Departing Rocket Mortgage CEO had a salary boost in 2022

Jay Farner, the soon-to-be-retired CEO of Rocket Mortgage, saw his compensation package balloon in 2022 compared to a year prior.

Farner's pay was $9.46 million last year, almost five times larger than his yearly income in 2021 of $1.6 million, according to a company filing with the Securities and Exchange Commission in late-April.

The increase mainly stemmed from stock awards, of which Farner received $8.7 million. This also resulted in Rocket executives such as Bob Walters, COO of Rocket, and Brian Brown, CFO of Rocket, seeing a notable boost in their overall compensation package, receiving $3.2 million and $3.04 million from stock awards, respectively.

Farner, who is set to leave the mortgage giant in June, received a base salary of $800,000 in 2021 and 2022, the highest base salary out of the top six executives of the company. Per an SEC filing, Walters had the second largest base salary of $500,000, while Brown's base salary was $325,000. 

Bob Emerson, the candidate set to replace Farner as an interim CEO, will be receiving a base salary of $600,000. He will also be eligible for a target bonus of 100% of his base salary this year.

Emerson, who is currently the vice president of Rock Holdings, Inc., has already replaced Farner on the board of directors in January. The board is currently searching among internal and external candidates for a permanent successor to Farner with the help of an unnamed executive recruiting firm.

The disclosure of how much Rocket executives earned last year comes after a tough origination year for mortgage companies, and right before the Michigan-based lender is set to report its first quarter earnings on May 4.

In the fourth quarter, the company lost $493 million, though it managed to shave some of its expenses. Between the third and fourth quarters, Rocket reduced its total expenses by $202 million, beating its initial expectations of between $50 million and $100 million.

The company's full year net income of $700 million was well below the $6.07 billion earned in 2021. Last year's results include a $1.2 billion positive mark-to-market adjustment to its mortgage servicing rights.

Another SEC document filed by Rocket in late-April revealed some of the company's concerns going into the new year, such as technological innovation, or a lack thereof. 

The mortgage giant outlines in its annual report the importance of keeping pace with technological innovation, noting that if it cannot continue "to innovate and continue to deliver a super client experience, the demand for our products and services may decrease." 

Additionally, the annual report mentions that the recently announced leadership transitions could "disrupt and have a detrimental impact on our business." 

Since Farner announced his retirement, analysts have speculated the move could be the precursor to a further management shakeup.

"While there is no clear take away from the announcement, we would note that Mr. Farner is only 49 years old, so it is possible that the company is considering broader strategic changes," said Bose George, Michael Smyth, Alexander Bond, and Thomas McJoynt-Griffith in a report mid-February.