David Spector has been the CEO of PennyMac Financial Services, Inc. (NYSE:PFSI) since 2017. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does David Spector's Compensation Compare With Similar Sized Companies?
According to our data, PennyMac Financial Services, Inc. has a market capitalization of US$2.4b, and pays its CEO total annual compensation worth US$5.8m. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$750k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.
It would therefore appear that PennyMac Financial Services, Inc. pays David Spector more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at PennyMac Financial Services, below.
Is PennyMac Financial Services, Inc. Growing?
On average over the last three years, PennyMac Financial Services, Inc. has grown earnings per share (EPS) by 8.4% each year (using a line of best fit). It achieved revenue growth of 21% over the last year.
I think the revenue growth is good. And the modest growth in earnings per share isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. It could be important to check this free visual depiction of what analysts expect for the future.
Has PennyMac Financial Services, Inc. Been A Good Investment?
I think that the total shareholder return of 78%, over three years, would leave most PennyMac Financial Services, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We examined the amount PennyMac Financial Services, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. Whatever your view on compensation, you might want to check if insiders are buying or selling PennyMac Financial Services shares (free trial).
Important note: PennyMac Financial Services may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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