PORTFOLIO RECOVERY ASSOCIATES - $2 Million Perk for CEO Bypasses IRS Rule

Posted on Monday, June 14th, 2010 at 11:17pm CDT by Josh R.

Product: Debt Collection Agency CEO Greed

Company: PORTFOLIO RECOVERY ASSOCIATES

Location: US

Category: Other

FORM 8-K

PORTFOLIO RECOVERY ASSOCIATES, INC.

ANNUAL BONUS PLAN

June 4, 2010

Purposes of the Bonus Plan

To bypass IRS Code 162(m) which limits the Company'ss federal income tax deductibility of compensation paid to the Chief Executive Officer Steven D. Fredrickson and the three other most highly compensated officers unless such compensation qualifies as "performance-based compensation" under Code Section 162(m).

The Bonus Plan

At the 2010 Annual Meeting, Company shareholders also approved the adoption of the Portfolio Recovery Associates, Inc. Annual Bonus Plan (the "Bonus Plan"), which was adopted by the Board on March 19, 2010, subject to shareholder approval.

The Compensation Committee of the Board of Directors (or a subcommittee thereof) will administer the Bonus Plan and, subject to the terms thereof, has the sole discretion to determine the amounts, terms and conditions of each award; however, the maximum amount payable to a participant in respect of any award under the Bonus Plan in any 12-month period is $2,000,000.

CEO Steven D. Fredrickson and any other executive officer of the Company or of any affiliate may be selected by the Compensation Committee to receive an award under the Bonus Plan for any year, and any such selection generally must occur prior to the expiration of 25% of the applicable "performance period" (i.e., the fiscal year or portion thereof that will be used for measuring actual performance).

For each such performance period, the Compensation Committee will establish

(a) the performance goals based on business and financial criteria and

(b) a formula for calculating a participant's award based on actual performance as compared to the pre-established performance goals.

The Bonus Plan is designed so that the awards made there under will satisfy the requirements for "performance-based" compensation within the meaning of Code Section 162(m).

Eligible is only CEO Steven D. Fredrickson or an officers chosen by the compensation committee consisting of "outside directors" David Nathan Roberts and John E. Fuller.

John Fuller is the COB at Dealer Services Corporation where he also sits with David N. Roberts, the UFO.

Maximum award is $2,000,000 in any 12-month period.

Section 162(m) of the Code. Unless otherwise determined by the Committee, the provisions of this Plan shall be administered and interpreted in accordance with Section 162(m) of the Code to ensure the deductibility by the Company of the payment of Awards.

http://www.sec.gov/Archives/edgar/data/1185348/000129993310002302/exhibit2.htm


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