Farhad Nanji
PennyMac Financial ServicesAbout Farhad Nanji
Farhad Nanji, age 46, has served on PFSI’s Board since its formation in December 2012 and is currently Chair of the Compensation Committee. He co-founded MFN Partners Management, L.P. in December 2016 after serving as a Managing Director at Highfields Capital Management until December 2015; he holds an MBA from Harvard Business School and a B.Com from McGill University . The Board has affirmatively determined that Nanji is independent under NYSE rules .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| MFN Partners Management, L.P. | Co-Founder | Dec 2016–present | Significant shareholder context given MFN’s PFSI stake |
| Highfields Capital Management LP | Managing Director | Until Dec 2015 | Investment expertise |
| PennyMac Financial Services, Inc. | Director | Since Dec 2012 | Compensation Committee Chair |
External Roles
| Organization | Capacity | Tenure | Notes |
|---|---|---|---|
| MFN Partners, LP (and affiliated entities) | Managing member roles tied to MFN Partners GP, LLC and MFN Partners Management, LLC | Ongoing | Disclaims beneficial ownership except to the extent of pecuniary interest |
Board Governance
- Independence: Board determined 82% of directors are independent, including Nanji .
- Committee leadership and meetings: Compensation Committee Chair; the committee met 4 times in Fiscal 2024 .
- Overall Board activity: Board held 15 meetings in Fiscal 2024; each incumbent director attended at least 75% of aggregate Board and committee meetings for which they served .
- Executive sessions: Independent directors meet in regular executive sessions chaired by the Independent Lead Director ; Jeffrey A. Perlowitz re-elected as Independent Lead Director in Feb 2025 .
Fixed Compensation
| Component | 2024 Amount | Notes |
|---|---|---|
| Fees Earned or Paid in Cash ($) | 111,000 | Nanji elected to receive director fees in fully vested shares in lieu of cash |
| Stock Awards ($) | 157,460 | Annual RSU grant; 1,854 RSUs at $84.93 grant-date fair value |
| Total ($) | 268,460 |
Additional program detail:
- Standard director cash retainers: Base $92,500; committee membership retainers range $7,750–$10,000; committee chair retainers $10,750–$12,000; Independent Lead Director additional $30,000 .
- RSU vesting: Non-management director RSUs vest on first anniversary of grant .
- Change-in-control: Non-management director equity awards assumed or become fully vested if not assumed .
- Stock-in-lieu policy: Directors may elect shares in lieu of cash fees per Board policy .
Performance Compensation
As Compensation Committee Chair, Nanji oversees PFSI’s pay-for-performance programs. Key metrics and 2024 outcomes:
| Annual Incentive Objective | Weight | Target | Actual Performance | Actual Payout % |
|---|---|---|---|---|
| ROE | 70% | 15% ROE → 100% payout | 8.5% ROE | 52.6% of ROE component |
| Strategic Objectives | 30% | 100% payout baseline | Committee-determined achievements (see strategic table) | 150% of strategic component |
| Total Annual Incentive | 100% | Max 255% of target | 81.8% of target for NEOs |
PSU design (2024–2026):
| PSU Metric | Threshold | Target | Maximum | Leverage Multiplier | Individual Multiplier |
|---|---|---|---|---|---|
| ROE (Cumulative annualized) | <5% → 0% payout | 15% → 100% payout | ≥30% → 250% payout | Avg recourse debt/equity: 5x→50%, 3.5x→100%, ≤1.5x→120% | 60%–100% based on individual effectiveness; cap 100% |
Context:
- 2022 PSUs did not meet threshold ROE and were forfeited (ROE 8.8%; leverage 2.6x) .
- Compensation governance practices: clawback policy; anti-hedging/anti-pledging; no re-pricing; independent compensation consultant (Pearl Meyer) with no conflicts identified .
Other Directorships & Interlocks
| Topic | Detail |
|---|---|
| Compensation Committee composition | Nanji (Chair), Perlowitz, and McCallion (added Dec 31, 2024); all independent under NYSE/SEC rules |
| Interlocks | No executive officer of PFSI served as a director or comp committee member of another entity where an executive officer of that entity served on PFSI’s Compensation Committee during Fiscal 2024 |
Expertise & Qualifications
- Value-oriented investor with deep mortgage and financial services experience; co-founder of MFN Partners .
- Prior senior investing role at Highfields Capital; MBA (Harvard) and B.Com (McGill) .
- Committee leadership in compensation, aligning pay and performance and shareholder feedback .
Equity Ownership
| Holder | Shares | % Outstanding | Notes |
|---|---|---|---|
| Farhad Nanji (beneficial) | 4,714,756 | 9.1% | Includes 4,531,792 shares held by MFN Partners, LP |
| MFN Partners, LP (5% holder) | 4,531,792 | 8.8% | Nanji is a managing member of MFN GP and MFN LLC; disclaims beneficial ownership except to extent of pecuniary interest |
| Pledging/Hedging | None of the shares have been pledged; company prohibits hedging/pledging for directors | ||
| Ownership guidelines | Non-management directors must hold ≥5x base annual retainer; directors with 5+ years are in compliance |
Governance Assessment
- Strengths: Independent director leading Compensation Committee with robust governance practices (clawbacks, anti-hedging/pledging, no re-pricing) and structured metrics; directors meet stock ownership guidelines, and Nanji elected to receive cash fees in stock, reinforcing alignment . Strong say-on-pay support (99.0% in 2024; 82.6% in 2023; 98.7% in 2022), indicating investor confidence in compensation oversight .
- Potential conflict signals: Nanji is a significant beneficial owner (9.1%) with affiliated MFN Partners as an 8.8% stockholder; while the Board deems him independent, concentrated ownership plus chairing the Compensation Committee merits ongoing monitoring for perceived influence, mitigated by independent committee composition and formal conflict oversight structures (Related Party Matters Committee) .
- Engagement and attendance: Board met 15 times in FY2024, with all incumbents meeting at least the 75% attendance threshold; independent directors hold regular executive sessions led by the Independent Lead Director, supporting effective oversight .