Tomas C. Hernanz
ENCORE CAPITAL GROUPAbout Tomas C. Hernanz
Tomas C. Hernanz is Executive Vice President, Chief Financial Officer and Treasurer of Encore Capital Group (ECPG), appointed effective April 1, 2025, and serves as principal financial and accounting officer . He is 46, with a bachelor’s in International Business Administration from Universidad Pontificia Comillas (Spain) . Prior to becoming CFO, he served as CFO of Cabot Credit Management (Encore’s European unit) since October 2022 and led treasury, finance, and IR roles at Encore; earlier roles include Ondra Partners (Partner, 2009–2016), Goldman Sachs, and Citigroup . Company performance during 2024 showed strong cash generation but underperformance on longer-term metrics (ROIC and relative TSR), and in 2025 to date, Encore delivered higher revenues and net income versus 2024, with Hernanz as CFO since April 2025 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cabot Credit Management (Encore’s European unit) | Chief Financial Officer | Oct 2022–Mar 2025 | Finance leadership for Encore’s European operations . |
| Encore Capital Group | SVP, Corporate Finance & Investment Risk Management; prior treasury/finance/IR roles | Pre-2025 (dates not fully disclosed) | Corporate finance, treasury, IR leadership before appointment as Group CFO . |
| Ondra Partners | Partner | 2009–2016 | Financial advisory leadership (M&A/strategic) . |
| Goldman Sachs; Citigroup | Various positions | Pre-2009 (not dated) | Investment banking/finance experience . |
External Roles
No external public company directorships or outside board roles are disclosed for Hernanz in company filings .
Fixed Compensation
| Year | Base Salary ($) | Target Bonus (% of Salary) | Notes |
|---|---|---|---|
| 2025 | 500,000 | 85% | Appointed EVP, CFO & Treasurer effective Apr 1, 2025 . Eligible for relocation reimbursement . |
Performance Compensation
Annual Incentive (KCP) – Framework and 2024 Outcomes (Company-level)
| Metric | Weighting | Target | Actual/Result | Payout/Funding | Vesting/Payment |
|---|---|---|---|---|---|
| KCP Adjusted EBITDA | Not disclosed | Company primary metric | $1,337M; +20% YoY (2024) | Committee reduced funding from 135.9% to 120.0% for execs (100% for CEO) | Paid annually in March for prior-year performance . |
| Strategic Initiatives | Not disclosed | Not disclosed | Not disclosed | Incorporated in KCP formula; committee discretion applied | Annual cash . |
| Consumer Experience | Not disclosed | Not disclosed | Not disclosed | Part of KCP | Annual cash . |
| People Initiatives | Not disclosed | Not disclosed | Not disclosed | Part of KCP | Annual cash . |
Notes:
- Annual incentive metrics for 2024 are disclosed at the program level; individual NEO weightings are not broken out. Company applied negative discretion given GAAP earnings headwinds .
Long-Term Incentive (LTI) Design and 2024/2022 PSU Outcomes (Company-level)
| Grant/Plan | Metric | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| 2022 ROIC PSUs | 3-yr avg ROIC | 11.4% | 8.7% | 0% (below 9.1% threshold) | Cliff at Mar 9, 2025 if earned . |
| 2022 TSR PSUs | 3-yr relative TSR vs S&P SmallCap 600 Financials | ≥30th percentile threshold | 18th percentile | 0% | Cliff at Mar 9, 2025 if earned . |
| 2024 PSU programs | ROIC, relative TSR | Formulaic | Not yet determined | N/A | 3-year performance; 100% of earned awards vest at end . |
Hernanz 2025 LTI Award (individual)
| Element | Target Grant Date Value | Form | Vesting Schedule | Performance Metrics |
|---|---|---|---|---|
| RSUs | $475,000 (50% of $950k) | Time-vest RSUs | 1/3 on each Mar 9, 2026/2027/2028 (subject to continued employment) | N/A (time-vest) . |
| PSUs | $475,000 (50% of $950k) | Performance Stock Units | Cliff vest Mar 9, 2028 (subject to continued employment and performance) | “Certain performance metrics” (company-level; not itemized in 8-K) . |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Shares beneficially owned (Apr 11, 2025) | 3,290 shares; less than 1% of outstanding . |
| Shares outstanding (record date) | 23,448,221 . |
| Stock ownership guidelines | EVP requirement: 3x base salary; 5-year compliance window; retain 100% of after-tax shares until met; unvested RSUs count; PSUs/options excluded . |
| Compliance status | “All NEOs have met their applicable equity ownership requirements” (as of proxy) . |
| Hedging/pledging | Prohibited; also no margin purchases; policy filed with 2024 10-K . |
| Option usage | Current compensation program does not include option awards . |
Upcoming vesting/supply considerations (based on 2025 grants):
- RSUs: Scheduled to vest pro rata on March 9 each year 2026–2028; PSUs: single vest date March 9, 2028 if earned . Annual equity grants generally occur March 9; off-cycle grants May 15, Aug 15, Nov 15 (post-earnings trading windows), which can cluster vesting/sale windows in March .
Employment Terms
| Term | Detail |
|---|---|
| Appointment | EVP, CFO & Treasurer effective April 1, 2025; principal financial and accounting officer . |
| Compensation on appointment | Base salary $500,000; target annual bonus 85% of salary; 2025 LTI target ~$950,000 (50% RSUs, 50% PSUs) . |
| Severance eligibility | Tier 1 participant in Executive Separation Plan . |
| Relocation | Eligible for reimbursement of certain relocation expenses . |
| Related-party/arrangements | No arrangements/understandings for selection; no related-party transactions under Item 404(a) . |
Severance and Change-in-Control Economics (Plan terms)
- Without Cause / Good Reason (non-CIC): Cash equal to 2x base salary (Tier 1); pro rata annual bonus; health benefits value (24 months for EVP tier); unvested equity continues to vest for 12 months post-termination .
- In connection with Change in Control (double-trigger): Cash equal to 2x base salary; prorated target bonus for year of termination plus the greater of 100% target bonus or 100% of bonus based on annualized YTD performance; 24 months of health benefits; time-based awards vest immediately; PSUs vest pro rata at the greater of target or to-date performance; terminations within 180 days before or two years after a CIC qualify as “in connection with” for Separation Plan participants .
- Definitions and guardrails: Good Reason includes material pay/title/responsibility reductions or required relocation >35 miles, among others . “Best net” 280G cutback—parachute payments reduced if doing so yields higher after-tax proceeds vs paying excise tax; no excise tax gross-ups .
- Restrictive covenants: Non-solicitation (24 months for EVP tier), non-disparagement, confidentiality; cooperation requirements while receiving benefits .
Clawbacks and Trading Policies
- Compensation Recovery Policy permits clawback for misconduct causing significant financial/reputational harm; SEC/Nasdaq restatement clawback policy applies to Section 16 officers (incl. recovery from equity) .
- Hedging/pledging prohibited; equity grants timed post-earnings (Mar 9 primary) .
Performance & Track Record (Company context relevant to CFO oversight)
| Period | Revenues ($) | Net Income ($) | Commentary |
|---|---|---|---|
| 9M 2025 | 1,295,250,000 | 180,177,000 | Stronger purchasing drove collections; corporate salaries/benefits ~$31.6M and G&A ~$15.1M unallocated; interest exp. $218.7M . |
| 9M 2024 | 1,050,742,000 | 86,063,000 | Prior-year corporate salaries/benefits ~$28.7M; G&A ~$13.8M; interest exp. $184.0M . |
Additional 2024 context:
- Company reported record U.S. portfolio purchases; 16% collections increase and 20% cash generation increase vs 2023; however, ERC reductions and exits from two underperforming Cabot markets pressured GAAP earnings; 2022 ROIC and TSR PSUs did not vest (0% payout) .
Compensation Committee Analysis and Say-on-Pay
- Committee (2024/2025): Ash Gupta (Chair), William C. Goings, Angela Knight, Laura Newman Olle; independent consultant FW Cook assists .
- Governance practices: Majority at-risk pay, clawbacks, stock ownership requirements, no option repricing, no excise tax gross-ups; hedging/pledging prohibited .
- Say-on-Pay: 98% approval at 2024 annual meeting .
Investment Implications
- Alignment and incentives: CFO pay mix emphasizes at-risk equity (RSUs/PSUs), with vesting tied to three-year performance cycles and ownership requirements at 3x salary, supporting long-term alignment; hedging/pledging bans and robust clawbacks further align interests .
- Retention risk: Tier 1 severance with double-trigger CIC acceleration and 24 months health benefits is competitive; time-based equity and pro rata PSU vesting treatment in CIC/non-CIC scenarios reduce flight risk during strategic transitions .
- Performance rigor: Recent non-vesting of 2022 ROIC/TSR PSUs (0% payout) indicates meaningful performance hurdles; committee willingness to use negative discretion on annual bonuses underscores pay-for-performance discipline—both positive signals for shareholders .
- Trading/flow considerations: RSU tranches scheduled each March 9 (2026–2028) and PSU cliff in 2028 could create periodic selling pressure; ECPG’s award timing practices cluster grants/vests post-earnings, which may align liquidity but concentrate supply windows .
- Execution focus: 2025 YTD revenue and net income are up materially vs 2024 amid higher interest expense, reflecting a favorable supply environment and operating momentum as Hernanz assumes CFO duties; continued oversight on capital allocation, funding costs, and European portfolio quality will be key performance levers .