A struggling, shrinking loanDepot hands raises to executives

Retail lender hands new management contracts – with raises – to Jeff Walsh and Jeff DerGurahian

Due to heavy financial losses and shrinking production, loanDepot has reduced its funding capacity by $1 billion, laid off thousands of workers and exited the wholesale lending business. But that hasn’t stopped the nonbank lender from issuing generous pay raises to its top executives.

In a filing submitted to the Securities and Exchange Commission last week, loanDepot revealed that it agreed to pay chief revenue officer and senior executive vice president Jeff Walsh a base salary of $750,000, above his 2021 base pay of $715,385 in 2021. He is also eligible for an annual bonus of 200% of base salary.

The chief capital markets officer at loanDepot, Jeff DerGurahian, is also eligible for an annual bonus of 150%, according to SEC filings. His base salary rose to $600,000 from $568,846 in 2021.

The nonbank lender also provided retention bonuses of $1 million if Walsh and DerGurahian remain with the company through the end of 2022, and $1.5 million retention bonuses if they are still with the company through Dec. 31, 2023.

Both executives have made millions since loanDepot, the nation’s seventh-largest lender, went public during the mortgage boom. Walsh received a $1.5 million discretionary bonus in 2021 and earned $7.12 million in total compensation last year. In 2020, he notched $18.45 million in total compensation. DerGurahian received a $900,000 bonus in 2021 and $5.86 million in total compensation in 2021. In 2020, he received $16.25 million in total compensation.

Walsh and DerGurahian have been selling shares in the company in recent weeks, while company chairman and founder Anthony Hsieh has been acquiring stock.

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The company’s 2022 proxy statement also details the company’s employment agreement with Hsieh, who will be paid an annual base salary of $850,000 for 2022 and $350,000 for 2023 and subsequent years. He also also eligible to receive an annual bonus targeted at 250% of his base salary for 2022 with a “maximum payout of 300% of target for calendar year 2022, subject to the determination of the Compensation Committee.”

LoanDepot did not immediately respond to a request for comment. In an email sent to employees on Tuesday, CEO Frank Martell said loanDepot was “temporarily suspending” its 401K match effective October. The company is also consolidating and closing offices, including in its back yard of Orange County, California but also in Arizona, Miami and Nashville.

The compensation disclosures come as the nonbank lender engages in extreme cost-shedding exercises and sheds thousands of jobs, more than 4,000 since the close of last year.

In the last two months, loanDepot has reduced its warehouse lines of credit by a total of $1 billion, SEC filings show. The company said the decision was based on “current and projected mortgage loan originations.”

In August, after reporting a $223 million financial loss in the second quarter, the lender made the decision to close the wholesale channel. In an earnings call, CEO Frank Martell told analysts the company would “not chase market share.”

Earlier this month, loanDepot appointed Joseph Grassi as chief risk officer. He spent 20 years as a senior attorney at Fannie Mae, plus stints at Freddie Mac, Celebrity Home Loans, the United States Department of Housing and Urban Development, Guaranteed Rate and Prospect Mortgage.

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