UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 13, 2022

PennyMac Financial Services, Inc.

(formerly known as New PennyMac Financial Services, Inc.)

(Exact name of registrant as specified in its charter)

(818) 224-7442

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 1.01 Entry into a Material Definitive Agreement.

Employment Agreements

On December 13, 2022, PennyMac Financial Services, Inc. (the “Company”) and Private National Mortgage Acceptance Company, LLC (“PNMAC”), its wholly-owned subsidiary, entered into employment agreements with David A. Spector (the “Spector Agreement”) and Doug Jones (the “Jones Agreement”) for terms commencing on January 1, 2023 and expiring on December 31, 2026. Mr. Spector shall continue to serve as Chairman and Chief Executive Officer of the Company and Chief Executive Officer of PNMAC throughout the term of the Spector Agreement.  Mr. Jones shall continue to serve as President and Chief Mortgage Banking Officer of the Company and PNMAC throughout the term of the Jones Agreement.

The other material terms of the Spector Agreement and the Jones Agreement are described in Item 5.02 of this report.

Item 1.02 Termination of a Material Definitive Agreement.

In connection with entering into the new employment agreements with Mr. Spector and Mr. Jones as described in Item 1.01 of this report, the prior agreements with such executives will be terminated as of December 31, 2022.

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 1.01 of this report, the Company and PNMAC entered into new employment agreements with Mr. Spector and Mr. Jones, each of which has a four-year term.

Base Salary and Incentive Compensation

During the terms of their employment agreements, Mr. Spector and Mr. Jones shall each receive an annual base salary as determined by the Company’s board of directors (“Board”) at least as favorable as base salaries paid to other senior executives and shall each be entitled to receive annual cash and equity incentive compensation, with such compensation awarded at levels based on annual performance targets determined by the compensation committee of the Board. All future equity awards will be granted pursuant to the PennyMac Financial Services, Inc. 2022 Equity Incentive Plan (the “2022 Plan”) and subject to vesting requirements as specified in the relevant award agreements.

Other Benefits

The employment agreements provide for the annual accrual of 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, 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

Pursuant to the employment agreements, upon a termination due to death or disability, a termination by the Company other 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 of  change of control (as defined in the 2022 Plan, and/or any other equity incentive plan adopted by Company), in addition to any other amounts required by law to be paid to him, the executive would be entitled to any bonus earned but unpaid for the year prior to the year in which the termination date occurs and the pro rata portion of any bonus earned but unpaid for the year during which the termination date occurs. In any such termination event, any unvested equity awards granted pursuant to any equity incentive plan adopted by Company 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 pursuant 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, or upon a termination by Mr. Spector or Mr. Jones for good reason, the executive shall also receive a severance payment equal to two and one-half years of executive’s annual base salary plus two and one-half years of executive’s incentive compensation (based on the average 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 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 $2.0 million, with approximately $1.35 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 $1.5 million, with approximately $1.0 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.

The foregoing descriptions of 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 Form 8-K as Exhibits 10.1 and 10.2, respectively.

Item 9.01    Financial Statements and Exhibits.

(d)  Exhibits.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.