DEF 14A of Pra Group Inc
Filed Apr 29, 2024 · FY20230001193125-24-122822
Director Compensation
Director Compensation Our Board, upon the recommendation of the Compensation Committee, establishes the compensation for our non-employee directors. Non-employee director compensation for 2023 included annual cash retainers for our Board members, Board Chair, Committee members, Committee Chairs, and our Lead Independent Director. On the date of our 2023 Annual Meeting, each non-employee director also received an equity award valued at approximately $155,000 that consisted of restricted stock units (“RSUs”) that vest on the anniversary of the grant date or the date of the next annual meeting of the Company’s stockholders that follows the grant date, if earlier. The vesting schedule for the RSUs and the director stock ownership guidelines described below are intended to align our non-employee directors’ economic interests with those of our stockholders. Cash retainers for our Board for 2023 were as follows:
Director Compensation
| Annual Cash Retainers | 2023 | | Chairman | $125,000 | | Lead Director | $30,000 | | Audit Committee Chair | $30,000 | | Compensation Committee Chair | $30,000 | | Nominating and Corporate Governance Committee and Compliance Committee Chair | $30,000 | | Risk Committee Chair | $30,000 | | Board Member | $70,000 | | Audit Committee Member | $15,000 | | Compensation Committee Member | $15,000 | | Nominating and Corporate Governance Committee and Compliance Committee Members | $15,000 | | Risk Committee Member | $15,000 |
Director Compensation
Note that Committee Chairs only receive a retainer for their service as Committee Chairs and not also for serving as Committee Members. Our non-employee directors received the following compensation for service during 2023:
Director Compensation
| Name(1) | Fees Earned or Paid in Cash | Stock Awards(2) | Total | | Vikram A. Atal(3) | $28,750 | $0 | $28,750 | | Danielle M. Brown | $100,000 | $154,991 | $254,991 | | Marjorie M. Connelly | $115,000 | $154,991 | $269,991 | | John H. Fain | $107,500 | $154,991 | $262,491 | | Steven D. Fredrickson | $195,000 | $154,991 | $349,991 | | James A. Nussle | $115,000 | $154,991 | $269,991 | | Geir L. Olsen | $28,800 | $154,978 | $183,778 | | Brett L. Paschke | $107,500 | $154,991 | $262,491 | | Scott M. Tabakin | $107,500 | $154,991 | $262,491 | | Peggy P. Turner | $100,000 | $154,991 | $254,991 | | Lance L. Weaver | $115,000 | $154,991 | $269,991 | | (1) Mr. Marino was elected to our Board effective March 15, 2024. (2) Amounts represent the aggregate grant date fair value of the stock awards calculated by multiplying the number of RSUs granted by the closing price of our common stock on the grant dates, which was $23.67 on June 13, 2023 and $23.10 on June 15, 2023, respectively. The actual amount of compensation realized by a director will depend upon the market price of our common stock on the vesting date. (3) Mr. Atal was appointed as the Company’s President and CEO effective March 27, 2023. Amounts reflect his compensation for service as a non-employee director prior to his appointment as the Company’s President and CEO. | | | |
Director Compensation
In addition to the compensation described above, each non-employee director is reimbursed for travel expenses incurred for attending Board meetings and reasonable expenses associated with participating in continuing education programs. We offer no retirement benefits or perquisites to directors. We maintain policies of directors’ and officers’ liability insurance covering all directors.
Proposal 1: Election of Directors
Proposal 1: Election of Directors Directors are elected at each annual meeting to serve until the next annual meeting and until their successors are duly elected and qualified. Each director nominee was nominated by our Board for election upon the recommendation of the Nominating and Corporate Governance Committee. Moreover, each nominee was elected previously by our stockholders except Mr. Marino and Ms. Gadhia. Our Board currently consists of 12 directors. Mr. Fain will retire from our Board effective June 13, 2024, which is consistent with our Corporate Governance Guidelines that restrict the nomination for re-election of a person who will be 75 years of age on the date of the annual meeting of stockholders at which the person’s election would be considered. In addition, the Nominating and Corporate Governance Committee did not nominate Mr. Nussle for re-election at his request due to his expanded professional responsibilities. As a result, our Board will be reduced to 11 directors as of the date of the Annual Meeting. Nominees for director who receive the affirmative votes of a majority of the votes cast in person or by proxy at the Annual Meeting will be elected. Any nominee for director who does not receive the affirmative vote of a majority of the votes cast must offer promptly in writing to submit the director’s resignation to our Board. The Nominating and Corporate Governance Committee will then consider the offer and will recommend to our full Board what action should be taken. Our Board will consider all factors it deems relevant to the best interests of the Company and our stockholders and determine whether to accept the director’s resignation within a reasonable period of time after certification of the election results. Each nominee has consented to serve as a director if elected. We have no reason to believe that any of the nominees will be unable or unwilling for good cause to serve. However, if any nominee should become unable or unwilling to serve, proxies may be voted for another person nominated as a substitute by our Board or our Board may reduce the number of directors. If our Board nominates a substitute, the shares represented by all valid proxies will be voted for that nominee. We did not receive any nominations or recommendations for director from stockholders for consideration at the Annual Meeting.
Proposal 1: Election of Directors
| | | OUR BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH DIRECTOR NOMINEE. |
Philosophy and Objectives of Our Executive Compensation Program
| • | being competitive with our executive compensation peer companies identified under “Use of Competitive Data” below (“Compensation Peer Group”) and market data from similarly sized companies; |
Philosophy and Objectives of Our Executive Compensation Program
| • | driving the attainment of our short- and long-term financial and strategic objectives; |
Our Decision-Making Process
| • | evaluating the competitiveness of each NEO’s total compensation, including salary, annual bonus and long-term equity incentives; |
Our Decision-Making Process
| • | reviewing and approving corporate and individual performance goals and objectives for our incentive compensation plans; |
Our Decision-Making Process
| • | overseeing employment agreements, including the renewal process. |
Our Decision-Making Process
| • | analyzed each NEO’s compensation compared to our Compensation Peer Group and other survey data, including target and actual pay levels for each component, and in the aggregate, of our total direct compensation (salary, annual bonus award and annual equity grant) and the mix of our direct compensation components (fixed versus variable, short-term versus long-term and cash versus equity-based pay); |
Our Decision-Making Process
| • | reviewed and provided recommendations to the Compensation Committee on the composition of our Compensation Peer Group; |
Our Decision-Making Process
| • | evaluated the competitiveness of our long-term incentive plans, including their aggregate cost, the rate at which equity is awarded and their dilutive impact; |
Our Decision-Making Process
| • | provided a review of the Company’s non-employee director compensation program compared to our Compensation Peer Group. |
Our Decision-Making Process
Neither FW Cook nor Pearl Meyer provided any other services to the Company or the Compensation Committee during 2023. The Compensation Committee has assessed the independence of FW Cook and Pearl Meyer pursuant to SEC rules and Nasdaq listing standards and has determined that no known conflict of interest exists that prevented FW Cook or prevents Pearl Meyer from serving as a compensation consultant to the Compensation Committee. Role of Management At the Compensation Committee’s request, our CEO and other members of management attend portions of the Compensation Committee’s meetings to discuss the Company’s performance and compensation-related matters. While the CEO is not present during the voting or deliberations relating to his own compensation, he shares his assessment of his performance as well as the performance of our other executive officers with the Compensation Committee. Based on his assessment of the performance of our executive officers and the Company’s overall performance, our CEO makes recommendations to the Compensation Committee on certain compensation decisions for the other executive officers. The Compensation Committee considers our CEO’s recommendations, as well as data and analyses provided by the compensation consultant (and to a lesser extent, the other members of management), but retains full discretion to determine the compensation of all our executive officers, including our CEO. Use of Competitive Data The Compensation Committee generally compares the compensation of our NEOs to the median of the Compensation Peer Group. In addition, the Compensation Committee considers factors such as our financial performance relative to the Compensation Peer Group, the unique characteristics of the individual NEO’s position, and any succession and retention concerns.
Our Decision-Making Process
| To maintain the competitiveness of our executive compensation program, the Compensation Committee bases executive compensation levels on benchmarking and information regarding pay practices at comparable companies. Annually, the Compensation Committee determines, with input from the compensation consultant, our Compensation Peer Group, which is intended to reflect companies that are comparable to us based on various metrics, including net income, market capitalization, complexity of operations and business model. The Compensation Committee, with guidance from FW Cook, changed the Compensation Peer Group for purposes of making 2023 executive compensation decisions by: (i) removing Fair Isaac Corporation, due to its large market capitalization relative to ours, (ii) removing FirstCash, Inc., an international operator of pawn stores, due to the dissimilarity of its business model from ours, and (iii) adding MoneyGram International and Navient Corporation based on various factors making them reasonably comparable to us, including total assets, revenue and market capitalization. In addition to Compensation Peer Group data, the Compensation Committee reviews financial services compensation survey data reported by the compensation consulting firm of Willis Towers Watson. The Compensation Committee reviews the data related to the Compensation Peer Group and the Willis Towers Watson survey to ascertain the competitive market for our NEOs, to determine whether our compensation levels are competitive and to make compensation adjustments to reflect executive performance and Company performance. | 2023 Compensation Peer Group | | | Credit Acceptance Corp. CSG Systems International Encore Capital Group, Inc. Enova International Green Dot Corp. LendingClub Corp. MGIC Investment Corp. MoneyGram International Navient Corp. Ocwen Financial Corp. Walker & Dunlop WEX Inc. World Acceptance Corp. |
Our Decision-Making Process
Annual Bonus Plan Each year, the Compensation Committee establishes financial metrics to evaluate Company performance in connection with awards under the Annual Bonus Plan. The Committee determines the size of the bonus pool based on Company performance against the established financial metrics as well as individual, strategic and qualitative factors. The Committee generally bases actual Annual Bonus Plan payouts primarily on the Company’s performance versus established financial metrics, but also considers each executive officer’s individual contribution and performance, Company strategic objectives and additional qualitative factors that the Compensation Committee deems relevant. For 2023, the Compensation Committee approved the following financial metrics and strategic objectives upon the recommendation of the former CEO and CFO: GAAP Net Income; Adjusted EBITDA (as reported in SEC filings); strategic objectives related to cash collections; portfolio investments from new customers, products or geographies; overhead costs and strategic transactions. As noted in the Executive Summary to this CD&A, 2023 was a challenging year for the Company due in part to the previously discussed changes in executive officers. During the second quarter of 2023, the current management team under the leadership of Mr. Atal and with the Board’s approval adopted key priorities to optimize investments, drive operational execution, manage expenses and accelerate the pace and intensity of our efforts to deliver sustained performance and create value for our stockholders. By the end of 2023, our Board and the Compensation Committee recognized the impact of our cash generating and operational initiatives on our U.S. business and were encouraged that we appeared to be on track to transform the Company to become more robust, efficient and profitable. During the fourth quarter of 2023 and the first quarter of 2024, the Compensation Committee examined the financial metrics and strategic objectives established at the beginning of 2023 by the former management team that, as noted above, were updated to reflect the key priorities adopted under Mr. Atal’s leadership. The Compensation Committee considered the Company’s 2023 financial performance and the current management team’s accomplishments, including those of the current NEOs, as described in the Executive Summary. Based on the foregoing, the Compensation Committee approved 2023 Annual Bonus Plan payouts for our current NEOs as follows:
Our Decision-Making Process
| NEO | 2023 Bonus Target | 2023 Bonus Paid | Bonus Paid as a Percentage of Target | | Vikram A. Atal | $950,000 | $712,500 | 75% | | Rakesh Sehgal(1) | $351,010 | $265,000 | 75% | | Martin Sjölund(1)(2) | $426,557 | $320,000 | 75% | | Latisha O. Tarrant(1) | $351,575 | $265,000 | 75% | | R. Owen James(1)(2) | $293,272 | $220,000 | 75% |
Our Decision-Making Process
| (1) 2023 Bonus Target for Messrs. Sehgal, Sjölund and James, and Ms. Tarrant are prorated based on time worked, salaries and bonus targets in their current and former positions. |
Our Decision-Making Process
Long-Term Incentive Plan (“LTIP”) Awards Equity awards, which are made under our 2022 Omnibus Incentive Plan (“2022 Equity Plan”), are intended to focus executives on increasing long-term shareholder value, enhance executive retention and promote executive stock ownership. The Compensation Committee generally grants annual LTIP awards in March. For 2023, annual LTIP awards were a mix of 50% performance stock units (“PSU”) and 50% RSUs, which is consistent and aligns closely with market practices for the Compensation Peer Group. The Compensation Committee awards PSUs to align the interests of our executive officers with the interests of the stockholders by incentivizing them to focus on the long-term goals of the Company and maximizing stockholder returns. The Compensation Committee awards time-based RSUs to retain high caliber executives and reward them for past performance. The Compensation Committee determines target LTIP award amounts for all executive officers, including our NEOs, based on several factors, including comparative peer and market compensation data for each NEO position in the Compensation Peer Group, the percentage of total direct compensation that is equity-based, share usage, dilution, fair value transfer, performance goals for the LTIP award, the Company’s financial performance and retention considerations. The table below shows the annual LTIP awards for 2023 for each of our current NEOs:
Our Decision-Making Process
| NEO | 2023 Annual LTIP Awards | | | | | | 2023 PSUs | | 2023 RSUs | | | | # of Units | Grant Date $ Value(1) | # of Units | Grant Date $ Value(1) | | Vikram A. Atal | 0 | $0 | 0 | $0 | | Rakesh Sehgal | 3,014 | $125,000 | 3,014 | $125,000 | | Martin Sjölund | 10,851 | $450,000 | 10,851 | $450,000 | | LaTisha O. Tarrant | 3,617 | $150,000 | 3,617 | $150,000 | | R. Owen James | 2,712 | $112,450 | 2,713 | $112,500 |
Our Decision-Making Process
In addition to the annual LTIP awards, the Compensation Committee awarded RSUs (3-year ratable vesting) based on competitive market data to NEOs upon their appointment to an executive officer position during 2023, as shown in the table below:
Our Decision-Making Process
For the 2023 LTIP, the Compensation Committee streamlined the performance metrics for the PSUs by removing the Adjusted Revenues and Adjusted Net Income financial metrics and the Revenue from Corporate Development and Stock Price Appreciation measurements. The Compensation Committee retained the Adjusted EBITDA financial metric and added a total stockholder return (“TSR”) metric. The PSU component is earned and vests, subject to continued employment, based on the Company’s performance with respect to:
Our Decision-Making Process
| • | a TSR component is based upon the Company’s achievement of relative TSR calculated over the 2023-2025 performance period using the companies comprising the S&P SmallCap 600 Financial Sector Index; the Adjusted EBITDA and TSR components are independent of each other, and awards can be earned for either component based on the requirements for the component. |
Our Decision-Making Process
| 2023-2025 Adjusted EBITDA(1) | | 2023-2025 Relative TSR(1) | | | Performance vs. Target | Target Shares Earned (%) | Value | Target Shares Earned % | | Less than 80% | 0 | Below 30th percentile | 0 | | 80% | 50 | 30th percentile | 50 | | 90% | 75 | 50th percentile | 100 | | 100% | 100 | 70th percentile | 150 | | 112.5% | 150 | 90th percentile or more | 200 | | 125% or more | 200 | | |
Outstanding PSU Awards
Outstanding PSU Awards Following the grant of the 2023 LTIP awards, our current NEOs had three tranches (award years 2020-2023) of PSU awards outstanding. The key features of these outstanding awards are included below:
Outstanding PSU Awards
| LTIP Award Year | Performance Period | Measure | | 2021 | 2021-2023 | Adjusted Revenues | | | | Adjusted EBITDA | | | | Adjusted Net Income | | 2022 | 2022-2024 | Adjusted Revenues | | | | Adjusted EBITDA | | | | Adjusted Net Income | | | | Revenue from Corporate Development | | | | Stock Price Appreciation | | 2023 | 2023-2025 | Adjusted EBITDA | | | | TSR |
Realization of 2021 LTIP
Realization of 2021 LTIP In February 2024, the Compensation Committee reviewed the financial metrics for the relevant performance period and determined that Adjusted Revenues, Adjusted EBITDA and Adjusted Net Income awards for the three-year performance period of January 1, 2021 to December 31, 2023, resulted in payment of 78%, 84% and 0% of target, respectively.
Realization of 2021 LTIP
| • | Target Adjusted Revenues for the 2021-2023 performance period was $3,066 and actual performance was $2,865 (both in millions). Therefore, 78% of the target shares were awarded to our NEOs based on the Adjusted Revenues component. Adjusted Revenues are revenues calculated in accordance with GAAP as adjusted to neutralize foreign exchange fluctuations and for divestitures, acquisitions and changes in accounting principles and tax laws. |
Realization of 2021 LTIP
| • | The target Adjusted EBITDA for the 2021-2023 performance period was $3,663 and actual performance was $3,492 (both in millions). Therefore, 84% of the target shares were awarded to our NEOs based on the Adjusted EBITDA component. |
Realization of 2021 LTIP
| • | The target Adjusted Net Income for the 2021-2023 performance period was $321 and actual performance was $217 (both in millions). Therefore, 0% of the target shares were awarded to our NEOs based on the Adjusted Net Income component. Adjusted Net Income is net income attributable to the Company calculated in accordance with GAAP as adjusted to neutralize foreign exchange fluctuations and for divestitures, acquisitions and changes in accounting principles and tax laws. |
Employment Agreements
Employment Agreements Effective December 1, 2023, we entered into an employment agreement (the “Employment Agreement”) with Mr. Atal. The Employment Agreement provides for the following:
Employment Agreements
| • | a term that commenced on December 1, 2023 and ends on December 31, 2025; |
Employment Agreements
| • | base salary remains $950,000; |
Employment Agreements
| • | continued eligibility for an annual bonus under the Company’s Annual Bonus Plan and equity awards under the Company’s 2022 Equity Plan, subject to approval by the Compensation Committee; and |
Employment Agreements
| • | customary restrictive covenants relating to non-solicitation, non-competition, non-disparagement and confidentiality. |
Employment Agreements
The Company previously entered into employment agreements with Messrs. Sjölund and James, which are perpetual Agreements until terminated by the Company or by written notice by Messrs. Sjölund or James. Specified severance payments upon involuntary termination of employment without cause or as a result of constructive termination, death or disability are described in the section titled “Post-Employment Compensation Arrangements” (page 40) in this Proxy Statement.
Other Matters
| (3) Includes common stock owned directly and indirectly and 50% of unvested time-based RSUs based on the Guidelines. |
Other Matters
| • | change in control “double trigger” termination. |
Compensation Decisions for 2024
Compensation Decisions for 2024 Salary and Annual Bonus Targets During the first quarter of 2024, the Compensation Committee reviewed NEO salaries and 2024 Annual Bonus Plan targets. After considering each NEO’s total direct compensation and performance, the Company’s performance, comparative peer and market compensation data, internal pay equity, retention concerns and other relevant factors, including the scope of the executive’s responsibilities relative to peers, the Committee determined that no changes were warranted except with respect to Mr. Atal, whose annual bonus target was increased to 125% of his salary. 2024 LTIP For 2024, the Compensation Committee added return on average tangible equity (“ROATE”) to the Company’s LTIP as a metric in addition to the Adjusted EBITDA and TSR metrics described on page 31. ROATE is calculated by dividing Company net income by our average shareholder’s equity, net of intangible assets. 2024 Retention Awards In light of the significant executive leadership changes, challenges inherited by the new executive leadership team and the key accomplishments of the current NEOs, the Compensation Committee granted a retention award of $100,000 to each current NEO except Mr. Atal. The time-based RSUs, which had a grant date value of $100,000, will vest 100% two years from their grant date of March 7, 2024, subject to the NEO’s continued service. The Compensation Committee provided these awards in recognition of significant changes to the Company’s business strategies and viewed these awards as critical to the Company’s successful CEO transition.
Summary Compensation Table
Summary Compensation Table The following table sets forth all compensation awarded to, earned by, or paid to each of our NEOs for all services rendered to the Company for the years ended December 31, 2023, 2022, and 2021.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards(1) ($) | Non-Equity Incentive Plan Comp(2) ($) | All Other Comp(3) ($) | Total ($) | | Vikram A. Atal | | | | | | | | Chief Executive Officer | 2023 | $694,231 | $1,499,972 | $712,500 | $155,846 | $3,062,549 | | Rakesh Sehgal | | | | | | | | Chief Financial Officer | 2023 | $432,492 | $458,386 | $265,000 | $29,451 | $1,185,329 | | Martin Sjölund(4) | | | | | | | | President, PRA Group Europe | 2023 | $481,215 | $1,020,254 | $320,000 | $33,075 | $1,854,544 | | LaTisha O. Tarrant | | | | | | | | General Counsel & Chief Human Resources Officer | 2023 | $576,923 | $765,077 | $265,000 | $13,200 | $1,620,200 | | R. Owen James(4) | | | | | | | | Managing Director Acquisitions | 2023 | $367,521 | $480,022 | $220,000 | $27,564 | $1,095,107 | | Kevin P. Stevenson | | | | | | | | Former Chief Executive Officer | 2023 | $259,423 | $3,684,317 | $— | $2,684,920 | $6,628,660 | | | 2022 | $950,000 | $3,309,927 | $712,500 | $12,200 | $4,984,627 | | | 2021 | $950,000 | $3,249,986 | $1,425,000 | $11,600 | $5,636,586 | | Peter M. Graham | | | | | | | | Former Chief Financial Officer | 2023 | $405,000 | $1,473,706 | $— | $13,200 | $1,891,906 | | | 2022 | $540,000 | $1,323,960 | $459,000 | $12,200 | $2,335,160 | | | 2021 | $520,000 | $1,299,964 | $884,000 | $11,600 | $2,715,564 | | Laura B. White | | | | | | | | Former Chief Risk & Compliance Officer | 2023 | $309,615 | $1,020,254 | $— | $659,641 | $1,989,510 | | | 2022 | $500,000 | $916,569 | $425,000 | $12,200 | $1,853,769 | | | 2021 | $500,000 | $749,974 | $648,000 | $11,600 | $1,909,574 |
Summary Compensation Table
| (1) The amounts represent the aggregate grant date fair value of the stock awards granted in 2023, 2022 and 2021 determined pursuant to Accounting Standards Codification (“ASC”) Topic 718. The assumptions that we used in calculating these amounts are discussed in Note 1 and Note 11 to the consolidated financial statements in the 2023 Form 10-K. Stock awards consist of time-based RSUs, and performance-based PSUs awarded under the LTIP (see page 31 for a description of the LTIP). The actual amount of compensation that will be realized by the NEO at the time the stock award vests, if at all, will depend upon the market price of our common stock on the day prior to the vesting date. The value as of the grant date of the maximum number of shares that could vest under the 2023 LTIP PSU awards is as follows: Mr. Sehgal, $316,802; Mr. Sjölund, $1,140,526; Ms. Tarrant, $380,161; Mr. James, $285,058; Mr. Stevenson, $4,118,713; Mr. Graham, $1,647,494; and Ms. White, $1,140,526. For more information on the awards granted during 2023, see the Grants of Plan-Based Awards table (page 37). |
Summary Compensation Table
| (2) These amounts represent awards under the Annual Bonus Plan (see page 29 for a description of the Annual Bonus Plan). |
Summary Compensation Table
| (3) The amounts comprising “All Other Compensation” for Mr. Graham and Ms. Tarrant represent Company matching contributions to the recipient’s 401(k) plan account up to the $13,200 limit for such plan under federal income tax rules. For Messrs. Sjölund and James, the amounts represent payments under the Pensions Act 2008 of the Parliament of the United Kingdom. For Mr. James, the amount comprises Company pension contributions. Mr. Sjölund has reached the limit on his annual allowance for pension contributions and receives cash payments in lieu of Company pension contributions like other European employees in similar positions because he has not exceeded his annual allowance. The amounts comprising “All Other Compensation” for Messrs. Atal, Sehgal and Stevenson, and Ms. White are below. For a more detailed description of Mr. Atal’s relocation allowance and Mr. Sehgal’s reimbursed cost of travel, see “Perquisites and Other Personal Benefits” on page 34. For a more detailed description of Mr. Stevenson’s and Ms. White’s severance payments, see “Post-Employment Compensation Arrangements” on page 40. |
Summary Compensation Table
| | Mr. Atal | Mr. Sehgal | Mr. Stevenson | Ms. White | | 401(k) Match Contribution | $5,846 | $13,200 | $13,200 | $13,200 | | Relocation Allowance | $150,000 | | | | | Unused Paid Time Off (“PTO”) | | | $62,115 | $24,031 | | Severance | | | $2,609,605 | $622,410 | | Reimbursed cost of travel | | $16,251 | | |
Summary Compensation Table
| (4) Messrs. Sjölund and James compensation was converted to U.S. dollars from British pounds using a December 31, 2023 conversion rate of £1.00 = $1.2730. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table presents, for each of our NEOs, information concerning awards under our 2022 Equity Plan and Annual Bonus Plan during 2023.
Grants of Plan-Based Awards
| Name | Award Type(1) | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | | | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units(4) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | Vikram A. Atal | STI | | $0 | $950,000 | $5,000,000 | | | | | | | | RSU | 4/15/2023 | | | | | | | 38,779 | $1,499,972 | | Rakesh Sehgal | STI | | $0 | $351,010 | $5,000,000 | | | | | | | | RSU | 3/7/2023 | | | | | | | 3,014 | $124,991 | | | PSU | 3/7/2023 | | | | 0 | 3,014 | 6,028 | | $158,401 | | | RSU | 9/15/2023 | | | | | | | 8,208 | $174,995 | | Martin Sjölund | STI | | $0 | $495,336 | $5,000,000 | | | | | | | | RSU | 3/7/2023 | | | | | | | 10,851 | $449,991 | | | PSU | 3/7/2023 | | | | 0 | 10,851 | 21,702 | | $570,263 | | LaTisha O. Tarrant | STI | | $0 | $351,575 | $5,000,000 | | | | | | | | RSU | 3/7/2023 | | | | | | | 3,617 | $149,997 | | | PSU | 3/7/2023 | | | | 0 | 3,617 | 7,234 | 3,617 | $190,080 | | | RSU | 8/15/2023 | | | | | | | | $424,999 | | R. Owen James | STI | | $0 | $396,294 | $5,000,000 | | | | | | | | RSU | 3/7/2023 | | | | | | | 2,713 | $112,508 | | | PSU | 3/7/2023 | | | | 0 | 2,712 | 5,424 | | $142,529 | | | RSU | 8/15/2023 | | | | | | | 11,767 | $224,985 | | Kevin P. Stevenson | STI | | $0 | $950,000 | $5,000,000 | | | | | | | | RSU | 3/7/2023 | | | | | | | 39,184 | $1,624,960 | | | PSU | 3/7/2023 | | | | 0 | 39,185 | 78,370 | | $2,059,357 | | Peter M. Graham | STI | | $0 | $540,000 | $5,000,000 | | | | | | | | RSU | 3/7/2023 | | | | | | | 15,673 | $649,959 | | | PSU | 3/7/2023 | | | | 0 | 15,674 | 31,348 | | $823,747 | | Laura B. White | STI | | $0 | $500,000 | $5,000,000 | | | | | | | | RSU | 3/7/2023 | | | | | | | 10,851 | $449,991 | | | PSU | 3/7/2023 | | | | 0 | 10,851 | 21,702 | | $570,263 |
Grants of Plan-Based Awards
| (1) During 2023, our NEOs were awarded the following plan-based awards: annual short-term incentive award under our Annual Bonus Plan (“STI”) and time-based RSUs and performance-based PSUs under our LTIP. |
Grants of Plan-Based Awards
| (2) The amounts represent the range of possible payouts of the STI from $0 at threshold to $5,000,000 at maximum. |
Grants of Plan-Based Awards
| (3) The amounts represent the range of possible payouts of the PSUs from 0% at threshold to 200% of target (maximum). The PSUs will not vest if the performance criteria are not met. Vesting of the PSUs is based on the achievement of goals with respect to two financial metrics (Adjusted EBITDA and relative TSR) over the 2023-2025 performance period as well as continued employment. |
Grants of Plan-Based Awards
| (4) The amounts represent RSUs. One-third vests on each of the first, second and third anniversary of the grant date, subject to continued employment. |
Grants of Plan-Based Awards
| (5) The amounts represent the aggregate grant date fair value of each award, calculated by multiplying the fair value on the grant date by the number of RSUs and the target number of the PSUs. The fair value of the RSUs is based on the closing price per share of our common stock on the grant date, which was: |
Grants of Plan-Based Awards
| Grant Date | Fair Value | | 3/7/2023 | $41.47 | | 4/15/2023 | $38.68 | | 8/15/2023 | $19.12 | | 9/15/2023 | $21.32 |
Grants of Plan-Based Awards
The fair value of the PSUs is based on $63.64 per share for the relative TSR performance metric, a market condition, and $41.47 per share, the closing price of our common stock on the grant date, for the other performance metric, Adjusted EBITDA.
Outstanding Equity Awards at Fiscal-Year End
Outstanding Equity Awards at Fiscal-Year End The following table provides information on our NEOs’ outstanding unvested equity awards as of December 31, 2023. No options were outstanding as of December 31, 2023.
Outstanding Equity Awards at Fiscal-Year End
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested(1) (#) | Market Value of Shares of Stock that Have Not Vested(2) ($) | Equity Incentive Plan Awards: Number of Unearned Shares Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market of Payout Value of Unearned Shares Units or Other Rights That Have Not Vested ($)(2)(3) | | Vikram A. Atal | 4/15/2023 | 38,779 | $1,016,010 | — | $— | | Rakesh Sehgal | 5/15/2022 | 7,863 | $206,011 | — | $— | | | 3/7/2023 | 3,014 | $78,967 | 3,014 | $78,967 | | | 9/15/2023 | 8,208 | $215,050 | — | $— | | Martin Sjölund | 3/7/2021 | 3,337 | $87,429 | 10,013 | $262,341 | | | 3/7/2022 | 6,682 | $175,068 | 10,022 | $262,576 | | | 3/7/2023 | 10,851 | $284,296 | 10,851 | $284,296 | | LaTisha O. Tarrant | 3/7/2021 | 556 | $14,567 | 1,669 | $43,728 | | | 3/7/2022 | 1,114 | $29,187 | 1,670 | $43,754 | | | 11/15/2022 | 1,079 | $28,270 | — | $— | | | 3/7/2023 | 3,617 | $94,765 | 3,617 | $94,765 | | | 8/15/2023 | 22,228 | $582,374 | — | $— | | R. Owen James | 3/7/2021 | 890 | $23,318 | 2,670 | $69,954 | | | 3/7/2022 | 1,485 | $38,907 | 2,227 | $58,347 | | | 3/7/2023 | 2,713 | $71,081 | 2,712 | $71,054 | | | 8/15/2023 | 11,767 | $308,295 | — | $— | | Kevin P. Stevenson | 3/7/2021 | — | $— | 31,337 | $821,029 | | | 3/7/2022 | — | $— | 14,074 | $368,739 | | | 3/7/2023 | — | $— | 2,176 | $57,011 | | Peter M. Graham | 3/7/2021 | — | $— | — | $— | | | 3/7/2022 | — | $— | — | $— | | | 3/7/2023 | — | $— | — | $— | | Laura B. White | 3/7/2021 | — | $— | — | $— | | | 3/7/2022 | — | $— | — | $— | | | 3/7/2023 | — | $— | — | $— |
Outstanding Equity Awards at Fiscal-Year End
| (1) The RSU shares granted vest ratably over a three-year period, beginning on the first anniversary of the award date subject to the terms of the respective RSU agreement. |
Outstanding Equity Awards at Fiscal-Year End
| (2) The amounts represent the fair market value using $26.20 per share, the closing price of our common stock on December 31, 2023. |
Outstanding Equity Awards at Fiscal-Year End
| (3) The performance component of the LTIP awards will not vest or be awarded if we do not achieve the minimum threshold performance targets pursuant to the terms of the respective PSU agreement, as described more fully on page 30. If such targets are met, the number of shares to be received by each NEO will be determined based on actual performance (for each year). For the 2021 grant only, if TSR performance is negative, then the average percentage of the target PSUs earned cannot exceed 100% of target. The PSU award performance period is three-years beginning on January 1 of the year of the grant and ending in three years on December 31st. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table provides information concerning the shares acquired on vesting of RSUs and PSUs during 2023 on an aggregated basis for each of our NEOs, and includes the value realized upon vesting. During 2023, we had no stock options outstanding and awarded no stock options.
Option Exercises and Stock Vested
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1)(2) | | Vikram A. Atal | – | $ – | | Rakesh Sehgal | – | $ – | | Martin Sjölund | 18,211 | $759,945 | | LaTisha O. Tarrant | 2,335 | $84,123 | | R. Owen James | 5,474 | $228,430 | | Kevin P. Stevenson | 79,393 | $3,313,070 | | Peter M. Graham | 27,911 | $1,164,726 | | Laura B. White | 16,289 | $679,740 | | (1) The amounts represent the aggregate dollar amount realized upon vesting, computed by multiplying the number of shares of stock by the closing market price of our common stock on the day prior to the vesting date. (2) On February 14, 2024, the Compensation Committee determined the final payment of PSUs earned under the 2021 LTIP for the three-year period ended December 31, 2023, based on the Company’s financial results and, as a result it is not included in this table. | | |
Option Exercises and Stock Vested
The following table provides detailed vesting information of the value realized upon vesting of stock awards:
Option Exercises and Stock Vested
| Name | Award Type | Vesting Date | Number of Shares (#)(1) | Closing Market ($)(2) | Value Realized on Vesting ($) | | Martin Sjölund | PSU | 3/7/2023 | 8,972 | $41.73 | $374,402 | | | RSU | 3/7/2023 | 9,239 | $41.73 | $385,543 | | LaTisha O. Tarrant | RSU | 11/15/2023 | 540 | $17.07 | $9,218 | | | RSU | 3/7/2023 | 1,795 | $41.73 | $74,905 | | R. Owen James | PSU | 3/7/2023 | 2,989 | $41.73 | $124,731 | | | RSU | 3/7/2023 | 2,485 | $41.73 | $103,699 | | Kevin P. Stevenson | PSU | 3/7/2023 | 41,126 | $41.73 | $1,716,188 | | | RSU | 3/7/2023 | 38,267 | $41.73 | $1,596,882 | | Peter M. Graham | PSU | 3/7/2023 | 13,459 | $41.73 | $561,644 | | | RSU | 3/7/2023 | 14,452 | $41.73 | $603,082 | | Laura B. White | PSU | 3/7/2023 | 7,477 | $41.73 | $312,015 | | | RSU | 3/7/2023 | 8,812 | $41.73 | $367,725 | | (1) Final payment of PSUs earned under the 2021 LTIP for the three-year period ended December 31, 2023, was determined on February 14, 2024, after the Compensation Committee certified the Company’s financial results and are not included in this table. (2) Closing market price of our common stock to calculate value of shares at vesting is the trading day prior to the vesting date. | | | | | |
CEO Pay Ratio
CEO Pay Ratio For 2023, our last completed fiscal year:
CEO Pay Ratio
| • | the annual total compensation of our median employee was $56,570. |
CEO Pay Ratio
| • | the annualized total compensation of our CEO was $3,275,073; and |
CEO Pay Ratio
| • | the ratio of the annual total compensation of our CEO to our median employee was 58 to 1. |
CEO Pay Ratio
In accordance with SEC rules, we selected a new median employee for 2023. Based on our payroll and employment records, we identified the median employee from an employee population of 3,220 individuals on September 30, 2023. Our employee population included all employees as of September 30, 2023. We included the following pay elements in the total compensation for each employee:
CEO Pay Ratio
| • | salary received; |
CEO Pay Ratio
| • | overtime pay received; and |
CEO Pay Ratio
| • | incentive compensation payments received. |
CEO Pay Ratio
We identified our median employee for 2023 by: (1) calculating the total compensation using the pay elements described above for each of our employees and (2) ranking the total compensation of all employees (other than our CEO) from lowest to highest. We calculated the annual total compensation for our 2023 median employee using the same methodology used to calculate our CEO’s annual total compensation for 2023 as reported in the Summary Compensation Table in this Proxy Statement. Due to our current CEO not serving in the CEO role until March 27, 2023, CEO pay was annualized. The annual total compensation of Mr. Atal for 2023 was $3,062,072. Mr. Atal was our CEO as of September 30, 2023, the date we chose to determine our median-paid associate. To calculate Mr. Atal’s compensation for the pay ratio rule, we annualized the salary he earned between March 27, 2023, the day he became CEO, through December 31, 2023, the last day of our fiscal year. We also annualized his 401(k) match that is noted in footnotes to the Summary Compensation Table. As a result, this amount differs from his compensation as reported in the Summary Compensation Table.
Pay versus Performance
Pay versus Performance Set forth below is information about the relationship between “compensation actually paid” to our NEOs and certain financial performance measures. For further information concerning our pay-for-performance philosophy and how we align executive compensation with our performance, refer to CD&A beginning on page 23 of this Proxy Statement.
Pay versus Performance
| Year (1) | Summary Compensation Table (SCT) Total for Vikram A. Atal (2) | Compensation actually paid to Vikram A. Atal (3) | SCT Total for Kevin P. Stevenson (2) | Compensation actually paid to Kevin P. Stevenson (3)(4) | Average SCT Total for non- PEO NEOs (2) | Average Compensation actually paid to non-PEO NEOs (3)(4) | Value of Initial Fixed $100 Investment based on (5) : | | GAAP Net Income ($M) | Adjusted EBITDA ($M) (7)(8) | | | | | | | | | TSR | Peer Group TSR(6) | | | | 2023 | $3,062,549 | $2,578,587 | $6,628,660 | $1,888,877 | $1,602,094 | $764,609 | $72 | $109 | ($83) | $1,007 | | 2022 | $ — | $ — | $4,984,627 | $462,885 | $2,050,507 | $648,867 | $93 | $97 | $117 | $1,107 | | 2021 | $ — | $ — | $5,636,586 | $8,853,857 | $2,282,627 | $3,251,463 | $138 | $127 | $183 | $1,378 | | 2020 | $ — | $ — | $5,536,378 | $6,570,289 | $2,085,675 | $2,390,802 | $109 | $104 | $149 | $1,337 |
Pay versus Performance
| (1) The following table lists the principal executive officer (“PEO”) and non-PEO NEOs for each of the fiscal years 2023, 2022, 2021 and 2020 |
Pay versus Performance
| Year | PEO | Non-PEO NEOs | | 2023 | Vikram A. Atal, Kevin P. Stevenson | Rakesh Sehgal, Martin Sjölund, LaTisha O. Tarrant, R. Owen James, Peter M. Graham, Laura B. White | | 2021-2022 | Kevin P. Stevenson | Peter M. Graham, Steven C. Roberts, Christopher B. Graves, Laura B. White | | 2020 | Kevin P. Stevenson | Peter M. Graham, Steven C. Roberts, Christopher B. Graves, Martin Sjölund |
Pay versus Performance
| (2) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year for Messrs. Atal and Stevenson and (ii) the average of the total compensation reported in the Summary Compensation Table for non-PEO NEOs for each applicable year. |
Pay versus Performance
| (3) To calculate compensation actually paid in accordance with SEC rules, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Messrs. Atal and Stevenson and for the average of the non-PEO NEOs is set forth following the footnotes to this table. |
Pay versus Performance
| (4) Compensation actually paid differs from that reported for 2022 due to a minor correction in a formulaic equation performed in 2023. |
Pay versus Performance
| (5) Pursuant to the rules of the SEC, the comparison assumes $100 was invested on December 31, 2019 in our common stock. Historical stock price performance is not necessarily indicative of future stock price performance. |
Pay versus Performance
| (6) Index TSR reflects the Nasdaq Financial 100. |
Pay versus Performance
| (7) As noted in the CD&A, the Compensation Committee considered various key financial metrics when it determined Annual Bonus Plan payouts. The Compensation Committee selected adjusted EBITDA as the Company Selected Measure. It is an important supplemental measure of operations and financial performance, as it excludes certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business. |
Pay versus Performance
| (8) Adjusted EBITDA is a non-GAAP financial measure that is calculated by starting with our GAAP financial measure, Net income/(loss) attributable to PRA Group, Inc. and is adjusted for: |
Pay versus Performance
| • | income tax expense (or less income tax benefit) |
Pay versus Performance
| • | foreign exchange loss (or less foreign exchange gain); |
Pay versus Performance
| • | interest expense, net (or less interest income, net); |
Pay versus Performance
| • | other expense (or less other income); |
Pay versus Performance
| • | depreciation and amortization; |
Pay versus Performance
| • | impairment of real estate; |
Pay versus Performance
| • | net income attributable to noncontrolling interests; and |
Pay versus Performance
| • | recoveries applied to negative allowance less changes in expected recoveries. |
Pay versus Performance
| | 2023 | | | | | | | | PEO Atal | | PEO Stevenson | | Average for Non-PEO NEOs | | | Summary Compensation Table Total (1) | | 3,062,549 | | 6,628,660 | | 1,602,094 | | Adjustments (2) | | | | | | | | Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns of the Summary Compensation Table | ($ | 1,499,972) | ($ | 3,684,317) | ($ | 869,617) | | Year-end fair value of equity awards granted in the applicable year | | 1,016,010 | | 47,621 | | 346,128 | | Year-over-year change in fair value of equity awards granted in prior years that are unvested at year end | | — | ($ | 1,734,265) | ($ | 418,727) | | Year-over-year change in fair value of equity awards granted in prior years that vested in the year | | — | | 631,177 | | 104,731 | | COMPENSATION ACTUALLY PAID | | 2,578,587 | | 1,888,877 | | 764,609 |
Pay versus Performance
| (1) For Messrs. Atal and Stevenson, represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the non-PEO NEOs, amounts shown represent averages. |
Pay versus Performance
| (2) We do not provide any defined benefit or actuarial pension plans to any employee, including our NEOs. Thus, no pension valuation adjustments were necessary. In addition, for purposes of the equity award adjustments shown above, no equity awards were cancelled due to failure to meet vesting conditions, no equity awards were granted and vested in the same year, and there are no dividends or interest accrued to report. |
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the NEOs
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the NEOs The following is a list of financial performance measures, which in our assessment represent the most important financial performance measures used by the Company to link compensation actually paid to the NEOs for 2023. Net income and Adjusted EBITDA are the two primary performance measures in our Annual Bonus Plan. Adjusted EBITDA and stock price are the two performance measures in the PSUs granted as part of our long-term incentive program. In addition to the metrics noted below, our Annual Bonus Plan also incorporates individual objectives relating to business results, Company strategic objectives and organization and talent. See the section titled “Annual Bonus Plan” (page 29) in this Proxy Statement for a further description of the metrics used in the Company’s executive compensation program.
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the NEOs
| Most Important Performance Measures Used to Link Compensation Actually Paid to Company Performance | | Net Income | | Adjusted EBITDA | | Stock Price |