-approval of all audit and non-audit services performed by the independent registered public accounting firm. The Audit Committee approved all of the fees above. In reviewing and approving audit and non-audit service fees, the Audit Committee considers several factors, including the scope and quality of work, as well as an assessment of the impact on auditor independence of non-audit fees and services. Throughout the fiscal year, the Audit Committee is given regular updates regarding audit related and non-audit related fees. TABLE OF CONTENTS Report of the Audit Committee of the Board Our management is primarily responsible for loanDepot’s internal control and financial reporting process. Our independent registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of loanDepot’s consolidated financial statements and issuing opinions on the conformity of those audited financial statements with United States generally accepted accounting principles and the effectiveness of loanDepot’s internal control over financial reporting. The Audit Committee monitors loanDepot’s financial reporting process and reports to the Board on its findings. In this context, the Audit Committee hereby reports as follows: 1.
| The Audit Committee has reviewed and discussed the audited financial statements with loanDepot’s management. |
2.
| The Audit Committee has discussed with the independent registered public accounting firm the matters required to audit our consolidatedbe discussed under the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and combined financial statements for the fiscal year ending December 31, 2022.During 2021, Ernst & Young LLP served as ourSecurities and Exchange Commission.
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3.
| The Audit Committee has received from the independent registered public accounting firm the written disclosures and also provided certain other audit-related and tax services. See “Principal Accounting Fees and Services” on page 39 and “Reportthe letter required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee ofconcerning independence and has discussed with the Board of Directors” on page 42. Representatives of Ernst & Young LLP are expected to participate in the Annual Meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2022 requiresits independence.
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4.
| Based on the affirmative vote of a majority ofreview and discussions referred to in paragraphs (1) through (3) above, the shares of loanDepot common stock present in person or represented by proxy and entitledAudit Committee recommended to be voted at the Annual Meeting. If the appointment is not ratified, the Board, will consider whether it should select another independent registered public accounting firm.Recommendation ofand the Board of DirectorsOur Board recommends a vote FORhas approved, that the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firmaudited financial statements be included in loanDepot’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, fiscal year.for filing with the Securities and Exchange Commission.
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AUDIT COMMITTEE(1) John Dorman (Chair) Dawn Lepore Pamela Patenaude As of December 31, 2021, there were approximately 11,307 employees (including executive officers) of the Company who would be eligible to participate in the 2022 ESPP. Non-employee directors and other non-employee service providers are not eligible to participate in the 2022 ESPP.
| | | Purchase Price51
The purchase price per share at which LDI Class A Shares are sold in an Offering under the 2022 ESPP may not be less than the lower of (i) 85% of the fair market value of a common share on the first day of the Plan Period or (ii) 85% of the fair market value of a common share on the purchase date. If the scheduled purchase date is not a trading day, the fair market value price will be determined using the immediately preceding trading day.
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares may be accumulated by payroll deductions over the Plan Period. To the extent permitted in the Offering, a participant may increase, reduce or terminate their payroll deductions. All payroll deductions made on behalf of a participant are credited to his or her account under the 2022 ESPP and deposited with the Company's general funds. To the extent permitted in the Offering, a participant may make additional payments into such account. The Compensation Committee may specify a maximum number of LDI Class A Shares an employee may be granted the right to purchase and the maximum aggregate number of LDI Class A Shares that may be purchased pursuant to such Offering by all participants. If the aggregate number of shares to be purchased upon exercise of all outstanding purchase rights would exceed the number of LDI Class A Shares remaining available under the 2022 ESPP, or the maximum number of shares that may be purchased on a single purchase date across all Offerings, the Compensation Committee will make a pro rata allocation (based on each participant's accumulated contributions) of available shares. Unless the employee's participation is discontinued, his or her right to purchase shares is exercised automatically at the end of the purchase period at the applicable price. See "Withdrawal" below.
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TABLE OF CONTENTS Proposal No. 3: Advisory Vote to Approve the Compensation of Our Named Executive Officers Our Board and Compensation Committee are committed to executive compensation programs that align the interests of our executives with those of our stockholders. The Executive Compensation portion of this proxy statement contains information with respect to our compensation program for our named executive officers (“NEOs”) for fiscal 2022. We believe that we maintain a compensation program deserving of stockholder support. Accordingly, the Board recommends stockholder approval of the compensation of our NEOs as disclosed in this proxy statement. As an advisory vote in accordance with Section 14A of the Exchange Act, this proposal is not binding on loanDepot, the Board, or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by our stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding our NEOs. We anticipate holding the next advisory vote to approve executive compensation of our named executive officers next year. Recommendation of the Board Our Board recommends a vote FOR the approval of the following resolution: “RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation paid to the Company’s named executive officers for the fiscal year ended December 31, 2022, as described in the compensation tables and narrative discussion accompanying such compensation table, in this Proxy Statement.” TABLE OF CONTENTS Withdrawal
Each participant in the 2022 ESPP may elect to participate in an Offering and authorize payroll deductions by completing an enrollment form. The participant may withdraw from a given Offering by terminating his or her payroll deductions and by delivering to the Company a notice of withdrawal from the 2022 ESPP. Such withdrawal may be elected at any time prior to the end of the applicable Offering, except as otherwise provided in the Offering. Upon any withdrawal from an Offering by the employee, the Company will generally distribute to the employee his or her accumulated but unused payroll deductions without interest, and such employee's rights in the offering will be automatically terminated. An employee's withdrawal from an Offering will not prevent such employee from participating in subsequent Offerings under the 2022 ESPP.
Termination of Employment
A participant's rights under any Offering under the 2022 ESPP will terminate immediately if the participant is no longer actively employed by the Company or a “parent corporation” or "subsidiary corporation" (subject to any post-employment participation period required by law), and the Company will distribute to such individual all of his or her accumulated and unused payroll deductions or unused contributions, without interest.
Restrictions on Transfer
Rights granted under the 2022 ESPP are not transferable except by will, the laws of descent and distribution, or by a beneficiary designation. During the lifetime of the participant, such rights may only be exercised by the participant.
Adjustment Provisions
Upon certain transactions by the Company, such as a merger, consolidation, reorganization, amalgamation, arrangement, recapitalization, reincorporation, share dividend, dividend in property other than cash, share split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other similar transaction, the 2022 ESPP share reserve, the outstanding purchase rights thereunder, and any purchase limits will be appropriately adjusted as to the type, class and maximum number of shares subject thereto.
Effect of Certain Corporate Transactions
In the event of a corporate transaction, (a) any surviving corporation or acquiring corporation (or the surviving or acquiring corporation's parent company) may assume or continue outstanding purchase rights under the 2022 ESPP or may substitute similar rights (including a right to acquire the same consideration paid to the shareholders in the corporate transaction) for those outstanding purchase rights, or (b) if any surviving or acquiring corporation (or its parent company) does not assume or continue outstanding purchase rights or does not substitute similar rights for outstanding purchase rights under the 2022 ESPP, then the participants' accumulated contributions will be used to purchase the LDI Class A Shares within 10 business days prior to the corporate transaction under the outstanding purchase rights, and the participants' outstanding purchase rights will terminate immediately after such purchase.
For purposes of the 2022 ESPP, a "corporate transaction" generally means the occurrence, in a single transaction or in a series of related transactions, of the consummation of: (a) a sale of all or substantially all of the assets of the Company and its subsidiaries; (b) a sale or disposition of more than 50% of the Company's outstanding securities; (c) a merger, consolidation, amalgamation, arrangement or similar
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Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares We are requesting that shareholders vote to approve the Second Amendment (the “Amendment”) to the 2021 Plan (as amended by the Second Amendment the “Amended Plan”). Subject to shareholder approval, the Amendment increases the shares reserved for issuance under the 2021 Plan by 15,000,000 LDI Class A Shares (the “Share Increase”). The Share Increase represents approximately 20% of the total number of our LDI Class A Shares outstanding as of April 14, 2023. The purpose of the Amended Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer eligible individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. A copy of the Amended Plan is attached to this Proxy Statement/Circular as Appendix A. If the Amended Plan is not approved by shareholders, the Company will continue to operate the 2021 Plan with the existing number of shares subject thereto, which we do not expect will be sufficient to meet the Company’s equity award needs in the near term. | | | |
TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares Summary of the Amended Plan The following is a brief summary of the Amended Plan. This summary is qualified in its entirety by reference to the full text of the Amended Plan, a copy of which is attached as Appendix A to this Proxy Statement. You are urged to read the text of the Amended Plan in its entirety. Administration The Amended Plan is administered by a committee determined by the Board, which is currently the Compensation Committee (such committee or the Board in the absence of such committee, the “Plan Administrator”). The Plan Administrator has authority to grant awards under the Amended Plan, determine the terms and conditions of awards and make all other determinations in connection with the administration of the Amended Plan. Amended Plan Share Pool The aggregate number of shares of LDI Class A Shares that may be issued under the Amended Plan will equal 43,597,820 shares (the “Share Pool”), which represents 16,250,000 shares initially reserved for issuance under the 2021 Plan, 729,045 shares added to the initial share pool on January 1, 2022 as a result of the evergreen provision under the 2021 Plan, 1,449,940 shares added to the initial share pool on January 1, 2023 as a result of the evergreen provision under the 2021 Plan, and 10,168,835 shares authorized under the First Amendment to the 2021 Plan and 15,000,000 newly authorized shares pursuant to the Amendment. The Share Pool under the Amended Plan will continue to be increased per the existing terms of the through the 2031 fiscal year by 2% of the total LDI Class A Shares outstanding on the last day of the immediately preceding fiscal year or a lesser amount determined by the Board. In general, if awards under the Amended Plan are cancelled, settled in cash, or expire or terminate unexercised, the shares covered by such awards will again be available for the grant of awards under the Amended Plan. With respect to stock appreciation rights and options, upon settlement, only the number of LDI Class A Shares actually delivered to a participant will count against the aggregate and individual share limitations. If any LDI Class A Shares are withheld to satisfy tax withholding obligations on an award issued under the Amended Plan, the number of such shares withheld will again be available for issuance under the Amended Plan. Eligibility Members of the Board and employees and consultants of the Company and its affiliates are eligible to participate in the Amended Plan. As of April 14, 2023, there were approximately 4,895 employees (including executive officers), 7 non-employee directors and 883 consultants who would be eligible to participate in the Amended Plan. Limit on Director Compensation The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all types of awards granted under the Amended Plan to any individual non-employee director in any fiscal year (excluding any stock dividends payable in respect of outstanding awards), when combined with other compensation received for such year fiscal year in connection with service as a director, may not exceed $600,000 increased to $1,000,000 in the fiscal year of his or her initial service as a non-employee director. transaction in which the Company is not the surviving corporation; or (d) a merger, consolidation, amalgamation, arrangement or similar transaction in which the Company is the surviving corporation but the LDI Class A Shares of the Company are converted into other securities, cash, or other property by virtue of the transaction.54
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TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares
Awards Under the Amended Plan Stock Options The Plan Administrator may grant nonqualified stock options to eligible individuals and incentive stock options, or ISOs, only to eligible employees. The Plan Administrator will determine the number of LDI Class A Shares subject to each option, the term of each option, which may not exceed ten years (or five years in the case of an ISO granted to a ten percent stockholder), the exercise price, the vesting schedule, if any, and the other material terms of each option. No ISO or nonqualified stock option may have an exercise price less than the fair market value of a LDI Class A Shares at the time of grant (or 110% of fair market value in the case of an ISO granted to a ten percent stockholder). Options will be exercisable at such time or times and subject to such terms and conditions as determined by the Plan Administrator at grant and the exercisability of such options may be accelerated by the Plan Administrator. Stock Appreciation Rights The Plan Administrator may grant stock appreciation rights, or SARs, either with a stock option, which may be exercised only at such times and to the extent the related option is exercisable (a tandem SAR) or independent of a stock option (a non-tandem SAR). An SAR is a right to receive a payment in LDI Class A Shares or cash, as determined by the Plan Administrator, equal in value to the excess of the fair market value of one LDI Class A Share on the date of exercise over the exercise price per share established in connection with the grant of the SAR. The term of each SAR may not exceed ten years. The exercise price per share covered by an SAR will be the exercise price per share of the related option in the case of a tandem SAR and will be the fair market value of an LDI Class A Share on the date of grant in the case of a non-tandem SAR. The Plan Administrator may also grant limited SARs, either as tandem SARs or non-tandem SARs, which may become exercisable only upon the occurrence of a change in control, as defined in the Amended Plan, or such other event as the Plan Administrator may designate at the time of grant or thereafter. Restricted Stock The Plan Administrator may award shares of restricted stock. Except as otherwise provided by the Plan Administrator upon the award of restricted stock, the recipient generally has the rights of a stockholder with respect to the shares, including the right to receive dividends, the right to vote the shares of restricted stock and, conditioned upon full vesting of shares of restricted stock, the right to tender such shares, subject to the conditions and restrictions generally applicable to restricted stock or specifically set forth in the recipient’s restricted stock agreement. The payment of dividends, if any, will be deferred until the expiration of the applicable restriction period unless otherwise determined by the Plan Administrator at the time of the award. Recipients of restricted stock are required to enter into a restricted stock agreement with us that states the restrictions to which the shares are subject, which may include satisfaction of pre-established performance goals, and the criteria or date or dates on which such restrictions will lapse. Other Stock-Based Awards The Plan Administrator may, subject to limitations under applicable law, make a grant of such other stock-based awards, including, without limitation, performance units, dividend equivalent units, stock equivalent units, restricted stock units and deferred stock units under the Amended Plan that are payable TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares in cash or denominated or payable in or valued by LDI Class A Shares or factors that influence the value of such shares. The Plan Administrator may determine the terms and conditions of any such other awards, which may include the achievement of certain minimum performance goals and/or a minimum vesting period. LTIP Units The Compensation Committee may, subject to the provisions of the LD Holdings LLC Agreement, grant awards of equity-based awards, valued by reference to LDI Class A Shares, consisting of Holdco Units in LD Holdings and an equal number of shares of Class B common stock of the Company (“LTIP Units”). LTIP Units may be subject to any vesting conditions as the Plan Administrator may decide, similar to any other more typical equity incentive programs, such as restricted stock. Holders of LTIP Units will have the right to exchange such units for LDI Class A Shares on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Any LTIP Units exchanged under the exchange provisions described above will thereafter be owned by the Company, and any shares of Class B common stock of the Company exchanged will be cancelled. Each LTIP Unit awarded will be equivalent to an award of one LDI Class A Share for purposes of reducing the number of shares available under the Share Pool. Other Cash-Based Awards The Plan Administrator may grant awards payable in cash. Cash-based awards will be in such form, and dependent on such conditions, as the Plan Administrator will determine, including, without limitation, being subject to the satisfaction of vesting conditions or awarded purely as a bonus and not subject to restrictions or conditions. If a cash-based award is subject to vesting conditions, the Plan Administrator may accelerate the vesting of such award in its discretion. Performance Awards The Plan Administrator may grant a performance award to a participant payable upon the attainment of specific performance goals established by the Plan Administrator in its sole discretion. If the performance award is payable in cash, it may be paid upon the attainment of the relevant performance goals either in cash or in shares of restricted stock, based on the then current fair market value of such shares, as determined by the Plan Administrator. Based on service, performance and/or other factors or criteria, the Plan Administrator may, at or after grant, accelerate the vesting of all or any part of any performance award. Change in Control In connection with a change in control, as defined in the Amended Plan, the Plan Administrator may accelerate vesting of outstanding awards under the Amended Plan. In addition, such awards may be, in the discretion of the Plan Administrator, (i) assumed and continued or substituted in accordance with applicable law, (ii) purchased by the Company for an amount equal to the excess of the price of an LDI Class A Share paid in a change in control over the exercise price of the awards, or (iii) cancelled if the price of an LDI Class A Share paid in a change in control is less than the exercise price of the award. The Plan Administrator may also provide for accelerated vesting or lapse of restrictions of an award at any time. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares
Stockholder Rights Except as otherwise provided in the applicable award agreement, and with respect to an award of restricted stock, a participant has no rights as a stockholder with respect to LDI Class A Shares covered by any award until the participant becomes the record holder of such shares. Transferability Awards granted under the Amended Plan generally are nontransferable, other than by will or the laws of descent and distribution, except that the Plan Administrator may provide for the transferability of nonqualified stock options at the time of grant or thereafter to certain family members. Recoupment of Awards The Amended Plan provides that awards granted under the Amended Plan are subject to any recoupment policy that we may have in place or any obligation that we may have regarding the clawback of “incentive-based compensation” under the Exchange Act, or under any applicable rules and regulations promulgated by the SEC or NYSE. Amendment and Termination Notwithstanding any other provision of the Amended Plan, the Board may at any time amend any or all of the provisions of the Amended Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to stockholder approval in certain instances; provided, however, that, unless otherwise required by law or specifically provided in the Amended Plan, the rights of a participant with respect to awards granted prior to such amendment, suspension or termination may not be adversely affected without the consent of such participant. Effective Date and Term The 2021 Plan was originally effective January 21, 2021, and the Amendment will be effective on June 7, 2023. No award will be granted under the Amended Plan on or after January 21, 2031. Any award outstanding under the Amended Plan at the time of termination will remain in effect until such award is exercised or has expired in accordance with its terms. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares Awards Granted Under the 2021 Plan No awards made under the 2021 Plan prior to the date of the Annual Meeting were granted subject to stockholder approval of the Amendment. The following table summarizes awards made to certain individuals and groups during the last fiscal year (prior to the Amendment) under the 2021 Plan and is included in accordance with SEC regulations. No associates of any director, executive officer or director nominee have received any RSUs or PSUs under the 2021 Plan. | | Anthony Hsieh
Executive Chairman;
Former Chief Executive Officer | | | 123,525 | | | 533,628 | | | 370,575 | | | 1,964,529 | | | — | | | | Executive Group | | | 1,141,347 | | | 2,180,619 | | | 1,424,041 | | | 2,500,469 | | | 4,000,000 | | | | Non-Executive Director Group | | | 631,708 | | | 915,977 | | | — | | | — | | | — | | | | Non-Executive Officer Employee Group | | | 1,317,818 | | | 2,565,787 | | | 1,214,165 | | | 2,228,322 | | | 2,000,000 | | | | Employee Group | | | 10,024,039 | | | 29,066,439 | | | 60,000 | | | 64,024 | | | | | | | Total | | | 13,238,437 | | | $35,262,449 | | | 3,068,781 | | | $6,757,343 | | | 6,000,000 | |
New Plan Benefits
Participation in the 2022 ESPP is voluntary and each eligible employee will make his or her own decision whether and to what extent to participate in the 2022 ESPP. It is therefore not possible to determine the benefits or amounts that will be received in the future by individual employees or groups of employees under the 2022 ESPP.
Duration, Amendment and Termination
Because each eligible employee will make his or her own decision whether and to what extent to participate in the 2022 ESPP, it is not possible to determine with specificity the period for which the 2022 ESPP share reserve will be sufficient to cover future purchases of shares.
The Compensation Committee may amend, suspend or terminate the 2022 ESPP at any time. However, except in regard to capitalization adjustments, any amendment to the 2022 ESPP must be approved by the shareholders to the extent shareholder approval is required by applicable law or listing requirements.
Rights granted before amendment, suspension or terminationSummary of the 2022 ESPP will not be materially impaired by any amendment, suspension or termination of the 2022 ESPP without consent of the employee to whom such rights were granted, except with the consent of the participant, as necessary to comply with applicable laws, or as necessary to obtain or maintain favorable tax, listing or regulatory treatment.
U.S. Federal Income Tax ConsequencesAmended Plan
The following generally summarizes certain key United States federal income tax consequences that will arise with respect to participation inis a brief summary of the 2022 ESPP and with respect to the sale of LDI Class A Shares acquired under the 2022 ESPP.Amended Plan. This summary is based onqualified in its entirety by reference to the tax laws in effect asfull text of the dateAmended Plan, a copy of which is attached as Appendix A to this Proxy Statement/Circular. ChangesStatement. You are urged to these laws could alterread the tax consequences described below. text of the Amended Plan in its entirety. Administration The following summaryAmended Plan is not intended to beadministered by a complete summarycommittee determined by the Board, which is currently the Compensation Committee (such committee or legal interpretation, and it does not address consequences other than U.S. federal tax consequences. Eligible employees also might be subject to state or local tax, including tax in jurisdictions outside the U.S., as a result of participatingBoard in the 2022 ESPP. Tax Consequencesabsence of such committee, the “Plan Administrator”). The Plan Administrator has authority to Participants
423 Component. Participants do not experience any federal income tax consequences upon enrolling in the 2022 ESPP. Amounts withheld via payroll deduction for purposes of purchasing common sharesgrant awards under the 2022 ESPP are includedAmended Plan, determine the terms and conditions of awards and make all other determinations in the participant's income in accordanceconnection with the Company's regular income and payroll tax withholding and reporting procedures. There is no income tax atadministration of the time the participant purchases common shares. As a general matter, additional income tax is not realized until the participant sells the LDI Class A Shares acquired under the 2022 ESPP.Amended Plan.
A participant may have both ordinary income and capital gain income or both ordinary income and a capital loss upon the saleAmended Plan Share Pool
The aggregate number of shares of LDI Class A Shares that were acquiredmay be issued under the Amended Plan will equal 43,597,820 shares (the “Share Pool”), which represents 16,250,000 shares initially reserved for issuance under the 2021 Plan, 729,045 shares added to the initial share pool on January 1, 2022 ESPP.as a result of the evergreen provision under the 2021 Plan, 1,449,940 shares added to the initial share pool on January 1, 2023 as a result of the evergreen provision under the 2021 Plan, and 10,168,835 shares authorized under the First Amendment to the 2021 Plan and 15,000,000 newly authorized shares pursuant to the Amendment. The amountShare Pool under the Amended Plan will continue to be increased per the existing terms of each typethe through the 2031 fiscal year by 2% of income and loss will depend on when the participant sells thetotal LDI Class A Shares outstanding on the last day of the immediately preceding fiscal year or a lesser amount determined by the Board. In general, if awards under the Amended Plan are cancelled, settled in cash, or expire or terminate unexercised, the shares covered by such awards will again be available for the grant of awards under the Amended Plan. With respect to stock appreciation rights and options, upon settlement, only the price at which the participant sells thenumber of LDI Class A Shares.Shares actually delivered to a participant will count against the aggregate and individual share limitations. If any LDI Class A Shares are withheld to satisfy tax withholding obligations on an award issued under the Amended Plan, the number of such shares withheld will again be available for issuance under the Amended Plan. Eligibility Members of the Board and employees and consultants of the Company and its affiliates are eligible to participate in the Amended Plan. As of April 14, 2023, there were approximately 4,895 employees (including executive officers), 7 non-employee directors and 883 consultants who would be eligible to participate in the Amended Plan. Limit on Director Compensation The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all types of awards granted under the Amended Plan to any individual non-employee director in any fiscal year (excluding any stock dividends payable in respect of outstanding awards), when combined with other compensation received for such year fiscal year in connection with service as a director, may not exceed $600,000 increased to $1,000,000 in the fiscal year of his or her initial service as a non-employee director. TABLE OF CONTENTS
If the participant sells the LDI Class A Shares more than two years after the commencement of the Offering during which the LDI Class A Shares were purchased and more than one year after the date that the participant purchased the LDI Class A Shares, then the participant will have ordinary income equal to the lesser of:
15% of the value of the common shares on the day the Offering commenced; and
the participant's profit (the excess of the sales proceeds over the purchase price).
Any profits in excess of amounts classified as ordinary income will be taxed as long-term capital gain income. If the participant sells the LDI Class A Shares at a loss (if sales proceeds are less than the purchase price) after satisfying these waiting periods, there is no ordinary income, and the participant will have a long-term capital loss for the difference between the sale price and the purchase price.
If the participant sells the LDI Class A Shares prior to satisfying these waiting periods, including by way of gift, then he or she will have engaged in a disqualifying disposition. Upon a disqualifying disposition, the participant will have ordinary income equal to the value of the LDI Class A Shares on the day he or she purchased the common shares less the purchase price. If the participant's profit exceeds the ordinary income, then the excess profit will be a capital gain. If the participant's profit is less than the ordinary income, then the participant will have a capital loss equal to the value of the LDI Class A Shares on the day he or she purchased the LDI Class A Shares less the sales proceeds. This capital gain or loss will be long-term if the participant has held the shares for more than one year and otherwise will be short-term.
Non-423 Component. Participants do not experience any federal income tax consequences upon enrolling in the 2022 ESPP. Amounts withheld via payroll deduction for purposes of purchasing shares under the 2022 ESPP are included in the participant's income in accordance with the Company's regular income and payroll tax withholding and reporting procedures. A participant will have ordinary income equal to the difference between the purchase price and the fair market value of the shares when the participant purchases shares. This amount will be subject to withholding.
When the participant sells shares, the participant will have a capital gain or loss, depending on whether the sale price is more or less than the fair market value of the shares at purchase. This capital gain or loss will be long-term if the participant has held the shares for more than one year and otherwise will be short-term.
Tax Consequences to the Company
There will be no tax consequences to the Company except that we will be entitled to a deduction when a participant has ordinary income. Any such deduction will be subject to the limitations of Section 162(m) of the Code.
Registration with the SEC
If the 2022 ESPP is approved by our shareholders, we intend to file a Registration Statement on Form S-8 relating to the issuance of LDI Class A Shares under the 2022 ESPP with the SEC pursuant to the Securities Act of 1933, as amended.
Recommendation of the Board of DirectorsOur Board recommends a vote FOR the approval of the loanDepot, Inc. 2022 Employee Stock Purchase Plan.
TABLE OF CONTENTS Proposal No. 4: Vote to Approve Firstthe Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 10,168,83515,000,000 Shares We are requesting that shareholders voteAwards Under the Amended Plan Stock Options The Plan Administrator may grant nonqualified stock options to approveeligible individuals and incentive stock options, or ISOs, only to eligible employees. The Plan Administrator will determine the number of LDI Class A Shares subject to each option, the term of each option, which may not exceed ten years (or five years in the case of an ISO granted to a First Amendment (the “Amendment”)ten percent stockholder), the exercise price, the vesting schedule, if any, and the other material terms of each option. No ISO or nonqualified stock option may have an exercise price less than the fair market value of a LDI Class A Shares at the time of grant (or 110% of fair market value in the case of an ISO granted to a ten percent stockholder). Options will be exercisable at such time or times and subject to such terms and conditions as determined by the Plan Administrator at grant and the exercisability of such options may be accelerated by the Plan Administrator. Stock Appreciation Rights The Plan Administrator may grant stock appreciation rights, or SARs, either with a stock option, which may be exercised only at such times and to the loanDepot, Inc.extent the related option is exercisable (a tandem SAR) or independent of a stock option (a non-tandem SAR). An SAR is a right to receive a payment in LDI Class A Shares or cash, as determined by the Plan Administrator, equal in value to the excess of the fair market value of one LDI Class A Share on the date of exercise over the exercise price per share established in connection with the grant of the SAR. The term of each SAR may not exceed ten years. The exercise price per share covered by an SAR will be the exercise price per share of the related option in the case of a tandem SAR and will be the fair market value of an LDI Class A Share on the date of grant in the case of a non-tandem SAR. The Plan Administrator may also grant limited SARs, either as tandem SARs or non-tandem SARs, which may become exercisable only upon the occurrence of a change in control, as defined in the Amended Plan, or such other event as the Plan Administrator may designate at the time of grant or thereafter. Restricted Stock The Plan Administrator may award shares of restricted stock. Except as otherwise provided by the Plan Administrator upon the award of restricted stock, the recipient generally has the rights of a stockholder with respect to the shares, including the right to receive dividends, the right to vote the shares of restricted stock and, conditioned upon full vesting of shares of restricted stock, the right to tender such shares, subject to the conditions and restrictions generally applicable to restricted stock or specifically set forth in the recipient’s restricted stock agreement. The payment of dividends, if any, will be deferred until the expiration of the applicable restriction period unless otherwise determined by the Plan Administrator at the time of the award. Recipients of restricted stock are required to enter into a restricted stock agreement with us that states the restrictions to which the shares are subject, which may include satisfaction of pre-established performance goals, and the criteria or date or dates on which such restrictions will lapse. Other Stock-Based Awards The Plan Administrator may, subject to limitations under applicable law, make a grant of such other stock-based awards, including, without limitation, performance units, dividend equivalent units, stock equivalent units, restricted stock units and deferred stock units under the Amended Plan that are payable TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan (the “2021 Plan”,to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares in cash or denominated or payable in or valued by LDI Class A Shares or factors that influence the value of such shares. The Plan Administrator may determine the terms and conditions of any such other awards, which may include the achievement of certain minimum performance goals and/or a minimum vesting period. LTIP Units The Compensation Committee may, subject to the provisions of the LD Holdings LLC Agreement, grant awards of equity-based awards, valued by reference to LDI Class A Shares, consisting of Holdco Units in LD Holdings and an equal number of shares of Class B common stock of the Company (“LTIP Units”). LTIP Units may be subject to any vesting conditions as amendedthe Plan Administrator may decide, similar to any other more typical equity incentive programs, such as restricted stock. Holders of LTIP Units will have the right to exchange such units for LDI Class A Shares on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Any LTIP Units exchanged under the exchange provisions described above will thereafter be owned by the Company, and any shares of Class B common stock of the Company exchanged will be cancelled. Each LTIP Unit awarded will be equivalent to an award of one LDI Class A Share for purposes of reducing the number of shares available under the Share Pool. Other Cash-Based Awards The Plan Administrator may grant awards payable in cash. Cash-based awards will be in such form, and dependent on such conditions, as the Plan Administrator will determine, including, without limitation, being subject to the satisfaction of vesting conditions or awarded purely as a bonus and not subject to restrictions or conditions. If a cash-based award is subject to vesting conditions, the Plan Administrator may accelerate the vesting of such award in its discretion. Performance Awards The Plan Administrator may grant a performance award to a participant payable upon the attainment of specific performance goals established by the Plan Administrator in its sole discretion. If the performance award is payable in cash, it may be paid upon the attainment of the relevant performance goals either in cash or in shares of restricted stock, based on the then current fair market value of such shares, as determined by the Plan Administrator. Based on service, performance and/or other factors or criteria, the Plan Administrator may, at or after grant, accelerate the vesting of all or any part of any performance award. Change in Control In connection with a change in control, as defined in the Amended Plan, the Plan Administrator may accelerate vesting of outstanding awards under the Amended Plan. In addition, such awards may be, in the discretion of the Plan Administrator, (i) assumed and continued or substituted in accordance with applicable law, (ii) purchased by the Company for an amount equal to the excess of the price of an LDI Class A Share paid in a change in control over the exercise price of the awards, or (iii) cancelled if the price of an LDI Class A Share paid in a change in control is less than the exercise price of the award. The Plan Administrator may also provide for accelerated vesting or lapse of restrictions of an award at any time. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the “Amended Plan”), which ourNumber of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares
Stockholder Rights Except as otherwise provided in the applicable award agreement, and with respect to an award of restricted stock, a participant has no rights as a stockholder with respect to LDI Class A Shares covered by any award until the participant becomes the record holder of such shares. Transferability Awards granted under the Amended Plan generally are nontransferable, other than by will or the laws of descent and distribution, except that the Plan Administrator may provide for the transferability of nonqualified stock options at the time of grant or thereafter to certain family members. Recoupment of Awards The Amended Plan provides that awards granted under the Amended Plan are subject to any recoupment policy that we may have in place or any obligation that we may have regarding the clawback of “incentive-based compensation” under the Exchange Act, or under any applicable rules and regulations promulgated by the SEC or NYSE. Amendment and Termination Notwithstanding any other provision of the Amended Plan, the Board may at any time amend any or all of Directors adopted on April 20, 2022. Subjectthe provisions of the Amended Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to shareholderstockholder approval in certain instances; provided, however, that, unless otherwise required by law or specifically provided in the Amended Plan, the rights of a participant with respect to awards granted prior to such amendment, suspension or termination may not be adversely affected without the consent of such participant. Effective Date and Term The 2021 Plan was originally effective January 21, 2021, and the Amendment increaseswill be effective on June 7, 2023. No award will be granted under the shares reservedAmended Plan on or after January 21, 2031. Any award outstanding under the Amended Plan at the time of termination will remain in effect until such award is exercised or has expired in accordance with its terms. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for issuanceIssuance by 15,000,000 Shares Awards Granted Under the 2021 Plan No awards made under the 2021 Plan by 10,168,835 LDI Class A Shares (the “Share Increase”). The Share Increase represents approximately 23%prior to the date of the total number of our LDI Class A Shares outstanding as of March 31, 2022. The purposeAnnual Meeting were granted subject to stockholder approval of the Amended Plan isAmendment. The following table summarizes awards made to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer eligible individuals cash and stock-based incentives in order to attract, retain and reward suchcertain individuals and strengthengroups during the mutualitylast fiscal year (prior to the Amendment) under the 2021 Plan and is included in accordance with SEC regulations. No associates of interests between such individuals andany director, executive officer or director nominee have received any RSUs or PSUs under the Company’s stockholders. A copy of the Amended Plan is attached to this Proxy Statement/Circular as Appendix B.2021 Plan.
| | Anthony Hsieh
Executive Chairman;
Former Chief Executive Officer | | | 123,525 | | | 533,628 | | | 370,575 | | | 1,964,529 | | | — | | | | Executive Group | | | 1,141,347 | | | 2,180,619 | | | 1,424,041 | | | 2,500,469 | | | 4,000,000 | | | | Non-Executive Director Group | | | 631,708 | | | 915,977 | | | — | | | — | | | — | | | | Non-Executive Officer Employee Group | | | 1,317,818 | | | 2,565,787 | | | 1,214,165 | | | 2,228,322 | | | 2,000,000 | | | | Employee Group | | | 10,024,039 | | | 29,066,439 | | | 60,000 | | | 64,024 | | | | | | | Total | | | 13,238,437 | | | $35,262,449 | | | 3,068,781 | | | $6,757,343 | | | 6,000,000 | |
Summary of the Amended Plan The following is a brief summary of the Amended Plan. This summary is qualified in its entirety by reference to the full text of the Amended Plan, a copy of which is attached as Appendix BA to this Proxy Statement. You are urged to read the text of the Amended Plan in its entirety. Administration The Amended Plan is administered by a committee determined by the Board, of Directors, which is currently the Compensation Committee (such committee or the Board of Directors in the absence of such committee, the “Plan Administrator”). The Plan Administrator has authority to grant awards under the Amended Plan, determine the terms and conditions of awards and make all other determinations in connection with the administration of the Amended Plan. Amended Plan Share Pool The aggregate number of shares of LDI Class A Shares that may be issued under the Amended Plan will equal 27,147,88043,597,820 shares (the “Share Pool”), which represents 16,250,000 shares initially reserved for issuance under the 2021 Plan, 729,045 shares added to the initial share pool on January 1, 2022 as a result of the evergreen provision under the 2021 Plan, 1,449,940 shares added to the initial share pool on January 1, 2023 as a result of the evergreen provision under the 2021 Plan, and 10,168,835 shares authorized under the First Amendment to the 2021 Plan and 15,000,000 newly authorized shares.shares pursuant to the Amendment. The Share Pool under the Amended Plan will continue to be increased beginning withper the 2023existing terms of the through the 2031 fiscal year by 2% of the total LDI Class A Shares outstanding on the last day of the immediately preceding fiscal year or a lesser amount determined by our Board of Directors.the Board. In general, if awards under the Amended Plan are cancelled, settled in cash, or expire or terminate unexercised, the shares covered by such awards will again be available for the grant of awards under the Amended Plan. With respect to stock appreciation rights and options, upon settlement, only the number of LDI Class A Shares actually delivered to a participant will count against the aggregate and individual share limitations. If any LDI Class A Shares are withheld to satisfy tax withholding obligations on an award issued under the Amended Plan, the number of such shares withheld will again be available for issuance under the Amended Plan. TABLE OF CONTENTS
Eligibility Members of ourthe Board of Directors and employees and consultants of the Company and its affiliates are eligible to participate in the Amended Plan. As of December 31, 2021,April 14, 2023, there were approximately 11,3074,895 employees (including executive officers), 7 non-employee directors and 9883 consultants who would be eligible to participate in the Amended Plan. Limit on Director Compensation The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all types of awards granted under the Amended Plan to any individual non-employee director in any fiscal year (excluding any stock dividends payable in respect of outstanding awards), when combined with other compensation received for such year fiscal year in connection with service as a director, may not exceed $600,000 increased to $1,000,000 in the fiscal year of his or her initial service as a non-employee director. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares
Awards Under the Amended Plan Stock Options The Plan Administrator may grant nonqualified stock options to eligible individuals and incentive stock options, or ISOs, only to eligible employees. The Plan Administrator will determine the number of LDI Class A Shares subject to each option, the term of each option, which may not exceed ten years (or five years in the case of an ISO granted to a ten percent stockholder), the exercise price, the vesting schedule, if any, and the other material terms of each option. No ISO or nonqualified stock option may have an exercise price less than the fair market value of a LDI Class A Shares at the time of grant (or 110% of fair market value in the case of an ISO granted to a ten percent stockholder). Options will be exercisable at such time or times and subject to such terms and conditions as determined by the Plan Administrator at grant and the exercisability of such options may be accelerated by the Plan Administrator. Stock Appreciation Rights The Plan Administrator may grant stock appreciation rights, or SARs, either with a stock option, which may be exercised only at such times and to the extent the related option is exercisable (a tandem SAR) or independent of a stock option (a non-tandem SAR). An SAR is a right to receive a payment in LDI Class A Shares or cash, as determined by the Plan Administrator, equal in value to the excess of the fair market value of one LDI Class A Share on the date of exercise over the exercise price per share established in connection with the grant of the SAR. The term of each SAR may not exceed ten years. The exercise price per share covered by an SAR will be the exercise price per share of the related option in the case of a tandem SAR and will be the fair market value of an LDI Class A Share on the date of grant in the case of a non-tandem SAR. The Plan Administrator may also grant limited SARs, either as tandem SARs or non-tandem SARs, which may become exercisable only upon the occurrence of a change in control, as defined in the Amended Plan, or such other event as the Plan Administrator may designate at the time of grant or thereafter. Restricted Stock The Plan Administrator may award shares of restricted stock. Except as otherwise provided by the Plan Administrator upon the award of restricted stock, the recipient generally has the rights of a stockholder with respect to the shares, including the right to receive dividends, the right to vote the shares of restricted stock and, conditioned upon full vesting of shares of restricted stock, the right to tender such TABLE OF CONTENTS
shares, subject to the conditions and restrictions generally applicable to restricted stock or specifically set forth in the recipient’s restricted stock agreement. The payment of dividends, if any, will be deferred until the expiration of the applicable restriction period unless otherwise determined by the Plan Administrator at the time of the award. Recipients of restricted stock are required to enter into a restricted stock agreement with us that states the restrictions to which the shares are subject, which may include satisfaction of pre-established performance goals, and the criteria or date or dates on which such restrictions will lapse. Other Stock-Based Awards The Plan Administrator may, subject to limitations under applicable law, make a grant of such other stock-based awards, including, without limitation, performance units, dividend equivalent units, stock equivalent units, restricted stock units and deferred stock units under the Amended Plan that are payable TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares in cash or denominated or payable in or valued by LDI Class A Shares or factors that influence the value of such shares. The Plan Administrator may determine the terms and conditions of any such other awards, which may include the achievement of certain minimum performance goals and/or a minimum vesting period. LTIP Units The Compensation Committee may, subject to the provisions of the LD Holdings LLC Agreement, grant awards of equity-based awards, valued by reference to LDI Class A Shares, consisting of Holdco Units in LD Holdings and an equal number of shares of Class B common stock of the Company (“LTIP Units”). LTIP Units may be subject to any vesting conditions as the Plan Administrator may decide, similar to any other more typical equity incentive programs, such as restricted stock. Holders of LTIP Units will have the right to exchange such units for LDI Class A Shares on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Any LTIP Units exchanged under the exchange provisions described above will thereafter be owned by the Company, and any shares of Class B common stock of the Company exchanged will be cancelled. Each LTIP Unit awarded will be equivalent to an award of one LDI Class A Share for purposes of reducing the number of shares available under the Share Pool. Other Cash-Based Awards The Plan Administrator may grant awards payable in cash. Cash-based awards will be in such form, and dependent on such conditions, as the Plan Administrator will determine, including, without limitation, being subject to the satisfaction of vesting conditions or awarded purely as a bonus and not subject to restrictions or conditions. If a cash-based award is subject to vesting conditions, the Plan Administrator may accelerate the vesting of such award in its discretion. Performance Awards The Plan Administrator may grant a performance award to a participant payable upon the attainment of specific performance goals established by the Plan Administrator in its sole discretion. If the performance award is payable in cash, it may be paid upon the attainment of the relevant performance goals either in cash or in shares of restricted stock, based on the then current fair market value of such shares, as determined by the Plan Administrator. Based on service, performance and/or other factors or criteria, the Plan Administrator may, at or after grant, accelerate the vesting of all or any part of any performance award. TABLE OF CONTENTS
Change in Control In connection with a change in control, as defined in the Amended Plan, the Plan Administrator may accelerate vesting of outstanding awards under the Amended Plan. In addition, such awards may be, in the discretion of the Plan Administrator, (i) assumed and continued or substituted in accordance with applicable law, (ii) purchased by the Company for an amount equal to the excess of the price of an LDI Class A Share paid in a change in control over the exercise price of the awards, or (iii) cancelled if the price of an LDI Class A Share paid in a change in control is less than the exercise price of the award. The Plan Administrator may also provide for accelerated vesting or lapse of restrictions of an award at any time. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares
Stockholder Rights Except as otherwise provided in the applicable award agreement, and with respect to an award of restricted stock, a participant has no rights as a stockholder with respect to LDI Class A Shares covered by any award until the participant becomes the record holder of such shares. Transferability Awards granted under the Amended Plan generally are nontransferable, other than by will or the laws of descent and distribution, except that the Plan Administrator may provide for the transferability of nonqualified stock options at the time of grant or thereafter to certain family members. Recoupment of Awards The Amended Plan provides that awards granted under the Amended Plan are subject to any recoupment policy that we may have in place or any obligation that we may have regarding the clawback of “incentive-based compensation” under the Exchange Act, or under any applicable rules and regulations promulgated by the SEC.SEC or NYSE. Amendment and Termination Notwithstanding any other provision of the Amended Plan, ourthe Board of Directors may at any time amend any or all of the provisions of the Amended Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to stockholder approval in certain instances; provided, however, that, unless otherwise required by law or specifically provided in the Amended Plan, the rights of a participant with respect to awards granted prior to such amendment, suspension or termination may not be adversely affected without the consent of such participant. Effective Date and Term The 2021 Plan was originally effective January 21, 2021, and the Amendment will be effective on April 20, 2022.June 7, 2023. No award will be granted under the Amended Plan on or after January 21, 2031. Any award outstanding under the Amended Plan at the time of termination will remain in effect until such award is exercised or has expired in accordance with its terms. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares Awards Granted Under the 2021 Plan No awards made under the 2021 Plan prior to the date of the Annual Meeting were granted subject to stockholder approval of the Amendment. The following table sets forth information with respectsummarizes awards made to RSUscertain individuals and performance stock units (“PSUs”), based on achievement of target performance, that have been TABLE OF CONTENTS
grantedgroups during the last fiscal year (prior to the named executive officers, the director nominees, recipients of more than 5% of all awardsAmendment) under the 2021 Plan and the specified groups set forth below under the 2021 Plan as of March 31, 2022.is included in accordance with SEC regulations. No associates of any director, executive officer or director nominee have received any RSUs or PSUs under the 2021 Plan.
| | Name and Position | | RSUs | | PSUs (at Target) | | | | RSUs | | PSUs (at Target) | | NQSOs | | | | Anthony Hsieh
Executive Chairman; Former Chief Executive Officer | | 1,183,025 | | 370,575 | | | | # | | $ | | # | | $ | | # | | | | Jeff Walsh
EVP, Chief Revenue Officer | | 258,996 | | 221,239 | | Anthony Hsieh
Executive Chairman;
Former Chief Executive Officer | | 123,525 | | 533,628 | | 370,575 | | 1,964,529 | | — | | | | Jeff DerGurahian
EVP, Capital Markets | | 233,351 | | 202,802 | | Executive Group | | 1,141,347 | | 2,180,619 | | 1,424,041 | | 2,500,469 | | 4,000,000 | | | | All current executive officers as a group (5) | | 1,817,723 | | 997,418 | | Non-Executive Director Group | | 631,708 | | 915,977 | | — | | — | | — | | | | All current directors who are not executive officers as a group (6) | | 186,971 | | 0 | | Non-Executive Officer Employee Group | | 1,317,818 | | 2,565,787 | | 1,214,165 | | 2,228,322 | | 2,000,000 | | | | Dawn Lepore | | 8,929 | | 0 | | Employee Group | | 10,024,039 | | 29,066,439 | | 60,000 | | 64,024 | | | | | | John Lee | | 139,750 | | 0 | | Total | | 13,238,437 | | $35,262,449 | | 3,068,781 | | $6,757,343 | | 6,000,000 | | | | Frank Martell | | 0 | | 0 | | | | | George Brady | | 1,000,000 | | 0 | | | | | Zeenat Sidi | | 2,000,000 | | 0 | | | | | All employees, including current officers who are not executive officers, as a group (42) | | 5,002,944 | | 0 | | |
New Plan Benefits The Company cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to eligible participants under the Amended Plan because the grant of awards and terms of such awards are to be determined in the sole discretion of the Plan Administrator. U.S. Federal Income Tax Consequences The following generally summarizes certain key United States federal income tax consequences that will arise with respect to participation in the Amended Plan and with respect to the sale of LDI Class A Shares acquired under the Amended Plan. This summary is based on the tax laws in effect as of the date of this Proxy Statement/Circular. Changes to these laws could alter the tax consequences described below. The following summary is not intended to be a complete summary or legal interpretation, and it does not address consequences other than U.S. federal tax consequences. Eligible individuals also might be subject to state or local tax, including tax in jurisdictions outside the U.S., as a result of participating in the Amended Plan. Laws Affecting Deferred Compensation Section 409A of the Code regulates all types of deferred compensation. If the requirements of Section 409A of the Code apply and are not satisfied,complied with, deferred compensation and earnings thereon will be subject to tax as it vests, plus an interest charge at the underpayment rate plus 1% and a 20% penalty tax. Certain awards under the 2019 Plan may be subject to Section 409A of the Code. TABLE OF CONTENTS
Incentive Stock Options A participant will not recognize income at the time an ISO is granted. When a participant exercises an ISO, a participant also generally will not be required to recognize income (either as ordinary income or capital gain). However, to the extent that the fair market value (determined as of the date of grant) of the shares with respect to which the participant’s ISOs are exercisable for the first time during any year exceeds $100,000, the ISOs for the shares over $100,000 will be treated as nonqualified stock options, and not ISOs, for federal tax purposes, and the participant will recognize income as if the ISOs were nonqualified TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares
stock options. In addition to the foregoing, if the fair market value of the shares received upon exercise of an ISO exceeds the exercise price, then the excess may be deemed a tax preference adjustment for purposes of the federal alternative minimum tax calculation. The federal alternative minimum tax may produce significant tax repercussions depending upon the participant’s particular tax status. The tax treatment of any shares acquired by exercise of an ISO will depend upon whether the participant disposes of his or her shares prior to two years after the date the ISO was granted or one year after the shares were transferred to the participant (referred to as the “Holding Period”). If a participant disposes of shares acquired by exercise of an ISO after the expiration of the Holding Period, any amount received in excess of the participant’s tax basis for such shares will be treated as short-term or long-term capital gain, depending upon how long the participant has held the shares. If the amount received is less than the participant’s tax basis for such shares, the loss will be treated as short-term or long-term capital loss, depending upon how long the participant has held the shares. If the participant disposes of shares acquired by exercise of an ISO prior to the expiration of the Holding Period, the disposition will be considered a “disqualifying disposition.” If the amount received for the shares is greater than the fair market value of the shares on the exercise date, then the difference between the ISO’s exercise price and the fair market value of the shares at the time of exercise will be treated as ordinary income for the tax year in which the “disqualifying disposition” occurs. The participant’s basis in the shares will be increased by an amount equal to the amount treated as ordinary income due to such “disqualifying disposition.” In addition, the amount received in such “disqualifying disposition” over the participant’s increased basis in the shares will be treated as capital gain. However, if the price received for shares acquired by exercise of an ISO is less than the fair market value of the shares on the exercise date and the disposition is a transaction in which the participant sustains a loss that otherwise would be recognizable under the Code, then the amount of ordinary income that the participant will recognize is the excess, if any, of the amount realized on the “disqualifying disposition” over the basis of the shares. Nonqualified Stock Options A participant generally will not recognize income at the time a nonqualified stock option is granted. When a participant exercises a nonqualified stock option, the difference between the option price and any higher market value of the shares of Common Stock on the date of exercise will be treated as compensation taxable as ordinary income to the participant. The participant’s tax basis for the shares acquired under a nonqualified stock option will be equal to the option price paid for such shares, plus any amounts included in the participant’s income as compensation. When a participant disposes of shares acquired by exercise of a nonqualified stock option, any amount received in excess of the participant’s tax basis for such shares will be treated as short-term or long-term capital gain, depending upon how long the participant has held the shares. If the amount received is less than the participant’s tax basis for such shares, the loss will be treated as short-term or long-term capital loss, depending upon how long the participant has held the shares. TABLE OF CONTENTS
Restricted Stock A participant who receives restricted stock generally will recognize as ordinary income the excess, if any, of the fair market value of the shares granted as restricted stock at such time as the shares are no longer subject to forfeiture or restrictions, over the amount paid, if any, by the participant for such shares. However, a participant who receives restricted stock may make an election under Section 83(b) of the TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares Code within 30 days of the date of transfer of the shares to recognize ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard to the restrictions on such shares) over the purchase price, if any, of such shares. If a participant does not make an election under Section 83(b) of the Code, then the participant will recognize as ordinary income any dividends received with respect to such shares. At the time of sale of such shares, any gain or loss realized by the participant will be treated as either short-term or long-term capital gain (or loss) depending on the holding period. For purposes of determining any gain or loss realized, the participant’s tax basis will be the amount previously taxable as ordinary income, plus the purchase price paid by the participant, if any, for such shares. Stock Appreciation Rights Generally, a participant who receives a non-tandem SAR will not recognize taxable income at the time the non-tandem SAR is granted, provided that the SAR is exempt from or complies with Section 409A of the Code. If a participant receives the appreciation inherent in the SARs in cash, the cash will be taxed as ordinary income to the recipient at the time it is received. If a participant receives the appreciation inherent in the SARs in LDI Class A Shares, the spread between the then current market value and the grant price, if any, will be taxed as ordinary income to the employee at the time it is received. In general, there will be no federal income tax deduction allowed to the Company upon the grant or termination of SARs. However, upon the exercise of a SAR, the Company will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the exercise. LTIP Units The tax consequences of the grant of LTIP Units may vary depending on the structure determined by the Plan Administrator at the time of grant. To the extent a participant who receives LTIP Units recognizes ordinary income, the Company will generally receive a federal income tax deduction for such year in an amount equal to the ordinary income that the participant has recognized. Other Awards In the case of an award of performance awards, other stock-based awards and other cash-based awards, the recipient will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any LDI Class A Shares received on the date of payment or delivery, provided that the award is exempt from or complies with Section 409A of the Code. In that taxable year, the Company will receive a federal income tax deduction in an amount equal to the ordinary income that the participant has recognized. TABLE OF CONTENTS
Tax Consequences to the Company To the extent that a participant recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code and is not disallowed by the $1,000,000 limitation on certain compensation paid to certain covered employees in any year under Section 162(m) of the Code. TABLE OF CONTENTS Proposal No. 4: Vote to Approve the Second Amendment to Our 2021 Omnibus Incentive Plan to Increase the Number of LDI Class A Shares Authorized for Issuance by 15,000,000 Shares
Registration with the SEC If the Amendment is approved by our shareholders, we intend to file a Registration Statement on Form S-8 relating to the issuance of LDI Class A Shares under the Amended Plan with the SEC pursuant to the Securities Act of 1933, as amended. Recommendation of the Board of DirectorsOur Board recommends a vote FOR the approval of the FirstSecond Amendment to the loanDepot, Inc. 2021 Omnibus Incentive Plan. TABLE OF CONTENTS
Proposal No. 5: Advisory Vote to Approve the Compensation of Our Named Executive OfficersOur Board and Compensation Committee are committed to excellence in corporate governance and to executive compensation programs that align the interests of our executives with those of our stockholders.
The Executive Compensation portion of this proxy statement contains a detailed description of our compensation philosophy and programs, the compensation decisions made under those programs with regard to our named executive officers (“NEOs”) for fiscal 2021, and the factors considered by the Compensation Committee in making those decisions. We believe that we maintain a compensation program deserving of stockholder support. Accordingly, the Board of Directors recommends stockholder approval of the compensation of our NEOs as disclosed in this proxy statement.
As an advisory vote in accordance with Section 14A of the Exchange Act, this proposal is not binding on loanDepot, the Board, or the Compensation Committee. However, the Compensation Committee and the Board value the opinions expressed by our stockholders in their votes on this proposal and will consider the outcome of the vote when making future compensation decisions regarding our NEOs. We anticipate holding the next advisory vote to approve executive compensation of our named executive officers next year.
Recommendation of the Board of DirectorsOur Board recommends a vote FOR the approval of the following resolutions:
“RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation paid to the Company’s named executive officers for the fiscal year ended December 31, 2021, as described in Executive Compensation, including the compensation tables and narrative discussion following such compensation tables, in this Proxy Statement.”
TABLE OF CONTENTS Proposal No. 6: Advisory VoteFrequently Asked QuestionsWhy did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials? Under rules adopted by the U.S. Securities and Exchange Commission (“SEC”), we are furnishing proxy materials to Approveour stockholders online at www.proxyvote.com, rather than mailing printed copies of our proxy materials. We believe that this process expedites stockholders’ receipt of these materials, lowers the Frequencycosts of Future Advisory Votesour Annual Meeting and helps to Approveconserve natural resources. If you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive printed copies of the Compensationproxy materials unless you request them. Instead, the notice will contain instructions on how to access and review the proxy materials online, including this proxy statement and our annual report on Form 10-K for the fiscal year ended December 31, 2022, as well as the proxy card to vote online. If you would like printed copies of the proxy materials, please follow the instructions on the notice. How can I participate in the Annual Meeting? Our Named Executive Officers2023 Annual Meeting will be a completely virtual meeting of stockholders via live webcast. You are entitled to participate in the Annual Meeting only if you were a loanDepot stockholder as of the close of business on April 14, 2023 or if you hold a valid proxy for the Annual Meeting. You will be able to participate in the Annual Meeting of stockholders online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/LDI2023. You also will be able to vote your shares electronically at the Annual Meeting. To participate in the Annual Meeting, stockholders of record will need the 16-digit control number included on your proxy card or on the instructions that accompanied your proxy materials. If your shares are held in street name and your voting instruction form indicates that you may vote those shares through www.proxyvote.com, then you may access, participate in and vote at the Annual Meeting with the 16-digit access code indicated on that voting instruction form. Otherwise, stockholders who hold their shares in street name should contact their bank, broker or other nominee (preferably at least five days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in or vote at the Annual Meeting. The Dodd-Frank Act enables our stockholdersmeeting webcast will begin promptly at 9:00 a.m., Pacific Time, on June 7, 2023. Online access will begin at 8:45 a.m., Pacific Time, and we encourage you to vote, on an advisory or non-binding basis, on how frequently they would likeaccess the meeting prior to cast an advisory votethe start time. How can I submit questions prior to approve the compensationmeeting? You can submit questions in advance of the Annual Meeting, and access copies of our named executive officers. By voting on this proposal, stockholders may indicate whether they would prefer an advisory vote on named executive officer compensation once every one year, two years,proxy statement and annual report, by visiting www.proxyvote.com. Questions timely submitted that comply with our rules of conduct during the meeting will be answered, time permitting, however, loanDepot reserves the right to edit or three years,reject questions it deems profane or they may abstain from voting. After careful considerationotherwise inappropriate. Detailed guidelines for submitting written questions during the meeting will be included in our rules of the frequency alternatives, our Board believes conducting advisory votes to approve executive compensation on an annual basis is appropriate for loanDepot and our stockholdersconduct, which are available at this time, as it will allow stockholders to provide timely, direct input on our executive compensation philosophy, policies and practices. As an advisory vote in accordance with Section 14A of the Exchange Act, this proposal is not binding on the Company or the Board.
Recommendation of the Board of Directors
Our Board recommends a vote for ONE YEAR on the frequency of future advisory votes to approve the compensation of our named executive officers.www.virtualshareholdermeeting.com/LDI2023.
TABLE OF CONTENTS ProposalsFrequently Asked Questions
Other MattersWhat if I need technical assistance?FAQsBeginning 15 minutes prior to the start of and during the virtual Annual Meeting, we will have a support team ready to assist stockholders with any technical difficulties they may have accessing or hearing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, you should call our support team at the phone number listed on the login page located at www.virtualshareholdermeeting.com/LDI2023.Voting Information What Items will be voted on at the Annual Meeting? There are four (4) proposals to be voted on at the Annual Meeting 1.
| What is includedTo elect the three (3) Class II director nominees named in this proxy statement. |
2.
| To ratify the proxy materials?appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. |
3.
| To approve, on a non-binding, advisory basis, the compensation of our named executive officers. |
4.
| To approve the Second Amendment to our 2021 Omnibus Incentive Plan to increase the number of LDI Class A Shares authorized for issuance by 15,000,000 LDI Class A Shares. |
TheseWe do not anticipate any other matters will come before the Annual Meeting. If any other matter properly comes before the Annual Meeting, the proxy materials include this proxy statementholders appointed by the Board will have discretion to vote on those matters.
How does the Board recommend stockholders vote on the four (4) proposals? The Board recommends: 1.
| that you vote FOR each of the nominees in Proposal 1; |
2.
| that you vote FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting form for the fiscal year ending December 31, 2023; |
3.
| that you vote FOR the approval, on a non-binding, advisory basis, the compensation of our named executive officers; and |
4.
| that you vote FOR the approval of the Second Amendment to our 2021 Omnibus Incentive Plan to increase the number of LDI Class A Shares authorized for issuance by 15,000,000 LDI Class A Shares. |
Who is entitled to vote and our 2021 Annual Reporthow many shares can I vote? Each holder of common shares of loanDepot issued and outstanding as of the close of business on Form 10-KApril 14, 2023, the record date for the fiscal year ended December 31, 2021. IfAnnual Meeting, is entitled to vote on all items being voted upon at the Annual Meeting as follows: (i) holders of LDI Class A Shares are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally; (ii) holders of shares of our Class C common stock are entitled to five votes for each share held of record on all matters on which stockholders are entitled to vote generally; and (iii) holders of shares of our Class D common stock are entitled to five votes for each share held of record on all matters on which stockholders are entitled to vote generally, all voting together as a single class. You may vote all shares owned by you as of the record TABLE OF CONTENTS Frequently Asked Questions
date, including (i) shares held directly in your name as the registered stockholder, including shares purchased through our dividend reinvestment program and employee stock purchase plans, and shares held through our Direct Registration Service, and (ii) shares held for you as the beneficial owner through a broker, trustee or other nominee. On the record date, loanDepot, Inc. had approximately (i) 76,399,354 shares of Class A common stock issued and outstanding; (ii) 148,977,545 shares of Class C common stock issued and outstanding; and (iii) 97,026,671 shares of Class D common stock issued and outstanding. We have no shares of Class B common stock issued and outstanding. How can I vote my shares during the Annual Meeting? This year’s annual meeting will again be held entirely online to allow greater participation. Stockholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/LDI2023. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card, or on the instructions that accompanied your proxy materials. Shares held in your name as the registered stockholder may be voted electronically during the Annual Meeting. Shares for which you are the beneficial owner, but not the registered stockholder, also may be voted electronically during the Annual Meeting. Even if you plan to participate in the Annual Meeting online, we recommend that you also vote by proxy as described below so that your vote will be counted if you later decide not to participate in the Annual Meeting. Specifically, if voting instruction form indicates that you may vote those shares through the http://www.proxyvote.com website, then you may access, participate in, and vote at the Annual Meeting with the 16-digit access code indicated on that voting instruction form. Otherwise, if you own your shares beneficially (i.e., in street name), you should contact your bank, broker or other nominee (preferably at least 5 days before the Annual Meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote at the Annual Meeting. Even if you plan to participate in the Annual Meeting online, we recommend that you also vote by proxy as described below so that your vote will be counted if you later decide not to participate in the Annual Meeting. How can I vote my shares without participating in the Annual Meeting? Whether you hold shares directly as the registered stockholder of record or through a broker, trustee, or other nominee as the beneficial owner, you may direct how your shares are voted without participating in the Annual Meeting. Beneficial owners should check their voting instruction form for how to vote in advance of the Annual Meeting. For registered stockholders of record, there are three ways to vote by proxy: By Internet—Stockholders who have received a paper copy of these materials by mail, it will also include a proxy card by mail may submit proxies over the Internet by following the instructions on the proxy card. By Telephone—Stockholders of record who live in the United States or Canada may submit proxies by telephone by calling 1-800-690-6903. By Mail—Stockholders who have received a paper copy of a proxy card by mail may submit proxies by completing, signing, and dating their proxy card and mailing it in the accompanying pre-addressed envelope. Stockholders of record who have received a proxy card by mail must have the control number that appears on their proxy card available when voting. Most stockholders who are beneficial owners of their shares living in the United States or Canada and who have received a voting instructions form by mail TABLE OF CONTENTS Frequently Asked Questions
may vote via Internet or by phone by calling the number specified in the voting instructions form provided by their broker, trustee, or nominee. Those stockholders should check the instructions for telephone voting availability. Those stockholders should check the instructions for telephone voting availability. What is the deadline for voting my shares? If you hold shares as the registered stockholder of record, your vote by proxy must be received before the Annual Meeting or you can vote at the Annual Meeting. If you are the beneficial owner of shares held through a broker, trustee, or other nominee, please follow the voting instructions provided by your broker, trustee or nominee. May I change my vote or revoke my proxy? You may change your vote or revoke your proxy at any time prior to the vote during the Annual Meeting. If you are the registered stockholder of record, you may change your vote by: granting a new proxy bearing a later date (which automatically revokes the earlier proxy); providing a written notice of revocation to the Corporate Secretary at the address below in “– How may I obtain a copy of loanDepot’s 2022 Form 10-K and other financial information?” prior to your shares being voted; or voting your shares electronically during the Annual Meeting. Participation in the Annual Meeting alone will not cause your previously granted proxy to be revoked unless you specifically make that request. For shares you hold beneficially in the name of a broker, trustee, or other nominee, you may change your vote by submitting new voting instructions to your broker, trustee, or nominee, or by participating in the meeting and electronically voting your shares during the Annual Meeting. Is my vote confidential? Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed, either within loanDepot or to third parties, except: (1)
| as necessary to meet applicable legal requirements; |
(2)
| to allow for the tabulation of votes and certification of the vote; and |
(3)
| to facilitate a successful proxy solicitation. |
Occasionally, stockholders provide written comments on their proxy card, which are then forwarded to management. How are votes counted, and what effect do abstentions and broker non-votes (as defined below) have on the proposals? You may vote “FOR,” “AGAINST,” or “ABSTAIN” for any of the proposals (other than election of directors for which you can vote “FOR ALL,” “WITHHOLD ALL” or “FOR ALL EXCEPT”). If you elect to abstain the abstention will be counted as votes against Proposals 2, 3 and 4. Directors are elected by a plurality of votes. Votes “withheld” will not have any impact on election of directors. TABLE OF CONTENTS Frequently Asked Questions
Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions, brokers may in some cases vote the shares in their discretion, but are not permitted to vote on certain proposals (referred to in this case as “broker non-votes”) and may elect not to vote on any of the proposals unless you provide voting instructions. If you do not provide voting instructions and the broker elects to vote your shares on some but not all matters, it will result in a “broker non-vote” for the matters on which the broker does not vote. Broker non-votes will not impact the vote for any of the proposals. Broker non-votes, if any, will not impact the vote for any of the proposals. What is the voting requirement to approve each of the proposals? For the election of directors, each director must be elected by a plurality of the votes cast. This means that the three nominees receiving the largest number of “for” votes will be elected as directors. We do not have cumulative voting. Approval of proposals 2, 3 and 4 requires the affirmative vote of a majority of the voting power of the shares present, in person or represented by proxy, and entitled to vote on the proposal. Annual Meeting Information How many shares must be present or represented to conduct business at the Annual Meeting? The quorum requirement for holding the Annual Meeting and transacting business is that holders of a majority of the voting power of the issued and outstanding shares of loanDepot common stock entitled to vote must be present in person or represented by proxy. Both abstentions and broker non-votes described previously in “– How are votes counted, and what effect do abstentions and broker non-votes (as defined below) have on the proposals?” are counted for the purpose What happens if additional matters are presented at the Annual Meeting? Other than the items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holder, Frank Martell and Gregory Smallwood, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. Who will serve as Inspector of Election? The Inspector of Election will be a representative from Broadridge. Where can I find the voting results of the Annual Meeting? We intend to announce preliminary voting results at the Annual Meeting and publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days of the Annual Meeting. Who will bear the cost of soliciting votes for the Annual Meeting.Meeting? loanDepot is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials and soliciting votes. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities. We also will reimburse brokerage houses and other custodians, nominees, and fiduciaries for forwarding proxy and solicitation materials to stockholders. 2.
66 | How can I access the proxy materials over the Internet? | | |
TABLE OF CONTENTS Frequently Asked Questions
I share an address with another stockholder, how do we change the number of proxy materials are available at https://investors.loandepot.com/financials/Annual-Report-and-Proxy and will be available during the voting period at www.proxyvote.com. In addition, we are providing proxy materials to those stockholders who have previously elected delivery of the proxy materials or notice electronically. Those stockholders should receive an e-mail containing a link to the website where those materials are available and a link to the proxy voting website.receive?
3.
| How can I obtain the proxy materials by e-mail? |
Your proxy card will contain instructions on how you may request access to proxy materials by e-mail on an ongoing basis. Choosing to access your future proxy materials electronically will help us conserve natural resources and reduce the costs of distributing our proxy materials. If you choose to access future proxy materials electronically, you will receive an e-mail with instructions containing a link to the website where those materials are available and a link to the proxy voting website. Your election to access proxy materials by e-mail will remain in effect until you terminate it.
4.
| I share an address with another stockholder, how do we change the number of proxy materials we receive? |
Under the rules adopted by the SEC, we may deliver a single set of proxy materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the proxy materials, as requested, to any stockholder at the shared address to which a single copy of these documents were delivered. If you prefer to receive separate copies of the proxy statement or annual report, contact Broadridge Financial Solutions, Inc. by calling 1-866-540-7095 or in writing at 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department. In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future notices and proxy materials for your household, you may notify your Broker if your shares are held in a brokerage account or you may notify Broadridge if you hold registered shares. Registered stockholders may notify Broadridge Financial Solutions, Inc. at the above telephone number or address. TABLE OF CONTENTS
5.
| What should I do if I receive more than one e-mail about, or more than one paper copy of, the proxy materials? |
If you areHow may I obtain a registered stockholdercopy of loanDepot’s 2022 Form 10-K and your shares are registered in more than one name, you may receive more than one e-mail, or more than one proxy card and more than one set of proxy materials. If you hold your shares in more than one brokerage account, you may receive a separate e-mail, or separate instructions for each brokerage account in which you hold shares. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card that you receive and vote over the Internet the shares represented by each e-mail or proxy card or voting instruction form that you receive (unless you have requested and received other instructions for the shares represented by one or more of those e-mails or proxy materials).financial information?
6.
| How may I obtain a copy of loanDepot’s 2021 Form 10-K and other financial information? |
Stockholders can access the proxy statement and 20212022 Annual Report on Form 10-K, on loanDepot’s Investor Relations website at: https://investors.loandepot.com/financials/Annual-Report-and-Proxy. We will promptly send a copy of these documents to you without charge upon request by mail to Corporate Secretary, loanDepot, 6561 Irvine Center Dr., Irvine, CA 92618, or by calling (949) 822-4074. 7.
| Who is entitled to vote and how many shares can I vote? |
Each holder of common shares of loanDepot issuedStockholder Proposals, Director Nominations and outstanding as ofRelated Bylaw Provisions
What is the close of business on March 31, 2022 (the “record date”deadline to propose actions (other than director nominations) for the Annual Meeting) is entitled to vote on all items being voted uponconsideration at the Annual Meeting as follows: (i) holders of LDI Class A Shares are entitled to one vote for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors elected by our stockholders generally; (ii) holders of shares of our Class C common stock are entitled to five votes for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors elected by our stockholders generally; and (iii) holders of shares of our Class D common stock are entitled to five votes for each share held of record on all matters on which stockholders are entitled to vote generally, including the election or removal of directors elected by our stockholders generally. You may vote all shares owned by you as of the record date, including (i) shares held directly in your name as the registered stockholder, including shares purchased through our dividend reinvestment program and employee stock purchase plans, and shares held through our Direct Registration Service, and (ii) shares held for you as the beneficial owner through a broker, trustee or other nominee. On the record date, loanDepot, Inc. had approximately (i) 43,594,694 LDI Class A Shares issued and outstanding; (ii) 180,680,045 shares of Class C common stock issued and outstanding; and (iii) 97,026,671 shares of Class D common stock issued and outstanding. We have no shares of Class B common stock issued and outstanding. Holders of shares of our common stock do not have cumulative voting rights in the election of directors. 8.
| How can I vote my shares during the Annual Meeting? |
Thisnext year’s annual meeting will be held entirely online to allow greater participation. Stockholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/LDI2022. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card, or on the instructions that accompanied your proxy materials. Shares held in your name as the registered stockholder may be voted electronically during the Annual Meeting. Shares for which you are the beneficial owner, but not the
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registered stockholder, also may be voted electronically during the Annual Meeting. Even if you plan to participate in the Annual Meeting online, we recommend that you also vote by proxy as described below so that your vote will be counted if you later decide not to participate in the Annual Meeting.
9.
| How can I vote my shares without participating in the Annual Meeting? |
Whether you hold shares directly as the registered stockholder of record or through a broker, trustee, or other nominee as the beneficial owner, you may direct how your shares are voted without participating in the Annual Meeting. There are three ways to vote by proxy:stockholders?
By Internet—Stockholders who have received a paper copy of a proxy card by mail may submit proxies over the Internet by following the instructions on the proxy card.
By Telephone—Stockholders of record who live in the United States or Canada may submit proxies by telephone by calling 1-800-690-6903.
By Mail—Stockholders who have received a paper copy of a proxy card and voting instructions by mail may submit proxies by completing, signing, and dating their proxy card and mailing it in the accompanying pre-addressed envelope.
Stockholders of record who have received a proxy card by mail must have the control number that appears on their proxy card available when voting. Most stockholders who are beneficial owners of their shares living in the United States or Canada and who have received voting instructions by mail may vote by phone by calling the number specified in the voting instructions provided by their broker, trustee, or nominee. Those stockholders should check the instructions for telephone voting availability.
10.
| What is the deadline for voting my shares? |
If you hold shares as the registered stockholder of record, your vote by proxy must be received before the polls close during the Annual Meeting. If you are the beneficial owner of shares held through a broker, trustee, or other nominee, please follow the voting instructions provided by your broker, trustee or nominee.
11.
| May I change my vote or revoke my proxy? |
You may change your vote or revoke your proxy at any time prior to the vote during the Annual Meeting.
If you are the registered stockholder of record, you may change your vote by:
granting a new proxy bearing a later date (which automatically revokes the earlier proxy);
providing a written notice of revocation to the Corporate Secretary at the address below in Question 21 prior to your shares being voted; or
voting your shares electronically during the Annual Meeting. Participation in the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request.
For shares you hold beneficially in the name of a broker, trustee, or other nominee, you may change your vote by submitting new voting instructions to your broker, trustee, or nominee, or by participating in the meeting and electronically voting your shares during the meeting.
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12.
| Is my vote confidential? |
Proxy instructions, ballots, and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed, either within loanDepot or to third parties, except:
(1)
| as necessary to meet applicable legal requirements; |
(2)
| to allow for the tabulation of votes and certification of the vote; and |
(3)
| to facilitate a successful proxy solicitation. |
Occasionally, stockholders provide written comments on their proxy card, which are then forwarded to management.
13.
| How are votes counted, and what effect do abstentions and broker non-votes have on the proposals? |
You may vote “FOR,” “AGAINST,” or “ABSTAIN” for any of the proposals (other than election of directors for which you can vote “FOR ALL,” “WITHHOLD ALL” or “FOR ALL EXCEPT”). If you elect to abstain the abstention will be counted as votes against Proposals 2-5. Directors are elected by a plurality of votes. Votes “withheld” will not have any impact on election of directors. Broker non-votes will not impact the vote for any of the proposals.
14.
| What is the voting requirement to approve each of the proposals? |
Approval of the election of directors requires the affirmative vote of a plurality of the shares present, in person or represented by proxy, and entitled to vote on that proposal at the annual meeting. Approval of all other proposals requires the affirmative vote of a majority of the voting power of the shares present, in person or represented by proxy, and entitled to vote on the proposal.
ANNUAL MEETING INFORMATION15.
| How many shares must be present or represented to conduct business at the Annual Meeting? |
The quorum requirement for holding the Annual Meeting and transacting business is that holders of a majority of outstanding shares of loanDepot common stock entitled to vote must be present in person or represented by proxy. Both abstentions and broker non-votes described previously in Question 13 are counted for the purpose of determining the presence of a quorum.
16.
| What if a quorum is not present at the Annual Meeting? |
If a quorum is not present at the scheduled time of the Annual Meeting, then either the chair of the Annual Meeting or the stockholders by vote of the holders of a majority of the stock having voting power present in person or represented by proxy at the Annual Meeting are authorized by our Bylaws to adjourn the Annual Meeting until a quorum is present or represented.
17.
| What happens if additional matters are presented at the Annual Meeting? |
Other than the five items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Anthony Hsieh and Peter Macdonald, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any reason any of the nominees
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named in this proxy statement is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board, the Board may decrease the size of the Board or leave a vacancy.
18.
| Who will serve as Inspector of Election? |
The Inspector of Election will be a representative from Broadridge.
19.
| Where can I find the voting results of the Annual Meeting? |
We intend to announce preliminary voting results at the Annual Meeting and publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days of the Annual Meeting.
20.
| Who will bear the cost of soliciting votes for the Annual Meeting? |
loanDepot is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials and soliciting votes. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities. We also will reimburse brokerage houses and other custodians, nominees, and fiduciaries for forwarding proxy and solicitation materials to stockholders.
STOCKHOLDER PROPOSALS, DIRECTOR NOMINATIONS, AND RELATED BYLAWS PROVISIONS21.
| What is the deadline to propose actions (other than director nominations) for consideration at next year’s annual meeting of stockholders? |
You may submit proposals (other than director nominations) for consideration at future stockholder meetings. For a stockholder proposal (other than director nomination) to be considered for inclusion in our proxy statement for the Annual Meeting next year under Rule 14a-8 under the Exchange Act, the Corporate Secretary must receive the written proposal at our principal executive offices no later than the close of business on January 2,December 26, 2023. Such proposals also must comply with Rule 14a-8 requirements and regulations. Proposals should be addressed to: Corporate Secretary, loanDepot, 26642 Towne Centre6561 Irvine Center Drive, Foothill Ranch,Irvine, California, 92610.92618. For a stockholder proposal that is not intended to be included in our proxy statement for next year’s annual meeting under Rule 14a-8, the stockholder must provide the information required by our Bylaws and give timely notice to the Corporate Secretary in accordance with our Bylaws, which, in general, require that the notice be received by the Corporate Secretary: not earlier than the close of business on January 18, 2023;February 8, 2024; and not later than the close of business on February 17, 2023.March 9, 2024. TABLE OF CONTENTS ProposalsFrequently Asked Questions
If the date of the stockholder meeting is moved more than 30 days before or 70 days after the anniversary of our annual meeting for the prior year, then notice of a stockholder proposal that is not intended to be included in our proxy statement under Rule 14a-8 must be received no earlier than the close of business 120 days prior to the meeting and not later than the close of business on the later of the following two dates: 90 days prior to the meeting; and 10 days after public announcement of the meeting date. Deadlines for the nomination of director candidates are discussed in Question 22“– How may I nominate individuals to serve as directors and what are the deadlines for director nominations?” below. For these purposes, “close of business” means 5:00 p.m. local time at the Company’s principal executive offices, and if an applicable deadline falls on the “close of business” on a day that is not a business day, then the applicable deadline shall be deemed to be the close of business on the immediately preceding business day. “Business day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are authorized or obligated by law or executive order to close. 22.How may I nominate individuals to serve as directors and what are the deadlines for director nominations? | How may I nominate individuals to serve as directors and what are the deadlines for director nominations? |
Our Bylaws permit stockholders to nominate directors for consideration at an annual meeting (but not for inclusion in our proxy statement).meeting. To nominate a director for consideration at an annual meeting, (but not for inclusion in our proxy statement), a nominating stockholder must provide the information required by our Bylaws (including information required under Rule 14a-19 under the Exchange Act) and give timely notice of the nomination to the Corporate Secretary in accordance with our Bylaws, and each nominee must meet the qualifications required by our Bylaws. To nominate a director for consideration at next year’s annual meeting, in general the notice must be received by the Corporate Secretary between the close of business (as specified above) on January 18, 2023February 8, 2024 and the close of business on February 17, 2023,March 9, 2024, unless the annual meeting is moved by more than 30 days before or 70 days after the anniversary of the prior year’s annual meeting, in which case the deadline will be as described in Question 21“– What is the deadline to propose actions (other than director nominations) for consideration at next year’s annual meeting of stockholders?” above. In addition to satisfying the deadlines required by our Bylaws, a shareholder who intends to solicit proxies in support of nominees submitted under these advance notice provisions must provide the notice required under Rule 14a-19 to the Corporate Secretary no later than March 19, 2023. TABLE OF CONTENTS loanDepot, Inc.
2022 Employee Stock Purchase Plan
Section 1. Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Companies with an opportunity to purchase Common Stock through accumulated payroll deductions. The Company intends for the Plan to have two components: a Code Section 423 Component (“423 Component”) and a non-Code Section 423 Component (“Non-423 Component”). The Company’s intention is to have the 423 Component of the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code to the extent possible. The provisions of the 423 Component, accordingly, will be construed so as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code. In addition, the Plan authorizes the grant of an option to purchase shares of Common Stock under the Non-423 Component that does not qualify as an “employee stock purchase plan” under Section 423 of the Code; such an option will be granted pursuant to rules, procedures, or sub-plans adopted by the Administrator designed to achieve tax, non-U.S. exchange, or securities laws or other objectives for Eligible Employees and the Company. Except as otherwise provided, the Non-423 Component, to the extent utilized by the Company, will operate and be administered in the same manner as the 423 Component.
Section 2. Definitions. For purposes of the Plan, the following terms will have the following meanings:
“Administrator” means the Board or any Committee designated to administer the Plan pursuant to Section 14.
“Affiliate” means any entity, other than a Subsidiary, in which the Company has an equity or other ownership interest.
“Applicable Laws” means the requirements relating to the administration of equity-based awards and the related issuance of shares of Common Stock under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted, and the applicable securities and exchange control laws of any non-U.S. country or jurisdiction where options are, or will be, granted under the Plan.
“Board” means the Board of Directors of the Company.
“Code” means the U.S. Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder will include such section or regulation, any valid regulation, or other official applicable guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation.
“Committee” means a committee of the Board appointed in accordance with Section 14.
“Common Stock” means the Class A common stock, par value $0.001 per share, of the Company.
“Company” means loanDepot, Inc., a Delaware corporation, or any successor thereto.
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“Compensation” means an Eligible Employee’s regular and recurring straight time gross earnings, commission, payments for overtime and shift premium, but exclusive of payments for bonuses, equity compensation, and other similar compensation. The Administrator, in its discretion, may, on a uniform and nondiscriminatory basis, establish a different definition of Compensation for a subsequent Offering Period.
“Designated Company” means any Subsidiary or Affiliate that has been designated by the Administrator in its sole discretion as eligible to participate in the Plan. For purposes of the 423 Component, only the Company and its Subsidiaries may be Designated Companies; provided that a Subsidiary that is a Designated Company under the 423 Component may not simultaneously be a Designated Company under the Non-423 Component.
“Effective Date” means April 20, 2022, subject to approval by the stockholders of the Company in the manner and to the degree required under Applicable Laws.
“Eligible Employee” means any individual who is a common law employee (and, with respect to the Non-423 Component, is not classified by the Company as an intern or temporary employee) providing services to the Company or a Designated Company. For purposes of the Plan, the employment relationship will be treated as continuing intact while the individual is on sick leave or other leave of absence that the Employer approves or that is legally protected under applicable local laws. Where the period of leave exceeds three months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated three months and one day following the commencement of such leave. The Administrator, in its discretion, from time to time may, prior to an Enrollment Date for all options to be granted on such Enrollment Date in an Offering, determine (for each Offering under the 423 Component, on a uniform and nondiscriminatory basis or as otherwise permitted by Section 423 of the Code) that the definition of Eligible Employee will or will not include an individual if he or she: (a) has not completed at least two years of service since his or her last hire date (or such lesser period of time as may be determined by the Administrator in its discretion), (b) customarily works not more than 20 hours per week (or such lesser period of time as may be determined by the Administrator in its discretion), (c) customarily works not more than five months per calendar year (or such lesser period of time as may be determined by the Administrator in its discretion), (d) is a highly compensated employee within the meaning of Section 414(q) of the Code, or (e) is a highly compensated employee within the meaning of Section 414(q) of the Code with compensation above a certain level or is an officer or subject to the disclosure requirements of Section 16(a) of the Exchange Act; provided the exclusion is applied with respect to each Offering under the 423 Component in an identical manner to all highly compensated individuals of the Employer whose employees are participating in that Offering. Such exclusions may be applied with respect to an Offering under a 423 Component in a manner complying with Section 423 of the Code. Such exclusions may be applied with respect to an Offering under the Non-423 Component without regard to the limitations of Section 423 of the Code.
“Employer” means the employer of an Eligible Employee.
“Enrollment Date” means the first Trading Day of each Offering Period.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.
“Exercise Date” means the last Trading Day of each Offering Period.
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“Fair Market Value” means, as of any date and unless the Administrator determines otherwise, the value of Common Stock determined as follows:
(a)
| if the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, the New York Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market of the Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock as quoted on such exchange or system on the date of determination (or the closing bid, if no sales were reported); |
(b)
| if the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value will be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or if no bids and asks were reported on that date, as applicable, on the last Trading Day such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
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(c)
| in the absence of an established market for the Common Stock, the Fair Market Value thereof will be determined in good faith by the Administrator. |
Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs on a weekend or holiday, the Fair Market Value will be the price as determined in accordance with subsections (a) through (c) above (as applicable) on the next business day, unless otherwise determined by the Administrator.
“New Exercise Date” means a new Exercise Date if the Administrator shortens any Offering Period then in progress.
“Offering” means an offer under the Plan of an option that may be exercised during an Offering Period as further described in Section 4. For purposes of the Plan, the Administrator may designate separate Offerings under the Plan (the terms of which need not be identical) in which Eligible Employees of one or more Employers will participate, even if the dates of the applicable Offering Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. If an Offering under the 423 Component is made, to the extent permitted by Section 423 of the Code, the terms of each Offering need not be identical provided that the terms of the Plan and an Offering together satisfy Section 423 of the Code.
“Offering Periods” means the periods of approximately six months during which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after February 15 and August 15 of each year and terminating on the last Trading Day on or before August 15 and February 15, respectively, approximately six months later. The duration and timing of Offering Periods may be changed pursuant to Sections 4 and 20, provided that in no event shall an Offering Period exceed 27 months in duration.
“Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
“Participant” means an Eligible Employee who participates in the Plan.
“Plan” means this loanDepot, Inc. 2022 Employee Stock Purchase Plan.
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“Purchase Period” means the approximately six-month period commencing after one Exercise Date and ending with the next Exercise Date, except that the first Purchase Period of any Offering Period will commence on the Enrollment Date and end with the next Exercise Date. Unless the Administrator provides otherwise, the Purchase Period will have the same duration and coincide with the length of the Offering Period.
“Purchase Price” means an amount equal to 85% of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided, however, that the Purchase Price may be determined for subsequent Offering Periods by the Administrator subject to compliance with Section 423 of the Code (or any successor rule or provision or any other Applicable Law) or pursuant to Section 20.
“Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
“Trading Day” means a day on which the national stock exchange upon which the Common Stock is listed is open for trading.
Section 3. Eligibility.
(a)
| Any Eligible Employee on a given Enrollment Date will be eligible to participate in the Plan, subject to the requirements of Section 5.
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(b)
| Eligible Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether they also are citizens or residents of the United States or resident aliens (within the meaning of Section 7701(b)(1)(A) of the Code)) may be excluded from participation in the Plan or an Offering if the participation of such Eligible Employees is prohibited under the laws of the applicable jurisdiction or if complying with the laws of the applicable jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code. In the case of the Non-423 Component, an Eligible Employee may be excluded from participation in the Plan or an Offering at the discretion of the Administrator. |
(c)
| Any provisions of the Plan to the contrary notwithstanding, with respect to any Offering under the 423 Component, no Eligible Employee will be granted an option under the Plan (i) to the extent that, immediately after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company or any Parent or Subsidiary of the Company and/or hold outstanding options to purchase such stock possessing 5% or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Parent or Subsidiary of the Company, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans (as defined in Section 423 of the Code) of the Company or any Parent or Subsidiary of the Company accrues at a rate that exceeds $25,000 worth of stock (determined based on the Fair Market Value of the Common Stock at the time such option is granted) for each calendar year in which such option is outstanding at any time, as determined in accordance with Section 423 of the Code and the regulations thereunder. |
Section 4. Offering Periods. The Plan will be implemented by consecutive Offering Periods with a new Offering Period commencing on the first Trading Day on or after February 15 and August 15 of each year, or on such other date as the Administrator will determine. The Administrator will have the power to
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change the duration of Offering Periods (including the commencement dates thereof) with respect to future Offerings without stockholder approval if such change is announced prior to the scheduled beginning of the first Offering Period to be affected thereafter.
Section 5. Participation.
(a)
| An Eligible Employee will be entitled to participate in the first Offering Period specified in Section 2 only if such individual submits a subscription agreement authorizing payroll deductions in a form determined by the Administrator to the Company’s designated stock administrator or completes an electronic or other enrollment procedure determined by the Administrator, in each case during such period of time as the Administrator may determine (the “Enrollment Window”). An Eligible Employee’s failure to submit the subscription agreement or complete the enrollment procedure during the Enrollment Window will result in such individual being disqualified from participation in the first Offering Period under the Plan.
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(b)
| An Eligible Employee may participate in the Plan in any Offering Period following the first Offering Period by (i) submitting to the Company’s stock administrator (or its designee), on or before a date prescribed by the Administrator prior to an applicable Enrollment Date, a properly completed subscription agreement authorizing payroll deductions in the form provided by the Administrator for such purpose, or (ii) completing an electronic or other enrollment procedure determined by the Administrator, in each case during the applicable Enrollment Window. Unless otherwise determined by the Administrator, a Participant’s subscription agreement and the designated rate of payroll deduction by a Participant shall continue for future Offering Periods unless the Participant changes or cancels, in accordance with procedures established by the Administrator, prior to the Enrollment Date with respect to a future Offering Period or elects to withdraw from the Plan in accordance with Section 10.
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Section 6. Payroll Deductions.
(a)
| At the time a Participant enrolls in the Plan pursuant to Section 5, he or she will elect to have payroll deductions made on each pay day during the Offering Period in an amount not exceeding 10% of the Compensation that he or she receives on each pay day during the Offering Period; provided, however, that should a pay day occur on an Exercise Date, a Participant will have the payroll deductions made on such day applied to his or her account under the subsequent Offering Period. A Participant’s subscription agreement will remain in effect for successive Offering Periods unless terminated as provided in Section 10.
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(b)
| Payroll deductions for a Participant will commence on the first pay day following the Enrollment Date and will end on the last pay day prior to the Exercise Date of such Offering Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 10; provided, however, that for the first Offering Period, payroll deductions will commence on the first pay day on or following the later of (i) the end of the Enrollment Window, or (ii) the Enrollment Date of the first Offering Period.
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(c)
| All payroll deductions made for a Participant will be credited to his or her account under the Plan and will be withheld in whole percentages only. A Participant may not make any additional payments into such account. |
(d)
| A Participant may discontinue his or her participation in the Plan as provided in Section 10. If permitted by the Administrator, as determined in its sole discretion, during a Purchase Period, a
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Participant may increase or decrease the rate of his or her payroll deductions during the Purchase Period by (i) properly completing and submitting to the Company’s stock administrator (or its designee), on or before a date prescribed by the Administrator prior to an applicable Exercise Date, a new subscription agreement authorizing the change in payroll deduction rate in the form provided by the Administrator for such purpose, or (ii) completing an electronic or other procedure prescribed by the Administrator. If a Participant has not followed such procedures to change the rate of payroll deductions, the rate of his or her payroll deductions will continue at the originally elected rate throughout the Purchase Period and future Offering Periods and Purchase Periods (unless terminated as provided in Section 10). The Administrator may, in its sole discretion, limit the nature and/or number of payroll deduction rate changes that may be made by Participants during any Offering Period or Purchase Period. Any change in payroll deduction rate made pursuant to this Section 6(d) will be effective as of the first full payroll period following five business days after the date on which the change is made by the Participant (unless the Administrator, in its sole discretion, elects to process a given change in payroll deduction rate more quickly).
(e)
| Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(c), a Participant’s payroll deductions may be decreased to 0% by the Administrator at any time during a Purchase Period. To the extent necessary, and subject to Section 423(b)(8) of the Code, payroll deductions will recommence at the rate originally elected by the Participant effective as of the beginning of the first Purchase Period scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 10.
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(f)
| Notwithstanding any provisions or limits to the contrary in the Plan, the Administrator may allow Eligible Employees to participate in the Plan via cash contributions or other methods instead of payroll deductions if (i) payroll deductions are not permitted under applicable local law, (ii) the Administrator determines that cash contributions are permissible under Section 423 of the Code, or (iii) for Participants participating in the Non-423 Component. |
(g)
| At the time the option is exercised, in whole or in part, or at the time some or all of the Common Stock issued under the Plan is disposed of (or any other time that a taxable event related to the Plan occurs), the Participant must make adequate provision for the Company’s or Employer’s federal, state, local, or any other tax liability payable to any authority, including taxes imposed by jurisdictions outside of the U.S., national insurance, social security, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock (or any other time that a taxable event related to the Plan occurs). At any time, the Company or the Employer may, but will not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company or the Employer to meet applicable withholding obligations, including any withholding required to make available to the Company or the Employer any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Eligible Employee. In addition, the Company or the Employer may, but will not be obligated to, withhold from the proceeds of the sale of Common Stock or any other method of withholding the Company or the Employer deems appropriate to the extent permitted by Section 423 of the Code. |
Section 7. Grant of Options. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period will be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of Common Stock
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determined by dividing such Eligible Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the Eligible Employee’s account as of the Exercise Date by the applicable Purchase Price; provided that in no event will an Eligible Employee be permitted to purchase under the Plan during each Purchase Period more than 6,500 shares of Common Stock (subject to any adjustment pursuant to Section 19); and provided, further, that such purchase will be subject to the limitations set forth in Sections 3(c) and 13. The Eligible Employee may accept the grant of such option in accordance with the requirements of Section 5. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of shares of Common Stock that an Eligible Employee may purchase during each Purchase Period. Exercise of the option will occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10. The option will expire on the last day of the Offering Period.
Section 8. Exercise of Option.
(a)
| Unless a Participant withdraws from the Plan as provided in Section 10, his or her option for the purchase of shares of Common Stock will be exercised automatically on the Exercise Date, and the maximum number of full shares subject to the option will be purchased for such Participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares of Common Stock will be purchased; any payroll deductions accumulated in a Participant’s account that are not sufficient to purchase a full share will be retained in the Participant’s account for the subsequent Purchase Period or Offering Period, as applicable, subject to earlier withdrawal by the Participant as provided in Section 10. Any other funds left over in a Participant’s account after the Exercise Date will be returned to the Participant. During a Participant’s lifetime, a Participant’s option to purchase shares hereunder is exercisable only by him or her.
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(b)
| If the Administrator determines that, on a given Exercise Date, the number of shares of Common Stock with respect to which options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of shares of Common Stock available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (A) provide that the Company will make a pro rata allocation of the shares of Common Stock available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all Participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect or (B) provide that the Company will make a pro rata allocation of the shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as will be practicable and as it will determine in its sole discretion to be equitable among all Participants exercising options to purchase Common Stock on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20. The Company may make a pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date.
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Section 9. Delivery. As soon as reasonably practicable after each Exercise Date on which a purchase of shares of Common Stock occurs, the Company will arrange the delivery to each Participant of the shares purchased upon exercise of his or her option in a form determined by the Administrator (in its sole
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discretion) and pursuant to rules established by the Administrator. The Company may permit or require that shares be deposited directly with a broker designated by the Company or with a trustee or designated agent of the Company, and the Company may utilize electronic or automated methods of share transfer. The Company may require that shares be retained with such broker, trustee, or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions or other dispositions of such shares. No Participant will have any voting, dividend, or other stockholder rights with respect to shares of Common Stock subject to any option granted under the Plan until such shares have been purchased and delivered to the Participant as provided in this Section 9.
Section 10. Withdrawal.
(a)
| A Participant may withdraw all, but not less than all, of the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by (i) submitting to the Company’s stock administrator (or its designee) a written notice of withdrawal in the form determined by the Administrator for such purpose, or (ii) completing an electronic or other withdrawal procedure determined by the Administrator. The Administrator may set forth a deadline of when a withdrawal must occur to be effective prior to a given Exercise Date in accordance with policies it may approve from time to time. All of the Participant’s payroll deductions credited to his or her account will be paid to such Participant promptly after receipt of notice of withdrawal and such Participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions will not resume at the beginning of the succeeding Offering Period, unless the Participant re-enrolls in the Plan in accordance with the provisions of Section 5.
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(b)
| A Participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or in succeeding Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws. |
Section 11. Termination of Employment. Upon a Participant’s ceasing to be an Eligible Employee for any reason, he or she will be deemed to have elected to withdraw from the Plan, and the payroll deductions credited to such Participant’s account during the Offering Period but not yet used to purchase shares of Common Stock under the Plan will be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such Participant’s option will be automatically terminated. Unless determined otherwise by the Administrator in a manner that, with respect to an Offering under the 423 Component, is permitted by, and compliant with, Section 423 of the Code, a Participant whose employment transfers between entities through a termination with an immediate rehire (with no break in service) by the Company or a Designated Company shall not be treated as terminated under the Plan; however, no Participant shall be deemed to switch from an Offering under the Non-423 Component to an Offering under the 423 Component or vice versa unless (and then only to the extent) such switch would not cause the 423 Component or any option thereunder to fail to comply with Section 423 of the Code.
Section 12. Interest. No interest will accrue on the payroll deductions of a Participant in the Plan, except as may be required by Applicable Law, as determined by the Company, and if so required by the laws of a particular jurisdiction, shall, with respect to Offerings under the 423 Component, apply to all Participants in the relevant Offering, except to the extent otherwise permitted by Section 423 of the Code.
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Section 13. Stock.
(a)
| Subject to adjustment upon changes in capitalization of the Company as provided in Section 19, the maximum number of shares of Common Stock that will be made available for sale under the Plan will be equal to 2,000,000 shares of Common Stock. In addition, on each January 1 for the first 10 calendar years after the Effective Date, the aggregate number of shares of Common Stock reserved for issuance under the Plan, at the discretion and approval of the Administrator, will equal to the least of (i) 2,000,000 shares; (ii) 1% of the outstanding shares of the Company’s Common Stock as of the last day of the immediately preceding fiscal year (calculated assuming all outstanding shares of the Company’s Class B common stock, Class Common stock and Class D common stock were converted or exchanged for Common Stock), or (iii) such other amount as determined by the Administrator; and provided, further, that the aggregate number of shares issued pursuant to the 423 Component over the term of the Plan will not exceed 3,000,000 shares of Common Stock.
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(b)
| Until the shares of Common Stock are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a Participant will only have the rights of an unsecured creditor with respect to such shares, and no right to vote or receive dividends or any other rights as a stockholder will exist with respect to such shares. |
(c)
| Shares of Common Stock to be delivered to a Participant under the Plan will be registered in the name of the Participant or in the name of the Participant and his or her spouse. |
Section 14. Administration. The Plan will be administered by the Board or a Committee appointed by the Board, which Committee will be constituted to comply with Applicable Laws. To the extent permitted by Applicable Laws, the Administrator will have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to delegate ministerial duties to any of the Company’s employees, to designate separate Offerings under the Plan, to designate Subsidiaries and Affiliates as participating in the 423 Component or Non-423 Component, to determine eligibility, to adjudicate all disputed claims filed under the Plan, and to establish such procedures that it deems necessary or advisable for the administration of the Plan (including, without limitation, to adopt such procedures, sub-plans, and appendices to the subscription agreement as are necessary or appropriate to permit the participation in the Plan by employees who are non-U.S. nationals or employed outside the U.S., the terms of which sub-plans and appendices may take precedence over other provisions of the Plan, with the exception of Section 13(a), but unless otherwise superseded by the terms of such sub-plan or appendix, the provisions of the Plan shall govern the operation of such sub-plan or appendix). Unless otherwise determined by the Administrator, the employees eligible to participate in each sub-plan will participate in a separate Offering under the 423 Component, or if the terms would not qualify under the 423 Component, in the Non-423 Component, in either case, unless such designation would cause the 423 Component to violate the requirements of Section 423 of the Code. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding eligibility to participate, the definition of Compensation, handling of payroll deductions, making of contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold payroll deductions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures, and handling of stock certificates that vary with applicable local requirements. The Administrator also is authorized to determine that, to the extent permitted by Section 423 of the Code, the terms of an option granted under the Plan or an Offering to citizens or residents of a non-U.S.
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jurisdiction will be less favorable than the terms of options granted under the Plan or the same Offering to employees resident solely in the U.S. Every finding, decision, and determination made by the Administrator will, to the full extent permitted by law, be final, binding, and conclusive upon all parties.
Section 15. Designation of Beneficiary.
(a)
| If permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any shares of Common Stock and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such Participant of such shares and cash. In addition, if permitted by the Administrator, a Participant may file a designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent will be required for such designation to be effective. |
(b)
| Such designation of beneficiary may be changed by the Participant at any time by notice in a form determined by the Administrator. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company will deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent, or relative is known to the Company, then to such other person as the Company may designate. |
(c)
| All beneficiary designations will be in such form and manner as the Administrator may designate from time to time. Notwithstanding Sections 15(a) and (b), the Company and/or the Administrator may decide not to permit such designations by Participants in non-U.S. jurisdictions to the extent permitted by Section 423 of the Code.
|
Section 16. Transferability. Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15) by the Participant. Any such attempt at assignment, transfer, pledge, or other disposition will be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10.
Section 17. Use of Funds. The Company may use all payroll deductions received or held by it under the Plan for any corporate purpose, and the Company will not be obligated to segregate such payroll deductions except under Offerings or for Participants in the Non-423 Component for which Applicable Laws require that contributions to the Plan by Participants be segregated from the Company’s or the Employer’s general corporate funds and/or deposited with an independent third party; provided that, if such segregation or deposit with an independent third party is required by Applicable Laws, it will apply to all Participants in the relevant Offering under the 423 Component, except to the extent otherwise permitted by Section 423 of the Code. Until shares of Common Stock are issued, Participants will only have the rights of an unsecured creditor with respect to such shares.
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Section 18. Reports. Individual accounts will be maintained for each Participant in the Plan. Statements of account will be given to participating Eligible Employees at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares of Common Stock purchased, and the remaining cash balance, if any.
Section 19. Adjustments, Dissolution, Liquidation, Certain Transactions.
(a)
| In the event that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Stock or other securities of the Company, or other change in the corporate structure of the Company affecting the Common Stock occurs, the Administrator, to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number and class of Common Stock that may be delivered under the Plan, the Purchase Price per share, and the class and the number of shares of Common Stock covered by each option under the Plan that has not yet been exercised, and the numerical limits of Sections 6 and 13.
|
(b)
| In the event of the proposed dissolution or liquidation of the Company, any Offering Period then in progress will be shortened by setting a New Exercise Date, and will terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date will be before the date of the Company’s proposed dissolution or liquidation. The Administrator will notify each Participant in writing or electronically, prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10.
|
(c)
| In the event of a merger, consolidation, or similar transaction directly or indirectly involving the Company in which the Company is not the surviving corporation, each outstanding option will be assumed or an equivalent option substituted by the acquiring or successor corporation or a Parent or Subsidiary of the acquiring or successor corporation. If the acquiring or successor corporation does not assume or substitute the option for another award, the Offering Period with respect to which such option relates will be shortened by setting a New Exercise Date on which such Offering Period shall end. The New Exercise Date will occur before the date of the proposed transaction. The Administrator will notify each Participant, in writing or electronically prior to the New Exercise Date, that the Exercise Date for the Participant’s option has been changed to the New Exercise Date and that the Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10.
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Section 20. Amendment or Termination.
(a)
| The Administrator, in its sole discretion, may amend, suspend, or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Administrator, in its discretion, may elect to terminate all outstanding Offering Periods, either immediately or upon completion of the purchase of shares of Common Stock on the next Exercise Date (which may be sooner than originally scheduled, if determined by the Administrator in its discretion), or may elect to permit Offering Periods to expire in accordance with their terms (and subject to any |
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adjustment pursuant to Section 19). If the Offering Periods are terminated prior to expiration, all amounts then credited to Participants’ accounts that have not been used to purchase shares of Common Stock will be returned to the Participants (without interest thereon, except as otherwise required under Applicable Laws, as further set forth in Section 12) as soon as administratively practicable.
(b)
| Without stockholder consent and without limiting Section 20(a), the Administrator will be entitled to change the Offering Periods or Purchase Periods, designate separate Offerings, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange rate applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable that are consistent with the Plan.
|
(c)
| If the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify, amend, or terminate the Plan to reduce or eliminate such accounting consequence, including, but not limited to: |
(i)
| amending the Plan to conform with the safe harbor definition under the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto), including with respect to an Offering Period underway at the time; |
(ii)
| altering the Purchase Price for any Offering Period or Purchase Period, including an Offering Period underway at the time of the change in Purchase Price, but, with respect to any existing Offerings under the 423 Component, in no event below the lowest Purchase Price permitted by Section 423 of the Code; |
(iii)
| shortening any Offering Period by setting a New Exercise Date, including an Offering Period underway at the time of the Administrator action; |
(iv)
| reducing the maximum percentage of Compensation a Participant may elect to set aside as payroll deductions; and |
(v)
| reducing the maximum number of shares of Common Stock a Participant may purchase during any Offering Period. |
Such modifications or amendments will not require stockholder approval or the consent of any Participants.
Section 21. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan will be deemed to have been duly given when received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
Section 22. Conditions upon Issuance of Shares. Shares of Common Stock will not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto will comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the
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requirements of any stock exchange upon which the shares may then be listed, and will be further subject to the approval of counsel for the Company with respect to such compliance. As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
Section 23. Section 409A of the Code. The 423 Component of the Plan is intended to be exempt from the application of Section 409A of the Code pursuant to Treasury Regulations § 1.409A-1(b)(5)(ii), and any ambiguities herein will be interpreted to so be exempt from Section 409A of the Code. To the extent the options granted under the Non-423 Component are subject to U.S. taxation, the Non-423 Component is intended to be exempt from the application of Section 409A of the Code as options granted thereunder are intended to constitute “short term deferrals,” and any ambiguities herein will be interpreted such that those options shall so be exempt from Section 409A of the Code. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Administrator determines that an option granted under the Plan may be subject to Section 409A of the Code or that any provision in the Plan would cause an option under the Plan to be subject to Section 409A of the Code, the Administrator may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action the Administrator determines is necessary or appropriate, in each case, without the Participant’s consent, to exempt any outstanding option or future option that may be granted under the Plan from or to allow any such options to comply with Section 409A of the Code, but only to the extent any such amendments or action by the Administrator would not violate Section 409A of the Code. Notwithstanding the foregoing, the Company and any of its Parent or Subsidiaries shall have no liability to a Participant or any other party if the option to purchase Common Stock under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Administrator with respect thereto. The Company and any of its Parent or Subsidiaries makes no representation that the option to purchase Common Stock under the Plan is compliant with Section 409A of the Code.
Section 24. Term of Plan. The Plan will become effective as of the Effective Date, and will continue in effect until the tenth anniversary thereof, unless earlier terminated under Section 20.
Section 25. Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to any conflict of law provisions (whether of the State of Delaware or any other jurisdiction).
Section 26. No Right to Employment. Participation in the Plan by a Participant shall not be construed as giving a Participant the right to be retained as an employee of the Company or a Subsidiary or Affiliate, as applicable. Furthermore, the Company or a Subsidiary or Affiliate may dismiss a Participant from employment at any time, free from any liability or any claim under the Plan.
Section 27. Severability. If any provision of the Plan is or becomes or is deemed to be invalid, illegal, or unenforceable for any reason in any jurisdiction or as to any Participant, such invalidity, illegality, or unenforceability shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as to such jurisdiction or Participant as if the invalid, illegal, or unenforceable provision had not been included.
Section 28. Compliance with Applicable Laws. The terms of the Plan are intended to comply with all Applicable Laws and will be construed accordingly.
* * * *
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Appendix B
LOANDEPOT, INC.
2021 OMNIBUS INCENTIVE PLAN (as amended by the First Amendment)Amendment and Second Amendment thereto) ARTICLE I
PURPOSE The purpose of this loanDepot, Inc. 2021 Omnibus Incentive Plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders. The Plan is effective as of the date set forth in Article XVI. ARTICLE II
DEFINITIONS For purposes of the Plan, the following terms shall have the following meanings: 2.1 “Affiliate” means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade or business (including, without limitation, a partnership or limited liability company) which is directly or indirectly controlled 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Company or one of its Affiliates; (d) any trade or business (including, without limitation, a partnership or limited liability company) which directly or indirectly controls 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any of its Affiliates has a material equity interest and which is designated as an “Affiliate” by resolution of the Committee; provided that, unless otherwise determined by the Committee, the Common Stock subject to any Award constitutes “service recipient stock” for purposes of Section 409A of the Code or otherwise does not subject the Award to Section 409A of the Code. 2.2 “Award” means any award under the Plan of any Stock Option, Stock Appreciation Right, Restricted Stock Award, Performance Award, Other Stock-Based Award, Other Cash-Based Award or LTIP Units. All Awards shall be granted by, confirmed by, and subject to the terms of, a written agreement executed by the Company and the Participant. 2.3 “Award Agreement” means the written or electronic agreement setting forth the terms and conditions applicable to an Award. 2.4 “Board” means the Board of Directors of the Company. 2.5 “Cause” means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination of Employment or Termination of Consultancy, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “cause” (or words of like import)), termination due to a Participant’s insubordination, dishonesty, fraud, incompetence, moral turpitude, willful misconduct, failure to adhere to written policies of the Company or any Affiliate, refusal to perform the Participant’s duties or responsibilities for any reason other than TABLE OF CONTENTS illness or incapacity or materially unsatisfactory performance of the Participant’s duties for the Company or an Affiliate or indictment for, or conviction of (including a guilty plea or plea of nolo contendere), a felony or misdemeanor involving moral turpitude, as determined by the Committee in its good faith discretion; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. With respect to a Participant’s Termination of Directorship, “cause” means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law. 2.6 “Change in Control” has the meaning set forth in Section 12.2. 2.7 “Change in Control Price” has the meaning set forth in Section 12.1. 2.8 “Code” means the Internal Revenue Code of 1986, as amended. Any reference to any section of the Code shall also be a reference to any successor provision and any regulation of U.S. Department of Treasury promulgated thereunder (the “Treasury Regulation”). 2.9 “Committee” means any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, the term “Committee” shall be deemed to refer to the Board for all purposes under the Plan. 2.10 “Common Stock” means the Class A common stock, $0.001 par value per share, of the Company. 2.11 “Company” means loanDepot, Inc., a Delaware corporation, and its successors by operation of law. 2.12 “Consultant” means any Person who is an advisor or consultant to the Company or its Affiliates. 2.13 “Disability” means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination, a permanent and total disability as defined in Section 22(e)(3) of the Code. A Disability shall only be deemed to occur at the time of the determination by the Committee of the Disability. Notwithstanding the foregoing, for Awards that are subject to Section 409A of the Code, Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code. 2.14 “Effective Date” means the effective date of the Plan as defined in Article XVI. 2.15 “Eligible Employees” means each employee of the Company or an Affiliate. 2.16 “Eligible Individual” means an Eligible Employee, Non-Employee Director or Consultant who is designated by the Committee in its discretion as eligible to receive Awards subject to the conditions set forth herein. 2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. 2.18 “Fair Market Value” means, for purposes of the Plan, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, as of any date and except as provided below, TABLE OF CONTENTS closing sales price reported for the Common Stock on the applicable date: (a) as reported on the principal national securities exchange in the United States on which it is then traded or (b) if the Common Stock is not traded, listed or otherwise reported or quoted, the Committee shall determine in good faith the Fair Market Value in whatever manner it considers appropriate taking into account the requirements of Section 409A of the Code. For purposes of the grant of any Award, the applicable date shall be the trading day immediately prior to the date on which the Award is granted. For purposes of the exercise of any Award, the applicable date shall be the date a notice of exercise is received by the Committee or, if not a day on which the applicable market is open, the next day that it is open. 2.19 “Family Member” means “family member” as defined in Section A.1.(a)(5) of the general instructions of Form S-8. 2.20 “Holdings” means LD Holdings Group, LLC. 2.21 “Incentive Stock Option” means any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries and its Parents (if any) under the Plan intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code. 2.22 “Incumbent Director” has the meaning set forth in Section 12.2(c). 2.23 “LLC Agreement” means the Fourth Amended and Restated Limited Liability Company Agreement of LD Holdings Group, LLC, as may be amended and/or restated from time to time. 2.24 “Lead Underwriter” has the meaning set forth in Section 15.19. 2.25 “Limited Stock Appreciation Right” has the meaning set forth in Section 7.5. 2.26 “Lock-Up Period” has the meaning set forth in Section 15.19. 2.27 “LTIP Units” shall mean common units in Holdings issued under the LLC Agreement. 2.28 “Non-Employee Director” means a director or a member of the Board of the Company or any Affiliate who is not an active employee of the Company or any Affiliate. 2.29 “Non-Qualified Stock Option” means any Stock Option awarded under the Plan that is not an Incentive Stock Option. 2.30 “Non-Tandem Stock Appreciation Right” shall mean the right to receive an amount in cash and/or stock equal to the difference between (x) the Fair Market Value of a share of Common Stock on the date such right is exercised, and (y) the aggregate exercise price of such right, otherwise than on surrender of a Stock Option. 2.31 “Other Cash-Based Award” means an Award granted pursuant to Section 11.3 of the Plan and payable in cash at such time or times and subject to such terms and conditions as determined by the Committee in its sole discretion. 2.32 “Other Stock-Based Award” means an Award under Article XI of the Plan that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including, without limitation, an Award valued by reference to an Affiliate. 2.33 “Parent” means any parent corporation of the Company within the meaning of Section 424(e) of the Code. 2.34 “Participant” means an Eligible Individual to whom an Award has been granted pursuant to the Plan. TABLE OF CONTENTS 2.35 “Performance Award” means an Award granted to a Participant pursuant to Article IX hereof contingent upon achieving certain Performance Goals. 2.36 “Performance Goals” means goals established by the Committee as contingencies for Awards to vest and/or become exercisable or distributable based on one or more performance goals established by the Committee in its sole discretion. 2.37 “Performance Period” means the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate. 2.38 “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a government or any branch, department, agency, political subdivision or official thereof. 2.39 “Plan” means this loanDepot, Inc. 2021 Omnibus Incentive Plan, as amended from time to time. 2.40 “Proceeding” has the meaning set forth in Section 15.8. 2.41 “Reference Stock Option” has the meaning set forth in Section 7.1. 2.42 “Registration Date” means the date on which the Company sells its Common Stock in a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities Act. 2.43 “Reorganization” has the meaning set forth in Section 4.2(b)(ii). 2.44 “Restricted Stock” means an Award of shares of Common Stock under the Plan that is subject to restrictions under Article VIII. 2.45 “Restriction Period” has the meaning set forth in Section 8.3(a) with respect to Restricted Stock. 2.46 “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provision. 2.47 “Section 409A of the Code” means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable Treasury Regulations and other official guidance thereunder. 2.48 “Securities Act” means the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. 2.49 “Stock Appreciation Right” shall mean the right pursuant to an Award granted under Article VII. 2.50 “Stock Option” or “Option” means any option to purchase shares of Common Stock granted to Eligible Individuals granted pursuant to Article VI. 2.51 “Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code. 2.52 “Substitute Award” shall mean an Award granted under the Plan in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, in any case, TABLE OF CONTENTS upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Stock Option or Stock Appreciation Right. 2.53 “Tandem Stock Appreciation Right” shall mean the right to surrender to the Company all (or a portion) of a Stock Option in exchange for an amount in cash and/or stock equal to the difference between (a) the Fair Market Value on the date such Stock Option (or such portion thereof) is surrendered, of the Common Stock covered by such Stock Option (or such portion thereof), and (b) the aggregate exercise price of such Stock Option (or such portion thereof). 2.54 “Ten Percent Stockholder” means a Person owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its Subsidiaries or its Parent. 2.55 “Termination” means a Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable. 2.56 “Termination of Consultancy” means: (a) that the Consultant is no longer acting as a consultant to the Company or an Affiliate; or (b) when an entity which is retaining a Participant as a Consultant ceases to be an Affiliate unless the Participant otherwise is, or thereupon becomes, a Consultant to the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that a Consultant becomes an Eligible Employee or a Non-Employee Director upon the termination of such Consultant’s consultancy, unless otherwise determined by the Committee, in its sole discretion, no Termination of Consultancy shall be deemed to occur until such time as such Consultant is no longer a Consultant, an Eligible Employee or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Consultancy in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Consultancy thereafter, provided that any such change to the definition of the term “Termination of Consultancy” does not subject the applicable Award to Section 409A of the Code. 2.57 “Termination of Directorship” means that the Non-Employee Director has ceased to be a director of the Company; except that if a Non-Employee Director becomes an Eligible Employee or a Consultant upon the termination of such Non-Employee Director’s directorship, such Non-Employee Director’s ceasing to be a director of the Company shall not be treated as a Termination of Directorship unless and until the Participant has a Termination of Employment or Termination of Consultancy, as the case may be. 2.58 “Termination of Employment” means: (a) a termination of employment (for reasons other than a military or personal leave of absence granted by the Company) of a Participant from the Company and its Affiliates; or (b) when an entity which is employing a Participant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that an Eligible Employee becomes a Consultant or a Non-Employee Director upon the termination of such Eligible Employee’s employment, unless otherwise determined by the Committee, in its sole discretion, no Termination of Employment shall be deemed to occur until such time as such Eligible Employee is no longer an Eligible Employee, a Consultant or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise TABLE OF CONTENTS define Termination of Employment in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Employment thereafter, provided that any such change to the definition of the term “Termination of Employment” does not subject the applicable Award to Section 409A of the Code. 2.59 “Transfer” means: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in any entity), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance of equity in any entity) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law). “Transferred” and “Transferable” shall have a correlative meaning. ARTICLE III
ADMINISTRATION 3.1 The Committee. The Plan shall be administered and interpreted by the Committee. To the extent required by applicable law, rule or regulation, it is intended that each member of the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, and (b) an “independent director” under the rules of any securities exchange or automated quotation system on which shares of Common Stock are listed, quoted or traded. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify. 3.2 Grants of Awards. The Committee shall have full authority to grant, pursuant to the terms of the Plan, to Eligible Individuals: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock Awards, (iv) Performance Awards; (v) Other Stock-Based Awards; (vi) Other Cash-Based Awards; and (v) LTIP Units. In particular, the Committee shall have the authority: (a)
| to select the Eligible Individuals to whom Awards may from time to time be granted hereunder; |
(b)
| to determine whether and to what extent Awards, or any combination thereof, are to be granted hereunder to one or more Eligible Individuals; |
(c)
| to determine the number of shares of Common Stock to be covered by each Award granted hereunder; |
(d)
| to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture restrictions or waiver thereof, regarding any Award and the shares of Common Stock relating thereto, based on such factors, if any, as the Committee shall determine, in its sole discretion); |
(e)
| to determine the amount of cash to be covered by each Award granted hereunder; |
(f)
| to determine whether, to what extent and under what circumstances grants of Options and other Awards under the Plan are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of the Plan; |
(g)
| to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock and/or Restricted Stock under Section 6.4(d); |
(h)
| to determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option; |
TABLE OF CONTENTS (i)
| to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of shares acquired pursuant to the exercise of an Award for a period of time as determined by the Committee, in its sole discretion, following the date of the acquisition of such Award; |
(j)
| to modify, extend or renew an Award, subject to Article XIII and Section 6.4(l), provided, however, that such action does not subject the Award to Section 409A of the Code without the consent of the Participant; and |
(k)
| solely to the extent permitted by applicable law, to determine whether, to what extent and under what circumstances to provide loans (which may be on a recourse basis and shall bear interest at the rate the Committee shall provide) to Participants in order to exercise Options under the Plan. |
3.3 Guidelines. Subject to Article XIII hereof, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for Persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. Notwithstanding the foregoing, no action of the Committee under this Section 3.3 shall impair the rights of any Participant without the Participant’s consent. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule 16b-3, and the Plan shall be limited, construed and interpreted in a manner so as to comply therewith. 3.4 Decisions Final. Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors and assigns. 3.5 Procedures. If the Committee is appointed, the Board shall designate one of the members of the Committee as chairman and the Committee shall hold meetings, subject to the By-Laws of the Company, at such times and places as it shall deem advisable, including, without limitation, by telephone conference or by written consent to the extent permitted by applicable law. A majority of the Committee members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all of the Committee members in accordance with the By-Laws of the Company, shall be fully effective as if it had been made by a vote at a meeting duly called and held. The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. 3.6 Designation of Consultants/Liability. (a)
| The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and (to the extent permitted by applicable law |
TABLE OF CONTENTS and applicable exchange rules) may grant authority to officers to grant Awards and/or execute agreements or other documents on behalf of the Committee. In the event of any designation of authority hereunder, subject to applicable law, applicable stock exchange rules and any limitations imposed by the Committee in connection with such designation, such designee or designees shall have the power and authority to take such actions, exercise such powers and make such determinations that are otherwise specifically designated to the Committee hereunder. (b)
| The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant or agent shall be paid by the Company. The Committee, its members and any Person designated pursuant to sub-section (a) above shall not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, no officer of the Company or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it. |
3.7 Indemnification. To the maximum extent permitted by applicable law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance directly insuring such Person, each officer or employee of the Company or any Affiliate and member or former member of the Committee or the Board shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Committee) or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such officer’s, employee’s, member’s or former member’s own fraud or bad faith. Such indemnification shall be in addition to any right of indemnification the employees, officers, directors or members or former officers, directors or members may have under applicable law or under the Certificate of Incorporation or By-Laws of the Company or any Affiliate. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to such individual under the Plan. ARTICLE IV
SHARE LIMITATION 4.1 Shares. (a)
| The aggregate number of shares of Common Stock with respect to which Awards may be granted under the Plan shall initially be equal to 27,147,88043,597,82016,250,00027,147,880any increase or decreaseadjustment pursuant to Section 4.2), which amount shall be increased on the first day of each fiscal year during the term of the Plan commencing with the 20232022 fiscal year by (i) 2% of the total number of shares of Common Stock outstanding on the last day of the immediately preceding fiscal year, or (ii) a lesser amount determined by the Board. The shares of Common Stock with respect to which awards may be granted under the Plan may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company or both. The maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under the Plan shall be 27,147,88027,147,88043,597,82016,250,000 |
TABLE OF CONTENTS shares. With respect to Stock Appreciation Rights and Options settled in Common Stock, upon settlement, only the number of shares of Common Stock delivered to a Participant shall count against the aggregate and individual share limitations set forth under Sections 4.1(b) and 4.1(b). If any Option, Stock Appreciation Right or Other Stock-Based Awards granted under the Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any unexercised Award shall again be available for the purpose of Awards under the Plan. If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock awarded under the Plan to a Participant are forfeited for any reason, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock shall again be available for purposes of Awards under the Plan. If any shares of Common Stock are withheld to satisfy tax withholding obligations on an Award issued under the Plan, the number of shares of Common Stock withheld shall again be available for purposes of Awards under the Plan. If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is granted in tandem with an Option, such grant shall only apply once against the maximum number of shares of Common Stock which may be issued under the Plan. Any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitations. (b)
| The aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted under the Plan to any individual Non-Employee Director in any fiscal year of the Company (excluding any stock dividends payable in respect of outstanding Awards), when combined with other compensation received for such year in connection with service as a director, shall not exceed $600,000 increased to $1,000,000 in the fiscal year of his or her initial service as a Non-Employee Director. |
(c)
| In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Committee may grant Substitute Awards. Substitute awards may be granted on such terms as the Committee deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards shall not reduce the shares of Common Stock authorized for grant under the Plan, except as may be required by reason of Section 422 of the Code. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Common Stock authorized for grant under the Plan; provided that Awards using such available shares of Common Stock shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Subsidiaries immediately prior to such acquisition or combination. |
4.2 Changes. (a)
| The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board, the Committee or the stockholders of the Company to make or authorize |
TABLE OF CONTENTS (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate act or proceeding.
(i)
| any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate act or proceeding. |
(b)
| Subject to the provisions of Section 12.1: |
(i)
| If the Company at any time subdivides (by any split, recapitalization or otherwise) the outstanding Common Stock into a greater number of shares of Common Stock, or combines (by reverse split, combination or otherwise) its outstanding Common Stock into a lesser number of shares of Common Stock, then the respective exercise prices for outstanding Awards that provide for a Participant elected exercise and the number of shares of Common Stock covered by outstanding Awards shall be appropriately adjusted by the Committee (as the Committee determines in its sole discretion) to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan. |
(ii)
| Excepting transactions covered by Section 4.2(b)(i), if the Company effects any merger, consolidation, statutory exchange, spin-off, reorganization, sale or transfer of all or substantially all the Company’s assets or business, or other corporate transaction or event in such a manner that the Company’s outstanding shares of Common Stock are converted into the right to receive (or the holders of Common Stock are entitled to receive in exchange therefor), either immediately or upon liquidation of the Company, securities or other property of the Company or other entity (each, a “Reorganization”), then, subject to the provisions of Section 12.1, (A) the aggregate number or kind of securities that thereafter may be issued under the Plan, (B) the number or kind of securities or other property (including cash) to be issued pursuant to Awards granted under the Plan (including as a result of the assumption of the Plan and the obligations hereunder by a successor entity, as applicable), or (C) the purchase price thereof, shall be appropriately adjusted by the Committee (as the Committee determines in its sole discretion) to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan. |
(iii)
| If there shall occur any change in the capital structure of the Company other than those covered by Section 4.2(b)(i) or 4.2(b)(ii), including by reason of any extraordinary dividend (whether cash or equity), any conversion, any adjustment, any issuance of any class of securities convertible or exercisable into, or exercisable for, any class of equity securities of the Company, then the Committee shall appropriately adjust any Award and/or make such other adjustments to the Plan to prevent dilution or enlargement of the rights granted to, or available for, Participants under the Plan, as the Committee determines in its sole discretion. |
(iv)
| Any such adjustment determined by the Committee pursuant to this Section 4.2(b) shall be final, binding and conclusive on the Company and all Participants and their respective heirs, executors, administrators, successors and permitted assigns. Any adjustment to, or assumption or substitution of, an Award under this Section 4.2(b) shall be intended to comply with the requirements of Section 409A of the Code and Treasury Regulation §1.424-1 (and any amendments thereto), to the extent applicable. Except as expressly provided in this Section 4.2 or in the applicable Award Agreement, a Participant shall have no additional rights under the Plan by reason of any transaction or event described in this Section 4.2. |
TABLE OF CONTENTS Regulation §1.424-1 (and any amendments thereto), to the extent applicable. Except as expressly provided in this Section 4.2 or in the applicable Award Agreement, a Participant shall have no additional rights under the Plan by reason of any transaction or event described in this Section 4.2.
(v)
| Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a) or this Section 4.2(b) shall be aggregated until, and eliminated at, the time of exercise or payment by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half, provided, that, any shares of Common Stock underlying Stock Options or Stock Appreciation Rights shall be rounded down. No cash settlements shall be required with respect to fractional shares eliminated by rounding. Notice of any adjustment shall be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan. |
4.3 Minimum Purchase Price. Notwithstanding any provision of the Plan to the contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan, such shares shall not be issued for a consideration that is less than as permitted under applicable law. ARTICLE V
ELIGIBILITY AND GRANTING OF AWARDS 5.1 General Eligibility. All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee in its sole discretion. 5.2 Incentive Stock Options. Notwithstanding the foregoing, only Eligible Employees of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock Options under the Plan. Eligibility for the grant of an Incentive Stock Option and actual participation in the Plan shall be determined by the Committee in its sole discretion. 5.3 General Requirement. The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee, Consultant or Non-Employee Director, respectively. 5.4 Award Agreement. Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award as determined by the Committee in its sole discretion (consistent with the requirements of the Plan and any applicable Program). Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code. 5.5 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule. 5.6 Foreign Holders. Notwithstanding any provision of the Plan or applicable Program to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its TABLE OF CONTENTS
Subsidiaries operate or have Eligible Employees, Non-Employee Directors or Consultants, or in order to comply with the requirements of any foreign securities exchange or other applicable law, the Committee, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by the Plan; (b) determine which Eligible Individuals outside the United States are eligible to TABLE OF CONTENTS participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable law (including, without limitation, applicable foreign laws or listing requirements of any foreign securities exchange); (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section 4.1; and (e) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities exchange. ARTICLE VI
STOCK OPTIONS 6.1 Options. Stock Options may be granted alone or in addition to other Awards granted under the Plan. Each Stock Option granted under the Plan shall be of one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option. 6.2 Grants. The Committee shall have the authority to grant to any Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options. The Committee shall have the authority to grant any Consultant or Non-Employee Director one or more Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not so qualify shall constitute a separate Non-Qualified Stock Option. 6.3 Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under such Section 422. 6.4 Terms of Options. Options granted under the Plan shall be subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: (a)
| Exercise Price. The exercise price per share of Common Stock subject to a Stock Option shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Stock Option shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the time of grant. |
(b)
| Stock Option Term. The term of each Stock Option shall be fixed by the Committee, provided that no Stock Option shall be exercisable more than 10 years after the date the Option is granted; and provided further that the term of an Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed five years. |
(c)
| Exercisability. Unless otherwise provided by the Committee in accordance with the provisions of this Section 6.4, Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any Stock Option is exercisable subject to certain limitations (including, without limitation, that such Stock Option is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the |
TABLE OF CONTENTS and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any Stock Option is exercisable subject to certain limitations (including, without limitation, that such Stock Option is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after the time of grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such Stock Option may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion.
(d)
| Method of Exercise. Subject to whatever installment exercise and waiting period provisions apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Option term, by giving written notice of exercise to the Company specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) solely to the extent permitted by applicable law, if the Common Stock is traded on a national securities exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the purchase price; or (iii) on such other terms and conditions as may be acceptable to the Committee (including, without limitation, having the Company withhold shares of Common Stock issuable upon exercise of the Stock Option, or by payment in full or in part in the form of Common Stock owned by the Participant, based on the Fair Market Value of the Common Stock on the payment date as determined by the Committee). No shares of Common Stock shall be issued until payment therefor, as provided herein, has been made or provided for. |
(e)
| Non-Transferability of Options. No Stock Option shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding the foregoing, the Committee may determine, in its sole discretion, at the time of grant or thereafter that a Non-Qualified Stock Option that is otherwise not Transferable pursuant to this Section is Transferable to a Family Member in whole or in part and in such circumstances, and under such conditions, as specified by the Committee. A Non-Qualified Stock Option that is Transferred to a Family Member pursuant to the preceding sentence (i) may not be subsequently Transferred other than by will or by the laws of descent and distribution and (ii) remains subject to the terms of the Plan and the applicable Award Agreement. Any shares of Common Stock acquired upon the exercise of a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified Stock Option or a permissible transferee pursuant to a Transfer after the exercise of the Non-Qualified Stock Option shall be subject to the terms of the Plan and the applicable Award Agreement. |
(f)
| Termination by Death or Disability. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant (or in the case of the Participant’s death, by the legal representative of the Participant’s estate) at any time within a period of one (1) year from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that, in the event of a Participant’s Termination by reason of Disability, if the Participant dies within such |
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exercise period, all unexercised Stock Options held by such Participant shall thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of one (1) year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options. |
TABLE OF CONTENTS (g)
| Involuntary Termination Without Cause. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by involuntary termination by the Company without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of ninety (90) days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options. |
(h)
| Voluntary Resignation. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is voluntary (other than a voluntary termination described in Section 6.4(i)(y) hereof), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of thirty (30) days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options. |
(i)
| Termination for Cause. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination (x) is for Cause or (y) is a voluntary Termination (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Termination for Cause, all Stock Options, whether vested or not vested, that are held by such Participant shall thereupon terminate and expire as of the date of such Termination. |
(j)
| Unvested Stock Options. Unless otherwise determined by the Committee at the time of grant, or if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participant’s Termination for any reason shall terminate and expire as of the date of such Termination. |
(k)
| Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under the Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. In addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary or any Parent at all times from the time an Incentive Stock Option is granted until three months prior to the date of exercise thereof (or such other period as required by applicable law), such Stock Option shall be treated as a Non-Qualified Stock Option. Should any provision of the Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend the Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company. |
(l)
| Form, Modification, Extension and Renewal of Stock Options. Subject to the terms and conditions and within the limitations of the Plan, Stock Options shall be evidenced by such form of agreement or grant as is approved by the Committee, and the Committee may (i) modify, extend or renew outstanding Stock Options granted under the Plan (provided that the rights of a Participant are not reduced without such Participant’s consent and providedfurther that such action does not subject the Stock Options to Section 409A of the Code without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor |
TABLE OF CONTENTS extend or renew outstanding Stock Options granted under the Plan (provided that the rights of a Participant are not reduced without such Participant’s consent and providedfurther that such action does not subject the Stock Options (to Section 409A of the Code without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding the foregoing, an outstanding Option may not be modified to reduce the exercise price thereof nor may a new Option at a lower price be substituted for a surrendered Option (other than adjustments or substitutions in accordance with Section 4.2), unless such action is approved by the stockholders of the Company.
(m)
| Deferred Delivery of Common Stock. The Committee may in its discretion permit Participants to defer delivery of Common Stock acquired pursuant to a Participant’s exercise of an Option in accordance with the terms and conditions established by the Committee in the applicable Award Agreement, which shall be intended to comply with the requirements of Section 409A of the Code. |
(n)
| Early Exercise. The Committee may provide that a Stock Option include a provision whereby the Participant may elect at any time before the Participant’s Termination to exercise the Stock Option as to any part or all of the shares of Common Stock subject to the Stock Option prior to the full vesting of the Stock Option and such shares shall be subject to the provisions of Article VIII and be treated as Restricted Stock. Unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate. |
(o)
| Other Terms and Conditions. The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Non-Qualified Stock Option on a cashless basis on the last day of the term of such Option if the Participant has failed to exercise the Non-Qualified Stock Option as of such date, with respect to which the Fair Market Value of the shares of Common Stock underlying the Non-Qualified Stock Option exceeds the exercise price of such Non-Qualified Stock Option on the date of expiration of such Option, subject to Section 15.4. Stock Options may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate. |
ARTICLE VII
STOCK APPRECIATION RIGHTS 7.1 Tandem Stock Appreciation Rights. Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option (a “Reference Stock Option”) granted under the Plan (“Tandem Stock Appreciation Rights”). In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of the grant of such Reference Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of the grant of such Reference Stock Option. 7.2 Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, and the following: (a)
| Exercise Price. The exercise price per share of Common Stock subject to a Tandem Stock Appreciation Right shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant. |
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(b)
| Term. A Tandem Stock Appreciation Right or applicable portion thereof granted with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the Reference Stock Option, except that, unless otherwise determined by the Committee, in its sole discretion, at the time of grant, a Tandem Stock Appreciation Right |
TABLE OF CONTENTS granted with respect to less than the full number of shares covered by the Reference Stock Option shall not be reduced until, and then only to the extent that the exercise or termination of the Reference Stock Option causes, the number of shares covered by the Tandem Stock Appreciation Right to exceed the number of shares remaining available and unexercised under the Reference Stock Option. |
(c)
| Exercisability. Tandem Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Reference Stock Options to which they relate shall be exercisable in accordance with the provisions of Article VI, and shall be subject to the provisions of Section 6.4(c). |
(d)
| Method of Exercise. A Tandem Stock Appreciation Right may be exercised by the Participant by surrendering the applicable portion of the Reference Stock Option. Upon such exercise and surrender, the Participant shall be entitled to receive an amount determined in the manner prescribed in this Section 7.2. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent that the related Tandem Stock Appreciation Rights have been exercised. |
(e)
| Payment. Upon the exercise of a Tandem Stock Appreciation Right, a Participant shall be entitled to receive up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee in its sole discretion) equal in value to the excess of the Fair Market Value of one share of Common Stock over the Option exercise price per share specified in the Reference Stock Option agreement multiplied by the number of shares of Common Stock in respect of which the Tandem Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment. |
(f)
| Deemed Exercise of Reference Stock Option. Upon the exercise of a Tandem Stock Appreciation Right, the Reference Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Article IV of the Plan on the number of shares of Common Stock to be issued under the Plan. |
(g)
| Non-Transferability. Tandem Stock Appreciation Rights shall be Transferable only when and to the extent that the underlying Stock Option would be Transferable under Section 6.4(e) of the Plan. |
7.3 Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights may also be granted without reference to any Stock Options granted under the Plan. 7.4 Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, and the following: (a)
| Exercise Price. The exercise price per share of Common Stock subject to a Non-Tandem Stock Appreciation Right shall be determined by the Committee at the time of grant, provided that the per share exercise price of a Non-Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant. |
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(b)
| Term. The term of each Non-Tandem Stock Appreciation Right shall be fixed by the Committee, but shall not be greater than 10 years after the date the right is granted. |
(c)
| Exercisability. Unless otherwise provided by the Committee in accordance with the provisions of this Section 7.4, Non-Tandem Stock Appreciation Rights granted under the Plan shall be |
TABLE OF CONTENTS exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at the time of grant. If the Committee provides, in its discretion, that any such right is exercisable subject to certain limitations (including, without limitation, that it is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such right may be exercised), based on such factors, if any, as the Committee shall determine, in its sole discretion. |
(d)
| Method of Exercise. Subject to whatever installment exercise and waiting period provisions apply under Section 7.4(c), Non-Tandem Stock Appreciation Rights may be exercised in whole or in part at any time in accordance with the applicable Award Agreement, by giving written notice of exercise to the Company specifying the number of Non-Tandem Stock Appreciation Rights to be exercised. |
(e)
| Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee in its sole discretion) equal in value to the excess of the Fair Market Value of one share of Common Stock on the date that the right is exercised over the Fair Market Value of one share of Common Stock on the date that the right was awarded to the Participant. |
(f)
| Termination. Unless otherwise determined by the Committee at grant or, if no rights of the Participant are reduced, thereafter, subject to the provisions of the applicable Award Agreement and the Plan, upon a Participant’s Termination for any reason, Non-Tandem Stock Appreciation Rights will remain exercisable following a Participant’s Termination on the same basis as Stock Options would be exercisable following a Participant’s Termination in accordance with the provisions of Sections 6.4(f) through 6.4(j). |
(g)
| Non-Transferability. No Non-Tandem Stock Appreciation Rights shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all such rights shall be exercisable, during the Participant’s lifetime, only by the Participant. |
7.5 Limited Stock Appreciation Rights. The Committee may, in its sole discretion, grant Tandem Stock Appreciation Rights and Non-Tandem Stock Appreciation Rights either as a general Stock Appreciation Right or as a Limited Stock Appreciation Right. A “Limited Stock Appreciation Right” is a Stock Appreciation Right that may be exercised only upon the occurrence of a Change in Control or such other event as the Committee may, in its sole discretion, designate at the time of grant or thereafter. Upon the exercise of Limited Stock Appreciation Rights, except as otherwise provided in an Award Agreement, the Participant shall receive in cash and/or Common Stock, as determined by the Committee, an amount equal to the amount (i) set forth in Section 7.2(e) with respect to Tandem Stock Appreciation Rights, or (ii) set forth in Section 7.4(e) with respect to Non-Tandem Stock Appreciation Rights. 7.6 Other Terms and Conditions. The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on the last day of TABLE OF CONTENTS
the term of such Stock Appreciation Right if the Participant has failed to exercise the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the shares of Common Stock TABLE OF CONTENTS underlying the Stock Appreciation Right exceeds the exercise price of such Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to Section 15.4. Stock Appreciation Rights may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate. ARTICLE VIII
RESTRICTED STOCK 8.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Eligible Individuals, to whom, and the time or times at which, grants of Restricted Stock shall be made, the number of shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2), the time or times within which such Awards may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards. The Committee may condition the grant or vesting of Restricted Stock upon the attainment of specified performance targets (including, the Performance Goals) or such other factor as the Committee may determine in its sole discretion. 8.2 Awards and Certificates. Eligible Individuals selected to receive Restricted Stock shall not have any right with respect to such Award, unless and until such Participant has delivered a fully executed copy of the agreement evidencing the Award to the Company, to the extent required by the Committee, and has otherwise complied with the applicable terms and conditions of such Award. Further, such Award shall be subject to the following conditions: (a)
| Purchase Price. The purchase price of Restricted Stock shall be fixed by the Committee. Subject to Section 4.2, the purchase price for shares of Restricted Stock may be zero to the extent permitted by applicable law, and, to the extent not so permitted, such purchase price may not be less than par value. |
(b)
| Acceptance. Awards of Restricted Stock must be accepted within a period of 60 days (or such shorter period as the Committee may specify at grant) after the grant date, by executing a Restricted Stock agreement and by paying whatever price (if any) the Committee has designated thereunder. |
(c)
| Legend. Each Participant receiving Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form: |
“The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance or charge of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the loanDepot, Inc. (the “Company”) 2021 Omnibus Incentive Plan (the “Plan”) and an Agreement entered into between the registered owner and the Company dated _____________.. Copies of such Plan and Agreement are on file at the principal office of the Company.” TABLE OF CONTENTS
(d)
| Custody. If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of |
TABLE OF CONTENTS Restricted Stock, the Participant shall have delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Restricted Stock Award in the event that such Award is forfeited in whole or part. |
