UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☑ Filed by a Party other than the Registrant ☐
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☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted byRule 14a-6(e)(2)) | |
☑ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to§240.14a-12 |
Regional Management Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of 20182020 Annual Meeting of Stockholders
and Proxy Statement
REGIONAL MANAGEMENT CORP.
Regional Management Corp. 979 Batesville Road, Suite B Greer, South Carolina 29651 (864)448-7000 |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 25, 2018May 21, 2020
To the Stockholders of Regional Management Corp.:
We hereby give notice that the 20182020 Annual Meeting of Stockholders (the “Annual Meeting”) of Regional Management Corp. will be held exclusively online via the Internet on Wednesday, April 25, 2018,May 21, 2020, at 8:3:00 a.m. local time, at our headquarters located at 979 Batesville Road, Suite B, Greer, SC 29651, forp.m. Eastern Time. The purposes of the following purposes:meeting are as follows:
(1) | To elect the |
(2) | To ratify the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
(3) | To hold an advisory vote to approve executive compensation; and |
(4) |
To transact such other business as may properly come before the Annual Meeting or any adjournments thereof. |
We will beginbegan mailing this Notice of Annual Meeting of Stockholders and our Proxy Statement to stockholders on or about March 23, 2018.April 22, 2020. Only stockholders whose names appear of record on our books at the close of business on February 26, 2018April 7, 2020 will be entitled to notice of and to vote at the Annual Meeting or at any adjournments thereof.
In light of the novel coronavirus (“COVID-19”) pandemic, for the safety of our directors, team members, and stockholders, and taking into account recent federal, state, and local guidance related toCOVID-19 and restrictions on the size of gatherings, we have determined that the Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physicalin-person meeting. If you plan to participate in the virtual meeting, please see “General Information and Frequently Asked Questions” in this Proxy Statement. Stockholders will be able to attend, vote, and submit questions (both before, and during a designated portion of, the meeting) from any location via the Internet. The Annual Meeting will be presented exclusively online at www.virtualshareholdermeeting.com/RM2020. You will be able to attend the Annual Meeting online, vote your shares electronically, and submit your questions to management during the Annual Meeting by visiting www.virtualshareholdermeeting.com/RM2020. At this time, we intend to resume holdingin-person meetings beginning with our 2021 Annual Meeting of Stockholders.
To participate in the Annual Meeting (e.g., submit questions and/or vote), you will need the control number provided on your proxy card or voting instruction form. If you are not a stockholder or do not have a control number, you may still access the Annual Meeting as a guest, but you will not be able to participate.
Your vote is important. Whether or not you plan to attend the virtual Annual Meeting, in person, you are urged to cast your vote promptly in order to assure representation of your shares at the meeting and so that a quorum may be established.In advance of the Annual Meeting, you may vote by Internet or by mail. If you attend the virtual Annual Meeting, you may revoke your proxy and vote your shares in person.electronically during the meeting.
To vote by Internet prior to the meeting, please visitwww.proxyvote.com. Have the enclosed proxy card in hand when you access the website, and follow the instructions to obtain your records and to create an electronic voting instruction form. | ||||
To vote by mail, please complete, date, and sign the enclosed proxy card, and mail it in the enclosed envelope. No postage need be affixed if the proxy card is mailed in the United States. |
On behalf of our Board of Directors and our management team, we thank you for your interest in Regional and for your participation in the Annual Meeting.
By Order of the Board of Directors
Brian J. Fisher
Senior Vice President,EVP, General Counsel, and Secretary
Greer, South Carolina
MarchApril 22, 20182020
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER
STOCKHOLDER MEETING TO BE HELD ON APRIL 25, 2018:MAY 21, 2020: The Notice of Annual Meeting of Stockholders,
Proxy Statement, and
Annual Report on Form10-K are available free of charge at
https://materials.proxyvote.com/75902K and on our Investor
Relations website atwww.regionalmanagement.com under the “Annual Reports” tab..
PROXY STATEMENT
20182020 Annual Meeting of Stockholders
Page | ||
1 | ||
Matrix of Director Skills, Experience, and Demographic Background | ||
53 | ||
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56 | ||
Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm | ||
Proposal No. 3: Advisory Vote to Approve Executive Compensation | ||
Security Ownership of Certain Beneficial Owners and Management | ||
Delinquent Section 16(a) | ||
REGIONAL MANAGEMENT CORP.
979 Batesville Road, Suite B
Greer, South Carolina 29651
PROXY STATEMENT
For the Annual Meeting of Stockholders to Be Held on April 25, 2018May 21, 2020
Important Notice Regarding the Availability of Proxy Materials
for the Stockholder Meeting to Be Held on April 25, 2018:May 21, 2020:
The Notice of Annual Meeting of Stockholders, Proxy Statement, and Annual Report on Form10-K are available free of charge at
https://materials.proxyvote.com/75902K and on the Investor Relations website of Regional Management Corp. at
www.regionalmanagement.comunder the “Annual Reports” tab..
MarchApril 22, 20182020
20182020 PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting.
Annual Meeting of Stockholders
Date: |
May 21, 2020 | |||
Time:
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3:00
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Record Date:
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Voting:
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Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each other proposal. Stockholders may vote | |||
Proxy Materials:
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The Proxy Statement and the accompanying proxy card are first being mailed on or about
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Meeting Agenda
Proposal | Board Vote
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Election of
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FOR ALL
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Ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31,
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FOR
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Advisory vote to approve executive compensation
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FOR
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Transact other business as may properly come before the meeting
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Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 1 |
Election of Director Nominees
The following table provides summary information about each director nominee. The nominees receiving a plurality of the votes cast at the meeting will be elected as directors.
Name | Age | Director Since | Experience/Qualification | Independent | Committees | |||||||||
AC |
CC |
CGN | ||||||||||||
Alvaro G. de Molina, Chair of the Board |
60 |
2012 |
Financial Services Industry, Leadership, Credit Risk, Corporate Finance, M&A, Accounting, Risk Management
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✓ |
✓ |
✓ | ||||||||
Jonathan D. Brown |
33 |
2018 |
Financial Services Industry, Capital Allocation, Investor Relations
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✓ | ||||||||||
Roel C. Campos |
69 |
2012 |
Leadership, Cyber Security, Corporate Governance, Government Affairs, Securities Compliance, Regulatory
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✓ |
✓ |
C | ||||||||
Maria Contreras-Sweet |
62 |
2018 |
Financial Services Industry, Leadership, Corporate Finance, Technology/Innovation, Corporate Governance, Regulatory, Public Relations, Government Affairs
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✓ |
✓ | |||||||||
Michael R. Dunn |
66 |
2014 |
Financial Services Industry, Leadership, Credit Risk, Corporate Finance, M&A, Risk Management, Investor Relations
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Steven J. Freiberg |
61 |
2014 |
Financial Services Industry, Leadership, Credit Risk, Corporate Finance, Marketing, M&A, Executive Compensation, Technology, Risk Management, Investor Relations
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✓ |
✓ |
C | ||||||||
Peter R. Knitzer |
59 |
2015 |
Financial Services Industry, Leadership, Credit Risk, Corporate Finance, Marketing, Investor Relations
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Carlos Palomares |
73 |
2012 |
Financial Services Industry, Leadership, Credit Risk, Corporate Finance, Executive Compensation, Accounting, Risk Management
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✓ |
C |
✓ |
Name | Director Since | Experience/Qualifications | Independent | Committees | ||||||||||
AC | CC | CGN | ||||||||||||
Carlos Palomares, Chair of the Board | 2012 | Financial Services Industry, Leadership, Credit Risk, Corporate Finance, Executive Compensation, Accounting, Risk Management | ✓ | ✓ | ✓ | |||||||||
Robert W. Beck | 2020 | Financial Services Industry, Leadership, Credit Risk, Corporate Finance, Marketing, M&A, Accounting, Risk Management, Investor Relations | ||||||||||||
Jonathan D. Brown | 2018 | Financial Services Industry, Capital Allocation, M&A, Corporate Governance, Investor Relations | ✓ | |||||||||||
Roel C. Campos | 2012 | Leadership, Cybersecurity, Corporate Governance, Government Affairs, Securities Compliance, Regulatory | ✓ | ✓ | C | |||||||||
Maria Contreras-Sweet | 2018 | Financial Services Industry, Leadership, Corporate Finance, Technology/Innovation, Corporate Governance, Regulatory, Public Relations, Government Affairs | ✓ | ✓ | ✓ | |||||||||
Michael R. Dunn | 2014 | Financial Services Industry, Leadership, Credit Risk, Corporate Finance, M&A, Risk Management, Investor Relations | ||||||||||||
Steven J. Freiberg | 2014 | Financial Services Industry, Leadership, Credit Risk, Corporate Finance, Marketing, M&A, Executive Compensation, Technology, Risk Management, Investor Relations | ✓ | ✓ | C | |||||||||
Sandra K. Johnson | 2020 | Financial Services Industry, Leadership, Information Technology, Cybersecurity, Blockchain Technology, Technology/Innovation, Entrepreneurship | ✓ | ✓ | ||||||||||
Alvaro G. de Molina | 2012 | Financial Services Industry, Leadership, Credit Risk, Corporate Finance, M&A, Accounting, Risk Management | ✓ | C | ✓ |
AC = Audit Committee |
CC = Compensation Committee |
CGN = Corporate Governance and Nominating Committee |
C = Committee Chair |
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 2 |
Ratification of Independent Registered Public Accounting Firm
As a matter of good corporate governance, we are asking our stockholders to ratify the selection of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2020.
Advisory Vote to Approve Executive Compensation
As required by Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are providing our stockholders with the opportunity at the Annual Meeting of Stockholders to vote on anon-binding advisory resolution to approve the compensation of our named executive officers (commonly known as a“Say-on-Pay Vote”).
Advisory Vote on the Frequency of Future Advisory Votes to Approve Executive Compensation
As required by Section 14A of the Exchange Act, we are providing our stockholders with the opportunity at the Annual Meeting of Stockholders to vote on anon-binding advisory resolution on whether to have a“Say-on-Pay Vote” every one year, two years, or three years (commonly known as a“Say-on-Pay Frequency Vote”).
20172019 Compensation-Related Highlights
✓ | Continued alignment of executive pay with company performance: |
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Performance goals are rigorousand are based almost exclusively on objective, quantitative criteria |
✓ | Maintained competitive compensation and incentive program target opportunities for our executives in order to continue to align their overall compensation with the market for executive talent |
✓ | Set our short-term incentive payout opportunities to provide high upside if performance goals are exceeded, while paying low or no bonus amounts if goals are not achieved |
✓ | Granted long-term incentives, which include a significant portion that is contingent upon the achievement of rigorous and clearly-defined performance measures, to named executive officers and other key contributors, effectively aligning such individuals’ interests with the long-term interests of our stockholders |
Compensation Program “Best Practices” Summary
✓ | Compensation program designed to closely align pay with performance |
✓ | Significant share ownership guidelines for executives (5x base salary for CEO, 2x for other executive officers) |
✓ | Significant share ownership guidelines for directors (5x annual cash retainer) |
✓ | Significant portion of compensation is variable and/or performance-based |
✓ | No excessive perquisites |
✓ | No excise taxgross-ups |
✓ | Formalized clawback policy |
✓ | Double-triggerchange-in-control provisions |
✓ | Prohibition against hedging and pledging |
✓ | Nore-pricing of equity incentive awards without stockholder approval |
✓ | Independent Compensation Committee |
✓ | Independent compensation consultant |
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 3 |
Fiscal 20172019 Compensation Summary
The following table sets forth the cash and other compensation that we paid to our named executive officers or that was otherwise earned by our named executive officers for their services in all employment capacities during 2017.2019. See the Summary Compensation Table of the Proxy Statement for additional information.
Name and Principal Position | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | |||||||
Peter R. Knitzer, President and Chief Executive Officer
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530,000 |
— |
949,985 |
— |
522,580 |
42,552 |
2,045,117 | |||||||
John D. Schachtel, Executive Vice President and Chief Operating Officer
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207,123 |
— |
— |
299,994 |
204,224 |
21,239 |
732,580 | |||||||
Jody L. Anderson, Former President and Chief Operating Officer
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127,603 |
— |
172,494 |
172,493 |
125,816 |
178,350 |
776,756 | |||||||
Donald E. Thomas, Executive Vice President and Chief Financial Officer
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342,000 |
66,667 |
170,994 |
170,995 |
337,212 |
24,900 |
1,112,768 | |||||||
Daniel J. Taggart, Senior Vice President and Chief Risk Officer
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318,000 |
— |
105,987 |
105,998 |
313,548 |
8,810 |
852,343 | |||||||
Brian J. Fisher, Senior Vice President, General Counsel, and Secretary
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240,000 |
50,000 |
80,000 |
79,994 |
236,640 |
10,800 |
697,434 |
Name and Principal Position | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | |||||||
Robert W. Beck, President and Chief Executive Officer (Former Executive Vice President and Chief Financial Officer) |
178,630 |
— |
224,981 |
224,990 |
178,630 |
73,104 |
880,335 | |||||||
Peter R. Knitzer, Former President and Chief Executive Officer |
600,000 |
— |
1,049,946 |
524,997 |
1,928,715 |
82,747 |
4,186,405 | |||||||
John D. Schachtel, Executive Vice President and Chief Operating Officer |
400,000 |
— |
299,984 |
149,994 |
322,800 |
61,705 |
1,234,483 | |||||||
Donald E. Thomas, Former Executive Vice President and Chief Financial Officer |
266,301 |
200,000 |
— |
— |
214,905 |
35,021 |
716,227 | |||||||
Brian J. Fisher, Executive Vice President, General Counsel, and Secretary |
335,000 |
— |
217,459 |
133,748 |
371,601 |
15,910 |
1,073,718 | |||||||
Daniel J. Taggart, Former Executive Vice President and Chief Credit Risk Officer |
375,000 |
— |
331,221 |
190,622 |
436,789 |
20,022 |
1,353,654 |
20192021 Annual Meeting of Stockholders
◾ | Stockholder proposals submitted pursuant to SEC Rule14a-8 must be received by us no later than |
◾ | Notice of stockholder proposals outside of SEC Rule14a-8 must be delivered to us not earlier than |
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 4 |
AND FREQUENTLY ASKED QUESTIONS
This proxy statement (the “Proxy Statement”) and the accompanying proxy card are first being sent on or about March 23, 2018,April 22, 2020, to the stockholders of Regional Management Corp., a Delaware corporation (“Regional,” the “Company,” “we,” “us,” and “our”), in connection with the solicitation of proxies by our Board of Directors (the “Board”) for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on April 25, 2018,May 21, 2020, at Regional’s headquarters located at 979 Batesville Road, Suite B, Greer, SC 29651, at 8:3:00 a.m. local timep.m. Eastern Time and any postponement or adjournment thereof. Our Annual Report on Form10-K, containing financial statements for the fiscal year ended December 31, 2017,2019, is being mailed together with this Proxy Statement to all stockholders entitled to vote at the Annual Meeting.
Why did I receive a proxy card and Proxy Statement?
As a stockholder of record on February 26, 2018,April 7, 2020, you are entitled to vote at the Annual Meeting. The accompanying proxy card is for use at the Annual Meeting if a stockholder either will be unable to attend in personvirtually on May 21, 2020 or will attend virtually but wishes to vote by proxy in advance of the Annual Meeting. Even if you plan to attend the virtual Annual Meeting, you are encouraged to vote by proxy in advance. Instructions as to how you may cast your vote by proxy are found on the proxy card. If you attend the virtual Annual Meeting, you may revoke your proxy and vote your shares electronically during the virtual Annual Meeting.
The proxy card is solicited by mail by and on behalf of the Board, and the cost of soliciting proxies will be borne by us. In addition to use of the mails,solicitations by mail, proxies may be solicited in person, by telephone, or via the Internet by our directors and officers who will not receive additional compensation for such services. We will request banks, brokerage houses, and other institutions, nominees, and fiduciaries to forward the soliciting material to beneficial owners and to obtain authorization for the execution of proxies. We will, upon request, reimburse these parties for their reasonable expenses in forwarding proxy materials to our beneficial owners.
Why is the Annual Meeting taking place virtually this year?
We will host the Annual Meeting exclusively live online this year due to the circumstances surrounding the existence and spread of the novel coronavirus (“COVID-19”) pandemic. Federal, state, and local governments have encouraged, and in some instances ordered, businesses to restrict all unnecessary travel and limit the size of gatherings to avoid the spread ofCOVID-19. As a result, and in order to protect the health and well-being of our directors, team members, and stockholders, we have decided to hold the Annual Meeting exclusively online this year. At this time, we intend to resume holdingin-person meetings beginning with the 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”).
How do I attend and participate in the Annual Meeting online?
We will host the Annual Meeting exclusively live online. Any stockholder can attend the Annual Meeting live online at www.virtualshareholdermeeting.com/RM2020. To enter the Annual Meeting, you will need to log in with the control number provided on your proxy card or voting instruction form. Once you are logged in to the Annual Meeting, instructions on how to participate, including how to submit questions and vote during the meeting, will be provided at www.virtualshareholdermeeting.com/RM2020. If you are not a stockholder or do not have a control number, you may still access the meeting as a guest, but you will not be able to participate. We are committed to ensuring that our stockholders have the same rights and opportunities to participate in the Annual Meeting as if it had been held in a physical location. If you have questions about accessing the website for the virtual Annual Meeting, please contact the Company’s Corporate Secretary by sending an email to investor.relations@regionalmanagement.com or calling (864)448-7000 by May 18, 2020. If you encounter any technical difficulties with thelog-in process or during the Annual Meeting, please call the technical support number that will be posted on the virtual Annual Meeting website.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and mobile phones) running the most updated version of applicable software and plugins. Stockholders (or their authorized representatives) should ensure that they have a strongWi-Fi connection wherever they intend to participate in the meeting. Stockholders (or their authorized representatives) should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 5 |
What is the purpose of the Annual Meeting?
The purposespurpose of the Annual Meeting are:is:
(i) | to elect the |
(ii) | to ratify the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
(iii) | to hold an advisory vote to approve executive compensation; and |
(iv) |
to transact such other business as may properly come before the Annual Meeting or any adjournments thereof. |
Who is entitled to vote?
Only stockholders of record at the close of business on February 26, 2018April 7, 2020 (the “Record Date”), will be entitled to receive notice of and to vote at the Annual Meeting. As of the Record Date, 11,690,60211,175,028 shares of our common stock, $0.10 par value per share, were outstanding. The holders of common stock are entitled to one vote per share for each director nominee and to one vote per share on any other proposal presented at the Annual Meeting.
Brokers that are members of certain securities exchanges and that hold shares of our common stock in “street name” on behalf of beneficial owners have authority to vote on certain items when they have not received instructions from beneficial owners. Under the New York Stock Exchange (“NYSE”) rules and regulations governing such brokers, the proposal to ratify the appointment of RSM US LLP as our independent registered public accounting firm is considered a “discretionary” item. This means that brokers may vote in their discretion on this proposal on behalf of beneficial owners who have not furnished voting instructions. In contrast, certain items are considered“non-discretionary,” and a “brokernon-vote” occurs when a broker or other nominee holding shares for a beneficial owner votes on one proposal but does not vote on another proposal because, with respect to such other proposal, the nominee does not have discretionary voting power and has not received instructions from the beneficial owner. The proposals to elect directors to approve executive compensation, and to determine the frequency of future advisory votes to approve executive compensation are considered“non-discretionary,” and therefore, for such proposals, brokers cannot vote your shares on these proposals when they do not receive voting instructions from you.
What constitutes a quorum?
The representation, in personvirtually or by proxy, of at least a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting is necessary to constitute a quorum for the transaction of business. Votes withheld from any nominee, abstentions, and “brokernon-votes” are counted as present or represented for purposes of determining the presence or absence of a quorum for the Annual Meeting. Virtual attendance at our Annual Meeting constitutes presence in person for purposes of determining whether there is a quorum at the meeting.
Can I ask questions at the virtual Annual Meeting?
Stockholders as of the Record Date who attend and participate in our virtual Annual Meeting at www.virtualshareholdermeeting.com/RM2020 will have an opportunity to submit questions about topics of importance to the Company’s business and affairs live via the Internet during a designated portion of the meeting. Instructions for submitting questions during the virtual Annual Meeting will be available at www.virtualshareholdermeeting.com/RM2020 during the meeting. Stockholders may also submit a question in advance of the Annual Meeting at www.proxyvote.com. In both cases, stockholders must have available their control number provided on their proxy card or voting instruction form. All questions from stockholders that are pertinent to Annual Meeting matters will be answered during the meeting, subject to time limitations.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 6 |
How do I vote?
Stockholders may vote in personby proxy or by proxy.attending the virtual Annual Meeting online and voting electronically during the Annual Meeting. Instructions as to how you may cast your vote by proxy are set forth below and are found on the accompanying proxy card.
| Vote by Before the Meeting – Go towww.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on During the Meeting – Go towww.virtualshareholdermeeting.com/RM2020 You may attend the meeting via the Internet and vote electronically during the meeting. Have your proxy card in hand when you access the website, and follow the instructions. | ||||
Vote by Mail:Mark, sign, and date your proxy card and promptly return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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Will other matters be voted on at the Annual Meeting?
Aside from the fourthree proposals described above, the Board knows of no other matters to be presented at the Annual Meeting. If any other matter should be presented at the Annual Meeting upon which a vote properly may be taken, shares represented by all proxies received by the Board will be voted with respect thereto in accordance with the best judgment of the persons named as proxy holders andattorneys-in-fact in the proxies.
May I revoke my proxy instructions?
Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted.voted at the Annual Meeting. Proxies may be revoked by (i) filing with our Corporate Secretary, before the taking of the vote at the Annual Meeting, a written notice of revocation bearing a later date than the proxy; (ii) duly completing a later-dated proxy card relating to the same shares and delivering it to our Corporate Secretary before the taking of the vote at the Annual Meeting; or (iii) attending the virtual Annual Meeting and voting in personelectronically (although attendance at the Annual Meeting will not in and of itself constitute a revocation of a proxy). Any written notice of revocation or subsequent proxy should be sent so as to be delivered to Regional Management Corp., 979 Batesville Road, Suite B, Greer, South Carolina 29651, Attention: Corporate Secretary, before the taking of the vote at the Annual Meeting.
How many votes are required to approve each proposal?
With respect to the proposal to elect directors (Proposal No. 1), the eightnine nominees receiving the highest number of affirmative votes of the shares present, virtually or represented by proxy, and entitled to vote at the Annual Meeting shall be elected as directors. Regarding the proposal to ratify the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20182020 (Proposal No. 2), an affirmative vote of a majority of the shares present, in personvirtually or represented by proxy, and voting on such matter is required for approval. Likewise, the compensation of executive officers (Proposal No. 3) will be approved, on an advisory basis, if a majority of the shares present, in personvirtually or represented by proxy, and voting on such matter is cast in favor of the proposal. Finally, the frequency of the advisory vote on future advisory votes to approve executive compensation (Proposal No. 4) receiving the greatest number of votes cast—one year, two years, or three years—will be deemed by us as the frequency that has been recommended by stockholders. “Brokernon-votes” are not considered voted for the particular matter, and for proposals subject to majority voting that are considered“non-discretionary”(Proposal No. 2 and Proposal No. 3), “brokernon-votes” have the effect of reducing the number of affirmative votes required to achieve a majority for such matter by reducing the total number of shares from which the majority is calculated. For proposals subject to majority voting that are considered “discretionary” (Proposal No. 2), there will be no “brokernon-votes” and brokers may vote in their discretion on behalf of beneficial owners who have not furnished voting instructions. Virtual attendance at our Annual Meeting constitutes presence for purposes of the vote required under our Amended and Restated Bylaws (the “Bylaws”).
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 7 |
Because your votesvote on Proposal No. 3 and Proposal No. 4 areis advisory, theyit will not be binding on us, our Board, or our Compensation Committee. However, the Board and the Compensation Committee will consider the outcome of each of these votesthis vote when making future compensation decisions for our executive officers or decisions regarding the frequency of the advisory vote on the compensation of our executive officers.
The persons named as proxy holders andattorneys-in-fact in the proxy card, Peter R. KnitzerRobert W. Beck and Brian J. Fisher, were selected by the Board and are officers of the Company. All properly executed proxiesproxy cards returned in time to be counted at the Annual Meeting will be voted by such persons at the Annual Meeting. Where a choice has been specified on the proxy card with respect to the foregoing matters, the shares represented by the proxy will be voted in accordance with the specifications. If no such specifications are indicated, such proxiesshares will be voted “FOR” the election of theall director nominees, “FOR” the ratification of the appointment of our independent registered public accounting firm, and “FOR” the advisory approval of executive compensation, and “ONE YEAR” on the advisory vote on the frequency of future advisory votes on the approval of executive compensation.
How can I correspond directly with Regional Management Corp.?
The address of our principal executive office is 979 Batesville Road, Suite B, Greer, South Carolina 29651, and our telephone number is(864) 448-7000. In addition, any person interested in communicating directly with the independent Chair of our Board or with any other Board member may address such communication to our Corporate Secretary, 979 Batesville Road, Suite B, Greer, South Carolina 29651, who will forward such communication to the appropriate party.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 8 |
CORPORATE GOVERNANCE MATTERS
The Board is responsible for directing and overseeing the management of our business and affairs in a manner consistent with the best interests of the Company and its stockholders. The Board has implemented written Corporate Governance Guidelines designed to assist the Board in fulfilling its duties and responsibilities. The Corporate Governance Guidelines address a number of matters applicable to directors, including Board composition, structure, and policies; director qualification standards; Board meetings; committees of the Board; roles and expectations of the Board and its directors; director compensation; management succession planning; and other matters. These Corporate Governance Guidelines are available on our Investor Relations website under the “Corporate Governance” tab atwww.regionalmanagement.com. A stockholder may request a copy of the Corporate Governance Guidelines by contacting our Corporate Secretary at 979 Batesville Road, Suite B, Greer, South Carolina 29651.
Our Corporate Governance and Nominating Committee (the “Nominating Committee”) is responsible for reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board. The Nominating Committee considers minimum individual qualifications, including relevant career experience, strength of character, mature judgment, familiarity with our business and industry, independence of thought, and an ability to work collegially with the other members of the Board, and all other factors it considers appropriate, which may include age, diversity of background, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations (such as antitrust issues), corporate governance background, financial and accounting background, executive compensation background, and the size, composition, and combined expertise of the existing Board. The Board and the Nominating Committee monitor the mix of specific experience, qualifications, and skills of itsthe Company’s directors in order to assureensure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of our business and structure. Stockholders may also nominate directors for election at our annual stockholders’ meeting by following the provisions set forth in our Amended and Restated Bylaws, (the “Bylaws”), and in such a case, the Nominating Committee will consider the qualifications of directors proposed by stockholders.
When determining whether director nominees have the experience, qualifications, attributes, and professional and functional skills, taken as a whole, to enable our Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Nominating Committee has focused primarily on theirthe valuable contributions of incumbent directors to our success in recent years and on the skills, experience, and individual attributes that each director nominee brings to the Board, including those discussed in the biographical descriptions and matrix set forth below.
The Board recognizes and embraces the value of a diverse board of directors in improving the quality of its performance and our success. Diversity promotes the inclusion of different perspectives and ideas, mitigates against groupthink, and ensures that the Board has the opportunity to benefit from all available talent. The Board also recognizes the need for its directors to understand and to be able to respond effectively to the financial needs of its diverse customer base. The promotion of a diverse Board makes prudent business sense and makes for better corporate governance.
In February 2018, the Board approved its Board Diversity Policy (the “Diversity Policy”), which is available on our Investor Relations website under the “Corporate Governance” tab atwww.regionalmanagement.com. The Diversity Policy establishes the Board’s approach to achieving and maintaining diversity on the Board. The Board and the Nominating Committee are committed to actively seeking out highly qualified, diverse candidates to include in the pool from which Board nominees are chosen. The Board seeks to comprise itself of talented and dedicated directors with a diverse mix of expertise in areas needed to foster our business success, as well as a diversity of personal characteristics that include, but are not limited to, gender, race, ethnicity, national origin, sexual orientation, age, and geography. The Board and the Nominating Committee implement the Diversity Policy by maintaining a director candidate list comprised of individuals qualified to fill openings on the Board, which includes candidates with useful expertise who possess diverse personal backgrounds. When director openings occur, the list will be used to assist in selecting
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 9 |
new directors. Ultimately, the selection of new directors will be based on the Board’s judgment of the overall contributions that a candidate will bring to the Board, giving due weight to diverse personal characteristics that contribute to the Board achieving the objectives of the Diversity Policy.
The Nominating Committee is charged with reviewing all steps taken pursuant to the Diversity Policy on an annual basis, assessing the Board’s progress in achieving diversity, and presenting its findings and assessment to the full Board for input. BecauseIn 2019, the Diversity Policy isBoard was awarded the Latino Corporate Directors Association 2019 Corporate Visionary Award in recognition of Regional’s commitment to an inclusive and diverse Board, which includes four Latino members. In addition, the Board was nominated for NACD NXT™ recognition by the National Association of Corporate Directors, which applauds exemplary board leadership practices that promote greater diversity and inclusion. Also in 2019, the Board commenced a search for a new policy, the Nominating Committee has not yet performed an annual review and assessment of the Board’s progress in achieving the objectives set forthindependent director resulting in the Diversity Policy. The Nominating Committee has, however, considered the current compositionappointment of Sandra K. Johnson, our second female director and first African American director, effective as of April 21, 2020. Following Dr. Johnson’s appointment, more than 50% of the Board and assessed the diverse characteristics of its current directors, 50% of whom are Hispanic
American, one being a Hispanic American female. The Nominating Committee and the Board are proud of the diverse characteristics of its directors.the Company’s directors and will continue to promote diversity initiatives at the Board level and throughout the Company.
Current Directors and Director Nominees
The Board has the discretion to determine the size of the Board, the members of which are elected at each year’s annual meeting of stockholders. Our Board currently consists of eightnine directors: Alvaro G. de Molina,Carlos Palomares, Robert W. Beck, Jonathan D. Brown, Roel C. Campos, Maria Contreras-Sweet, Michael R. Dunn, Steven J. Freiberg, Peter R. Knitzer,Sandra K. Johnson, and Carlos Palomares,Alvaro G. de Molina, with Mr. de MolinaPalomares serving as Chair of the Board. Each of these individuals has also been nominated as a director candidate for election at the Annual Meeting.
Biographical information of each of our directors is provided below. In addition, following the biographical information of our directors, we have provided a matrix summarizing the background, skills, experience, qualifications, and other attributes of our directors that led the Nominating Committee and the Board to conclude that such individuals would provide valuable contributions to our business and should therefore serve our company as its directors.
Age:
Director Since: 2012
Chair of the Board
Member of the Audit Committee and Compensation Committee | Mr. | |
ROBERT W. BECK Age: 56 President and Director Since: 2020 | Mr. Beck has served as President and |
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 10 |
Chief Financial Officer of Citibank’s US Consumer and Commercial Bank. Prior to that, Mr. Beck served in a number of different roles at Citibank, including head of Citigroup Corporate Finance, head of Citigroup Reengineering, andco-head of Citigroup Corporate M&A. Mr. Beck received his BS in Business Administration and Management from Washington University | ||
JONATHAN D. BROWN
Age:
Director Since: 2018 | Mr. Brown has served as a director of Regional since January 2018. He is a
Mr. Brown is the representative of Basswood, our largest stockholder. For a description of our cooperation agreement with Basswood, pursuant to which Mr. Brown is nominated, see “Other Information – Certain Relationships and Related Person Transactions – Cooperation Agreement,” below. | |
ROEL C. CAMPOS
Age:
Director Since: 2012
Chair of the Corporate Governance and Nominating Committee
Member of the Compensation Committee | Mr. Campos has served as a director of Regional since March 2012. He has been a partner and currently serves as Senior Counsel with the law firm of Hughes Hubbard & Reed LLP since February 2016, where he practices in the areas of securities regulation, corporate governance, and securities enforcement and serves as Chair of the firm’s Securities Enforcement Practice. Prior to joining Hughes Hubbard & Reed LLP, Mr. Campos was a partner with Locke Lord LLP (April 2011 to February 2016) and Cooley LLP (September 2007 to April 2011). Prior to that, he received a presidential appointment and served as a Commissioner of the Securities and Exchange Commission (the “SEC”) from 2002 to 2007. Prior to serving with the SEC, Mr. Campos was a founding partner of a Houston-based radio broadcaster. Earlier in his career, he practiced corporate law and served as a federal prosecutor in Los Angeles, California. Mr. Campos also previously served from January 2013 to May 2017 on the |
board of directors of WellCare Health Plans, Inc., a publicly-held entity which provides managed care services targeted to government-sponsored health care programs. He is |
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 11 |
MARIA CONTRERAS-SWEET
Age:
Director Since: 2018
Member of the Corporate Governance and Nominating Committee and the Compensation Committee | Ms. Contreras-Sweet has been a director of Regional since January 2018. She is the Managing Partner of Rockway Equity Partners, and she previously served as a member of President Obama’s cabinet as the 24thAdministrator of the U.S. Small Business Administration from April 2014 to January 2017. Since March 2017, Ms. Contreras-Sweet has served as a director and member of the audit committee of Sempra Energy, | |
MICHAEL R. DUNN
Age:
Director Since: 2014 | Mr. Dunn has been a director of Regional since July 2014. He previously served as Chief Executive Officer of Regional from October 2014 through July 2016 and as Executive Chairman of the Board from August 2016 through December 2016. Prior to joining Regional, Mr. Dunn was a partner at the private equity firm of Brysam Global Partners, a specialized firm focusing on investment in international banking and consumer lending companies, from 2007 through 2013. Mr. Dunn served as a board or alternate board member for all of Brysam’s portfolio companies. Prior to that, Mr. Dunn was with Citigroup for over 30 years, where he was the Chief Financial Officer of the Global Consumer Group from 1996 through 2007, adding the title of Chief Operating Officer of the Group in 2005. He was also a member of the Citigroup Management and Operating Committees. Mr. Dunn previously served on the boards of Banamex, a wholly-owned Mexican bank subsidiary of Citigroup, and on the U.S.-based Student Loan Corporation, of which Citigroup owned a majority interest. He holds a B.S. degree from New York University and attended the University of Michigan Executive Program. He is a Certified Public Accountant in New York State. | |
STEVEN J. FREIBERG
Age:
Director Since: 2014
Chair of the Compensation Committee
Member of the Audit Committee | Mr. Freiberg has been a director of Regional since July 2014. He |
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 12 |
directors of several of Citigroup’s affiliates, including Citibank N.A., Citicorp Credit Services Inc., Citicorp Investment Services, Citicorp Insurance Group, Citibank Trust N.A., Citibank FSB, and the Citigroup Foundation. Mr. Freiberg has served on the board of directors of MasterCard Incorporated, a publicly-traded |
multinational financial services corporation, since September 2006 and currently chairs its audit committee. He also served on the former U.S. region board of MasterCard from January 2001 until May 2006 and served as Chairman of MasterCard’s United States region board from 2004 until May 2006. In addition, Mr. Freiberg currently serves | ||
Age: 59
|
Regional Management Corp. | Proxy Statement for | 13 |
Age:
Director Since: 2012
Chair of the Audit Committee
Member of the | Mr. |
There are no family relationships among any of our directors or executive officers.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 14 |
Matrix of Director Skills, Experience, and Demographic Background
The following table provides our stockholders and other interested parties with an overview of our directors’ skills, experience, and demographic background. These qualities are of particular value to our business and led the Nominating Committee and the Board to conclude that such individuals would provide valuable contributions to our company and should therefore serve our company as its directors.
Alvaro G. de Molina | Jonathan D. Brown | Roel C. Campos | Maria Contreras- Sweet | Michael R. Dunn | Steven J. Freiberg | Peter R. Knitzer | Carlos Palomares | |||||||||
Skills and Experience
| ||||||||||||||||
Financial Services Industry
|
✓
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| |||||||||
Other Public Co. Board of Directors
| ✓
| ✓
| ✓
| ✓
| ||||||||||||
Executive Management
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| |||||||||
Entrepreneurship/Business Operations
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| |||||||||
Credit Risk Management
| ✓
| ✓
| ✓
| ✓
| ✓
| |||||||||||
Corporate Finance and/or Capital Allocation
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| |||||||||
Marketing and/or Public Relations
| ✓
| ✓
| ✓
| ✓
| ||||||||||||
Marketing to Hispanic Population
| ✓
| ✓
| ✓
| |||||||||||||
Mergers and Acquisitions
| ✓
| ✓
| ✓
| ✓
| ||||||||||||
Human Resources/Executive Comp
| ✓
| ✓
| ||||||||||||||
Cyber Security and/or Technology/Innovation
| ✓
| ✓
| ✓
| |||||||||||||
Corporate Governance
| ✓
| ✓
| ||||||||||||||
Government Affairs
| ✓
| ✓
| ||||||||||||||
Regulatory and/or SEC Compliance
| ✓
| ✓
| ||||||||||||||
Audit Committee Financial Expert
| ✓
| ✓
| ✓
| |||||||||||||
SOX and Internal Audit
| ✓
| ✓
| ||||||||||||||
Risk Management
| ✓
| ✓
| ✓
| ✓
| ||||||||||||
Business Ethics
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| ✓
| |||||||||
Investor Relations
| ✓
| ✓
| ✓
| ✓
| ||||||||||||
Demographic Background
| ||||||||||||||||
Board Tenure and Independence
| ||||||||||||||||
Year First Appointed or Elected
|
2012
|
2018
|
2012
|
2018
|
2014
|
2014
|
2015
|
2012
| ||||||||
Board Independent
|
✓
|
✓
|
✓
| ✓
|
✓
|
✓
| ||||||||||
Gender
| ||||||||||||||||
Male
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
|
✓
| |||||||||
Female
| ✓
| |||||||||||||||
Age
| ||||||||||||||||
Years Old
|
60
|
33
|
69
|
62
|
66
|
61
|
59
|
73
| ||||||||
Race/Ethnicity
| ||||||||||||||||
White/Caucasian
|
✓
|
✓
|
✓
|
✓
| ||||||||||||
Hispanic/Latino
| ✓
| ✓
| ✓
| ✓
|
MariaRobert W. Jonathan Roel C. Michael R. Steven J. Sandra K. Alvaro G. Carlos Contreras-Beck D. Brown Campos Dunn Freiberg Johnson de Molina Palomares Sweet Financial Services Industry Other Public Co. Board of Directors Executive Management Entrepreneurship/Business Operations Credit Risk Management Corporate Finance or Capital Allocation Marketing and/or Public Relations Marketing to Hispanic Population Mergers and Acquisitions Human Resources/Executive Comp Cybersecurity or Technology/Innovation Information Technology or Blockchain Corporate Governance Government Affairs Regulatory and/or SEC Compliance Audit Committee Financial Expert SOX and Internal Audit Risk Management Business Ethics Investor Relations Demographic BackgroundBoard Tenure and IndependenceYear First Appointed or Elected 2020 2018 2012 2018 2014 2014 2020 2012 2012Board Independent GenderMale Female AgeYears Old 56 35 71 64 68 63 59 62 75Race/EthnicityWhite/Caucasian Hispanic/Latino African American
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 15 |
Ms. Contreras-Sweet, Dr. Johnson, and Messrs. Brown, Campos, Freiberg, de Molina, and Palomares are each independent in accordance with the criteria established by the NYSE for independent board members. The Board performed a review to determine the independence of its members and made a subjective determination as to each of these independent directors that no transactions, relationships, or arrangements exist that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director of the Company. In making these determinations, the Board reviewed the information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and its management. We define an “independent” director in accordance with Section 303A.02 of the NYSE Rules. The categorical standards that the Board has established to assist it in making independence determinations can be found in our Corporate Governance Guidelines on our Investor Relations website under the “Corporate Governance” tab atwww.regionalmanagement.com.
As described in the Corporate Governance Guidelines, the Board may select its Chair and our Chief Executive Officer in any way that it considers to be in our best interests. Therefore, the Board does not have a policy on whether the roles of Chair and Chief Executive Officer should be separate or combined and, if they are to be separate, whether the Chair should be selected from the independent directors.
Mr. de Molina currently servesPalomares was appointed to serve as Chair of our Board.Board in July 2019, replacing Mr. de Molina who previously served as Chair. At this time, the Board believes that the separation of the roles of Chair and Chief Executive Officer promotes communication between the Board, the Chief Executive Officer, and other senior management, and enhances the Board’s oversight of management. We believe that our leadership structure provides increased accountability of our Chief Executive Officer to the Board and encourages balanced decision-making. We also separate the roles in recognition of the differences in the roles. While the Chief Executive Officer is responsible forday-to-day leadership of the Company and the setting of strategic direction, the Chair of the Board provides guidance to the Chief Executive Officer and coordinates and manages the operationoperations of the Board and its committees.
At this time, the Board believes that ourits current leadership structure, with an independent Chair, of the Board, is appropriate for the Company and provides many advantages to the effective operation of the Board. The Board will periodically evaluate and reassess the effectiveness of this leadership structure.
The Board held 1613 meetings during the fiscal year ended December 31, 2017.2019. During 2017,2019, each current director then in office attended more than 75% of the total number of meetings of the Board and committees on which he or she served. In addition to formal Board meetings, our Board communicates from time to time via telephone, electronic mail, and informal meetings, and our Board and its committees may act by written consent in lieu of a formal meeting. Ournon-employee directors met in executive session following each of our regular, quarterly Board meetings in 2017,2019, and the independent members of our Board also periodically met in executive session in 2017.2019. Mr. de MolinaPalomares presides over each executive session of ournon-employee directors and independent directors.
Other than an expectation set forth in our Corporate Governance Guidelines that each director will make every effort to attend the annual meeting of stockholders, we do not have a formal policy regarding the directors’ attendance at annual meetings. All of our then-current directors then in office attended our last annual meeting of stockholders held on April 27, 2017.25, 2019.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 16 |
Our Board has three standing committees: the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee. The composition and responsibilities of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our Board.
Audit
| Compensation
| Corporate Governance
| ||||||||
Jonathan D. Brown
| ||||||||||
Roel C. Campos
|
✓
|
Chair
| ||||||||
Maria Contreras-Sweet
|
✓
| |||||||||
Steven J. Freiberg
|
✓
|
Chair
| ||||||||
Alvaro G. de Molina
|
✓
|
✓
| ||||||||
Carlos Palomares
|
Chair
|
✓
| ||||||||
Number of Meetings Held in 2017:
|
6
|
10
|
5
|
Audit
| Compensation
| Corporate Governance
| ||||||
Roel C. Campos
|
✓
|
Chair
| ||||||
Maria Contreras-Sweet
| ✓
| ✓
| ||||||
Steven J. Freiberg |
| ✓
|
| Chair
| ||||
Sandra K. Johnson
| ✓
| |||||||
Alvaro G. de Molina
|
| Chair
|
| ✓
| ||||
Carlos Palomares
|
| ✓
|
| ✓
| ||||
Number of Meetings Held in 2019:
|
|
6
|
|
6
|
3
|
Audit Committee
The Audit Committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee consists of Messrs. Palomares (Chair),de Molina, Freiberg, and Palomares. Mr. de Molina.Molina was appointed as Chair of the Audit Committee in July 2019, replacing Mr. Palomares as Chair. In accordance with SEC rules and NYSE rules, each of the members of our Audit Committee is an independent director in accordance with the criteria established by the NYSE for the purpose of audit committee membership independence. In addition, the Board has examined the SEC’s definition of “audit committee financial expert” and has determined that Messrs. Palomares,de Molina, Freiberg, and de MolinaPalomares satisfy this definition.
Pursuant to the Audit Committee’s written charter, our Audit Committee is responsible for, among other things:
selecting and hiring our independent registered public accounting firm, andpre-approving the audit andnon-audit services to be performed by our independent auditors;
discussing the scope and results of the audit with the independent registered public accounting firm;
assisting the Board in evaluating the qualifications, performance, and independence of our independent auditors;
assisting the Board in monitoring the quality and integrity of our financial statements and our accounting and financial reporting processes;
assisting the Board in monitoring our compliance with legal and regulatory requirements;
assisting the Board in reviewing the adequacy and effectiveness of our internal control over financial reporting processes;
assisting the Board in monitoring the performance of our internal audit function;
reviewing with management and our independent auditors our annual and quarterly financial statements;
establishing procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by our employees and others of concerns regarding questionable accounting or auditing matters; and
preparing the audit committee report that the SEC requires in our annual proxy statement.
The Audit Committee Charter, which contains a more complete explanation of the roles and responsibilities of the Audit Committee, is posted on our Investor Relations website under the “Corporate Governance” tab atwww.regionalmanagement.com. A stockholder may request a copy of the Audit Committee Charter by contacting our Corporate Secretary at 979 Batesville Road,
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 17 |
Suite B, Greer, South Carolina 29651. The Audit Committee held six meetings during the fiscal year ended December 31, 2017. In addition to formal Audit Committee meetings, our Audit Committee communicates from time to time via telephone, electronic mail, and informal meetings.2019.
Compensation Committee
Our Compensation Committee consists of Messrs.Mr. Freiberg (Chair), Mr. Campos, Ms. Contreras-Sweet, and Mr. Palomares. In accordance with NYSE rules, each of the members of our Compensation Committee is an independent director in accordance with the criteria established by the NYSE for the purpose of compensation committee membership independence. Pursuant to the Compensation Committee’s written charter, our Compensation Committee is responsible for, among other things:
reviewing and approving, or making recommendations to the Board with respect to, corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of those goals and objectives, and either as a committee or together with the other independent directors (as directed by the Board), determining and approving our Chief Executive Officer’s compensation level based on such evaluation;
reviewing and approving the compensation of our executive officers, including annual base salary, annual incentive bonuses, specific goals, equity compensation, employment agreements, severance andchange-in-control arrangements, and any other benefits, compensation, or arrangements;
reviewing and recommending the compensation of our directors;
reviewing and discussing annually with management our “Compensation Discussion and Analysis”;
preparing the Report of the Compensation Committee; and
reviewing and making recommendations with respect to our equity compensation plans.
The Compensation Committee is entitled to delegate any or all of its responsibilities to subcommittees of the Compensation Committee. Additionally, the Compensation Committee may delegate to one or more of our officers the authority to make grants and awards of cash or options or other equity securities to any of ournon-Section 16 officers under our incentive-compensation or other equity-based plans, as the Compensation Committee deems appropriate and in accordance with the terms of such plans, provided that such delegation is in compliance with such plans and applicable law.
The Compensation Committee has the authority to hire outside advisors and experts, including compensation consultants to assist it with director and executive officer compensation determinations. See “Compensation Discussion and Analysis – Compensation Objectives and Approaches – Compensation Determination Process” for information about our independent compensation consultant.
The Compensation Committee Charter, which contains a more complete explanation of the roles and responsibilities of the Compensation Committee, is posted on our Investor Relations website under the “Corporate Governance” tab atwww.regionalmanagement.com. A stockholder may request a copy of the Compensation Committee Charter by contacting our Corporate Secretary at 979 Batesville Road, Suite B, Greer, South Carolina 29651. The Compensation Committee held 10six meetings during the fiscal year ended December 31, 2017. In addition to formal Compensation Committee meetings, our Compensation Committee communicates from time to time via telephone, electronic mail, and informal meetings.2019.
Corporate Governance and Nominating Committee
Our Nominating Committee consists of Mr. Campos (Chair), Ms. Contreras-Sweet, Dr. Johnson, and Mr. de Molina. In accordance with NYSE rules, each of the members of our Nominating Committee is an independent director in accordance with the criteria established by the NYSE for the purpose of corporate governance and nominating committee membership independence. Pursuant to the Nominating Committee’s written charter, the Nominating Committee is responsible for, among other things:
assisting our Board in identifying prospective director nominees and recommending nominees to the Board;
overseeing the evaluation of the Board and management;Board;
overseeing our guidelines and policies with respect to risk assessment and risk management;
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 18 |
reviewing developments in corporate governance practices and developing, recommending, and maintaining a set of corporate governance guidelines; and
recommending members for each committee of our Board.
The Nominating Committee will consider a candidate for director proposed by a stockholder. A candidate must be highly qualified and be both willing to serve and expressly interested in serving on the Board. A stockholder wishing to propose a candidate for the Nominating Committee’s consideration in connection with the 2021 Annual Meeting should forward the candidate’s name and information about the candidate’s qualifications to Regional Management Corp., 979 Batesville Road, Suite B, Greer, South Carolina 29651, Attn: Corporate Secretary, not earlier than December 26, 2018January 21, 2021 nor later than January 25, 2019. If, following the filing and delivery of these proxy materials, the date of the 2019 annual meeting of stockholders (the “2019 Annual Meeting”) is advanced or delayed by more thanFebruary 20, calendar days from theone-year anniversary date of the 2018 Annual Meeting, we will, in a timely manner, provide notice to our stockholders of the new date of the 2019 Annual Meeting and the new dates by which stockholder proposals submitted both pursuant to and outside of SEC Rule14a-8 must be received by the Company. Such notice will be included in the earliest possible Quarterly Report on Form10-Q under Part II, Item 5.2021.
The Nominating Committee will select individuals, including candidates proposed by stockholders, as director nominees who have the highest personal and professional integrity, who have demonstrated exceptional ability and judgment, and who will be most effective, in conjunction with the other nominees to the Board, in collectively serving the long-term interests of our stockholders. In evaluating nominees, the Nominating Committee will consider, among other things, the director qualifications described above and will apply the objectives outlined in the Diversity Policy.
The Nominating Committee Charter, which contains a more complete explanation of the roles and responsibilities of the Nominating Committee, is posted on our Investor Relations website under the “Corporate Governance” tab atwww.regionalmanagement.com. A stockholder may request a copy of the Nominating Committee Charter by contacting our Corporate Secretary at 979 Batesville Road, Suite B, Greer, South Carolina 29651. The Nominating Committee held fivethree meetings during the fiscal year ended December 31, 2017. In addition to formal Nominating Committee meetings, our Nominating Committee communicates from time to time via telephone, electronic mail, and informal meetings.2019.
As part of its role in risk oversight, our AuditNominating Committee is responsible for reviewing our risk assessment and risk management policies,practices, and for discussing its findings with both management and our independent registered public accounting firm. The Audit CommitteeBoard and the BoardNominating Committee periodically review the risks that may potentially affect us as identified and presented by management,management’s efforts to manage those risks, including risks reflected in our periodic filings. For example, on a periodic basis, members of the Board and the Nominating Committee engage with management and/or third-party consultants to assess the cyber threat landscape, to evaluate our information security program, to review the results of penetration testing, and to analyze the design, effectiveness, and ongoing enhancement of our capabilities to monitor, prevent, and respond to cyber threats and events. The Board may also request supplemental information and disclosure about any other specific area of interest and concern relevant to risks it believes are faced by us and our business. Finally, the Board may also consider emerging or evolving risks as they arise, such as risks related to theCOVID-19 pandemic, and may either meet as a full Board or assign risks to a committee for continuing oversight.
The Board believes that our current leadership structure enhances its oversight of risk management because our Chief Executive Officer, who is ultimately responsible for our risk management process, is in the best position to discuss with the Board these key risks and management’s response to them by also serving as a director of the Company.
Code of Business Conduct and Ethics
Our Board has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”). The Code of Ethics applies to all of our directors, officers, and employees and must be acknowledged in writing by our Chief Executive Officer and Chief Financial Officer. In February 2018,2020, the Board approved certain amendments to the Code of Ethics, which were intended to update and bring the Code of Ethics more in line with current best practices. The Code of Ethics is posted on our Investor Relations website under the “Corporate Governance” tab atwww.regionalmanagement.com. A stockholder may request a copy of the Code of Ethics by contacting our
Corporate Secretary at 979 Batesville Road, Suite B, Greer, South Carolina 29651. To the extent permissible under applicable law, the rules of the SEC, and NYSE listing standards, we intend to disclose on our website any amendment to our Code of Ethics, or any grant of a waiver from a provision of our Code of Ethics, that requires disclosure under applicable laws, the rules of the SEC, or NYSE listing standards.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 19 |
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 2017, Messrs.2019, Mr. Campos, Ms. Contreras-Sweet, Mr. Freiberg, and Mr. Palomares served on our Compensation Committee. No member of the Compensation Committee washas ever served as an officer or employee of the Company or any of its subsidiaries or had any relationship during the fiscal year ended December 31, 2017.2019 that would be required to be disclosed pursuant to Item 404 of RegulationS-K. In addition, during the fiscal year ended December 31, 2017,2019, none of our executive officers served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on our Board or Compensation Committee.
Each member of the Board is receptive to and welcomes communications from our stockholders and other interested parties. Stockholders and other interested parties may contact any member (or all members) of the Board, including, without limitation, the Chair of the Board, any independent director, or the independent directors as a group, by addressing such communications or concerns to our Corporate Secretary, 979 Batesville Road, Suite B, Greer, South Carolina, 29651, who will forward such communications to the appropriate party.
If a complaint or concern involves accounting, internal accounting controls, or auditing matters, the correspondence will be forwarded to the chair of the Audit Committee. If no particular director is named, such communication will be forwarded, depending on the subject matter, to the chair of the Audit Committee, Compensation Committee, or Nominating Committee, as appropriate.
Anyone who has concerns regarding (i) questionable accounting, internal accounting controls, and auditing matters, including those regarding the circumvention or attempted circumvention of internal accounting controls or that would otherwise constitute a violation of our accounting policies, (ii) compliance with legal and regulatory requirements, or (iii) retaliation against employees who voice such concerns, may communicate these concerns by writing to the attention of the Audit Committee as set forth above, or by calling (800)224-2330 at any time.
Qualitynon-employee directors are critical to our success. We believe that the two primary duties ofnon-employee directors are to effectively represent the long-term interests of our stockholders and to provide guidance to management. As such, our compensation program fornon-employee directors is designed to meet several key objectives:
Adequately compensate directors for their responsibilities and time commitments and for the personal liabilities and risks that they face as directors of a public company;
Attract the highest calibernon-employee directors by offering a compensation program consistent with those at companies of similar size, complexity, and business character;
Align the interests of directors with our stockholders by providing a significant portion of compensation in equity and requiring directors to own our stock; and
Provide compensation that is simple and transparent to stockholders and reflects corporate governance best practices.
The Compensation Committee, with the assistance of the Compensation Committee’s executive compensation consultant, reviews the compensation of ournon-employee directors. In benchmarking director compensation, we use the same compensation peer group that is used to benchmark compensation for our named executive officers (see “Compensation Discussion and Analysis –Compensation– Compensation Objectives and Approaches – Compensation Determination Process” for information about the peer group).
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 20 |
Our employees who serve as directors receive no separate compensation for service on the Board or on committees of the Board. We maintain anon-employee director compensation program structured as follows:
Board Cash Retainer: Eachnon-employee director receives an annual cash retainer of $30,000$70,000 payable in quarterly installments ($50,00090,000 in the case of the chair or lead independent director, if applicable, of the Board);.
Committee Member Cash Retainer: Each member of the Audit Committee, Compensation Committee, and Nominating Committee receives an additional annual cash retainer of $10,000$8,750 payable in quarterly installments ($20,00017,500 in the case of the chair of each committee);.
The equity-based awards are in the form of restricted stock andawards (each, an “RSA”) are granted on the fifth business day following the date of the annual stockholders’ meeting at which directors are elected. The number of shares subject to the restricted stock award (the “RSA”) is determined by dividing the value of the award by the closing price per share of common stock on the grant date (rounded down to the nearest whole share). The RSA vests and becomesnon-forfeitable as to 100% of the underlying shares on the earlier of the first anniversary of the grant date or the date of the next annual stockholders’ meeting, subject to the director’s continued service from the grant date until the vesting date, or upon the earlier occurrence of the director’s termination of service as a director by reason of death or disability or upon a change in control of the Company. In the event of the director’s termination of service for any other reason, the director forfeits the RSA immediately. The RSA is subject to the terms and conditions of the Regional Management Corp. 2015 Long-Term Incentive Plan (as amended and restated, effective April 27, 2017) (the “2015 Plan”) and an RSA agreement, the form of which was previously approved by the Compensation Committee and the Board and filed with the SEC.
Under the 2015 Plan, the maximum number of shares of common stock subject to awards granted during any12-month period to anon-employee director, taken together with any cash fees paid during such12-month period to suchnon-employee director in respect of Board service, may not exceed $600,000 in total value (calculating the value of any such awards based on the fair market value per share of common stock on the grant date of the award). In the event that the service of a director as a director, committee member, or Board or committee chair commences or terminates during the director’s annual service to us, the director’s cash compensation will be adjusted on apro-rata basis. Annual service relates to the approximately12-month period between our annual meetings of stockholders. Each director is also reimbursed for reasonableout-of-pocket expenses incurred in connection with his or her service on our Board.Board, including the cost of attending continuing education seminars related to corporate board of directors service and other topics relevant to the Company.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 21 |
The following table provides information regarding the compensation paid to each of ournon-employee directors for their service asnon-employee directors during the fiscal year ended December 31, 2017.2019.
Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Total �� ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Total ($) | ||||||||||||||||||
Incumbent Directors:
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Directors: | ||||||||||||||||||||||||
Jonathan D. Brown | 70,000 | 90,000 | 160,000 | |||||||||||||||||||||
Roel C. Campos
|
| 82,500
|
|
| 119,992
|
|
| 202,492
|
| 96,250 | 116,250 | 212,500 | ||||||||||||
Maria Contreras-Sweet | 87,500 | 107,500 | 195,000 | |||||||||||||||||||||
Michael R. Dunn
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| 30,000
|
|
| 89,989
|
|
| 119,989
|
| 70,000 | 90,000 | 160,000 | ||||||||||||
Steven J. Freiberg
|
| 84,000
|
|
| 119,992
|
|
| 203,992
|
| 96,250 | 116,250 | 212,500 | ||||||||||||
Sandra K. Johnson(3) | N/A | N/A | N/A | |||||||||||||||||||||
Alvaro G. de Molina
|
| 86,500
|
|
| 130,000
|
|
| 216,500
|
| 102,204 | 127,500 | 229,704 | ||||||||||||
Carlos Palomares
|
| 101,500
|
|
| 130,000
|
|
| 231,500
|
| 101,624 | 116,250 | 217,874 | ||||||||||||
Former Directors:
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Richard A. Godley
|
| 16,957
|
|
| 89,989
|
|
| 106,946
|
|
(1) | The compensation shown in |
(2) | On May |
(3) | Dr. Johnson was appointed to the Board in April 2020 and, therefore, received no compensation for the fiscal year ended December 31, 2019. |
The total number of shares subject to RSAs held by each of ournon-employee directors as of December 31, 20172019 was: Mr. Brown, 3,649 shares; Mr. Campos, 5,7554,714 shares; Ms. Contreras-Sweet, 4,359 shares; Mr. Dunn, 4,3163,649 shares; Mr. Freiberg, 5,7554,714 shares; Mr. de Molina, 6,2355,170 shares; and Mr. Palomares, 6,2354,714 shares. Due to his resignation in July 2017, Mr. Godley forfeited the RSA granted to him on May 4, 2017, and he had no stock awards outstanding as of December 31, 2017. In addition, as of December 31, 2017, Mr. Dunn previously held 32,774 shares subject toa performance-contingent restricted stock unit (“RSU”) award agreements granted to him during his service as our Chief Executive Officer.Officer, pursuant to which 10,166 target shares remained outstanding at the beginning of 2019. In March 2019, our Compensation Committee determined that 116.5% of the target shares were earned based upon our performance over a three-year performance period that began on January 1, 2016 and ended on December 31, 2018. The total number of shares subject tonon-qualified stock options held by each of ournon-employee directors as of December 31, 20172019 was: Mr. Campos, 28,670 shares; Mr. Dunn, 148,866 shares; Mr. Freiberg, 17,941 shares; Mr. de Molina, 30,166 shares; and Mr. Palomares, 28,670 shares. As of December 31, 2019, Dr. Johnson held no shares subject to RSAs, and Mr. GodleyBrown, Ms. Contreras-Sweet, and Dr. Johnson had no option awards outstanding as of December 31, 2017.outstanding. The outstanding equity awards held by Mr. KnitzerBeck as of December 31, 20172019 are set forth in the Outstanding Equity Awards at FiscalYear-End table
that is presented elsewhere in this Proxy Statement. Mr. Brown and Ms. Contreras-Sweet were not members of the Board on December 31, 2017 and had no stock awards or option awards outstanding as of such date.
Followingyear-end, in February 2018, our Compensation Committee increasedCurrently, our director stock ownership requirement from 3x tois 5x the annual cash retainer, placing the dollar value of the ownership requirement inabove the 9075th percentile of our peer group.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 22 |
The following is a brief description of the background, business experience, and certain other information regarding each of our executive officers:
Peter R. KnitzerRobert W. Beck (age 59)56) has served as President and Chief Executive Officer of Regional since May 2017. From August 2016 until May 2017, Mr. Knitzer servedand as Chief Executive Officer of Regional. He has also been a director of Regional since March 2020. From July 2015.2019 until March 2020, Mr. Knitzer’sBeck served as Executive Vice President and Chief Financial Officer of Regional. Mr. Beck’s full biographical information is set forth above under “Board of Directors and Corporate Governance Matters – Current Directors and Director Nominees.”
John D. Schachtel (age 56)58) has served as Executive Vice President and Chief Operating Officer of Regional since May 2017. Mr. Schachtel has more than 30 years of experience in consumer financial services. From 2013 until 2016, Mr. Schachtel was the Chief Operating Officer of OneMain Financial Holdings, Inc. (formerly known as CitiFinancial). As Chief Operating Officer of OneMain Financial, Mr. Schachtel’s responsibilities included management and oversight of sales, field operations, marketing, and collections. Prior to assuming the Chief Operating Officer role, Mr. Schachtel served for over 10 years as OneMain/CitiFinancial’s Executive Vice President, Northeast and Midwest Division. Mr. Schachtel also held various other positions at OneMain/CitiFinancial during his29-year career with the company, including Operations Director and Director of Field Compensation, New Branch Development, and Project Management, before becoming Senior Vice President of Corporate Marketing in 1999. Since March 2017, Mr. Schachtel has also served as a member of the Board of Directors of SilverSun Technologies, Inc., a publicly-traded business application, technology, and consulting company. He serves as the chairman of SilverSun’s compensation committee and as a member of its audit committee and its nominating and corporate governance committee. He received his MBAM.B.A. in Finance from New York University and his B.S. degree in Industrial Engineering and Economics from Northwestern University.
Donald E. ThomasBrian J. Fisher (age 59)36) has served as Executive Vice President, General Counsel, and Chief Financial OfficerSecretary of Regional since January 2013. Mr. Thomas has over 30 years of finance and accounting experience in public and private companies, having previously served since April 2010 as Chief Financial Officer of TMX Finance LLC, a title lending company.February 2020. Prior to joining TMX Finance LLC,February 2020, Mr. Thomas spent 17 years with7-Eleven, an operator of convenience stores, where he served in various capacities, including Chief Accounting Officer and Controller, acting Chief Financial Officer, Vice President of Operations, and Vice President of Human Resources. Prior to7-Eleven, Mr. Thomas spent 11 years in the audit function of Deloitte & Touche LLP and one year with the Trane Company as a financial manager. Mr. Thomas earned accounting and finance degrees from Tarleton State University and is a certified public accountant and certified global management accountant.
Daniel J. Taggart(age 45) has served as Senior Vice President and Chief Risk Officer of Regional since January 2015. Prior to joining Regional, Mr. Taggart was Executive Vice President of Agility 360, a financial services consultancy. Prior to that, he was Senior Vice President at Wingspan Portfolio Advisors, a specialty mortgage service provider, and also served as Executive Vice President of REDC Default Solutions LLC, a startup division of Auction.com, LLC, a mortgage loss mitigation subservicing company. Before joining REDC Default Solutions LLC, Mr. Taggart spent 11 years at Citigroup, where he held a variety of positions, including Senior Vice President and Senior Credit Officer of CitiMortgage Default Risk Management, Senior Vice President and Senior Credit Officer of Retail Distribution Risk Management, and Senior Vice President and Chief Credit Officer of CitiFinancial (now known as OneMain Financial). Mr. Taggart has also worked for The Associates (prior to its acquisition by Citigroup), FirstPlus Financial, and Fleet Bank in risk management and loan servicing functions. Mr. Taggart received his B.S. in Finance from Canisius College.
Brian J. Fisher (age 34) has served as Senior Vice President, General Counsel, and Secretary of Regional since February 2018. From January 2013 (when he joined Regional) until February 2018, he served as Vice President, General Counsel, and Secretary. Prior to joining Regional, Mr. Fisher was an attorney in the Corporate and Securities practice group of Womble Carlyle Sandridge and Rice, LLP (now known as Womble Bond Dickinson (US) LLP) from 2009 to 2013. Mr. Fisher holds a B.A. degree in Economics from Furman University and a J.D. degree from the University of South Carolina School of Law.
Manish Parmar(age 42) has served as Executive Vice President and Chief Credit Risk Officer of Regional since January 2020. Mr. Parmar has nearly 20 years of credit and financial experience across a broad range of functions, including credit risk, analytics, financial partnerships, database marketing, and modeling. Prior to joining Regional, Mr. Parmar was Chief Credit and Analytics Officer at Conn’s, Inc. Prior to his tenure at Conn’s, Mr. Parmar held several senior management roles at Discover Financial Services, ultimately becoming its Head of Consumer Credit Risk Management. Mr. Parmar received a Bachelor of Chemical Engineering from the University of Mumbai in India, and his M.B.A. from Bauer College of Business at the University of Houston.
Michael S. Dymski (age 48) has served as Vice President, interim Chief Financial Officer, and Chief Accounting Officer of Regional since March 2020. Mr. Dymski has over 25 years of financial services experience and is skilled in business strategy, operational analysis, budgeting and planning, SEC and GAAP reporting, and mergers and acquisitions. Prior to adding the role of interim Chief Financial Officer in 2020, Mr. Dymski served as the Company’s Chief Accounting Officer since 2016 and Corporate Controller from 2013 to 2016. From 2011 through 2013, he was the Director of Finance, South USA with TD Bank. From 2000 through 2010, Mr. Dymski was employed by The South Financial Group in varying roles, including Vice President and Controller of Finance and Accounting and Senior Vice President of Finance. Mr. Dymski, who earned a Bachelor of Business Administration degree from the University of Georgia, is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.
There are no family relationships among any of our directors or executive officers.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 23 |
COMPENSATION DISCUSSION AND ANALYSIS
The following discussion of the compensation arrangements of our executive officers should be read together with the compensation tables and related disclosures contained elsewhere in this Proxy Statement. Actual compensation programs that we adopt following the date of this Proxy Statement may differ materially from the existing and currently planned programs summarized in this discussion.
Executive Summary of Compensation Programs
Company Performance and Business Highlights in 20172019
We produced another set of strong operating and financial results in 2017,2019, including double-digit growth of our loan portfolio, total revenue, net income, and diluted earnings per share. Our
Loan Portfolio Growth:In 2019, we crossed the $1.0 billion milestone for our loan portfolio, grew by $100 million to $817 million,ending the year with total outstanding receivables of $1.1 billion, an increase of 14%19% from the prior year—our thirdfifth consecutive year of double-digit portfolio growth. Our core portfolio of small and large installment loans grew by 22%, year-over-year, led by continued, significant expansion in our large loan category.
Increased Revenues and Improved Expense Management:Revenues of $272$356 million in 20172019 were up 13%16% from 2016,2018, while our operating expenses as a percentage of average net receivables were down slightly. expense ratio improved by 50 basis points and our efficiency ratio improved by 160 basis points, each from the prior-year.
Increased Earnings:Net income for 20172019 was $30$45 million and diluted EPS was $2.54, an increase$3.80, representing year-over-year increases of 25%27% and 28%30%, respectively, from 2016. Finally, ourrespectively.
Long-Term Stock Price Growth and Return of Capital: Our stock price at the close of 20172019 was $26.31, a slight increase$30.03, up from our stock price$24.05 at the end of 20162018 and up more than 65% from our stock price of $15.81$15.49 at the end of 2014.
Our hybrid growth strategy In addition, in 2019, we repurchased approximately $25 million of increasing average receivables in our existing branches coupled with some de novo branch expansion was central to delivering outstanding 2017 results. At the endcommon stock at a weighted-average price of 2016, our average finance receivables$26.65 per branch was $2.1 million. By the endshare.
In 2019, we also achieved a number of 2017, we grew that figure to nearly $2.4 million. The sizable increase in our large loan portfolioother operating milestones. We continued to driveimprove upon our organic growth and overall performance, now comprising over 42% of our total loan portfolio.
Perhaps more importantly to our long-term success, we took significant steps to modernize our infrastructure. We have now successfully completed our transition to a new loan origination and servicing system, leaving us well-positioned to continueallowing for an increased number of electronic payments made by our top and bottom line growth. Now that we are operating on our new loan system, we have introduced electronic payments,customers, improved texting and imaging capabilities, anand increased usage of our online customer portal, improved lead management, and automated underwriting across our entire branch network.portal. In addition, we have invested significantly in enhancingcompleted the rollout of new custom credit scorecards and marketing risk and response models, which benefited our credit function, most notably throughperformance and improved our customer response to our marketing campaigns. From a human capital perspective, we introduced several talent development initiatives, including thebuild-out implementation of company-wide district training branches designed to improve onsite training for our new centralized collections team that focuses on late-stage delinquencies, allowing our branch employees to focus morefield personnel. In addition, in the second half of their time on sales and servicing.
We also2019, we continued to enhance our liquidity in 2017 by expandingimprove upon and diversifyingdiversify our funding sources. In the second quarter, we entered into a $125 million warehouse facility (expandable to $150 million) that is fundedsources by large loan receivables. In addition, we renewed and expandedamending our senior revolving credit facility committed line from $585 million to $638 million, with improved terms in September and closing our third asset-backed securitization transaction in October. Finally, throughout 2019, we worked toward the implementation of the new accounting standard for current expected credit losses (“CECL”), and in late 2019, we were fully prepared for the January 1, 2020 implementation of CECL, resulting in a maturity date of June 2020.smooth transition.
We were pleased with our 20172019 results, and we believe that the compensation paid to our named executive officers (our “NEOs”) for 20172019 appropriately reflects and rewards their contributions to our performance.
Compensation Program Highlights in 20172019
At our 2019 annual meeting of stockholders, we included a proposal that provided our stockholders with the opportunity to vote to approve, on an advisory basis, the compensation of our NEOs. Because we only ceased to be an emerging growth company under the Jumpstart Our Business Startups Act in 2018, this was our second annual meeting of stockholders that included such a“say-on-pay” proposal. We were pleased to report substantial stockholder approval of our NEOs’ compensation, with 96.24% of voted shares having been voted in favor of approval.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 24 |
In 2017,2019, our Compensation Committee with assistance from an independent compensation consultant, Veritas Executive Compensation Consultants (“Veritas”), carefully reviewed our executive compensation program to ensure that it is designed to achieve its intended objectives and continues to reflect executive compensation “best practices.” To that end, the Compensation Committee made three changes to our compensation program in 2019:
Added restricted stock awards to long-term incentive program: The Compensation Committee added a restricted stock award to our long-term incentive program so that it now includes a balance of four types of incentive awards, which are split approximately equally between performance-based and service-based awards. Our Compensation Committee Board,believes that the restricted stock award provides a strong incentive to participants to drive sustainable achievement of long-term financial goals that align with long-term stockholder interests. It is also utilized to attract, retain, and stockholders took a number of important actions in 2017:motivate executive talent.
Included ROA as short-term incentive metric:In April, followingpart based on suggestions from two of the recommendationCompany’s largest stockholders, the Compensation Committee decided to change our short-term incentive program metrics to include a return on assets metric, replacing the previously utilized leverage ratio. Further, the Compensation Committee also feels that a return metric, such as return on assets, is more reflective of company performance and, thus, serves as a more appropriate metric in our incentive program.
Reweighted short-term incentive metrics: Due to the use of the return on assets metric, the Compensation Committeere-weighted all short-term incentive program metrics in order to more appropriately incentivize executive performance.
In making these determinations, our Compensation Committee and our Board, our stockholdersre-approved our 2015 Plan, as amended and restated, which increases the number of shares available for grant under the plan, reflects bestreceived advice from its independent compensation practices, allows us to compete successfully for executive talent, and more strongly aligns the interests of our stockholders and our executives.
Compensation Program Best Practices
The primary objectives of our executive compensation program are to attract and retain talented executives to effectively manage and lead our company and to create long-term stockholder value. We compensate our executive officers primarily through a mix of base salary, performance-based annual cash awards, and service- and performance-based long-term incentive awards. Consistent with ourpay-for-performance philosophy, a substantial portion of our executives’ compensation is at risk and linked to the successful performance and management of our company, as measured against rigorous performance measuresgoals established by our Compensation Committee. Our 20172019 executive compensation program continued to include a number of best compensation practices, including the following:
✓ | Alignment of executive pay with company performance: |
|
Performance goals are rigorousand are based almost exclusively on objective, quantitative criteria |
◾ |
|
◾ | Our compound annual growth rates (“CAGR”) of net income and earnings per share between 2017 |
✓ | Competitive compensation and incentive program target opportunities for our executives in order to continue to align their overall compensation with the market for executive talent |
✓ |
|
✓ |
|
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 25 |
✓ | No payment of excessive perquisites to any NEO or other key employee |
✓ | No excise taxgross-up paymentsto any NEO or other key employee |
✓ | Double-triggerchange-in-control provisions included in all employment agreements and long-term incentive award agreements |
✓ | Prohibition againstre-pricing of equity incentive awards without stockholder approval under our 2015 Plan |
✓ | Stock Ownership and Retention Policy for NEOs and directors (5x base salary for CEO, 2x base salary for other NEOs, and |
✓ | Compensation Recoupment Policy, or |
✓ | Prohibition against hedging and pledging, as set forth in our Code of |
✓ | Compensation program governed by anindependent Compensation Committee with input from anindependent compensation consultant |
Aligning Pay with Performance
We believe that a substantial portion of our executive officers’ compensation should be tied to their performance and the short- and long-term financial and operating results of our company.
We developed our long-term incentive program in 2014 in consultation with Veritas. In 2013, our Chief Executive Officer and the majority of our NEOs did not receive any long-term incentive awards. In addition, when we appointed a new Chief Executive Officer in late October 2014, he did not receive any long-term incentive awards until we finalized his employment agreement in 2015. As a result, the annualized total direct compensation of our Chief Executive Officers who were serving at the end of 2013 and 2014 was substantially below both the median of our peer group and our current Chief Executive Officer’s total direct compensation. We believe that the creation and evolution of our long-term incentive program since 2014 has been critical to our ability to link our executives’ pay with the performance of our company, to align our executives’ interests with those of our stockholders, and to remain competitive in the marketplace for executive talent.
Our executive compensation program now embodies ourpay-for-performance philosophy and closely ties the interests of our key executives to those of our stockholders. We heavily weight our executive officers’ compensation in performance-based short- and long-term incentive awards that are designed to reward exceptional performance. The following table describes the program design for each element of our incentive-based pay in 2017.2019.
Pay Elements Program Design Short-Term Incentive Program Consists entirely of performance-based awards: Metrics include net income from operations, average finance receivables, net credit losses as a percentage of average finance receivables, return on assets, total general and administrative expense as a percentage of total revenue, and an analysis by our Compensation Committee of our executives execution against short-term strategic objectives Motivates our executives and brings total cash opportunities to competitive levels Significant upside opportunity for high performance, but with a challenging Threshold Long-Term Incentive Program Consists of performance-contingent RSUs, cash-settled performance units, nonqualified stock options, and restricted stock awards: Vesting of performance-contingent RSUs and cash-settled performance units is based primarily on the CAGRs of net income and basic earnings per share, respectively, compared to our peer group over a three-year performance period Roughly one-half of grant date fair value is in the form of performance-contingent awards Provides strong incentive to meet or exceed pre-established long-term financial goals that align with long-term stockholder interests, and is utilized to attract, retain, and motivate executive talent
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The compensation packages of our Chief Executive Officer and our other NEOs are closely aligned with performance. TheFor 2019, the majority of compensation iswas variable and performance-based:
Chief Executive Officer Target Pay Mix | Other NEO Average Target Pay Mix | |
|
|
Note: The Chief Executive Officer target pay mix above is that of Mr. Knitzer, who joined Regional in 2016. It reflects his aggregate target pay mix for 2016 (partial year) and 2017. The Other NEO target pay mix set forth above is the average for our incumbent NEOs,Messrs. Schachtel, Taggart, and Fisher. The target pay for Messrs. Thomas Taggart, and Fisher, and our new Executive Vice President andBeck is not included in light of the Chief OperatingFinancial Officer Mr. Schachtel. For incumbent NEOs, we have used 2017 compensation data, and for Mr. Schachtel, we have used his aggregate target pay mix for 2017 (partial year) and 2018, as set forthtransition that occurred in his employment agreement and more fully described below.2019. The presentation excludes perquisites, which are an immaterial component of our executives’ compensation.
Results of Short- and Long-Term Incentive Programs
Our short-term incentive program provides our executives with the opportunity to earn performance-based annual cash awards pursuant to our Annual Incentive Plan (as amended and restated, the “Annual Incentive Plan”). The achievement and payment of annual cash awards in 20172019 was tied directly to our financial and operational performance, based primarily (85%) on clearly-defined, objective performance measures and, to a lesser extent (15%), on our Compensation Committee’s assessment of our executive team’s achievement of its short-term strategic objectives. For 2017,2019, our executive officers were paid 98.6%80.7% of their target annual bonuses (out of a range of 0% to 150%) under our Annual Incentive Plan as a result of our strong financial and operating results andresults. The strategic objective portion of the Annual Incentive Plan did not pay out in 2019 due to poor operational management of our information technology infrastructure, as described in more detail below. However, our executive officers demonstrated strong performance in the execution of certainvarious other key strategic objectives, including the successful completion of oura $25 million stock repurchase program, the successful closing of a favorable amendment to the Company’s senior revolving credit facility, the successful extension of and amendment to the Company’s warehouse credit facility, the completion of the custom credit scorecard rollout, the completion and rollout of new marketing risk and response models, the introduction of several talent development initiatives, and the successful planning and implementation of the Company’s transition to athe new loan origination and servicing platform.accounting standard for CECL.
OurIn 2017, our long-term incentive program providesprovided for the delivery of long-term incentive awards through a combination of three award vehicles:(i) non-qualified stock options, (ii) performance-contingent RSUs, and (iii) cash-settled performance units. Vesting of each of the performance-contingent awards iswas subject to, among other things, the achievement of performance objectives over a three-year performance period that beginsbegan on January 1,st of the grant year. The three-year performance period established under the 2015 long-term incentive program 2017 and ended on December 31, 2017. The performance metrics for2019. Vesting of the performance-contingent RSUs and cash-settled performance units under the 2015 long-term incentive program were, respectively, cumulative EBITDA and cumulative basicgranted in 2017 was based primarily (90%) on our CAGRs of net income (in the case of the performance-contingent RSUs) and basic earnings per share (in the case of the cash-settled performance units) compared to our peer group over the three-year performance period, and to a lesser extent (10%) on our Compensation Committee’s assessment of our executive team’s achievement of its long-term strategic objectives over the same time period. In February 2018,March 2020, as described in greater detail below, based upon results achieved during the performance period, our Compensation Committee determined that we failed to meetparticipants in the threshold performance goals set under the 20152017 long-term incentive program and as a result, no compensation was earned or paid pursuant to the 201596.6% of their target performance-contingent RSUs orand 126.6% of their target cash-settled performance units, and all shares associated with the performance-contingent RSUs were forfeited.units.
Regional Management Corp. | Proxy Statement for 2020 Annual Meeting | | 27 |
Stockholder Outreach and Engagement
Stockholder outreach is a central feature of our investor relations philosophy. We provide numerous opportunities for current and prospective stockholders to gain access to our management team through attendance at investor conferences,one-on-onein-person meetings, and telephone calls. Through these interactions, we are able to educate current and prospective investors about our company, learn about concerns of stockholders, and provide investors with a better understanding of our business model and philosophy. We also receive valuable feedback from investors on topics including strategy, corporate governance, and compensation, which the Board and management take into consideration in making future business and compensation decisions.
Since our 20172019 annual meeting of stockholders, we reached out to institutional investors owning more than 60% of our outstanding common stock (as of September 30, 2017)2019), specifically for the purpose of receiving their feedback regarding executive compensation practices and corporate governance matters. Based on the feedback received, we have made and willexpect to continue to make certain changes to our compensation and corporate governance practices and disclosures. For example, in the past, certain investors requested that we increase the percentage of independent directors on our Board and improve the gender diversity of our Board. In response, in 2018, we added two new independent directors including Maria Contreras-Sweet, and adopted a Board Diversity Policy. See “Board of Directors and Corporate Governance Matters – Board Diversity.” Independent directors now hold 75%78% of our Board seats. In addition, certain investors expressed concern thatsince 2018, we had granted retention awards in consecutive years (2015 and 2016) to certain executives pursuantadded two female directors to our key employee retentionBoard. Finally, in 2019, in part at the suggestion of our investors, were-evaluated and adjusted the performance metrics and relative weightings within our short-term incentive program. In response, we did not grant any retention awards to executive officers in 2017.
In 20182020 and beyond, we expect to continue our stockholder outreach, including by making ourselves available to hear stockholder feedback regarding executive compensation and corporate governance practices.
Compensation Objectives and Approaches
Compensation Program Objectives
The primary objectives of our executive compensation program are to attract and retain talented executives to effectively manage and lead our company and to create long-term stockholder value. The compensation packages for our executive officers for 20172019 generally includeincluded a base salary, performance-based annual cash awards, service- and performance-based long-term incentive awards, and other benefits. Our current compensation program for our executive officers has been designed based on our view that each component of executive compensation should be set at levels that are necessary, within reasonable parameters, to successfully attract and retain skilled executives and that are fair and equitable in light of market practices.
Base salaries are intended to provide a minimum, fixed level of cash compensation sufficient to attract and retain an effective management team when considered in combination with other components of our executive compensation program. The base salary element is meant to provide our executive officers with a stable income stream that is commensurate with their responsibilities and to compensate them for services rendered during the fiscal year.
Consistent with ourpay-for-performance strategy, our performance-based annual cash incentive program is customized to achieve specific objectives, reward increased levels of operational success, and place emphasis on appropriate levels of performance measurement. The key goals addressed by our short-term incentive program include (1) achievement of short-term financial and operational objectives, (2) increased stockholder value, (3) motivation and attraction of key management talent, (4) rewarding key contributors for performance against established criteria, and (5) focusing on ourpay-for-performance compensation strategy. Benefits earned under our short-term incentive program are paid under our Annual Incentive Plan, which wasre-approved by our stockholders at our 2015 annual meeting of stockholders.Plan.
Our long-term incentive program, which includesfor 2019 includednon-qualified stock options, performance-contingent RSUs, and cash-settled performance units, and restricted stock awards, operates in tandem with our short-term incentive program and is consistent with ourpay-for-performance strategy. Performance-based long-term incentives and service-based option and restricted stock awards can provide significant benefits to both our employees and stockholders. These long-term incentives generally are intended to create (1) a strong sense of ownership, (2) focus on achievement of long-term, strategic business objectives, (3) an enhanced linkage between the interests of our executives and stockholders, (4) an enhanced relationship between pay and performance, and
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(5) an incentive to attract and retain superior employees. Long-term incentive program benefits are issued under our 2015 Long-Term Incentive Plan, (the “2015 Plan”), which was approved by our stockholders at our 2015 annual meeting of stockholders andre-approved, as amended and restated, at our 2017 annual meeting of stockholders.
The discussion below includes a review of our compensation program for 20172019 and a preview of certain aspects of our compensation program for 2018.2020. Our NEOs for 20172019 were:
Robert W. Beck President and Chief Executive Officer (Former EVP and Chief Financial Officer) Peter R. Knitzer Former President and Chief Executive Officer John D. Schachtel Executive Vice President and Chief Operating Officer Donald E. Thomas Former Executive Vice President and Chief Financial Officer Daniel J. Taggart Former Executive Vice President and Chief Credit Risk Officer Brian J. Fisher Executive Vice President, General Counsel, and Secretary Note: As described in more detail elsewhere in the Proxy Statement, in July 2019, Robert W. Beck succeeded Donald E. Thomas as the Company’s Executive Vice President and Chief Financial Officer. In addition, Daniel J. Taggart resigned as the Company’s Executive Vice President and Chief Credit Risk Officer in early 2020, and he was succeeded by Manish Parmar. Finally, in March 2020, Mr. Beck succeeded Peter R. Knitzer as the Company’s President and Chief Executive Officer. Currently, Mr. Beck serves as our President and Chief Executive Officer, and Michael S. Dymski serves as our Vice President, interim Chief Financial Officer, and Chief Accounting Officer.
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Compensation Determination Process
The Compensation Committee reviews and approves the compensation determinations for all of our executive officers. In setting an executive officer’s compensation package and the relative allocation among different types of compensation, we consider the nature of the position, the scope of associated responsibilities, the individual’s prior experience and skills, and the individual’s compensation expectations, as well as the compensation of our existing executive officers and our general impressions of prevailing conditions in the market for executive talent.
Engagement and Use of an Independent Compensation Consultant
The Compensation Committee has the authority to hire outside advisors and experts, including compensation consultants, to assist it with director and executive officer compensation determinations. TheSince 2014, the Compensation Committee has retained the services of Veritas Executive Compensation Consultants, an independent compensation consultant, since 2014 to better ensure that our compensation practices are appropriate for our industry, to review and to make recommendations with respect to executive officer and director cash and equity compensation, and to update our peer group, in each case for the Compensation Committee’s use in setting compensation.
Veritas’ recommendations to the Compensation Committee were generally in the form of suggested ranges of compensation or descriptions of policies that Veritas currently considers “best practice” in our industry and for publicly-traded companies. The Compensation Committee used Veritas’ reports to further its understanding of executive officer cash and equity compensation practices in the market.
During 2017,2019, Veritas worked only for the Compensation Committee and performed no additional services for usthe Company or any of our executive officers. The Compensation Committee Chair approved all work performed by Veritas. During 2017,2019, the Compensation Committee and the Company did not use the services of any other compensation consultant. The Compensation Committee has also engaged Veritas in 20182020 to provide similar services.
Our Compensation Committee has assessed the independence of Veritas, taking into account, among other things, the factors set forth in NYSE rules, and has concluded that no conflict of interest exists with respect to the work Veritas performed or performs for our Compensation Committee and that Veritas is independent under NYSE rules.
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Establishment and Use of a Peer Group
We generally monitor compensation practices in the marketmarkets where we compete for executive talent to obtain an overview of market practices and to ensure that we make informed decisions on executive pay packages. For 20172019 compensation decisions, to obtain a sense of the market and a general understanding of current compensation practices, we reviewed the compensation awarded by a peer group of publicly-traded companies. In addition, as described in greater detail below, the vesting of certain of our executives’ long-term incentive awards is determined based upon our financial performance compared to the financial performance of our peer group over a three-year performance period.
At the outset of 2017,2019, based upon prior peer group reviews conducted with the assistance of Veritas, our peer group consisted of the following companies:
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• Consumer Portfolio Services, Inc.
• Credit Acceptance Corp.
• • Elevate Credit, Inc. | •
• • EZCORP, Inc.
• FirstCash, Inc.
• Green Dot Corporation
• JMP Group LLC
• LendingClub Corporation | • Marlin Business Services Corp.
• | •
• OneMain Holdings, Inc.
• PRA Group, Inc.
• World Acceptance Corporation |
In the third and fourth quartersquarter of 2017,2019, with assistance from Veritas, we reviewed our peer group using a scorecard-based approach that involved applying several filters (e.g., strong financial health, positive shareholder standing, similar in size, similar in industry classification, presence of overlapping peers, identification as a peer by a proxy advisory firm) and selecting the most qualified peer companies from a broader list of candidates. Based on the evaluation, our Compensation Committee determined to remove Aaron’s,B. Riley Financial Inc., FBR & Co.,Rent-A-Center, and CYS Investments, Inc., and The J.G. Wentworth Company from our peer group and to add Enova International, Inc., Capstead Mortgage Corporation, CYS Investments, Inc., On Deck Capital, Inc., and B. Riley Financial, Inc. to our peer group.CURO Group Holdings Corp. As a result, our new peer group for 20182020 consists of the following companies. As of the time that the Compensation Committee approved our new peer group, we were in the 472thnd percentilequartile of the peer group based on revenue.revenue, market capitalization, and enterprise value.
• America’sCar-Mart, Inc.
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• Consumer Portfolio Services, Inc.
• Credit Acceptance Corp. | • • Elevate Credit, Inc.
• Encore Capital Group, Inc. | • Enova International, Inc.
• EZCORP, Inc.
• FirstCash, Inc.
• Green Dot Corporation
• JMP Group LLC | • LendingClub Corporation • Marlin Business Services Corp.
| • Nicholas Financial, Inc.
• On Deck Capital, Inc.
• OneMain Holdings, Inc.
• PRA Group, Inc.
• World Acceptance Corporation |
Proxy advisory firms Institutional Shareholder Services, Inc. and/or Glass, Lewis & Co. have identified 18fourteen of these companies (or 85%74% of our total peer group) as peers of Regional. These companies are largely within the consumer finance or specialty finance industries, are similar in size and/or scope to Regional, and/or are companies that Regional competes against for products, services, and human capital. Some companies included in our peer group will meet some, but not all, of these criteria. For example, OneMain Holdings, Inc. (doing business as OneMain Financial) is larger than us, but it competes directly with us in the consumer finance industry both for customers and for human capital. In fact, two of our executive officers were previously employed by OneMain. As a result, despite being a larger company, we believe it is important to include OneMain in our peer group to ensure that we maintain awareness of our direct competition, which will assist in our efforts to retain talented executives and other employees. However, in
setting compensation levels for our executive officers, as noted below, our Compensation Committee remains cognizant that OneMain and certain other of our peer companies are larger than us.
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Consistent with our compensation objectives of attracting and retaining top executive talent, we believe that the base salaries and performance-based short- and long-term incentive compensation of our executive officers should be set at levels which are competitive with our peer group companies of comparable size, although we do not target any specific pay percentile for our executive officers. The peer group is used more as a general guide, being mindful of the following:
Appropriate base salaries for our executive officers should generally be in line with those paid by peer group companies of comparable size.
Performance-based short- and long-term incentive awards should reward exceptional performance, which can result in overall compensation that can exceed those of peer group companies of comparable size.
Total compensation for executive officers may approach the higher end of the compensation at such peer group companies of comparable size, but only if high levels of short- and long-term performance are reached.
Each executive officer is eligible to receive a balance of variable and fixed compensation. The following table describes the various forms of compensation:compensation used in 2019: