The heyday in Payday at Dollar Financial…

October 5, 2010

There’s a lot of money to be made from making payday loans, as we learned by reading the preliminary proxy (Schedule 14A) that Dollar Financial Corp. (DLLR) filed last week. It gave us a glimpse of just how profitable the business is for the executives at the top.

First, we looked at the comp package paid to Jeffrey Weiss, Dollar’s Chairman of the Board and CEO. Besides pulling in a base salary of $985,000, Weiss got stock awards worth more than $1.46 million, option awards of $495,125, and non-equity incentive plan comp of $1,723,750. Dollar Financial also paid (in addition to other types of benefits) $34,523 for country club dues, $16,909 for his personal tax and legal services, and $130,850 for life insurance premiums on a policy (or policies) for which the company is not the beneficiary. In all, for FY2010, Weiss got a total comp package of $5,477,110 – that’s over $1 million more than he got for FY 2009.

Randy Underwood, Dollar’s Executive Vice President and CFO, whose amended employment agreement from mid-May, 2010 prompted this post, saw his total compensation package nearly double, from $1,615,893 for FY 2009, to $3,114,950 for FY 2010. Although an initial glance suggests that Dollar Financial only pays $6,510 for Underwood’s insurance premiums (more on that in a second), his perks are significantly higher than Weiss’s, coming in at $108,858. The big ticket expenses include $24,000 for a car allowance, $36,000 for a housing allowance, and $48,000 under the category “Benefits Allowance.” Reading the fine print in the explanatory footnote reveals that the company is actually footing the bill for additional insurance premiums. It states: “Mr. Underwood receives a monthly benefits allowance for the reimbursement of life and long term disability insurance premiums and in 2008, 2009 and 2010 a tax gross-up allowance for allowances received.”

The other notable recipient of perks is Silvio Piccini, the Senior Vice President and Managing Director – United Kingdom Operations. While all of the named executive officers got significant increases in their total compensation packages from FY 2009, Piccini got the smallest increase – only $391,463. But his perks increased by more than $109,000 since last year. He got $76,143 for a housing allowance and $10,436 for a car allowance. The company also paid $35,692 for a tuition allowance for his kids, and $220,682 as a “foreign tax reimbursement.” The footnote explains: “Mr. Piccini is working as an expatriate in the United Kingdom and we pay the difference between the payroll taxes in the United Kingdom and the taxes Mr. Piccini would otherwise have paid in the United States.” There isn’t any explanation, though, for why the foreign tax reimbursement was $98,639 for FY 2009, but $220,682 for FY 2010.

Each of the named executive officers also got LTIP awards for fiscal 2011 that gave them RSUs, option shares, and cash awards (which ranged from $73,024 for EVP and Chairman – National Money Mart Co. Sydney Franchuk, to $394,000 cash for Weiss). The proxy notes that:

Pursuant to Mr. Weiss— current employment agreement with us, Mr. Weiss is entitled to receive annual awards beginning with fiscal 2011 equal to 200% of his base salary, one half of which is payable in cash and one half of which is payable in a combination of restricted stock units, non-qualified stock options and cash.

In all, that sentence will give Weiss an extra $1.97 million each year, putting him in the fortunate group of people who are unlikely to seek a payday loan any time soon.

Image source: swanksalot via flickr

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