PennyMac Financial Services, Inc. (NYSE:PFSI) Files An 8-K Entry into a Material Definitive Agreement
Item 5.02 Entry into a Material Definitive Agreement.
Employment Agreements
On December 28, 2018, PennyMac Financial Services, Inc. (the “Company”)and Private National Mortgage Acceptance Company, LLC (“PNMAC”), its wholly-owned subsidiary, entered into employment agreements with each of Stanford L. Kurland (the “Kurland Agreement”), David A. Spector (the “Spector Agreement”) and Doug Jones (the “Jones Agreement”) for terms commencing on January 1, 2019 and expiring on December 31, 2022.
to the Kurland Agreement, Mr. Kurland shall continue to serve as the Executive Chairman of the Board of Directors (the “Board”) through December 31, 2019, and, beginning on January 1, 2020 and continuing through the end of the term, shall serve as the Non-Executive Chairman of the Board of the Company, assuming he is re-elected to that post through the end of such term. Mr. Spector shall continue to serve as a member of the Board and as the President and Chief Executive Officer of the Company and PNMAC throughout the term of the Spector Agreement. Mr. Jones shall continue to serve as Senior Managing Director and Chief Mortgage Banking Officer of the Company and PNMAC throughout the term of the Jones Agreement.
The other material terms of the Kurland Agreement, the Spector Agreement and the Jones Agreement are described in Item 5.02 of this report.
Item 5.02 Termination of a Material Definitive Agreement.
In connection with entering into the new employment agreements with Mr. Kurland and Mr. Spector as described in Item 5.02 of this report, the prior employment agreements with such executives were terminated, effective as of December 31, 2018. The prior employment agreements were scheduled to expire on December 31, 2018.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreements
As described in Item 5.02 of this report, the Company and PNMAC entered into employment agreements with Mr. Kurland, Mr. Spector and Mr. Jones, each of which has a four-year term.
Base Salary and Incentive Compensation
to the Kurland Agreement, Mr. Kurland shall receive an annual base salary of $900,000 from January 1, 2019 through and including December 31, 2019. During that time, Mr. Kurland also shall be entitled to receive cash and equity incentive compensation, with such compensation awarded at levels based on annual performance targetsdetermined by the Board and the compensation committee of the Board. From January 1, 2020 and for so long as Mr. Kurland remains on the Board as Non-Executive Chairman, Mr. Kurland shall be entitled to receive (i) annual director fees in cash in amount equal to 2.5 times the annual director fees of the highest paid non-employee Board member, and (ii) annual equity awards in an amount equal to 2.5 times the amount granted to any other non-employee Board member.
During the term of the Spector Agreement, Mr. Spector shall receive an annual base salary of no less than $900,000, which amount shall increase to $1,000,000 on January 1, 2020. During the term of the Jones Agreement, Mr. Jones shall receive an annual base salary of no less than $550,000, which amount shall increase to $600,000 on January 1, 2020. During the terms of their employment agreements, each of Mr. Spector and Mr. Jones also shall be entitled to receive annual cash and equity incentive compensation, with such compensation awarded at levels based on annual performance targets determined by the Board and the compensation committee of the Board.
All equity awards are granted to the PennyMac Financial Services, Inc. 2013 Equity Incentive Plan (the “2013 Plan”) and subject to vesting requirements as specified in the relevant award agreement.
Other Benefits
The employment agreements provide for the annual accrual of forty days of paid time off for Mr. Kurland and twenty days of paid time off for Mr. Spector and Mr. Jones, in each case at the executive’s regular base pay rate during each year of the term. The agreements also provide for medical benefits, reimbursement for expenses related to tax advice and financial counseling not to exceed $25,000, an automobile allowance of up to $1,500 per month for Mr. Kurland and Mr. Spector, reimbursement of reasonable business expenses, and participation in such other benefits programs as are provided to the Company’s executives generally.
Payments Upon Specified Termination Events
to the employment agreements, upon a termination due to death or disability, a termination by the Companyother than for cause(as defined in the employment agreement), a termination by the executive for good reason(as defined in the employment agreement), or a termination as a result ofchange of control (as defined in the 2013 Plan), in addition to any other amounts required by law to be paid to him, the executive would be entitled to any cash bonus earned but unpaid for the year prior to the year in which the termination date occurs and the pro rata portion of any cash bonus earned but unpaid for the year during which the termination date occurs. In any such termination event, any unvested equity awards granted to the 2013 Plan shall vest immediately. The Company will also generally reimburse the executive or his estate for any amounts paid by him or his estate for coverage of him and his family under the Company’s group health medical benefits plan to the Consolidated Omnibus Budget Reconciliation Act, or COBRA, for as long as the executive or his family is eligible to receive such benefits under COBRA. Upon a termination due to death, the executive’s estate will also receive a continuing payment of executive’s annual base salary as of the termination date for a period of six months following such termination.
Upon a termination of Mr. Spector’s or Mr. Jones’ employment as a result of a change of control or by the Company other than for cause, orupon a termination by Mr. Spector or Mr. Jones for good reason, the executive shall also receive a severance payment equal to two years of executive’s annual base salary plus two years of executive’s cash incentive compensation (based on the average cash incentive bonus received in the most recent two years), with such amounts to be paid in 24 monthly installments. Upon termination of Mr. Spector’s or Mr. Jones’ employment by the Company or PNMAC for cause, the executive shall receive his annual base salary through the termination date, any accrued but unused paid time off and reimbursement of any unreimbursed incurred expenses.
Consulting Services
Upon the expiration of the term of the Kurland Agreement or upon a termination of Mr. Kurland’s employment by the Company other than for cause or a termination by Mr. Kurland for good reason, Mr. Kurlandshall serve as a consultant to the Company for an 18-month period commencing on the termination date. During the consulting period, the executive will receive a consulting fee of $1.5 million, with approximately $1 million paid in 18 monthly installments and the remainder paid upon the completion of the consulting period; provided, however, that such compensation will cease if the executive engages in services for a business that competes with the Company.
Upon the expiration of the term of the Spector Agreement, Mr. Spector shall serve as a consultant to the Company for an 18-month period commencing on the termination date. During the consulting period, Mr. Spector will receive a consulting fee of $1.5 million, with approximately $1 million paid in 18 monthly installments and the remainder paid upon the completion of the consulting period; provided, however, that such compensation will cease if the executive engages in services for a business that competes with the Company.
Upon the expiration of the term of the Jones Agreement, Mr. Jones shall serve as a consultant to the Company for an 18-month period commencing on the termination date. During the consulting period, Mr. Jones will receive a consulting fee of $1 million, with approximately $750,000 paid in 18 monthly installments and the remainder paid upon the completion of the consulting period; provided, however, that such compensation will cease if the executive engages in services for a business that competes with the Company.
The foregoing descriptions of the Kurland Agreement, the Spector Agreement and the Jones Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which have been filed with this Current Report on Form8-K as Exhibits10.1, 10.2 and 10.3, respectively.
Item 5.02Financial Statements and Exhibits.
(d)Exhibits.
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Exhibit No. |
Description |
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10.1 |
Employment Agreement, dated December 28, 2018, among Stanford L. Kurland, Private National Mortgage Acceptance Company, LLC and PennyMac Financial Services, Inc. |
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10.2 |
Employment Agreement, dated December 28, 2018, among David A. Spector, Private National Mortgage Acceptance Company, LLC and PennyMac Financial Services, Inc. |
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10.3 |
Employment Agreement, dated December 28, 2018, among Doug Jones, Private National Mortgage Acceptance Company, LLC and PennyMac Financial Services, Inc. |
PennyMac Financial Services, Inc. Exhibit
EX-10.1 2 ex-10d1.htm EX-10.1 Ex 10.1 – Kurland Agreement Exhibit 10.1 EMPLOYMENT AGREEMENT This Employment Agreement (“Agreement”) is effective the 1st day of January,…
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About PennyMac Financial Services, Inc. (NYSE:PFSI)
PennyMac Financial Services, Inc. (PFSI) is a financial services company. The Company is focused on the production and servicing of the United States residential mortgage loans and the management of investments related to the United States mortgage market. It operates through three segments: loan production, loan servicing and investment management. Its loan production segment is sourced through approximately two channels: correspondent production and consumer direct lending. Its loan servicing segment performs loan administration, collection and default management activities, including the collection and remittance of loan payments; response to customer inquiries; accounting for principal and interest; counseling delinquent mortgagors, and supervising foreclosures and property dispositions. Its investment management segment represents the activities of the Company’s investment manager, which include sourcing, performing diligence, bidding and closing investment asset acquisitions.
