Concerned Shareholders of Oportun Financial Corporation Call on Three Directors to Resign Based on Their Unwillingness to Replace Value-Destructive Management

Rhea-AI Summary

Concerned shareholders of Oportun Financial (NASDAQ: OPRT) are calling for the resignation of three directors and the appointment of a new CEO following the 2024 Annual Meeting. The group, led by Bradley Radoff and Josh Schechter, highlights that only 28.4% of total outstanding shares voted for Nominating and Corporate Governance Committee Chair Ginny Lee in an uncontested election. They urge Ms. Lee, Neil Williams, and Louis Miramontes to resign, citing their apparent inability to hold CEO Raul Vazquez accountable for poor financial results and an ~80% share price decline since the 2019 IPO.

The shareholders demand the appointment of a new CEO with relevant industry experience to initiate a turnaround. They also criticize the use of non-GAAP metrics for executive compensation and call for industry-standard GAAP metrics instead.

Positive

• None.

Negative

• Only 28.4% of total outstanding shares voted for Nominating and Corporate Governance Committee Chair Ginny Lee
• ~80% share price decline since the 2019 IPO
• Poor financial results under current CEO Raul Vazquez
• Lack of independent oversight in the boardroom
• Use of non-GAAP metrics for executive compensation

Insights

Corporate Governance Expert

The recent shareholder vote at Oportun Financial reveals a significant crisis of confidence in the company's leadership. With only 28.4% of outstanding shares supporting the re-election of Nominating and Corporate Governance Committee Chair Ginny Lee, it's clear that investors are deeply dissatisfied with the current governance structure.

This level of opposition in an uncontested election is extremely rare and concerning. It suggests that shareholders believe the board has failed in its oversight duties, particularly in holding management accountable for the company's poor performance. The call for resignations of three long-standing directors - Lee, Williams and Miramontes - indicates a desire for a complete overhaul of the board's composition.

The shareholders' demand for a new CEO with relevant industry experience is a critical point. It highlights a potential mismatch between leadership skills and company needs, which may have contributed to Oportun's underperformance. The board's apparent reluctance to address this issue raises questions about their independence and commitment to shareholder interests.

From a governance perspective, the use of non-GAAP metrics for executive compensation is also troubling. This practice can lead to inflated pay packages that aren't aligned with actual company performance, further eroding shareholder value and trust.

Overall, this situation underscores the importance of robust board oversight and the potential consequences when shareholders perceive a lack of accountability. The board now faces a critical decision: act on these demands or risk further erosion of investor confidence.

Financial Analyst

Oportun's financial performance paints a grim picture for investors. The approximately 80% share price decline since the company's IPO in 2019 is a staggering loss of shareholder value. This severe underperformance suggests fundamental issues with the company's business model or execution - or both.

The shareholders' criticism of the company's use of Adjusted EBITDA instead of GAAP metrics is particularly noteworthy. Non-GAAP measures can sometimes provide useful insights, but they can also be used to obscure underlying financial realities. In this case, the implication is that management may be using these adjusted figures to artificially inflate their compensation, which would be a serious misalignment of interests with shareholders.

The call for a new CEO with relevant industry experience indicates that the current leadership may lack the specific skills needed to navigate Oportun's market effectively. This is important in the financial services sector, where regulatory knowledge and industry-specific expertise can make or break a company.

From an investor's perspective, the current situation presents significant risks. The potential for continued underperformance, coupled with governance issues, makes Oportun a highly speculative investment at best. Any turnaround would likely require substantial changes in both management and strategy, which could take considerable time to implement and show results.

Investors should carefully monitor any board or management changes, as well as any shifts towards more transparent financial reporting, as potential catalysts for a turnaround. However, given the depth of the issues raised, caution is warranted until clear signs of improvement emerge.

Group Highlights Just 28.4% of Total Outstanding Shares Voted For Nominating and Corporate Governance Committee Chair Ginny Lee in Uncontested Election, Signaling a Clear Lack of Confidence Among Investors

Urges Ms. Lee, Neil Williams and Louis Miramontes to Resign From the Board Given Their Apparent Inability to Hold CEO Raul Vazquez Accountable for Poor Financial Results and an ~80% Share Price Decline

Wants the Board to Finally Appoint a New CEO with Relevant Industry Experience to Initiate a Turnaround

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) regarding the need for three directors to resign following the 2024 Annual Meeting of Shareholders and the Board to appoint a new Chief Executive Officer.

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

Members of the Board,

We are meaningful shareholders of Oportun who have previously expressed our concerns to you regarding the appointment of a CEO who lacks relevant industry experience, the Company’s poor financial results under said chief executive and the apparent lack of independent oversight in the boardroom. Recent developments, including the voting results of Oportun’s 2024 Annual Meeting of Shareholders (the “Annual Meeting”), have only strengthened our conviction that the Board needs to take immediate action to reverse the Company’s significant destruction of value since its 2019 initial public offering.

Given the fact that just 28.4% of the total outstanding shares supported Ginny Lee’s uncontested re-election, shareholders clearly believe that Ms. Lee should assume accountability for her apparent failures as Chair of the Company’s Nominating and Corporate Governance Committee. We believe Ms. Lee should immediately resign from the Board.

We also call for the resignations of directors Neil Williams and Louis Miramontes. Following Mr. Williams and chief executive Raul Vazquez’s overlapping tenures at Intuit, it appears obvious Mr. Williams is unwilling to hold Mr. Vazquez accountable for Oportun’s disappointing operating results and the Company’s approximately 80% share price decline over the past 12 years.¹ Mr. Miramontes, who has served on the Board for 10 years now, has overseen this destruction of virtually all shareholder value.

We believe only a reconstituted Board will make the necessary changes – starting with the dismissal of Mr. Vazquez, whose appointment has proven to be a mistake. We have no confidence in management’s ability to fix the business and believe a turnaround can only occur with a new CEO who possesses the right experience.

Lastly, we reiterate our demand that the Company use industry-standard GAAP metrics instead of management’s concocted Adjusted EBITDA, which only serves to artificially inflate executives’ compensation figures.

We look forward to managerial and governance changes at Oportun.

Sincerely,

Brad Radoff & Josh Schechter

***

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1} Source: Bloomberg. Share price data is calculated from market open on September 26, 2019 through market close on July 24, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725250410/en/

Greg Lempel

greg@fondrenlp.com

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

FAQ

What percentage of Oportun (OPRT) shares voted for Ginny Lee's re-election in 2024?

Only 28.4% of the total outstanding shares of Oportun (OPRT) voted for Ginny Lee's uncontested re-election at the 2024 Annual Meeting of Shareholders.

How much has Oportun's (OPRT) share price declined since its 2019 IPO?

Oportun's (OPRT) share price has declined by approximately 80% since its initial public offering in 2019.

Which Oportun (OPRT) directors are being asked to resign by concerned shareholders?

Concerned shareholders are calling for the resignation of Ginny Lee, Neil Williams, and Louis Miramontes from Oportun's (OPRT) Board of Directors.

What changes are the concerned shareholders of Oportun (OPRT) demanding?

The concerned shareholders are demanding the resignation of three directors, the appointment of a new CEO with relevant industry experience, and the use of industry-standard GAAP metrics for financial reporting and executive compensation.