Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

Payment of Filing Fee (Check all boxes that apply):

 

Dear Fellow Shareholders,

2022 was a year of dramatic volatility and extreme challenge for the mortgage and broader housing markets. Virtually no part of the housing ecosystem was left unaffected as participants in the market grappled with substantial and rapid increases in the cost of home loans, the cumulative impact of significant home price appreciation driven by structural imbalances in supply and demand, and the depressive impact of high inflation on available household incomes.

The impact of this once-in-a-generation downshift in market activity was magnified by the fact that the mortgage industry had greatly expanded its operational capacity to accommodate the historically high levels of demand in 2020 and 2021, fueled by ultra-low interest rates. Over the past fifteen months, firms across our industry have had to face into the need to move decisively to shrink their workforces and adjust their business models to address the evolving market conditions.

To address these challenges and market dislocations, our management team and Board crafted and launched our Vision 2025 plan in July 2022, through which to drive long-term shareholder value in our evolving market. Vision 2025 enables us to address the immediate challenges on hand and capitalize on longer-term opportunities resulting from shifts in homebuyer demographics, technology, and process optimization.

Vision 2025 is comprised of the following four strategic pillars:

We have made significant progress against each of these pillars in 2022. While there is a long way to go, I expect our progress to accelerate in 2023, positioning us to emerge from this current market cycle as a stronger and more resilient company.

As mentioned above, a significant component of Vision 2025 is reorienting our mortgage origination footprint around purpose-driven lending to the increasingly diverse communities comprising of first-time homebuyers. We have already garnered recognition in this area; earlier this year The Wall Street Journal named us “Best Mortgage Lender for First-Time Buyers.” Over time, we believe a laser focus on serving first-time buyers will enable loanDepot to build relationships with customers for life, becoming the “partner of choice” for future lending or other home-related transactions.

Another step that helped us increase access and opportunity in underserved communities last year was the creation of our 10^th joint venture partnership with National Home Corp, a Georgia-based homebuilder specializing in affordable single-family homes. Our joint venture channel is a unique and differentiated business that generates exceptionally high-quality customers, and we will continue to invest in growing it. We believe all these efforts will contribute to expanding our revenues going forward.

During 2022, we centralized our client-facing originations channels – specifically in-market retail, consumer direct and builder joint ventures – as well as our operations teams to sharpen our focus and accelerate the implementation of Vision 2025. We expect to see the benefits from continued optimization of our organization as we build operating leverage and realize the advantages of our scale.

In addition to streamlining and simplifying our organizational structure, we also invested in profitable revenue-generating opportunities that fit the strategic imperatives outlined in Vision 2025. Examples include the launch of our HELOC solution in late 2022. Synergistically, our in-house servicing portfolio consists of many borrowers with low interest rates, which creates opportunities for loanDepot to provide HELOC solutions to customers with whom we already have a relationship.

We also made significant investments in our quality, delivery, compliance, and risk management capabilities. In this regard, we recently completed the process of bringing all our mortgage loan servicing portfolios onto our in-house platform, which is already driving higher levels of customer satisfaction at lower costs. We also announced our investment in a new loan origination platform that will deliver operational efficiency and state-of-the-art technology and workflow processes to drive both customer and originator satisfaction. Finally, we added new leadership to help optimize our organizational structure and increase the effectiveness of our quality and compliance initiatives.

Even as we advanced our efforts to build new revenue vectors and invest in our technology platforms, the operating environment of 2022 required us to aggressively reset our operations and cost structure. When we announced Vision 2025, we established a goal of reducing our non-volume related expenses by an annualized $375 to $400 million. The size of our targeted reductions and the focus on speed of implementation reflect just how unique and sizable this market downturn has been. Our team overachieved against our expense reduction goals by delivering annualized savings of just over $500 million that also included savings realized as a result of our exit from the wholesale channel.

We believe that the mortgage market will remain challenged in 2023. We will continue to adapt by reducing our expenses aggressively as we implement a low-cost, sustainable operating model and target our return to run-rate profitability. Importantly, we will also continue to focus on profitable growth vectors. By maintaining a sizable cash balance, we believe we are positioned to continue investing in our people, technology, platforms and processes while eventually benefiting from industry consolidation. Over the medium to longer term, our investments are expected to create operating efficiencies and improve business automation, which will enable us to maintain our position as a leader in the industry.

I want to conclude by thanking Team loanDepot for their support, resilience, and commitment to our long-term success. While 2022 was a very challenging time, this period was also an important catalyst for change and progress for the company. As we move further into 2023, we have a clear and focused plan that we believe will help loanDepot navigate through the market downturn and emerge as a stronger company for our shareholders, customers, employees and communities.

Sincerely,

 

Frank Martell

We encourage you to read our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and the sections captioned “Risk Factors” and “Special Note Regarding Forward-Looking Statements” for a description of the substantial risks and uncertainties related to the forward-looking statements included herein.

loanDepot, Inc.

6561 Irvine Center Drive

Irvine, California 92618

Meeting Date: June 7, 2023

Time: 9:00 a.m., Pacific Time

Location: www.virtualshareholdermeeting.com/LDI2023 / access begins at 8:45 a.m., Pacific Time

The board of directors has fixed the close of business on April 14, 2023 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any postponement or adjournment thereof.

We will furnish our proxy materials over the Internet as permitted by the rules of the U.S. Securities and Exchange Commission. As a result, we are sending to certain of our stockholders a Notice of Internet Availability of Proxy Materials rather than a full paper set of the proxy materials. Such notice contains instructions on how to access our proxy materials on the Internet, as well as instructions on how stockholders may obtain a paper copy of the proxy materials. This process will reduce the costs associated with printing and distributing our proxy materials. We expect to mail this notice and our proxy materials on or about April 24, 2023.

Prior to the meeting, questions can be submitted at www.proxyvote.com. During the meeting questions can only be submitted in the question box provided at www.virtualshareholdermeeting.com/LDI2023.

Your vote is important. We encourage you to vote by proxy in advance of the meeting, whether or not you plan to attend the meeting. The Notice of Internet Availability of Proxy Materials includes instructions on how to vote, including by Internet and telephone. If you hold your shares through a brokerage firm, bank, broker-dealer or other similar organization, please follow their instructions.

By Order of the Board of Directors,

 

Gregory Smallwood

Chief Legal Officer and Corporate Secretary

Irvine, CA

April 24, 2023

The Proxy Statement and the Company’s Annual Report are available at www.proxyvote.com.

Although we refer to our website in this proxy statement, the contents of our website are not included or incorporated by reference into this proxy statement. All references to our website in this proxy statement are intended to be inactive textual references only.

loanDepot, Inc. is providing this proxy statement to you in connection with the solicitation of proxies by the board of directors (the “Board”) for our 2023 Annual Meeting of Stockholders to be held on Wednesday, June 7, 2023, at 9:00 a.m. (Pacific Time) at www.virtualshareholdermeeting.com/LDI2023, and any adjournment or postponement of that meeting (the “Annual Meeting”). As a stockholder, you are invited to attend the Annual Meeting and are entitled and encouraged to vote on the proposals described in this proxy statement. On or about April 24, 2023, we mailed our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and our 2022 Annual Report on Form 10-K. References to “loanDepot, Inc.” “loanDepot.com,” “Company,” “company,” “we,” “us,” or “our” refer to loanDepot, Inc.

The following is a summary of proposals to be voted on at the Annual Meeting. This is only a summary and it may not contain all of the information that is important to you. For more complete information, please review this proxy statement as well as our 2022 Annual Report on Form 10-K.

There are four (4) proposals to be voted on at the Annual Meeting:

The Board has nominated three (3) Class II directors for election at the Annual Meeting to hold office until the 2026 annual meeting and until their successors are duly elected and qualified or until their earlier resignation, retirement, disqualification, death or removal. Information regarding the nominees can be found beginning on page 5. The Board recommends that you vote “FOR” each of the Class II director nominees.

The Audit Committee has appointed, and stockholders are being asked to ratify the appointment of, Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm for fiscal year 2023. Information regarding fees paid to and services rendered by EY can be found beginning on page 49. The Board recommends that you vote “FOR” Proposal 2.

We are asking stockholders to approve, on a non-binding, advisory basis, the compensation of our named executive officers. The Board and Compensation Committee are committed to executive compensation programs that align the interests of our executives with those of our stockholders. Information regarding our programs can be found beginning on page 25. The Board recommends that you vote “FOR” Proposal 3.

We are asking stockholders to approve the Second Amendment to the loanDepot, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”) to increase the number of LDI Class A Shares authorized for issuance under the 2021 Plan by 15,000,000 shares. Information regarding the amendment can be found beginning on page 53. The Board recommends that you vote “FOR” Proposal 4.

Our Board consists of nine directors, divided into three classes, each serving staggered, three-year terms as follows:

As a result, only one class of directors will be elected at each annual meeting of stockholders, with the other classes continuing for the remainder of their respective terms.

We are party to a stockholders agreement (as described below under “Related Party Transactions”) with the Hsieh Stockholders (as defined below) and the Parthenon Stockholders (as defined below) and whereby, among other things, the parties agreed to certain matters relating to the Company’s corporate governance (as amended and/or restated from time to time, the “Stockholders Agreement”). Pursuant to the Stockholders Agreement, both the Hsieh Stockholders and the Parthenon Stockholders initially have the right to nominate two directors to serve on the Board. The Hsieh Stockholders nominated Anthony Hsieh and John Lee to serve as Class III and Class I directors, respectively, and the Parthenon Stockholders nominated Brian Golson and Andrew Dodson to serve as Class III and Class II directors, respectively.

In addition, the Stockholders Agreement provides that Mr. Hsieh will serve as Chairman of the Board. For additional details, please see “Related Party Transactions.”

We are party to a settlement and cooperation agreement (as described below under “Related Party Transactions”) with the Hsieh Stockholders, pursuant to which, among other things, Steven Ozonian was appointed to our Board in April 2023 and is being nominated for re-election at the Annual Meeting. For additional details, please see “Related Party Transactions.”

Our Board consists of world-class directors with the diversity of skills, experience, ethnicity, and gender necessary to provide exceptional leadership for loanDepot. The selection criteria for our directors include:

The Board believes that a balance of the following skillsets and qualifications is key to ensure that decision making, risk oversight, innovation, and financial performance are aligned with our business strategy and contribute to the effective oversight of loanDepot.

Our Board selected the nominees based on their diverse set of backgrounds, skills, and experiences, which align with our business strategy and contribute to the effective oversight of loanDepot. We are pleased to report that 44% of our directors are diverse identifying as women or as members from traditionally under-represented communities.

The following table includes a summary of our directors’ experience, qualifications, attributes and skills.

The Board has nominated Andrew Dodson, Steven Ozonian and Pamela Patenaude for re-election as Class II directors at the Annual Meeting to hold office until the annual meeting of stockholders to be held in 2026 and until his or her successor is duly elected and qualified, or his or her earlier death, resignation, or removal. The persons named as proxy holders will vote to elect each of these nominees unless a stockholder indicates that his or her shares should be withheld with respect to one or more of such nominees.

Should any of the nominees become unable to serve for any reason prior to the Annual Meeting, subject to the terms of the Stockholders Agreement and the Cooperation Agreement, the Board may designate a substitute nominee, in which event the proxy holders will vote for the election of such substitute nominee, or may reduce the number of directors on the Board. See “Related Party Transactions” for additional information regarding the Stockholders Agreement and the Cooperation Agreement.

In determining that each director should be nominated for re-election, our board considered his or her service, business experience, prior directorships, qualifications, attributes and skills described in the biography set forth below.

The Board unanimously recommends that you vote FOR each of the director nominees (Andrew Dodson, Steven Ozonian and Pamela Patenaude) to be elected as loanDepot’s Class II directors.

Under the New York Stock Exchange’s (the “NYSE”) corporate governance standards, we are a “controlled company” since more than 50% of the voting power of our capital stock is held by the Hsieh Stockholders. As a controlled company, we are not required to comply with certain corporate governance requirements, including the following:

We currently rely on the controlled company exemptions and do not have a majority of independent directors or a nominating and corporate governance committee or a compensation committee comprised entirely of independent directors. These exemptions, however, do not modify the independence requirements for our audit committee, and we have complied with the rules of the NYSE relating to audit committee membership and independence.

As a result of our “controlled company” status, our Board is not required to have a majority of independent directors.

Under our Corporate Governance Guidelines, a director will be considered independent if they meet the independence standards of the NYSE corporate governance listing standards and, for purposes of serving on the audit and compensation committees, the heightened independence standards for audit committees and compensation committees under the Securities Exchange Act of 1934, as amended.

In determining independence, in addition to considering the bright-line tests specified in the NYSE listing rules, the Board reviews whether directors have any material relationship with loanDepot, either directly or as a partner, stockholder, or officer of an organization that has a relationship with loanDepot. In assessing the materiality of a director’s relationship to loanDepot, the Board considers all relevant facts and circumstances, including consideration of the issues from the director’s standpoint and from the perspective of the persons or organizations with which the director has an affiliation.

The Board has determined that each of John Dorman, Dawn Lepore, Steven Ozonian and Pamela Patenaude is an independent director. Michael Linton, who resigned from our Board effective as of April 20, 2022, was previously determined to be an independent director.

Pursuant to the terms of the Stockholders Agreement, Anthony Hsieh serves as our Chairman of the Board and the Board does not have a lead independent director. Frank Martell, the Company’s President and CEO, leads the Company under the direction of the Board.

A structured, conscientious approach to risk management is more important than ever for our Company. Our Board, both directly and through its committees, reviews our risk management program (the “Risk Management Program”), which is an enterprise-wide program designed to enable effective and efficient identification of, and management visibility into, critical enterprise risks and to facilitate the incorporation of risk considerations into decision making across the Company. The Risk Management Program is overseen by the Chief Risk Officer and is executed through a “three lines of defense” model that includes independent risk oversight and internal audit functions with active engagement of our businesses. In particular, the Risk Management Program:

The Risk Management Program enables a holistic view on our enterprise risks and is facilitated through targeted risk assessments, and incorporation of relevant risk perspectives from other internal areas including Internal Audit, Accounting, Information Technology, Cybersecurity, Human Resources, Regulatory, Fair Lending and Legal to name a few. Our decentralized risk model allows for input from all areas of loanDepot to provide input into day-to-day risk management activities and assist with the day-to-day monitoring, evaluating and reporting of each area’s respective risks. Management is then able to make informed decisions with a view on potential areas of risk exposure and to mitigate and report on important activities.

Throughout the year, the Board oversees its committees’ ongoing risk oversight activities, and the Audit Committee escalates issues relating to risk oversight to the full Board, in a continuous effort to keep the Board adequately informed of developments that could affect the Company’s risk profile or other aspects of our business. The Board also considers specific risk topics in connection with strategic planning and other matters.

The Company operates a complex and large IT infrastructure that is critical in maintaining our ongoing operations in addition to a significant R&D footprint including labs, build and test systems, and supporting infrastructure that all have varying levels of risk exposures. We have a Chief Information Security Officer (“CISO”) who oversees the back office security, inclusive of the corporate IT environment and security standards that are used as a framework for the management of security across the Company. Our CISO is also responsible for developing and administering our corporate security training and sponsoring our policy and standards. Our cybersecurity plan is reviewed annually and the Board, Audit Committee, and senior management oversee our cybersecurity program, receiving regular updates directly from our CISO, management, and the Company product security experts from various business and operational areas.

The Company has the following three standing committees: (1) Audit Committee; (2) Compensation Committee; and (3) Nominating and Corporate Governance Committee.

The current committee membership and the function of each of these standing committees are described below. Each of the standing committees operates under a written charter adopted by the Board. All of the committee charters are available on our Governance website at https://investors.loandepot.com/ governance/governance-documents. Each committee reviews and reassesses the adequacy of its charter annually, conducts annual evaluations of its performance with respect to its duties and responsibilities as laid out in the charter, and reports regularly to the Board with respect to the committee’s activities. Additionally, the Board and each of the committees have the authority to retain, terminate, and receive appropriate funding for outside advisors as the Board and/or each committee deems necessary.

Our Audit Committee aids our Board in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by approving the services performed by our independent registered public accounting firm and reviewing their reports regarding our accounting practices and systems of internal accounting controls. The Audit Committee also oversees the audit efforts of our independent registered public accounting firm and takes those actions as it deems necessary to satisfy itself that the independent registered public accounting firm is independent of management. The Audit Committee is composed entirely of independent directors.

The members of our Audit Committee are John Dorman (chair), Dawn Lepore, Steven Ozonian and Pamela Patenaude. The Board has determined that each of the Audit Committee members is independent within the meaning of the NYSE and SEC standards for independence of directors and audit committee members. Additionally, the Board has determined that Mr. Dorman, chair of the Audit Committee, is an audit committee financial expert.

Our Compensation Committee determines our general compensation policies and the compensation provided to our directors and officers. The Compensation Committee also reviews and determines bonuses for our officers and other employees. In addition, the Compensation Committee reviews and determines or recommends to our Board equity-based compensation for our directors, officers, employees and consultants and administers our 2021 Omnibus Equity Incentive Plan. Our Compensation Committee oversees our corporate compensation programs.

The members of our Compensation Committee are Dawn Lepore (chair), John Dorman and John Lee. The Company is relying on the NYSE controlled company exemption from having a compensation committee composed entirely of independent directors. The Board has determined that each of Dawn Lepore and John Dorman are independent within the meaning of the NYSE standards of independence for directors and compensation committee members. In addition, each of Dawn Lepore and John Dorman qualifies as a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act.

Our Nominating and Corporate Governance Committee is responsible for making recommendations to the Board regarding candidates for directorships and the size and composition of the Board. In addition, the Nominating and Corporate Governance Committee is responsible for overseeing our corporate governance guidelines and reporting and making recommendations to the Board concerning corporate governance matters.

The members of our Nominating and Corporate Governance Committee are Dawn Lepore (chair), John Dorman and John Lee. The Company is relying on the NYSE controlled company exemption from having a nominating and corporate governance committee consisting entirely of independent directors. The Board has determined that each of Dawn Lepore and John Dorman is independent within the meaning of applicable NYSE listing standards.

Our Board holds regularly scheduled meetings each year, in addition to special meetings scheduled as appropriate. During 2022, our Board held 8 meetings. In addition, the Audit Committee held 6 meetings, the Compensation Committee held 3 meetings, and the Nominating and Corporate Governance Committee held 1 meeting.

Each of our directors attended at least 75% of the total number of meetings of the Board and the total number of meetings held by all committees of the Board on which each such director served, during the period for which each such director served in 2022. All directors are also encouraged to attend our annual meetings of stockholders, and all eight (8) then-incumbent directors attended our Annual Meeting of Stockholders in 2022.

The Board conducts a self-evaluation annually to determine whether it, its committees and its individual members are functioning effectively and whether the Board possesses the appropriate expertise and diversity. Each committee of the Board also conducts a self-evaluation annually and reports the results to the Board. The Board monitors the mix of specific experience, qualifications, skills and diversity of its current directors in order to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure.

The Board annually reviews the appropriate skills and characteristics required of directors in the context of the current composition of the Board, our operating requirements, and the long-term interests of our stockholders. The Board believes that its members should possess a variety of skills, professional experience, and backgrounds 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 below to evaluate potential nominees, it has no stated minimum criteria for nominees.

Our Corporate Governance Guidelines contain the current Board membership criteria that apply to nominees recommended for a position on the Board.

Under those criteria, the Nominating and Corporate Governance Committee seeks nominees who:

As such, as a director’s service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties. Specifically, our Corporate Governance Guidelines provide that a director who is not currently an executive officer of another company, cannot serve on more than four public company boards, including loanDepot. Further, if the director is an executive at a public company, the number of public company directorships they may hold is limited to two. In addition, our Audit Committee members may not serve simultaneously on the audit committee of more than three public companies, including our Audit Committee.

In addition, the Nominating and Corporate Governance Committee considers a potential director’s ability to contribute to the diversity of background and experience represented on the Board, and it reviews its effectiveness in balancing these considerations when assessing the composition of the Board. Diversity is considered in a broad sense, including, among other attributes, skills and experience, perspectives, gender, race and ethnicity. We balance the importance of historical knowledge of the Company with our regard for fresh perspectives by considering director tenure on a case-by-case basis, rather than imposing mandatory term limits.

In each instance, the Nominating and Corporate Governance Committee considers the totality of the circumstances of each individual candidate. Identified candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee and may be considered at any point during the year. In addition, as described below, the Nominating and Corporate Governance Committee will consider properly submitted stockholder recommendations of candidates for the Board. The Nominating and Corporate Governance Committee will evaluate all candidates appropriately submitted, regardless of source of recommendation, using the same rigorous evaluation process and criteria. In evaluating such candidates, the Nominating and Corporate Governance Committee seeks to achieve a balance of knowledge, experience, and capability that will enable the Board to effectively oversee the Company’s business.

The policy of the Nominating and Corporate Governance Committee is to consider properly submitted stockholder recommendations of candidates for membership on the Board. In evaluating such recommendations, the Nominating and Corporate Governance Committee will seek to achieve a balance of knowledge, experience, and capabilities on the Board. Any stockholder recommendations submitted for consideration by the Nominating and Corporate Governance Committee should include verification of the person submitting the recommendation’s stockholder status, and the recommended candidate’s name and qualifications for Board membership, and should be addressed to: Corporate Secretary, loanDepot, 6561 Irvine Center Drive, Irvine, California, 92618. The Nominating and Corporate Governance Committee considers candidates recommended by our stockholders in the same manner as a nominee recommended by our Board members or management.

In addition, our Bylaws permit stockholders to nominate directors for consideration at an annual stockholder meeting. For a description of the process for nominating directors in accordance with our Bylaws, see “Frequently Asked Questions—Stockholder Proposals, Director Nominations, and Related Bylaws Provisions—How may I nominate individuals to serve as directors and what are the deadlines for director nominations?” on page 68.

Stockholders and other interested parties may communicate with the Board, including Chairman of the Board, or the independent directors as a group, by contacting: Corporate Secretary, 6561 Irvine Center Drive, Irvine, California, 92618. The Corporate Secretary reviews all correspondence, organizes the communications for review by the Board, and posts communications to the full Board or to individual directors, as appropriate. Our independent directors have requested that certain items that are unrelated to the Board’s duties, such as spam, junk mail, mass mailings, solicitations, resumes, and job inquiries, not be posted. Communications that are intended specifically for the Chairman, independent directors as a group, or the non-employee directors as a group, or any individual director, should be sent to the street address noted above, to the attention of the Corporate Secretary.

We maintain a code of business conduct and ethics for directors, officers, and employees, known as our Code of Ethics. We also have adopted Corporate Governance Guidelines, which, in conjunction with our Certificate of Incorporation, Bylaws, and respective charters of the Board committees, form the framework for our governance. All of these documents are available at https://investors.loandepot.com/ governance/governance-documents for review, downloading, and printing. On our governance website, we will post any amendments to the Code of Ethics or waivers of the Code of Ethics for directors and executive officers that are required to be disclosed in accordance with applicable NYSE and SEC requirements. Stockholders may request free printed copies of our Certificate of Incorporation, Bylaws, Code of Ethics, Corporate Governance Guidelines, and charters of the committees of the Board by contacting: loanDepot, Inc., Attention: Investor Relations, 6561 Irvine Center Drive, Irvine, California, 92618.

The Board has adopted a compensation program for our non-employee directors, or the “Non-Employee Director Compensation Policy,” which was most recently updated in 2022 in consultation with the Compensation Committee and Korn Ferry, the Compensation Committee’s independent compensation consultant. Pursuant to the Non-Employee Director Compensation Policy, each non-employee member of our Board receives the following cash compensation for Board services, as applicable:

Each director is expected to sit on up to two committees for no additional consideration. Any director who sits on more than two committees (other than any special committee) will be provided with an additional $25,000 in annual cash compensation.

In addition, pursuant to the Non-Employee Director Compensation Policy, on June 21, 2022, John Dorman, Dawn Lepore, Pam Patenaude, Andrew Dodson and Brian Golson each received 107,759 RSUs and John Lee received a pro-rated 92,913 RSUs under the 2021 Omnibus Incentive Plan that vested in quarterly installments on each of June 30, 2022, August 31, 2022, November 30, 2022, and February 28, 2023.

The following table sets forth certain information with respect to non-employee director compensation for the fiscal year ended December 31, 2022 with respect to our Directors. Mr. Hsieh and Mr. Martell did not receive any additional compensation for their service on the Board during 2022.

Along with Frank Martell, our President and Chief Executive Officer (for a detailed biography please see “Our Directors – Class I Directors – Term Ends 2025” on page 11), our executive officer team has significant experience in the residential mortgage loan production and servicing industry, and the investment management industry.

This section discusses the compensation awarded to, earned by or paid to both individuals who served as our principal executive officer during the 2022 fiscal year and our two next most highly compensated executive officers for such fiscal year. These individuals, listed below, are referred to as the “named executive officers.” We follow the compensation disclosure requirements applicable to smaller reporting companies for the executive compensation disclosure included in this proxy statement.

The following table sets forth certain information with respect to compensation of our named executive officers for the fiscal years ended December 31, 2022 and December 31, 2021. Mr. Martell commenced employment with us in 2022.

We have entered into employment agreements with our named executive officers. The material terms of these employment agreements are summarized below and are qualified by reference to the actual text of the agreements. All of the employment agreements provide for severance payments and benefits upon certain terminations of employment, as described in more detail under “Additional Narrative Disclosure—Potential Payments Upon a Termination or Change in Control” below. In addition, each employment agreement provides that each named executive officer is subject to standard covenants regarding innovation assignment, confidentiality, non-disparagement, and customer and employee noninterference.

Effective as of April 21, 2022, in connection with Mr. Martell’s appointment as President and Chief Executive Officer, the Company entered into an Executive Employment Agreement (the “Martell Agreement”) with Mr. Martell, which provides for at-will employment. The Martell Agreement provides for an initial annual base salary of $800,000, subject to increase in the sole discretion of the Board or a committee of the Board. Under the terms of the Martell Agreement, Mr. Martell is also (i) eligible to receive an annual bonus targeted at 225% of his base salary (the “Martell Target Bonus”), subject to the determination of the Board (or a committee of the Board) in its sole discretion, (ii) eligible to receive equity incentive grants as determined by the Board (or a committee of the Board) in its sole discretion, and (iii) entitled to the benefits and compensation practices that may be in effect from time to time and are provided by the Company to its executive employees generally. For calendar year 2022 only, the

Martell Target Bonus was pro-rated for the portion of the year in which Mr. Martell was employed, but in no event was to be (i) less than $900,000 or (ii) more than a pro rata amount of the maximum bonus under the program (i.e. 300% of target). The Martell Agreement also provided for certain equity awards, as described in more detail under “—Equity Awards—2022 CEO Inducement Awards” below.

Effective as of April 21, 2022, in connection with Mr. Hsieh’s appointment as Executive Chairman, the Company entered into an Amended and Restated Executive Employment Agreement (the “Amended and Restated Hsieh Agreement”).The Amended and Restated Hsieh Agreement is generally no longer in effect as a result of Mr. Hsieh’s ceasing to serve as Executive Chair, effective February 6, 2023.

In September 2022, we entered into new executive employment agreements with Messrs. Walsh and DerGurahian that provide for initial three-year terms and automatically renew for successive one-year periods unless either party provides written notice at least 60 days prior to the end of the applicable renewable period. The employment agreements provide for at-will employment. Under the terms of the employment agreements, Mr. Walsh is entitled to receive a base salary of $750,000 and a target annual bonus of 200% of base salary, and Mr. DerGurahian is entitled to receive a base salary of $600,000 and a target annual bonus of 150% of base salary. The maximum annual bonus, in each case, is up to 300% of the target bonus, and the bonuses are determined in the discretion of the Board (or a committee thereof). The employment agreements also provide for standard benefits and eligibility to participate in our equity incentive plans.

In addition, the employment agreements with Messrs. Walsh and DerGurahian provide for a $1,000,000 retention bonus, subject to continued employment through December 31, 2022 and payable within 30 days thereafter and a $1,500,000 retention bonus, subject to continued employment through December 31, 2023 and payable within 30 days thereafter.

Each named executive officer has a target annual bonus set forth under their respective employment agreements, as described above. Following the end of the 2022 fiscal year, our Board determined, based on an assessment of the Company’s performance during 2022 and individual performance and contribution, to award the following annual bonuses for 2022:

Prior to the initial public offering, we granted incentive units that were intended to constitute “profits interests” for U.S. federal income tax purposes, and represent the right to share in any increase in the equity value of the company that exceeds a specified threshold (collectively, the “Incentive Units”). The

Incentive Units were originally granted as Class X Units of LDLLC and Class V Units of LDLLC (collectively, the “Historical Incentive Units”). Following the 2018 restructuring of the Company, pursuant to which LD Holdings became the principal owner of LDLLC, all of the Historical Incentive Units were exchanged for substantially similar equity of LD Holdings (“LD Holdings Incentive Units”), and Incentive Units granted after January 1, 2019 were LD Holdings Incentive Units.

As part of the Reorganization Transactions, the LD Holdings Incentive Units were equitably adjusted and replaced with the single new class of Holdco Units held by the Trilogy Entities and immediately after such conversion was affected, each holder of the LD Holdings Incentive Units exchanged on a one-for-one basis such LD Holdings Incentive Units for TMI Units. For more information about the Reorganization Transaction and exchange rights of the TMI Units, please refer to “Reorganization Transactions” on page 41 and “Stock Ownership Information of Certain Beneficial Owners and Management” on page 38.

The TMI Units originally granted on June 5, 2020 to Messrs. DerGurahian and Walsh are subject to the following vesting schedule: (i) 20% of TMI Units vested on May 1, 2021, and (ii) 1.667% of the TMI Units vest on the last day of each calendar month commencing on the first full calendar month following May 1, 2021 such that 100% of the TMI Units will be vested on May 1, 2025, subject to the named executive officer’s continued employment through each vesting date.

In connection with his appointment as Chief Executive Officer and President, Mr. Martell received the equity awards as described below in May 2022 under the 2022 Inducement Plan. The inducement grant was designed to immediately equitize Mr. Martell and provide meaningful portion of time-vested restricted stock units (“RSUs”) and options for retention and alignment purposes, balanced with a significant performance-based component to drive share price appreciation and align with shareholder experience. Based on the grant date fair value, 30% of the award was in time-vested RSUs and options, while 70% was tied to achievement of meaningful stock price thresholds over a 30-consecutive trading day period and thus designed to motivate long-term sustained performance over the five-year performance period.

In March 2022, Messrs. Hsieh, Walsh and DerGurahian were granted the following RSUs that vest as to 25% on each of July 28, 2022, July 28, 2023, July 28, 2024 and July 28, 2025, and target PSUs that vest on March 29, 2026 from 0% to 150% of target, in each case, under the 2021 Plan:

The percentage of the PSUs that are eligible to vest on March 29, 2026 is based on the highest closing price average for any 20-consecutive days during the performance period beginning March 29, 2022 and ending March 29, 2026 in accordance with the following table:

In December 2022, Messrs. Walsh and DerGurahian received the following additional equity awards for retention purposes under the 2021 Plan:

The following table sets forth certain information with respect to all outstanding equity awards held by our named executive officers as of December 31, 2022.

Our named executive officers did not participate in or have account balances in qualified or nonqualified defined benefit plans, nonqualified defined contributions plans or other nonqualified deferred compensation plans maintained by us. Our named executive officers do participate in our 401(k) plan with matching contributions on the same basis as other eligible employees.

Pursuant to the Martell Agreement, Mr. Martell would be entitled to receive certain payments and benefits in connections with certain terminations of employment, as follows:

Under his previously effective employment agreement, in the event Mr. Hsieh’s employment was terminated by the Company without “cause” or by Mr. Hsieh for “good reason” not in connection with a “change in control” (each as defined in Amended and Restated Hsieh Agreement), Mr. Hsieh would have been entitled to, subject to his execution and non-revocation of a release of claims, (i) a lump sum payment equal to 24 months of base salary, (ii) a pro-rata annual bonus based on the actual achievement of the performance objectives for the fiscal year in which termination occurs, (iii) the earned, but unpaid portion of annual bonus for the prior fiscal year (if applicable) and (iv) the payment or reimbursement of healthcare premiums through the earlier of (A) 24 months following Mr. Hsieh’s date of termination and (B) the date Mr. Hsieh became eligible for another healthcare plan.

If Mr. Hsieh’s employment was terminated by the Company without “cause” or by Mr. Hsieh for “good reason” during the period beginning 3 months prior to a change in control and ending 12 months after a change in control, then Mr. Hsieh would have been entitled to (i) a lump sum payment equal to 3x the sum of Mr. Hsieh’s base salary plus target bonus, (ii) a pro-rata annual bonus based on the actual achievement of the performance objectives for the fiscal year in which termination occurs, (iii) the earned, but unpaid portion of annual bonus for the prior fiscal year (if applicable), (iv) the payment or the reimbursement of healthcare premiums through the earlier of (A) 36 months following Mr. Hsieh’s date of termination and (B) the date Mr. Hsieh became eligible for another healthcare plan, and (v) full accelerated vesting of any unvested equity awards held by Mr. Hsieh, with any performance-based vesting criteria being deemed earned at the greater of target or actual performance through the date of the change in control.

In the event Messrs. Walsh’s or DerGurahian’s employment is terminated by the Company without “cause” or by the named executive officer for “good reason” not in connection with a “change in control” (each as defined in the employment agreements), each named executive officer will be entitled to receive the earned, but unpaid portion of his annual bonus for the prior fiscal year (if applicable) and, subject to their execution and non-revocation of a release of claims, (i) a lump sum payment equal to 12 months of the named executive officer’s base salary, (ii) a pro-rata annual bonus based on the actual achievement of the performance objectives for the fiscal year in which termination occurs, (iii) the payment or reimbursement of healthcare premiums through the earlier of (A) 12 months following the named executive officer’s date of termination and (B) the date the named executive officer becomes eligible for another healthcare plan, (iv) acceleration of all performance-based equity awards held by Mr. Martell,

based on actual performance measured to the date of such termination, with a 30-day post-termination window during which achievement of performance goals will still qualify and (v) extension of the exercise period for vested but unexercised options until the earlier of (A) one year following the date of such termination or (B) the expiration date of the option.

If Messrs. Walsh’s or DerGurahian’s employment is terminated by the Company without “cause” or by the named executive officer for “good reason” during the period beginning 3 months prior to a change in control and ending 12 months after a change in control, then the same severance benefits will apply, except that (i) the lump sum payment will instead be equal to 1.5x the sum of the named executive officer’s base salary and target bonus, (ii) the healthcare premiums will instead be through the earlier of (A) 18 months following the named executive officer’s date of termination and (B) the date the named executive officer becomes eligible for another healthcare plan, and (iii) any unvested equity awards held by the named executive officer shall immediately vest, with any performance-based vesting criteria being deemed earned at the greater of target or actual performance through the date of termination.

In the event any payment provided to any of our named executive officers would implicate Section 280G of the Code, the named executive officer would receive either (i) payment of the full amounts to which the named executive officer is entitled or (ii) payment of such lesser amount that does not trigger excise taxes under Section 280G of the Code, whichever results in the named executive officer receiving a higher amount after taking into account all federal, state and local income, excise and employment taxes.

If a named executive officer’s employment with the Company is terminated for any reason (other than in connection with a sale of the Company), all unvested TMI Units will be forfeited. If the named executive officer is terminated for “cause” (as defined in each respective grant agreement), both vested and unvested TMI Units will be forfeited. In the event of the named executive officer’s termination of employment, we will have the option to purchase some or all of the named executive officer’s vested TMI Units for the fair market value of such TMI Units on the repurchase date.

Upon a sale of the Company, any outstanding and unvested TMI Units will accelerate and vest provided that the named executive officer remains continuously employed through the date of such sale.

loanDepot has a policy prohibiting directors, executives and employees from engaging in any form of hedging transaction (derivatives, equity swaps, forwards, etc.) in loanDepot stock, including, among other things, short sales and transactions involving publicly traded options. In addition, loanDepot’s directors, executives and employees are prohibited from holding loanDepot stock in margin accounts and from pledging loanDepot stock as collateral for loans. These policies further align directors’ and employees’ interests with those of our stockholders.

The following table sets forth information about LDI Class A Shares that may be issued under equity compensation plans as of December 31, 2022.

In accordance with the requirements of Item 402(v) of Regulation S-K, the following tables and graphs along with the accompanying footnotes and narrative provide information required by the SEC regarding executive compensation and certain measures of our performance in the fiscal years since our IPO. The amount of compensation “actually paid” set forth in the initial table is calculated in the manner set forth in the SEC regulations and may not reflect amounts realized or realizable with respect to the covered compensation.

The company’s executive compensation program reflects a variable pay for performance philosophy, with a large portion of each NEO’s compensation considered “at risk” and subject to variability with the Company’s performance, including stock price performance. The company generally seeks to incentivize long-term performance, and therefore does not specifically align the company’s performance measures with “compensation actually paid” (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the Company is providing the following descriptions of the relationships between certain information presented in the Pay Versus Performance table during the period covered thereby. Amounts shown below for the “compensation actually paid” to the PEOs is based on the aggregate “compensation actually paid” to Messrs. Hsieh and Martell.

 

 

The following table sets forth information as of April 14, 2023 (or as of the date otherwise indicated below), the record date of the Annual Meeting, concerning beneficial ownership by:

Certain of our officers and directors (each, a “Continuing Member”, and as a group, the “Continuing Members”) hold their equity indirectly through one or more management holding companies, Trilogy Management Investors Six, LLC (“TMI 6”), Trilogy Management Investors Seven, LLC (“TMI 7”), or Trilogy Management Investors Eight, LLC (“TMI 8” and together with TMI 6 and TMI 7, each are referred to herein as a “Trilogy Entity,” and together, the “Trilogy Entities”). Upon such equity being granted by our subsidiary holding company, LD Holdings Group LLC (“LD Holdings”) to the Continuing Members, the units of LD Holdings (“Historical Holdco Units”) being granted were immediately contributed to and exchanged for an equal number of units of the applicable Trilogy Entity (“TMI Units”). As part of our IPO restructure, all of the outstanding Historical Holdco Units (including those held by the Trilogy Entities) were equitably adjusted and converted into and exchanged for a number of Class A Common Units of LD Holdings (the “Holdco Units”), and the Company also issued to each Trilogy Entity that number of shares of Class C common stock that was equal to the number of Holdco Units held by each respective Trilogy Entity.

Continuing Members have the right to redeem units of the Trilogy Entities that can be exercised in whole or in part. Upon surrender of the applicable Trilogy Entity’s units (“Surrendered TMI Units”), the Continuing Member directs the Trilogy Entity to convert a number of Class C common stock (together with an equal number of Holdco Units) equal to the Surrendered TMI Units in exchange for LDI’s issuance to the Continuing Member of LDI Class A Shares on a one-for-one basis, subject to approval of the LDI Board of Directors. Anthony Hsieh, our founder and Chairman, is the sole manager of each of the Trilogy Entities and has sole voting power over the Class C common stock they hold until such shares are converted and issued as LDI Class A Shares to the Continuing Members (together the “Hsieh Stockholders”). While the Class C common stock held by the Trilogy Entities for the benefit of our executive officers and directors are not reflected in the table below, footnote 6 to the table provides further detail.

Beneficial ownership is determined in accordance with SEC rules. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities or have the right to acquire such voting power or investment power within 60 days. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. Except as otherwise indicated, the address for each beneficial owner listed in the table below is c/o loanDepot.com, LLC, 6561 Irvine Center Drive, Irvine, California 92618.

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.

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.

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.

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.

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.

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

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.

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

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:

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

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:

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

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.

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