Two Harbors faces stockholder suit over CCM proxy

"The complaint alleges the CCM deal structure ensures approximately $35 million in immediate management payouts at closing far exceeding the proxy's disclosed golden-parachute figures. It also criticizes the board for doubling the termination fee payable to CCM from $25.4 million to $50 million. None of these facts management entrenchment, the Board's refusal to engage with UWMC, the economic illogic of doubling a termination fee to reward a matching bid offering no additional value, the Board's repetition of the bare-match pattern on May 8, 2026, or the approximately $35 million in immediate management payouts UWMC has publicly identified as the deal-protective feature driving the Board's choice were disclosed, the lawsuit states."

"Instead, the suit claims the proxy presents the board's rejection of UWM and the doubled termination fee as ordinary, value-maximizing exercises of business judgment. Two Harbors and its directors countered that they believe that the Assad Complaint and the Assad Motion are without merit and that no supplemental disclosures are required under applicable laws. To avoid delaying the merger and to minimize litigation expenses, Two Harbors voluntarily filed a proxy supplement acknowledging the complaint and UWM's recent proxy filing, doing so without admitting liability or wrongdoing."

"The lawsuit heavily references a May 6 earnings call with United Wholesale Mortgage (UWM) CEO Mat Ishbia, who publicly accused Two Harbors management of steering the deal to CCM to protect their own jobs and compensation rather than negotiating with UWM. It's very clear that their management team and their board is maybe playing some games, doing things because they realize that we don't see any value for them specifically, Ishbia said. We'll see how it shakes out for us."

"The company emphasized the disclosure was provided solely to eliminate the burden and expense of further litigation and to put the claims to rest. Assad is seeking to block the May 19 vot"

A lawsuit cites a May 6 earnings call in which UWM CEO Mat Ishbia accused Two Harbors management of steering the CCM deal to protect jobs and compensation rather than negotiating with UWM. The complaint alleges the CCM structure provides about $35 million in immediate management payouts at closing, exceeding disclosed golden-parachute figures. It also alleges the board doubled the termination fee payable to CCM from $25.4 million to $50 million. The suit claims these facts, including management entrenchment, refusal to engage with UWMC, and the economic illogic of increasing a termination fee to reward a matching bid, were not disclosed. Two Harbors and its directors deny wrongdoing and say no supplemental disclosures are required. Two Harbors filed a proxy supplement to acknowledge the complaint and UWM’s recent proxy filing to reduce litigation burden, without admitting liability. Assad seeks to block the May 19 vote.

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