Green Dot 2014 Annual Report Download - page 48

Stock-based Retailer Incentive Compensation — Stock-based retailer incentive compensation was $8.7 million
for the year ended December„31, 2013, an increase of $0.4 million, or 5%, from the comparable period in 2012. Our
right to repurchase lapsed as to 441,720 shares issued to Walmart during the year ended December„31, 2013. We
recognized the fair value of the shares using the then-current fair market value of our Class„A common stock. The
increase was the result of a higher average stock price in the year ended December„31, 2013 compared with the
corresponding period in 2012.
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:
Year Ended December 31,
2013 2012
Amount
% of Total
Operating Revenues Amount
% of Total
Operating Revenues
(In thousands, except percentages)
Operating expenses:
Sales and marketing expenses. . . . . . . . . . . . . . . $218,370 38.1% $ 209,870 38.4%
Compensation and benefits expenses . . . . . . . . . 127,287 22.2 114,930 21.0
Processing expenses . . . . . . . . . . . . . . . . . . . . . . 89,856 15.7 77,445 14.2
Other general and administrative expenses . . . . . 88,976 15.4 71,900 13.2
Total operating expenses . . . . . . . . . . . . . . . . . . . . $524,489 91.4%$474,145 86.8%
Sales and Marketing Expenses — Sales and marketing expenses totaled $218.4 million for the year ended
December„31, 2013, an increase of $8.5 million, or 4% from the comparable period in 2012. This increase was primarily
the result of an increase in the sales commissions, driven by period-over-period growth of 9% in the number of cash
transfers sold and an increase in the sales commission rate we pay to Walmart for the MoneyCard program, which
increased in May 2013 by approximately four percentage points. The increase in sales and marketing expenses was
also due to higher costs of manufacturing and distributing card packages related to new product launches. The increase
was partially offset by a decline in advertising and marketing expenses as we reduced our television and online
advertising.
Compensation and Benefits Expenses — Compensation and benefits expenses totaled $127.3 million for the year
ended December„31, 2013, an increase of $12.4 million or 11%, from the comparable period in 2012. This increase
was primarily the result of a $14.9„million increase in employee compensation and benefits, which included a $2.0
million increase in employee stock-based compensation expense. The period-over-period growth in employee
compensation and benefits is due to our efforts to attract and retain technology personnel and higher incentive
compensation earned by employees. These increases were partially offset by a reduction in third-party contractor
expenses.
Processing Expenses — Processing expenses totaled $89.9 million for the year ended December„31, 2013, an
increase of $12.5 million, or 16% from the comparable period in 2012. The increase was primarily the result of period-
over-period growth of 6% in purchase volume, higher usage of our fee-free ATM network and certain costs to prepare
for the transition of our card issuing program with GE Capital Retail Bank to Green Dot Bank, which was completed
in February 2014. Processing expenses were partially offset by a reduction in third-party issuing bank fees as we
transitioned our card issuing program with Synovus Bank to our subsidiary bank in November 2012.
Other General and Administrative Expenses — Other general and administrative expenses totaled $89.0 million
for the year ended December„31, 2013, an increase of $17.1 million, or 24%, from the comparable period in 2012.
This increase was primarily the result of a $9.0 million increase in depreciation and amortization of property and
equipment associated with our investment in technology to support our new products launches and improve our core
infrastructure, a $5.7 million increase in transaction losses, primarily associated with customer disputed transactions,
and a $4.2 million increase in impairment charges associated with capitalized internal-use software. These increases
were partially offset by a reduction in professional service fees and rent expense.
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