David A. Spector
PennyMac Financial ServicesAbout David A. Spector
David A. Spector (age 62) is Chairman and Chief Executive Officer of PennyMac Financial Services (PFSI), serving as CEO since January 2017 and Chairman since February 2021; he has been a director since December 2012. He holds a B.A. from UCLA and previously held senior capital markets roles at Morgan Stanley (co-head of Global Residential Mortgages) and Countrywide Financial (Senior Managing Director, Secondary Marketing) . Under his leadership, PFSI delivered 2024 net income of $311.4 million (vs. $144.7 million in 2023), ROE of 8.5% (vs. 4.1% in 2023), and increased its quarterly dividend to $0.30; PFSI was the #2 producer of U.S. mortgage loans in 2024 and grew servicing UPB to ~$666B, while PFSI’s cumulative TSR translated a $100 initial investment into $319.4 over 2020–2024 (peer TSR $132.2) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| PennyMac Financial Services/PNMAC | Chairman & CEO; previously President & CEO; Executive MD/President/COO; President/COO | Chairman since 2021; CEO since 2017; Exec roles 2013–2016/2016 | Led expansion to #2 US mortgage producer; balanced production/servicing, capital markets/hedging risk management |
| PennyMac Mortgage Investment Trust (PMT) | Director; Chairman | Director since 2009; Chairman since 2021 | Oversight of externally managed REIT; alignment across PMT/PFSI ecosystem |
| Morgan Stanley | Co-Head, Global Residential Mortgages (London) | 2006–2008 | Global RMBS/whole loan capital markets leadership |
| Countrywide Financial (later BofA) | Senior Managing Director, Secondary Marketing | 1990–2006 | Pricing, trading, hedging and secondary market leadership through cycles |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| PennyMac Mortgage Investment Trust (NYSE: PMT) | Director; Chairman | Director since 2009; Chairman since 2021 | PFSI’s investment mgmt. subsidiary externally manages PMT |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 1,000,000 | 1,100,000 |
| Target Annual Incentive ($) | 3,625,000 | 3,625,000 |
| Actual Annual Incentive ($) | 1,631,250 | 2,965,086 |
Performance Compensation
Annual Incentive Design and Outcomes (FY2024)
| Component | Weight | Target | Actual | Payout |
|---|---|---|---|---|
| ROE | 70% | 15% ROE = 100% payout | 8.5% ROE | 52.6% component payout |
| Strategic objectives | 30% | 100% | See disclosed strategic achievements (tech, efficiency, market share, ERM, etc.) | 150% component payout |
| Total payout | 100% | — | — | 81.8% of target; CEO actual $2,965,086 |
Long-Term Equity Awards (granted Feb 29, 2024)
| Instrument | Grant-date value ($) | Units/Options | Vesting | Key terms |
|---|---|---|---|---|
| PSUs | 3,137,484 | 36,942 | 3-year cliff (2024–2026) | Payout 0–300% based on: ROE threshold <5%=0%, target 15%=100%, max ≥30%=250% × Leverage Ratio multiplier (50% at ≥5x, 100% at 3.5x, 120% at ≤1.5x) × Individual multiplier (60%–100%) |
| RSUs (time-based) | 1,568,742 | 18,471 | 1/3 annually over 3 years | Service-based, settled in shares |
| Stock Options | 1,725,634 | 46,177 | 1/3 annually over 3 years; 10-year term | Strike $84.93 (2/29/2024), Black-Scholes $37.37 |
PSU Performance History
| PSU grant year | Period | ROE result | Leverage modifier | Payout |
|---|---|---|---|---|
| 2022 PSU | 1/1/2022–12/31/2024 | 8.8% (below threshold) | 108.9% | 0% (forfeited) |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 1,415,509 shares (2.7% of outstanding as of 3/31/2025); includes 155,604 shares held by ST Family Investment Company LLC and 668,345 options exercisable by 5/30/2025 |
| Pledging/Hedging | None of the shares have been pledged; anti-pledging and anti-hedging policy applies to officers/directors |
| Ownership guidelines | CEO required to hold 5x base salary; executives with 5+ years are in compliance |
| 2024 vesting/exercises | Options exercised: 61,120 shares; value realized $5,146,043. RSUs vested: 24,042 shares; value realized $2,089,106 |
| Outstanding awards (12/31/2024) | Non-vested RSUs: 18,471 ($1,886,628); unearned PSUs: 36,942 (target, $3,773,256); Unexercised options include 46,177 unexercisable @ $84.93 (exp. 2/28/2034), plus multiple earlier grants |
Vesting mechanics and trading controls:
- Time-based RSUs vest ratably over three years; options vest ratably over three years with a 10-year term .
- Preclearance and trading window policy; 10b5-1 plans permitted only during open windows and pre-approved; hedging, pledging, short sales, margin trading prohibited .
Employment Terms
| Term/Provision | Summary |
|---|---|
| Agreement term | Employment agreements for Spector and Jones commenced Jan 1, 2023 and expire Dec 31, 2026 (unless earlier terminated) . |
| Severance multiples | Upon termination by company other than for cause, resignation for good reason, or termination in connection with Change in Control (double trigger): 2.5x base salary + 2.5x average incentive (prior two years), paid over 24 months; COBRA reimbursement; pro rata/unpaid bonus; immediate vesting of equity and option term to original 10-year expiry . |
| Death/Disability | Immediate equity vesting; continued salary for 6 months (death); COBRA reimbursements; unpaid/pro rata bonus . |
| Restrictive covenants | 18-month non-solicitation post-termination . |
| Excise tax gross-ups | None; payments reduced to avoid 4999 excise tax if beneficial on after-tax basis . |
| Illustrative payouts (as of 12/31/2024) | Estimated aggregate for Spector under “Termination Other than For Cause/Change-in-Control/Good Reason”: $28,541,804; includes base, incentive, accelerated equity values, COBRA . |
Performance & Track Record (select indicators)
- Financial/returns: 2024 net income $311.4M (up from $144.7M in 2023); ROE 8.5% (vs. 4.1%); book value per share increased to $74.54; dividend per quarter raised to $0.30 .
- Scale/market position: #2 mortgage producer in 2024; #1 correspondent market share 19.0%; #3 broker channel (4.1% share); servicing UPB ~$666B (+10% YoY) .
- TSR: PFSI “value of $100” grew to $319.4 over 2020–2024 (peer group $132.2) .
Board Governance (Spector as Director)
- Board service: Director since 2012; Chairman since 2021; no committee memberships as a management director .
- Combined CEO/Chair: Board reaffirmed combined role in Feb 2025, citing Spector’s founding/industry expertise; mitigated by a strong Lead Independent Director (Jeffrey A. Perlowitz) with defined authorities and regular executive sessions .
- Independence structure: 82% of directors independent as of 2025; committee chairs independent across Audit, Compensation, Finance, Nominating & Corporate Governance, Related Party Matters, and Risk .
- Board activity: 15 board meetings in 2024; all incumbents attended ≥75% of aggregate meetings for their service period; regular independent executive sessions .
- Director compensation: Management directors (Spector, Jones) receive no board fees; director pay disclosed separately .
Director Compensation & Interlocks
- Spector received no additional director compensation for board service; compensation details appear under NEO compensation .
- Related-party oversight: A dedicated Related Party Matters Committee oversees PMT and other related-party transactions, reducing conflict risks inherent in PFSI’s externally managed REIT relationships .
Compensation Program Structure & Shareholder Feedback
- Design: Heavy tilt to pay-at-risk; CEO target comp 89% at risk in 2024; long-term equity emphasizes PSUs with multi-metric design (ROE main, leverage/individual modifiers) .
- Say-on-Pay support: 2022: 98.7%; 2023: 82.6%; 2024: 99.0% approval .
- Peer group & benchmarking: Peer framework includes mortgage/financial services companies with 0.25x–3x combined size of PFSI+PMT; Compensation Committee made no changes to peer group for 2024 design; recent peers include Essent, FNF, First American, MGIC, Mr. Cooper, OneMain, Radian, Redwood, Rithm Capital, Rocket, SLM, UWM, Walker & Dunlop, Zillow .
Equity Ownership & Alignment Details (granular)
| Category | Metric |
|---|---|
| Beneficial ownership detail | 1,415,509 shares; includes 155,604 via ST Family Investment Company LLC; 668,345 options exercisable within 60 days; none pledged . |
| Non-vested equity (12/31/2024) | RSUs 18,471 ($1,886,628); PSUs (target) 36,942 ($3,773,256) . |
| Options outstanding (examples) | 46,177 unexercisable @ $84.93 exp. 2/28/2034; 30,869 unexercisable @ $60.74 exp. 2/23/2033; plus multiple older in-the-money tranches . |
| 2024 realized equity | Options exercised 61,120 ($5,146,043); RSUs vested 24,042 ($2,089,106) . |
| Policies | Executive stock ownership: CEO 5x salary; executives in seat ≥5 years in compliance . Anti-pledging/hedging/trading plan controls in place . |
Employment Terms (granular)
| Topic | Detail |
|---|---|
| Term | Spector agreement effective 1/1/2023–12/31/2026 . |
| Severance/CoC | Double-trigger cash: 2.5x base + 2.5x average bonus; immediate equity vesting on specified terminations (death, disability, without cause, good reason, or termination in connection with CoC); COBRA reimbursement; options maintain original 10-year expiry; 18-month non-solicit; payments cut to avoid excise tax if beneficial . |
| Illustrative payout (12/31/2024) | Aggregate $28,541,804 for termination other than for cause/CoC/good reason scenario (includes salary $2,750,000; incentive $5,745,420; accelerated equity/COBRA) . |
Compensation Committee Analysis and Controls
- Clawbacks: Dodd-Frank compliant clawback policy for Section 16 officers; separate clawback for other Senior Managing Directors .
- Risk: Independent consultant review concluded compensation design does not encourage excessive risk-taking; balanced mix, governance oversight .
- No single-trigger equity on CoC for directors if awards are assumed; no repricing; no speculative trading/gross-ups .
Risk Indicators & Red Flags
- Positive: Strong Say-on-Pay (2024: 99.0%); high at-risk pay; robust ownership/anti-hedging/anti-pledging; clawbacks; no single-trigger; no excise gross-up .
- Watch items: Combined CEO/Chair (mitigated by empowered Lead Independent Director and independent-majority board) ; 2022 PSUs forfeited (0% payout) highlighting challenging ROE delivery through the cycle ; related-party ecosystem with PMT mitigated via dedicated committee .
Investment Implications
- Pay-for-performance alignment: Spector’s pay is highly variable with explicit GAAP ROE hurdles (70% of annual bonus) and multi-metric PSU design; 2022 PSU forfeiture and sub-target 2024 bonus demonstrate downside sensitivity when ROE underperforms, a favorable alignment for shareholders .
- Insider supply dynamics: 2024 equity settlements included ~61K options exercised and ~24K RSUs vested; anti-pledging policies and preclearance/10b5-1 controls reduce forced-sell and timing risk, but scheduled vesting can create periodic selling pressure near anniversaries/option maturities .
- Retention/continuity: Multi-year PSU cliff vesting and options plus a double-trigger CoC package support retention; current agreement runs through 12/31/2026 with an 18-month non-solicit, lowering near-term leadership transition risk .
- Governance: Combined Chair/CEO warrants continued scrutiny, but strong independent oversight (Lead Independent Director, >80% independent board, active committees) offsets independence concerns; Say-on-Pay momentum and stakeholder engagement are supportive .