Document

DEF 14A 1 ecpg-20210429xdef14a.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

________________________________________________


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ENCORE CAPITAL GROUP, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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ENCORE CAPITAL GROUP, INC.

350 Camino De La Reina, Suite 100, San Diego, CA 92108

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 11, 2021

__________________________________________________________________________________________________________


Date and Time:			June 11, 2021, at 12:00 P.M., Eastern Time
Place:			The annual meeting will be a virtual meeting via live webcast on the internet at www.virtualshareholdermeeting.com/ECPG2021
Items of Business:			1.To elect nine directors, each for a term of one year; 2.To approve, in a non-binding advisory vote, the compensation of our named executive officers (often called the “say-on-pay” vote); 3.To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and 4.To transact such other business that may properly come before the meeting.
Record Date:			April 14, 2021 (the “Record Date”) Only stockholders of record at the close of business on the Record Date are entitled to notice of and to vote at the annual meeting or any postponement or adjournment thereof.
Mail Date:			We intend to mail the Notice Regarding the Availability of Proxy Materials, or the proxy statement and proxy card, as applicable, on or about April 29, 2021, to our stockholders of record on the Record Date.
Participation in Virtual Meeting:			We are pleased to invite you to participate in our annual meeting, which will be conducted exclusively online at www.virtualshareholdermeeting.com/ECPG2021. To participate in the annual meeting, you will need the 16-digit control number included on your notice, on your proxy card or on the instructions that accompanied your proxy materials.
Voting:			Your vote is important. Whether or not you plan to virtually attend the meeting, please submit your vote as soon as possible using one of the voting methods described in the attached materials. Submitting your voting instructions by any of these methods will not affect your right to virtually attend the meeting and vote should you so choose.


			By Order of the Board of Directors,

			Gregory Call
			Secretary

April 29, 2021

San Diego, California

This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, are available at www.proxyvote.com.

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TABLE OF CONTENTS


Questions about the Meeting			1

Corporate Governance and the Election of Directors
Corporate Governance			4
PROPOSAL 1 - Election of Directors			11
Executive Officers			14
Environmental, Social and Governance			15

Compensation
Compensation Discussion and Analysis – Executive Summary			18
Compensation Discussion and Analysis			21
Compensation Committee Interlocks and Insider Participation			32
Compensation Committee Report			33
Risks Related to Compensation Policies and Practices			34
Summary Compensation Table			35
Grants of Plan-Based Awards			37
Outstanding Equity Awards at Fiscal Year-End			39
Option Exercises and Stock Vested			42
Potential Payments Upon a Termination or Change In Control			43
CEO Pay Ratio			48
Compensation of Directors			49
PROPOSAL 2 - Non-Binding Vote to Approve the Compensation of the Named Executive Officers			51

Other Matters
Certain Relationships and Related Transactions			52
Security Ownership of Principal Stockholders and Management			53
Equity Compensation Plan Information			55
PRO POSAL 3 - Ratification of Selection of Independent Registered Public Accounting Firm			56
Independent Registered Public Accounting Firm			57
Report of the Audit Committee			58
Stockholder Proposals and Nominations			59
Additional Information			59
Other Matters			60

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ENCORE CAPITAL GROUP, INC.

350 Camino De La Reina, Suite 100

San Diego, CA 92108

858-309-6442

_______________________________________________________________________________________________________

PROXY STATEMENT

_______________________________________________________________________________________________________


QUESTIONS ABOUT THE MEETING
Why am I receiving these materials?

The Board of Directors (our “Board”) of Encore Capital Group, Inc. (“Encore” or the “Company”) has made these materials available to you over the internet, or has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies for use at the 2021 annual meeting of stockholders of Encore Capital Group, Inc., to be held via a live webcast on the internet at www.virtualshareholdermeeting.com/ECPG2021 on June 11, 2021 at 12:00 p.m. Eastern time, or at such other time and place to which the annual meeting may be adjourned or postponed. The enclosed proxy is solicited by our Board and is first being mailed and/or made available on or about April 29, 2021 to stockholders entitled to vote at the meeting.


What is the purpose of the annual meeting?

At our annual meeting, stockholders will act upon the matters outlined in the accompanying notice of meeting, including (1) the election of nine directors, (2) the approval, by non-binding vote, of the compensation of our named executive officers, and (3) the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm. In addition, representatives of BDO USA, LLP will be given an opportunity to make a statement and to respond to questions regarding the audit of our consolidated financial statements.


Who is entitled to vote?

Only stockholders of record at the close of business on the record date, April 14, 2021, are entitled to receive notice of the annual meeting and to vote the shares that they held on that date at the meeting, or any postponement or adjournment of the meeting. At the close of business on the record date, April 14, 2021, there were 31,009,845 outstanding shares of our common stock, each of which is entitled to cast one vote.


How do I participate in a virtual meeting?

Encore’s 2021 annual meeting will be conducted online only, via live webcast. Stockholders will be able to access the meeting live by visiting www.virtualshareholdermeeting.com/ECPG2021. To participate in the annual meeting, you will need the 16-digit control number included on your notice, on your proxy card or on the instructions that accompanied your proxy materials.


Why is the Company having a virtual meeting?

We are utilizing the virtual meeting format to enhance stockholder access and encourage participation and communication with our management. We will continue to ensure that our stockholders are afforded the same rights and opportunities to participate as they would at an in-person meeting. We believe this format facilitates stockholder attendance and participation by enabling all stockholders to participate fully, and equally, using any internet-connected device from any location around the world at no cost. We believe a virtual meeting protects the health and safety of attendees, and saves the Company’s and stockholders’ time and money.


Who can attend the meeting?

All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Others may attend the meeting at our discretion. If you have any questions or wish to obtain directions to virtually attend the annual meeting and to vote, please call our Investor Relations representative, at 858-309-6442.

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What constitutes a quorum?

The presence at the meeting, virtually or represented by proxy, of a majority of the outstanding shares of common stock entitled to vote on the record date will constitute a quorum, which will permit us to hold the annual meeting and conduct business. Proxies received but marked as abstentions, withheld votes and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting. Abstentions include shares virtually present at the meeting but not voting and shares represented by proxy but with respect to which the holder has abstained from voting. Broker non-votes occur when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power on that item and has not received instructions from the beneficial owner.


How do I vote by proxy before the meeting?

Before the meeting, you may vote your shares in one of the following three ways if your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company:

•By internet at www.proxyvote.com;

•By telephone at 1-800-690-6903; or

•By mail, if you received a printed copy of the proxy materials, by completing, signing, dating and returning the enclosed proxy card in the postage paid envelope provided.

Please refer to the proxy card for further instructions on voting via the internet and by telephone. Please follow the directions on your proxy card carefully. If your shares are held in a brokerage account in the name of a bank, broker or other nominee (this is called “street name”), then you are the beneficial owner of the shares and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the annual meeting. You have the right to direct your bank or broker on how to vote the shares in your account, and your ability to vote by telephone or via the internet depends on the voting procedures used by your broker. You may receive a separate voting instruction form with this proxy statement, or you may need to contact your broker, bank or other nominee to determine whether you will be able to vote electronically using the internet or telephone.


May I vote my shares at the meeting?

Yes. You may vote your shares electronically at the virtual meeting, even if you previously submitted a proxy card or voted by internet or telephone. Whether or not you plan to attend the meeting, however, we encourage you to vote your shares by proxy before the meeting. To participate in the annual meeting, you will need the 16-digit control number included on your notice, on your proxy card or on the instructions that accompanied your proxy materials.

Please note that if your shares are held in “street name” and you wish to vote at the meeting, you will not be permitted to do so unless you first obtain a legal proxy issued in your name from the broker, bank or nominee that holds your shares.


What if I submit a proxy and then change my mind?

You may revoke your proxy at any time before it is exercised:

•By filing with the Corporate Secretary of Encore a notice of revocation at the address shown on the first page of this proxy statement;

•By sending in another duly executed proxy bearing a later date; or

•By virtually attending the meeting and casting your vote electronically.


What are the Board’s recommendations for how I should vote my shares?

If you sign and return your proxy card with voting instructions, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you sign and return a proxy card but do not fill out the voting instructions on the proxy, the persons named on the proxy card will vote in accordance with the recommendations of our Board. The Board recommends that you vote your shares as follows:

Proposal 1 – FOR the election of each of the nine director nominees for a term of one year.

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Proposal 2 – FOR, in a non-binding advisory vote, the compensation of our named executive officers (often called the “Say-on-Pay Vote”).

Proposal 3 – FOR the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, in their own discretion.


What vote is required to approve each item?

Election of Directors. Directors shall be elected by a plurality of the votes cast, meaning that the nine nominees who receive the most votes will be elected to our Board. With respect to the election of directors, you may vote “For All,” “For All Except” or “Withhold All” for the nominees for the Board. A properly executed proxy marked to withhold authority with respect to the election of one or more directors will have no effect on the proposal to elect the directors other than that it will be counted for purposes of determining whether there is a quorum present at the annual meeting. Notwithstanding the foregoing, we have adopted a Majority Voting Policy that is described on page 10 of this proxy statement.

Other Items. For each other item, the affirmative vote of the majority of the shares voting for or against, represented at the meeting or by proxy, on the item will be required for such item’s approval, meaning that a majority of votes cast must be voted “For” the proposal for it to be approved. With respect to any proposal other than the election of directors you may vote “For,” “Against” or “Abstain.” A properly executed proxy marked “Abstain” with respect to any such matter will not be voted and will not be counted in determining the number of shares necessary for approval, although it will be counted for purposes of determining whether there is a quorum.

Effect of Broker Non-Votes. If you hold your shares in “street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares may not be voted on those matters and will not be counted in determining the number of shares necessary for approval. Shares represented by such “broker non-votes” will, however, be counted in determining whether there is a quorum.


Who pays for the cost of this proxy solicitation?

We will bear the cost of solicitation of proxies, including the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of our outstanding common stock. In addition to the solicitation of proxies by mail, our officers, directors and employees may solicit proxies in person, by telephone or by facsimile, none of whom will receive additional compensation for those services.


How many annual reports and proxy statements are delivered to the same address?

If you and one or more of our other stockholders share the same address, it is possible that only one annual report and proxy statement was delivered to your address unless we have received contrary instructions from one or more of the stockholders. This is known as “householding.” Any registered stockholder who wishes to receive separate copies of an annual report or proxy statement at the same address now or in the future may: (1) call Encore at 858-309-6442 or toll free at 1-800-579-1639 or (2) mail a request to receive separate copies to: Encore Capital Group, Inc., 350 Camino De La Reina, Suite 100, San Diego, CA 92108, Attention: Corporate Secretary, and we will promptly deliver the annual report and/or proxy statement to you. Stockholders who own our common stock through a broker and who wish to receive separate copies of an annual report and proxy statement should contact their brokers directly. Stockholders currently receiving multiple copies of an annual report and proxy statement at a shared address and who wish to receive only a single copy in the future may direct their request to the same phone number or address listed above.

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CORPORATE GOVERNANCE

Board Meetings and Committees

The Board met 9 times during 2020 and otherwise acted by unanimous written consent. In 2020, each incumbent director attended at least 75% of the aggregate number of meetings of the Board and meetings of committees of the Board on which he or she served, in each case held during such director’s period of service.

In 2020 the Board had four standing committees: the Audit Committee; the Compensation Committee; the Nominating and Corporate Governance (“NCG”) Committee; and the Risk Committee. The members of our Board and the composition of the Board’s standing committees as of December 31, 2020 and the number of meetings held in 2020 are reflected in the table below.

Name(1)

Board

Audit

Compensation

NCG

Risk

Ash Gupta

●

Wendy G. Hannam(2)

●

Jeffrey A. Hilzinger(3)

●

Angela A. Knight(3)

●

Michael P. Monaco

●

Laura Newman Olle(4)

●

Richard J. Srednicki

●

Richard P. Stovsky

●

Ashish Masih

●

Number of Meetings

● Chair ● Member

_______________________________________

(1)Messrs. Francis E. Quinlan and Norman R. Sorensen did not stand for re-election as directors at the Company’s 2020 Annual Meeting. In 2020, Mr. Quinlan served as Chair of the Risk Committee and as a member of the Compensation Committee until the Company’s 2020 Annual Meeting. In 2020, Mr. Sorensen served as a member of the Audit Committee and the NCG Committee until the Company’s 2020 Annual Meeting.

(2)Ms. Hannam became chair of the Risk Committee in June 2020 after the Company’s 2020 Annual Meeting.

(3)In June 2020 after the Company’s 2020 Annual Meeting, Mr. Hilzinger joined the Audit Committee and the NCG Committee and Ms. Knight joined the Compensation Committee and became Chair of the NCG Committee.

(4)Ms. Olle served as Chair of the NCG until June 2020.

Our Board has adopted written charters for each of its standing committees and each of those written charters is available on our website at www.encorecapital.com. Click on “Investors,” then “Corporate Governance” and then the respective committee charters. The standing committees each assess the adequacy of their charters annually. Information contained on our website is not incorporated by reference in, or considered to be a part of, this proxy statement.

Audit Committee. We have a standing Audit Committee that is responsible for assisting the Board in oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company.

Among other things, the Audit Committee has the authority and responsibility under its charter to:

•appoint our independent auditors and regularly review their performance and internal control procedures and material issues raised by our independent auditors;

•approve audit and non-audit services and fees;

•review and approve the internal audit function, including the charter, the effectiveness of internal audit, the internal audit plan, and results of internal audits as they relate to finance and accounting;

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•review and evaluate our financial statements, accounting principles and system of internal controls regarding finance and accounting;

•review and evaluate reports from the independent auditors concerning all critical accounting policies and practices used by the Company;

•establish procedures for receiving and responding to complaints or concerns regarding our internal controls or other auditing matters;

•support the Board by primarily overseeing those risks that may directly or indirectly affect the Company’s financial statements, including the areas of financial reporting, internal controls and compliance with public reporting requirements;

•review and approve related person transactions; and

•consider other appropriate matters regarding our financial affairs.

Compensation Committee. The Compensation Committee is responsible for discharging the responsibilities of the Board with respect to the compensation of our executive officers, administering our equity-based plans and periodically reviewing compensation and equity-based plans, with authority to adopt such plans.

Among other things, the Compensation Committee has the authority and responsibility under its charter to:

•review and approve our policies on executive compensation, benefits and perquisites, including incentive cash compensation plans, or other forms of executive incentives;

•review and approve the compensation, benefits and perquisites of the Chief Executive Officer (“CEO”), who serves as our principal executive officer, and the Compensation Committee refers its determination and approval of the same to the Board for ratification;

•review and approve the compensation, benefits and perquisites of all executive officers;

•review and evaluate the compensation and benefits for non-employee directors and, if appropriate, recommend changes to the Board; and

•consider, approve and administer our incentive compensation plans and equity-based plans in which directors, the CEO, other executive officers and other employees and consultants may be participants.

The Compensation Committee may delegate any of its responsibilities to subcommittees or any committee member, except that it shall not delegate its responsibilities for any matters that involve executive or director compensation or any matters where it has determined such compensation is intended to be exempt from Section 16(b) under the Securities Exchange Act of 1934 pursuant to Rule 16b-3 by virtue of being approved by a committee of “non-employee directors.”

The Compensation Committee may delegate its responsibilities with respect to the administration of the incentive compensation, equity compensation, deferred compensation, and employee pension and welfare benefit plans to the Company’s officers and employees, as consistent with applicable law, who may also utilize the services of third-party administrators, record keepers, consultants, and other service providers.

The Compensation Committee sets the corporate performance goals and objectives for the executive officers and also sets the individual performance goals and objectives for the CEO and evaluates their performance with respect to those goals. The Compensation Committee sets the executive officers’ compensation based upon the evaluation of their performance and approves all employment and severance related agreements with such executives. In evaluating executive officer compensation, the Compensation Committee may retain the services of compensation consultants and considers recommendations from the CEO with respect to performance and compensation of the other executive officers. The Compensation Committee also periodically reviews compensation for non-employee directors.

The CEO is not present when the Compensation Committee reviews and establishes the compensation, benefits and perquisites of the CEO. Although the CEO generally makes recommendations to the Compensation Committee with respect to executive compensation decisions, including base salaries, cash incentive bonuses and equity-based awards, the Compensation Committee has in the past determined compensation, benefits or perquisites that were different from those recommended by the CEO.

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The Compensation Committee approves all grants of equity-based awards to executives. The Board and the Compensation Committee have delegated authority to the CEO to approve grants of equity awards to non-executive employees, subject to share and grant date fair value limitations and subject to continued oversight by the Compensation Committee. Equity award grants to executives are determined based on a periodic review by the Compensation Committee regarding appropriate incentives, with recommendations typically originating from the CEO based on each executive’s individual performance, consistent with the criteria established in the long-term incentive program adopted by the Compensation Committee.

The Compensation Committee has the specific authority to hire outside advisors and consultants in its discretion at our expense. The Compensation Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”) to provide comprehensive executive compensation consulting advice. A more detailed description of FW Cook’s activities for the Compensation Committee is provided in the Compensation Discussion and Analysis section of this proxy statement.

Nominating and Corporate Governance Committee. The function of the Nominating and Corporate Governance Committee is to consider and recommend qualified candidates for election as directors of the Company, to make recommendations to the Board regarding the size and composition of the Board and to develop and recommend to the Board matters related to corporate governance.

Among other things, the NCG Committee has the authority and responsibility under its charter to:

•make recommendations to the Board concerning the size and composition of the Board;

•identify, screen and evaluate proposed candidates for the Board;

•to the extent deemed appropriate, retain third party search firms or other advisors to identify and evaluate director nominee candidates;

•recommend to the Board nominees to fill vacancies on the Board;

•annually review the Board committee structure and recommend to the Board for its approval directors to serve as members of each committee;

•recommend to the Board a process to review the effectiveness of the Board and its members, and to oversee that review process;

•develop and recommend to the Board a succession plan for the CEO role, and periodically to review that succession plan;

•make recommendations to the Board regarding governance matters, including, but not limited to, the Company’s certificate of incorporation, bylaws, and the charters of the Board’s other committees;

•develop, oversee, and periodically update as necessary, an orientation program for new directors and a continuing education program for current directors; and

•review the Company’s environmental, social and governance (ESG) strategy, initiatives and policies and receive updates from the Company on significant ESG activities.

Prior to each annual meeting of stockholders, the NCG Committee identifies nominees to serve on the Board by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. The NCG Committee or the Board decides whether to nominate a member for re-election based on considerations, including, but not limited to, the value of continuity of service by existing members of the Board and the desired size and composition of the Board. The NCG Committee may from time to time identify new nominees for the Board based on the desired skills and experience of a new nominee considering the criteria described below. Current members of the NCG Committee, the Board and management are polled for suggestions as to individuals meeting the desired criteria. Third party search firms or other advisors may also be retained to identify qualified individuals.

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The NCG Committee has not set specific minimum qualifications or criteria for nominees. Although we do not have a specific diversity policy, we fully appreciate the value of Board diversity, which improves the quality of discussions, enhances Board culture and contributes to a more effective decision making process. The NCG Committee evaluates the entirety of a nominee’s credentials and considers a broad range of factors in evaluating prospective director nominees, including the following:

•the appropriate size of the Board;

•a candidate’s knowledge, skills and experience, including experience in business, finance, technology, credit, strategy, asset and capital allocation, accounting or administration, considering prevailing business conditions, the needs of the Company and the knowledge, skills and experience already possessed by other members of the Board;

•whether a candidate is “independent,” as defined by NASDAQ Listing Rules and other applicable rules, and whether circumstances exist that may create the appearance of a conflict of interest;

•a candidate’s familiarity with accounting rules and practices applicable to our business;

•a candidate’s international business experience;

•a candidate’s character, integrity and reputation for working constructively with others;

•whether a candidate has sufficient time available to devote to the duties of a director of the Company;

•the desire to assemble a Board that is strong in its collective knowledge and has a diversity of skills, viewpoints, professional and personal experience, race, ethnicity, age and gender;

•the importance of maintaining productive working relationships among the Board members and between the Board and management for the benefit of all stockholders; and

•recognition of both the considerable benefit of continuity and the fresh perspective provided by the periodic introduction of new members and retirement of current members.

The NCG Committee assesses the effectiveness of its efforts when it evaluates the Board’s composition as a part of the annual nomination process.

The NCG Committee will consider stockholder nominations for directors submitted in accordance with the procedure set forth in Section 3.14 of our Bylaws. The committee will consider each candidate equally based on the factors listed above, regardless of whether the candidate is recommended by a stockholder for election to our Board or is recommended by a member of the Board or a third-party search firm. The procedures for stockholder nominated director candidates provide that a notice relating to the nomination in connection with an annual meeting must be timely given in writing to: Encore Capital Group, Inc., Attention: Corporate Secretary, 350 Camino De La Reina, Suite 100, San Diego, CA 92108. To be timely, the notice must be delivered within the time period described in the “Stockholder Proposals and Nominations” section of this proxy statement. Such notice must be accompanied by the nominee’s written consent to serve if elected, must contain information relating to the business experience and background of the nominee and provide information with respect to the nominating stockholder and persons acting in concert with the nominating stockholder and otherwise comply with the requirements outlined in our Bylaws.

Risk Committee. The Risk Committee assists the Board in its oversight of our risk governance structure, including the Enterprise Risk Management framework and the policies, procedures and practices utilized to manage risk.

Among other things, the Risk Committee had the authority and responsibility under its charter to:

•oversee our risk governance structure, including the Enterprise Risk Management framework;

•review and approve any risk appetite statement of the Company and management’s proposed approach to risk tolerance, including overseeing the development of appropriate risk capacity, risk tolerances and key risk indicators;

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•review and approve our risk management policies and procedures dealing with risk identification and risk assessment for the principal operational, business and compliance risks facing the Company, including but not limited to, the risks and incident responses associated with: operations; regulatory compliance; information security; business continuity and disaster recovery; reputation; legal; and vendor management;

•review management’s efforts to foster a Company-wide culture that supports appropriate risk awareness and identification, escalation and appropriate treatment of risks that exceed designated risk tolerance levels;

•discuss with management and our Chief Risk Officer our major risk exposures and review the steps management has taken to monitor and control those exposures, including our risk assessment and risk management policies;

•provide oversight of the Company’s crisis management framework, including the Company’s incident response plans; and

•review our internal audit work plan to ensure alignment with identified risks and risk governance needs.


Other Corporate Governance Matters

Director Independence. The Board has determined that all members of the Board other than Mr. Masih are “independent directors” within the meaning of NASDAQ listing standards. During its independence review, the Board considered transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries, affiliates and significant stockholders. The Board also examined transactions and relationships between directors or their affiliates and members of the Company’s senior management or their affiliates. The Board has determined that each member of the Board’s Audit, Compensation, and NCG Committees is independent (or similarly designated) based on the Board’s application of the standards of NASDAQ, the Securities and Exchange Commission (the “SEC”) or the Internal Revenue Service (the “IRS”), as appropriate for such committee membership.

Annual Board and Committee Evaluations. Our Board conducts an annual self-evaluation aimed at enhancing its effectiveness. As part of the evaluation, each director completes a written questionnaire that is designed to gather suggestions for improving Board effectiveness and to solicit feedback on a range of issues, including Board operations, Board and committee structure, the flow of information from management, and agenda topics. The feedback received from the questionnaires is discussed during an evaluation session to determine what actions, if any, could further enhance the operations of the Board and its committees. Each of our standing committees also conducts its own annual self-evaluation, which includes a written questionnaire and evaluation session led by the respective committee chairs.

The NCG Committee annually appraises the framework for our Board and committee evaluation processes.

Audit Committee Financial Expert. The Board has determined that each of Messrs. Stovsky, Hilzinger and Monaco and Ms. Hannam qualifies as an “audit committee financial expert,” as defined in SEC regulations, and also possesses the financial sophistication and requisite experience as required under NASDAQ listing standards.

Board Leadership Structure. The Board evaluates its leadership structure on an ongoing basis according to what the Board considers to be best for the Company at any given point in time. Currently, we separate the roles of non-executive Chairman and CEO. The Board believes that having a separate non-executive Chairman and CEO provides an effective leadership model for the Company and provides the benefit of the distinct abilities and experience of both the non-executive Chairman and CEO.

Our non-executive Chairman, Michael P. Monaco, provides overall leadership to the Board in its oversight function. Our CEO, Ashish Masih, is responsible for setting the strategic direction for the Company and the day-to-day leadership and overall operating performance of the Company. We believe the separation of offices ensures the independence of the Board and allows Mr. Monaco to focus on managing Board matters and Mr. Masih to focus on managing our business. Having the CEO serve on our Board ensures that the Board contains the individual most familiar with the Company’s business and industry and promotes open communication between management and our directors. The CEO provides advice and recommendations to the full Board for the Board’s consideration.

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Code of Ethics. The Board has adopted a code of ethics entitled the “Standards of Business Conduct” applicable to our directors and all employees and officers of the Company, including our principal executive officer, principal accounting officer and principal financial officer. A copy of the Standards of Business Conduct is available on our website at www.encorecapital.com. Click on “Investors,” then “Corporate Governance” and then “Standards of Business Conduct.” We may post amendments to or waivers of the provisions of the Standards of Business Conduct, if any, made with respect to any of our directors and executive officers on that website, unless otherwise required by NASDAQ listing standards to disclose any waiver in a Current Report on Form 8-K. Please note that the information contained on our website is not incorporated by reference in, or considered to be a part of, this proxy statement.

Risk Oversight. Our management has day-to-day responsibility for identifying risks and assessing them in relation to Company strategies and objectives; implementing suitable risk mitigation plans, processes and controls; and appropriately managing risks in a manner that serves the best interests of the Company and its stockholders. While the Board has retained the responsibility for general oversight of key strategic risks and of the Company’s Enterprise Risk Management (“ERM”) program, the Board’s standing committees support the Board by regularly addressing various risks in their respective areas of oversight.

•The Risk Committee oversees and reviews the Company’s risk governance structure, including the ERM program (which includes risk tolerance). The Company’s various operating subsidiaries also have general corporate governance structures and, depending on their operations and market, have also established board committees or processes to manage risk and compliance relative to their specific operations.

•The Audit Committee primarily oversees those risks that may directly or indirectly affect our financial statements, including the areas of financial reporting, internal controls and compliance with public reporting requirements. The Audit Committee also assists the Board by overseeing and reviewing the internal audit function.

•The Compensation Committee assists the Board in fulfilling its risk management oversight responsibilities associated with risks arising from employee compensation policies and practices.

•The NCG Committee oversees risks related to corporate governance matters and processes. The committee also oversees risk related to succession planning for the Company’s executives.

Each standing committee routinely provides reports to the full Board at regular meetings concerning the activities of the committee and actions taken by the committee since the last regular meeting. The Board’s role in risk oversight is consistent with the Company’s leadership structure, with the CEO and management responsible for assessing, managing and mitigating our risk exposure and the Board and its committees providing oversight in connection with those efforts.

Communications with Directors. We have not adopted a formal process for stockholder communications with the Board. Given our size, the Board does not deem it necessary to formally adopt a written policy regarding stockholder communications. Stockholders, however, can contact the Board or an individual director by writing to: Board of Directors, Encore Capital Group, Inc., 350 Camino De La Reina, Suite 100, San Diego, CA 92108, Attention: Corporate Secretary. Absent unusual circumstances or as contemplated by committee charters, communications received in writing are distributed to members of the Board as appropriate depending on the facts and circumstances outlined in the communication received.

Outside Advisors. The Compensation Committee has engaged FW Cook to assist it in carrying out the Company’s executive compensation programs. The Compensation Committee has assessed the independence of FW Cook pursuant to SEC rules and determined that FW Cook is independent and its respective work for the Compensation Committee does not raise any conflict of interest. In addition, various committees of the Board may hire outside legal counsel from time to time to provide additional advice.

Executive Sessions of Independent Directors. Independent Board members meet without management present following regularly scheduled Board meetings and at any other time deemed appropriate by the Board.

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Policy Regarding Directors’ Attendance at Annual Meetings. We encourage directors to attend our annual meeting, but we do not have a policy that requires the attendance of all directors at our annual meeting. Each of our current directors who was a director at the time attended the 2020 annual meeting.

Majority Voting Policy. The Company has adopted a Majority Voting Policy, which states that in an uncontested election (i.e., an election where the only nominees are those recommended by the Board), any nominee for director who receives a greater number of votes “withheld” from election than votes “for” such election shall promptly tender a resignation to the Board for consideration.

The NCG Committee shall promptly consider the resignation offer and recommend to the Board action with respect to the tendered resignation, which may include (1) accepting the resignation, (2) maintaining the director but addressing the underlying cause of the “withheld” votes, (3) determining not to renominate the director in the future, (4) rejecting the resignation or (5) any other action the NCG Committee deems to be appropriate and in the best interest of the Company. In considering what action to recommend with respect to the tendered resignation, the NCG Committee will take into account all factors deemed relevant, including without limitation, any stated reasons why stockholders “withheld” votes for election from such director, the length of service and qualifications of the director whose resignation has been tendered, the overall composition of the Board, the director’s contributions to the Company, the mix of skills and backgrounds of the directors and whether accepting the tendered resignation would cause the Company to fail to meet any applicable requirements of the SEC or the NASDAQ Stock Market.

The Board will act on the NCG Committee’s recommendation no later than 90 days following certification of the stockholder vote.

Following the Board’s decision on the NCG Committee’s recommendation, the Company will promptly disclose the Board’s decision with respect to the tendered resignation and will provide a description of the process by which the decision was reached in a Current Report on Form 8-K filed with the SEC.

Except in certain special circumstances, any director who tenders a resignation pursuant to this provision shall not participate in the NCG Committee review and recommendation process or the Board’s consideration regarding the action to be taken with respect to the tendered resignation.

To the extent that one or more directors’ resignations are accepted by the Board, the NCG Committee will recommend to the Board whether to fill such vacancy or vacancies or to reduce the size of the Board.

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ELECTION OF DIRECTORS (PROPOSAL NO. 1)

General

Our Board currently consists of nine members, each with a term expiring at the 2021 annual meeting. The NCG Committee of the Board has recommended, and the Board has nominated, the incumbent directors listed below for election at the 2021 annual meeting.

If any nominee named below is unable or declines to serve as a director, the Board may change the number of seats on the Board or may designate an alternate nominee to fill the vacancy. If a substitute nominee is named, the proxy holders will vote the proxies held by them for the election of such person, unless contrary instructions are given. We are not aware of any nominee who will be unable or will decline to serve as a director. The term of office for each person elected as a director continues until the next annual meeting of stockholders or until his or her successor has been elected and qualifies.


Required Vote

Subject to the Majority Voting Policy described above, if a quorum is present (virtually) and voting, the nine nominees receiving the highest number of votes will be elected to the Board.


The Board of Directors recommends a vote FOR the election of each of the nine director nominees for a term of one year.


Director Nominees

Set forth below is certain biographical information about each of our nominees to the Board. 55% of the nominees to the Board are diverse by gender or race. Of the nominees, three are female and two are racially diverse. Currently 75% of our Board committees are chaired by diverse Board members.

Name

Age

Position(s)

Michael P. Monaco

Non-Executive Chairman and Director

Ashwini (Ash) Gupta

Director

Wendy G. Hannam

Director

Jeffrey A. Hilzinger

Director

Angela A. Knight

Director

Laura Newman Olle

Director

Richard J. Srednicki

Director

Richard P. Stovsky

Director

Ashish Masih

President, Chief Executive Officer and Director

MICHAEL P. MONACO. Mr. Monaco has served as a director since August 2014. He served as a Senior Advisor to FTI Consulting, Inc. from July 2017 to April 2018. He served as the Senior Managing Director at CDG Group, LLC, a New York-based firm specializing in restructurings, mergers and acquisitions and crisis and turnaround management from 2002 until CDG Group, LLC was acquired by FTI Consulting, Inc. in July 2017. He previously served as Chairman and Chief Executive Officer of Accelerator, LLC, a provider of outsource services, from 2000 to 2002. He served as a Vice Chairman of Cendant Corporation from 1996 to 2000. In addition, Mr. Monaco served as the Executive Vice President and Chief Financial Officer of the American Express Company from 1990 to 1996. He was previously a director of iPayment, Inc., a leader in the payment processing industry, and the International Securities Exchange. Mr. Monaco also previously served as a director of I.D. Systems, Inc., a publicly traded company, from 2002 to June 2014. Mr. Monaco is also a Certified Public Accountant. His additional qualifications to serve on the Board include experience in public company accounting, risk management, disclosure, and financial system management, leadership experience in the financial services industry, and service as a public company director.

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ASH GUPTA. Mr. Gupta has served as a director since September 2015. Mr. Gupta retired from American Express Company in March 2018 after 40 continuous years of service as an executive officer, including serving as President - Global Credit Risk & Information Management from 2016 to 2018. Previously, he was the company’s Chief Risk Officer and was instrumental in successfully guiding American Express through the Great Recession. He is currently, a board member and chair for Corridor Platforms Inc., and a board member for Nova Credit. In addition, he is a board advisor to Nexus Venture Partners, Global Consulting firm Oliver Wyman and X1 Card. Mr. Gupta earned an MBA from Columbia University and a bachelor’s degree in Engineering from Indian Institute of Technology (IIT), Delhi. He serves on the non-profit boards of Big Brothers Big Sisters of New York and the New York Chapter of NACD and on the advisory board of South Asian Youth Action (SAYA!). Mr. Gupta’s qualifications to serve on the Board include his significant experience as an executive officer of a public international finance company and his experience related to risk and information management.

WENDY G. HANNAM. Ms. Hannam has served as a director since September 2015. Ms. Hannam retired from Scotiabank, an international Canadian bank and a leading financial services provider in North America, Latin America and parts of Asia, in 2014. Ms. Hannam joined Scotiabank in 1983 and held positions of increasing responsibility, most recently as Executive Vice President, International Retail Banking from 2009 to 2012 and Executive Vice President, Latin America from 2012 until she retired. Ms. Hannam holds an MBA from the University of Toronto. She is also a graduate of the Advanced Management Programme at the European Institute of Business (INSEAD) and the ICD-Rotman Directors Education Program. She serves on the Independent Review Committee of BMO Asset Management Inc, and on the board of the Royal Conservatory of Music. Ms. Hannam was named one of Canada’s 100 Most Powerful Women 2007-2010, and was named to the Latinvex Top 100 Business Women in Latin America in 2013. Ms. Hannam’s qualifications to serve on the Board include her substantial experience in international financial services and operations in regulated industries.

JEFFREY A. HILZINGER. Mr. Hilzinger has served as a director since September 2019. He has served as Chief Executive Officer, President and as a director of Marlin Business Services Corp., a publicly-traded bank holding company, since June 2016. From 2010 to May 2016, Mr. Hilzinger served in positions of increasing responsibility at Everbank Commercial Finance, Inc., most recently as President. In 2004, Mr. Hilzinger co-founded US Express Leasing, Inc. and served as its Chief Financial Officer until it was acquired by Everbank Financial Corporation in 2010. Mr. Hilzinger co-founded Aternus Partners, LLC, a management consulting firm, and served as a Managing Director until 2004. From 1979 until it was acquired by GE Capital in 2002, Mr. Hilzinger served in various regional and global leadership roles with Heller Financial, Inc. and certain of its subsidiaries and affiliates. Mr. Hilzinger’s qualifications to serve on the Board include his experience as the Chief Executive Officer of a publicly-traded company, his substantial experience in the financial services industry, his experience interacting with regulatory authorities and his experience leading businesses located outside of the United States.

ANGELA A. KNIGHT CBE. Ms. Knight has served as a director since September 2019. Ms. Knight has been the Senior Independent Director for TP ICAP plc (previously Tullett Prebon) since September 2011 and a Non-Executive Director of Arbuthnot Latham & Co Ltd since June 2016, of Taylor Wimpey plc since November 2016, and of Provident Financial plc since August 2018. She is currently the deputy chairman of the Astana Financial Services Authority, the new regulator being set up by the Kazakhstan Government, under English law and UK/international regulatory standards. Since 1997, Ms. Knight has held several Non-Executive Directorships, including Brewin Dolphin plc from 2007 to 2017, where she was the Senior Independent Non-Executive Director and also chaired the Dublin subsidiary, until December 2018 and was the Chairman of the UK Treasury sponsored body, the Office of Tax Simplification, until March 2019. She was the Chief Executive Officer of Energy UK from 2012 to 2014, and prior to that was the Chief Executive Officer of the British Bankers’ Association, from 2007 to 2012. Between 1997 and 2006, Ms. Knight was the Chief Executive Officer of the Association of Private Client Investment Managers and Stockbrokers. Ms. Knight started her career at Air Products and Chemicals where she worked for five years, primarily as a development engineer and project leader. In 1977, she set up Cook & Knight (Metallurgical Processors) and was Joint Managing Director until the company was sold in 1988. She became a member of Sheffield City Council in 1987 and was elected as the Member of Parliament for Erewash in the East Midlands in 1992. She was the Parliamentary Aid to the Minister for Industry in 1993, then to the Chancellor of the Exchequer in 1994, before becoming Economic Secretary to HM Treasury from 1995 to 1997. Ms. Knight has a BSc degree in Chemistry from Bristol University. Ms. Knight’s qualifications to serve on the Board include her substantial experience in international financial services, operations in regulated industries and service on international boards.

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LAURA NEWMAN OLLE. Ms. Olle has served as a director since February 2014. Ms. Olle retired from Capital One Financial Corporation, a publicly traded bank holding company specializing in credit cards, home loans, auto loans, banking and savings products, in 2007, where she served as Chief Enterprise Risk Officer. She joined Capital One in 1999 as Senior Vice President of Information Technology Systems Development. Prior to Capital One, Ms. Olle served as Senior Vice President of Information Systems and Services at Freddie Mac. She has also previously held key information technology positions at the Marriott Corporation and worked as a management consultant at Arthur Young and Company. Ms. Olle serves as a board member of Morgan Stanley Bank, N.A. (MSBNA), Morgan Stanley Private Bank, National Association (MSPBNA), E*Trade Bank, and E*Trade Savings Bank, which are U.S. bank operating subsidiaries of Morgan Stanley. Ms. Olle is a former Certified Public Accountant. Ms. Olle’s qualifications to serve on the Board include her broad experience interacting with regulatory authorities and developing and overseeing enterprise risk management and information technology programs at complex financial institutions.

RICHARD J. SREDNICKI. Mr. Srednicki has served as a director since February 2014. Mr. Srednicki retired from JPMorgan Chase & Co., a publicly traded multinational banking and financial services holding company, in 2007 following seven years as Chief Executive Officer of Chase Card Services and a member of the JPMorgan Chase Operating and Executive Committees. Prior to Chase Card Services, he was President of the Home Services Division at Sears Roebuck & Co., President of AT&T Universal Card Services, General Manager of Citibank Germany, General Manager of Citibank Card Services USA and a Senior Product Manager at Colgate Palmolive Company. He previously served as a board member of Alliance Bank of Arizona and the Affinion Group, Inc. Mr. Srednicki’s qualifications to serve on the Board include his substantial experience in the financial services industry with other highly regulated companies and service on other financial industry boards.

RICHARD P. STOVSKY. Mr. Stovsky has served as a director since August 2018. Mr. Stovsky retired from PricewaterhouseCoopers LLP (“PwC”) in June 2018. Mr. Stovsky joined PwC in August 1983, and held positions of increasing responsibility, most recently as a Vice Chairman. Mr. Stovsky has served as a member of the board, audit and compliance committee and compensation committee of Olympic Steel, Inc. since May 2020. Mr. Stovsky serves on several non-profit organization Boards of Directors/Trustees including The Cleveland Orchestra, The 50 Club of Cleveland Executive Committee, The Cleveland Museum of Art Executive Committee, Bluecoats of Cuyahoga County Executive Committee and University School. Mr. Stovsky is a Certified Public Accountant and is licensed to practice law in the state of Ohio. Mr. Stovsky’s qualifications to serve on the Board include his experience as a certified public accountant, and his substantial experience in providing tax and overall business advice in a variety of industries.

ASHISH MASIH. Mr. Masih has served as a director and our President and Chief Executive Officer since June 2017. He had previously served as Executive Vice President and President of Midland Credit Management from November 2016 until June 2017, Executive Vice President, U.S. Debt Purchasing and Operations from February 2014 until November 2016 and Senior Vice President, Legal Collections Operations from 2010 until February 2014. Mr. Masih joined the Company in 2009, serving as Senior Vice President, Corporate Development. From 2001 until joining the Company, Mr. Masih was employed at Capital One Financial Corporation where he held senior roles in the Collections & Recoveries functions in the credit card business and was also chief financial officer and head of analytics for a business unit of Capital One. Prior to joining Capital One, Mr. Masih was an Associate Principal at McKinsey & Company and a Manager at KPMG Consulting. Mr. Masih earned an MBA from The Wharton School of the University of Pennsylvania, a Master of Science in Manufacturing Systems Engineering from Lehigh University and a bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, New Delhi, India.

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EXECUTIVE OFFICERS

Set forth below is certain biographical information about each of our current executive officers. Executive officers are appointed by the Board and serve at the discretion of the Board.

Name

Age

Position(s)

Ashish Masih

President and Chief Executive Officer

Jonathan C. Clark

Executive Vice President, Chief Financial Officer and Treasurer

Ryan B. Bell

President, Midland Credit Management

Craig A. Buick

Chief Executive Officer of the Cabot Credit Management Group

Gregory L. Call

Executive Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary

ASHISH MASIH. For biographical information, see Election of Directors (Proposal No. 1) above.

JONATHAN C. CLARK. Mr. Clark has served as our Executive Vice President, Chief Financial Officer and Treasurer since February 2015. Mr. Clark served as Chief Financial Officer of Midland Credit Management, Inc. (“MCM”), the Company’s domestic operating subsidiary, since October 2014. Prior to that, Mr. Clark’s most recent role was Executive Vice President and Chief Financial Officer of SLM Corporation, a publicly traded company more commonly known as Sallie Mae, where he served in such capacity from January 2011 until March 2013. Sallie Mae’s primary business was to originate, service, and collect on student loans. He previously served in various other executive capacities at Sallie Mae, including Treasurer, beginning in 2008. Prior to joining Sallie Mae, Mr. Clark served in various capacities, most recently as Managing Director, at Credit Suisse Securities (USA) LLC, an investment bank, from 2000 to 2007, after having served in various executive roles at Prudential Securities, The First Boston Corporation, and a variety of other companies during his career. Mr. Clark received his bachelor’s degree in economics from the University of Virginia in 1981 and his MBA from the Harvard Business School in 1985.

RYAN B. BELL. Mr. Bell joined the Company in September 2011 and has served in positions of increasing responsibility and was recently promoted from Executive Vice President, Chief Operating Officer of MCM to President of MCM in January 2020. From September 2000 to August 2011, he held positions of increasing responsibility at Capital One Financial Corp. including as Director of Operations Strategy and Execution from January 2009 to August 2011. Mr. Bell earned a bachelor's degree in Management Information Systems (graduating cum laude) from Texas A&M University and an MBA (graduating Beta Gamma Sigma) from The Cox School Business at Southern Methodist University.

CRAIG A. BUICK. Mr. Buick has served as the Chief Executive Officer of Cabot Credit Management (“Cabot”), the Company’s European operating unit, since January 2020. He joined Cabot Credit Management in January 2016 as Chief Financial Officer. From August 2002 to December 2015, Mr. Buick held a number of senior finance and audit roles at GE Capital, including Financial Controller for GE Capital Bank (UK), Chief Financial Officer for GE Money (Italy) and Managing Director – Internal Audit for Europe and Asia. From January 1990 to July 2002, Mr. Buick served in positions of increasing responsibility at PricewaterhouseCoopers in various offices across Australia, United Kingdom, Russia and Indonesia. Mr. Buick is a Chartered Accountant (Institute of Chartered Accountants – Australia and New Zealand) and holds a Bachelor of Economics (Commerce) from Adelaide University, Australia.

GREGORY L. CALL. Mr. Call has served as Executive Vice President and Chief Administrative Officer since July 2017 and has served as our General Counsel and Corporate Secretary since September 2011. Mr. Call joined the Company in January 2010, serving as Vice President, Legal and Business Affairs. From 1999 until 2008, Mr. Call held various positions, culminating as Vice President, General Counsel, of Gateway, Inc. From 1999 until joining the Company, Mr. Call was a shareholder of New Hope Legal Center, Inc. From 1994 until 1999, Mr. Call was an associate at the law firm Milbank, Tweed, Hadley & McCoy LLP, a leading international law firm, where his practice focused on complex commercial litigation and dispute resolution. Mr. Call received his bachelor’s degree in English from Brigham Young University in 1991 and his JD, with honors, from the J. Reuben Clark Law School at Brigham Young University in 1994.

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ENVIRONMENTAL, SOCIAL, AND GOVERNANCE

Approach to Environmental, Social, and Governance

Our commitment to Environmental, Social, and Governance (“ESG”) is an extension of our refreshed Mission, Vision and Values. Our Mission is to create pathways to economic freedom, and we do this by creating an opportunity-rich work environment for our people, giving back to the communities where we live and work, and operating effectively and ethically with a focus on the overall consumer experience.

Our Values are:

•We Care: We put people first and engage with honesty, empathy, and respect.

•We Find a Better Way: We deliver our best in everything we do, find ways to make a positive difference, and achieve impactful results.

•We are Inclusive and Collaborative: We embrace our differences and work together to ensure every individual can thrive.

Encore is committed to ESG transparency. Although corporate responsibility has long been a part of the culture at Encore, in 2020, we conducted an enterprise-wide assessment, which included interviewing and surveying global stakeholders from across Encore who work directly with our various stakeholder groups: our consumers, issuers, communities, employees, and investors. The findings from these activities helped to clarify and develop a strategy that lays the foundation for identifying and prioritizing environmental, social and governance opportunities within our business. We expect to further build on our strong commitment to ESG in the coming years by enhancing the quality of our disclosures and engaging with our stakeholders on a consistent basis. Our ESG efforts and strategy are focused on five key pillars:

These pillars will set the foundation for critical programs in years to come and provide the focus necessary to continue our path as responsible corporate citizens, stewards of the environment, and cultivators of an inclusive culture.

ESG Governance and Commitment

We have established an oversight structure for our ESG efforts that ensures these activities are prioritized and executed at the highest levels of the company. Our ESG efforts fall under the oversight of the Nominating and Corporate Governance Committee, which oversees the strategy and provides ongoing review of ESG initiatives and policies. The Nominating and Corporate Governance Committee reports to the full Board of Directors on our ongoing ESG-related activities.

At the management level, our ESG program is overseen by an ESG Steering Committee, made up of several senior company leaders, that guides and directs the activation and sustainment of our ESG strategy and related activities. The ESG Steering Committee is chaired by Encore’s Senior Vice President and Chief Human Resources Officer, who reports directly to Encore’s Chief Executive Officer. Encore’s Chief Executive Officer and Executive Leadership Team also provide oversight and guidance to the ESG Steering Committee to ensure the ESG strategy and related activities are aligned with and help inform other imperatives of the Company. The ESG Steering Committee provides periodic updates to the Nominating and Corporate Governance Committee and the full Board of Directors on our ESG efforts.

As part of our commitment to ESG and in alignment with our Values, 30% of the funding of the annual bonus plan for our executive officers is based on the achievement of certain ESG-related metrics related to consumer experience and employee engagement.

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2020 ESG Highlights:


Consumer			We Put Consumers First Our consumers are at the heart of our business. We’re committed to promoting a strong culture of treating consumers with respect, honesty, and empathy, and keeping customer service and compliance at the core of our business strategy. •In response to the COVID-19 pandemic, we took the following actions to support impacted consumers around the globe: ◦Suspended collections for consumers directly impacted by the pandemic ◦Enabled our consumers to defer or reduce previously scheduled payments without any negative impact to their accounts ◦Consistent with our long-standing policies, we did not charge interest, fees, or collect from active duty service members •Protected our consumers through the U.S. debt purchasing industry’s first-ever and only Consumer Bill of Rights, which codifies our company’s consumer-focused principled intent. •Received a strong score - higher than all large banks - for customer service in 2020 as part of the Institute of Customer Service UK Customer Satisfaction Index. •Taught financial literacy to more than 3,000 students globally since 2017 through our financial literacy program, Money Matters, which educates youth and adults on using credit responsibly. •Hosted Skills4Bills money management sessions for primary school children in Europe.
People			We Support and Value Our People We foster a culture of respect and inclusion in various ways including by providing unconscious bias and diversity training, tracking gender diversity, and sponsoring global cultural appreciation initiatives. •Developed an enterprise-wide diversity and inclusion (“D&I”) purpose statement that guides all our work in this space, and the introduction of various training and educational programs to mitigate biases and accommodate a better work-life balance. •Trained 100% of employees in the U.S., India and Costa Rica on creating an inclusive environment and introduced a monthly D&I Speaker Series to create a space for open dialogue among our colleagues. •Launched a “Love Has No Labels” campaign in Europe to promote topics of inclusivity and the importance of self-love. •Created an employee-led Diversity Advisory Council to formalize our commitment and ensure long-term sustainment of these efforts. We attract and retain talent by creating opportunities for professional growth through competitive benefits, wellness incentives, and other initiatives and trainings. •Provided numerous tools, resources, and professional support to employees to promote mental health and wellness, in addition to resources for coping with the COVID-19 pandemic. •Committed to actively fostering a learning culture and investing in ongoing professional and career development for our employees. •Conducted our annual confidential employee engagement survey. Feedback from this survey provides our management team with valuable information about our workplace culture.

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Environment			We Make a Positive Impact on the Environment We minimize our environmental footprint through smart resource use and sustainable practices, including recycling programs, plastic-free break rooms/cafeterias, reduction of water consumption and electricity use, and powering our business with renewable energy where possible. •Achieved Blue Flag Ecological Certification from the Costa Rica Ministry of Environment and Energy for sustainable facility operations. •Moved to 30% post-consumer recycled paper and saved 70,000 pieces of paper weekly across our U.S. Internal Legal operations by adopting digital-first business practices. •Achieved ISO 14001 certification in Spain, a process that identifies where further improvements can be made to reduce our impact on the environment.
Community			We Work Together to Strengthen Our Community We encourage employee community service and support through corporate matching programs, paid time off for volunteering activities, our annual day of giving, company-sponsored volunteer opportunities, and corporate giving and partnerships. •Donated more than $350,000 to charitable organizations in 2020, with $100,000 going to support vulnerable populations affected by COVID-19. •Partnered with a local non-governmental organization (NGO) in India to sponsor holistic care for 80 underprivileged children, provide educational support for 300 children, and contribute toward pandemic relief and infrastructure development benefiting over 380 underprivileged children. •Contributed pandemic and natural disaster aid in the form of food drives, toy drives, volunteer work (over 6,000 total volunteer hours across the enterprise), employee donation drives, and donation of personal protective equipment (PPE) and sanitizing products to support the communities where we operate across the globe. •Honored with gold-level recognition for the U.S. Presidential Volunteer Service Award for the past six years.
Operating Responsibly			We Operate Responsibly We hold ourselves to the highest ethical practices and decision making as guided by our expanded Standards of Business Conduct. •Maintained business resilience and continuity during the COVID-19 pandemic, including transitioning employees to remote work environments, where roles allowed, with minimal down time. •Established an enterprise Anti-Corruption policy. •Invested in data security and advanced technologies to comply with the General Data Protection Regulation 2016/679 (“GDPR”) and Payment Card Industry (PCI) security standards. •Earned an ISO 27001:2013 information security management certification. We emphasize the responsibility of each employee through mandatory, ongoing data and information security training. •Ensured supplier and vendor integrity through a robust third-party due diligence process. •Proactively managed our business and compliance risks through our dedicated Risk Committee. •Followed a Three Lines of Defense risk management framework for effective oversight: The first line being the business itself, the second line including corporate legal, risk and compliance and enterprise risk management, and the third line being internal audit.

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COMPENSATION DISCUSSION AND ANALYSIS – EXECUTIVE SUMMARY

Introduction

This Compensation Discussion and Analysis is intended to provide an understanding of our compensation philosophy, objectives and practices; our compensation setting process; the elements of our executive compensation program; and the compensation of each of the following individuals, who were our Named Executive Officers (“NEOs”) for 2020:


Name						Title
Ashish Masih						President and Chief Executive Officer
Jonathan C. Clark						Executive Vice President, Chief Financial Officer, and Treasurer
Gregory L. Call						Executive Vice President, General Counsel, Chief Administrative Officer and Secretary
Ryan B. Bell						President, Midland Credit Management
Craig A. Buick						Chief Executive Officer of Cabot Credit Management(1)

________________________________

(1)Mr. Buick was appointed Chief Executive Officer of Cabot Credit Management effective January 1, 2020.


Performance Measures Driving 2020 Compensation and Resulting Performance Award Achievement

GAAP Net Income(1)

GAAP Return on Average Equity(2)

GAAP EPS(3)

$212

million

26% Increase

from Prior Year

18.9%

+70 Basis Points Increase from Prior Year

$6.68

25% Increase

from Prior Year

Performance-Award Achievement

KCP Funding %(4)

Performance Stock Vesting (ROAE)(5)

Performance Stock Vesting (EPS)(5)

169.7%

150%

Vested

170%

Vested

________________________________

(1)As reported in the Company’s Annual Report on Form 10-K, filed with the SEC on February 24, 2021. See “KCP Bonus” below for a reconciliation of adjustments applied to reported results for purposes of the KCP bonus calculations.

(2)GAAP Return on Average Equity (“ROAE”) is defined as GAAP net income / average stockholders’ equity.

(3)Amount represents GAAP earnings per share.

(4)Represents Key Contributor Plan (“KCP”) funding percentage, which is used to determine the KCP payout for our NEOs.

(5)Represents actual vesting on performance stock units that were eligible to vest in 2020 based on the achievement of certain Economic EPS and ROAE targets.

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2020 Elements of Compensation

The following chart describes the main elements of our 2020 compensation program.

Base Salary

Key Contributor Plan (“KCP”) Bonus

Restricted Stock Units

Performance Equity (ROAE)

Performance Equity (TSR)

Form of Compensation

Cash

Equity

Type

Fixed

Performance-Based

Variable

Performance-Based

Purpose

Fixed Pay

Drive Short-Term Performance

Drive Long-Term Performance, Align Management Interests with those of Stockholders and Promote Retention

Period

Ongoing

1 Year

3 Years (one-third vesting each year)

3 Years

Vesting Metrics

N/A

GAAP Net Income, Strategic Initiatives, Consumer Experience and People Initiatives

Time Vested

(Return on Average Equity

Total Stockholder Return compared to Constituents of the S&P Small Cap 600
Financial Sector Index

Payment/Grant Date

Ongoing

Paid Annually in March for Prior Year Performance

Annually in March

Payment is 3 Years after Grant/ Granted Annually in March

Performance Determination

Based in part on individual performance, experience and expertise

Formulaic + Compensation Committee Discretion

Formulaic

Formulaic; Compensation Committee Verifies Performance


Pay for Performance and Alignment with Stockholders

The elements of our compensation program are designed to deliver pay for performance and align the interests of our executives with those of our long-term stockholders. Approximately 79% of the CEO’s compensation is “at-risk,” with value delivery tied to either the achievement of performance targets or stock price performance. Similarly, on average, 71% of the compensation of our other NEOs is “at-risk.” The mix of target direct compensation for our CEO and other NEOs is shown below:

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Key Governance and Pay Practices

Practices We Engage In

Practices We Do Not Engage In

Majority of executive pay “at-risk”

Compensation programs that encourage excessive risk taking

Regular reviews of compensation programs and practices

Excise tax gross-ups

Stock ownership requirements

Excessive benefits or perquisites

Compensation recoupment (or clawback) policy

Repricing stock options

Annual say-on-pay vote

Pledging and hedging of Company stock

Independent compensation consultant

Use of peer groups


“Say-on-Pay” Advisory Vote on Executive Compensation

At our 2020 annual meeting of stockholders, a non-binding, advisory vote was taken with respect to the compensation of the Company’s NEOs (commonly referred to as a “say-on-pay” vote). Approximately 98% of the votes cast were in favor of approval of our executive compensation program. We value this endorsement by our stockholders of our executive compensation program and policies, and the Compensation Committee continues to look for ways to enhance and refine our pay-for-performance executive compensation program.

We solicit a “say-on-pay” vote every year, including at this annual meeting of stockholders.

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COMPENSATION DISCUSSION AND ANALYSIS

The Company’s Compensation Philosophy and Objectives

The principal objectives of our executive compensation program are:

•Retain and attract highly-talented executive officers who possess the skills and competencies needed for us to execute our strategy and achieve our objectives;

•Encourage and reward corporate and individual performance, innovation and growth, without promoting undue risk;

•Motivate our executive officers to achieve both short-term and long-term goals that promote sustained stockholder value; and

•Reinforce our Company Mission, Vision, and Values.

We seek to achieve these objectives by creating a compensation program that focuses on:

•Pay for Performance: a substantial portion of executive compensation is variable or “at risk” and directly linked to both Company and individual performance;

•Competitive Market Practice: providing total compensation opportunities that are competitive with peers to attract and retain executives with exceptional levels of experience, skills and education;

•Stockholder Alignment: aligning executives with the long-term interests of stockholders through equity-based compensation, “at-risk” compensation linked to challenging performance goals which promote long-term stockholder value, and stock ownership requirements; and

•Retention: establishing multi-year vesting of performance-based compensation such that an executive must remain with the company to receive value from an award.

2020 Elements of Compensation. The table below describes the primary elements of our NEOs’ compensation for 2020:

Element

Description/Role

Base Salary

Form: Cash

Focus: Short-Term

Type: Fixed

• Base salaries are evaluated annually by the Compensation Committee and are intended to provide competitive, fixed annual cash compensation.

KCP Bonus

Form: Cash

Focus: Short-Term

Type: Variable - Performance Based

• The KCP bonus is an annual cash bonus payable based on the Company’s achievement against pre-established targets and goals for GAAP Net Income, strategic initiatives, consumer satisfaction and call quality scores, and certain employee engagement goals as well as individual performance.

• Focuses executives on the short-term results that are closely tied to longer-term stockholder value creation.

• Rewards achievement of annual financial targets.

Restricted Stock Units

Form: Equity

Focus: Long-Term

Type: Variable – Time Based

• Of the 2020 annual equity grant to NEOs, 50% consists of time-based restricted stock units (“RSUs”) that vest in equal annual installments over a three-year period.

• Creates a link between compensation of executives and interests of stockholders with awards that derive value based on our stock price.

• Supports retention.

• Vesting provisions and terms promote a long-term management perspective.

Performance Based Equity Awards

Form: Equity

Focus: Long-Term

Type: Variable - Performance Based

• Of the 2020 annual long-term equity grant to NEOs, 50% consists of performance stock units (“PSUs”). Of these PSUs, 50% vest annually over a three-year period based on the Company’s achievement of annual ROAE targets established by the Compensation Committee at the beginning of each year (“ROAE PSUs”) and 50% vest at the end of a three-year performance period based on the Company’s relative TSR performance compared to the component companies included in the S&P SmallCap 600 Financial Sector Index (“TSR PSUs”) at the time of the grant.

• Vesting provisions and terms incentivize a long-term focus on financial performance and stockholder value.

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How We Make Compensation Decisions

Role of the Compensation Committee. The Compensation Committee meets regularly throughout the year, although its primary decision-making occurs in the first quarter of the fiscal year, when the Compensation Committee: (1) approves total compensation levels for our NEOs for the current fiscal year, including any adjustment to salary, target annual KCP bonus opportunities and annual equity grant values; (2) determines whether performance targets have been satisfied for performance-based equity granted during previous fiscal years; and (3) approves payments under the KCP and any other cash bonuses applicable to our executive officers for the previous fiscal year. As discussed above, the Compensation Committee met 5 times in 2020, and otherwise acted by unanimous written consent.

Role of the Independent Compensation Consultant. Since 2015, the Compensation Committee has engaged FW Cook as its independent compensation consultant to assist in structuring the Company’s executive and non-employee director compensation programs. FW Cook:

•Regularly attends Compensation Committee meetings, including meeting in executive session with the Compensation Committee;

•Provides advice on the appropriateness and competitiveness of our executive compensation program relative to market practice, including advising the Compensation Committee on the selection of our peer group for benchmarking;

•Consults on executive compensation trends and developments;

•Consults on various executive compensation matters and recommends program designs and practices to support our business and human capital strategies and objectives;

•At the direction of the Compensation Committee, cooperates with management to compile market data and review the appropriateness of such data; and

•At the direction of the Compensation Committee, works with management to assess the potential risks arising from our compensation policies and practices.

Role of Management. The Compensation Committee generally solicits management’s input with respect to the executive compensation program. The Chief Executive Officer and representatives from the Human Resources and Legal departments generally attend Compensation Committee meetings to make presentations/recommendations regarding, and to discuss management’s viewpoint on, various compensation matters related to pay levels, program design, and related policies. The Chief Executive Officer is not present for deliberations regarding his own compensation.

Compensation Peer Group. The Compensation Committee uses a peer group to review the competitiveness of executive pay levels and program design, consider the retention value of compensation and provide market context for other compensation design and award decisions. The Compensation Committee engages FW Cook to assist with the review of, and make recommendations relating to the selection of companies to be included in the “Compensation Peer Group.”

The following table sets forth the companies included in Compensation Peer Group used to review executive compensation for 2020, which were identified based on industry, business complexity, revenue and market capitalization value. With respect to revenue and market capitalization value, peer companies were generally limited to those with revenue between 0.33-3.0x the Company’s size and market capitalization value between 0.25-4.0x the Company size. At the time the Compensation Peer Group was approved by the Compensation Committee, the Company’s was positioned slightly above the 75th percentile with respect to revenue and below the median with respect to market capitalization value.

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2020 Compensation Peer Group(1)
Axos Financial(1)						HMS Holdings Corporation
Banc of California, Inc.						HomeStreet, Inc.
Cathay General Bancorp						LendingClub
Corelogic Inc.						Moneygram International Inc.
Credit Acceptance Corp.						PRA Group, Inc.
CSG Systems International, Inc.						Sykes Enterprises
Enova International, Inc.						Walker & Dunlop, Inc.
Fair Isaac Corporation						Washington Federal, Inc.
FirstCash, Inc.						World Acceptance Corp.
Green Dot Corporation

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(1)Compared to the prior peer group, Black Knight, Inc. and Western Alliance Bancorporation were removed from the Company’s Compensation Peer Group for 2020 because the market capitalization value of each was significantly larger than the market capitalization value of the Company and Blackhawk Network Holdings, Inc. was removed because it is no longer a public company. Sykes Enterprises was added because it met the objective selection criteria.

“Say-on-Pay” Advisory Vote on Executive Compensation. The Compensation Committee considered the results of the 2020 advisory vote and other factors in evaluating the Company’s executive compensation programs as discussed herein. Given the significant support received in 2020, no changes were made to the Company’s executive compensation program and policies explicitly as a result of the 2020 “say-on-pay” vote.


Overview of 2020 Compensation


Base Salary.

Our philosophy is to pay base salaries that are commensurate with the NEO’s experience and expertise, taking into account, among other things, the recommendation of FW Cook and competitive market data for executives with similar roles and responsibilities. The Compensation Committee does not benchmark to a specific percentile within that data. The Compensation Committee reviews each NEO’s base salary annually considering market salary data, relative compensation within the executive group, an assessment of corporate performance, as well as individual performance of each NEO.


Name	Base Salary at December 31, 2019(1)		Base Salary at December 31, 2020		% Increase
Ashish Masih	$	750,000	$	765,000	2.0	%	(2)
Jonathan C. Clark	$	589,375	$	607,056	3.0	%	(2)
Gregory L. Call	$	410,000	$	422,300	3.0	%	(2)
Ryan B. Bell	$	400,000	$	440,000	10.0	%	(3)
Craig A. Buick	$	488,779	$	488,779	0.0	%	(4)

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(1)For Mr. Buick, amount represents his base salary as of January 1, 2020, the day he became Chief Executive Officer of Cabot Credit Management.

(2)Base salary increases for Messrs. Masih, Clark, and Call received in March 2020 were in connection with the Compensation Committee’s annual review of salaries.

(3)Mr. Bell received an increase to $440,000 from $400,000 in March 2020 in connection with his promotion to President, Midland Credit Management.

(4)Mr. Buick is paid in British pounds. The average exchange rate as of the last business day of fiscal 2020 was used to convert Mr. Buick’s base salary to U.S. dollars for purposes of this presentation

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KCP Bonus.

KCP Bonus Overview. KCP bonus is an annual cash bonus plan designed to motivate and reward achievement of our short-term business goals and to attract and retain highly-talented individuals. The KCP bonus opportunity for each NEO is directly linked to both the Company’s achievement of annual operational performance objectives, as well as to the NEO’s individual performance during the applicable year. Company and individual goals are established in the first quarter of the year and are designed to incentivize management to drive strong operating performance that supports the creation of stockholder value.

Determining Threshold, Target and Maximum Bonus Amounts. Each NEO’s target bonus is stated as a percentage of their base salary, which is determined at the beginning of each year by the Compensation Committee taking into account, among other things, the recommendation of FW Cook and competitive market data. For 2020, the threshold bonus percentage for all our NEOs was 50% of the NEO’s target amount and the maximum bonus percentage for each NEO was 200% of the target amount.

Assessing Performance for Funding and Payout: Baseline funding of the 2020 KCP bonus is determined by the level of achievement against goals for select performance measures in the following four categories: stockholder value; strategic initiatives; consumer experience; and people initiatives. The resulting funding percentage is then subject to an adjustment by the Compensation Committee of +/- 5% based on a recommendation from the Risk Committee derived from its assessment of the Company’s performance related to risk management (the “Risk Management Adjustment”). Below is a table of the 2020 KCP bonus performance measures and their relative weights:

Weighting


Performance Measures	Adjusted Target		Adjusted Actual		Achievement (% of Target)		Element Funding %		Weighting		KCP Funding
GAAP Net Income(1)	$	213.6	$	253.8	118.8	%	194.1	%	50.0	%	97.0	%
Strategic Initiatives(2)					118.5	%	132.5	%	20.0	%	26.5	%
Call Quality and Consumer Satisfaction Scores(3)					101.4	%	142.8	%	15.0	%	21.4	%
Employee Engagement Goals(4)					108.6	%	200.0	%	15.0	%	30.0	%
											174.9	%
			Risk Management Adjustment(5)								97.0	%
					KCP Funding %						169.7	%

SEC Form DEF 14A filed by Encore Capital Group Inc