Dive Brief:

• Following the resignation of CEO Keith Jezek, Open Lending Corp. CFO Chuck Jehl will serve as interim CEO for the lending service provider effective immediately, the company said in a filing with the Securities and Exchange Commission. Jezek’s resignation is effective as of Monday, with the former CEO departing for other opportunities, the company said.
• Jehl was also appointed as the company’s chief operating officer and will continue to act as CFO for the Austin, Texas-based company, Open Lending said in a recent press release. Its board has begun a comprehensive search for a permanent CEO, it said. Jezek will remain “available” to the company to advise during the transition following his resignation as chief executive and board member.
• “The Board is confident that Chuck is the right person to lead the Company through this interim period and to keep the Open Lending team focused on the Company’s 2024 priorities, which we believe will position Open Lending well as the industry inevitably recovers,” Chairman Jessica Buss said in a statement included in the press release.

Dive Insight:

Open Lending is leaning on its CFO of four years for both the COO and interim CEO responsibilities as it looks to position itself to weather continuing weakness in the auto lending space. Jehl joined the company in 2020 from Forestar Group, where he served a 14-year tenure in a variety of positions including as its CFO and treasurer, according to his LinkedIn profile.

“Open Lending is in a strong position and Keith laid a firm foundation for future growth,” Kevin Filan, SVP of marketing told CFO Dive via email. “Chuck has been working at Open Lending for four years and has earned a solid, well-regarded reputation within the auto lending industry. We are excited to see what we can achieve together.”

In association with his additional responsibilities, Jehl’s compensation will be adjusted to an annual base salary of $500,000, effective as of March 22, according to the company filing. He will also receive a short-term incentive award of 100% of his base salary, an annual long-term incentive target of $2 million and a one-time award of restricted stock units with a grant date value of $2 million, to be vested ratably over four years from the grant date.

This compares to the $405,000 annual base salary Jehl received as the company’s CFO and treasurer for 2022, according to Open Lending’s most recent proxy statement filed in April. Jehl, along with the company’s COO and chief effective officers at the time, did not receive an annual bonus for that fiscal year as “they did not fully achieve the agreed upon goals,” according to the proxy statement.

As well as acting as Open Lending’s interim CEO, Jehl is assuming operational responsibilities at a time when the CFO and COO roles appear to be merging. As CFOs become more strategic players at their organizations, their realm has begun to overlap with that of the COO — causing businesses to consider the potential benefits of dual COO-CFO leadership, CFO Dive previously reported.

Open Lending is also dealing with a leadership change at a time when the auto lending industry is struggling to cope with lower inventory rates while consumers pull back from larger purchases such as cars. High interest rates and inflated car prices have left banks growing concerned over defaults regarding auto loans, according to a report by Bloomberg.

Financial institutions have tightened credit standards in response, reducing access for potential buyers with lower credit while other consumers find it increasingly difficult to get loan approval, Bloomberg said. The auto loan delinquency ratio at U.S. banks reached 3.3% by the end of 2023 — its highest level in a decade, according to data from S&P Global.

The jump is due to unique factors impacting the space; supply chain constraints during the pandemic pushed up prices, while low interest rates enabled customers to continue buying cars with higher balance loans than they might have qualified for otherwise, experts told S&P Global.

Open Lending has taken several steps to position itself for growth while it prepares for the industry’s “inevitable” recovery. In January, it announced a partnership with Automatic, a platform which pairs auto lenders with independent used vehicle dealers, in a bid to help connect its customers with “a wider variety of high-yield lending opportunities,” its Chief Revenue Officer Matt Roe said in a press release.

The company’s priorities for the year will be to “optimize” its core business and further expand into the bank segment, Jezek said in a statement included in its fourth quarter and full year 2023 earnings results reported in February. For the quarter ended Dec. 31, Open Lending reported total revenue of $14.9 million compared to $26.8 million in the prior year period, impacted by a $14.3 million reduction in estimated profit share revenues, according to its earnings results.