Letter to Elevate Credit

The following is a letter addressed to the Board of Elevate Credit, highlighting some problems in the management.

Dear Members of the Board,

In the recent Annual Report, the CEO has indicated positive results for 2021, I however do not share the same view and would like to express my disappointment in the management of this company, specifically around compensation.

In 2021, revenues have declined, costs have gone up, and operating income has declined 84%, and yet the Board has decided that it would be wise to increase the total compensation for Mr. Harvison by 103%, former CFO Mr. Lute’s compensation by 41%, and the Chief Counsel’s compensation by 21%.

The CEO’s total compensation equals about a quarter of the operating income, and it is concerning that the Board has decided to approve this compensation package, given the lack of expectational business results. The shareholders of Elevate Credit have been seeing their investments shrink in value, while the CEO is enriching himself and the Board has no problem awarding him a 7-figure stock compensation.

The average compensation for each Board Member is $227,000, which is too high and should be reduced by 50% immediately. Why should shareholders pay $2 million for a Board that does not question the ridiculous amount of money the C-level executives are taking from the company?

Looking at Elevate’s business model, its sales and marketing efforts seem to be ineffective, expensive, or useless, since 60% of new customers are acquired through Direct Mail. Using marketing strategies that every other competitor uses will not help in establishing Elevate Credit’s brand, and it should consider new ideas for advertising, such as short-term 0% financing, or referral programs. It might be worth borrowing some ideas from Buy Now Pay Later companies.

While my business suggestion is less likely to be taken seriously, I hope the compensation topic is addressed. I do not have a problem with CEOs making money, but shareholders do expect results and accomplished goals to determine that outcome, not disappointing business results.

Thank you

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