Daniel S. Perotti
PennyMac Financial ServicesAbout Daniel S. Perotti
Senior Managing Director and Chief Financial Officer (CFO) of PennyMac Financial Services, Inc. since January 1, 2021; previously Deputy CFO (2017–2020) and held executive roles since 2008. Age 44; BA in Economics and Computer Science from Columbia University; prior experience at BlackRock leading quantitative research within BlackRock Solutions (2002–2008) . Company FY2024 performance that drove incentive outcomes: Net income $311.4M and ROE 8.5% amid higher rates and mortgage market headwinds . Executive officers also serve as officers of PennyMac Mortgage Investment Trust (PMT), aligning oversight across PFSI and PMT .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| PennyMac Financial Services/PNMAC | CFO | 2021–present | Oversees accounting, reporting, treasury, IR, FP&A, tax, SOX; leader across mortgage finance cycles |
| PennyMac Financial Services/PNMAC | Deputy CFO | 2017–2020 | Built FP&A and control environment during rate/inflation shifts |
| PennyMac Financial Services/PNMAC | Chief Asset & Liability Management Officer; other exec roles | 2008–2016 (executive since 2008) | Balance sheet, risk, capital structure, MSR valuation/hedging |
| BlackRock, Inc. | Head of quantitative research, BlackRock Solutions | 2002–2008 | Led quant research for risk/analytics platform; data-driven decisioning |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| PennyMac Mortgage Investment Trust (PMT) | Executive officer (and officer of certain subsidiaries) | Ongoing | PFSI executives concurrently serve as PMT officers, supporting aligned strategies |
Fixed Compensation
| Component | 2022 | 2023 | 2024 | Notes |
|---|---|---|---|---|
| Annual Base Salary (actual paid) | $400,000 | $400,000 | $470,833 | Reflects timing of 2024 raise to $500,000 in Feb 2024 |
| Annual Base Salary (set by Committee) | — | — | $500,000 | Raised $100k; below 25th percentile vs peers |
| 401(k) Employer Match | $13,800 | $13,800 | $13,800 | Company match cap for FY2024 was $13,800 |
| All Other Compensation | $58,878 | $48,536 | $49,740 | Includes insurance premiums ($18,370), tax/financial counseling ($16,595), 401(k) match ($13,800), cell phone allowance |
Performance Compensation
| Metric | Weighting | Target | Actual | Payout % | $ Payout |
|---|---|---|---|---|---|
| ROE (Annual Incentive) | 70% | 15% ROE=100% payout | 8.5% ROE | 52.6% | Part of overall payout |
| Strategic Objectives (Annual Incentive) | 30% | 100% | Multiple operational/tech/customer targets achieved; strategic payout set at 150% | 150% | Part of overall payout |
| Total Annual Incentive | 100% | — | — | 81.8% | $1,145,137 |
2024 Annual Target Incentive (before performance): $1,400,000 . The annual incentive plan uses objective ROE targets (no GAAP adjustments) and strategic goals, interpolated across thresholds with a 255% cap at maximum . PSU design for long-term equity emphasizes three-year cumulative annualized ROE with leverage and individual-effectiveness multipliers (max 300% of target shares) .
Equity Awards – 2024 Grants and Vesting Design
| Award Type | Grant Date | # Units/Options | Grant-Date Fair Value | Vesting | Key Terms |
|---|---|---|---|---|---|
| Performance-Based RSUs (PSUs) | Feb 29, 2024 | 10,008 | $849,979 | Three-year performance period (2024–2026); payout based on cumulative annualized ROE; leverage ratio multiplier (50–120%); individual effectiveness multiplier (0–100%); max 300% shares | ROE thresholds: <5% payout 0%; target 15% payout 100%; ≥30% payout 250% |
| Time-Based RSUs | Feb 29, 2024 | 5,004 | $424,990 | Ratable vesting over 3 years (equal installments beginning first anniversary) | Settled in common stock upon vesting |
| Nonstatutory Stock Options | Feb 29, 2024 | 12,510 | $467,499 | Ratable vesting over 3 years; 10-year term | Exercise price $84.93; expiration 2/28/2034 |
2022 PSU tranche outcome (Feb 23, 2022 grant, performance through 12/31/2024): ROE 8.8% below threshold; payout 0%; tranche forfeited, underscoring pay-for-performance discipline .
Equity Ownership & Alignment
| Item | Amount/Detail |
|---|---|
| Total beneficial ownership | 417,030 shares (<1%) |
| Ownership breakdown | 244,525 shares held by Perotti Family Trust; 172,505 shares underlying stock options exercisable by May 30, 2025 |
| Shares pledged | None; “None of the shares have been pledged as security” |
| Stock ownership guidelines | CEO 5x salary; other executive officers 3x salary; execs ≥5 years in role are in compliance |
| Insider trading/pledging policy | No hedging, pledging, short sales, options or margin trading by officers/directors; preclearance required; 10b5‑1 plans permitted during open windows |
| Deferred compensation (2024) | Executive contribution $57,257; aggregate balance $57,257 |
Outstanding awards as of Dec 31, 2024 (subset):
- Options: 12,510 unexercisable at $84.93 expiring 2/28/2034; 8,575 unexercisable / 4,287 exercisable at $60.74 expiring 2/23/2033; 11,932 unexercisable / 23,860 exercisable at $57.10 expiring 2/22/2032 .
- RSUs/PSUs unvested at year-end: 5,004 time-based RSUs (market value $511,109 at $102.14/share); 10,008 PSUs at target (market value $1,022,217 at $102.14/share; payout subject to performance) .
2024 realized transactions from scheduled vesting/exercises:
| Item | Shares | Value Realized |
|---|---|---|
| Options exercised | 16,481 | $1,385,087 |
| RSUs vested | 6,819 | $592,469 |
Note: “Value realized” equals shares times fair market value at vest/exercise dates; PSU tranche for the 2022 grant did not vest (0% payout) .
Employment Terms
- Individual employment agreement: Not disclosed for Mr. Perotti; covered by the Change of Control Severance Plan adopted Sept 22, 2021 for executives without separate agreements .
- Change-of-control economics (double-trigger): If terminated without cause or resigns for good reason within two years post-CoC, entitled to two years base salary plus 200% of bonus; acceleration of outstanding unvested time-based awards; PSUs accelerate at target to the extent not addressed by equity plan CoC rules; continued health benefits (18 months); outplacement services; payments reduced to avoid excise tax under Section 4999 to produce best after-tax result (no tax gross-ups) .
- CFO (Perotti) CoC payout illustration (as of 12/31/2024): Base $1,000,000; Bonus $2,290,274; Equity Vesting $5,356,947; Total $8,647,221 .
- Clawback: SEC-compliant clawback covering incentive compensation for current/former Section 16 officers; separate clawback also applies to Senior Managing Directors .
Compensation Structure Analysis
| Year | Salary | Stock Awards | Option Awards | Non-Equity Incentive | All Other Comp | Total |
|---|---|---|---|---|---|---|
| 2022 | $400,000 | $749,952 | $269,811 | $1,375,000 | $58,878 | $2,853,641 |
| 2023 | $400,000 | $937,400 | $328,968 | $630,000 | $48,536 | $2,344,904 |
| 2024 | $470,833 | $1,274,969 | $467,499 | $1,145,137 | $49,740 | $3,408,178 |
- 2024 base salary increased to $500,000 (from $400,000), while still below the 25th percentile of peer CFO base salaries, signaling heavier weight on performance-based pay and equity .
- Long-term equity grants in 2024: PSUs 10,008 shares (50% of LTI value at target), RSUs 5,004, options 12,510; mix aligns incentives with ROE/leverage and shareholder returns .
- 2024 annual incentive paid at 81.8% of target due to company ROE at 8.5% vs. 15% target, partially offset by strong strategic execution (150% for strategic component) .
- 2022 PSU forfeiture (0% payout) reinforces the plan’s stringency and reduces realized pay when performance underachieves .
Compensation Peer Group (Benchmarking)
Peer group used for compensation decisions includes: Essent Group Ltd., Fidelity National Financial, First American Financial, MGIC Investment, Mr. Cooper Group, OneMain Holdings, Radian Group, Redwood Trust, Rithm Capital, Rocket Companies, SLM Corporation, UWM Holdings, Walker & Dunlop, Zillow Group .
Say‑on‑Pay & Shareholder Feedback
| Year | Approval (“For” votes % of cast) |
|---|---|
| 2022 | 98.7% |
| 2023 | 82.6% |
| 2024 | 99.0% |
Committee maintained ROE-centric design after reviewing alternatives; widened maximum ROE payout range and adjusted leverage multiplier to balance risk-taking and performance; enhanced strategic disclosure; ongoing investor engagement across meetings, conferences, and roadshows .
Risk Indicators & Governance Policies
- No hedging/pledging/margin trading; robust preclearance and trading window controls; 10b5‑1 plans permitted during open windows .
- Clawback policies (SEC-compliant and internal) extend recoupment to incentive compensation for covered executives .
- Indemnification: Standard Delaware law-based indemnification agreements; as of proxy, no pending litigation naming directors/officers seeking indemnification .
- Related party framework: Formal committee oversight of PMT management/servicing/MBS agreements; allocations and fees disclosed, mitigating conflicts .
Investment Implications
- Alignment: High at‑risk mix with ROE‑driven PSUs and structured annual incentive; forfeiture of 2022 PSUs indicates a genuine pay‑for‑performance ethos and reduces realized comp when ROE underperforms . Stock ownership guidelines and anti‑pledging policy further align long‑term interests with shareholders .
- Retention risk: 2024 LTI awards (PSUs/RSUs/options) vest over multi‑year schedules, providing retention hooks; CoC severance is double‑trigger without tax gross‑ups, balancing retention with shareholder safeguards .
- Trading signals: Scheduled vesting and option exercises in 2024 (16,481 options exercised; 6,819 RSUs vested) suggest routine liquidity/tax events rather than discretionary selling; pledging banned, and PSU forfeitures cut realized equity, limiting near‑term selling pressure from PSU settlements .
- Execution risk: Annual incentive below target (81.8%) due to ROE 8.5% vs 15% target highlights macro sensitivity of mortgage banking; the widened ROE payout range and leverage multiplier adjustments should better differentiate outcomes across rate cycles . Continued emphasis on technology, operational efficiency, and balanced production/servicing model supports ROE recovery potential over time .