Concerned Shareholders Issue Letter to Oportun Financial Corporation’s Board of Directors Regarding the Urgent Need for Changes in Management and Strategy

Rhea-AI Summary

Bradley Radoff and Josh Schechter, Concerned Shareholders of Oportun Financial (OPRT), urge the Board to replace CEO Raul Vazquez due to significant share price decline and poor financial performance. They emphasize the need for a CEO with relevant industry experience to prevent further value destruction.

Positive

• Concerned Shareholders highlight Oportun's share price decline of 84% since its IPO in 2019 and a 37% drop over the past year.
• They criticize CEO Raul Vazquez's leadership, attributing the company and its borrowers to be in a worse position than before going public.
• The Concerned Shareholders advocate for urgent action to appoint a new CEO with the right experience to facilitate a turnaround and prevent further value destruction.
• They express dissatisfaction with the Board's handling of financial metrics, executive compensation, and lack of focus on tangible book value decline.
• The Concerned Shareholders question the Board's decision-making process and urge directors to consider the company's performance relative to competitors like OneMain Holdings Inc.

Negative

• Oportun's significant share price decline and poor financial performance under CEO Raul Vazquez raise concerns about the company's future prospects.
• The Board's reliance on non-GAAP metrics for executive compensation and performance evaluation is criticized for potentially masking poor financial results.
• The decline in Oportun's tangible book value and GAAP losses highlight underlying financial challenges that need to be addressed.
• The market's lack of confidence in the current leadership team and Board is evident from the recent post-earnings share price decline amidst potential proxy fight.

HOUSTON--(BUSINESS WIRE)-- Bradley Radoff and Josh Schechter (together with their affiliates, the “Concerned Shareholders” or “we”) today issued the below open letter to the Board of Directors (the “Board”) of Oportun Financial Corporation (NASDAQ: OPRT) (“Oportun” or the “Company”) regarding the need to appoint a new Chief Executive Officer (“CEO”) and enact further changes to support value creation.

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Oportun Financial Corporation
2 Circle Star Way
San Carlos, California 94070
Attention: The Board of Directors (Roy Banks, Jo Ann Barefoot, Mohit Daswani, Ginny Lee, Carlos Minetti, Louis P. Miramontes, Sandy Smith, Raul Vazquez and R. Neil Williams)

Members of the Board,

We are meaningful and concerned shareholders of Oportun, with strong conviction that the Board needs to take immediate action to replace the Company’s existing CEO with a proven industry operator. The Board’s long-term gamble on a CEO who comes from a big company culture and lacks relevant industry experience has proven to be a mistake. Oportun’s share price has declined by approximately 84% since its 2019 initial public offering and is down more than 37% over the past year.¹ The Company and its borrowers seem to be in a far worse position today than when CEO Raul Vazquez took it public several years ago. The Board needs to take swift action to prevent further value destruction under Mr. Vazquez. We believe a turnaround can only occur with a new CEO who possesses the right experience and is willing to take immediate action. Any director who does not comprehend the need for urgent change following the significant deterioration of shareholder value that has occurred under Mr. Vazquez should resign immediately.

Despite the temptation to force a proxy fight to try to protect the dismal status quo, we believe the Board would be abdicating its fiduciary duty to shareholders if it did so. There is no justification for fighting to delay changes that are so obviously needed. If you need further convincing, review the financial statements of OneMain Holdings Inc. (a competitor to Oportun) and its use of standard GAAP metrics to lay out its superior performance. On the other hand, each of you allow management to present a host of non-GAAP metrics – in an apparent effort to polish up poor performance – despite Oportun’s simple model. You have even rewarded Mr. Vazquez with outsized compensation for poor financial results, given that the Company’s executive compensation program is largely based on non-GAAP metrics. In 2022, the Board awarded Mr. Vazquez approximately $5 million in total compensation – representing a nearly 53% annual raise – in part because the Company reported favorable non-GAAP metrics, such as adjusted net income of approximately $69 million – despite the GAAP equivalent being losses of nearly $78 million.² Oportun’s decline in tangible book value – which management ignores – is alarming. Last year’s GAAP loss of nearly $5 per share should have been more than enough cause to initiate a management change and strategy reassessment.³ The recent post-earnings share price decline – amidst a potential proxy fight, when management usually attempts to deliver good news – underscores the market’s complete lack of confidence in the current leadership team and Board. We are especially interested in what Carlos Minetti and Mohit Daswani – who chose to join the Board in the middle of this turmoil – think about Oportun’s current financial performance and we urge them to remain independent and hold management accountable.

Although we only own approximately 1% of the Company’s shares today, this is due to concerns that you will materially dilute shareholders or simply bankrupt the business. If the right changes are made, we would be prepared to significantly increase our investment and inject additional capital into the business if necessary. These changes include:

• Announce a CEO transition and search process.
• Refresh the Board to include directors that have an “owner mindset.”
• Commit to evaluating the Company’s existing strategy with particular emphasis on cost structure.
• Commit to the use of GAAP financial measures.

We look forward to seeing the Board act with the necessary sense of urgency to protect and enhance shareholder value while also providing a stable and thriving platform for borrowers.

Sincerely,

Bradley Radoff & Josh Schechter

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¹ Source: Bloomberg. Share price data as of March 28, 2024.
² Source: Oportun’s 2023 definitive proxy statement.
³ Source: Oportun’s Form 10-K for fiscal year 2023.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240401006724/en/

Greg Lempel

greg@fondrenlp.com

Source: On behalf of Bradley L. Radoff and Josh Schechter

FAQ

Why do Bradley Radoff and Josh Schechter want a new CEO for Oportun Financial (OPRT)?

They believe the current CEO, Raul Vazquez, lacks relevant industry experience and has led to significant share price decline and poor financial performance.

What is the share price decline mentioned in the press release for Oportun Financial (OPRT)?

Oportun's share price has declined by approximately 84% since its 2019 IPO and is down more than 37% over the past year.

What is the Concerned Shareholders' opinion on the Board's handling of financial metrics at Oportun Financial (OPRT)?

The Concerned Shareholders criticize the Board for relying on non-GAAP metrics for executive compensation and performance evaluation.

How much was Mr. Vazquez's total compensation in 2022 at Oportun Financial (OPRT)?

Mr. Vazquez was awarded approximately $5 million in total compensation in 2022, representing a nearly 53% annual raise.

Why are Bradley Radoff and Josh Schechter dissatisfied with Oportun Financial 's (OPRT) current leadership team and Board?

They express dissatisfaction with the Board's handling of financial metrics, executive compensation, and lack of focus on tangible book value decline.

What is the Concerned Shareholders' view on Oportun Financial 's (OPRT) recent post-earnings share price decline?

They see the recent post-earnings share price decline amidst a potential proxy fight as a sign of the market's lack of confidence in the current leadership team and Board.