SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
OCWEN FINANCIAL CORPORATION
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which the transaction applies: N/A
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined.): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
[LOGO OMITTED]
O C W E N
March 29, 2004
Dear Fellow Shareholder:
On behalf of the Board of Directors I cordially invite you to attend the Annual
Meeting of Shareholders of Ocwen Financial Corporation, which will be held at
the offices of the Company located at 1675 Palm Beach Lakes Boulevard, West Palm
Beach, Florida 33401, on Tuesday, May 18, 2004 at 9:00 a.m., Eastern Standard
Time. The matters to be considered by shareholders at the Annual Meeting are
described in detail in the accompanying materials.
It is very important that you be represented at the Annual Meeting regardless of
the number of shares you own or whether you are able to attend the Annual
Meeting in person. Let me urge you to mark, sign and date your proxy card today
and return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Ocwen Financial Corporation are
sincerely appreciated.
Sincerely,
/s/ William C. Erbey
- ------------------------------------
William C. Erbey
Chairman and Chief Executive Officer
2
OCWEN FINANCIAL CORPORATION
1675 Palm Beach Lakes Boulevard
West Palm Beach, Florida 33401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 18, 2004
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Shareholders of Ocwen
Financial Corporation (the "Company") will be held at the offices of the Company
located at 1675 Palm Beach Lakes Boulevard, West Palm Beach, Florida 33401 on
Tuesday, May 18, 2004 at 9:00 a.m., Eastern Standard Time, for the following
purposes:
1. To elect seven directors for a one-year term and until their successors
are elected and qualified;
2. To ratify the appointment by the Audit Committee of the Board of Directors
of PricewaterhouseCoopers LLP as the independent auditor of the Company
for the fiscal year ending December 31, 2004; and
3. To transact such other business as may properly come before the meeting
and any adjournment thereof. Management is not aware of any such other
business at this time.
The Board of Directors has fixed March 18, 2004 as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting and any adjournment thereof. Only shareholders of record at the close of
business on that date will be entitled to vote at the Annual Meeting or any
adjournment thereof.
By Order of the Board of Directors,
/s/ John R. Erbey
- -----------------
John R. Erbey
Secretary
West Palm Beach, Florida
March 29, 2004
3
OCWEN FINANCIAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished to the holders of the Common Stock, par
value $.01 per share, of Ocwen Financial Corporation, a Florida corporation.
Proxies are being solicited on behalf of the Board of Directors of Ocwen to be
used at the Annual Meeting of Shareholders to be held at the offices of Ocwen
located at 1675 Palm Beach Lakes Boulevard, West Palm Beach, Florida 33401, on
Tuesday, May 18, 2004 at 9:00 a.m., Eastern Standard Time, and at any
adjournment thereof, for the purposes set forth in the Notice of Annual Meeting
of Shareholders.
This Proxy Statement and the accompanying proxy card (the "Proxy") are first
being mailed to the shareholders of Ocwen on or about March 29, 2004.
The Proxy solicited hereby, if properly signed and returned to Ocwen and not
revoked prior to its use, will be voted in accordance with the instructions
contained therein. If no contrary instructions are given, each Proxy received
will be voted:
(i) for each of the nominees for director described herein;
(ii) for ratification of the appointment of PricewaterhouseCoopers LLP as our
independent auditor for 2004; and
(iii) upon the transaction of such other business as may properly come before
the meeting, in accordance with the best judgment of the persons appointed
as proxies.
Proxies solicited hereby may be exercised only at the Annual Meeting and any
adjournment thereof and will not be used for any other meeting. Any shareholder
giving a Proxy has the power to revoke it at any time before it is exercised by:
(i) filing written notice thereof with our Secretary at the following address:
John R. Erbey, Secretary
Ocwen Financial Corporation
1675 Palm Beach Lakes Boulevard
West Palm Beach, Florida 33401
(ii) submitting a properly executed Proxy bearing a later date; or
(iii) appearing at the Annual Meeting and giving the Secretary notice of his or
her intention to vote in person.
VOTING
Only holders of record of Common Stock at the close of business on March 18,
2004 will be entitled to vote at the Annual Meeting or any adjournment thereof.
On March 18, 2004, there were 68,196,050 shares of Common Stock issued and
outstanding, and we had no other class of equity securities outstanding. Each
share of Common Stock is entitled to one vote at the Annual Meeting on all
matters properly presented.
The presence at the Annual Meeting of a majority of the votes entitled to be
cast, represented in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting.
Assuming the presence of a quorum, the seven persons receiving the greatest
number of votes of the Common Stock cast at the Annual Meeting by the holders of
stock entitled to vote shall be elected as directors of Ocwen. With regard to
the election of directors, shareholders may vote in favor of or withhold
authority to vote for one or more nominees for director. Votes that are withheld
and broker non-votes in connection with the election of one or more nominees for
director will not be counted as votes cast for such individuals and accordingly
will have no effect. Abstentions may be specified on all other proposals.
4
Assuming the presence of a quorum, the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as Ocwen's independent auditor for 2004 and any other
matter properly submitted to shareholders for their consideration at the Annual
Meeting (other than the election of directors) shall be approved if the votes
cast by the holders of the shares represented at the Annual Meeting and entitled
to vote on the subject matter favoring the action exceed the votes cast opposing
the action. Abstentions and broker non-votes will not be counted in determining
the votes cast in connection with the proposal to ratify the appointment of
Ocwen's independent auditor and thus will have no effect on such proposals.
COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph compares the cumulative total return on the Common Stock of
Ocwen since December 31, 1998 with the cumulative total return on the stocks
included in the Standard & Poor's 500 Market Index and the Standard & Poor's
Financial (Diversified) 500 Market Index.
Total Return Performance
[GRAPHIC CHART OMITTED]
PERIOD ENDING
----------------------------------------------------------------------------------------------
INDEX 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
- -------------------------------------------------------------------------------------------------------------------------------
Ocwen Financial Corporation 100.00 50.77 51.83 68.89 22.75 71.97
S&P 500 100.00 119.53 107.41 93.40 71.57 90.39
S&P Diversified Financials 100.00 127.34 161.41 138.29 106.40 148.75
The above graph represents $100 invested in Common Stock on December 31, 1998 at
the closing price of $12.31 per share on that date and in each index on such
date. The Common Stock has been listed on the New York Stock Exchange since
August 1, 1997.
5
ELECTION OF DIRECTORS
(Proposal One)
Ocwen's Bylaws provide that the Board of Directors of Ocwen shall be comprised
of between three and eight members, with the exact number to be fixed by the
Board of Directors. Pursuant to the Bylaws of Ocwen, on March 16, 2004, the
Board of Directors voted to reduce the number of directors to seven effective
immediately following the Annual Meeting. Directors are elected annually and
hold office until the earlier of the election and qualification of their
successors or their resignation and removal.
Accordingly, Ocwen will propose seven directors for election at the Annual
Meeting. All seven of the persons standing for election at the Annual Meeting
are currently directors of Ocwen. There are no arrangements or understandings
between any nominee for director and any other person pursuant to which such
person was selected as a nominee. No director is related to any other director
or executive officer of Ocwen by blood, marriage or adoption.
If any person named as nominee should be unable or unwilling to stand for
election at the time of the Annual Meeting, the person or persons appointed as
proxies will nominate and vote for a replacement nominee or nominees recommended
by the Board of Directors. At this time, the Board of Directors knows of no
reason why any of the nominees listed below would not be able to serve as
director if elected.
NOMINEES FOR DIRECTOR
The following table sets forth certain information concerning the directors of
Ocwen:
Name Age (1) Director Since Executive Committee
- ----------------------------------- -------------- ----------------- ----------------------
William C. Erbey 54 1988 X (2)
Ronald M. Faris 41 2003
Ronald J. Korn 64 2003
William H. Lacy 59 2002
W. Michael Linn 55 2002
W.C. Martin 55 1996
Herbert B. Tasker (5) 67 2002
Barry N. Wish 62 1988 X
[Cont'd]
Nomination/ Governance
Name Audit Committee Compensation Committee Committee
- ----------------------------------- -------------------- ----------------------- ------------------------
William C. Erbey
Ronald M. Faris
Ronald J. Korn X (2)
William H. Lacy X X
W. Michael Linn X (3) X (4)
W.C. Martin X X (2)
Herbert B. Tasker (5) X X
Barry N. Wish X (6)
(1) As of March 18, 2004
(2) Committee Chairman
(3) Committee member until February 17, 2004.
(4) Committee member and Chairman until February 17, 2004.
(5) Herbert B. Tasker is not seeking reelection, as he is retiring from his
position as a director of Ocwen.
(6) Committee Chairman as of February 17, 2004.
The principal occupation for the last five years of each director of Ocwen, as
well as some other information, is set forth below.
William C. Erbey. Mr. Erbey has served as the Chairman of the Board of Directors
of Ocwen since September 1996, as the Chief Executive Officer of Ocwen since
January 1988, as the Chief Investment Officer of Ocwen from January 1992 to
August 1999 and as the President of Ocwen from January 1988 to May 1998. Mr.
Erbey has served as the Chairman of the Board of Directors of Ocwen Federal Bank
FSB, a subsidiary of Ocwen, since February 1988 and as the Chief Executive
Officer of the Bank since June 1990. He also serves as a director and officer of
many other subsidiaries of Ocwen. From 1983 to 1995, Mr. Erbey served as a
Managing General Partner of The Oxford Financial Group, a private investment
partnership that was the predecessor of Ocwen. From 1975 to 1983, Mr. Erbey
served at General Electric Capital Corporation in various capacities, most
recently as the President and Chief Operating Officer of General Electric
Mortgage Insurance Corporation. Mr. Erbey also served as the Program General
Manager of GECC's Commercial Financial Services Department and as the President
6
of Acquisition Funding Corporation. He holds a Bachelor of Arts in Economics
from Allegheny College and received a Master of Business Administration from
Harvard University.
Ronald M. Faris. Mr. Faris has served as a Director of Ocwen since May 2003, on
the Board of Directors of Ocwen Federal Bank FSB since March 2001 and as the
President of Ocwen and the Bank since March 2001. Mr. Faris served as Executive
Vice President of Ocwen and the Bank from May 1998 to March 2001, as a Senior
Vice President of the Bank from May 1997 to May 1998 and Vice President and
Chief Accounting Officer of Ocwen from June 1995 to May 1997 and of the Bank
from July 1994 to May 1997. From March 1991 to July 1994, he served as
Controller for a subsidiary of Ocwen. From 1986 to 1991, Mr. Faris was a Vice
President with Kidder, Peabody & Co., Inc., and from 1984 to 1986 worked in the
General Audit Department of PricewaterhouseCoopers LLP. He holds a Bachelor of
Science from Pennsylvania State University.
Ronald J. Korn. Mr. Korn has served as a director of Ocwen since May 2003 and of
Ocwen Federal Bank FSB since May 2003. Mr. Korn is currently the President of
Ronald Korn Consulting, which provides business and marketing services to a
limited number of clients. He is a Founding Director, Chairman of the Audit
Committee, and member of the Loan Committee of Horizon Bank FSB. He is also a
Director of Horizon Financial Corporation, the parent holding company of Horizon
Bank FSB. Mr. Korn has been Director and Chairman of the Audit Committee of
PetMed Express, Inc. (OTC: PETS) since 2002. He was a partner and employee of
KPMG, LLP, from 1961 to 1991, where his client responsibilities included a
number of large financial institutions and various public corporations.
Previously, he has also served as a Director and Audit Committee Chairman for
various public companies. Mr. Korn graduated from the University of
Pennsylvania, Wharton School in 1961 and New York University Law School in 1965.
He is admitted as Certified Public Accountant in New York, Michigan and Florida,
with licenses currently inactive. He was also admitted to the New York Bar in
1966, but has never practiced law.
William H. Lacy. Mr. Lacy has served as a Director of Ocwen since May 2002 and
Ocwen Federal Bank FSB since May 2003. Mr. Lacy was formerly Chairman of
Mortgage Guaranty Insurance Corporation and Chairman and Chief Executive Officer
of MGIC Investment Corporation, Milwaukee, Wisconsin. Both corporations are
providers of private mortgage guaranty insurance and other mortgage related
services. Mr. Lacy is also a Director of C-2 Inc. and of Johnson Controls, Inc.,
both New York Stock Exchange public corporations. Mr. Lacy is Chairman of
Johnson Controls' Pension and Investment Committee and serves on Johnson
Controls' Compensation Committee. He is also Chairman of C-2's Compensation
Committee and serves on C-2's Audit Committee. Mr. Lacy is a graduate of the
University of Wisconsin with a Bachelor of Arts from the School of Business.
W. Michael Linn. Mr. Linn has served as a Director of Ocwen since August 2002,
Ocwen Federal Bank FSB since May 2003, and became employed by the company as
Executive Vice President of Sales & Marketing on February 17, 2004. Mr. Linn was
the Chairman and Chief Executive Officer of Max Q Technologies, Inc., Findlay,
Ohio. Prior to joining Max Q Technologies, he served as the Executive Vice
President of Sales & Marketing of Solomon Software, Inc., a corporation now
owned by Microsoft Corporation. Mr. Linn serves or has served on the Board of
Directors of National Lime & Stone, Efficiency Software LLC, Transport Topics
Publications, TLB Inc., Solomon Software, Inc., Floral Design Inc. and the
Health Watch Advisory Board. He graduated from Harvard College in 1970 with a
Bachelor of Arts and earned a Masters of Business Administration from Harvard
Business School in 1973.
W.C. Martin. Mr. Martin has served as a Director of Ocwen since July 1996 and of
Ocwen Federal Bank FSB since August 1996. Since 1982, Mr. Martin has been
associated with Holding Capital Group and has been engaged in the acquisition
and turnaround of businesses in a broad variety of industries. Since March 1993,
Mr. Martin also has served as President and Chief Executive Officer of SV
Microwave, a company he formed along with other HCG investors to acquire the
assets of the former Microwave Division of Solitron Devices, Inc. In 1998, Mr.
Martin became CEO of HCG Technologies, Inc., a holding company formed by him and
HCG to acquire, fund or start technology companies. In 1999, he became CEO of SV
Microwave Components Group, Inc., a newly formed subsidiary of HCGT engaged in
the design, production and sale of passive microwave devices. Prior to 1982, Mr.
Martin was a Manager in Touche Ross & Company's Management Consulting Division,
and prior to that he held positions in financial management with Chrysler
Corporation. Mr. Martin holds a Bachelor of Science in Industrial Management
from LaSalle University and received a Masters of Business Administration from
the University of Notre Dame.
7
Barry N. Wish. Mr. Wish has served as Chairman Emeritus of the Board of
Directors of Ocwen since September 1996, and he previously served as Chairman of
the Board of Ocwen from January 1988 to September 1996. Mr. Wish has served as a
Director of Ocwen Federal Bank FSB since February 1988. From 1983 to 1995, he
served as a Managing General Partner of The Oxford Financial Group, which he
founded. From 1979 to 1983, he was a Managing General Partner of Walsh,
Greenwood, Wish & Co., a member firm of the New York Stock Exchange. Prior to
founding that firm, Mr. Wish was a Vice President and shareholder of Kidder,
Peabody & Co., Inc. He is a graduate of Bowdoin College.
The Board of Directors unanimously recommends that shareholders vote FOR each of
the nominees for director.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Meetings of the Board of Directors
The Board of Directors of Ocwen held six meetings during 2003. No director of
Ocwen attended fewer than 75% of the aggregate of the number of meetings of the
Board of Directors held during 2003 and the number of meetings held by all
committees thereof on which he served during the period. Although Ocwen does not
have a formal policy regarding director attendance at the Annual Meeting,
directors are encouraged to attend. All seven members of the Board of Directors
attended the 2003 Annual Meeting.
Independence of Directors
Ocwen's Corporate Governance Guidelines provide that the Board of Directors must
be comprised of a majority of directors who qualify as independent directors
under the listing standards of the New York Stock Exchange and applicable law.
The Board reviews annually the relationships that each director has with the
Company (either directly or as a partner, shareholder or officer of an
organization that has a relationship with the Company). Following such review,
only those directors who the Board affirmatively determines have no material
relationship with the Company are considered independent directors, subject to
additional qualifications prescribed under the listing standards of the New York
Stock Exchange or applicable law. Our current Board of Directors has determined
that Messrs. Korn, Lacy, Martin, Tasker and Wish are independent in accordance
with applicable laws and the New York Stock Exchange listing standards.
Committees of the Board of Directors
The Board of Directors of Ocwen has established an Executive Committee, an Audit
Committee, a Compensation Committee and a Nomination/Governance Committee. A
brief description of these Committees is set forth below.
Executive Committee. The Executive Committee is generally responsible to act on
behalf of the Board of Directors during the intervals between meetings of the
Board of Directors. This Committee did not meet during 2003.
Audit Committee. The Audit Committee of the Board of Directors manages Ocwen's
independent auditors, reviews and advises the Board of Directors with respect to
reports by Ocwen's independent auditor and monitors Ocwen's compliance with laws
and regulations applicable to Ocwen's operations including the evaluation of
significant matters relating to the financial reporting process and system of
internal accounting controls of Ocwen and the review of the scope and results of
the annual audit conducted by the independent auditor. Each member of the Audit
Committee is independent as defined in regulations adopted by the Securities and
Exchange Commission and the listing standards of the New York Stock Exchange.
The Board of Directors has determined that Ronald J. Korn qualifies as an audit
committee financial expert, as that term is defined in recently adopted
Securities and Exchange Commission rules implementing requirements of the
Sarbanes-Oxley Act of 2002. The Audit Committee operates under a written
charter, a copy of which is included as Exhibit A hereto and is available on
Ocwen's website at www.ocwen.com. This Committee met five times during 2003.
Compensation Committee. The Compensation Committee of the Board of Directors
oversees Ocwen's compensation and employee benefit plans and practices. The
Compensation Committee also evaluates and makes recommendations to the Board of
8
Directors for human resource and compensation matters relating to the executive
officers of Ocwen. Each member of the Compensation Committee is independent as
defined in the listing standards of the New York Stock Exchange. The
Compensation Committee operates under a written charter approved by the whole
Board of Directors, a copy of which is available on Ocwen's website at
www.ocwen.com. This Committee met four times during 2003.
Nomination/Governance Committee. The Nomination/Governance Committee of the
Board of Directors recommends to the Board individuals qualified to serve as
directors of Ocwen and on committees of the Board; advises the Board with
respect to Board composition, procedures and committees; develops and presents
to the Board a set of corporate governance principles; and oversees the
evaluation of the Board and Ocwen's management. Each member of the
Nomination/Governance Committee is independent as defined in the listing
standards of the New York Stock Exchange. The Nomination/Governance Committee
operates under a written charter, a copy of which is available on Ocwen's
website as www.ocwen.com. This Committee met four times during 2003.
It is the policy of the Nomination/Governance Committee to consider candidates
for director recommended by shareholders. In evaluating nominees for director,
the Nomination/Governance Committee takes into account the applicable
requirements for directors under the Securities Exchange Act of 1934, as amended
and the listing standards of the New York Stock Exchange. In addition, the
Nomination/Governance Committee takes into account the needs of the company, as
well as such factors as knowledge, experience, skills, expertise and diversity.
Should a shareholder recommend a candidate for director, the
Nomination/Governance Committee would evaluate such candidate in the same way as
it evaluates any other nominee.
Shareholders wishing to recommend persons for consideration by the
Nomination/Governance Committee as nominees for election to the Board of
Directors can do so by writing to the Secretary of Ocwen Financial Corporation,
1675 Palm Beach Lakes Boulevard, West Palm Beach, Florida 33401, giving each
proposed nominee's name, biographical data and qualifications. The
recommendation should also include a written statement from the proposed nominee
consenting to be named as a nominee and, if nominated and elected, to serve as a
director. For consideration, Ocwen must receive such recommendations by November
30, 2004.
Corporate Governance Guidelines
The Corporate Governance Guidelines adopted by the Board of Directors provide
guidelines for Ocwen and the Board of Directors to ensure effective corporate
governance. The Corporate Governance Guidelines cover topics including, but not
limited to, director qualification standards, Board and committee composition,
director responsibilities, director access to management and independent
advisors, director compensation, director orientation and continuing education,
management succession and annual performance evaluation of the Board.
The Nomination/Governance Committee will review Ocwen's Governance Guidelines at
least once a year and, if necessary, recommend changes to the Board. The
Governance Guidelines are available on our web site at www.ocwen.com.
Executive Sessions of Non-Management Directors
Non-management directors meet in executive session without management on a
regularly scheduled basis at least four times each year. A non-management
director presides on a rotational basis as determined by the Board at each
executive session.
Communications with Directors
Any shareholder or other interested party who desires to contact the Board of
Directors or any individual director regarding Ocwen may do so by mail addressed
to the Secretary of Ocwen at 1675 Palm Beach Lakes Boulevard, West Palm Beach,
Florida 33401. Communications received in writing are distributed to the Board
or to individual directors as appropriate depending on the facts and
circumstances outlined in the communication received.
9
Code of Ethics
Ocwen has adopted a Code of Ethics that applies to directors, officers and
employees of the Company, as required by the New York Stock Exchange rules. Any
waivers from the Code of Ethics must be approved by the Board of Directors or a
Board committee and must be promptly disclosed to shareholders. This Code of
Ethics is available on www.ocwen.com.
BOARD OF DIRECTORS COMPENSATION
The Directors of Ocwen are currently compensated by delivering to each a total
annual value of $30,000, which is payable $15,000 in shares of Common Stock
pursuant to a Directors Stock Plan adopted by the Board of Directors and
shareholders of Ocwen in July 1996 and $15,000 cash. (which may be prorated for
a director serving less than a full one-year term, as in the case of a director
joining the Board of Directors after an Annual Meeting of shareholders), subject
to review and adjustment by the Board of Directors from time to time. Directors
serving as committee chairpersons receive an additional $5,000 in cash
compensation. Such payment is made after the annual organizational meeting of
the Board of Directors, which follows the Annual Meeting of shareholders of
Ocwen During 2003, an aggregate of 30,536 shares of Common Stock was granted to
the eight directors of Ocwen.
The number of shares issued pursuant to the Directors Stock Plan is based on the
"fair market value" of the Common Stock on the date of grant. The term "fair
market value" is defined in the Directors Stock Plan to mean the average of the
high and low prices of the Common Stock as reported on the New York Stock
Exchange on the relevant date. Shares issued pursuant to the Directors Stock
Plan, other than the committee chair fee shares, are subject to forfeiture
during the 12 full calendar months following election or appointment to the
Board of Directors or a committee thereof, if the director does not attend an
aggregate of at least 75% of all meetings of the Board of Directors and
committees thereof of which the director is a member during such period.
All of the directors for Ocwen also serve on the Board of Directors of Ocwen
Federal Bank FSB. During 2003, the Bank compensated its non-management directors
by delivering to each a total annual value of $10,000 in cash, paid in equal
quarterly installments in arrears, in respect of their service on the Bank's
Board of Directors. During 2003, an aggregate of $44,000 in cash was paid to
five directors of Ocwen in respect of their service as members of the Board of
Directors of the Bank, including as chairman of the committees of the Bank's
Board of Directors.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to each person
who currently serves as an executive officer of Ocwen but does not serve on
Ocwen's Board of Directors. Executive officers of Ocwen are elected annually by
the Board of Directors and generally serve at the discretion of the Board. There
are no arrangements or understandings between Ocwen and any person pursuant to
which such person was elected as an executive officer of Ocwen. No director or
executive officer is related to any other director or executive officer of Ocwen
or any of its subsidiaries by blood, marriage or adoption.
Name Age (1) Position
- ------------------------------- -------------- ---------------------------------------------------------------------
Robert J. Leist, Jr. 54 Vice President and Chief Accounting Officer
William R. Shepro (2) 35 President of Global Servicing Solutions LLC and Senior Vice President
Mark S. Zeidman 52 Senior Vice President and Chief Financial Officer
(1) As of March 18, 2004.
(2) Effective after the May 18, 2004 shareholders meeting.
10
The background for the last five years of each executive officer of Ocwen who is
not a director, as well as certain other information, is set forth below.
Robert J. Leist, Jr. Mr. Leist has served as Vice President and Chief Accounting
Officer of Ocwen and the Bank since his employment began with the Company in
March 1999. From March 1987 until March 1999 he was employed at J.P. Morgan &
Co., Incorporated, most recently as a Vice President. Prior to 1987 he held
positions with Brylane, Inc. and Arthur Andersen & Co. Mr. Leist holds a
Bachelor of Arts from Boston College, attended New York University for a Master
of Business Administration, and is a Certified Public Accountant.
William B. Shepro. Mr. Shepro is the President of Global Servicing Solutions
LLC, a joint venture between Ocwen Financial Corporation and Merrill Lynch. In
addition to Mr. Shepro's role at GSS, he is Senior Vice President of Ocwen's
Commercial Finance and Affordable Housing segments. Prior to joining the
Commercial Finance segment in August 1998, Mr. Shepro was Counsel in the Ocwen
Law Department. Before joining Ocwen in August 1997, Mr. Shepro was an Attorney
with Willinger, Shepro, Tower and Bucci, P.C. He holds a Bachelor of Science in
Business from Skidmore College and a Juris Doctorate from the Florida State
University College of Law.
Mark S. Zeidman. Mr. Zeidman has served as Senior Vice President and Chief
Financial Officer of Ocwen and the Bank since May 1997 and as Chief Investment
Officer of Ocwen since August 1999. He also serves as an officer of many
subsidiaries of Ocwen. From 1986 until May 1997, Mr. Zeidman was employed by
Nomura Securities International, Inc., most recently as Managing Director. Prior
to 1986, he held positions with Shearson Lehman Brothers and Coopers & Lybrand.
He holds a Bachelor of Arts from the University of Pennsylvania and received a
Master of International Affairs from Columbia University and a Master of
Business Administration from the Wharton School of Business at the University of
Pennsylvania. Mr. Zeidman is also a Certified Public Accountant.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND RELATED STOCKHOLDER MATTERS
Beneficial Ownership of Common Stock
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of the date indicated by:
(i) each director and named executive officer of Ocwen,
(ii) all directors and executive officers of Ocwen as a group, and
(iii) all persons known by Ocwen to own beneficially 5% or more of the
outstanding Common Stock or have a Schedule 13G on file with the
Securities and Exchange Commission.
The table is based upon information supplied to Ocwen by directors, officers and
principal shareholders and filings under the Securities Exchange Act of 1934, as
amended.
Shares Beneficially Owned as of
March 11, 2004 (1)
----------------------------- -----------------------------
Amount Percent
----------------------------- -----------------------------
Name of Beneficial Owner:
Becker Capital Management, Inc.
1211 SW Fifth Avenue, Suite 2185 3,474,900 (2) 5.17%
Portland, OR 97204
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor 3,385,500 (3) 5.04%
Santa Monica, CA 90401
NewSouth Capital Management, Inc.
1100 Ridgeway Loop Rd., Suite 444 3,321,578 (4) 4.9%
Memphis, TN 38120
Directors and Named Executive Officers:
William C. Erbey 19,430,189 (5) 28.18%
Ronald M. Faris 420,982 (6) *
Ronald J. Korn 3,817 *
William H. Lacy 11,283 *
W. Michael Linn 61,314 (7) *
W.C. Martin 19,307 (8) *
Herbert A. Tasker 12,322 *
Barry N. Wish 8,710,649 (9) 12.78%
Robert J. Leist, Jr. 31,945 (10) *
Arthur D. Ringwald 14,635 *
Mark S. Zeidman 171,615 (11) *
All Directors and Executive Officers as a Group (11 persons) 28,888,057 41.59%
* Less than 1%
(1) For purposes of this table, an individual is considered the beneficial
owner of shares of Common Stock if he or she directly or indirectly has or
shares voting power or investment power, as defined in the rules
promulgated under the Securities Exchange Act of 1934, as amended. Unless
otherwise indicated, an individual has sole voting power and sole
investment power with respect to the indicated shares.
(2) Based on information contained in a Schedule 13G filed with the Commission
on February 2, 2004 by Becker Capital Management, Inc., an investment
advisor registered under Section 203 of the Investment Advisors Act of
12
1940. Includes 3,090,400 shares as to which sole voting power is claimed,
and 3,474,900 shares as to which sole dispositive power is claimed.
(3) Based on information contained in a Schedule 13G/A filed with the
Commission on February 6, 2004 by Dimensional Fund Advisors Inc., an
investment advisor that acquired the shares on behalf of its clients. As to
the 3,385,500 shares held, sole voting power and sole dispositive power is
claimed on the entire amount.
(4) Based on information contained in a Schedule 13G/A filed with the
Commission on February 9, 2004 by NewSouth Capital Management, Inc., an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940. Includes 3,283,078 shares as to which sole voting power is
claimed, 27,000 shares as to which shared voting power is claimed, and
3,321,578 shares as to which sole dispositive power is claimed.
(5) Includes 13,138,351 shares held by FF Plaza Partners, a Delaware
partnership of which the partners are William C. Erbey, his spouse, E.
Elaine Erbey, and Delaware Permanent Corporation, a corporation
wholly-owned by William C. Erbey. Mr. and Mrs. William C. Erbey share
voting and dispositive power with respect to the shares owned by FF Plaza
Partners. Also includes 5,409,704 shares held by Erbey Holding Corporation,
a corporation wholly-owned by William C. Erbey. Also includes options to
acquire 805,554 shares, which are exercisable at or within 60 days after
March 18, 2004.
(6) Includes 25,680 shares held jointly with spouse. Also includes options to
acquire 341,140 shares, which are exercisable at or within 60 days after
March 18, 2004.
(7) Includes 6,000 shares held by William M. Linn, II Et Al Trust, of which Mr.
Linn is the custodian for his minor children.
(8) Includes 5,110 shares held by the Martin & Associates Management
Consultants, Inc. Defined Contribution Pension Plan & Trust.
(9) Includes 7,972,305 shares held by Wishco, Inc., a corporation controlled by
Barry N. Wish pursuant to his ownership of 93% of the Common Stock thereof;
351,940 shares held by B.N.W. Partners, a Delaware partnership of which the
partners are Mr. Wish and B.N.W., Inc., a corporation wholly-owned by Mr.
Wish; and 83,000 shares held by the Barry Wish Family Foundation, Inc., a
charitable foundation of which Mr. Wish is a director.
(10) Includes options to acquire 24,195 shares, which are exercisable at or
within 60 days after March 18, 2004.
(11) Includes options to acquire 136,193 shares, which are exercisable at or
within 60 days after March 18, 2004.
Equity Compensation Plan Information
The following table sets forth information as of the end of the most recently
completed fiscal year with respect to compensation plans under which our equity
securities are authorized for issuance. The information is split between all
compensation plans previously approved by security holders and all compensation
plans not previously approved by security holders.
Number of securities to be issued Weighted average exercise price of
upon exercise of outstanding options, outstanding options, warrants and
Plan Category warrants and rights rights
- ----------------------------------------- -------------------------------------- ---------------------------------------
Equity compensation plans 4,581,370 $8.08
approved by security holders
Equity compensation plans
not 0 0
approved by security holders
- ----------------------------------------- -------------------------------------- ---------------------------------------
Total 4,581,370 $8.08
[Cont'd]
Number of securities remaining
Plan Category available for future issuance
- ----------------------------------------- -------------------------------------
Equity compensation plans 6,293,554
approved by security holders
Equity compensation plans
not 0
approved by security holders
- ----------------------------------------- -------------------------------------
Total 6,293,554
13
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Ocwen's executive officers,
directors, and persons who own more than 10% of the Common Stock, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by Securities and Exchange Commission regulations to furnish Ocwen with copies
of all Section 16(a) forms they file.
To Ocwen's knowledge, based solely upon review of the copies of such reports
furnished to Ocwen and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% shareholders were complied with during 2003, with
the exception of one late filing with respect to one transaction by our
executive officer, Robert J. Leist, Jr.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table discloses compensation received by Ocwen's chief executive
officer and the four other most highly paid directors and executive officers of
Ocwen for the years indicated.
Annual Compensation
--------------------------------
Name & Position Year Salary (1) Bonus (2)
- -------------------------------------------------- ----------- --------------- ----------------
William C. Erbey 2003 $360,000 $337,500
Chairman of the Board and 2002 $360,000 $338,750
Chief Executive Officer 2001 $360,000 $351,000
2003 $321,538 $354,836
Ronald M. Faris 2002 $300,000 $317,813
President 2001 $292,308 $297,673
Arthur M. Ringwald (8) 2003 $300,085 $150,000
President and CEO of 2002 $300,000 $185,625
Ocwen Technology Xchange 2001 $220,385 $262,577
Mark S. Zeidman 2003 $357,959 $186,781
Senior Vice President and 2002 $357,731 $148,955
Chief Financial Officer 2001 $355,000 $124,250
Robert J. Leist, Jr. 2003 $220,177 $58,547
Vice President and 2002 $202,730 $46,545
Chief Accounting Officer 2001 $189,000 $50,625
[Cont'd]
Long-Term Compensation Awards
-----------------------------------------------------------------
Restricted Stock Securities
Restricted Stock Underlying All Other
Name & Position Awards ($) (3) Options (#) (4)(5) Compensation (6)
- -------------------------------------------------- --------------------- -------------------- ----------------------
William C. Erbey $168,750 63,679 $4,000
Chairman of the Board and $271,000 84,688 $4,000
Chief Executive Officer $0 141,475 $2,940
$177,418 66,950 $4,000
Ronald M. Faris $254,250 79,452 $4,000
President $0 319,981 (7) $2,973
Arthur M. Ringwald (8) - - $4,000
President and CEO of $148,500 46,406 $4,000
Ocwen Technology Xchange $0 60,491 $62,527 (9)
Mark S. Zeidman $93,391 35,242 $4,000
Senior Vice President and $119,163 37,239 $4,000
Chief Financial Officer $0 90,081 (10) $2,947
Robert J. Leist, Jr. $29,274 11,047 $4,000
Vice President and $37,236 11,636 $4,000
Chief Accounting Officer $0 20,405 $3,400
(1) Represents amounts paid in 2003.
(2) For 2003, 2002, and 2001, consists of bonuses awarded pursuant to Ocwen's
1998 Annual Incentive Plan, as amended, in the first quarter of the
following year for services rendered in the years indicated.
(3) The restricted stock award is a portion of the bonuses awarded in the first
quarter of 2004 for services rendered in 2003 pursuant to Ocwen's 1998
Annual Incentive Plan, as amended.
(4) Based on the average closing price of the Common Stock for the last five
trading days of 2003.
(5) Except as otherwise noted, consists of options granted pursuant to Ocwen's
1991 Non-Qualified Stock Option Plan, as amended. The 2003, 2002, and 2001
amounts consist of grants made as of the first quarter of the following
year for services rendered in the years indicated.
(6) Unless otherwise noted, consists of contributions by Ocwen pursuant to
Ocwen's 401(k) Savings Plan.
14
(7) Consists of options to purchase 119,981 shares of Common Stock granted
pursuant to the stock option plan and additional options to purchase
200,000 shares of Common Stock granted to Mr. Faris.
(8) Ocwen had an employment agreement with Mr. Ringwald. Ocwen and Mr. Ringwald
mutually agreed to terminate this agreement, effective January 29, 2004.
Pursuant to the terms of the employment agreement, Mr. Ringwald was
entitled to a lump sum cash payment of $750,000 and any amounts payable to
Mr. Ringwald as of the date of termination. Mr. Ringwald's agreement also
included provisions for confidentiality, indemnification and
non-competition.
(9) Mr. Ringwald commenced his employment as President and Chief Executive
Officer of Ocwen Technology Xchange on April 1, 2001. His annual salary is
prorated for his period of employment in 2001. His other compensation
represents reimbursed relocation expenses.
(10) Consists of options to purchase 50,081 shares of Common Stock granted
pursuant to the stock option plan and additional options to purchase 40,000
shares of Common Stock granted to Mr. Zeidman.
Option Grants for 2003
The following table provides information relating to option grants made by Ocwen
during 2003 and pursuant to Ocwen's stock option plan in 2004 to the individuals
named in the Summary Compensation Table for services rendered in 2003.
No. of Percent of
Securities Securities
Underlying Underlying Total
Options Granted Options Granted Exercise Price Expiration Date
Name (#) (1)(2) (%) (2) ($/share) ( / / )
- ----------------------------------- ------------------ ---------------------- --------------- -----------------
William C. Erbey 63,679 15.09% $6.18 1/31/14
Ronald M. Faris 66,950 15.87% $6.18 1/31/14
Arthur D. Ringwald - - - -
Mark S. Zeidman 35,242 8.35% $6.18 1/31/14
Robert J. Leist, Jr. 11,047 2.62% $6.18 1/31/14
[Cont'd]
Potential Realizable Value at Assumed Rates of
Stock Price Appreciation for Option Term (3)
Name 0% ($) 5% ($) 10% ($)
- ----------------------------------- ---------------- ----------------- ------------------
William C. Erbey $170,660 $525,481 $1,069,875
Ronald M. Faris $179,427 $552,473 $1,124,830
Arthur D. Ringwald - - -
Mark S. Zeidman $94,448 $290,814 $592,096
Robert J. Leist, Jr. $29,605 $91,157 $185,594
(1) All options are to purchase shares of Common Stock, and, unless otherwise
noted, one-fifth vests and becomes exercisable on the date of grant and on
January 31, 2005, 2006, 2007 and 2008.
(2) Grants were made in 2004 for service in 2003. The percentage of securities
underlying these options is based on options to purchase a total of 421,982
shares of Common Stock granted to employees of Ocwen and its subsidiaries.
(3) Assumes future prices of shares of Common Stock of $8.86, $14.432 and
$22.981 at compounded rates of return of 0%, 5% and 10%, respectively, from
the average closing price per share on the New York Stock Exchange on
December 31, 2003.
15
AGGREGATED OPTION EXERCISES IN 2003 AND YEAR-END OPTION VALUES
The following table provides information relating to option exercises during the
year 2003 by the individuals named in the Summary Compensation Table and the
value of each such individual's unexercised options at December 31, 2003 (1).
Number of Securities Underlying
No. of Unexercised Options at
Shares December 31, 2003 (1)
Acquired ------------------------------------------
Name on Exercise Value Realized Exercisable Unexercisable
- ----------------------------------- ------------------ ---------------------- --------------------- --------------------
William C. Erbey 0 0 805,554 197,853
Ronald M. Faris 0 0 341,140 379,706
Arthur D. Ringwald 0 0 21,381 52,039
Mark S. Zeidman 0 0 136,193 125,266
Robert J. Leist, Jr. 13,318 $22,121 (3) 24,195 29,476
Value of Unexercised In-the-Money
options at December 31, 2003 (2)
----------------------------------------
Name Exercisable Unexercisable
- ----------------------------------- ------------------- --------------------
William C. Erbey $1,376,168 $854,096
Ronald M. Faris $1,139,943 $769,664
Arthur D. Ringwald $102,037 $268,928
Mark S. Zeidman $517,083 $363,417
Robert J. Leist, Jr. $91,037 $123,779
(1) All options are to purchase shares of Common Stock. Options listed as
"exercisable" consist of options that became exercisable at or within 60
days of December 31, 2003.
(2) Based on the average closing price of a share of Common Stock on the New
York Stock Exchange on December 31, 2003.
(3) Based on the average of the high and low prices of the Common Stock as
reported on the New York Stock Exchange on November 17, 2003.
Compensation Committee Interlocks and Insider Participation
Determinations regarding compensation of Ocwen's employees are made by the
Compensation Committee. No member of the Committee is or at any time was an
employee of Ocwen or any subsidiary, nor did any member of the Committee have an
interest in a transaction, which would require disclosure hereunder.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors is responsible for
establishing management compensation policies and procedures to be reflected in
the compensation program offered to the executive officers of Ocwen and the
Bank. The Committee shares jurisdiction with the full Board of Directors over
the administration of and grants under the 1991 Non-Qualified Stock Option Plan.
General Compensation Policies. The broad general salary and benefit guidelines
are determined by the Committee. Ocwen seeks to provide executives with
long-term wealth accumulation capability, conditional upon personal performance,
individual service longevity and consistent high level financial performance of
Ocwen. With respect to Ocwen's officers other than Mr. William C. Erbey, the
Committee considered salary and bonus recommendations prepared by Mr. William C.
Erbey or other executive officers to determine fiscal 2003 compensation. The
salary adjustment recommendations were based on Ocwen's overall performance in
the past year and an analysis of compensation levels necessary to maintain and
attract quality personnel. It is through this process that Ocwen is able to
compete for and retain talented executives who are critical to Ocwen's long-term
success and align the interests of those executives with the long-term interests
of Ocwen's shareholders.
Annual Incentive Compensation. Ocwen's primary incentive compensation plan for
executives is the 1998 Annual Incentive Plan. Pursuant to the current plan, a
participant can earn cash, restricted stock, and stock option awards as
determined by the Compensation Committee. The awards are based on objective
performance criteria established by the Committee pursuant to the Plan, which
includes growth in our core businesses, reduction in non-core assets, cost
savings through Six Sigma initiatives and meeting budget objectives. Each
participant has a targeted annual incentive award that is expressed as a
percentage of total target compensation and varies with the participant's level
of responsibility. At the executive level, 20-60% of each executive's total
target compensation is at risk and payable only upon achievement of certain
16
minimum Company and individual performance levels. The incentive awards are
structured so that the compensation opportunities for executives are related to
the levels of business unit and individual performances actually achieved.
Other Compensation. The Compensation Committee's policy with respect to other
employee benefit plans is to provide competitive benefits to employees of Ocwen
and the Bank, including executive officers. A competitive comprehensive benefit
program is essential to achieving the goal of attracting and retaining highly
qualified employees.
Tax Considerations. Under Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"), the tax deduction by corporate taxpayers is limited
with respect to the compensation of certain executive officers to $1 million per
covered executive unless such compensation is based upon the attainment of
performance objectives meeting certain regulatory criteria or is otherwise
excluded from the limitation. Ocwen obtained shareholder approval of the 1998
Annual Incentive Plan and all amendments thereto and the LTIP in order to
qualify awards under such plans as performance-based compensation under Section
162(m) of the Code. It is the Compensation Committee's intention to qualify all
performance-based compensation for the exclusion from the deductibility
limitation of 162(m), except in situations where qualifying compensation for the
exclusion would be inconsistent with the overall best interest of Ocwen.
Chief Executive Officer Compensation. In determining the overall compensation
package for the Chief Executive Officer, the Committee considered the
performance of the Chief Executive Officer and the financial performance
achieved by Ocwen during the past fiscal year. For the CEO, incentive
compensation for 2003 was based largely on performance against specific goals
including growth of our loan servicing business and growth in our other core
businesses, reduction in non-core assets and cost savings, including those
attributable to increased utilization of our India operations centers and to our
Six Sigma initiatives.
Compensation Committee:
March 16, 2004 W.C. Martin, Chairman
W. Michael Linn, Director
Herbert B. Tasker, Director
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
(Proposal Two)
The Audit Committee of the Board of Directors of Ocwen has appointed
PricewaterhouseCoopers LLP, independent certified public accountants, to be
Ocwen's independent auditor for the year ending December 31, 2004, and has
further directed that the selection of the auditor be submitted for ratification
by the shareholders at the Annual Meeting.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting, will be given the opportunity to make a statement, if they so desire,
and will be available to respond to appropriate questions from shareholders.
The Board of Directors unanimously recommends that shareholders vote FOR the
appointment of PricewaterhouseCoopers LLP as the independent auditor for 2004.
Report of the Audit Committee
The Audit Committee of the Board of Directors has:
o Reviewed and discussed with management Ocwen's audited financial statements
as of and for the year ended December 31, 2003;
o Discussed with PricewaterhouseCoopers LLP, Ocwen's independent auditor, the
matters required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees"; and
o Received and reviewed the written disclosures and the letter from
PricewaterhouseCoopers LLP required by the Independence Standards Board's
Independence Standard No. 1, "Independence Discussions with Audit
17
Committees" and discussed with PricewaterhouseCoopers LLP their
independence.
In reliance on the review and discussion referred to above, the Committee
recommends to the Board of Directors that the audited financial statements be
included in Ocwen's Annual Report on Form 10-K for the year ended December 31,
2003.
PricewaterhouseCoopers LLP Fees
The following table shows the aggregate fees billed to Ocwen for professional
services by PricewaterhouseCoopers LLP for fiscal years 2003 and 2002:
Fiscal 2003 Fiscal 2002
----------- -----------
Audit Fees $ 1,035,119 $ 1,007,820
Audit-Related Fees 561,079 426,300
Tax Fees 90,409 114,131
All Other Fees 17,882 264,737
----------- -----------
Total $ 1,704,489 $ 1,812,988
=========== ===========
Audit Fees. This category includes the aggregate fees billed for professional
services rendered for the audits of the Ocwen's consolidated financial
statements for fiscal years 2003 and 2002, for the reviews of the financial
statements included in the Ocwen's quarterly reports on Form 10-Q during fiscal
2003 and 2002, and for services that are normally provided by the independent
auditors in connection with statutory and regulatory filings or engagements for
the relevant fiscal years.
Audit-Related Fees. This category includes the aggregate fees billed in each of
the last two fiscal years for assurance and related services by the independent
auditors that are reasonably related to the performance of the audits or reviews
of the financial statements and are not reported above under "Audit Fees," and
generally consist of fees for other attest engagements under professional
auditing standards, internal control related matters, audits of employee benefit
plans, and due diligence.
Tax Fees. This category includes the aggregate fees billed in each of the last
two fiscal years for professional services rendered by the independent auditors
for tax compliance, tax planning and tax advice. Of these amounts, $51,889 and
$29,511 were related to tax compliance services for 2003 and 2002, respectively.
All Other Fees. This category includes the aggregate fees billed in each of the
last two fiscal years for products and services provided by the independent
auditors that are not reported above under "Audit Fees," "Audit-Related Fees,"
or "Tax Fees."
The Audit Committee considered the compatibility of the non-audit-related
services provided by and fees paid to PricewaterhouseCoopers LLP in 2003 and the
proposed services for 2004 and determined that such services and fees are
compatible with the independence of PricewaterhouseCoopers LLP.
Audit Committee:
March 16, 2004 Ronald J. Korn, Chairman
William H. Lacy, Director
W. C. Martin, Director
SHAREHOLDER PROPOSALS
At the Annual Meeting, Ocwen may exercise discretionary authority when voting on
a shareholder proposal that is not included as an agenda item in this Proxy
Statement if the proposal was received by Ocwen after February 11, 2004 and the
proposal is properly presented at the annual meeting. Ocwen did not receive
notice of any shareholder proposal relating to the Annual Meeting.
Any proposal which a shareholder desires to have included in the proxy materials
of Ocwen relating to the next Annual Meeting of Shareholders, which is scheduled
to be held in May 2005 (the "2005 Annual Meeting"), must be received at the
executive offices of Ocwen no later than November 30, 2004. If notice of a
shareholder proposal relating to the 2005 Annual Meeting is received on or prior
18
to February 15, 2005 and the proposal is properly presented at the 2005 Annual
Meeting, then the Company may exercise discretionary authority when voting on
the proposal, unless the shareholder satisfies certain requirements of the SEC,
including mailing a separate proxy statement to Ocwen's shareholders. If notice
of a shareholder proposal relating to the 2005 Annual Meeting is received by
Ocwen after February 15, 2005 and the proposal is properly presented at the 2005
Annual Meeting, then Ocwen may exercise discretionary authority when voting on
the proposal.
All shareholder proposals should be directed to Ocwen Financial Corporation,
Attn: Secretary, 1675 Palm Beach Lakes Boulevard, West Palm Beach, Florida
33401. It is urged that any shareholder proposal be sent certified mail,
return-receipt requested.
ANNUAL REPORTS
A copy of Ocwen's Annual Report to Shareholders for the year ended December 31,
2003 was mailed to shareholders entitled to notice of the Annual Meeting
commencing on or about March 29, 2004. Such report is not part of the proxy
solicitation materials.
Ocwen will furnish without charge to each person whose proxy is solicited and to
each person who represents that as of the record date for the meeting he or she
was a beneficial owner of shares entitled to vote at the meeting, on written
request, a copy of Ocwen's Annual Report on Form 10-K for the year ended
December 31, 2003 required to be filed by Ocwen with the SEC under the Exchange
Act. Such requests should be directed to Shareholder Relations, Ocwen Financial
Corporation, 1675 Palm Beach Lakes Boulevard, West Palm Beach, Florida 33401,
telephone number (561) 682-8400. Such report is not part of the proxy
solicitation materials.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting other
than the matters described above in this Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
Proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the person or persons appointed as proxies.
The cost of the solicitation of proxies will be borne by Ocwen. Ocwen will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of the Common Stock. In addition to solicitations by mail,
directors, officers and employees of Ocwen may solicit proxies personally or by
telephone without additional compensation.
19
EXHIBIT A
OCWEN FINANCIAL CORPORATION
AUDIT COMMITTEE CHARTER
NOVEMBER 7, 2002
Amended March 8, 2004
I. PURPOSE OF THE COMMITTEE
The Committee's purpose is to provide assistance to the Board in fulfilling its
legal and fiduciary obligations with respect to matters involving the
accounting, auditing, financial reporting, internal control and legal compliance
functions of the Corporation and its subsidiaries. This includes, without
limitation, (a) assisting the Board's oversight of (i) the integrity of the
Corporation's financial statements, (ii) the Corporation's compliance with legal
and regulatory requirements, (iii) the Corporation's independent auditors'
qualifications and independence and (iv) the performance of the Corporation's
independent auditors and the Corporation's internal audit function, and (b)
preparing the report required to be prepared by the Committee pursuant to the
rules of the Securities and Exchange Commission (the "SEC") for inclusion in the
Corporation's annual proxy statement.
II. COMPOSITION OF THE COMMITTEE
The Committee shall be comprised of three or more directors as determined from
time to time by resolution of the Board. Each member of the Committee shall be
qualified to serve on the Committee pursuant to the requirements of the New York
Stock Exchange (the "NYSE") and the Sarbanes - Oxley Act of 2002 (the "Act") and
the rules and regulations promulgated by the SEC pursuant to the Act. Director's
fees (including any additional amounts paid to chairs of committees and to
members of committees of the Board) are the only compensation a member of the
Committee may receive from the Corporation.
No director may serve as a member of the Committee if such director serves on
the audit committee of more than two other public companies, unless the Board
determines that such simultaneous service would not impair the ability of such
director to effectively serve on the Committee. Any such determination must be
disclosed in the Corporation's annual proxy statement.
The chairperson of the Committee shall be designated by the Board, provided that
if the Board does not so designate a chairperson, the members of the Committee,
by a majority vote, may designate a chairperson. Each member of the Committee
must be "financially literate", as such qualification is interpreted by the
Board in its business judgment, or must become financially literate within a
reasonable period of time after his or her appointment to the Committee. In
addition, at least one member of the Committee must have "accounting or related
financial management expertise", as the Board interprets such qualification in
its business judgement. Further, either (i) at least one member of the Committee
must be a "financial expert", as such term is defined in the rules and
regulations promulgated by the SEC pursuant to the Act, or (ii) if no member of
the Committee is a "financial expert", the Committee shall so inform the
Corporation.
Any vacancy on the Committee shall be filled by majority vote of the Board at
the next meeting of the Board following the occurrence of the vacancy. No member
of the Committee may be removed except by majority vote of the Board.
III. MEETINGS OF THE COMMITTEE
The Committee shall meet once every fiscal quarter or more frequently as it
shall determine is necessary to carry out its duties and responsibilities. The
Committee, in its discretion, may ask members of management or others to attend
its meetings (or portions thereof) and to provide pertinent information as
necessary. The Committee should meet separately on a periodic basis with (i)
management, (ii) the director of the Corporation's internal auditing department
or other person responsible for the internal audit function and (iii) the
Corporation's independent auditors, in each case to discuss any matters that the
20
Committee or any of the above persons or firms believe should be discussed
privately.
A majority of the members of the Committee present in person or by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other shall constitute a
quorum.
The Committee shall maintain minutes of its meetings and records relating to
those meetings and provide copies of such minutes to the Board.
IV. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
In carrying out its duties and responsibilities, the Committee's policies and
procedures should remain flexible, so that it may be in a position to best react
or respond to changing circumstances or conditions. The following are within the
authority of the Committee:
(a) Select, in its sole discretion (subject to shareholder ratification),
the firm of independent auditors to audit the books and accounts of the
Corporation and its subsidiaries for each fiscal year, instruct the
Corporation's independent auditors that they are ultimately accountable to the
Committee and approve the independent auditors' annual engagement letter as well
as all audit and, as provided in the Act, all permitted non-audit engagements
and relationships between the Corporation and such auditors;
(b) Review the performance of the Corporation's independent auditors,
including the lead partner of the independent auditors, and, in its sole
discretion, make decisions regarding the replacement or termination of the
independent auditors when circumstances warrant;
(c) Obtain and review at least annually the report of the independent
auditors describing:
(i) the independent auditors' internal quality-control procedures;
(ii) any material issues raised by the most recent internal quality-
control review, by a peer review or by any inquiry or investigation by any
governmental or professional authority of the independent auditors, within the
preceding five years, respecting one or more independent audits carried out by
the independent auditors, and any steps taken to deal with any such issues; and
(iii) all relationships between the independent auditors and the
Corporation (including a description of each category of services provided by
the independent auditors to the Corporation and a list of the fees billed for
each such category);
The Committee should present its conclusions with respect to the above matters,
as well as its review of the lead partner of the independent auditors, and its
views on whether there should be a regular rotation of the independent auditors,
to the Board.
(d) Oversee the independence of the independent auditors by, among other
things:
(i) actively engaging in a dialogue with the independent auditors
with respect to any disclosed relationships or services that may impact the
objectivity and independence of the independent auditors, and taking appropriate
action to satisfy it of the auditors' independence;
(ii) inquiring that the lead audit partner and reviewing audit partner
responsible for the audit of the Corporation's financials statements have not
performed audit services for the Corporation for more than the previous five
consecutive fiscal years of the Corporation;
(iii) inquiring that the chief executive officer, controller, chief
financial officer, chief accounting officer or other persons serving in an
equivalent position of the Corporation, was not, within one year prior to the
21
initiation of the audit, an employee of the independent auditor who participated
in any capacity in the Corporation's audit; and
(iv) considering whether there should be a regular rotation of the
Corporation's independent auditors;
(e) Review the annual audit plan of the Corporation's independent auditors,
including the scope of the audit and monitor such plan's progress and results
during the year;
(f) Review the results of the year-end audit of the Corporation by the
independent auditors, including any significant matters regarding internal
controls over financial reporting that have come to their attention during the
conduct of their audit;
(g) Review with management, the Corporation's independent auditors and the
director of the Corporation's internal auditing department, the following:
(i) the Corporation's annual audited financial statements and
quarterly unaudited financial statements, including the Corporation's
disclosures under "Management's Discussion and Analysis of Financial Condition
and Results of Operations";
(ii) critical accounting policies and such other accounting policies
of the Corporation as are deemed appropriate for review by the Committee prior
to any interim or year-end filings with the SEC or other regulatory body,
including any financial reporting issues which could have a material impact on
the Corporation's financial statements;
(iii) any significant changes in the Corporation's selection or
application of accounting principles;
(iv) alternative treatments of financial information that have been
discussed by the independent auditors and management, ramifications of the use
of such alternative disclosures and treatments and the treatment preferred by
the auditors;
(v) all other material written communications between the independent
auditors and management; and
(vi) the effect of off-balance sheet structures on the financial
statements of the Corporation;
(h) Review with the chief executive officer and chief financial officer and
independent auditors, periodically, the following:
(i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Corporation's ability to
record, process, summarize, and report financial data, including any material
weaknesses in internal controls identified by the Corporation's independent
auditors;
(ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Corporation's internal
controls; and
(iii) any significant changes in internal controls over financial
reporting, including any corrective actions with regard to significant
deficiencies and material weaknesses.
(i) Attempt to resolve all disagreements between the Corporation's
independent auditors and management regarding financial reporting;
(j) Review on a regular basis with the Corporation's independent auditors
any major issues or serious difficulties encountered by the independent auditors
in the course of any audit work, including management's response with respect
thereto, any restrictions on the scope of the independent auditor's activities
or on access to requested information, and any significant disagreements with
22
management. In connection therewith, the Committee should review with the
independent auditors the following:
(i) any accounting adjustments that were noted or proposed by the
independent auditors but were rejected by management;
(ii) any significant consultations on matters that are otherwise
required to be disclosed to the Committee made with the independent auditor's
national office respecting auditing or accounting issues' and
(iii) any "management" or "internal control" letter issued by the
independent auditors to the Corporation;
(k) Confirm that the Corporation's interim financial statements included in
Quarterly Reports on Form 10- Q have been reviewed by the Corporation's
independent auditors;
(l) Review:
(i) the adequacy and effectiveness of the Corporation's accounting
and internal control policies and procedures on a regular basis, including the
responsibilities, budget and staffing of the Corporation's internal audit
function, through inquiry and discussions with the Corporation's internal
auditors and management of the Corporation; and
(ii) any required report prepared by management, and attested to by
the Corporation's independent auditors, regarding the effectiveness of the
Corporation's internal controls over financial reporting and stating
management's responsibility to establish and maintain such internal controls,
prior to its inclusion in the Corporation's annual report;
(m) Review with management the Corporation's administrative, operational
and accounting internal controls, including any special steps adopted in light
of the discovery of material control deficiencies, and evaluate whether the
Corporation is operating in accordance with its prescribed policies, procedures
and codes of conduct;
(n) Receive periodic reports from management to assess the impact on the
Corporation of significant accounting or financial reporting developments that
may have a bearing on the Corporation;
(o) Establish and maintain free and open means of communication between and
among the Board, the Committee, the Corporation's independent auditors, the
Corporation's internal auditing department and management, including providing
such parties with appropriate opportunities to meet separately and privately
with the Committee on a periodic basis;
(p) Review the Corporation's earnings press releases (especially the use of
"pro forma" or "adjusted" information not prepared in compliance with generally
accepted accounting principles), as well as financial information and earnings
guidance provided by the Corporation to analysts and rating agencies which
review may be done generally (i.e., discussion of the types of information to be
disclosed and type of presentations to be made), and the Committee need not
discuss in advance each earnings release or each instance in which the
Corporation may provide earnings guidance;
(q) Establish clear hiring policies by the Corporation for employees or
former employees of the Corporation's independent auditors, as needed;
(r) Discuss guidelines and policies governing the process by which senior
management of the Corporation assess and manage the Corporation's exposure to
risk, as well as the Corporation's major financial risk exposures and the steps
management has taken to monitor and control such exposures;
(s) Meet at least annually with the general counsel, and outside counsel
when appropriate, to review legal and regulatory matters, including any matters
that may have a material impact on the financial statements of the Corporation;
23
(t) Prepare the report required by the rules of the SEC to be included in
the Corporation's annual proxy statement;
(u) Review the Corporation's program to monitor compliance with the
Corporation's Code of Conduct, and meet periodically with the Corporation's
Compliance Officer to discuss compliance with the Code of Conduct;
(v) Obtain from the Corporation's independent auditors any information
pursuant to Section l0A of the Securities Exchange Act of 1934, if triggered;
(w) Establish procedures for (i) the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal accounting
controls or auditing matters, and (ii) the confidential, anonymous submission by
employees of the Corporation of concerns regarding questionable accounting or
auditing matters;
(x) Secure independent expert advice to the extent the Committee determines
it to be appropriate, including retaining independent counsel, accountants,
consultants or others, to assist the Committee in fulfilling its duties and
responsibilities, the cost of such independent expert advisors to be borne by
the Corporation;
(y) Report regularly to the Board on its activities, as appropriate. In
connection therewith, the Committee should review with the Board any issues that
arise with respect to the quality or integrity of the Corporation's financial
statements, the Corporation's compliance with legal or regulatory requirements,
the performance and independence of the Corporation's independent auditors or
the performance of the internal audit function;
(z) Prepare and review with the Board an annual performance evaluation of
the Committee, which evaluation must compare the performance of the Committee
with the requirements of this Charter, and set forth the goals and objectives of
the Committee for the upcoming year. The evaluation should include a review and
assessment of the adequacy of the Committee's Charter. The performance
evaluation by the Committee shall be conducted in such manner as the Committee
deems appropriate. The report to the Board may take the form of an oral report
by the chairperson of the Committee or any other member of the Committee
designated by the Committee to make this report; and
While the Committee has the duties and responsibilities set forth in this
charter, the Committee is not responsible for planning or conducting the audit
or for determining whether the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles.
In fulfilling their responsibilities hereunder, it is recognized that members of
the Committee are not full-time employees of the Corporation. It is not the duty
or responsibility of the Committee or its members to conduct "field work" or
other types of auditing or accounting reviews or procedures or to set auditor
independence standards. Each member of the Committee shall be entitled to rely
on (i) the integrity of those persons and organizations within and outside the
Corporation from which it receives information, (ii) the accuracy of the
financial and other information provided to the Committee absent actual
knowledge to the contrary (which shall be promptly reported to the Board) and
(iii) statements made by management or third parties as to any information
technology, internal audit and other non-audit services provided by the auditors
to the Corporation.
24
OCWEN FINANCIAL CORPORATION
1675 Palm Beach Lakes Boulevard - West Palm Beach, Florida 33401
REVOCABLE PROXY
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF OCWEN
FINANCIAL CORPORATION, FOR USE ONLY AT THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 2004 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints John R. Erbey, William C. Erbey, Ronald M. Faris
or any of them, as proxy, with full powers of substitution, and hereby
authorizes them to represent and vote, as designated below, all the shares of
Common Stock of Ocwen Financial Corporation (the "Company") held of record by
the undersigned on March 18, 2004 at the Annual Meeting of Shareholders to be
held at the offices of the Company located at 1675 Palm Beach Lakes Boulevard,
West Palm Beach, Florida 33401 on Tuesday, May 18, 2004 at 9:00 a.m., Eastern
Standard Time, and at any adjournment thereof.
Shares of Common Stock of the Company will be voted as specified. If not
otherwise specified, this proxy will be voted FOR the election of each of the
Board of Directors' nominees to the Board of Directors and FOR the ratification
of the appointment of PricewaterhouseCoopers LLP as independent auditor. You may
revoke this proxy at any time prior to the time it is voted at the Annual
Meeting.
The Undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders of Ocwen Financial Corporation to be held on May 18, 2004, or any
adjournment thereof, a Proxy Statement for the Annual Meeting and the 2003
Annual Report to Shareholders of the Company prior to the signing of this proxy.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE ADDRESSED TO: AMERICAN STOCK TRANSFER & TRUST COMPANY,
59 MAIDEN LANE, NEW YORK, N.Y. 10038
(Continued and to be dated and signed on the reverse side)
COMMENTS:
25
ANNUAL MEETING OF SHAREHOLDERS OF
OCWEN FINANCIAL CORPORATION
MAY 18, 2004
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach and mail in the envelope provided.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
- -----------------------------------------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS: 2. RATIFICATION OF THE APPOINTMENT BY THE BOARD OF
NOMINEES: DIRECTORS OF PRICEWATERHOUSECOOPERS LLP AS THE
INDEPENDENT AUDITOR OF THE COMPANY FOR THE YEAR
[ ] FOR ALL NOMINEES ( ) William C. Erbey ENDING DECEMBER 31, 2004.
[ ] WITHHOLD AUTHORITY ( ) Ronald M. Faris
FOR ALL NOMINEES ( ) Ronald J. Korn [ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] FOR ALL EXCEPT ( ) William H. Lacy
(See instructions below) ( ) W. Michael Linn 3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
( ) W.C. Martin VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
( ) Barry N. Wish BEFORE THE ANNUAL MEETING.
INSTRUCTION: To withhold authority to vote for any PLEASE CHECK IF YOU PLAN TO ATTEND THE MEETING [ ]
individual nominee(s), mark "FOR ALL EXCEPT" and fill
in the circle next to each nominee you wish to TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE
withhold, as shown here: (X) REVERSE SIDE HEREOF.
To change the address on your account, please check he
box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be submitted
via this method. [ ]
Signature of Shareholder __________________ Date: _____ Signature of Shareholder __________________ Date: _____
Please sign exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
26