Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 728

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 3
Chunk 728
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 operations. His close involvement in management places Mr. Bradley in the best position to decide
which business issues require consideration by the independent directors of the board. In addition, having a combined Chairman and Chief
Executive Officer enables us to speak with a unified voice to shareholders, customers and others concerned with our company. The Board
believes that combining the Chief Executive and Chairman roles, as part of a governance structure that includes oversight of management
responsibilities by independent directors, provides the preferred system for meeting the requirement that the Company be managed in the
best interest of our shareholders.

Risk Oversight 

The board’s overall responsibility for
directing the management of the Company includes risk oversight. The risk oversight function is performed at the board level, and by
the Audit and Compensation Committees.

The Board of Directors as a whole in its regular
meetings discusses and considers the risk inherent in the existing business of the Company and in proposed initiatives. Because the Company’s
business consists of extending consumer credit to individuals believed to be of higher risk than others (sub-prime credit), the assessment
of the risk assumed in such extensions of credit is a primary consideration on the part of the board. Risk oversight is also a key function
of the Audit Committee and Compensation Committee.

The principal risk management function performed
by the Audit Committee is the ongoing assessment of the credit estimates and allowances periodically recorded in the Company’s
books. The Audit Committee reviews that assessment regularly. Other risk assessments performed by the Audit Committee include assessments
of contingent liabilities, and of other reserves and allowances.

The principal risk management functions performed
by the Compensation Committee are its setting and evaluation of objectives for the chief executive officer, in connection with its administration
of the Executive Management Bonus Plan. The Compensation Committee recognizes that the Company’s business of extending subprime
credit inherently includes a conflict between growing the business and managing the risk of credit losses: one means to increase the Company’s
business is to offer credit on terms that are priced too low for the risk assumed. The Compensation Committee manages that risk by insisting
that objectives to grow the business are qualified by a mandate that credit quality be maintained at appropriate levels. To some extent,
such risk management is shared with the Audit Committee, which performs the primary oversight of whether credit risk assumed is reflected
with adequate allowances in the Company’s financial statements. 

 64 

Chief Executive Officer Pay Ratio

The Dodd-Frank Reform and Consumer Protection
Act includes a mandate that public companies disclose the ratio of the compensation of their chief executive officer