Form 4: Rithm Capital CLO Acquires Equity Units

Rithm Capital Corp.'s Chief Legal Officer, David Zeiden, acquired Class B Profits Units through dividend equivalents and a new profits interest award.

Summary

• David Zeiden, Chief Legal Officer of Rithm Capital Corp. (RITM), acquired Class B Profits Units of Rithm Capital Management LLC.
• On October 31, 2025, Zeiden acquired 467 Class B Profits Units, representing dividend equivalent rights accrued on existing Class B Profits Units. These units vest on the same schedule and are subject to the same terms as the underlying awards.
• Following this transaction, Zeiden beneficially owns 40,310 Class B Profits Units related to this specific pool of dividend equivalent awards.
• Also on October 31, 2025, Zeiden acquired an additional 499 Class B Profits Units as a profits interest award.
• This 499-unit award was granted on February 24, 2025, and will vest in three equal annual installments on February 24 of 2026, 2027, and 2028, contingent on continued employment with the Issuer.
• Following this transaction, Zeiden beneficially owns 22,437 Class B Profits Units related to this specific profits interest award.
• Class B Profits Units are exchangeable into shares of Rithm Capital Corp. Common Stock on a one-for-one basis after they have become vested and a sufficient amount of profits have been allocated to the holder.
• An additional profits interest award of Class B Profits Units was granted on May 1, 2024, which will vest in two equal installments on January 1, 2025, and January 1, 2026, subject to continued employment.

Sentiment

Score: 7

Explanation: The filing reports routine executive compensation and ownership changes, which are generally positive for aligning management interests with shareholders. No negative news or significant financial shifts are indicated, making the sentiment moderately positive due to executive alignment.

Positives

• The acquisition of Class B Profits Units by a key executive (Chief Legal Officer) indicates continued alignment of interests with shareholders.
• The units are granted as part of a long-term incentive plan, encouraging executive retention and performance over several years.

Risks

• Vesting of Class B Profits Units is contingent on continued employment, posing a risk of forfeiture if the executive leaves the company before vesting dates.
• Exchangeability of Class B Profits Units into common stock is subject to sufficient profit allocation, which may not always be met, potentially affecting the value or timing of conversion.

Future Outlook

The acquisition of these Class B Profits Units, which vest over several years, indicates a long-term incentive structure for the Chief Legal Officer, aligning future performance with executive compensation. The vesting schedules extend through early 2028, suggesting a continued focus on long-term value creation and executive retention.

Management Comments

• Class B Profits Units of Rithm Capital Management LLC will be exchangeable into shares of Common Stock of the Issuer on a one-for-one basis pursuant to the terms and conditions set forth in the Rithm Capital Management LLC Long Term Incentive Plan and the individual award agreement.
• Dividend equivalent rights accrued on existing Class B Profits Units, the grant of which was previously reported, in connection with the Issuer's quarterly dividend. Such dividend equivalent Class B Profits Units will vest on the same schedule and are subject to the same terms and conditions as the underlying awards.
• Profits interest award in the form of Class B Profits Units in RCM granted to the Reporting Person on May 1, 2024, which will vest in two equal installments on January 1 of each of 2025 and 2026, so long as the Reporting Person remains in continued employment with the Issuer.
• Profits interest award in the form of Class B Profits Units in RCM granted to the Reporting Person on February 24, 2025, which will vest in three equal annual installments on February 24 of each of 2026, 2027 and 2028, so long as the Reporting Person remains in continued employment with the Issuer.

Industry Context

This filing reflects standard executive compensation practices within the financial services industry, where long-term incentive plans, often involving equity or equity-linked units, are used to align executive interests with shareholder value. The use of profits interest units is common in LLC structures, providing tax-efficient compensation tied to the company's performance and promoting executive retention.

Comparison to Industry Standards

• The use of Class B Profits Units as a long-term incentive mechanism is consistent with compensation strategies observed in other financial services firms and real estate investment trusts (REITs) that utilize LLC structures for management entities, such as Blackstone or KKR, which often employ similar partnership unit structures for executive compensation.
• Vesting schedules extending over multiple years (e.g., 2-3 years) are standard for executive equity awards across various industries, including financial services, aiming to promote long-term retention and performance.
• The one-for-one exchangeability into common stock is a common feature for such units, providing a clear path to liquidity and direct alignment with the public equity value of Rithm Capital Corp.

Related Party Transactions

• The acquisition of Class B Profits Units by the Chief Legal Officer from Rithm Capital Management LLC, a related entity, constitutes a related party transaction as part of an executive compensation plan.

Stakeholder Impact

• Shareholders: Increased alignment of executive interests with shareholder value through equity-linked compensation. Potential for future dilution upon exchange of units into common stock, though this is a standard aspect of equity compensation plans.
• Employees: The long-term incentive plan structure may serve as a model or benchmark for other executive or key employee compensation, promoting retention and performance within the company.

Next Steps

• Continued vesting of Class B Profits Units on scheduled dates (January 1, 2025, January 1, 2026, February 24, 2026, February 24, 2027, February 24, 2028).
• Potential future exchange of vested Class B Profits Units into Rithm Capital Corp. Common Stock by the reporting person.

Key Dates

Recommendation

This Form 4 filing details routine executive compensation and ownership changes, specifically the acquisition of Class B Profits Units by the Chief Legal Officer. While it indicates continued alignment of management interests with shareholders, it does not present new information that would fundamentally alter the company's financial outlook or strategic direction. Therefore, it does not warrant a change in investment recommendation based solely on this filing.

Keywords

Rithm Capital Corp, RITM, SEC Form 4, Insider Transaction, Executive Compensation, Class B Profits Units, Equity Awards, David Zeiden, Chief Legal Officer, Beneficial Ownership