8-K
PRA GROUP INC (PRAA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of Earliest Event Reported): | March 22, 2023 |
|---|
PRA Group, Inc.
_________________________________________
(Exact name of registrant as specified in its charter)
| Delaware | 000-50058 | 75-3078675 | |||||
|---|---|---|---|---|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||
| 120 Corporate Boulevard | |||||||
| Norfolk, | Virginia | 23502 | |||||
| (Address of principal executive offices) | (Zip Code) | Registrant’s telephone number, including area code: | (888) | 772-7326 | |||
| --- | --- | --- |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value per share | PRAA | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 5.02 Departure of Directors or Certain Officers; Appointment of Principal Officers
Chief Executive Officer Transition
On March 22, 2023, the Board of Directors (“Board”) of PRA Group, Inc. (the “Company”) approved the termination without cause of Kevin P. Stevenson’s employment as the Company’s President and Chief Executive Officer effective March 27, 2023 consistent with the terms of the existing employment agreement between the Company and Mr. Stevenson (the “Stevenson Employment Agreement”). In connection with his termination, Mr. Stevenson resigned from the Board effective March 27, 2023. Mr. Stevenson's termination was not the result of any dispute or disagreement with the Company or management, nor due to the Company's recent settlement with the U.S. Consumer Financial Protection Bureau (“CFPB”).
On March 22, 2023, the Board also appointed Vikram A. Atal, a member of the Board since 2015, as the Company’s President and Chief Executive Officer effective March 27, 2023.
Mr. Atal, age 67, has served as President of Atal Advisers, LLC (“Atal Advisers”) since 2013, when he formed the business and strategy consulting firm. Since 2016, he has also served as Senior Advisor to McKinsey and Company, Inc., covering the banking, payments, consumer lending and analytics domains. Prior to forming Atal Advisers, Mr. Atal served in executive roles with increasing responsibility with Citigroup, Inc. (“Citigroup”) (NYSE) for 27 years, including as Executive Vice President for Citigroup’s global consumer bank from 2008 to 2013, where he shaped the consumer bank as an information-centric enterprise, leveraged analytics and data to drive growth, and oversaw loss mitigation efforts related to Citigroup’s high-risk consumer portfolio through the global financial crisis; as Chairman and Chief Executive Officer for Citi Cards’ branded and retail partner cards franchise in North America; and as leader of partnership programs for Citi Cards, serving as CFO of the U.S. cards franchise and overseeing Securities and Exchange Commission (“SEC”), regulatory and business financial reporting.
There are no arrangements or understandings between Mr. Atal and any other persons pursuant to which he was selected as President and Chief Executive Officer. There are no family relationships between Mr. Atal and any director or executive officer of the Company, and Mr. Atal has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Separation Arrangements with Former Chief Executive Officer
Mr. Stevenson will receive separation payments that are consistent with the terms of the Stevenson Employment Agreement. See the Company’s Current Report on Form 8-K filed with the SEC on December 23, 2020, for further information. In connection with his termination, Mr. Stevenson provided the Company with a general release of claims and will remain subject to certain non-compete and non-solicitation provisions for a period of time following his separation from the Company.
Compensation of New Chief Executive Officer
In connection with Mr. Atal’s appointment as the Company’s President and CEO, the Board of Directors approved the following compensation for Mr. Atal: (1) an annual base salary of $950,000 along with other perquisites and benefits provided to Company employees, (2) an award of restricted stock units valued at $1,500,000, which will vest ratably over a three-year period beginning with the first anniversary of the grant date and (3) eligibility to receive an annual bonus in accordance with the Company’s Annual Bonus Plan with a target opportunity of $950,000. The foregoing description of Mr. Atal's compensation arrangement is qualified in its entirety by reference to the full description of his compensation which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.
The Company’s Annual Bonus Plan and other executive compensation programs are described in further detail in the “Compensation Discussion and Analysis” section of the Company’s proxy statement for its 2022 Annual Meeting of Shareholders (filed with the SEC on April 28, 2022), which discussion is incorporated into this Item 5.02 by reference.
Item 7.01 Regulation FD Disclosure
On March 23, 2023, the Company issued a press release announcing the CFPB settlement discussed in Item 8.01 of this Current Report on Form 8-K. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated into this Item 7.01 by reference.
On March 27, 2023, the Company issued a press release announcing the Chief Executive Officer transition discussed in Item 5.02 of this Current Report on Form 8-K. A copy of the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated into this Item 7.01 by reference.
None of the information furnished in Item 7.01, Exhibit 99.1 or Exhibit 99.2 of this Current Report on Form 8-K shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section. Unless expressly set forth by specific reference in such filings, none of the information furnished in this Current Report on Form 8-K shall be incorporated by reference in any filing under the Securities Act of 1933, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings.
Item 8.01 Other Events
As previously reported in the Company’s Current Report on Form 8-K filed on September 9, 2015, Portfolio Recovery Associates, LLC ("LLC"), the Company's wholly owned subsidiary, entered into a consent order with the CFPB effective September 9, 2015 settling a previously disclosed investigation of certain debt collection practices of LLC (the "2015 Consent Order"). In December 2020, the CFPB advised the Company that the CFPB believed the Company may have violated certain provisions of the 2015 Consent Order with the CFPB and applicable law. On March 23, 2023, the CFPB filed a lawsuit against LLC alleging that LLC had violated federal consumer financial law and the parties entered into a final stipulated judgment and order (“Stipulated Judgment”) to resolve the lawsuit. As part of the settlement, LLC agreed to pay a civil monetary penalty of $12 million and approximately $15 million to impacted consumers, who represent less than one-tenth of 1% of LLC’s active accounts. The majority of the financial impact of the settlement was reflected in the Company's December 31, 2022 financial statements. The Company does not expect that this agreement will have a material adverse impact on its financial condition or results of operations. Under the Stipulated Judgment, the Company neither admits nor denies the allegations in the CFPB’s lawsuit.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits | |
|---|---|---|
| 99.1 | Press Release dated March 23, 2023 | |
| 99.2 | Press Release dated March 27, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PRA Group, Inc. | ||
|---|---|---|
| Date: March 27, 2023 | By: | /s/ Peter M. Graham |
| Peter M. Graham | ||
| Executive Vice President and Chief Financial Officer |
portfoliorecoveryassocia
Portfolio Recovery Associates LLC Settles CFPB Matter NORFOLK, Va., March 23, 2023 — PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and servicing nonperforming loans, announced today that its subsidiary, Portfolio Recovery Associates, LLC (PRA), has reached an agreement with the U.S. Consumer Financial Protection Bureau (CFPB). As part of the settlement, PRA has agreed to pay a penalty of $12 million and approximately $15 million to impacted consumers, who represent less than one-tenth of 1% of PRA's active accounts. The majority of the financial impact of the settlement was reflected in our December 31, 2022, financial statements. This agreement is not expected to have a material adverse impact on the company’s financial condition or results of operations. PRA Group, Inc. President and Chief Executive Officer Kevin Stevenson said, “Our company was founded on the principles of treating customers with fairness and respect, and we have prided ourselves in upholding these values for more than 27 years. Although we have admitted to no wrongdoing as part of the resolution, and we continue to disagree with the CFPB’s characterization of our conduct, we are pleased to have this matter resolved and behind us, allowing us to return our full attention to our impactful work with consumers, promoting their journey toward financial recovery.” Throughout this process, PRA’s team worked collaboratively with the CFPB, demonstrating its dedication to helping consumers and to compliance excellence in the financial services industry. “Our organization is committed to strict compliance with consumer protection law, and to providing the highest standards of customer service,” added Laura White, executive vice president and chief risk and compliance officer. About PRA Group As a global leader in acquiring and collecting nonperforming loans, PRA Group returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe and Australia. With thousands of employees worldwide, PRA Group, Inc. companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com. News Media Contact: Elizabeth Kersey Senior Vice President, Communications and Public Policy Elizabeth.Kersey@PRAGroup.com (757) 641-0558
Investor Contact: Najim Mostamand, CFA Vice President, Investor Relations IR@PRAGroup.com (757) 431-7913 ###
nr_pragroupnamesvikramat
PRA GROUP, INC. NAMES VIKRAM ATAL PRESIDENT AND CHIEF EXECUTIVE OFFICER Longtime Board Member Replaces Kevin Stevenson NORFOLK, VA., March 27, 2023 — PRA Group, Inc. (NASDAQ: PRAA), a global leader in acquiring and collecting nonperforming loans, announced today that its board of directors has elected longtime board member Vikram (Vik) Atal as its president and CEO, effective immediately. Mr. Atal replaces Kevin Stevenson, who has served as president and CEO since 2017 and is leaving the company. Mr. Atal joined PRA Group’s board in 2015 and served on the audit committee and as chair of the risk committee. Over his 27-year career at Citigroup, he led the North America card franchise, with 30,000 employees and 60 million customers, to record results amidst a changing regulatory landscape. As the vice-chair of Citigroup’s worldwide credit card franchise, he oversaw operations spanning 50 countries and a team that successfully managed $200 billion of high-risk consumer assets during the 2008 financial crisis. He is a member of the board of Goldman Sachs Bank USA and has served as a senior advisor to both McKinsey & Company and venture investment firm MissionOG. Mr. Atal holds degrees in economics and finance from the London School of Economics and mathematics from St. Stephens College in India. He has lived and worked extensively in Europe, Asia and Latin America as well as the U.S. and will relocate to Norfolk from his current home in New York City. “I feel privileged to have the opportunity to serve the talented and deeply experienced team of PRA Group from an exciting new vantage point,” Mr. Atal said. “Our strategic focus as a company remains unchanged—capitalizing intelligently on the near- term growth we expect in the receivables pipeline; optimizing operational performance with customers and controls at the center; building out our global expansion into newer markets; and continuing to identify and test new opportunities that complement our core franchise. And we will do so without ever losing sight of our values and the responsibility to our communities that have been key to PRA Group’s sustained performance and will contribute to our future success." Mr. Stevenson co-founded PRA Group (then called Portfolio Recovery Associates) with current PRA Group Board Chair Steve Fredrickson in 1996. The company has grown from four people into one of the largest buyers of nonperforming loans in the world, with more than 3,000 employees and portfolio operations in 18 countries across the globe. The company purchased $850 million in portfolios during 2022, with worldwide cash collections totaling $1.7 billion. “We wish Kevin the best and thank him for his many contributions over the years. We now look forward as we transition to a deeply experienced, collaborative new leader
who is truly passionate about our company and our future,” Mr. Fredrickson said. “Vik has been a tremendous asset to our board, and will now bring his unmatched vision, integrity, market insight, energy and leadership skill to shaping our growth from the other side of the boardroom table, and unlocking new opportunities to serve our customers, scale our business and expand our reach around the globe.” About PRA Group As a global leader in acquiring and collecting nonperforming loans, PRA Group returns capital to banks and other creditors to help expand financial services for consumers. With thousands of employees worldwide, PRA Group companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com. About Forward-Looking Statements Statements made herein that are not historical in nature, including PRA Group, Inc.'s or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group, Inc.'s future operations and financial and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that our expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group, Inc. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group, Inc.'s filings with the Securities and Exchange Commission, including PRA Group, Inc.'s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'s business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.'s expectations with regard thereto or to reflect
any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part. News Media Contact: Elizabeth Kersey Senior Vice President, Communications and Public Policy Elizabeth.Kersey@PRAGroup.com (757) 641-0558 Investor Contact: Najim Mostamand, CFA Vice President, Investor Relations IR@PRAGroup.com (757) 431-7913