Collection House CEO Anthony Rivas bonus: chairman defends paying short-term incentive after financial targets missed

UNDER-fire debt chasing agency Collection House paid its CEO a $260K short-term bonus even though the Brisbane company missed financial targets attached to that bonus.

Collection House has defended paying a bonus to its CEO.

• Collection House rejects doubts about share sales, profits

UNDER-fire debt chasing agency Collection House paid its chief executive officer a $266,000 short-term bonus even though the Brisbane-based company missed financial targets attached to that bonus.

The payment for new CEO Anthony Rivas was made because the board determined “the 2017 financial results were acceptable given the one-off costs absorbed to improve operating efficiency and other sustainable economic benefits that will accrue to the company”.

“Progress was also made” against some non-financial targets. “The board applied its discretion to award, in part, payment of the (bonus),” the company’s annual report said.

Almost 60 per cent of Mr Rivas’s potential $331,000 bonus, or $198,000, was riding on net profit after tax and earnings per share. Both went backwards in latest financial results and the accounts specifically said the targets were not met.

But Collection House chairman Kerry Daly also said that the latest financial results included a $2.45 million hit on capitalised software costs incurred between 2010 and 2017.

“The underlying operating performance has not gone backwards. The underlying operating performance was satisfactory,” he told The Courier-Mail. “The board believe we had a sound and appropriate basis” for awarding the bonus, he said.

The payment came with Collection House’s 12 per cent shareholder, Lev Mizikovsky, aggressively picking a fight with the board. He has tried to have two directors dumped and called for investors to reject the company’s remuneration report.

Market watchers have also further scrutinised the company’s results. One highlighted area is the appearance on page 54 of the accounts of an extra $1.96 million in income from a call option – which is an agreement for the holder to buy an asset at a certain price.

Mr Daly said the option related to assigning debt ledgers to other regional agencies who have local knowledge but use Collection House software to reap debt on Collection House’s behalf.

This move was one initiative of Mr Rivas, he said.

The call option was not listed in the presentation, even though the company played up the notion that a year earlier the results had been topped up with the sale of $4.08 million in debt.

Mr Daly argued that presentations covered “key issues we think are appropriate to investors’ decisions”. The call option was listed in the accounts.

Presentations were a summary and companies cannot regurgitate everything from the accounts in these matters, Mr Daly said.