You are cordially invited to attend the Annual Meeting of Stockholders of IndyMac Bancorp, Inc. (“Indymac”). The meeting will be held on May 1, 2008, at 9:00 a.m. at Indymac’s offices at 3465 East Foothill Boulevard, Pasadena, California.

In advance of the meeting, I encourage you to read the annual shareholder letter, which we released last month, as in it I provide my assessment of how the mortgage industry and Indymac got to where we are today as well as our plans for returning Indymac to profitability in 2008. The bottom line is that 2007 was an incredibly tough year for Indymac Bank and for you, our stockholders, and the difficult mortgage market continues today. The unprecedented crisis in the housing and mortgage industries has also been difficult for Indymac’s employees, management team and Board of Directors, and we have clearly suffered along with our stockholders as our business has eroded and our stock price has declined precipitously. At December 31, 2006, when our stock was valued at $45.83 a share, our Executive Officers and Directors owned stock and had vested options worth a total of $129 million. During 2007, no Executive Officers or Directors of Indymac sold stock or exercised options, and today, with our stock at $6.20 as of February 29, 2008, this group had lost 97% of the $129 million in value it had as of the end of 2006. Clearly, just as you are not pleased with Indymac’s performance, I can assure you that we are not pleased either. But I can also assure you that we are working tirelessly to fight our way through the tough market we are facing, and I am confident that Indymac will be a survivor and will emerge as a stronger competitor than ever once the housing and mortgage markets do recover.

We hope you will join us at the Annual Meeting, as during the meeting I plan to further elaborate on our outlook for 2008 and how we plan to adapt and improve our performance in light of market conditions. Even if you do plan to attend the meeting, we encourage you to sign, date and return the enclosed proxy card, or submit your proxy vote via telephone or the Internet. You may still vote in person at the Annual Meeting if you desire by withdrawing your proxy, but returning your proxy card now, or submitting your voting instructions via telephone or the Internet, will assure that your vote is counted if your plans change and you are unable to attend the meeting.

As set forth in the attached Proxy Statement, the meeting will be held to consider the following matters:

Your vote is important, regardless of the number of shares you own. We urge you to indicate your approval by voting FOR each of the matters indicated in the notice and described in the proxy statement. With that said, I want to remind you of what I stated in my annual shareholder letter. While I am confident that I am the person most capable of leading Indymac through this crisis period and rebuilding shareholder value, and I have the support of the management team, board of directors and our regulators, if you don’t share this view, I respect and understand this, and you will have the opportunity to make a leadership change with your vote. If I am not re-elected to the board, I will respect the shareholders’

Thank you for your support of Indymac. I look forward to seeing you at the Annual Meeting.

The Annual Meeting of Stockholders (the “Annual Meeting”) of IndyMac Bancorp, Inc. (“Indymac”) will be held at Indymac’s offices located at 3465 East Foothill Boulevard, Pasadena, California on May 1, 2008 at 9:00 a.m., local time, for the following purposes:

1. To elect the Board of Directors for the ensuing year;

The proposals described above are described more fully in the accompanying proxy statement, which forms a part of this Notice.

If you plan to attend the Annual Meeting, please notify the undersigned at the address set forth above so that appropriate preparations can be made. Please note that picture identification will be required for entry into the Annual Meeting.

The Board of Directors has fixed March 3, 2008 as the record date for the Annual Meeting. Only stockholders of record at the close of business on that date will be entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements of the Annual Meeting. A list of those stockholders will be available for inspection at our offices located at 888 East Walnut Street, Pasadena, California 91101 commencing at least ten days before the Annual Meeting.

Whether or not you plan to attend the Annual Meeting, please sign, date and return the enclosed proxy card, or submit your voting instructions electronically or via telephone in the manner described on the enclosed proxy card. If you choose to return the enclosed proxy card via United States mail, a return envelope that requires no postage for mailing in the United States is enclosed for this purpose. If you are present at the Annual Meeting you may, if you wish, withdraw your proxy and vote in person. Thank you for your interest and consideration of the proposals listed above.

EACH VOTE IS IMPORTANT.  TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY CARD AND MAIL IT IN THE ENCLOSED RETURN ENVELOPE, OR SUBMIT YOUR VOTING INSTRUCTIONS ELECTRONICALLY OR VIA TELEPHONE IN THE MANNER DESCRIBED ON THE ENCLOSED PROXY CARD.

This Proxy Statement is furnished to stockholders of IndyMac Bancorp, Inc. (“Indymac,” the “Company,” “we,” “us” or “our”) in connection with the solicitation by the Board of Directors of Indymac of proxies to be voted at the 2008 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at our offices located at 3465 East Foothill Boulevard, Pasadena, California on May 1, 2008, at 9:00 a.m., local time, or at any adjournment or postponement of the Annual Meeting. We expect to mail the proxy solicitation materials for the Annual Meeting on or about March 24, 2008.

The principal solicitation of proxies for the Annual Meeting is being made by mail. Officers, directors and employees of Indymac, none of whom will receive additional compensation for their assistance, may also solicit proxies by telephone or other personal or electronic contact. Indymac has retained Morrow & Co., LLC to assist in the solicitation of proxies for an estimated fee of $9,000 plus reimbursement of expenses. Indymac will bear the cost of the solicitation of proxies, including postage, printing and handling, and will reimburse brokerage firms and other record holders of shares beneficially owned by others for their reasonable expenses incurred in forwarding solicitation material to beneficial owners of shares.

A stockholder may revoke his or her proxy at any time before it is voted by delivering a later dated, signed proxy or other written notice of revocation to the Corporate Secretary of Indymac. Any stockholder present at the Annual Meeting may also withdraw his or her proxy and vote in person on each matter brought before the Annual Meeting. All shares represented by properly signed and returned proxies in the accompanying form, unless revoked, will be voted in accordance with the instructions given on the proxy. If no instructions are given, the shares will be voted in favor of Proposals One and Two described in this Proxy Statement.

Only holders of shares of Indymac’s Common Stock, par value $0.01 per share (the “Common Stock”), of record at the close of business on March 3, 2008 will be entitled to notice of and to vote at the Annual Meeting or at any postponement or adjournment thereof. On the record date, 82,539,252 shares of Common Stock were outstanding. Stockholders will each be entitled to one vote per share of Common Stock held by them.

Votes cast in person or by proxy at the Annual Meeting will be tabulated by the inspector of elections appointed for the meeting. Pursuant to Indymac’s Bylaws and the Delaware General Corporation Law (the “DGCL”), the presence of the holders of shares representing a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting, whether in person or by proxy, is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and “broker non-votes” (that is, proxies from brokers or nominees that do not have discretionary authority to vote on a matter and have not received voting instructions from the beneficial owners or other persons entitled to vote with respect to such matter) will be treated as present for purposes of determining the presence of a quorum.

In accordance with Indymac’s Bylaws, for a director nominee to be elected, other than in a contested election (i.e., where the number of director nominees exceeds the number of directors to be elected), the director nominee must receive a majority of votes cast with respect to such director nominee, which means that there must be more votes cast “for” than votes cast “against” the director nominee. According to Indymac’s Bylaws, shares represented by proxies that reflect abstentions will not be treated as votes cast for the election of directors. As a result, abstentions will not affect the election of director nominees. Indymac’s Bylaws also provide that in a contested election of directors the director nominees shall be elected by a plurality of the shares present or represented by proxy and entitled to vote on the election of directors.

At the Annual Meeting, the election of each of the director nominees under Proposal One will require that the votes cast for a director nominee exceed the votes cast against the director nominee (assuming that the number of director nominees does not exceed the number of directors to be elected) and the approval of Proposal Two will require the affirmative vote of a majority of the shares of Common Stock present or represented by proxy and entitled to vote on the proposal at the Annual Meeting. For purposes of determining approval of Proposal Two, abstentions will be deemed present and entitled to vote and will, therefore, have the same legal effect as a vote “against” Proposal Two.

A broker non-vote will be deemed “not entitled to vote” on the proposal for which the non-vote is indicated and will, therefore, have no legal effect on the voting for Proposals One and Two.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 1, 2008: This Proxy Statement and the 2007 Annual Report to Stockholders are available at http://about.indymacbank.com/annualreports.

You can save Indymac future postage and printing expense by consenting to receive future annual reports and proxy statements over the Internet instead of receiving paper copies in the mail.

Stockholders will be given the opportunity to consent to future Internet delivery. You may consent to future Internet delivery by so indicating in the space provided on the enclosed proxy card. For some

If you are not given an opportunity to consent to Internet delivery when you vote your proxy, contact the bank, broker or other holder of record through which you hold your shares and inquire about the availability of this means of delivery to you.

If you consent, your account will be so noted and, when the proxy statement for the 2009 Annual Meeting of Stockholders and Indymac’s 2008 Annual Report become available, you will be notified on how to access them on the Internet.

Stockholders who elected last year to receive their Indymac materials via the Internet this year will be notified of the Internet location of the materials at the same time the materials are distributed to all other Indymac stockholders.

If you elect to receive your Indymac materials via the Internet, you can still request paper copies free of charge by writing to Investor Relations at IndyMac Bancorp, Inc., 888 East Walnut Street, Pasadena, California 91101-5646.

In addition, if you own Common Stock in more than one account, such as individually and also jointly with your spouse, you may receive more than one set of these proxy materials. To assist us in saving money and to provide you with better shareholder services, we encourage you to have all your accounts registered in the same name and address.

The Board of Directors of Indymac is providing these materials to you in connection with Indymac’s upcoming Annual Meeting of Stockholders. As a stockholder, you are invited to attend the Annual Meeting and entitled to vote on the items of business described in this Proxy Statement.

The information contained in this Proxy Statement describes the proposals to be voted on at the upcoming Annual Meeting, the voting process, compensation of the Company’s directors and most highly paid executives, and certain other required information.

Only shareholders of record at the close of business on March 3, 2008, will be entitled to vote at the Annual Meeting.

If you are the shareholder of record you may cast your vote using one of the following methods:

If your stock is held in “street name,” that is, through a brokerage account or bank, you will receive voting instructions from your bank or broker describing how to vote your stock.

To ensure that your proxy is voted, it should be received by 5 p.m. Eastern Time on April 30, 2008.

The Board of Directors recommends voting:

Representatives of The Bank of New York, our transfer agent, will tabulate votes and act as independent inspectors of election.

If you do not indicate your vote on a matter submitted at the meeting, your shares will be voted on that particular matter as follows:

To change your vote, you must cast a new vote:

If you hold your shares in your name and you attend the Annual Meeting and vote in-person, your in-person vote will change any previously submitted proxy.

If you wish to revoke rather than change your vote, written revocation must be sent to the Corporate Secretary, at the address set forth below, prior to the Annual Meeting.

If your shares are registered directly in your name with Indymac’s transfer agent, The Bank of New York, you are considered, with respect to those shares, the shareholder of record, and these proxy materials are being sent directly to you by us. As the shareholder of record, you have the right to grant your voting proxy directly to the persons named in the proxy or to vote in person at the meeting. Indymac has enclosed a proxy card for you to use.

If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker on how to vote and are also invited to the meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the meeting. Your broker or nominee has enclosed a voting instruction card for you to use.

Yes. Your vote will not be disclosed to our Directors or employees, except for a very limited number of employees involved in coordinating the vote tabulation process. An independent inspector reviews the vote tabulation process.

Our confidentiality policy does not apply to certain matters, such as contested elections or disputed votes.

If you plan to attend the Annual Meeting, please notify Indymac’s Corporate Secretary at the address provided below. Please note that picture identification will be required for entry into the Annual Meeting.

As of February 14, 2008, the following entities were known to Indymac to be the beneficial owners of more than 5% of Indymac’s outstanding Common Stock. The following table shows: (1) the number of shares of Common Stock owned by each such entity; and (2) the percentage of all outstanding shares represented by such ownership (based upon the most recently reported number of shares outstanding as of the date the entity filed a Schedule 13G with the Securities and Exchange Commission).

The executive officers of Indymac are:

Mr. Perry is Chief Executive Officer and Chairman of the Board of Directors. Under his leadership, Indymac has grown from four employees and total assets of $714 million to over 7,500 employees and total assets of over $32 billion as of December 31, 2007. Based on asset size, Indymac is the 7th largest savings and loan in the nation and, with $77 billion in mortgage loan production in 2007, Indymac is the 2nd largest independent mortgage lender.

Prior to joining Indymac in January 1993, Mr. Perry served as Senior Executive Vice President in charge of the Mortgage Banking Division of Commerce Security Bank, a state chartered bank based in Sacramento, California. Mr. Perry has over 20 years of business experience with mortgage banking companies, financial institutions, and real estate firms, including four years as an auditor with KPMG Peat Marwick.

Mr. Perry’s civic involvement includes membership on the non-profit boards of “Homes for Working Families”, an organization that addresses the shortage of homes that working Americans can afford, and the Young Presidents Organization of San Gabriel Valley.

In December 2007, Mr. Perry was named as a new member of the Federal Reserve Board’s Thrift Institutions Advisory Council (TIAC) for a two-year term beginning January 1, 2008. TIAC is an advisory group made up of twelve representatives from thrift institutions. The Council was established by the Board in 1980 and includes members from savings and loan associations, savings banks, and credit unions. It

Mr. Perry is a Master Certified Mortgage Banker, as designated by the Mortgage Bankers Association, and is a Certified Public Accountant (inactive). In 2002, Mr. Perry received the Los Angeles Business Journal’s Financial Industry Leader of the Year Award and was inducted into the Journal’s Business Hall of Fame. Also in 2002, Mr. Perry received Ernst & Young’s Los Angeles Entrepreneur of the Year award in the financial services category. Mr. Perry is an honors graduate of California State University, Sacramento with a B.S. degree in Business Administration.

Richard H. Wohl is President. He became a director of Indymac Bank in July 2005. Mr. Wohl oversees the specialty lending and new business growth and incubation areas of Indymac Bank in both its thrift and mortgage banking segments. Mr. Wohl currently serves on the Mortgage Bankers Association’s Board of Directors and is a Certified Mortgage Banker. Mr. Wohl previously served Indymac in several capacities, including as Chief Executive Officer of Indymac Mortgage Bank from February 2000 to July 2005, Chief Operating Officer in charge of various financial and administrative functions from February 1999 to February 2000, and as general counsel and secretary from April 1994 to February 1999. Prior to joining Indymac in April 1994, Mr. Wohl practiced as an attorney with Morrison & Foerster in Los Angeles, California, where he worked in the institutional lending and corporate areas with a focus on mortgage banking. Mr. Wohl graduated with distinction from Stanford University and received a J.D. with honors from Harvard Law School, where he was an editor of the Harvard Law Review.

Blair Abernathy is Executive Vice President, Capital Markets and is responsible for Indymac’s capital market activities including overseeing the Secondary Marketing Group. Previously, Mr. Abernathy was responsible for the whole loan and mortgage-backed securities investment portfolio, the mortgage conduit and corporate finance functions, and prior to that, hedging, trading, product development, risk-based pricing and secondary marketing functions of Indymac Bank. Prior to joining Indymac in February 1994, Mr. Abernathy managed the accounting and investment functions of Commerce Security Bank, a state chartered bank in Sacramento, California, as Senior Vice President and Chief Financial Officer. From July 1988 to January 1993, Mr. Abernathy served as Vice President and Controller of Sunrise Bancorp of California, a publicly traded bank holding company with banking and mortgage banking subsidiaries. Mr. Abernathy received a B.S. in Business Administration from California State University, Sacramento where he graduated with honors.

Ashwin Adarkar is Executive Vice President, New Business Incubation, Organizational Effectiveness and Mergers and Acquisitions. Mr. Adarkar is responsible for all new business activity at Indymac Bank from conducting mergers and acquisitions, to launching start-ups, to overseeing new or underperforming businesses. Mr. Adarkar joined Indymac Bank in September 2003 and previously served as the CEO of the Consumer Bank and as Executive Vice President of Human Resources. Prior to joining Indymac Bank, Mr. Adarkar was a Principal with McKinsey & Company, a management consulting firm, where he established McKinsey’s practice in India, led its West Coast Financial Services and Health Care Practices and its Global Business Process Outsourcing Practice. Prior to joining McKinsey & Company, Mr. Adarkar

Canise Arredondo is the Executive Vice President, Chief Audit Executive. As Chief Audit Executive, Ms. Arredondo reports directly to the Audit Committee of the Board of Directors. Ms. Arredondo joined Indymac Bank in July 2004 and has held various positions in Financial Management and Enterprise Risk Management, prior to taking on her current role in August 2006. Prior to joining Indymac Bank, Ms. Arredondo was a senior manager with Deloitte & Touche, LLP, where she spent approximately 10 years in the Assurance and Advisory Services practice and focused on clients in the financial services industries. Ms. Arredondo has a B.A. in Business Economics from the University of California, Santa Barbara, and is a Certified Public Accountant and a Certified Internal Auditor.

Anthony L. Ebers is Executive Vice President and Chief Operating Officer. Mr. Ebers joined Indymac Bank in 2002 as Executive Vice President responsible for overseeing the entire Home Loan Servicing Division. Mr. Ebers assumed the responsibility of managing the Company’s Consumer Lending Business in February 2005. In 2007, Mr. Ebers also assumed the responsibility for Centralized Mortgage Operations, Corporate Customer Service, Corporate Compliance and Enterprise Process & Technology.

Prior to joining IndyMac Bank, Mr. Ebers was with HomeSide Lending, Inc. for over ten years. He worked in various divisions from an Assistant Vice President of Risk Management and Bankruptcy Department to a Senior Vice President and the Director of Operations / International Liaison most recently. He was responsible for Customer Service, Direct Sales and the business side of managing system priorities and strategy. His responsibilities also included budgeting, forecasting and general risk management. Prior to his tenure with HomeSide Lending, Inc., he was a Senior Financial Analyst at Citicorp Mortgage, Inc.

Mr. Ebers graduated from the University of Missouri — Columbia in 1988 with a BSBA in Finance and Banking.

Patrick Hymel is currently Executive Vice President, Chief Investment Officer responsible for the Investment Portfolio/Retained Asset Management division. Responsibilities include trading/capital management, hedging, prepayment and credit risk research, and portfolio retention. Mr. Hymel joined Indymac in June 1995 as Hedging Manager in the Secondary Marketing area. Prior to joining Indymac, Mr. Hymel spent four years working in Secondary Marketing at BancPLUS Mortgage in San Antonio. Mr. Hymel has a Bachelor of Science in Economics from Texas Christian University and a Master of Business Administration in Finance from the University of Texas at San Antonio.

Scott Keys is Executive Vice President and Chief Financial Officer. Mr. Keys is responsible for financial and managerial accounting, tax, financial reporting, strategic and financial planning, and investor relations. Prior to joining Indymac Bancorp in March 2002, Mr. Keys was a partner with Ernst & Young

Rayman Mathoda is Executive Vice President, Chief People Officer and Chief Efficiency Officer. She is responsible for managing all labor and non labor expense related functions for Indymac including recruiting, compensation, global outsourcing and non-traditional workforce strategies, communication and culture and real estate and purchasing. Ms. Mathoda joined Indymac Bank in May 2004, leading Indymac Bank’s company-wide Business Process Outsourcing program. Prior to joining Indymac Bank, Ms. Mathoda spent close to seven years with McKinsey & Company, a global management consulting firm focusing on strategic issues and performance transformation programs at Fortune 500 companies. Ms. Mathoda is a member of the Board of Directors of the Los Angeles Gay and Lesbian Center (LAGLC) and a member of the Board of Commissioners for the Los Angeles Public Housing Authority, which administers public and Section 8 housing for Los Angeles. Ms. Mathoda graduated with an A.B. with honors from the Woodrow Wilson School of Public and International Affairs at Princeton University. Ms. Mathoda also has an M.B.A. in Marketing and Entrepreneurship from the Kellogg School of Business at Northwestern University.

Ruthann K. Melbourne is Executive Vice President, Chief Risk Officer. Ms. Melbourne is responsible for the corporate oversight of the company’s risks, including credit & interest rate risks as well as the valuation of complex assets retained from the Bank’s loan sale and securitization activities (e.g., mortgage servicing rights, residual securities and non-investment grade bonds). Prior to joining Indymac Bank in February 2003, Ms. Melbourne was the Vice President in the Risk Research & Model Review Group of J.P. Morgan Chase & Co. in its New York office from July 2000 to February 2003. Ms. Melbourne has over 16 years of experience in due diligence audit, finance, risk management, risk research, marketing and related information systems. In addition, Ms. Melbourne has extensive experience with credit/market risk methodology, mortgage servicing right performance measurement, pricing/valuation model validation, credit derivative pricing, securitization comfort level support and interest rate and volatility term structure modeling. Ms. Melbourne holds a B.S. in Physics from the University of California, Santa Cruz, has an M.S. in Electrical Engineering from the California Institute of Technology and also received her Ph.D. in Finance from the University of Wisconsin.

Michelle Minier is the Chief Executive Officer and Vice Chair, Financial Freedom Senior Funding Corporation. Ms. Minier joined Indymac in March 1995 as Assistant Controller and has since held positions as the President of Warehouse Lending and, later, Executive Vice President and President of B2B Lending as well as head of the Centralized Mortgage Operations Unit. Prior to joining Indymac, Ms. Minier served as Controller at Cypress Financial Corporation and was the Assistant Treasurer at

John D. Olinski is Executive Vice President, Credit Risk Mitigation. Prior to this role, Mr. Olinski managed Indymac’s Secondary Marketing and Retained Asset groups. Previous responsibilities at Indymac Bancorp include Director of Corporate Finance/Treasury, Chairman of the management Asset and Liability Committee, and management of the Home Loan Servicing operations. Prior to joining Indymac Bancorp in April 1999, Mr. Olinski was an equity analyst focusing on consumer products for a regional investment bank. Mr. Olinski, who is a Chartered Financial Analyst and a Certified Mortgage Banker, has fifteen years of commercial and merchant banking experience with Security Pacific Merchant Bank, Sanwa Bank California (now Bank of the West) and Lloyds Bank California. Mr. Olinski received a B.A. in Management Science from the University of California, San Diego and an M.B.A. in Finance and Accounting from the University of Southern California.

Frank M. Sillman is Executive Vice President of Indymac Bank and Chief Executive Officer of Indymac Mortgage Bank. Mr. Sillman is responsible for the mortgage banking group, including retail, wholesale, correspondent, and warehouse lending. Mr. Sillman joined Indymac in 1997 as a Senior Vice President, was promoted to Executive Vice President of Sales and Marketing, Indymac Mortgage Bank in 2003 and became Chief Executive Officer of the Mortgage Professionals Group of Indymac Mortgage Bank in 2004. Prior to joining Indymac, he was a senior manager of two retail mortgage banking companies, TCM Mortgage and American Home Credit. From mid-1986 to the end of 1992, Mr. Sillman served as treasurer for Shearson Lehman Mortgage. Mr. Sillman has 20 years of experience in the mortgage banking industry and received his bachelor’s degree from the University of California, San Diego.

The following table provides information concerning the beneficial ownership of Common Stock, defined as shares owned beneficially plus shares that may be purchased through stock options currently exercisable or exercisable within 60 days of February 29, 2008, by each director nominee, including Indymac’s Chairman and Chief Executive Officer, each of Indymac’s other four most highly compensated executive officers, which includes Indymac’s Chief Financial Officer, and all executive officers and directors as a group, as of February 29, 2008. Except as otherwise indicated, all persons listed below have sole voting power, and dispositive power with respect to their shares, except to the extent that authority is shared by their spouses, and have record and beneficial ownership of their shares.

The following table provides information concerning the beneficial ownership of Common Stock as of December 31, 2006 and February 29, 2008, in accordance with the previous table, and the fair value of that ownership as of those dates. It is important to note that all stock options included in the shares of common stock owned beneficially as of February 29, 2008 have a strike price that is higher than the fair value of Indymac common stock as of February 29, 2008, or $6.20.

Indymac currently has 10 directors. All 10 directors are nominees for election as directors to serve until the next annual meeting and until their successors are elected and have qualified. In the absence of contrary instructions, it is the intention of the proxy holder named in the accompanying proxy card to vote for the nominees listed below. If any nominee becomes unavailable to serve for any reason, an event the Board of Directors does not anticipate, the proxies solicited hereby will be voted for election of the person, if any, designated by the Board of Directors to replace that nominee.

As stated in Indymac’s 2007 Annual Shareholder Letter, Mr. Perry will resign as Chief Executive Officer of Indymac and Indymac Bank if he is not re-elected as a director. Mr. Perry’s resignation would not waive his right to terminate his employment with Indymac for Good Reason, pursuant to his existing employment agreement. Mr. Perry has indicated, however, that he would decline his right to the severance provisions (with the exception of the health benefit) applicable to termination for Good Reason.

According to Indymac’s Bylaws, for a director nominee to be elected, other than in a contested election (i.e., where the number of director nominees exceeds the number of directors to be elected), the director nominee must receive a majority of votes cast with respect to that director nominee, which means that there must be more votes cast “for” than votes cast “against” the director nominee. According to Indymac’s Bylaws, shares represented by proxies that reflect abstentions will not be treated as votes cast for the election of directors. As a result, abstentions will not affect the election of director nominees. Indymac’s Bylaws also provide that in a contested election of directors, the director nominees shall be elected by a plurality of the shares present or represented by proxy and entitled to vote on the election of directors.

In addition, Indymac’s Bylaws include a director resignation policy that requires incumbent directors to submit an irrevocable offer of resignation in order to become eligible to be a nominee for re-election. The offer of resignation becomes effective, among other occurrences, upon the nominee’s failure to receive the required majority stockholder vote for re-election and acceptance of such resignation by the Board of Directors. Within 90 days after receiving the certified vote pertaining to a director election, the

Any incumbent that receives a majority of “against” votes in an election cannot participate in the Corporate Governance Committee’s recommendation or the Board of Director’s determination of whether to accept the resignation offer. If each member of the Corporate Governance Committee receives a majority of “against” votes at the same stockholder meeting, then the independent members of the Board of Directors must appoint a committee of independent directors who did not receive a majority of “against” votes to consider the resignation offers and make the recommendations to the Board of Directors. If the number of independent directors that receive a majority of “for” votes is three or fewer, then all directors may participate in the decision to accept or reject the resignation offers.

The following persons have been nominated to serve as directors of Indymac for the ensuing year, each of whom has agreed to serve as director until the next annual meeting if elected:

The Board of Directors held 8 meetings, in person or by telephone, during 2007. Each Board member is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties. In 2007, seven of the Board members attended 100% of the total meetings of the Board and those Board Committees of which he or she was a member. Three Board members attended at least 90% of their meetings: two members missed a Special Board Committee meeting that was convened on an unscheduled basis while one member was unable to attend a Board meeting. It is estimated that during 2007 on average each Board member spent approximately 335 to 365 hours in Board and Committee meetings and in preparation time for those meetings. In addition to attendance at Board and Committee meetings, each member of the Board is expected to attend each Annual Meeting of Stockholders and all members of the Board attended the 2007 Annual Meeting of Stockholders.

The Committees of the Board of Directors are as follows:

Each member of the Indymac Board of Directors also serves as a director of Indymac Bank, Indymac’s principal operating subsidiary. The Indymac Bank Board of Directors also has two independent directors and one executive officer-director who do not serve on the Indymac Board of Directors. The Indymac and Indymac Bank Board of Directors meetings are held concurrently. The following are the persons who serve as directors of Indymac Bank only:

In addition to the Committees of the Indymac Board of Directors referenced above, the Indymac Bank Board also has a Fair Lending, Compliance, Technology & Security Committee as follows:

The following table sets forth total compensation paid to non-employee directors for 2007:

For 2007, our compensation included the following for non-employee directors:

For 2007, each non-employee director received an automatic annual grant of a nonqualified stock option to purchase shares of Common Stock equal to 0.0125% of the issued and outstanding shares of such Common Stock as of the end of the preceding fiscal year (excluding treasury shares). Additionally, each non-employee director receives a number of shares of restricted common stock having a fair market value equal to the value of the above mentioned option grant, determined using the same valuation method as then used by Indymac for financial reporting.

As in the past, options and restricted stock were granted automatically on the same date that annual grants of long-term incentive awards were made to employees. Under the Director Compensation and Stock Ownership Policy, if a non-employee director is elected within six months following the annual grant date, he or she will receive options for the number of shares covered by the most recent annual director grant. If a non-employee director is elected more than six months following the most recent annual grant date, but before the next annual grant date, he or she will receive options for one-half the number of shares covered by the most recent annual director grant. The number of shares of restricted stock granted to such non-employee directors will be determined according to the value of the option grant, as described above.

Options have an exercise price equal to the fair market value of Common Stock on the date of grant, will vest on the first anniversary of the grant date, and expire on the latest date permitted under our incentive plan or earlier in the event of a non-employee director’s termination of service.

Restricted stock vests in equal annual installments over a three-year period, and any dividends on such shares will accrue and vest at the same time.

Vesting for options and restricted stock will accelerate in full upon a change in control of Indymac, a non-employee director’s death or disability, or a non-employee director’s failure to be renominated or reelected to the board after five years of service as a director, provided that the director remains on the board until his or her normal term expires. In addition, the options and restricted stock will become immediately vested in the event that a non-employee director ceases to be a director pursuant to the Board of Director’s acceptance of the non-employee director’s resignation after such director fails to receive a sufficient number of votes for re-election in accordance with the majority vote requirements in Indymac’s Bylaws.

The non-employee directors are eligible to participate in the Deferred Compensation Plan, which is discussed in detail in the section captioned “Deferred Compensation Plans” on page 50 of this Proxy Statement. In 2007, the following directors participated in the plan: Messrs. Caldera, Gramley, and Willison. Senator Seymour and Ms. Kennard were also participants in the plan. As described on page 50, the Indymac Bank Deferred Compensation Plan was frozen from future contributions in 2008 and going forward.

Refer to page 51 for a description of the Directors’ Stock Ownership guidelines. See also the description of the Director Emeritus program included in this section.

For 2008, several changes were made to our non-employee director compensation program, in consideration of the increase in time commitment, risk and complexity for directors given the recent difficulties in the mortgage industry and financial markets. These changes also reflect Indymac’s need to strengthen our ability to retain directors during this critical period of rebuilding the Company. The annual value of incentive awards will now be equal to the average cash compensation of all non-employee directors for the prior year. This amount includes the annual retainer, special retainers of committee or

Historically, Indymac has maintained a Director Emeritus Plan, which provides certain retiring non-employee directors with a benefit based upon length of service as a director and the level of cash compensation received as a director prior to retirement. Pursuant to the Director Compensation and Stock Ownership Policy, the Director Emeritus Plan is available only for non-employee directors who were serving on the board as of December 31, 2005, or who already were participating in the Director Emeritus Plan as of such date. Directors who wish to participate in the Director Emeritus Plan must execute a Participation Agreement that prohibits them from competing with Indymac during the benefit period.

The Audit Committee of the Board of Directors has appointed Ernst & Young LLP (“Ernst & Young”) as the independent auditors to audit Indymac’s consolidated financial statements for the fiscal year ending December 31, 2008. Ernst & Young has acted as the independent auditors for Indymac since 2001. This appointment is being presented to stockholders for ratification at this meeting. If the stockholders do not ratify the appointment of Ernst & Young, the Audit Committee will reconsider their appointment. A representative of Ernst & Young will be present at the Annual Meeting, will have an opportunity to make a statement if he or she wishes to do so, and will be available to respond to appropriate questions.

Indymac adopted formal corporate governance standards in January 2002 and has a Corporate Governance Committee (the “CGC”) of the Board of Directors (the “Board”) with the primary function of setting guidelines for corporate governance and reviewing governance standards annually to ensure they incorporate recent corporate governance developments and generally meet the corporate governance needs of Indymac. Specifically, the CGC (a) assists the Board by identifying individuals qualified to become Board members and recommends to the Board the director nominees for the next annual meeting of stockholders and for Board committee assignments, (b) recommends to the Board the Corporate Governance Guidelines, Board Committee Charters and Board Policies applicable to the Company, and (c) leads the Board in its annual review of the Board’s performance and other governance related matters.

You may obtain the Board of Directors’ Corporate Governance Philosophy and Guidelines and the charters of each of the Board’s committees, including the Audit Committee, Corporate Governance Committee, Enterprise Risk Management Committee, Management Development and Compensation Committee, Strategy and Execution Committee and Qualified Legal Compliance Committee by accessing the “Corporate Governance” subsection of the “Investors” section of www.imb.com, or by writing to Indymac’s Corporate Secretary at IndyMac Bancorp, Inc., 888 East Walnut Street, Pasadena, California 91101.

As of February 27, 2008, Institutional Shareholder Services, Inc. ranked Indymac’s governance at the 100th percentile of its industry group and at the 100th percentile of the S&P 400 group.

The Corporate Governance Committee of the Board of Directors has adopted criteria and procedures for evaluating the independence of Indymac’s directors based on the listing standards of the New York Stock Exchange, which can be found on the Company’s Web site at www.imb.com. Pursuant to these procedures, an independence review must be made when a director joins the Board, annually prior to re-election, and at any time that a director’s circumstances change such that the Committee or the Board determines that an independence assessment should be conducted. The Board undertook its annual review of director independence in January 2008. During this review, the Board considered relationships and transactions during the past three years between each director or any member of his or her immediate family and Indymac and its subsidiaries and affiliates. In addition to the transactions reported under “Certain Transactions and Business Relationships,” the Board considered the following:

Further, the Board considered each director’s board and committee service with companies which may transact business with Indymac. The purpose of the review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.

Based on the review, the Board of Directors affirmatively determined that Messrs. Caldera, Gramley, Grant, Haden, Hodel, Hunt, Seymour and Willison and Ms. Kennard, constituting all of the directors nominated for election at the Annual Meeting other than Mr. Perry, Indymac’s Chairman of the Board and Chief Executive Officer, are independent of Indymac and its management under the criteria established by the Corporate Governance Committee. Accordingly, 90% of the Board-elect consists of independent directors.

The Board of Directors’ Corporate Governance Philosophy and Guidelines require the Board to appoint presiding directors who are independent directors and shall serve as the presiding director at the Executive Sessions held during the following year. Prior to April 25, 2007, the Company rotated the role of presiding director throughout the year. Effective April 25, 2007, the Company approved the change of structure of the presiding director role to an annual term and Senator Seymour was appointed as the presiding director for the 2007-2008 term. Senator Seymour has been reappointed as presiding director for the 2008-2009 term. The Board of Directors met in Executive Session at 7 of its 8 meetings in 2007.

You may communicate with the presiding director or the Board as a group by writing to Presiding Director, IndyMac Bancorp, Inc., 888 East Walnut Street, Pasadena, California 91101. Communications to specific non-management directors may be submitted to the attention of the Corporate Secretary at the same address. The Corporate Secretary will regularly forward to the Board a summary or copies of all such correspondence that, in the opinion of the Corporate Secretary, relates to the functions of the Board or committees thereof or that she otherwise determines requires their attention. Directors may at any time request copies of any correspondence so summarized. Alternatively, a director may request that all correspondence addressed to him or her be forwarded to him or her. Concerns relating to accounting, internal controls or auditing matters may be communicated in this manner, or may be submitted via the Accounting/Audit link under the “Contact Us” section of www.imb.com. These concerns are immediately brought to the attention of Indymac’s internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters.

Pursuant to the applicable rules of the Securities and Exchange Commission, the Board undertook a review of the qualifications and expertise of the Audit Committee members in January 2008. Based on this review, the Board of Directors has determined that Messrs. Grant, Hunt and Willison, all of the

The Corporate Governance Committee will consider candidates recommended by stockholders of Indymac for nomination for election to the Board of Directors at Indymac’s Annual Meeting. A stockholder who wishes to recommend a candidate for nomination to the Board of Directors must submit such recommendation to the Corporate Secretary of Indymac in accordance with Indymac’s Bylaws, the Corporate Governance Philosophy and Guidelines, and the Policy & Guidelines on Director Candidates Recommended by Stockholders, which requires such notice be delivered to and received no later than one hundred twenty (120) days prior to the anniversary date of the mailing of the proxy statement in connection with the previous year’s annual meeting. All such recommendations will be forwarded by the Corporate Secretary to the Chairman of the Corporate Governance Committee.

All stockholder recommendations of candidates for nomination for election to Indymac’s Board must be in writing and must set forth as to each director candidate recommended the following: (1) name, age, business address and residence address of the individual; (2) the principal occupation or employment of the individual during the five-year period preceding the date of the recommendation; (3) the class and number of shares of capital stock of Indymac that are owned beneficially or of record by the individual; (4) any other information relating to the individual that would be required to be included in a proxy statement prepared in connection with the solicitation of proxies for an election of directors pursuant to applicable law and regulations; and (5) a statement of whether the individual, if elected, intends to tender, promptly following the individual’s election, an irrevocable offer of resignation as contemplated by the majority vote provisions of Indymac’s Bylaws. Certain information as to the stockholder providing the recommendation must be included, such as, the name and address of the stockholder, the class and number of shares of capital stock of Indymac which are owned beneficially or of record by the stockholder and a description of certain types of material agreements and arrangements between the stockholder and its related persons, on one hand, and the director candidate and its related persons, on the other hand. Each recommendation must be accompanied by: (i) a completed and signed questionnaire together with certain representations specified in Indymac’s Bylaws relating to the absence of certain commitments and agreements that might otherwise interfere with the candidate’s ability to carry out the duties of a director; and (ii) the written consent of each individual recommended, which must include a statement that if the individual were to be nominated and elected, the individual would serve as a director of Indymac and permission to investigate the individual for purposes of considering the individual as a director nominee.

The Corporate Governance Committee will consider prospective nominees for the Board of Directors based on the need for additional Board members to fill vacancies or to expand the size of the Board. Once the Corporate Governance Committee has identified a prospective nominee, the Committee makes an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is based on whatever information is provided to the Committee with the recommendation of the prospective candidate, as well as the Committee’s own knowledge of the prospective candidate, which may be supplemented by inquiries to the stockholder making the recommendation. The Committee then evaluates the prospective nominee against the standards and qualifications set forth in Indymac’s Corporate Governance Philosophy and Guidelines, including relevant experience, industry expertise, intelligence, independence, diversity of background and outside commitments.

Stockholders may also make nominations of persons for election to the Board of Directors at the annual meeting in accordance with the Bylaws of Indymac, if the stockholder provides notice of such nomination to the Corporate Secretary (1) not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders and (2) in the form required by the Bylaws of Indymac. No stockholder nominations of persons for election to the Board of Directors were received in connection with the 2008 Annual Meeting.

Indymac has a Code of Business Conduct and Ethics that is applicable to all employees and officers of Indymac, including the principal executive officer, the principal financial officer and the principal accounting officer. In addition, Indymac has a Director Code of Ethics that sets forth the policy and standards concerning ethical conduct for directors of Indymac. You may obtain the Code of Business Conduct and Ethics and the Director Code of Ethics by accessing the “Corporate Governance” subsection of the “Investors” section of www.imb.com, or free of charge by writing to Indymac’s Corporate Secretary at IndyMac Bancorp, Inc., 888 East Walnut Street, Pasadena, California 91101. Indymac intends to post amendments to or waivers from the Code of Business Conduct and Ethics (to the extent applicable to Indymac’s principal executive officer, principal financial officer or principal accounting officer) and the Director Code of Ethics at this location on its website.

Indymac recognizes that transactions with related persons present a heightened risk of actual or perceived conflicts of interest or improper valuation. Nevertheless, Indymac recognizes that there are situations where such transactions may be in, or may not be inconsistent with, the best interests of Indymac and its shareholders. The SEC requires public companies to report certain related person transactions in their public reports. For the first time in 2007, the SEC required public companies to describe their policies and procedures relating to the review, approval or ratification of related person transactions. Historically, Indymac’s practices and procedures to monitor and disclose related person transactions have included:

In addition, on February 27, 2007, Indymac adopted a formal, written policy which requires the Chairman of the Corporate Governance Committee to determine whether any transaction in which all of the following are present is a “related person transaction” under applicable rules and regulations:

Any related person or senior manager who becomes aware of a potential related person transaction is required to notify the Chief Governance Officer, who will inform the Chairman of the Corporate Governance Committee and the General Counsel’s office. If the Chairman of the Corporate Governance Committee determines that the proposed transaction would be a related person transaction, it must be pre-approved by the Corporate Governance Committee at the next regularly scheduled meeting. If it is not practicable or desirable to wait until the next meeting, the transaction may be pre-cleared by the Chairman of the Corporate Governance Committee or the Presiding Director (acting under delegated authority).

Any transaction involving the hiring of a related person, other than an independent director or an immediate family member of an independent director, to an ordinary position at Indymac for an ordinary level of compensation will not require pre-approval but will be reviewed and ratified, amended, or terminated by the Corporate Governance Committee on an annual basis. If the Chief Executive Officer or any senior manager becomes aware of a related person transaction that is pending or ongoing that has not been previously considered, reviewed or approved in accordance with the policy, the transaction will be reported to the Corporate Governance Officer, who will present it to the Chairman of the Corporate Governance Committee for consideration. If the Chairman of the Corporate Governance Committee determines that the transaction is a related person transaction, it must be presented to the Corporate Governance Committee for review and ratification, amendment or termination.

Only transactions that the Corporate Governance Committee (or the Committee Chairman or Presiding Director acting under delegated authority) determine in good faith to be in, or not inconsistent with, the best interests of Indymac and its shareholders will be pre-approved or ratified. Transactions involving extensions of credit required to be approved in accordance with Indymac’s Regulation O policy will be handled in accordance with that policy.

From time to time, certain directors and executive officers of Indymac and its subsidiaries, and family members of such persons, were indebted to Indymac Bank as customers in connection with mortgage loans and other extensions of credit by Indymac Bank. These transactions were in the ordinary course of business and were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons. None of these loans have involved more than the normal risk of collectibility or presented other unfavorable features. In addition, directors, officers and employees of Indymac and its subsidiaries are entitled to receive certain discounts or waivers of fees or commissions for certain products and services offered by Indymac Bank.

Indymac had a special loan program for senior officers to assist them in relocating to the Pasadena area. For senior officers who are eligible for the program, Indymac will extend a second mortgage loan in an amount up to $500,000, secured by the senior officer’s home. Pursuant to the terms of the loan, no interest or principal is due unless the senior officer’s employment is terminated for any reason, at which point the interest rate is modified and interest and principal payments are calculated to ensure payment in

Indymac also had a special loan program to assist senior officers with initiation fees for country club memberships to be used for business purposes. The loan program was discontinued in July 2002. Pursuant to the terms of the outstanding loans, the loans bear no interest and no principal is due unless the senior officer’s employment is terminated or he/she relinquishes the membership, at which point, the lesser of the value of the membership or the entire principal amount is due and payable. Indymac extended loans to executive officers under this program prior to the enactment of the Sarbanes-Oxley Act of 2002, and pursuant to the grandfather provisions of such law, these loans may remain outstanding (so long as they are not modified) until maturity. The total amount of loans outstanding to all senior officers under this loan program as of December 31, 2007, was $55,000.

The following table sets forth information concerning loans outstanding to Indymac’s executive officers under the two loan programs described above:

During 2007, certain family members of Messrs. Perry and Sillman, and Ms. Minier and Ms. Mathoda worked for Indymac or one of its subsidiaries or affiliates as set forth in the following table. None of Mr. Perry’s or Ms. Mathoda’s family member(s) resided in his or her respective household during the year. Neither Messrs. Perry or Sillman, nor Ms. Minier or Ms. Mathoda was involved in the direct management of their respective family members. Indymac’s general policy is to hire employees based on each employee’s qualifications for the position for which the employee is considered regardless of the employee’s relationship to directors, officers or employees of Indymac and its subsidiaries and affiliates.

Under Section 16(a) of the Securities Exchange Act of 1934, Indymac’s directors and executive officers are required to report their ownership of and transactions in Common Stock to the Securities and Exchange Commission and the New York Stock Exchange. Copies of these reports are also required to be supplied to Indymac. Specific dates for filing these reports have been established by the Securities and Exchange Commission, and Indymac is required to report in this Proxy Statement any failure of its directors and executive officers to file by the relevant due date any of these reports during 2007. Based solely on its review of the copies of the reports prepared or received by it, Indymac believes that all such filing requirements were satisfied, except that Mr. Hymel reported a small portion of shares held directly late, as a result of an error by Indymac.

Management is responsible for Indymac’s internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of Indymac’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board and to issue a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes, but the Audit Committee is not responsible for preparing Indymac’s financial statements or auditing those financial statements, which are the responsibilities of management and the independent auditors, respectively.

The Audit Committee has reviewed with Ernst & Young LLP (“Ernst & Young”), who, as Indymac’s independent auditors, are responsible for expressing an opinion on the conformity of the audited financial statements with generally accepted accounting principles, Ernst & Young’s judgment as to the quality, not just the acceptability, of Indymac’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. The Audit Committee has also discussed with Indymac’s internal auditors and Ernst & Young the overall scope and plans for their respective audits. The Audit Committee meets separately with the internal auditors and the independent auditors (without management present) to discuss the results of their examinations, their evaluations of Indymac’s internal controls and the overall quality of Indymac’s financial reporting.

In the context of the foregoing, the Audit Committee has reviewed the audited consolidated financial statements of Indymac for the fiscal year ended December 31, 2007 with management. In connection with that review, management represented to the Audit Committee that Indymac’s consolidated financial statements were prepared in accordance with generally accepted accounting principles.

The Audit Committee has reviewed management’s report on its assessment of internal controls over financial reporting, as required under the Sarbanes-Oxley Act of 2002 and the FDIC Improvement Act of 1991. In its report, management provided a positive assertion that internal controls over financial reporting were in place and operating effectively as of December 31, 2007. The Audit Committee also has reviewed with Ernst & Young LLP its attestation report on Indymac’s internal controls over financial reporting.

The Audit Committee has discussed the consolidated financial statements with Ernst & Young and it also has discussed with Ernst & Young the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees) and the New York Stock Exchange rules relating to the conduct of the audit. The Audit Committee also has received written disclosures and a letter from Ernst & Young regarding its independence from Indymac as required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), has discussed with Ernst & Young the independence of the firm, and has considered all of the above communications as well as all audit, audit-related and non-audit services provided by Ernst & Young. In reliance upon the foregoing, the Audit Committee has determined that Ernst & Young are independent auditors with respect to Indymac within the meaning of the federal securities laws and the rules and regulations thereunder and Rule 3600T of the Public Company Accounting Oversight Board, which designates as interim independence standards Rule 101 of the American Institute of Certified Public Accountants’ Code of Professional Conduct and Standards Nos. 1, 2 and 3 of the Independence Standards Board. In connection with Ernst & Young’s audit of Indymac’s consolidated financial statements, Indymac entered into an engagement

All three members of the Audit Committee have been determined by the Board of Directors of Indymac to be independent directors and financial experts as more fully described in “Corporate Governance”. The oversight and other responsibilities of the Audit Committee are described in the Audit Committee Charter, which can be found in the Corporate Governance section of our website at www.imb.com.

In reliance upon the above materials and discussions, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in Indymac’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

The Audit Committee, in its capacity as a committee of the Indymac Board of Directors, is directly responsible for the appointment, compensation, retention and oversight of Indymac’s independent auditors. The Audit Committee is required to approve all engagements with the independent auditors, including both audit services and non-audit services prior to such services being rendered. The Audit Committee has delegated to the Audit Committee Chairman the ability to pre-approve non-audit service engagements with the independent auditors involving fees of up to $100,000 per engagement. Any such services pre-approved by the Chairman are to be reported at the next full Audit Committee meeting. In approving such non-audit services, the Audit Committee (or Chairman when applicable) considers whether the proposed services are prohibited under current law or regulations. The Audit Committee (or Chairman when applicable) must, in order to approve the proposed non-audit services, also be of the opinion that the proposed services, both individually and collectively with all other provided services, will not impair the independence of the independent auditors relative to the financial statement audit opinion discussed above. The Audit Committee also receives assurances from the independent auditors for every proposed engagement that the independent auditors believe that the proposed engagement is not a prohibited service under applicable laws and regulations and that the proposed service will not impair the auditors’ independence relative to their audit opinion regarding Indymac’s financial statements.

The following table sets forth the aggregate fees agreed upon with and/or billed to Indymac for the fiscal years ended December 31, 2007 and 2006 by Ernst & Young:

The Audit Committee is required to pre-approve all audit and non-audit services provided by the independent auditor and has considered whether the provision of the services relating to these fees is compatible with maintaining the auditors’ independence. None of the services relating to these fees were rendered pursuant to a waiver of the Committee’s pre-approval procedures. Indymac’s audit fees increased significantly in 2007 over 2006 as a result of the added complexities created by the current market environment. The increase in audit related fees is due to the fact that Ernst & Young performed the due diligence on a greater number of Indymac’s securitizations in 2007 versus 2006 and did not result in an overall increase to the Company’s expenses.

The Management Development and Compensation Committee (the “MD&C Committee”) was created to assist the Board of Directors (the “Board”) in its responsibilities to establish, review and monitor the compensation philosophy and practices of Indymac, and its direct and indirect subsidiaries. The MD&C Committee’s goals are to:

The MD&C Committee consists of three directors, each of whom the Board has determined has no material relationship with the Company and is otherwise independent under the rules of the New York Stock Exchange and Indymac’s Corporate Governance Philosophy and Guidelines. The members of the MD&C Committee are Senator John Seymour (Chair), Mr. Louis Caldera and Mr. Hugh Grant. In 2007, the MD&C Committee met seven times.

The MD&C Committee periodically reviews the Company’s philosophy regarding overall executive compensation and discusses alternate compensation approaches with the CEO as appropriate. This includes: annually reviewing data to assess the Company’s competitive position for the three components of executive compensation (base salary, annual incentives, and long-term incentives); reviewing on an alternating annual basis an external compensation analysis provided by an outside expert on compensation, which may include surveys compiled by third-party consultants and other supplemental general industry

The MD&C Committee is charged with negotiating the terms of the CEO’s employment agreement and approving the final terms of such agreement. In 2006, the MD&C Committee exercised this duty and negotiated a new contract with Mr. Perry effective in September 2006. In terms of the MD&C Committee’s goal for establishing fair and competitive compensation for the CEO, the specific duties and responsibilities include reviewing and approving appropriate corporate goals and objectives for the next year; evaluating the performance of the CEO in meeting the prior year’s corporate goals and objectives, considering the total compensation (including base salary, cash incentive, long-term incentive and any other compensation) paid to the CEO for the prior year and reviewing and approving the compensation paid to the CEO; and consulting with such other information it deems appropriate, which may include the value of such awards granted to other CEOs of similarly situated companies, the financial services industry and industry in general.

All compensation for Executive Officers are reviewed and approved by the MD&C Committee for compliance with Section 16 of the Securities and Exchange Act and Section 162(m) of the Internal Revenue Code and any other applicable laws and regulations. The MD&C Committee administers and makes recommendations to the Board regarding the adoption, amendment or rescission of Long-Term Incentive Plans and assures that payments under these plans are in conformance with any restrictions placed thereon by the Board and shareholders. The MD&C Committee reviews the performance of the fiduciaries who manage the retirement, health and welfare plans as defined by the Employee Retirement Security Act of 1974 (“ERISA”) sponsored by the Company and all subsidiaries and render appropriate reports to the Board. Additionally, the MD&C Committee issues a report on executive compensation for inclusion in the Company’s proxy statement. The MD&C Committee also reviews and monitors hiring, compensation and other practices in support of a diverse workforce and compliance with applicable laws and regulations, including laws regarding nondiscrimination in employment and human resource practices.

Compensation for the executive officers of Indymac is administered under the direction of the Management Development and Compensation Committee of the Board of Directors, also referred to as the MD&C Committee. In fulfilling its oversight responsibilities, the MD&C Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement.

In reliance on the review and discussions in the Management Development and Compensation Committee section above, the MD&C Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and the Company’s Proxy Statement to be filed in connection with the Company’s 2008 Annual Meeting of Stockholders, each of which will be filed with the Securities and Exchange Commission.

This section provides information regarding the compensation program in place for our principal executive officer, principal financial officer and the four most highly-compensated executive officers other than the principal executive officer and the principal financial officer, collectively considered the “named executive officers” (“NEOs”). The information presented includes, among other things, the overall objectives of our compensation plan and each element of compensation we provide.

Adhering to the guidelines issued by the Securities Exchange Commission, Indymac has identified the following six executives as the Company’s NEOs:

We believe that a corporate culture based on a foundation of “meritocracy,” where individuals and teams are evaluated and rewarded based solely on their performance, without regard to politics, best fosters an environment of excellence and will lead to the greatest level of long-term business success for the Company. The objectives of Indymac’s compensation programs and our meritocracy culture are to attract, motivate and retain the type of executives needed to develop and execute the Company’s core strategies, which in turn should maximize the Company’s financial performance and long-term shareholder value creation.

Indymac’s compensation philosophy supports its culture of meritocracy by tying the incentive compensation of its senior managers — including NEOs — to their performance against the goals established for them. The specific goals for each of the NEOs relating to 2007 are described in more detail below.

While we adopt a highly metrics-focused approach to the design of our compensation plans, we must leave in some subjectivity to ensure the Company has flexibility to respond appropriately to unforeseen market changes. As such, we retain some flexibility in our compensation plans in order to retain, motivate

Such a downturn and disruption clearly occurred with respect to the mortgage industry and Indymac in 2007. In addition, given the precipitous decline in Indymac’s stock price, our senior management team now holds a substantial number of underwater stock options and other long-term incentive awards with significantly lower value than the grant date value. For example, the value of current employee owned outstanding stock options and unvested restricted stock declined by 97% from $192 million on December 31, 2006 to $6 million on December 31, 2007. In light of these challenging conditions, in 2007 the MD&C Committee used its discretion to weigh Indymac’s pay for performance principles against the need to motivate and retain the management team to successfully adapt Indymac’s business to the new mortgage environment and to rebuild Indymac’s business and financial model. The MD&C Committee took appropriate steps to adjust/modify senior manager compensation plans, as discussed more fully below (see section titled “The Elements of Our Compensation Program”).

The three principles that support our compensation philosophy are outlined below.

Our incentive compensation program, the engine of our meritocracy, is designed to reward improvements in actual results. Shareholder value is generally created by improvement in corporate performance; therefore, our compensation plans are designed to reward improved performance by our NEOs on a year-over-year basis. Consequently, Indymac’s compensation packages do not reward the status quo. To maximize incentive compensation, NEOs are motivated to continually improve their performance.

Indymac’s compensation plans for its NEOs are structured so that the approximate composition of total compensation is one third salary, one third short-term cash incentive, and the final third in the form of long-term incentives. Since the Company’s Long-Term Incentive Programs result in a predominant portion of the NEO’s long-term incentive compensation being driven by their actual short-term cash incentive, which is performance based, a predominant portion of NEO compensation is generally performance based.

We believe that a substantial portion of total compensation for the NEOs should be provided in the form of long-term incentive compensation, to provide the Company retention benefits and help align the interests of our NEOs with the interests of our shareholders. This is achieved in two ways. First, the awards always have vesting provisions of these awards (generally 3 to 5 years), which yield the Company strong retention benefits. Secondly, since these awards are either in the form of equity or in the form of restricted cash which can be invested in Indymac common stock, their value is generally aligned with Indymac share performance.

We are dedicated to creating shareholder value and believe that in order to achieve this goal we must recruit, motivate, and retain talented executives through competitive compensation packages. The competitiveness of the Company’s compensation packages is tested as the Company searches externally to fill key new and replacement senior management positions. In addition, as previously described, the Company conducts compensation benchmarking on a regular basis with an external review performed every 2 years and internal reviews performed on an ongoing basis. The most recent external compensation benchmarking analysis for the Company relative to its peers was completed in 2005 by Mercer Consulting. Mercer was engaged by the MD&C Committee to develop the peer group and to provide comparative data regarding executive compensation for 2005. Mercer was asked to assess pay levels, evaluate performance measurement system and comment on best practices in this area. The Company decided to delay its 2007 external compensation benchmarking analysis until 2008 as the 2007 analysis would have been based on 2006 proxy information, and we believe this information is no longer reflective of the current market reality.

The 2005 Mercer study found that base salaries for Indymac’s NEOs were generally at the median of those of our competitors. It also found that actual total compensation packages for Indymac’s NEOs were at approximately the 75th percentile mark of the total compensation paid by companies in our Peer Group. For the purposes of that review, total compensation included salary, short-term incentives and long-term incentives. Mercer attributed this historical compensation level relative to peers to Indymac’s superior financial performance, which exceeded the Peer Group EPS and ROE averages significantly over the benchmarking period. The Company does not target any particular percentile of its peers, but the MD&C Committee believes that previous external benchmarking results showed that Indymac’s ranking of compensation against its competitors reflected the Company’s philosophy of pay for performance. By this we mean that an executive’s total compensation should be commensurate with their absolute and relative job performance. We believe that by providing a median salary combined with significant incentive compensation upside and downside — such that a top executive could earn above or below average total compensation relative to peers for above or below average individual performance respectively — the Company can attract and retain the type of executive we wish to employ to achieve the financial goals set by the Company.

The 2005 survey is no longer used by the Company to make current compensation decisions as the information is out of date. Since external compensation benchmark data does not reflect current market reality, internal benchmarking is completed by the Company when a senior manager is eligible, recommended, or otherwise reviewed for any kind of change in compensation. For new hires, verification of current compensation serves as an external benchmark during the hiring process. Finally, internal benchmarking for the Company’s Executive Committee (EC) is also done on an annual basis, when the MD&C Committee reviews the total compensation of each EC member. This is to ensure that compensation levels and trends are in line with positions of similar responsibilities and actual job performance.

As the industry and Indymac transition through a very difficult period, the Company believes it is of paramount importance to retain and motivate its top management team in order to remain competitive in our industry. Experience has shown this can be accomplished with competitive compensation packages.

Each NEO has an employment agreement with the Company which documents the NEO’s compensation program and establishes a clear compensation, benefits and legal framework for the executive’s separation from the Company under various scenarios. Employment agreements for top managers are customary in our industry and are therefore a required component of each NEO’s total compensation package. The Company has a policy of offering employment agreements only to tenured, performing top managers. We believe these agreements improve manager morale and commitment to the Company and are viewed by managers as an expression of confidence in their performance and future with the Company. Additionally, the termination framework established by our employment agreements benefits the Company by enabling more expedient and less contentious termination decisions where considered appropriate. This section describes the elements of our compensation program for NEOs, together with a discussion of various matters relating to those elements, including the reasons the MD&C Committee chooses to include the elements in the compensation program. The elements are:

Section 162(m) of the Internal Revenue Code limits the corporate deduction for NEOs’ annual compensation to $1 million, unless the amount by which such compensation exceeds the $1 million threshold is based upon performance goals that are subject to MD&C Committee and shareholder approval (“performance-based compensation”). The MD&C Committee’s policy on deductibility is generally to develop compensation plans that provide for the payment of compensation that is tax deductible to Indymac, while recognizing that the legitimate interests of Indymac and its shareholders may at times be better served by compensation arrangements that may not be fully deductible. Additionally, NEO annual incentive plans are subject to MD&C Committee approval within the first calendar quarter of the service year.

The following paragraphs provide an overview of each element of our compensation program.

The base salary for each of the NEOs is initially stipulated in the individual employment agreement for each executive, providing the NEO some fixed and liquid compensation which is necessary to attract and retain the executives. It is subject to review during the year due to a change in position or responsibilities. Any increase in base salary for an NEO must be approved by the CEO and MD&C Committee. At the time that each of the employment agreements was entered into, the MD&C Committee established initial base salaries in consideration of the NEO’s position with the Company, the responsibilities associated with that position, the NEO’s experience, prior performance with the Company, expertise, and general market factors relating to retention and providing a competitive compensation package. Annual increases in salary, if any, are based principally upon the MD&C’s consideration of past

Indymac’s compensation plans for NEOs for 2007 were structured so that approximate proportions of total compensation would be as follows: one third salary, one third short-term cash incentive, and the final third in the form of long-term incentives. Since performance based incentives for 2007 were significantly reduced (as discussed in detail later in this proxy), which resulted in total compensation reductions relative to targeted levels, salary, as a percentage of total compensation, has therefore increased in 2007.

Short-term cash incentives are based on the achievement of short-term goals specified in each individual NEO’s performance-based incentive plan which the MD&C Committee believes yields the Company and provides the NEO the strongest short-term performance motivation consistent with the Company’s short and long-term financial objectives.

Each NEO must have a written incentive plan specifying his/her goals, which have been approved by the CEO and the MD&C Committee. Each goal must be to either improve upon a performance measure or to achieve an objective measure or milestone.

Generally speaking, short-term cash incentives based on achieving metric-related goals are calculated by multiplying a performance payout factor, or set of weighted performance factors, times the NEO’s Cash Incentive Basis, which is either formulaic, per his employment agreement, or otherwise representative of incentive payments made in the prior calendar year. Since we believe compensation improvement is driven by performance improvement, it is Indymac’s common practice to set a senior manager’s Incentive Basis at his/her prior year incentive payout, unless formulaically stipulated in the employment agreement. In order for the NEO to receive a 100 percent payout factor, we generally expect improvement relative to performance from the prior year specified for each of the stated metrics of the NEO’s Short-Term Cash Incentive Plan; this expectation can vary, based on market conditions and industry and peer performance. For those NEOs whose responsibilities include new business incubation or business turnaround, their actual performance is measured against an approved plan. Payout ratios generally range from zero percent to 150 percent of the Incentive Basis.

Long-Term Cash Incentives (LTI) are awarded formulaically based on short-term compensation, i.e., short-term performance. Since these awards vest over time, this component generally yields the Company strong retention benefits. It is equally important to note that the worth of these long-term awards, when granted as or invested in equity, is directly linked with the long-term performance of Indymac, providing the NEO a sustained long-term performance motivation and yielding the Company strong alignment to shareholder value.

Indymac has two Long-Term Incentive Programs for its NEOs, the Senior Manager Long-Term Incentive Plan and the Executive Committee Long-Term Incentive Plan. These programs operate under our 2002 Incentive Plan, which was approved by shareholders. Awards of both plans are formulaic and based on compensation provided through salary and short-term cash incentives.

In 2007, the Company modified the Long-Term Incentive Program due to concerns regarding the equity burn rate. Previously, in conjunction with an amendment to Indymac’s 2002 Incentive Plan to add

Indymac senior managers, including the NEOs, are eligible to participate in the Company’s Senior Manager Long-Term Incentive Plan. Historically, the plan provided stock options and/or restricted stock annually in an amount equal to 25 percent of the combined total of the individual executive’s salary and short-term cash incentive that was earned in the respective year. Generally, the stock options granted under this program vested ratably over a three-year period, and restricted stock granted under this program vested 100 percent at the end of a three-year period.

Prior to 2007, the Senior Manager equity grant accounted for approximately 30 percent of the annual burn rate and was the highest contributor to the burn rate. Given these circumstances, a modified Long-Term Incentive Program for Senior Managers was implemented in 2007. This program is intended to retain a tie to shareholder value creation, while moving to a cash-based program in order to reduce potential dilution and the equity burn rate.

The revisions to the Senior Manager Long-Term Incentive Plan are neutral from an economic standpoint for Senior Managers. Under the new program Senior Managers still receive a long-term incentive award valued at 25 percent of their earned base salary and short-term cash incentive for the respective year. However, rather than receiving restricted stock or stock options, which have historically vested at the end of three years, the award is made in restricted cash and may only be invested in an interest-bearing cash account or in an Indymac common stock fund.

Due to their elevated levels of responsibility, Executive Committee members, including the NEOs, are also eligible to participate in an additional long-term incentive award, in the form of restricted cash or stock options, as determined by the MD&C Committee, valued at 50 percent of the amount of their short-term cash incentive for the respective year. As the Executive Committee Long-Term Incentive Plan is based solely on the short-term cash incentive, it is automatically leveraged against the executive’s improvement in performance over prior periods. Restricted cash or stock options granted under this plan have historically vested ratably over a three-year period.

A cap is also placed on this award so that it will not exceed 75% of the two-year prior cash incentive award in value. As a result of the plan design and 75% cap, poor performance in one year will result in a reduced long-term incentive grant in the following year. The 75% cap is designed as a key control for the Company to avoid large long-term incentive grants in the event that an executive has a particularly high cash incentive award due to exceptional performance in a previous year.

The target annual long-term incentive award grant date will be set at March 15th of the following year. On March 15th (or the first business day thereafter, if March 15th falls on a weekend) the MD&C Committee will meet to approve the annual grant, taking into consideration the stock fair market value on that date relative to recent trends, as well as other relevant factors (e.g., the industry and market environment trends). The Committee may decide, based on their judgment and discretion to approve or postpone their approval until a future meeting date where the above process will be repeated. The annual grant must be approved and made no later than the day the quarterly blackout period begins for Q1 of that year.

On the grant date, the MD&C Committee will meet to review and approve the equity grant values and number of shares to be distributed. Option value, option strike price and stock fair-market value are set on the grant date, as required by Indymac’s shareholder-approved incentive plans.

In 2007, the Committee exercised its discretion in determining the grant date. On the target grant date (March 15th), the Committee Chair reviewed the stock and option fair market values vs. trailing 90 day averages and +/-10% of trailing 90 day averages, and also considered other items that might be considered material non-public information. Since the company had issued a press release on March 15th with content that might be viewed as positive by investors, the Chair decided to delay the grant to conservatively allow time between the press release and the actual grant (i.e., to ensure the grant was made when there was no material non-public information). Shortly thereafter, the company conservatively decided to close the trading window for key insiders until another matter was either determined to be material non-public information and disclosed to the public or otherwise resolved and deemed not to be material non-public information. On March 22nd, the matter mentioned above was determined (in consultation with outside counsel) not to be material non-public information. As a result, the company decided to re-open the trading window for key insiders as of March 23rd. Given the re-opening of the trading window, and pursuant to the Committee’s discretion to consider a market adjustment if the stock/option fair market value on grant date are above, or in this case below 90% of the trailing 90 day average values, the grant was made on March 23.

Indymac provides or pays for various perquisites for its NEOs. These perquisites can include financial planning services, memberships in social and professional clubs, car allowances, executive medical programs and gross up payments equal to the taxes payable on certain perquisites. The perquisites provided by Indymac are also provided by many of our peer companies to their NEOs and therefore provide the Company valuable attraction and retention benefits.

The MD&C Committee feels the use of professional and social clubs furthers the Company’s interests by creating opportunities for professional networking and exposure to new ideas. Additionally, the visibility provided by these venues for our NEOs raises the Company’s profile in the communities where we do business, which we believe is in our shareholders’ best interests.

Generally, the MD&C Committee believes the perquisites it provides to its NEOs are minimal and in the best interests of its shareholders. It is the Company’s policy to disclose all perquisites provided to NEOs regardless of whether they meet the SEC’s minimum threshold for disclosure of $10,000.

The Company’s Defined Benefit Pension Plan was frozen to new participants on January 1, 2003, and its benefits were frozen as of May 31, 2007. Employees hired prior to January 1, 2003, with one or more years of service, are entitled to annual pension benefits beginning at normal retirement age (65 years of age) equal to a formula approximating 0.9% of average compensation multiplied by credited service (not in excess of 35 years), subject to a vesting requirement of five years of service. Participants can also become vested upon attainment of Normal Retirement Age while still employed by the Company on such date or termination of employment (other than a termination for cause) within two years following a change in control of the Company, as defined in the Plan. Compensation for benefit computation purposes is limited under the Code to $220,000 for Plan Year 2007. As of December 31, 2006, Messrs. Perry, Wohl, Abernathy, Sillman, and Keys are eligible for this benefit.

The Company has always offered and continues to offer a 401(k) plan, and has historically provided a corporate match of up to 3 percent for all its employees (see below for recent changes made to this match). This 401(k) plan is the primary retirement benefit offered by the Company to its employees.

The employment agreements between Indymac and its NEOs have severance provisions for certain terminations or a termination in conjunction with a change of control. These provisions provide payments and other benefits if the NEO’s employment is terminated for a qualifying event or circumstance, such as being terminated without “Cause” or leaving employment for “Good Reason,” as these terms are defined in the employment agreements. We have also entered into transitional compensation agreements with each of our NEOs upon a qualifying event or circumstance after there has been a “Change-in-Control” (as defined in the agreements) of the Company. Additional information including a definition of key terms and a quantification of benefits that would have been received by our NEOs had termination occurred on December 31, 2007, is found under the heading “Potential Payments Upon Termination or Change in Control” on page 63 of this Proxy Statement.

Pursuant to agreements with directors or employment agreements with officers and directors, Indymac may make severance payments to a director who is not re-elected or to any officer or employee who is terminated. Such payments may require regulatory approval under certain conditions.

The MD&C Committee believes that severance benefits play a valuable role in attracting and retaining key executive officers, particularly in the context of a change in control transaction. At the time that each of the employment agreements was entered into, the MD&C Committee established severance benefits in consideration of the NEO’s position with the Company, compensation, and general market trends. The Company considers these benefits to be appropriate and consistent with competitive practices.

The variable elements of our compensation program have consistently been based on rewarding improved performance. However, given the severe mortgage industry downturn and market disruption that occurred in 2007, performance improvement was clearly not possible for Indymac this year, with the result that most senior managers’ incentive compensation would have been zero based on a strict adherence to the Short-Term Cash Incentive Plans. Senior managers have customized, individual incentive plans, which are either objective goal/milestone-based or performance metrics-based. Incentive payouts are

In our drive to return Indymac to profitability as quickly as possible, we have taken a number of cost cutting measures that impact the compensation of the management team:

These cost-cutting actions are in addition to other significant cost-saving measures, including most recently the approximately 26% reduction in our global work force discussed with investors in February 2008. While these measures are important to returning Indymac to profitability and consistent with our objective of being “the” low cost provider in the mortgage business, the MD&C Committee wants to make sure Indymac properly motivates and rewards the senior management team, as it believes that these executives are the key drivers of the Company’s turnaround and future success. Therefore, the MD&C Committee took action with respect to long-term equity incentive grants as discussed below.

Long-term equity incentive grants have traditionally formed a significant portion (20-40%) of total compensation for the Company’s senior managers and Executive Committee members. The significant decline in the trading price of the Company’s common stock in 2007 has resulted in a loss of nearly all of the value of the long-term equity incentive grants made to the Company’s employees, with 100% of outstanding options having exercise prices in excess of the trading price of the Company common stock as of February 29, 2008. This very substantial loss of value presents significant challenges as the Company seeks to retain its key senior managers to achieve a financial turnaround and return to profitability based on the Company’s new production model. In an effort to address these retention challenges in a cost effective manner, in conjunction with the larger compensation and benefits cost-saving initiatives described above, the MD&C Committee approved special retention grants of stock options to acquire an aggregate of approximately 2.1 million shares of Company common stock to a total of 111 Executive Committee members, Senior Managers and non-senior managers in critical roles. These options vest ratably over five years, subject to the holders’ continued employment with the Company through that date, although partial to full vesting is accelerated on a termination of employment due to death, disability or by the Company without cause and upon a change of control of the Company. The Chairman and Chief Executive Officer, the President, the Chairman of Financial Freedom and non-employee members of the board of directors of the Company did not receive grants under this program. The special retention grant will result in the Company’s three-year average equity grant burn rate as of December 31, 2008 increasing from its current level.

The following paragraphs present the details of 2007 compensation for each NEO.

As the Company’s Chairman and Chief Executive Officer, Mr. Perry is responsible for the overall direction and administration of all programs and services provided by the Company and for ensuring that all aspects of the Company’s activities are conducted commensurate with the best interests of shareholders, customers, employees, and other key stakeholders. His responsibilities include: (i) setting the strategic vision and establishing a strategic, financial and risk management plan for the Company, (ii) recruiting

Mr. Perry’s responsibilities, as described above, are significantly broader than any other Named Executive Officer at the Company. In determining his compensation package, in 2006, the Management Development and Compensation Committee asked Mercer, its independent compensation consultant, to review Mr. Perry’s compensation and to make a recommendation based upon the Company’s overall pay philosophy. Mercer provided the committee with peer group comparison data which indicated that a difference in pay generally exists between the CEO position and the other top executives in our industry. After reviewing this data and Mercer’s recommendation, the Company established Mr. Perry’s compensation package based upon his duties and responsibilities with the Company. Consideration also was given to his tenure in the role and his experience in the mortgage industry.

At Mr. Perry’s request, his salary has been capped at $1,000,000. Accordingly, it is fully deductible under Section 162(m) of the U.S. tax code. He received a zero 2007 short-term cash incentive payout, as determined by his entirely metric-based performance plan, which used Indymac’s 2007 EPS relative to that of 2006 as the single performance measure. Mr. Perry’s incentive basis was set at 1% of Indymac’s prior year income, in accordance with his employment agreement; therefore, his 2007 incentive basis was $3.42 million (1% of Indymac’s $342 million 2006 Net Income). The percentage of his incentive basis to be received was determined by the performance matrix shown in the table below:

Since Indymac’s EPS did not grow greater than 5% from 2006 to 2007, the resultant percentage of Incentive Basis earned was 0%, yielding a $0.00 short-term cash incentive payout.

Consistent with the long-term incentive practices discussed above and as required by Mr. Perry’s contract, Mr. Perry would have received a Senior Manager LTI restricted cash award, valued at 25% of his salary plus short-term cash incentive, equaling $250,000. However, given the Company’s 2007 performance, Mr. Perry declined to receive this award.

Mr. Wohl received $750,000 in salary for 2007, representing no increase from that of 2006. He received a $273,188 short-term cash incentive payout.

His metric-based performance plan used Net Income and ROE of the Indymac Bank businesses for which he was responsible in 2007 (Mortgage Professional, Consumer Direct & Retention, HELOC, Consumer Construction, and Subdivision Construction channels, and Servicing Operations and deposit gathering in the Retail Bank branches and call center) as performance measures. While we believe that EPS is the most representative compensation performance measure in alignment with Indymac performance for the entire company, this measure is problematic for individual business units with respect to the allocation of shares. Therefore, we believe that the combined use of Net Income and ROE as performance measures best aligns with performance of business segments. The use of these measures also applies to Messrs. Sillman and Abernathy discussed below.

Mr. Wohl’s incentive basis was set at his prior year incentive payout, which was $546,375. The percentage of his incentive basis earned was determined by the performance matrix shown in the table below:

This result was then multiplied by an ROE performance factor, determined by comparing his business’ 2007 ROE against their 2006 ROE and a predefined threshold ROE. This ROE performance factor ranged from 50% to 125%. Based upon the significant decrease in Bank 2007 Net Income, the resultant percentage of Incentive Basis earned was 0%. However, as indicated in the Elements discussion above, Mr. Wohl’s actual short-term incentive was paid at the discretionary 50% of incentive basis, $273,188.

Mr. Wohl received an upfront stock option grant at the beginning of his employment agreement, effective from November 1, 2002 through December 31, 2007. Under that agreement, he was not eligible for the already described standard LTI awards.

As discussed earlier, it is the Company’s practice to provide employment agreements to its senior management. Since Mr. Wohl’s previous employment agreement would have terminated at the end of 2007, his employment agreement was restated and amended. As President of Indymac Bank, Mr. Wohl’s new agreement generally parallels that of Mr. Perry’s, although his salary is at a 75% level and his incentive compensation is at a 50% level relative to that of the CEO. Pursuant to his new agreement, he will become eligible for LTI awards beginning with 2008 earned, 2009 granted awards.

Mr. Abernathy received $627,000 in salary for 2007, representing no increase from that of 2006. He received a $296,316 short-term cash incentive payout. His metric-based performance plan used Net Income and ROE of the Specialty Products businesses for which he was responsible in 2007 (Consumer Construction, HELOC, and Home Builder) as performance measures. Mr. Abernathy’s incentive basis was

This result was then multiplied by an ROE performance factor, determined by comparing his business’ 2007 ROE against their 2006 ROE and a predefined threshold ROE. This ROE performance factor ranged from 50% to 125%. Based upon the significant decrease in Specialty Business 2007 Net Income, the resultant percentage of Incentive Basis earned was 0%. However, as indicated in the Elements discussion above, Mr. Abernathy’s actual STI was paid at the discretionary 50% of incentive basis, $296,316.

Consistent with the LTI practice previously described, Mr. Abernathy received a Senior Manager LTI restricted cash award, valued at 25% of his salary plus short-term cash incentive, equaling $230,829, plus an Executive Committee LTI restricted cash award, valued at 50% of his short-term cash incentive, equaling $148,158, each of which vest over 5 years and may be invested via the Senior Manager and Non-Employee Director Deferred Compensation Plan in Indymac Common stock or in an interest bearing cash account.

Mr. Sillman received $500,000 in salary for 2007. He received a $352,978 short-term cash incentive payout. His metric-based performance plan used Net Income and ROE of the Mortgage Professionals channel and the Net Income of the Retail Lending Group (RLG), businesses for which he was responsible in 2007. Mr. Sillman’s incentive basis was set at his prior year incentive payout, which was $705,956. 80% of his incentive was based on the Mortgage Professionals business, while 20% was based on the new RLG business. The percentage of his incentive basis earned for the Mortgage Professionals business was determined by the performance matrix shown in the table below:

This result was then multiplied by an ROE performance factor, determined by comparing his business’ 2007 ROE against their 2006 ROE and a predefined threshold ROE. This ROE performance

The percentage of his incentive basis earned for the new Retail Lending Group business was determined by the performance matrix shown in the table below: