Green Dot 2010 Annual Report Download - page 56

Operating Expenses
The following table presents a breakdown of our operating expenses among sales and marketing,
compensation and benefits, processing, and other general and administrative expenses:
Amount
% of Total
Operating Revenues Amount
% of Total
Operating Revenues
2009 2008
Five Months Ended December 31,
(In thousands, except percentages)
Operating expenses:
Sales and marketing
expenses . . . . . . . . . . . . $31,333 27.8% $35,001 39.3%
Compensation and benefits
expenses . . . . . . . . . . . . 26,610 23.6 15,409 17.3
Processing expenses . . . . . 17,480 15.5 11,765 13.2
Other general and
administrative
expenses . . . . . . . . . . . . 14,020 12.4 9,463 10.6
Total operating expenses. . . . $89,443 79.3% $71,638 80.4%
Sales and Marketing Expenses — Our sales and marketing expenses were $31.3 million in the five
months ended December 31, 2009, a decrease of $3.7 million, or 10%, from the comparable period in
2008. This decrease was primarily the result of a $4.3 million decline in advertising and marketing
expenses. During the 2009 comparison period, we did no television advertising and deployed fewer new in-
store displays. The decrease in sales and marketing expenses was also the result of a $2.7 million, or 12%,
decline in the sales commissions we paid to our retail distributors and brokers because of reductions in the
commission percentages we paid to our retail distributors, most significantly Walmart. These declines
were partially offset by a $3.3 million increase in our manufacturing and distribution costs due to increased
numbers of GPR cards and MoneyPaks sold.
Compensation and Benefits Expenses — Our compensation and benefits expenses were $26.6 million
in the five months ended December 31, 2009, an increase of $11.2 million, or 73%, from the comparable
period in 2008. This increase was primarily the result of a $7.1 million increase in employee compensation
and benefits, which included a $5.8 million increase in stock-based compensation. In December 2009, our
board of directors awarded 257,984 shares of common stock to our Chief Executive Officer to compensate
him for past services rendered to our company. The number of shares awarded was equal to the number of
shares subject to fully vested options that unintentionally expired unexercised in June 2009. The aggregate
grant date fair value of this award was approximately $5.2 million, based on an estimated fair value of our
common stock of $20.01, as determined by our board of directors on the date of the award. We recorded the
aggregate grant date fair value as stock-based compensation on the date of the award. The increase in
compensation and benefits expenses was also the result of a $4.1 million increase in third-party contractor
expenses as the number of active cards in our portfolio and associated call volumes grew from the five
months ended December 31, 2008 to the five months ended December 31, 2009.
Processing Expenses — Our processing expenses were $17.5 million in the five months ended
December 31, 2009, an increase of $5.7 million, or 49%, from the comparable period in 2008. This increase
was primarily the result of period-over-period growth of 92% in the number of active cards in our portfolio,
partially offset by lower fees charged to us under agreements with one of the banks that issue our cards and
our third-party card processor that became effective in November 2008 and by more efficient use of our card
processor through the purging of inactive accounts and more effective use of analysis and reporting tools.
Other General and Administrative Expenses — Our other general and administrative expenses were
$14.0 million in the five months ended December 31, 2009, an increase of $4.6 million, or 48%, from the
comparable period in 2008. This increase was primarily the result of a $2.6 million increase in professional
service fees due to our potential bank acquisition and other corporate development initiatives and a
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