Shareholders May Be More Conservative With PennyMac Financial Services, Inc.'s (NYSE:PFSI) CEO Compensation For Now

Simply Wall St
May 27, 2021
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Performance at PennyMac Financial Services, Inc. (NYSE:PFSI) has been reasonably good and CEO David Spector has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 03 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for PennyMac Financial Services

How Does Total Compensation For David Spector Compare With Other Companies In The Industry?

Our data indicates that PennyMac Financial Services, Inc. has a market capitalization of US$4.2b, and total annual CEO compensation was reported as US$12m for the year to December 2020. That's a notable increase of 22% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.2m. This suggests that David Spector is paid more than the median for the industry. What's more, David Spector holds US$90m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.0m US$900k 8%
Other US$11m US$9.2m 92%
Total CompensationUS$12m US$10m100%

Talking in terms of the broader industry, salary and other compensation roughly make up 50% each, of the total compensation. In PennyMac Financial Services' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NYSE:PFSI CEO Compensation May 28th 2021

A Look at PennyMac Financial Services, Inc.'s Growth Numbers

PennyMac Financial Services, Inc. has seen its earnings per share (EPS) increase by 73% a year over the past three years. Its revenue is up 12% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has PennyMac Financial Services, Inc. Been A Good Investment?

Most shareholders would probably be pleased with PennyMac Financial Services, Inc. for providing a total return of 224% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for PennyMac Financial Services you should be aware of, and 2 of them are a bit concerning.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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