David Hanna

About David Hanna

David G. Hanna (age 60) is Atlanticus’ Executive Chairman and has chaired the Board since the company’s 1999 IPO; he served as CEO from founding in 1996 until March 2021, with 35+ years in consumer credit and prior leadership roles at HBR Capital (President since 1992) and Hanna Capital (President since 2006) . Under his leadership, Atlanticus reported 2024 net income of $110.1M and grew total operating revenue and other income to $1,310.0M from $1,155.2M in 2023 . Atlanticus’ cumulative TSR in the pay-versus-performance table increased to 78.21 as of 12/31/2024 (from 54.22 in 2023 and 36.74 in 2022), indicating multi‑year value creation for shareholders .

Past Roles

External Roles

Fixed Compensation

• Mr. Hanna did not receive annual cash bonuses for 2022–2024 .
• Employment agreement (Mar 18, 2021) provides a $600,000 base salary; no severance upon termination .

Performance Compensation

• Company maintains a Dodd‑Frank compliant clawback policy effective Oct 2, 2023; recovery applies to incentive-based pay tied to financial reporting measures for the three fiscal years preceding a restatement .
• Additional 2007 policy provides for reimbursement of certain awards in case of misconduct causing restatement .

Equity Ownership & Alignment

Pledging and related arrangements (red flags):

• All shares held by DKH (3,573,072) pledged to secure loans between entities controlled by the Hanna family; pledgee lacks voting/dispositive power prior to default .
• Excludes additional 3,598,072 shares pledged to an entity controlled by David G. Hanna to secure a loan to Frank J. Hanna entities, and 3,273,072 shares pledged to an entity controlled by Frank J. Hanna to secure a loan to David G. Hanna entities (no voting/dispositive rights prior to default) .
• Company prohibits short sales by insiders; otherwise, no broad hedging policy is in place for employees/directors (hedging policy gap) .

Stock ownership guidelines: Not disclosed for executives in the proxy materials reviewed .

Employment Terms

Board Governance

• Role and history: Executive Chairman; chaired the Board since 1999 IPO; former CEO (1996–2021) .
• Independence: Not independent (executive); Board has five independent directors (Harrod, Hudson, James, Jones, Mattingly) .
• Committees: Audit (James Chair; Jones; Mattingly), Compensation (Jones Chair; Hudson; Mattingly), Nominating & Corporate Governance (Hudson Chair; Harrod; James), Social Impact (Harrod Chair; Howard; Hudson); Mr. Hanna is not listed on these committees .
• Meetings/attendance: Board met 4 times in 2024; each incumbent director attended ≥75% of Board/committee meetings .
• Executive sessions: Regular executive sessions of independent directors are scheduled .
• Board leadership structure: Separate CEO (Howard) and Executive Chairman (Hanna); Board believes this promotes strategy and communication; five independent directors provide oversight .
• Director compensation: Non‑independent directors (including Mr. Hanna) receive no additional director pay beyond expense reimbursement .

Company Performance Snapshot (context for pay-for-performance)

Say‑on‑Pay & Shareholder Feedback

• Frequency: Shareholders previously voted in 2019 to hold say‑on‑pay every three years; 2025 proxy includes both say‑on‑pay and a new frequency vote (Board recommends every three years) .
• Results: 2022 say‑on‑pay approval passed (For 10,137,149; Against 31,390; Abstain 6,146) .
• 2024 Annual Meeting: Director elections only (Mr. Hanna received 7,671,611 “For”) .

Compensation Structure Analysis

• Mix shift and risk profile: Mr. Hanna’s compensation is largely fixed salary plus substantial perquisites (personal aircraft), with no annual bonus or equity awards reported for 2022–2024—indicating limited formal pay-for-performance linkage for the Executive Chairman role .
• Equity usage: Minimal outstanding options (1,000) and no recent RSUs/PSUs; economic alignment derives primarily from significant stock ownership rather than new incentive equity .
• Clawback: Robust Dodd‑Frank-compliant clawback adopted; complements earlier misconduct-based recovery policy .
• Hedging/pledging: Short sales prohibited but no broad hedging ban; significant pledging by family entities introduces potential margin-call/forced-selling risk .
• Consultant/benchmarking: Compensation Committee did not use a compensation consultant and does not formally benchmark NEO pay .

Related Party Transactions (governance risk)

• HBR Capital employee leasing: Reimbursements to Atlanticus of $778,044 (2024) and $605,374 (2023) .
• HBR sublease: 600 sq ft sublease; HBR paid $97,562 in both 2024 and 2023; $41,000 remaining payments through May 2025 .
• Dove Ventures (Series A Preferred): Atlanticus exchanged $40M loan for 400,000 shares of Series A Convertible Preferred in 2019; dividends 6% cumulative; $5.4M dividends paid Jan 1, 2023–Mar 31, 2025; Dove owned by three trusts affiliated with David and Frank Hanna; Series A convertible into common per formula .
• Review/approval: Audit Committee reviews related‑party transactions per charter and Code of Ethics .

Performance & Track Record

• Strategic achievements: Expansion of CaaS receivables to $2,724.8M period‑end managed balance (Dec 31, 2024), up from $2,411.3M (2023) .
• Financial outcomes: 2024 net income $110.1M; total operating revenue and other income up by $154.7M YoY .
• TSR trajectory: Cumulative TSR rose to 78.21 by 12/31/2024 from 36.74 in 2022 .

Equity Award and Vesting Detail (pressure indicators)

Employment Contracts, Severance, and Change‑of‑Control

• Mr. Hanna: No severance, no stated change‑in‑control benefits; at‑will with 30‑day notice; “cause” and “complete disability” definitions apply .
• Clawback regime covers incentive pay on restatements; additional 2007 policy for misconduct‑driven restatements .

Board Service History and Committee Roles (Director-specific)

• Board service: Director since 1999; Executive Chairman since March 2021 .
• Committee roles: Not listed on Audit, Compensation, or Nominating committees (all independent); Board also maintains a Social Impact Committee .
• Independence: Not independent; independent directors form all key committees .
• Attendance: Each incumbent director attended ≥75% of meetings in 2024 .
• Director fees: Non‑independent directors, including Mr. Hanna, receive no director pay .

Director Compensation (context)

• Independent director retainers and equity: Cash retainers and committee chair fees; 1,150-share RSU grants (Jan 2, 2025) vest over two years; non‑independent directors receive no additional compensation .

Say‑on‑Pay and Shareholder Engagement

Risk Indicators & Red Flags

• Pledging: Significant pledging of shares by family entities could create forced‑sale risk in adverse conditions .
• Related‑party financing: Series A preferred held by Dove (affiliated trusts) with cumulative dividends and conversion features; ongoing cash outflows to related party ($5.4M dividends over 2023–Q1’25) .
• Hedging policy gap: No broad hedging prohibition beyond short‑sale ban .
• Large perquisites: High personal aircraft usage costs as a material portion of Mr. Hanna’s reported compensation .

Investment Implications

• Alignment: Mr. Hanna’s 42.7% beneficial stake strongly aligns him with long‑term equity value; however, the compensation mix (heavy perquisites, no performance equity) provides limited incremental pay‑for‑performance sensitivity in the Executive Chairman role .
• Overhang/Trading signals: Extensive pledging among family entities introduces potential technical overhang and selling‑pressure risk during market stress; monitor any amendments, defaults, or changes to pledge terms and any Form 4 activity tied to margin events .
• Governance quality: Separation of Chair/CEO and independent committees are positives; nonetheless, related‑party transactions (HBR and Dove) merit continued scrutiny for capital allocation discipline and minority shareholder protection .
• Retention risk: No severance/CIC for Mr. Hanna reduces parachute costs and suggests commitment, given founder ownership; risk of abrupt transition appears mitigated by continuity and depth (CEO Howard tenure since 2014 as President, CEO since 2021) .
• Performance context: Improving revenues and consistent profitability, alongside rising cumulative TSR, support the case for stability; any regulatory shocks (e.g., late-fee rule) or funding market tightness could test business resilience—factors to watch in assessing future incentive design and insider transactions .