SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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|[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)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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April 16, 2021
Dear Fellow Shareholder:
On behalf of the Board of Directors, I cordially invite you to participate in the Annual Meeting of Shareholders of Ocwen Financial Corporation, which will be held on Tuesday, May 25, 2021, at 9:00 a.m., Eastern Daylight Time. In light of public health concerns regarding COVID-19, we will again be hosting this year’s Annual Meeting in a virtual format only via live audiocast on the Internet at www.virtualshareholdermeeting.com/OCN2021. To participate, vote or submit questions during the Annual Meeting via live audiocast, please review the detailed procedures included in our Notice of Annual Meeting. You will not be able to attend the Annual Meeting physically in person. For purposes of attendance at the Annual Meeting, all references herein to “present,” “participate,” or “in person,” shall mean virtually present at the Annual Meeting. This does not represent a change in our shareholder engagement philosophy and we continue planning to return to in-person meetings as soon as it is possible to safely do so.
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 participate in our virtual Annual Meeting. We encourage you to complete your proxy card in one of the manners described in the accompanying materials even if you plan to participate in the Annual Meeting. This will not prevent you from voting during the Annual Meeting if you choose to participate and vote at that time, but will ensure that your vote is counted if you are unable to participate. If you are a beneficial owner holding shares through a brokerage firm, bank, broker-dealer, or similar organization you should follow the instructions on your voting instruction form to vote your shares. Please note that if you are a beneficial owner of our shares you cannot vote your shares at the Annual Meeting unless you have obtained a legal proxy from your brokerage firm, bank, broker-dealer, or similar organization.
Your continued support of, and interest in, Ocwen Financial Corporation is sincerely appreciated.
Phyllis R. Caldwell
Chair, Board of Directors
OCWEN FINANCIAL CORPORATION
1661 Worthington Road, Suite 100
West Palm Beach, Florida 33409
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 25, 2021
Our Annual Meeting of Shareholders will be held:
|Date:||Tuesday, May 25, 2021|
|Time:||9:00 a.m., Eastern Daylight Time|
|Location:||Virtual Meeting Only via Live Audiocast|
Please review the instructions contained in this Proxy Statement if you wish to participate in the virtual Annual Meeting.
|●||To elect seven directors for one-year terms or until their successors are elected and qualified;|
|●||To ratify, on an advisory basis, the appointment by the Audit Committee of our Board of Directors of Deloitte & Touche LLP as the independent registered public accounting firm of Ocwen Financial Corporation for the fiscal year ending December 31, 2021;|
|●||To hold an advisory vote to approve executive compensation (“Say-on-Pay”);|
|●||To approve the Ocwen Financial Corporation 2021 Equity Incentive Plan; and|
|●||To transact such other business as may properly come before the meeting and any postponement or adjournment of the meeting. Management is not aware of any such other business at this time.|
|●||Our Board of Directors has fixed March 26, 2021 as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. A list of stockholders entitled to vote at the Annual Meeting will be available for examination at our offices for ten days prior to the Annual Meeting. The list of stockholders may also be accessed during the virtual Annual Meeting at www.virtualshareholdermeeting.com/OCN2021 by using the control number on your proxy card or voting instruction form.|
|●||Shareholders of record at the close of business on the record date will be entitled to vote and ask questions online at the Annual Meeting. Please note that if you do not have your control number, you will be able to access and listen to the Annual Meeting but you will not be able to vote your shares or submit questions during the Annual Meeting.|
|●||If you would like to attend the virtual meeting and you have your control number, please go to www.virtualshareholdermeeting.com/OCN2021 15 minutes prior to the start of the meeting to log in. For shareholders who hold shares in street name, if you came through your brokerage firm’s website and do not have your control number, you can gain access to the meeting by logging into your brokerage firm’s website 15 minutes prior to the meeting start, selecting the shareholder communications mailbox to link through to the meeting and the control number will automatically populate. For technical assistance when logging into Ocwen’s Annual Meeting, please call 844-976-0738 (US) or 303-562-9301 (International).|
|●||If you wish to submit a question during the Annual Meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/OCN2021, type your question into the “Ask a Question” field, and click “Submit.”|
This proxy statement for our 2021 Annual Meeting of Shareholders and our Annual Report to shareholders on Form 10-K for the year ended December 31, 2020 will be available on or about April 16, 2021 on our website at www.ocwen.com in the Financial Information section under the “Shareholders” tab. The approximate date on which this proxy statement, the proxy card and other accompanying materials are first being sent or given to shareholders is April 16, 2021. Additionally, and in accordance with Securities and Exchange Commission rules, you may access our annual report and proxy materials at http://shareholders.ocwen.com/sec.cfm, a website that does not identify or track visitors of the site.
If you have questions for Ocwen Financial Corporation regarding this virtual Annual Meeting, please contact our shareholder relations department at firstname.lastname@example.org.
By Order of the Board of Directors,
Joseph J. Samarias
April 16, 2021
OCWEN FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is being furnished to you in connection with the solicitation of proxies by the Board of Directors of Ocwen Financial Corporation (“Ocwen,” the “Company,” “we,” “us,” or “our”) for use at our 2021 Annual Meeting of Shareholders (the “Annual Meeting”) and at any postponement or adjournment of this meeting. The approximate date on which this proxy statement, the proxy card and other accompanying materials are first being sent or given to shareholders is April 16, 2021. The Annual Meeting will be held on Tuesday, May 25, 2021, at 9:00 a.m., Eastern Daylight Time, for the purposes listed in the Notice of Annual Meeting of Shareholders. In light of COVID-19 health concerns, we will be hosting this year’s Annual Meeting via live audiocast on the Internet at www.virtualshareholdermeeting.com/OCN2021. This does not represent a change in our shareholder engagement philosophy and we are planning to return to in-person meetings as soon as it is safe to do so. If you are interested in participating in the virtual meeting, voting or submitting questions at that time, please see “Annual Meeting Participation” below for further details. You will not be able to attend the Annual Meeting physically in person. For purposes of attendance at the Annual Meeting, all references herein to “present,” “participate,” or “in person,” shall mean virtually present at the Annual Meeting.
How a Proxy Works
The Board of Directors has appointed Glen A. Messina, President and Chief Executive Officer, and Joseph J. Samarias, Executive Vice President, General Counsel and Secretary, as the management proxy holders for the Annual Meeting. If you properly complete, sign and return your proxy card by mail, or submit your proxy by Internet or telephone, and do not revoke it prior to its use, your shares will be voted in accordance with your instructions. If you do not give contrary instructions, the management proxy holders will vote all shares represented by valid proxies as follows:
|●||Proposal One (Election of Directors) - “FOR ALL” of the seven nominees for Director;|
|●||Proposal Two (Advisory Ratification of Appointment of Independent Registered Public Accounting Firm) - “FOR” ratification, on an advisory basis, of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021;|
|●||Proposal Three (Advisory Resolution on Named Executive Officer Compensation) - “FOR” approval, on an advisory basis, of the compensation of Ocwen’s executive officers whose compensation is disclosed in this proxy statement (“named executive officers”) (“Say-on-Pay”);|
|●||Proposal Four (Approval of the Ocwen Financial Corporation 2021 Equity Incentive Plan (the “2021 Plan”)) - “FOR” approval; and|
|●||with regard to any other business that properly comes before the meeting, in accordance with the best judgment of the management proxy holders. As of the date of this proxy statement, we do not know of any other business that may come before the Annual Meeting.|
How to Revoke a Proxy
Your proxy may be used only at the Annual Meeting and any postponement or adjournment of this meeting and may not be used for any other meeting. You have the power to revoke your proxy at any time before it is exercised by:
|●||filing written notice of revocation with our Secretary at the following address:|
|Joseph J. Samarias, Secretary|
|c/o Ocwen Financial Corporation|
|1661 Worthington Road, Suite 100|
|West Palm Beach, Florida 33409|
|●||submitting a properly executed proxy card bearing a later date or submitting another proxy using the Internet or by telephone (your latest Internet or telephone voting instructions will be followed), or|
|●||participating in the virtual Annual Meeting and giving the Secretary notice of your intention to vote at that time.|
If you are interested in participating in the virtual Annual Meeting, voting or submitting questions at that time, please see “Annual Meeting Participation” below for further details.
Who May Vote at the Annual Meeting
On all matters properly presented at the Annual Meeting, each share of our common stock is entitled to one vote. All shareholders who owned our common stock as of the close of business on March 26, 2021 (the “Record Date”) are cordially invited to participate in the 2021 Annual Meeting. Only shareholders of record or beneficial owners of shares of our common stock at the close of business on the Record Date are entitled to participate and vote at the Annual Meeting or any postponement or adjournment of this meeting. If your shares are registered directly in your name with American Stock Transfer & Trust Company, Ocwen’s stock transfer agent, you are the “shareholder of record” with respect to those shares. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or similar organization (collectively, “Broker”), then you are the “beneficial owner of shares held in street name.” As a beneficial owner, you have the right to instruct your Broker how to vote your shares. Most individual shareholders are beneficial owners of shares held in street name. At the close of business on the Record Date, there were 8,688,115 shares of common stock issued and outstanding.
How to Vote if you are a Shareholder of Record
If you are a shareholder of record and you have received a printed set of the proxy materials by mail, we encourage you to fill in, date and sign the enclosed proxy card and mail it promptly in the enclosed envelope to make sure that your shares are represented at the Annual Meeting. Shareholders of record also have the option of voting by using a toll-free telephone number or via the Internet. Instructions for using these services are included on the proxy card. If you are a shareholder of record and participate in the Annual Meeting, you may, if you desire, revoke your proxy in accordance with the procedures described in this Proxy Statement and vote your shares during the meeting. Please note that your presence (without further action) at the Annual Meeting will not constitute revocation of a previously given proxy.
How to Give Voting Instructions if you are a Beneficial Owner of Shares held in Street Name
If you are a beneficial owner of shares held in street name, you are considered the beneficial owner of the shares, and your shares may be voted at the Annual Meeting only by the Broker that holds your shares. To instruct your Broker how your shares are to be voted at the Annual Meeting, you will need to follow the instructions provided by the Broker that holds your shares. Many Brokers offer the option of submitting voting instructions over the Internet or by telephone. You are also welcome to participate in the Annual Meeting, but you will need to follow the instructions provided to you by your Broker. Please note that if you are a beneficial owner of our shares you cannot vote your shares at the Annual Meeting unless you have obtained a legal proxy from your Broker. Please contact your Broker for further information. If you wish to revoke your proxy any time before the Annual Meeting you should contact your Broker to find out how to change or revoke your voting instructions.
If you hold your shares in street name through a brokerage account and you do not submit instructions to your Broker about how your shares are to be voted, one of two things can happen depending on the type of proposal. If the proposal involves a “routine” matter, such as ratification of the appointment of the independent registered public accounting firm, then the rules of the New York Stock Exchange provide Brokers discretionary power to vote your shares even if you do not provide instructions. If, however, the proposal involves a “non-routine” matter, such as the proposals to elect directors, approve Say-on-Pay and approve the 2021 Plan, then Brokers are not permitted to vote your shares without instruction from you. If you do not submit voting instructions to your Broker and your Broker exercises its discretion to vote your shares on Proposal Two to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021, your shares will constitute broker “non-votes” on each of the other proposals at the Annual Meeting. Therefore, it is important that you provide instructions to your Broker if your shares are held by a Broker so that your votes with respect to election of directors, Say-on-Pay, and the 2021 Plan are counted.
Quorum and Voting Information
The presence at the Annual Meeting of a majority of the votes of our common stock entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.
Assuming a quorum, the seven nominees for director receiving a plurality of the votes cast for director will be elected as directors of Ocwen. A plurality vote requirement means that the director nominees with the greatest number of votes cast, even if less than a majority, will be elected. There is no cumulative voting. You may vote in favor of or withhold authority to vote for one or more nominees for director. For Proposal Two to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021, Proposal Three to approve Say-on-Pay, and Proposal Four to approve the 2021 Plan, the proposal will be approved if the votes cast by the holders of the shares represented at the Annual Meeting and entitled to vote in favor of the action exceed the votes cast opposing the action. Because Proposal Two to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021 and Proposal Three to approve Say-on-Pay are advisory in nature, there is no specific requirement for approval for these proposals. It will be up to the Audit Committee and the Compensation and Human Capital Committee with respect to Proposals Two and Three, respectively, as well as the Board of Directors, to determine whether and how to implement the advisory votes on the ratification of the appointment of our independent registered public accounting firm and Say-on-Pay.
Abstentions will be counted as present and entitled to vote for purposes of determining whether a quorum is present. For Proposal One on the election of directors, a “withhold vote” will not be counted in determining the vote’s outcome, because the candidates who receive the highest number of “for” votes are elected, and candidates only need a single “for” vote to be elected. Abstentions will not be counted as votes cast with respect to Proposal Two to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021 or Proposal Three to approve Say-on-Pay. Under New York Stock Exchange listing standards applicable to shareholder approval of equity compensation plans, abstentions will be counted as votes cast on Proposal Four to approve the 2021 Plan and therefore will have the same effect as votes against that proposal. If any broker “non-votes” occur at the meeting with respect to your shares, the broker “non-votes” will be counted as present and entitled to vote for purposes of determining whether a quorum is present, but will not be counted as votes cast with respect to Proposal One on the election of directors, Proposal Three to approve Say-on-Pay, or Proposal Four to approve the 2021 Plan and therefore will not be counted in determining the outcome of those proposals presented for your vote.
Annual Meeting Participation
Because we continue to prioritize the health and wellbeing of our shareholders, our directors, and our employees, we will again be hosting our Annual Meeting via live audiocast on the Internet at www.virtualshareholdermeeting.com/OCN2021. You will not be able to attend the Annual Meeting physically in person. Our shareholders will be afforded the same opportunities to participate at the virtual Annual Meeting as they would at an in-person annual meeting of shareholders.
Shareholders of record will be able to vote and ask questions online during the meeting. If you would like to attend the virtual Annual Meeting and you have your control number, please go to www.virtualshareholdermeeting.com/OCN2021 15 minutes prior to the start of the meeting to log in. Please note that if you do not have your control number, you will be able to access and listen to the Annual Meeting but you will not be able to vote your shares or submit questions during the Annual Meeting. For shareholders who hold shares in street name, if you came through your brokerage firm’s website and do not have your control number, you can gain access to the meeting by logging into your brokerage firm’s website site 15 minutes prior to the meeting start, selecting the shareholder communications mailbox to link through to the meeting and the control number will automatically populate. Please note that if you are a beneficial owner of our shares you cannot vote your shares at the Annual Meeting unless you have obtained a legal proxy from your Broker. Please contact your Broker for further information.
After the Annual Meeting, we will spend up to 15 minutes answering shareholder questions that comply with the meeting rules of conduct, which will be posted on the website above prior to the Annual Meeting. To the extent time doesn’t allow us to answer all of the appropriately submitted questions, we will answer them in writing on our investor relations website, at http://www.ocwen.com in the Shareholder Relations section, soon after the meeting and the answers will remain available until one week after posting. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition.
For technical assistance when logging into the virtual Annual Meeting, please call 800-586-1548 (US) or 303-562-9288 (International).
If you plan to attend the virtual Annual Meeting, we request you notify us no less than seven days in advance at email@example.com (i.e. no later than May 18, 2021) to assist us in our preparations for the virtual meeting.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by a reference to a future period or by the use of forward-looking terminology and address matters that are, to different degrees, uncertain. Because forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially, readers should not place undue reliance on such statements. In the past, actual results have differed from those suggested by forward looking statements and this may happen again. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include those described in Ocwen’s reports and filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2020 and any current and quarterly reports since such date. Anyone wishing to understand Ocwen’s business should review our SEC filings. Ocwen’s forward-looking statements speak only as of the date they are made and we disclaim any obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise. Ocwen may post information that is important to investors on our website.
ELECTION OF DIRECTORS
Our Bylaws provide that our Board of Directors shall consist of no less than three and no more than eleven members with the exact number to be fixed by our Board of Directors. Effective May 27, 2020, our Board of Directors fixed the number of directors at seven.
As further described below under “Board of Directors and Corporate Governance” and, in particular, under “Annual Board Assessment” and “Director Nomination Process,” it is the responsibility of the Nomination/Governance Committee and the Board to periodically review Board size and composition and, if deemed appropriate, to make changes that the Board believes will best position the Board to enhance our ability to create value for shareholders and address changes in the market and business environment in which we operate.
Under the leadership of our Board, the Company demonstrated strong execution on our key strategic initiatives throughout 2020: expanding our originations business to replenish and grow our servicing portfolio, driving continuous cost improvement to maintain an industry cost competitive position, effectively managing our balance sheet to ensure adequate liquidity, finance our ongoing business needs and provide a solid platform for growth, and fulfilling our regulatory commitments while resolving remaining legacy and regulatory matters. In addition, the Board guided the Company through the highly challenging environment created by the global COVID-19 pandemic, including disruption in the financial markets and our industry, rapidly changing regulatory requirements, and the transition of most of our workforce to a remote working environment. As the Board navigated these critical near-term challenges, they remained committed to positioning the Company to execute on our strategic priorities while working to maximize value for our shareholders, shepherding the Company through a strategic process that resulted in early 2021 in the refinancing of our corporate debt and the launch of a long-term strategic relationship with Oaktree Capital Management L.P.
To put the Company in the best position to execute on these initiatives, the Nomination/Governance Committee and the Board evaluate on an ongoing basis the skillsets and experiential perspectives of our directors as well as individuals recommended as potential nominees. Consistent with our Board Diversity Policy and our Corporate Governance Guidelines, the Board has identified a set of director nominees with individual backgrounds that, when combined, provide a portfolio of experience and knowledge that will best serve the Company’s strategic and governance needs.
The following provides additional information about the attributes of our Board of Directors:
|Ocwen Financial Corporation|
|Board of Directors Skills and Experiences(1)|
|Phyllis R. Caldwell||Alan J. Bowers|
|Jacques J. Busquet||Glen A. Messina||DeForest B. Soaries, Jr.|
|Public Company Board Experience||✓||✓||✓||✓||✓||✓|
|Served as a Chief Executive Officer or Head of Comparably Sized Organization||✓||✓||✓||✓||✓||✓||✓|
|Financial Services Industry Experience||✓||✓||✓||✓||✓||✓||✓|
|Audit Committee Financial Expert||✓||✓||✓||✓||✓|
|Regulatory Compliance and Risk Management Experience||✓||✓||✓||✓||✓||✓||✓|
|Mortgage Servicing, Lending, or Community Housing Organization Experience||✓||✓||✓||✓||✓||✓|
|(1)||Includes outside managerial and director experience only (i.e., does not include Ocwen-based experience)|
Nominees for Director
Our Board of Directors, upon the recommendation of the Nomination/Governance Committee, is proposing the seven nominees listed below for election as directors at the Annual Meeting. All nominees currently serve as our directors. There are no arrangements or understandings between any nominee and any other person for selection as a nominee.
Each of the nominees listed below has consented to being named in this proxy statement and to serving as a director, if elected. If any nominee is unable to or will not 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 recommended by our Board of Directors or the Board of Directors may reduce the number of directors constituting the Board. As of the date of this proxy statement, our Board of Directors knows of no reason why any of the nominees would not be able or willing to serve as a director if elected.
The following sets forth certain information concerning our director nominees, including his or her principal occupation for at least the last five years, additional biographical information and specific qualifications of each director:
Phyllis R. Caldwell
Ms. Caldwell became Chair of the Board of Directors in March 2016 and has served as a director of Ocwen since January 2015. In March 2021, Ms. Caldwell was appointed as a member of the Board of Trustees of JBG SMITH (NYSE:JBGS), an owner and developer of mixed-use properties in the Washington, D.C. market. In December 2020, Ms. Caldwell was also appointed to the Board of Directors of Revolution Acceleration Acquisition Corp (Nasdaq:RAAC), a special purpose acquisition company. Ms. Caldwell is founder and has served since 2012 as the managing member of Wroxton Civic Ventures, which provides advisory services on various financial, housing and economic development matters. Previously, Ms. Caldwell was Chief Homeownership Preservation Officer at the U.S. Department of the Treasury, responsible for oversight of the U.S. housing market stabilization, economic recovery and foreclosure prevention initiatives established through the Troubled Asset Relief Program. In addition, Ms. Caldwell held various leadership roles during eleven years at Bank of America, including serving as President of Community Development Banking. From January 2014 through September 2018, Ms. Caldwell served as an independent director of American Capital Senior Floating, Ltd. (Nasdaq:ACSF), a business development company. Ms. Caldwell also serves or has served on the boards of other public and private businesses and numerous non-profit organizations engaged in housing and community development finance. Ms. Caldwell received her Master of Business Administration from the Robert H. Smith School of Business at the University of Maryland, College Park and holds a Bachelor of Arts in Sociology, also from the University of Maryland.
Ms. Caldwell was selected to serve as a member of our Board of Directors due to her extensive experience in the housing and financial services industries, both in the private sector and as a senior government official, and her experience as a board member of another public company in the financial services industry.
Alan J. Bowers
Mr. Bowers has served as a director of Ocwen since May 2015. Mr. Bowers has also served as a Director of Walker & Dunlop, Inc., a publicly traded commercial real estate finance company, since December 2010, serves as its Lead Director, and serves on its Nominating and Corporate Governance Committee and as Chair of its Audit Committee. Mr. Bowers also serves on the board and as Audit Committee Chair of CorePoint Lodging Group, a publicly traded lodging REIT. From July 2013 to May 2018, Mr. Bowers served as a Director of La Quinta Inns & Suites, a publicly traded hotel chain. Mr. Bowers’ additional prior roles include serving as a Director of American Achievement Corp., a privately-held manufacturer and distributer of graduation products, President, Chief Executive Officer and a board member of Cape Success, LLC, a private equity-backed staffing service and information technology solutions business, President, Chief Executive Officer and a board member of MarketSource Corporation, a marketing and sales support service firm and President, Chief Executive Officer and a board member of MBL Life Assurance Corporation, a life insurance company. Mr. Bowers also previously served on the boards and as Audit Committee Chair of Refrigerated Holdings, Inc., Roadlink Inc., and First-rate Holdings, Inc., each a transportation and logistics firm. Mr. Bowers has been a Certified Public Accountant since 1978, with experience including 17 years at Coopers & Lybrand, L.L.P. Mr. Bowers received his Bachelor of Science in Accounting from Montclair State University and his Master of Business Administration from St. John’s University.
Mr. Bowers was selected to serve as a member of our Board of Directors because he brings to our Board over thirty years of experience in accounting and executive management, including experience on the audit committees of private companies and Securities and Exchange Commission registrants. Mr. Bowers’ accounting expertise and diverse corporate management experience are assets to our Board.
Jenne K. Britell
Dr. Britell has served as a director of Ocwen since February 2019. Dr. Britell served as a director of United Rentals, Inc. from 2006 to 2019, including as its non-executive Chair from 2008 to 2019. Dr. Britell also served as a director of Quest Diagnostics Inc., including as a member of its Audit and Finance Committee, from 2005 to 2019. From 2000 through 2017, Dr. Britell served as a director of Crown Holdings, Inc., including as Chair of the Audit Committee. Previously, Dr. Britell served as Chair and Chief Executive Officer of Structured Ventures, Inc., advisors to U.S. and multinational companies, and as a senior executive of GE Capital, including as the Executive Vice President of Global Consumer Finance and President of Global Commercial and Mortgage Banking. Before joining GE Capital, she held significant management positions with Dime Bancorp, Inc., HomePower, Inc., Citicorp and Republic New York Corporation. Earlier, she was the founding Chair and Chief Executive Officer of the Polish-American Mortgage Bank. Dr. Brit ell’s extensive prior board service also includes serving as Lead Director for Eames Investment Corp., as a trustee for the Teachers Insurance and Annuity Association (TIAA-CREF), and as a director for Lincoln National Corp., in addition to numerous civic and philanthropic boards. Dr. Britell received a Ph.D. and a master’s degree in business administration from Columbia University and received a master’s degree and an undergraduate degree from Harvard University.
Dr. Britell was selected to serve as a member of our Board of Directors due to her extensive executive and advisory experience, including in corporate governance, corporate finance, capital markets, international business and strategic planning, with multinational corporations operating in complex, regulated industries.
Jacques J. Busquet
Mr. Busquet has served as a director of Ocwen since January 2016. Mr. Busquet was formerly Chief Risk Officer and Managing Director of Natixis North America LLC and a member of the Executive Committee from April 2008 to February 2015. Prior to that, Mr. Busquet was Executive Vice President and member of the Executive Committee of Canyon Americas (formerly Credit Lyonnais Americas) in charge of Risks, Compliance, Legal, Regulatory Affairs and Asset Recovery. Since July 2016, Mr. Busquet has served as a director of Mizuho Americas LLC, the US Bank Holding Company of Mizuho Financial Group, Inc. Since 2005, Mr. Busquet has served as a director of Prolate Inc., a privately-held commercial air scenting company. Mr. Busquet has previously served as a trustee of the Institute of International Bankers, and of the African Wildlife Foundation, which he also served as Audit Committee Chair. Mr. Busquet has a Master of Business Administration in Finance from each of The Wharton School of the University of Pennsylvania and Hautes Études Commercialese (HEC), Paris.
Mr. Busquet was selected to serve as a member of our Board of Directors because with his broad experience as an officer in charge of risks in his prior positions, Mr. Busquet brings to our Board valuable insight into risk management and compliance issues. His experience working in financial institutions provides him with a deep understanding of the financial services industry. We also benefit from his corporate management experience.
Glen A. Messina
Mr. Messina has served as President and Chief Executive Officer and as a director of Ocwen since October 2018. He previously served as the President and Chief Executive Officer of PHH Corporation (“PHH”) from January 2012 to June 2017 and Chief Operating Officer of PHH from July 2011 to December 2011. Mr. Messina also served as a director of PHH from January 2012 to June 2017 and as a consultant to PHH through March 2018. Prior to joining PHH, Mr. Messina spent 17 years at General Electric Company (“GE”), most recently as Chief Executive Officer of GE Chemical and Monitoring Solutions, a global water and process specialty chemicals services business.
Mr. Messina was selected to serve on our Board of Directors because of his extensive operational and leadership experience, including his service as both our President and Chief Executive Officer and his service as a director and the President and Chief Executive Officer of PHH.
DeForest B. Soaries, Jr.
Dr. Soaries has served as a director of Ocwen since January 2015. Dr. Soaries has served as Senior Pastor of First Baptist Church of Lincoln Gardens since 1990. He formerly served as New Jersey Secretary of State from 1999 to 2002 and as Chair of the United States Election Assistance Commission from 2004 to 2005. He currently serves as an independent director at Independence Realty Trust, a publicly traded real estate investment trust, a position he has held since February 2011, and is Chair of the Compensation Committee. Dr. Soaries has also served as an independent director of the Federal Home Loan Bank of New York since January 2009, where he is Chair of the Compensation and Human Resources Committee and also serves as a member of the Technology Committee and the Housing Committee. He also previously served as a director of New Era Bank. Dr. Soaries earned a Bachelor of Arts from Fordham University, a Master of Divinity from Princeton Theological Seminary and a Doctor of Ministry from United Theological Seminary.
Dr. Soaries was selected to serve as a member of our Board of Directors due to his experience in the financial services industry, including as a board member of a public financial services company. Dr. Soaries brings a unique perspective as a religious and community leader focused on the issues facing struggling borrowers and communities.
Mr. Stein has served as a director of Ocwen since February 2019. He is Chief Executive Officer of EJF Acquisition Corp. and a Senior Managing Director of EJF Capital LLC. Prior to joining EJF Capital, Mr. Stein served as Chief Executive Officer of Resolution Analytica Corp., a buyer of commercial judgments, since co-founding the business in 2017. From March 2016 through March 2017, he served as Senior Managing Director of KCK US, Inc., a family-controlled private equity firm. Mr. Stein was previously a Managing Director in the Financial Institutions Group of Barclays until 2016. Prior to joining Barclays in 2011, Mr. Stein served as a Partner at FBR & Co., as an executive of GreenPoint Financial Corporation, a bank holding company, and as an Associate Director of the Federal Deposit Insurance Corporation, Division of Resolutions. Mr. Stein is the Audit Chair of Dime Community Bancshares, Inc., and has served as a director since December 2017. Mr. Stein also served as a director of PHH from June 2017 until its acquisition by the Company in October 2018. Mr. Stein is Audit Committee Chair and has served since 1996 as a Director of Bedford Stuyvesant Restoration Corporation. Mr. Stein received his undergraduate degree from Syracuse University and his Master of Business Administration from Carnegie Mellon University.
Mr. Stein was selected to serve as a member of our Board of Directors due to his knowledge regarding the financial services industry and his mortgage servicing experience, including his prior service as a director of PHH.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR ALL” OF THE NOMINEES FOR DIRECTOR.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Role of the Board of Directors
The Board of Directors plays an active role in overseeing management and representing the interests of the shareholders. Each director is expected to dedicate sufficient time, energy and attention to ensure diligent performance of his or her duties, including by attending annual meetings of the shareholders of the Company, and meetings of the Board and Committees of which he or she is a member.
Our Board of Directors held 19 meetings and acted by unanimous written consent six times in 2020. Each incumbent director who served as a director during 2020 attended at least 75% of the aggregate of these meetings and all meetings held by all committees of our Board of Directors on which he or she served during 2020. Directors are expected to attend the annual meeting of shareholders (including via electronic participation) and a director who is unable to attend is expected to notify the Company Secretary in advance of such meeting. Our virtual 2020 Annual Meeting of Shareholders was attended by all directors.
In connection with the completion of a private placement of $199.5 million aggregate principal amount of Ocwen senior secured second lien notes (the “Second Lien Notes”) to funds managed by Oaktree Capital Management, L.P. (the “Oaktree Investors”) on March 4, 2021, Messrs. Jason Keller and Brian Laibow, who serve in management roles with the Oaktree Investors, joined the Company in the role of non-voting observers to our Board of Directors. Under their agreement with the Company, the Oaktree Investors may designate two Board of Directors observers for as long as the aggregate outstanding principal amount of the Second Lien Notes is at least $100 million or the Oaktree Investors and their affiliates collectively own at least 15.0% of all issued and outstanding common stock of the Company (assuming the exercise of certain warrants held by them in full). The observers are entitled to attend all meetings of the Board of Directors and its committees and review all information presented to them with limited exceptions, including discussions and presentations with respect to which the presence of the observers could jeopardize attorney-client privilege.
Our Corporate Governance Guidelines provide that a majority of our Board of Directors must be independent in accordance with the listing standards of the New York Stock Exchange.
Our Nomination/Governance Committee and the Board of Directors review independence upon appointment and annually review the direct and indirect relationships that each director has with Ocwen based in part on responses provided by our directors to a questionnaire that incorporates the independence standards established by the New York Stock Exchange. Only those directors who satisfy the independence standards and who are determined by our Board of Directors to have no material relationship with Ocwen (either directly or as a partner, shareholder or officer of an organization that has a relationship with Ocwen) are considered independent. Following the Nomination/Governance Committee’s review and findings, the Nomination/Governance Committee and our Board of Directors have affirmatively determined that Ms. Caldwell, Messrs. Bowers, Busquet, and Stein, and Drs. Britell and Soaries are independent directors. In addition, the Nomination/Governance Committee and our Board of Directors had previously determined that Robert J. Lipstein, who served as a director until May 27, 2020, was independent.
Annual Board Evaluation
Our Corporate Governance Guidelines and Nomination/Governance Committee Charter provide that the Nomination/Governance Committee will oversee an annual self-assessment of the performance of the Board of Directors as a whole and the performance of each committee of the Board of Directors. The evaluations are designed to assess whether the Board of Directors and its committees function effectively and make valuable contributions and to identify opportunities for improving their operations and procedures. Our 2020 performance self-assessments were conducted in the first quarter of 2021.
Board Leadership Structure
The Board of Directors believes that separating the positions of Chief Executive Officer and Chair of the Board of Directors is the best structure to fit the Company’s needs at this time. However, our Board of Directors does not believe that it is in the best interests of the Company and our shareholders to mandate the separation of the offices of Chair of the Board of Directors and Chief Executive Officer. Rather, our Board of Directors retains the discretion to make determinations on this matter from time to time as may be in the best interests of the Company and our shareholders. As Chair of the Board, Ms. Caldwell leads the Board of Directors and oversees Board meetings and the delivery of information necessary for the Board’s informed decision-making. As our President and Chief Executive Officer, Mr. Messina is responsible for our day-to-day operations and for formulating and executing our long-term strategies in collaboration with the Board of Directors.
Committees of the Board of Directors
Our Board of Directors has the following standing committees: an Audit Committee, a Compensation and Human Capital Committee, a Nomination/Governance Committee, a Risk and Compliance Committee, and an Executive Committee. The table below lists the current members of each of these committees. A brief description of each committee is provided below the table.
|Name||Age(1)||Director Since||Audit Committee||Compensation and Human Capital Committee||Nomination/ Governance Committee||Risk and Compliance Committee||Executive Committee|
|Alan J. Bowers||66||2015||X(2)||X|
|Jacques J. Busquet||72||2016||X||X||X(2)||X|
|Jenne K. Britell||78||2019||X||X|
|Phyllis R. Caldwell||61||2015||X(2)||X(2)|
|Glen A. Messina||59||2018||X|
|DeForest B. Soaries, Jr.||69||2015||X(2)||X|
|(1)||As of April 15, 2021|
Audit Committee. The Audit Committee of our Board of Directors oversees the relationship with our independent registered public accounting firm, and reviews and advises our Board of Directors with respect to matters involving accounting, auditing, and financial reporting, among other things. Audit Committee oversight also includes the evaluation of significant matters relating to the financial reporting process and our system of internal accounting controls. The Audit Committee also provides oversight of the internal audit function and is responsible for ensuring the Company has appropriate procedures in place for the receipt and review of confidential and anonymous reports of questionable accounting or auditing matters. Additionally, the Audit Committee reviews the scope and results of the annual audit conducted by the independent registered public accounting firm.
The current members of the Audit Committee are Messrs. Bowers (Chair), Busquet, and Stein. Each member of our Audit Committee (i) is independent as independence for audit committee members is defined in the listing standards of the New York Stock Exchange and applicable rules of the Securities and Exchange Commission, (ii) is financially literate, (iii) possesses accounting or related financial management expertise within the meaning of the listing standards of the New York Stock Exchange and (iv) qualifies as an audit committee financial expert, as such term is defined in the applicable rules of the Securities and Exchange Commission. No current member of the Audit Committee serves on the audit committee of more than three other public companies.
Our Audit Committee operates under a written charter approved by our Board of Directors, a copy of which is available on our website at www.ocwen.com in the “Shareholders” section under “Corporate Governance.” The Audit Committee generally reviews its charter annually and occasionally reviews it more frequently. When circumstances require, the charter is amended and the revised version posted on our website. This Committee met nine times in 2020.
Compensation and Human Capital Committee. The Compensation and Human Capital Committee (“Compensation Committee”) of our Board of Directors oversees our compensation and employee benefit plans and practices. In furtherance thereof, the Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of our executive officers, including the President and Chief Executive Officer, evaluates our executive officers’ performance in light of those goals and objectives and approves our executive officers’ compensation based on their evaluations. In addition, the Compensation Committee oversees the review and approval of awards made to our non-executive officer employees that participate in our cash and equity incentive programs. The Compensation Committee is empowered to review and to administer awards under the 2007 Equity Incentive Plan, under which no new awards may be granted but previously granted awards remain outstanding, the 2017 Performance Incentive Plan, under which no new awards will be granted if shareholders approve the 2021 Equity Incentive Plan but previously granted awards remain outstanding, and, if approved by shareholders, our 2021 Equity Incentive Plan. The Compensation Committee has the authority to retain, at the Company’s expense, compensation consultants, independent counsel or other advisers as it deems necessary in connection with its responsibilities. The Compensation Committee may form and delegate authority to subcommittees when it deems it to be appropriate. The role of the Compensation Committee and our processes and procedures for the consideration and determination of executive and director compensation are described in more detail below under “Board of Directors Compensation” and “Compensation Discussion and Analysis,” respectively.
The current members of the Compensation Committee are Dr. Soaries (Chair), Dr. Britell, and Mr. Busquet. Each of these directors is independent as independence for Compensation Committee members is defined in the listing standards of the New York Stock Exchange. In addition, each member of the Compensation Committee also qualifies as a “non-employee” director as defined in Rule 16b-3 of the Securities and Exchange Commission and as an “outside” director within the meaning of Section 162(m) of the Internal Revenue Code (the “Code”).
Our Compensation Committee operates under a written charter approved by our Board of Directors, a copy of which is available on our website at www.ocwen.com in the “Shareholders” section under “Corporate Governance.” The Compensation Committee generally reviews its charter annually and occasionally reviews it more frequently. When circumstances require, the charter is amended and the revised version posted on our website. This Committee met 11 times in 2020.
Compensation Committee Interlocks and Insider Participation. Dr. Soaries, Dr. Britell, and Mr. Busquet served as members of the Compensation Committee during 2020. None of such members were, at any time during the 2020 fiscal year or at any previous time, an officer or employee of the Company. None of our executive officers have served on the Board of Directors or Compensation Committee of any other entity that has or had one or more executive officers who served as a member of our Board of Directors or our Compensation Committee during the 2020 fiscal year. No member of the Compensation Committee had any relationship with us requiring disclosure under Item 404 of Securities and Exchange Commission Regulation S-K.
Nomination/Governance Committee. The Nomination/Governance Committee of our Board of Directors makes recommendations to our Board of Directors of candidates to serve as Directors and Committee members for our Board of Directors, advises our Board of Directors with respect to director composition, procedures and committees, recommends a set of corporate governance principles to our Board and oversees the evaluation of our Board of Directors and our management.
The current members of the Nomination/Governance Committee are Ms. Caldwell (Chair) and Drs. Britell and Soaries. Each member of our Nomination/Governance Committee is independent as defined in the listing standards of the New York Stock Exchange.
Our Nomination/Governance Committee operates under a written charter approved by our Board of Directors, a copy of which is available on our website at www.ocwen.com in the “Shareholders” section under “Corporate Governance.” The Nomination/Governance Committee generally reviews its charter annually and occasionally reviews it more frequently. When circumstances require, the charter is amended and the revised version posted on our website. This Committee met six times in 2020.
Risk and Compliance Committee. The Risk and Compliance Committee of our Board of Directors provides assistance to the Board of Directors with (i) review of risks that could affect the ability of the Company to achieve its strategies and preserve its assets, (ii) oversight of an enterprise risk management infrastructure to identify, measure, monitor and report on the risks the Company faces, (iii) oversight of our compliance function, including our compliance management system and information security/privacy programs, and (iv) oversight of our compliance with applicable laws, rules and regulations governing our consumer-oriented businesses, including Federal consumer financial laws and applicable state laws. The Risk and Compliance Committee also provides assistance to the Board of Directors with the review, approval and oversight of related party transactions pursuant to our Related Party Transactions Approval Policy.
The current members of the Risk and Compliance Committee are Messrs. Busquet (Chair) and Messrs. Bowers and Stein, all of whom are independent directors as defined in the listing standards of the New York Stock Exchange.
Our Risk and Compliance Committee operates under a written charter approved by our Board of Directors, a copy of which is available on our website at www.ocwen.com in the “Shareholders” section under “Corporate Governance.” The Risk and Compliance Committee generally reviews its charter annually and occasionally reviews it more frequently. When circumstances require, the charter will be amended and the revised version posted on our website. This Committee met ten times in 2020.
During 2020 and early 2021, the Risk and Compliance Committee, exercising authority delegated by the Board of Directors, provided oversight of the Company’s strategic process to explore potential business combinations and other transformative transactions.
Executive Committee. Our Executive Committee is generally responsible to act on behalf of our Board of Directors during the intervals between meetings of our Board of Directors, if necessary. The current members of the Executive Committee are Ms. Caldwell (Chair) and Messrs. Messina and Busquet.
Other Committees. Our Board of Directors has the authority to form additional standing or temporary committees, and delegate appropriate authority to such committees if and when the Board determines that it is advisable to do so. In addition, the Board may, from time to time, determine that a standing committee should be dissolved or re-organized in order to more efficiently serve the Company’s corporate governance needs.
Director Nomination Process
The Nomination/Governance Committee regularly assesses the appropriate size and composition of the Board of Directors, including whether any vacancies on the Board of Directors are anticipated. If vacancies are anticipated, various potential candidates for director are identified. Candidates may come to the attention of the Nomination/Governance Committee through current members of the Board of Directors, professional search firms, shareholders or industry sources.
Since January 1, 2015, the Nomination/Governance Committee has recommended, and the Board of Directors has appointed, eight new independent directors, including three new independent directors appointed in 2015, two new independent directors appointed in 2016, one new independent director appointed in 2017, and two new independent directors appointed in 2019. Effective May 27, 2020, our Board of Directors has fixed the number of directors at seven.
In evaluating nominees for Director, our Nomination/Governance Committee takes into account the applicable requirements for directors under the rules of the Securities and Exchange Commission and the listing standards of the New York Stock Exchange. In addition, our Nomination/Governance Committee takes into account such factors as experience, knowledge, skills, expertise, integrity, diversity, ability to make independent analytical inquiries, understanding of the Company’s business environment and willingness and ability to devote adequate time and effort to Board responsibilities and the interplay of the candidate’s qualifications and experience with the qualifications and experience of other members of our Board of Directors. In February 2019, we revised our prior policy that directors who have reached the age of 78 may generally not be nominated, as we believe it is more beneficial to focus on the qualifications, experience, and performance of our directors and director nominees and consider Board refreshment from a broader perspective than the age of individual directors. We also consider the number of other boards on which a nominee sits. The Company’s general policy is to limit the number of other public company boards of directors upon which a director may sit to four. The Board of Directors retains discretion to appoint or nominate for election by the shareholders individuals who sit on more than four other public company boards of directors if the Board of Directors considers the addition of such individual to the Board of Directors to be in the best interests of the Company and its shareholders. Our Nomination/Governance Committee evaluates all of the factors outlined above, as well as any other factors it deems to be appropriate, and recommends candidates that it believes will enhance our Board of Directors and benefit the Company and our shareholders. It is the policy of our Nomination/Governance Committee to consider candidates for director recommended by shareholders, but the Nomination/Governance Committee has no obligation to recommend such candidates. A copy of our Corporate Governance Guidelines is available on our website at www.ocwen.com in the “Shareholders” section under “Corporate Governance.”
Pursuant to the Board of Director’s Diversity Policy, the Nomination/Governance Committee considers diversity when it recommends director nominees to the Board of Directors. We view diversity in an expansive way to include differences in prior work experience, viewpoint, education and skill set. In particular, the Nomination/Governance Committee considers diversity in professional experience, skills, expertise, training, broad-based business knowledge and understanding of the Company’s business environment when recommending director nominees to the Board of Directors with the objective of achieving a Board with diverse business and educational backgrounds. In addition, the Board recognizes the value of including perspectives shaped by diverse ethnicities, geographic origins and genders in building an inclusive corporate culture that reflects and supports Ocwen’s diverse customer base and global workforce. Board members should have individual backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve the Company’s strategic and governance needs. The Nomination/Governance Committee reviews the skills and attributes of Board members within the context of the current make-up of the full Board of Directors from time-to-time, as appropriate. The Nomination/Governance Committee does not discriminate against candidates for the Board of Directors based on race, color, religion, sex, sexual orientation or national origin.
In evaluating a particular candidate, the Nomination/Governance Committee will consider factors other than the candidate’s qualifications, including the current composition of the Board of Directors, the balance of management and independent directors, the need for Audit Committee and other expertise and the evaluations of other prospective nominees. In connection with this evaluation, the Nomination/Governance Committee determines whether to interview the prospective nominee, and if warranted, one or more members of the Nomination/Governance Committee, and others as appropriate, interview prospective nominees. After completing this evaluation and interview process, the Nomination/Governance Committee makes a recommendation to the full Board of Directors as to the persons who should be nominated by the Board of Directors. The Board of Directors determines the nominees after considering the recommendation of the Nomination/Governance Committee. Should a shareholder recommend a candidate for Director, our Nomination/Governance Committee would evaluate such candidate in the same manner that it evaluates any other nominee. To date, no shareholder or group of shareholders has put forth any director nominees for the Annual Meeting.
If you wish to recommend persons for consideration by our Nomination/Governance Committee as nominees for election to our Board of Directors, you may do so by written notice to our Secretary at Ocwen Financial Corporation, 1661 Worthington Road, Suite 100, West Palm Beach, Florida 33409. Such notice must contain all the information set forth in Section 2.2 of our Bylaws and comply with the procedures and deadline set forth therein. See “Submission of Shareholder Proposals for 2021 Annual Meeting,” below for additional information about this process.
Prohibition against Short Sales, Hedging and Margin Accounts
Our Insider Trading Prevention Policy prohibits any director, officer or employee from engaging in any short sale of the Company’s stock, establishing and using a margin account with a broker-dealer for the purpose of buying or selling Company stock, pledging Company securities as collateral for a loan, buying or selling puts or calls on the Company’s stock, or engaging in any other transaction that hedges the economic risk associated with ownership of the Company’s securities. This policy is designed to encourage investment in the Company’s stock for the long term, on a buy and hold basis, and to discourage active trading or short-term speculation and applies regardless of whether such Company securities were (i) granted to the director, officer or employee as part of their compensation or (ii) held directly or indirectly by the director, officer or employee.
Corporate Governance Guidelines
The Corporate Governance Guidelines adopted by our Board of Directors provide guidelines for us and our Board of Directors to help ensure effective corporate governance. The Corporate Governance Guidelines cover topics such as director qualifications, board of director and committee composition, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession and annual performance appraisal of the Board of Directors.
Our Corporate Governance Guidelines are available on our website at www.ocwen.com in the “Shareholders” section under “Corporate Governance.” Our Nomination/Governance Committee reviews our Corporate Governance Guidelines annually and recommends amendments to the Board of Directors for approval.
The Board of Directors has also adopted a Clawback Policy as further described under “Clawback Policy” in the “Executive Compensation” section below.
Executive Sessions of Non-Management Directors
Ms. Caldwell chairs executive sessions of the full Board of Directors. Our non-management directors met in executive sessions of the full Board without management during eight meetings in 2020. In addition, our Audit, Compensation and Human Capital, and Risk and Compliance Committees generally met in executive session at each regularly scheduled quarterly meeting and on other occasions when the members believed it was advisable to do so.
Meetings with Management Independent of the Chief Executive Officer
Our Chair, the chairs of our committees and our other directors meet with various members of management, without the Chief Executive Officer present, to discuss matters relevant to the business of the Company. For example, in addition to discussions with members of senior management, the chair of the Audit Committee meets independently with the Chief Audit Executive, our independent auditors and the General Counsel from time to time and the chair of the Risk and Compliance Committee meets independently with the Chief Risk and Compliance Officer and the General Counsel from time to time. In prior years, our directors have also visited various of our U.S. and international sites to meet generally with employees and senior management in those locations.
Communications with Directors
If you desire to communicate with our Board of Directors or any individual director regarding Ocwen, you may do so by writing to our Secretary at Ocwen Financial Corporation, 1661 Worthington Road, Suite 100, West Palm Beach, Florida 33409. You may communicate anonymously or confidentially and may also indicate whether you are a shareholder, customer, supplier, or other interested party. You may also write to our Board of Directors through our website at http://shareholders.ocwen.com/contactBoard.cfm.
Shareholders and other interested parties may communicate directly with the Audit Committee and the non-management directors of the Board of Directors by calling our hotline, which is administered by a third party, at 1-800-884-0953. The Chair of the Audit Committee has been designated to receive such communications.
Communications received in writing are distributed to our Board of Directors or to individual directors, as the General Counsel and Secretary deem appropriate, depending on the facts and circumstances outlined in the communication received. In that regard, the Board of Directors has requested that certain items that are unrelated to the duties and responsibilities of the Board of Directors should be excluded, such as:
|●||Service or product complaints|
|●||Service or product inquiries|
|●||New service or product suggestions|
|●||Resumes and other forms of job inquiries|
|●||Business solicitations or advertisements|
In addition, material that is unduly hostile, threatening, illegal, repetitive, irrelevant to the Board of Directors or similarly unsuitable will be excluded, provided that any communication that is filtered out will be made available to any non-management director upon request.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees as required by the New York Stock Exchange rules. We have also adopted a Code of Ethics for Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. Any waivers from either the Code of Business Conduct and Ethics or the Code of Ethics for Senior Financial Officers must be approved by our Board of Directors or a Board Committee and must be promptly disclosed. The Code of Business Conduct and Ethics and the Code of Ethics for Senior Financial Officers are available on our web site at www.ocwen.com in the “Shareholders” section under “Corporate Governance.” Any amendments to the Code of Business Conduct and Ethics or the Code of Ethics for Senior Financial Officers, as well as any waivers that are required to be disclosed under the rules of the Securities and Exchange Commission or the New York Stock Exchange, will be posted on our website.
Risk Management and Oversight Process
One of our Board of Directors’ key responsibilities is the oversight of risk associated with the Company. Certain of these responsibilities have been delegated to specific committees, in which case the Board oversees the work of the committee.
Risk and Compliance Committee. As discussed above, this committee is responsible for monitoring the Company’s enterprise risk management framework, and regularly meets with the Chief Risk and Compliance Officer to discuss risk exposures and mitigation plans. This committee monitors the Company’s evaluation and management of risks, including operational risk, regulatory compliance risks and cybersecurity risks, through reviews with management, including comprehensive reviews every quarter with additional updates as appropriate. This committee also reviews and approves related party transactions in accordance with our Related Party Transactions Approval Policy to monitor and prevent conflicts of interest in the operations of the Company and the activities of management and directors.
Audit Committee. The Audit Committee monitors the Company’s financial risks through regular reviews of the Company’s financial activities with management and internal and external auditors. This committee also receives reports from the management-level Disclosure Review Committee which works to remediate the risk of inaccurate financial reporting through its review of the Company’s quarterly and annual financial reports and disclosure controls and procedures.
Nomination/Governance Committee. The Nomination/Governance Committee monitors the Company’s governance risk by regular reviews with management, including monitoring any circumstances that could potentially jeopardize the independence of directors or objectivity of management.
Compensation Committee. The Compensation Committee monitors potential risks created by the Company’s compensation policies and practices through regular reviews with management and through consulting regularly with an independent compensation consultant without management present. This committee also oversees human resources initiatives intended to reduce the risk of workplace discrimination and harassment incidents.
The Board of Directors’ role in risk oversight is consistent with the Company’s leadership structure with the President and Chief Executive Officer and other members of senior management, including our Chief Risk and Compliance Officer, having responsibility for assessing and managing the Company’s risk exposure, and the Board of Directors and its Committees providing oversight in connection with these efforts.
Environmental, Social and Corporate Governance (“ESG”) and Corporate Sustainability
Our Board of Directors and our management are committed to ensuring Ocwen has responsible practices to address the needs of its customers, employees and the communities it serves. Our comprehensive approach to ESG and corporate sustainability is detailed in our report “Environmental, Social and Corporate Governance (ESG) and Corporate Sustainability” on our website at www.ocwen.com in the “Shareholders” section under “Corporate Governance.” Our approach is represented by the following policies and programs:
Policy on non-discrimination. Ocwen’s non-discrimination policy provides equal employment opportunities for all qualified individuals without discrimination based upon the following legally protected characteristics: race, religious creed, color, national origin, ancestry, physical or mental disability, medical condition, genetic information, marital status (including registered domestic partnership status), sex (including pregnancy, childbirth, lactation and related medical conditions), gender (including gender identity and expression), age (40 and over), sexual orientation, Civil Air Patrol status, military and veteran status and any other consideration protected by federal, state or local law (collectively referred to as “protected characteristics”). Underlying this policy is Ocwen’s strong concern for its employees’ rights to be free from unlawful discrimination and its commitment to providing a safe, secure and productive work environment.
Every effort is made to ensure that Ocwen’s hiring, salary administration, promotion and transfer policies are based solely on job requirements, job performance and job-related criteria. In addition, the Company’s personnel policies and practices (including those relating to compensation, benefits, transfer, retention, termination, training and self-development opportunities, as well as social and recreational programs) are administered without discrimination on the basis of any legally protected characteristic.
Promoting equal opportunity and diversity. Ocwen’s Diversity and Inclusion Council meets quarterly to review progress related to the Company’s Diversity and Inclusion Roadmap. Diversity and Inclusion updates are provided to the Executive Leadership Team on a monthly basis and to the Board of Directors as necessary. Ocwen’s Global Diversity and Inclusion Policy is reviewed on an annual basis and diversity training is mandatory for all employees globally. Additionally, all leaders are required to complete a training course on Unconscious Bias, and Diversity and Inclusion goals are incorporated into annual performance evaluations for all managers.
In 2017, the Company formed the Ocwen Global Women’s Network (“OGWN”), an affinity group whose mission is to support recruitment, development and retention initiatives for women across the organization. This affinity group serves as a sounding board for business insights, supports the attainment of Company goals in diversity, inclusion and talent development. Integrating Diversity and Inclusion into Ocwen’s culture is critical for our success and allows us to make the most of the full range of our talent. More than 2,200 employees are OGWN members.
Ocwen maintains a robust dashboard that tracks representation of women and people of color across the Company. As of December 31, 2020, 44% of our global workforce is made up of women. In the U.S., women make up 59% of our workforce and 36% of our leadership team at the Director level and above. Additionally, in the U.S., people of color make up 45% of our workforce and 17% of our leadership team at the Director level and above. We also take action to support the recruitment, development and retention of our diverse talent. These programs include requiring diverse candidates as part of our hiring process, tracking minority hiring, promotion, retention and representation at all levels, and assessing diverse talent as part of our succession planning.
Ocwen sponsors several organizations focused on under-represented groups, including the American Mortgage Diversity Council and the National Association of Minority Mortgage Bankers of America. We are also committed to hiring graduates from historically black colleges and universities through the HomeFree-USA Center for Financial Advancement program.
Dependent care and special leave. Ocwen’s benefits programs strive to keep employees productive and engaged at work by serving the total well-being of employees’ and their families’ physical, mental and financial health. Our comprehensive benefits plan includes company-sponsored medical, dental and vision; company-paid basic life, accident and disability coverage; 401(k) with company match; and supplemental group coverage for critical illness, accident, auto, home, pet, legal, identity protection, childcare/eldercare and tutoring. The medical plans include 100% coverage for all preventive care services and all generic preventive medications.
Our wellness programs offer incentives for completing preventive health screenings, participating in online and telephonic health coaching, improving or reaching targeted health scores, and increasing physical activity. Additionally, we provide employees with a robust employee assistance program that includes virtual counseling, personalized health coaching for chronic conditions, diabetes and ergonomics, stress management and financial planning workshops, online guided meditation and yoga, and more. Ocwen also provides a generous paid time off (PTO) program to support employees’ need to rest and recharge. Our medical and family leave programs offer paid disability absences and paid parental/adoption leave, in addition to FMLA-required schedule flexibility and job security.
Training and development. Ocwen’s training curriculum includes functional business and compliance training for all employees. Training courses are housed in our learning management system, which is continually reviewed to ensure compliance with regulatory requirements. Ocwen’s Leadership Development Training curriculum is designed to prepare all employees at the Supervisor level and above with competencies to make them successful in their roles as leaders. The objective of the learning programs is to build functional and leadership competency for all levels of leadership.
Community development. At Ocwen, we believe homeownership is an important part of achieving financial independence, and our philosophy in this regard is “helping homeowners is what we do.” This philosophy is what guides us in our commitment to the communities we serve. We organize a variety of community outreach programs and events with local and national organizations around the country to assist homeowners, particularly in communities of color. Our outreach events were started during the 2008 mortgage crisis and have continued since that time. In 2020, we implemented a virtual borrower outreach program, in partnership with the NAACP, to support borrowers impacted by the pandemic, with 40 borrower outreach events completed. Homeowners needing assistance can also access our Ocwencares.com website, which provides the latest information regarding our outreach events.
To better serve our communities, Ocwen created its Community Advisory Council in 2014, consisting of 16 leaders from a diverse group of national non-profit organizations, consumer advocacy groups and civil rights organizations, as a platform to collaborate and share ideas on how to help homeowners. Ocwen provides grants and sponsorship funding to more than 20 nonprofit organizations each year in support of the work they do to help distressed communities and homeowners. Since 2012, Ocwen has allocated over $27 million to national and local non-profit organizations.
Responsible information security management. Ocwen maintains robust information security programs to ensure the confidentiality, integrity and availability of all data and information systems. Ocwen adopts the following industry standards for our information security operations: Control Objectives for Information and Related Technology (“COBIT”); Critical Infrastructure Cybersecurity Framework (“NIST”); Cloud Security Alliance (“CSA”); and International Organization for Standardization (“ISO”) 27001. In addition, we comply with the regulatory frameworks of the Federal Financial Institutions Examination Council (“FFIEC”) and New York Department of Financial Services. All employees receive training in identifying cybersecurity risks and preventing breaches. In addition, our third-party risk management program evaluates and monitors our vendors’ information security practices, and all third-party vendors that process data on our behalf are required to maintain a documented information security program that meets our minimum security requirements.
Environmental impact. In December 2020, we announced we remain committed to a primarily remote post-COVID-19 working model that will result in less than one-third of employees commuting to work on a daily basis, significantly reducing the use of natural resources in our facilities and reducing carbon emissions by eliminating a daily commute for thousands of our employees. We recycle office supplies at all U.S. facilities, are converting to LED lighting, and are in the process of transitioning to digital mailrooms to reduce paper usage.
BOARD OF DIRECTORS COMPENSATION
The following table discloses compensation received for fiscal year 2020 by each member of our Board of Directors who was not employed by us or one of our subsidiaries and who served as a director during fiscal year 2020 (our “non-management directors”).
|Name||Fees Earned Or Paid in Cash |
|Phyllis R. Caldwell||203,253||100,000||303,253|
|Jenne K. Britell||106,500||100,000||206,500|
|Alan J. Bowers||128,500||100,000||228,500|
|Jacques J. Busquet||138,952||100,000||238,952|
|Robert J. Lipstein (4)||40,610||—||40,610|
|DeForest B. Soaries, Jr.||119,000||100,000||219,000|
|(1)||Amounts reported for stock awards represent the aggregate grant date fair value of awards granted during fiscal year 2020 under the 2017 Performance Incentive Plan (the “2017 Plan”) computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. We based the grant date fair value of stock awards on the closing price of our common stock on the New York Stock Exchange on the date of grant of the awards.|
|(2)||On May 27, 2020, our non-management directors received equity awards under the 2017 Plan for their service for the 2020-2021 term. Each award had a grant date fair value totaling $100,000. Each director received 9,009 restricted stock units (“RSUs”) vesting May 27, 2021 in the event each director attends at least 75% of applicable Board and committee meetings.|
|(3)||Our non-management directors have no shares subject to option awards or other equity awards outstanding as of December 31, 2020, other than the RSUs issued May 27, 2020, except the following issued in prior service years to directors deferring their equity compensation pursuant to the Deferral Plan for Directors: Mr. Busquet holds 4,166 RSUs deliverable on June 1, 2022, and Dr. Soaries holds 4,982 RSUs deliverable six months following the termination of his service and 1,326 RSUs deliverable on January 1, 2023.|
|(4)||Mr. Lipstein retired effective May 26, 2020 immediately prior to the 2020 Annual Meeting. Accordingly, he did not receive a 2020 equity award for 2020-2021 director service.|
Standard Compensation Arrangements for Non-Management Directors
The Compensation Committee has the responsibility for determining the form and amount of compensation for our non-management directors. Mr. Messina, our management director, does not receive an annual retainer or any other compensation for his service on the Board of Directors. Non-management directors receive the following compensation for their services on the Board of Directors.
In 2020, we provided the following annual cash compensation to our non-management directors in quarterly installments (except as noted below):
|●||a retainer of $80,000;|
|●||an additional $75,000, prorated from January 1, 2020 to February 9, 2020, which was increased to $100,000 from February 10, 2020 to December 31, 2020, to the Chair of the Board;|
|●||an additional $25,000 to the Audit Committee, Compensation Committee, and Risk and Compliance Committee Chairs;|
|●||an additional $15,000 to the Nomination/Governance Committee Chair; and|
|●||an additional $12,500 to all Audit Committee, Compensation Committee, and Risk and Compliance Committee members (other than the Chairs).|
In addition, our directors receive per-meeting fees of $1,000 per meeting for each meeting in excess of eight meetings of the Board of Directors a year. Similarly, beginning January 1, 2021, each member of the Compensation Committee, Risk and Compliance Committee, and Audit Committee will receive an additional $1,000 for attending each of his or her respective committees’ meetings in excess of eight annually. Our other committee members are not compensated on a per-meeting basis.
Effective February 10, 2020, the Compensation Committee determined to increase annual compensation for service as Chair of the Board from $75,000 to $100,000.
At our 2017 Annual Shareholder Meeting, our shareholders approved the 2017 Performance Incentive Plan (the “2017 Plan”). Following the 2020 Annual Shareholder Meeting, each non-management member of the Board of Directors was granted an award of restricted stock units (“RSUs”) under the 2017 Plan with a grant date fair value of $100,000 (rounded to the next whole share). The RSUs vest on the one-year anniversary of grant if the director has attended an aggregate of at least 75% of all meetings of the Board of Directors and committees of which the director is a member during such period. Upon vesting, the shares of common stock underlying the RSUs will be issued to the director unless the director has elected to defer delivery in accordance with the Deferral Plan for Directors, as described below. In the event that the director has attended less than an aggregate of at least 75% of all such meetings, such director’s right to ownership will vest on a pro rata basis according to the director’s actual attendance percentage, with the remaining shares forfeited. RSUs are generally non-transferable, confer no voting rights in the underlying shares prior to delivery, and no adjustments will be made for dividends for which the record date is prior to the date of issuance of such shares.
Following our 2021 Annual Shareholder Meeting on May 25, 2021, each non-management member of the Board of Directors will again be granted an equity award with a grant date fair value of $100,000 (rounded to the next whole share), subject to their election to defer, as described further below. In the event we have an insufficient number of shares remaining available under the 2017 Plan at the time of the Annual Meeting, directors will be granted the right to receive cash to the extent of the available share shortfall. Payment of any cash amounts will be made on May 25, 2022 subject to the same vesting and other conditions as the RSUs.
Deferral Plan for Directors
The Ocwen Financial Corporation Deferral Plan for Directors provides non-management directors with the opportunity to defer the receipt of all or a portion of their equity compensation earned for their service as directors. The plan is administered by the Compensation Committee. Before the end of each calendar year (or, in the case of directors appointed between Annual Meetings, within 30 days of appointment), the non-management directors make an election to defer delivery of either all or a portion of the equity portion of their annual compensation for the following grant year. Directors electing to defer receipt of equity will become vested in the shares underlying a deferred equity award and will receive dividend equivalents to the same extent as they would if the original award had not been deferred.
Each director electing deferral must specify the payment date at the time of election for any shares underlying a deferred award as either (i) the six-month anniversary of the director’s termination date or (ii) any other date elected by the director which is at least two years after the last day of the year of service for which the compensation was awarded. At least thirty days prior to payment of deferred compensation, a director shall elect to receive such payment in the form of either (i) cash in an amount equal to the fair market value of the shares underlying the deferred equity award, or (ii) the shares of common stock underlying the deferred equity award.
Other Compensation Matters
Director compensation may be prorated for a director serving less than a full one-year term such as in the case of a director joining the Board of Directors after an annual meeting of shareholders. Directors are reimbursed for reasonable travel and other expenses incurred in connection with performing their duties, including attending meetings of the Board of Directors and its committees. Director compensation is subject to review and adjustment by the Compensation Committee from time to time.
The following table sets forth certain information with respect to each person who currently serves as one of our executive officers. Our executive officers are appointed by our Board of Directors and generally serve at the discretion of our Board of Directors. There are no arrangements or understandings between us and any person for the appointment of any person as an executive officer. None of our directors and/or executive officers is related to any other director and/or executive officer of Ocwen or any of its subsidiaries by blood, marriage or adoption.
|Glen A. Messina||59||President and Chief Executive Officer|
|Scott W. Anderson||52||Executive Vice President and Chief Servicing Officer|
|John V. Britti||61||Executive Vice President and Chief Investment Officer|
|June C. Campbell||63||Executive Vice President and Chief Financial Officer|
|Albert J. Celini||58||Executive Vice President and Chief Risk and Compliance Officer|
|Francois Grunenwald||50||Senior Vice President and Chief Accounting Officer|
|George T. Henley||53||Executive Vice President and Chief Growth Officer|
|Joseph B. Long||51||Executive Vice President, Capital Markets|
|Joseph J. Samarias||49||Executive Vice President, General Counsel and Company Secretary|
|Dennis Zeleny||65||Executive Vice President and Chief Administrative Officer|
|(1)||All age and position information set forth herein is as of April 15, 2021.|
The principal occupation for at least the last five years, as well as certain other biographical information, for each of our executive officers who is not a director is set forth below.
Scott W. Anderson. Mr. Anderson has served as Executive Vice President and Chief Servicing Officer since 2009, and his career with Ocwen has spanned over twenty years. Prior to his current role, he served as Senior Vice President, Residential Assets since November 2001. Prior to joining Ocwen in November 1993, Mr. Anderson was employed by CIGNA. He holds a Bachelor of Arts in Economics from Bowdoin College.
John V. Britti. Mr. Britti has served as Executive Vice President and Chief Investment Officer since June 2014. From July 1, 2018 through October 3, 2018, he also served as interim Chief Executive Officer. From September 2016 to February 2017, he served as the Interim Head of Risk Management. He previously served as Chief Financial Officer from March 2012 to June 2014 and Executive Vice President of Ocwen responsible for Finance and Business Development from January 2011 to March 2012. He has been with Ocwen since January 2011. Prior to joining Ocwen, Mr. Britti was Chief Operating Officer for mortgage insurer RMIC from 2005 to 2011. Mr. Britti held two positions at Freddie Mac as a Vice President running Field Sales and Pricing & Structured Transactions. Mr. Britti has also been a Vice President at Capital One running Thrift and Mortgage Operations. After business school, Mr. Britti worked at McKinsey & Company in its financial services industry group. He holds a Bachelor of Arts in Economics from the University of Maryland and a Master of Business Administration from Dartmouth’s Amos Tuck School.
June C. Campbell. Ms. Campbell has served as Executive Vice President and Chief Financial Officer since March 2019. Ms. Campbell joined Ocwen from GE Capital, the financial services unit of General Electric Company, where she held multiple senior management positions in Finance, Capital Markets and Operations during her more than 20-year career at the company. Most recently, she served as Managing Director, Global Capital Markets, a position she held since 2014. Ms. Campbell’s prior roles included serving as Chief Operating Officer for GE Capital Canada from 2011 to 2014 and Chief Financial Officer of GE Capital Real Estate Canada from 2008 to 2011. She holds a Bachelor of Science from Simmons College and a Master of Business Administration from the University of Chicago.
Albert J. Celini. Mr. Celini has served as Executive Vice President and Chief Risk and Compliance Officer since May 2019. From the closing of Ocwen’s acquisition of PHH Corporation in October 2018 until May 2019, he served as Senior Vice President and Chief Risk and Compliance Officer. From November 2017 through October 2018, he served as the Chief Risk and Compliance Officer of PHH Corporation. From May 2017 through October 2018, he served as a risk management consultant to the mortgage industry with Newbold Advisors LLC, a professional services firm, and from June 2016 through April 2017, with Common Securitization Solutions LLC (a joint venture between Fannie Mae and Freddie Mac). He also previously held executive roles at Sun National Bank, Freddie Mac, and Ally Bank (formerly GMAC Bank). Mr. Celini is a Certified Public Accountant and received a Bachelor of Science in Accounting from Fordham University.
Francois Grunenwald. Mr. Grunenwald has served as our Senior Vice President and Chief Accounting Officer since August 2019. Prior to joining Ocwen, he spent the prior 20 years at PricewaterhouseCoopers, where he served in various accounting and financial advisory roles with a focus on financial services clients, including for the last 12 years as a Partner. Mr. Grunenwald is a Certified Public Accountant and holds a Master’s degree in Finance and Banking from the University of Paris II Panthéon-Assas.
George T. Henley. Mr. Henley has served as Executive Vice President and Chief Growth Officer since February 15, 2021. In this role, Mr. Henley is responsible for the growth and development of our originations business and operations. From 2012 through the time he joined Ocwen, Mr. Henley served as an executive of Freedom Mortgage Corporation. He most recently served as Executive Vice President, Retail Lending of Freedom Mortgage responsible for sales, operations and originations channel expansion. Prior to that role, he was Executive Vice President, Capital Markets and Correspondent Lending responsible for the growth and development of Freedom Mortgage’s correspondent lending channel. He holds a Bachelor of Arts degree from Delta State University.
Joseph B. (“JB”) Long. Mr. Long has served as Executive Vice President, Capital Markets, since May 2020. He previously served a 25-year tenure at TIAA Bank (previously Everbank). Most recently, Mr. Long served as Executive Vice President, Strategic Business Development and Investments responsible for building a broader consumer lending offering and executing on the company’s investment acquisition strategy. Prior to that, he served as Executive Vice President, Head of Capital Markets responsible for the management of all portfolio loans, investments and secondary marketing. Earlier, he held roles of Senior Vice President, Director of Portfolio Management; Senior Vice President, MSR Investment Manager; and Vice President, Secondary Marketing. Mr. Long holds a Bachelor’s degree in Business Administration from the University of North Florida.
Joseph J. Samarias. Mr. Samarias has served as Executive Vice President and General Counsel since April 2019. He previously served as Senior Vice President, Deputy General Counsel of Ocwen since 2013. He also serves as the Company’s Chief Ethics Officer, and was appointed Company Secretary in April 2020. Prior to joining Ocwen, from 2009 to 2013, Mr. Samarias was a senior attorney with the Treasury Department’s Office of Financial Stability (“OFS”). From 2012 to 2013, he served as Chief Counsel of OFS where he was responsible for directing all legal activities of the Troubled Asset Relief Program, and served as the chief legal advisor to the Assistant Secretary for Financial Stability. Prior to his government service, Mr. Samarias was a litigator with several international law firms from 1997 to 2009. He holds a Bachelor of Arts from Vanderbilt University, a Juris Doctor from Washington University School of Law, and is a member of the bars of the Commonwealth of Virginia and the District of Columbia, as well as a Florida Authorized House Counsel, and a New Jersey In-House Counsel.
Dennis Zeleny. Mr. Zeleny has served as Executive Vice President and Chief Administrative Officer since August 2019. In that capacity, he oversees Ocwen’s human resources, communications, information technologies, facilities, sourcing, enterprise project management office and diversity and inclusion programs. From January through August 2019, Mr. Zeleny served Ocwen as a human resources consultant. From 2012 through 2019, Mr. Zeleny provided executive Human Capital consulting services including as co-CEO of Center on Executive Compensation. He previously held the role of Chief Administrative or Chief Human Resources Officer at Sunoco, Caremark, and DuPont, oversaw global human resources at Honeywell and served 17 years at PepsiCo. Mr. Zeleny also served on the Board of HRPA, Cornell ILR Advisory Board, SXL and SCX, NYSE publicly traded companies. He received a B.S. from Cornell University and an M.S. from the Graduate School of Business at Columbia University.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND RELATED SHAREHOLDER MATTERS
Beneficial Ownership of Equity Securities
The following table sets forth certain information regarding the beneficial ownership of our common stock as of April 15, 2021 by:
|●||each of our directors and director nominees;|
|●||each named executive officer; and|
|●||all of our directors and current executive officers as a group.|
Each of Ocwen’s directors, director nominees and named executive officers may be reached through Ocwen Corporate Headquarters at 1661 Worthington Road, Suite 100, West Palm Beach, Florida 33409.
The following table also sets forth information with respect to each person known by Ocwen to beneficially own more than five percent of the outstanding shares of its common stock.
The table is based upon information supplied to us by directors and executive officers and filings under the Securities Exchange Act of 1934, as amended, except where noted. We have based our calculation of the percentage of beneficial ownership on 8,708,271 shares of our common stock outstanding as of April 15, 2021. Share numbers have been adjusted to give effect to the Company’s one-for-15 reverse stock split effective August 13, 2020.
|Shares Beneficially Owned(1)|
|Name and Address of Beneficial Owner:||Amount of Beneficial Ownership||Percent of Class|
Deer Park Road Management Company, LP(2)
1195 Bangtail Way
Steamboat Springs, CO 80487
Oaktree Capital Management LP(3)
333 S. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Leon G. Cooperman(4)
7118 Melrose Castle Lane
Boca Raton, FL 33496
Roberto Marco Sella(5)
2400 Market Street, Suite 3022
Philadelphia, PA 19103
|Directors and Named Executive Officers:|
|Scott W. Anderson(6)||16,889||*|
|Alan J. Bowers(7)||19,124||*|
|Jenne K. Britell(8)||16,600||*|
|John V. Britti(9)||16,877||*|
|Jacques J. Busquet(10)||18,791||*|
|Phyllis R. Caldwell(11)||28,053||*|
|June C. Campbell(12)||7,302||*|
|Glen A. Messina(13)||82,762||*|
|DeForest B. Soaries, Jr.(14)||18,039||*|
|All Current Directors and Executive Officers as a Group (16 persons)(17)||246,709||2.8||%|
|*||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 has the right to acquire such common stock within 60 days of April 15, 2021 and 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, each person has sole voting power and sole investment power with respect to the reported shares. No shares have been pledged as security by the named executive officers or directors.|
|(2)||Deer Park Road Management Company, LP: Based solely on information contained in a Schedule 13G/A filed with the Securities and Exchange Commission on February 16, 2021, reporting securities deemed to be beneficially owned as of December 31, 2020, by Deer Park Road Management Company, LP (“Deer Park”); Deer Park Road Management GP, LLC (“DPRM”); Deer Park Road Corporation (“DPRC”); Michael Craig-Scheckman (“Mr. Craig-Scheckman”); AgateCreek LLC (“AgateCreek”); and Scott Edward Burg (“Mr. Burg”), each of which reports shared voting and dispositive power of 863,744 shares held for the account of STS Master Fund, Ltd. (the “STS Master Fund”), which is an exempted company organized under the laws of the Cayman Islands. Deer Park serves as investment adviser to the STS Master Fund and, in such capacity, exercises voting and investment power over the shares held in the account for the STS Master Fund. DPRM is the general partner of Deer Park. Each of DPRC and AgateCreek is a member of DPRM. Mr. Craig-Scheckman is the Chief Executive Officer of each of Deer Park and DPRC and the sole owner of DPRC. Mr. Burg is the Chief Investment Officer of Deer Park and the sole member of AgateCreek.|
|(3)||Oaktree Capital Management LP (“Oaktree”): On March 4, 2021, the Company issued 592,384 warrants to Opps OCW Holdings, LLC, a Delaware limited liability company, and 592,384 warrants to ROF8 OCW Holdings, LLC, a Delaware limited liability company, each an affiliate of Oaktree, pursuant to agreements between the Company and affiliates of Oaktree. The warrants cannot be exercised to the extent that affiliates of Oaktree would beneficially own in excess of 9.9% of the Company’s outstanding stock following such issuance without 61 days advance notice. Based on the Company’s shares outstanding as of April 15, 2021, these warrants could be exercised on such date for a maximum of 956,847 shares.|
|(4)||Mr. Cooperman: Based solely on information contained in a Schedule 13G/A filed with the Securities and Exchange Commission on January 21, 2021 reporting securities beneficially owned as of January 15, 2021. Mr. Cooperman is the Managing Member of Omega Associates, L.L.C. (“Associates”), a limited liability company organized under the laws of the State of Delaware. Associates is a private investment firm formed to invest in and act as general partner of investment partnerships or similar investment vehicles. Associates is the general partner of a limited partnership organized under the laws of Delaware known as Omega Capital Partners, L.P. (“Capital LP”), a private investment firm comprised of Cooperman family funds engaged in the purchase and sale of securities for investment for its own account. Mr. Cooperman is the ultimate controlling person of Associates and Capital LP. Mr. Cooperman is married to an individual named Toby Cooperman, and has an adult son named Michael S. Cooperman. Mr. Cooperman has investment authority over the shares held by Toby Cooperman and Michael S. Cooperman. Mr. Cooperman reports sole voting and dispositive power with respect to 779,037 shares, which consists of 645,702 shares owned by Capital LP, 66,667 shares owned by Mr. Cooperman, 33,334 shares owned by Toby Cooperman, and 33,334 shares owned by Michael S. Cooperman.|
|(5)||Mr. Sella: Based solely on information contained in a Schedule 13G/A filed with the Securities and Exchange Commission on February 6, 2020 reporting securities beneficially owned as of December 31, 2019, Mr. Sella reports sole voting and dispositive power with respect to 432,028 shares, consisting of 409,289 shares held of record by Roberto Marco Sella and 22,739 shares held of record by LL Charitable Foundation, of which Mr. Sella serves as President. Mr. Sella reports shared voting and dispositive power with respect to 22,739 shares held of record by the Roberto Sella 2012 Family Trust (the “Trust”). Francine Sella, Mr. Sella’s spouse, and Mr. Sella’s minor children are beneficiaries of the Trust. Francine Sella is a co-trustee of the Trust and in such capacity, Francine Sella has voting power over and power to dispose of the 22,739 shares of Common Stock held by the Trust. Mr. Sella is not a beneficiary of the Trust.|
|(6)||Mr. Anderson serves as Executive Vice President and Chief Servicing Officer. Includes shares underlying 3,685 options which are presently exercisable and 1,125 options which could become exercisable within 60 days of April 15, 2021.|
|(7)||Mr. Bowers serves as a director. Includes shares underlying 9,009 RSUs which will vest May 27, 2021 subject to certain conditions relating to the individual’s service as a director.|
|(8)||Dr. Britell serves as a director. Includes shares underlying 9,009 RSUs which will vest May 27, 2021 subject to certain conditions relating to the individual’s service as a director. Also includes 2,639 shares held by trust.|
|(9)||Mr. Britti serves as Executive Vice President and Chief Financial Officer. Includes shares underlying 3,852 options which are presently exercisable and 1,250 options which could become exercisable within 60 days of April 15, 2021.|
|(10)||Mr. Busquet serves as a director. Does not include shares underlying 9,009 RSUs which will vest May 27, 2021 subject to certain conditions relating to the individual’s service as a director but which are not settleable until June 1, 2022.|
|(11)||Ms. Caldwell serves as Chair of the Board of Directors. Includes shares underlying 9,009 RSUs which will vest May 27, 2021 subject to certain conditions relating to the individual’s service as a director.|
|(12)||Ms. Campbell serves as Executive Vice President and Chief Financial Officer. Includes shares underlying 1,475 options which are presently exercisable and 1,920 restricted stock units which could vest within 60 days of April 15, 2021. Also includes 3,176 shares held jointly with spouse.|
|(13)||Mr. Messina serves as President, Chief Executive Officer, and a director. Includes shares underlying 11,866 options which are presently exercisable. Also includes 20,554 shares held jointly with spouse.|
|(14)||Dr. Soaries serves as a director. Includes shares underlying 9,009 RSUs which will vest May 27, 2021 subject to certain conditions relating to the individual’s service as a director. Does not include 4,981 shares underlying vested RSUs which are not settleable until the six-month anniversary of the director’s termination of service, and 1,326 shares underlying vested RSUs which are not settleable until January 1, 2023.|
|(15)||Mr. Stein serves as a director. Includes shares underlying 9,009 RSUs which will vest May 27, 2021 subject to certain conditions relating to the individual’s service as a director. Also includes 7,952 shares held by trust.|
|(16)||Mr. Zeleny serves as Executive Vice President and Chief Administrative Officer.|
|(17)||Includes 4,249 shares and shares underlying 728 stock options which are presently exercisable held by Albert. J Celini, Francois Grunenwald, George Henley, Joseph B. Long and Joseph J. Samarias, who are current executive officers but not Named Executive Officers.|
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. As of the end of the most recently completed fiscal year, we did not maintain an equity compensation plan that had not previously been approved by security holders.
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
exercise price of
warrants and rights
Number of securities
remaining available for
future issuance under
|Equity compensation plans approved by security holders||386,513||274.30||249,746|
|Equity compensation plans not approved by security holders||—||—||—|
|(1)||Includes 124,866 shares subject to outstanding stock option awards and 261,647 shares subject to outstanding restricted stock unit awards (including outstanding performance-based restricted stock unit awards, which are presented at their target level of performance).|
|(2)||Calculated exclusive of outstanding restricted stock unit awards, which do not have an exercise price.|
|(3)||Represents 249,746 shares available for new award grants under the Company’s 2017 Performance Incentive Plan (the “2017 Plan”) as of December 31, 2020. Each share issued under the 2017 Plan pursuant to an award other than a stock option or other purchase right in which the participant pays the fair market value for such share measured as of the grant date, or appreciation right which is based upon the fair market value of a share as of the grant date, shall reduce the number of available shares by 1.2. Pursuant to the 2017 Plan, any shares subject to (1) restricted stock and restricted stock unit awards or (2) stock options granted under our 2007 Equity Incentive Plan that are presently outstanding which are subsequently forfeited, terminated, canceled, or otherwise reacquired by the Company will increase the pool of shares available for new awards under the 2017 Plan at the rate of 1.2 shares or 1.0 shares, respectively. Long-term incentive awards issued in the form of cash-settled restricted stock units do not reduce available shares under the 2017 Plan. This table does not reflect the 490,000 additional shares that will be available for issuance under the 2021 Plan if shareholders approve the 2021 Plan.|
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely upon a review of reports filed electronically with the Securities and Exchange Commission during the 2020 fiscal year, or written representations from certain reporting persons that no Forms 5 were required, we believe that all filing requirements applicable to our officers and directors and greater than 10% beneficial owners were complied with during the 2020 fiscal year.
LETTER FROM COMPENSATION COMMITTEE AND BOARD CHAIRS
Dear Fellow Shareholders:
In the following Compensation Discussion and Analysis we have provided the context and rationale the Compensation and Human Capital Committee (“Compensation Committee”) used in crafting the framework and determining the compensation for our named executive officers in 2020.
2020 was a year that required the management team and our entire employee population to work with remarkable focus and resiliency not only to navigate through the disruption created by the global pandemic, but to execute against our key business initiatives after we transitioned 98% of our employees to remote work within the span of two weeks.
In addition to putting the health and safety of our employees first, the pandemic’s outbreak in March caused us to re-assess our priorities against the incredibly dynamic and uncertain economic and regulatory environment that was unfolding, its potential impact on our business model, and the momentum we built coming off of the significant turn-around of the business we saw in 2019.
In the 2nd quarter, the Board of Directors approved undertaking a comprehensive strategic review to assess all alternatives to unlock value for our shareholders. The Board of Directors and management put in place six priorities for management to support Ocwen’s stated goals of returning to profitability in the shortest timeframe possible within an appropriate risk and compliance environment to enable a sustainable business model that would benefit not only our shareholders but also our customers and employees.
Moreover, based upon the feedback we received during our outreach initiatives to shareholders who collectively hold more than 62% of our stock, we know these priorities are largely correlated with those which hold the most value for our shareholders.
The six priorities which the CEO and the management team would need to deliver against were:
|1.||Returning to and sustaining profitability,|
|3.||Continuous cost improvement,|
|4.||Diversifying sources of capital and optimizing the balance sheet,|
|5.||Employee engagement and diversity and inclusion, and|
Looking back, the management team not only made terrific progress against all six of these priorities, but also concluded an exhaustive strategic review process which resulted in agreements with Oaktree which provided $250 million of capital to pursue growth and refinance existing corporate debt, and created a strategic relationship to acquire mortgage servicing rights (“MSRs”) through a licensed entity, MSR Asset Vehicle LLC (“MAV”). As a result, Ocwen is a stronger, more efficient, more diversified and better-balanced mortgage originator with exciting growth opportunities ahead of us.
We invite you to read the following Compensation Discussion and Analysis for further details on our decisions relating to compensation during 2020, and we look forward to further shareholder engagement.
DeForest B. Soaries Jr.
Chair, Compensation and Human Capital Committee
Phyllis R. Caldwell
Chair, Board of Directors
Compensation Discussion and Analysis
The design and the application of our executive compensation programs support organizational alignment around the achievement of Ocwen’s business plan and its performance against that plan. 2020 was a successful year in which we achieved our objective of returning to sustainable profitability, as measured by pre-tax income before notable items, within an appropriate risk and compliance environment, executing key strategic and operational initiatives against the backdrop of the challenging COVID-19 pandemic. For a discussion of how we measure pre-tax income before notable items and a reconciliation to financial measures prepared under Generally Accepted Accounting Principles (GAAP), please see our Current Report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2021.
Important business highlights which the management team delivered against include:
|●||Completed building a multi-channel, scalable originations platform and replenished and grew our owned servicing portfolio, including $5.7 billion unpaid principal balance (“UPB”) in the forward lending correspondent channel.|
|●||Selectively acquired mortgage servicing rights that meet or exceed our minimum targeted investment returns, with $16.6 billion UPB in bulk transactions and $15.1 billion UPB through Government Sponsored Enterprise Cash Window programs.|
|●||Implemented cost reduction and continuous improvement initiatives, including facility rationalization, strategic sourcing, off-shore utilization, lean process design and technology-enabled automation, resulting in approximately $100 million lower operating expenses compared to 2019.|
|●||Successfully concluded our strategic review process with the expansion of our strategic alliance with Oaktree Capital Management, L.P., including establishing an MSR asset vehicle, to support future growth of servicing volume, refinance corporate debt, and source capital to accelerate growth.|
|●||Supported borrowers and clients through numerous regulatory changes brought on by COVID-19, including managing 81,900 loans under forbearance along with repayment modifications and the moratorium on foreclosures, all with high levels of customer satisfaction.|
|●||Rapidly transitioned to a secure remote operating model for approximately 98% of our global workforce while continuing to adhere to COVID-19 health- and safety-related requirements and best practices across all of our locations.|
|●||Resolved all legacy state regulatory actions from April 2017 with the conclusion of the regulatory matter with the State of Florida Office of the Attorney General and Office of Financial Regulation on October 15, 2020.|
|●||Improved employee engagement scores by 16 points since 2017, achieving levels 14-16 points greater than geographic and industry benchmarks.|
The Compensation Committee designed the 2020 executive compensation program to align the organization’s effort to achieve key strategic and operational objectives and to adhere to evolving compensation and governance best practices, including the rigor used to link pay to performance and shareholder value creation.
The key features of our 2020 executive compensation program relating to pay decisions, program design and shareholder engagement are highlighted below:
|●||Evaluated the impacts of COVID-19 on our business and our shareholders:|
|○||To account for the volatility of the market at the time of our annual long-term equity grants in March 2020, we denominated target values into units based on the 30-trading-day average closing share price rather than closing share price on the grant date, which had been our prior practice. We believed this more accurately aligned with the shareholder experience at the time and resulted in a 42% reduction in initial fair market value for our executives.|
|○||The outbreak of the pandemic necessitated that we recast our business plan to adapt to the new regulatory and business environment and led us to finalize the performance metrics in our Annual Incentive Plan (“AIP”) scorecard in the 2nd quarter and include a provision allowing flexibility assessing metrics based on how the pandemic impacted business volumes and operational metrics.|
|○||Target pay levels for our employees were not reduced as our business successfully transitioned to a work-from-home model while balancing increased volumes of new loans and efforts to support existing homeowners who were adversely impacted by the pandemic.|
|●||Aligned the structure of our AIP to use multiple financial performance tranches that reflect a return to and a sustained level of profitability, as measured by pre-tax income before notable items, and incorporate diversity and inclusion (“D&I”) and employee engagement metrics to reinforce our commitment to effective human capital management practices.|
|●||Linked long-term equity awards to total shareholder return relative to compensation peer group to align with shareholder expectations, and realized top third performance during first measurement period.|
|●||Restored CEO’s annual incentive targets to terms contained in his original offer letter after his voluntary reductions to support cost-reengineering objectives that have since been realized.|
|●||Implemented special compensation arrangements for the executive leadership team to stabilize the organization and promote retention during a critical period of strategic evaluations, including grants of time-vested cash and restricted stock units and enhanced double-trigger benefits in the event of a change in control.|
|●||Initiated an outreach effort to shareholders representing over 62% of outstanding shares regarding their views on our executive compensation program.|
Our named executive officers (“NEOs”) for 2020, whose compensation we will discuss in detail below, are as follows:
|Glen A. Messina||President and Chief Executive Officer|
|Scott W. Anderson||Executive Vice President and Chief Servicing Officer|
|John V. Britti||Executive Vice President and Chief Investment Officer|
|June C. Campbell||Executive Vice President and Chief Financial Officer|
|Dennis Zeleny||Executive Vice President and Chief Administrative Officer|
Philosophy and Objectives of Our Executive Compensation Program
The philosophy underlying our executive compensation program is to provide an attractive, flexible, and market-based total compensation program that aligns the interests of executives and shareholders by rewarding both short-term and long-term performance against specific financial and strategic objectives designed to improve long-term shareholder value.
Equally important, our compensation programs are designed to communicate our goals and reinforce our standards as they relate to risk, compliance and leadership - not only to our senior management team, but across our entire employee population.
Within this context, we believe our executive compensation programs enable us to:
|●||Retain and hire top-caliber experienced executives: In a tight labor market and volatile industry, especially within an organization that is in turn-around mode, accelerating growth and has openly explored strategic alternatives, we believe it is critical that we offer compensation opportunities that allow us to attract and retain strong, proven executive talent.|
|●||Pay for performance: A significant portion of our target 2020 executive compensation (the sum of base salary, annual target bonus, and target value of annual equity program awards) – 79% for the CEO and 62% for other NEOs on average – was dependent on the Company’s business performance and our executive officers’ contribution to that performance, and the performance of our stock.|
|●||Align compensation with shareholder interests: A consequential portion of our target 2020 executive compensation – 52% for the CEO and 28% for other NEOs on average – was directly tied to total shareholder return or stock price emphasizing our focus on shareholder value creation.|
|●||Reinforce a commitment to serve all stakeholders: A major portion – 25% – of each executive officer’s target 2020 annual incentive compensation was tied to customer satisfaction, employee engagement and diversity and inclusion objectives, demonstrating our continued commitment to supporting our borrowers – “Helping Homeowners is What We Do” – and promoting effective human capital governance. We believe that taking all stakeholders’ opinions into account leads to long-term shareholder value creation.|
2020 Incentive Programs
To create a strong link between our incentive compensation opportunities and our short-term and longer-term objectives, we use two specific programs: our Annual Incentive Plan (“AIP”) and the grant of long-term incentive awards under our 2017 Performance Incentive Plan (“LTIP awards”).
The chart below illustrates the portions of our NEOs’ target 2020 executive compensation that are driven by the various objectives under our incentive programs. Our programs are designed to align the interests of our executives with the interests of our shareholders and link the drivers of short-term and long-term value creation with our executive compensation performance metrics.
|Element of 2020 Target Compensation||Description and Link to Key Priorities||
(excluding CEO) Average % of Total Target Compensation
|CEO’s % of Total Target Compensation|
● Only element of total target compensation that is not at risk based on short- or long-term performance.
● The Committee determines salaries after consideration of multiple factors, including comparative data from our peer group and general survey data provided by its independent compensation consultant (described below).
● Target amount is informed by comparative data and other factors further noted below.
● Funding is linked to key priorities of the Company in three areas (shown right).
● All components, as well as individual payouts, are capped at a maximum of 150%.
● Individual performance serves as a modifier to the corporate and business unit scorecard performance level.
Strategic and Operational Objectives
|Customers and Employees||8%||7%|
● Target amount is informed by comparator groups, including our peer group, and other factors further noted below.
● 50% of award is in the form of Restricted Stock Units (RSUs) that vest annually over three years in equal tranches.
● 50% of award is in the form of Performance-Restricted Stock Units (PRSUs) that cliff vest at end of three years provided minimum total shareholder return (TSR) level has been achieved relative to our compensation peer group.
Units Earned Based on Relative Total Shareholder Return
|(a)||Not included are one-time RSU and cash retention awards granted to all executives except Mr. Messina on September 10, 2020, which vest March 10, 2022 and are not taken into account as part of regular annual target compensation. Refer to “Special RSU and Cash Awards” below for further details.|
|(b)||Other compensation that is available to all of our U.S. employees includes medical, dental and life insurance programs. 401(k) matching contributions account for less than 0.1% of our NEOs’ compensation.|
Parties Involved in Compensation Decisions
The governance of our executive compensation programs generally occurs through interaction of three groups: the Compensation Committee, the Compensation Committee’s independent compensation consultant, and management. In 2020, on occasion and as it considered appropriate, the Compensation Committee enlisted the advice of outside counsel specializing in executive and non-employee director compensation matters to assist it in fulfilling its responsibilities under the Compensation Committee’s charter.
Role of the Compensation Committee
The Compensation Committee is responsible for overseeing the development and approval of our executive compensation and benefits policies and programs. The Compensation Committee, consisting of three independent directors, is responsible for the design, review and approval of all aspects of our executive compensation program. Among its duties, the Compensation Committee formulates recommendations to the Board of Directors for CEO compensation and reviews and approves all compensation recommendations for the other NEOs. Adjustments are made by the Compensation Committee in its judgment, taking into account compensation arrangements for comparable positions at peer group companies (discussed below), analysis prepared by Willis Towers Watson, the Compensation Committee’s independent compensation consultant, individual performance of the NEO, an assessment of the value of the individual’s performance going forward and compensation levels necessary to maintain and attract quality personnel. Compensation levels are also considered upon a promotion or other change in job responsibility. Additionally, the Company considers feedback from shareholders, including feedback in the form of shareholder advisory votes on Ocwen’s executive compensation.
The Compensation Committee’s review for NEOs also includes:
|●||approval of the AIP Corporate Scorecard;|
|●||evaluation of individual performance results to determine the AIP Individual Performance Multiplier of each NEO;|
|●||evaluation of the market competitiveness of each NEO’s total compensation (and principal elements of compensation) against relevant comparator groups, including broad-based industry survey data provided by the Compensation Committee’s independent compensation consultant (which is considered generally without focus on any particular company or group of companies in the survey other than the peer group companies noted below) as well as a peer group of companies that are recommended to the Compensation Committee by its independent compensation consultant based on a number of metrics, including industry classification, revenues, assets and number of employees. The peer group used to help inform compensation decisions at the beginning of 2020 is listed below.|
|Associated Banc-Corp||Mr. Cooper Group Inc.|
|BankUnited, Inc.||Navient Corporation|
|Black Knight Financial Services, Inc.||PennyMac Financial Services, Inc.|
|CenterState Bank Corporation||People’s United Financial, Inc.|
|CoreLogic, Inc.||Radian Group Inc.|
|Flagstar Bancorp, Inc.||Signature Bank|
|Jack Henry & Associates, Inc.||Sterling Bancorp|
|LendingTree, Inc.||Synovus Financial Corp.|
|MGIC Investment Corporation||Walker & Dunlop, Inc.|
In August 2020, the Compensation Committee revised the peer group to the list below to better reflect our business model, scale and competitors, removing three regional banks whose asset bases were more than five times that of the Company.
|Associated Banc-Corp||Mr. Cooper Group Inc.|
|BankUnited, Inc.||Navient Corporation|
|Black Knight Financial Services, Inc.||PennyMac Financial Services, Inc.|
|CoreLogic, Inc.||Radian Group Inc.|
|Flagstar Bancorp, Inc.||South State Corporation|
|Jack Henry & Associates, Inc.||Sterling Bancorp|
|LendingTree, Inc.||Walker & Dunlop, Inc.|
|MGIC Investment Corporation|
|●||approval of any changes to compensation, including, but not limited to, base salary, short-term and long-term incentive award opportunities, severance payments and retention programs.|
How We Make Compensation Decisions
Each year our executive and other compensation programs are developed and refined through a year’s worth of analysis and decision making by the Compensation Committee. A typical year’s work is summarized below:
|QUARTER 1||QUARTER 2||QUARTER 3||QUARTER 4|
|●||Evaluate the Company’s prior year performance against the financial and strategic metrics set forth in the prior year’s AIP scorecard.||●||Prepare the Compensation Committee’s report and CD&A for the Proxy Statement.||●||Undertake a review of the Company’s designated peer group to determine if any changes need to be made in order for it to remain appropriate.||●||Continue shareholder engagement focused on Say-on-Pay vote at the Annual Meeting.|
|●||Review and evaluate the individual performance of the CEO and each of our other NEOs and other executive officers.||●||Review and discuss Say-on-Pay voting recommendations from proxy advisory firms.||●||Commence shareholder engagement focused on the Say-on-Pay vote at the Annual Meeting to inform pay decisions and design compensation programs for the coming year.||●||Review the goals and objectives of the Company’s compensation programs.|
|●||Determine the payouts to be made under the AIP based on prior year’s performance.||●||Review and discuss the results of the voting at the Annual Meeting.||●||Conduct an assessment of executive compensation and independent Director compensation against peer group and relevant general survey data provided by the Compensation Committee’s independent compensation consultant.|
|●||Determine total target compensation levels for our NEOs and other executive officers, as informed by both market data and prior year’s performance.||●||Review reports from the Compensation Committee’s independent compensation consultants on practices and trends in the industry.||●||Conduct comprehensive, risk-based review of the Company’s compensation policies and practices that is designed to ensure appropriate mitigation of undue risk.|
|●||Establish the structure and targets for the current year’s AIP to align with the financial and strategic priorities for the Company (for 2020, moved to Q2 due to the pandemic).|
|●||Establish the structure for the current year’s LTIP awards, including TSR or other performance objective.|
Roles of Executive Officers
The President and Chief Executive Officer (“CEO”) is involved in the recommendation of certain compensation arrangements for approval by the Compensation Committee. The CEO, with the assistance of the Chief Administrative Officer, annually reviews the performance of the executive officers and is involved in formulating recommendations regarding equity compensation for the executive officers (other than himself, whose performance is reviewed and compensation determined by the Compensation Committee). The CEO presents his conclusions and recommendations regarding annual compensation and annual incentive opportunity amounts for the executive officers to the Compensation Committee for its consideration and approval. The Compensation Committee can exercise its discretion in accepting, rejecting and/or modifying any such recommendations, subject to any applicable limits contained in any plan or agreements applicable to such awards. All compensation decisions with respect to the compensation of the CEO are made by the Compensation Committee, which consults with the other non-management directors and outside advisors to the extent it deems appropriate. The Chief Administrative Officer assists the CEO and the Compensation Committee by providing them with market data and other reference materials.
Role of Independent Compensation Consultant
The primary role of the Compensation Committee’s independent compensation consultant, Willis Towers Watson, is to provide advice to the Compensation Committee in connection with the development and approval of our compensation policies and programs. Except as otherwise noted in this Compensation Discussion and Analysis, the Compensation Committee’s decisions are the result of the Compensation Committee’s business judgment with respect to compensation matters, informed by the experiences of its members and analysis and input from independent compensation consultants, among other factors. The Compensation Committee has assessed the independence of Willis Towers Watson and has concluded that its engagement does not raise any conflict of interest with the Company or any of its directors or executive officers. Willis Towers Watson performed a number of services for the Compensation Committee in fiscal year 2020, including but not limited to reviewing and providing guidance on:
|●||design of the annual AIP and LTIP awards;|
|●||market competitiveness of compensation of our NEOs;|
|●||Company’s peer group for purposes of informing compensation decisions;|
|●||reports of proxy advisory firms, ISS and Glass Lewis, relating to the Proxy Statement;|
|●||market competitiveness of the compensation of our independent directors; and|
|●||emerging best practices for executive and independent director compensation.|
Shareholder Engagement and Consideration of Shareholder Advisors’ Input
The Compensation Committee and our Board of Directors value shareholder feedback and actively engage with our largest shareholders through outreach and direct meetings with active investors. The Committee also considers recommended best practices put forth by shareholder proxy advisory firms such as ISS to the extent these institutions’ recommendations are aligned with the interests of our shareholders. Shareholder input has helped shape our approach towards LTIP awards and related performance metrics, and strengthened how we implement our pay-for-performance philosophy. We aspire for continued strong support for our executive pay decisions; last year, 90% of shareholder advisory votes were cast in favor of our Say-on-Pay proposal. We also intend to continue to hold an advisory Say-on-Pay vote at each annual meeting of shareholders.
Key Governance Considerations in How We Design and Implement Our Compensation Programs
|WHAT WE DO||WHAT WE DON’T DO|
Pay for performance
Most of our NEOs’ pay is at-risk and not guaranteed. We set clear and transparent financial and strategic goals within our short- and long-term incentive awards which include performance-based vesting conditions.
Discourage excessive risk taking
We operate within our risk management framework and include a balanced program design, multiple performance measures, claw-back and retention requirements. We also conduct an annual risk assessment of our NEO compensation plans to ensure they do not promote undue or excessive risk-taking.
Retain an independent compensation consultant
The Compensation Committee has retained the services of Willis Towers Watson as an independent consultant that reports directly to the Chair of the Compensation Committee.
Caps on annual incentives and long-term awards
Our practice under the AIP provides for a maximum payout opportunity at 150% of the target incentive and our current equity incentive plan limits the number of shares that may be awarded to any individual to 266,666 shares during any 12 -month period.
No fixed term of employment agreements
We do not have employment agreements that provide for a fixed term of employment with any of our executive officers. Employment is at-will and provisions for separation and treatment of compensation is contained in applicable award documents or offer letters.
No tax gross-ups
It is our policy to not provide tax gross-ups (other than for taxable relocation expenses for moves necessitated by our business), including tax gross-ups related to excess parachute payments as defined under section 280G of the Internal Revenue Code.
No option back-dating, re-pricing or reloading
We do not permit back-dating, re-pricing of stock options, or reloading of stock options. No stock options are granted with exercise prices that are below the closing price of Ocwen stock on the date of grant.
No hedging or pledging
We prohibit directors and all employees, including executive officers, from pledging shares of our stock as collateral for loans or for other reasons and from engaging in any activity that hedges the economic risk of an investment in our stock.
No “single-trigger” LTIP awards
Our LTIP awards do not automatically vest upon the occurrence of a change in control. Rather, these awards include double-trigger provisions such that following a change in control a NEO will only receive accelerated payouts if terminated without cause or upon voluntary resignation for good reason.
Base Salaries and Annual Incentive Targets for our NEOs
Base salaries and annual incentive targets are intended to provide a target level of cash compensation that is competitive and appropriate for the responsibilities of the executive’s position. The Compensation Committee determines each executive’s compensation levels based on its assessment of the nature and scope of each executive officer’s responsibilities, experience and performance, and an assessment of compensation levels necessary to maintain and attract quality personnel as informed by peer group and general industry survey data. As of December 31, 2020, the variable (AIP) proportion of total target cash compensation is 60% for the CEO and between 46% and 50% for other NEOs.
During 2020, the Compensation Committee adjusted compensation targets for Mr. Messina and Mr. Zeleny. Effective October 1, 2020, Mr. Messina’s AIP target was restored to the $1,350,000 target level from his October 4, 2018 hire, following successfully restoring Ocwen to profitability, as measured by pre-tax income before notable items, in the third quarter. This follows his voluntarily reducing his target by $225,000 to $1,125,000 in February 2019 in support of the Company’s cost re-engineering efforts. Effective September 15, 2020, Mr. Zeleny’s salary was increased $25,000 and his annual AIP target was increased $82,500 to compensate him for the expansion of responsibilities to include oversight of the Information Technology, Project Management and Offshore Operations functions.
The table below reflects each NEO’s 2020 base salary and AIP target and a comparison against 2019 compensation levels.
|Annual Salary||Annual AIP Target(1)||Annual Total Target Cash Compensation|
|Percent Change to Salary|
As of 12/31/2019
($ and % of Salary)
As of 12/31/2020
($ and % of Salary)
|Percent Change to AIP Target||As of
|Percent Change to Total Target Cash|
|Glen A. Messina||900,000||900,000||—||%||1,125,000||125||%||1,350,000||150||%||20||%||2,025,000||2,250,000||11||%|
|Scott W. Anderson||500,000||500,000||—||%||450,000||90||%||450,000||90||%||—||%||950,000||950,000||—||%|
|John V. Britti||450,000||450,000||—||%||405,000||90||%||405,000||90||%||—||%||855,000||855,000||—||%|
|June C. Campbell||475,000||475,000||—||%||475,000||100||%||475,000||100||%||—||%||950,000||950,000||—||%|
|(1)||Final AIP targets are pro-rated for mid-year compensation changes.|
2020 Annual Incentive Plan (AIP)
Ocwen’s annual incentive compensation opportunity for eligible employees, including our executive officers, is provided under the 1998 Annual Incentive Plan, as amended, which has been approved by our shareholders. The AIP award opportunity motivates executives to deliver against the key initiatives the Compensation Committee, working with the CEO, management and the Compensation Committee’s independent advisor, believes will enhance Company performance and create a path for long-term shareholder value.
2020 AIP award opportunities for each NEO were based on a combination of organization and individual performance. First, performance against the Corporate Scorecard objectives establishes the baseline funding level for the entire plan. From there, Organizational Performance Funding is allocated to each Business Unit and its managing NEO based on an assessment of the Business Unit’s achievement of its key priorities and the corresponding contributions to overall Corporate Scorecard results. Finally, each NEO’s award is adjusted based on an assessment of his or her individual performance against a number of key objectives unique to him or her, including demonstrated leadership in creating and sustaining a high-performing culture. Additional detail on each is outlined below.
The Corporate Scorecard, which drives the overall funding for the AIP, is approved annually by the Compensation Committee. In determining whether to approve the Corporate Scorecard each year, the Compensation Committee considers a number of factors, including whether the goals are consistent with and likely to enhance corporate performance and long-term shareholder value and discourage executives from pursuing short-term goals that may not be consistent with achieving such long-term success, as well as the level of difficulty associated with attainment of each goal in the scorecard. The 2020 Corporate Scorecard objectives, shown below with final performance results, were directly aligned to our six key business priorities, as follows:
|1.||Returning to and sustaining profitability,|
|3.||Continuous cost improvement,|
|4.||Diversifying sources of capital and optimizing the balance sheet,|
|5.||Employee engagement and diversity and inclusion, and|
Financial performance, or pre-tax income before notable items, had 50% of the overall scorecard weight as our goal of returning to and sustaining profitability was paramount. Our other priorities were necessary to continue strengthening and transforming our business, and our focus on customers and employees is key to our long-term success and are foundational components of our mission, values and operating principles.
The Compensation Committee establishes the “target” performance of each goal at a level that it intends to be challenging to achieve, a “threshold” level for each goal that must be met in order for any portion of the incentive to be paid with respect to that goal, and an outstanding or “maximum” level for each goal that would result in payment of the maximum bonus opportunity with respect to that goal. The chart below depicts the level of achievement for a given objective on the scorecard and the corresponding incentive leverage that is applied to the target funding for the given objective.
|Level of Achievement||% of Target Opportunity|
The Committee measured the level of performance achievement against scorecard objectives using both quantitative and qualitative assessments, as appropriate. Quantitative assessments were used when the objective measure was numeric in nature, such as meeting the budget. For these assessments, the level of achievement was determined using straight-line interpolation between the “threshold”, “target” and “maximum” anchor posts, as applicable. Other objectives required a combination of numeric and qualitative assessments, even for objectives containing deadlines and metrics which defined achievement, such as diversity and inclusion objectives.
Prior to the Committee’s assessment of the level of performance achieved against scorecard objectives, the information on which the Committee based its assessment was first reviewed and verified by the Company’s Internal Audit, Finance and Risk Management functions.
Based on the Company’s final performance and the relative weightings assigned to each objective, the overall Corporate Scorecard funding was 141.1%. Our Corporate Scorecard and corresponding achievement levels are detailed below:
|Corporate Objective||Objective Weight||Threshold||Target||Maximum||Performance Outcome||Performance Achievement||Weighted Performance Achievement|
1a. Return to Profitability by Q3 2020
Q3 Pre-tax income before notable items ($M)
1b. Sustained Profitability in Q4
Q4 Pre-tax income before notable items ($M)
1c. Full-Year Profitability
Full-year pre-tax income before notable items ($M)
|Key Business Priorities|
2. Growth and Revenue Diversification
Owned MSR and sub-serviced unpaid principal balance (UPB, $B)(2)
3. Continuous Cost Improvement
Quarterly operational expense run-rate as of 12/31/2020 ($M)
4a. Diversify Capital Sources
Net new committed equity capital by year-end at levels approved by Board ($M)(4)
4b. Balance Sheet Optimization
Improve asset utilization, maintain minimum liquidity threshold and generate surplus cash for investment ($M)(5)
|Customers & Employees|
5a. Employee Engagement Results
Assess the engagement of our work force and progress made from Q2 pulse survey to Q4 comprehensive engagement survey
5b. Diversity & Inclusion
Execute against the ambitious initiatives and short-term actions contained in the Diversity & Inclusion Road Map
6a. Customer Satisfaction – Servicing
Net Promoter Score (NPS) % point improvement Q4 2020 vs. Q4 2019
6b-i. Customer Satisfaction - Originations - Direct Lending
Net Promoter Score (NPS)
6b-ii. Customer Satisfaction - Originations - Reverse Mortgage
Net Promoter Score (NPS)
|(1)||Pre-tax income before notable items for purposes of the Corporate Scorecard excludes income statement notables and amortization of New Residential Investment Corp. (“NRZ”) lump-sum payments and refers to our pre-tax income/(loss) after excluding the positive impact of the amortization of NRZ lump-sum payments and after adjusting GAAP pre-tax income/(loss) for the following factors: (1) Expense Notables (excluding MSR Valuation Adjustments, net), (2) changes in fair value of our Agency and Non Agency MSRs due to changes in interest rates, valuation inputs and other assumptions, net of hedge positions, (3) offsets to changes in fair value of our MSRs in our NRZ financing liability due to changes in interest rates, valuation inputs and other assumptions, (4) changes in fair value of our reverse originations portfolio due to changes in interest rates, valuation inputs and other assumptions and (5) certain other non-routine transactions, including but not limited to pension benefit cost adjustments and opportunistic gains related to exercising servicer call rights on second lien portfolio subsequently sold and fair value assumption changes on other investments (Other) consistent with the intent of providing management and investors with a supplemental means of evaluating our net income/(loss). Collectively, we refer to these adjustments as “income statement notables.” “Expense Notables” includes (1) expenses related to severance, retention and other actions associated with continuous cost and productivity improvement efforts, (2) significant legal and regulatory settlement expense items, (3) NRZ consent process expenses related to the transfer of legal title in MSRs to NRZ, (4) PHH acquisition and integration planning expenses, and (5) certain other significant activities including, but not limited to, insurance related expense and settlement recoveries, compensation or incentive compensation expense reversals and non-routine transactions (Other) consistent with the intent of providing management and investors with a supplemental means of evaluating our expenses.|
|(2)||Growth and revenue diversification measurement for purposes of the Corporate Scorecard is specific to MSR originations and purchases and subservicing portfolio volume growth in 2020 achieved through new and diversified origination channels.|
|(3)||Continuous cost improvement measurement for purposes of the Corporate Scorecard is based on a 4Q’20 run rate compared to a 4Q’19 baseline and was adjusted for expense notable items, as defined above and further adjusted to normalize for expenses associated with performance measurement.|
|(4)||Capital source diversification measurement for purposes of the Corporate Scorecard is specific to investment in or from external parties to Ocwen Financial from the strategic review process.|
|(5)||Balance sheet optimization measurement for purposes of the Corporate Scorecard is specific to increased asset turn times and execution of opportunities to the fullest extent possible in order to increase liquidity levels and liquidity duration.|
Diversity & Inclusion Road Map (see 5b above)
Diversity, inclusiveness and respect are integral parts of our culture and work environment, and we are committed to being a globally diverse and inclusive workplace where every voice is heard. Our Diversity & Inclusion (“D&I”) Road Map is built around the four pillars of our diversity program, with numerous initiatives and short-term actions to support each one. Our 2020 goals and key results are summarized below:
|Pillar||Road Map Goals||Key Results|
Strengthen the understanding and commitment of D&I throughout all levels of the organization.
Ensure all leaders fully understand the benefit of D&I and can demonstrate inclusive work strategies.
|Diversity was incorporated into AIP, individual performance goals, mandatory training for the entire workforce, and cultural celebrations.|
Increase our ability to attract and hire diverse talent and improve our Diversity and Inclusion brand.
Increase diversity in leadership levels.
Drive engagement, development, and retention of top talent employees.
Access to leadership increased through mentoring programs and CEO roundtables, diverse recruitment was supported through a partnership with the National Association of Minority Mortgage Bankers of America, and internal training, and Ocwen Global Women’s Network events facilitated career development of women globally.
Additionally, there was significant improvement in women’s leadership metrics (hiring, promotions, representation and attrition).
Continue efforts to support external community engagement partnerships.
Create a corporate structure for social responsibility and employee outreach.
|Borrower outreach events increased 67% from 2019, and new corporate social responsibility efforts supported local communities with donations.|
|Vendor Diversity||Strengthen partnerships with diverse supplier groups and expand supplier diversity efforts year over year.||Minority- and/or women-owned vendors comprise 6.5% of spend and 10.5% of Tier 1/2 vendors, including two new vendors specializing in diversity hiring in APAC.|
Organizational Performance Funding Allocation by Business Unit
Upon approval of the Corporate Scorecard results, funding is allocated to each Business Unit based on the Compensation Committee’s assessment of the Business Unit’s contributions to scorecard achievement, which is informed by the CEO’s recommendation. The assessment is based on the Business Unit’s achievement of a unique set of financial and operating objectives required to support the six key priorities reflected in the Corporate Scorecard.
Each NEO worked with the CEO to develop their unique set of key priorities in their respective area of responsibility, which included specific cost or profitability targets, and were weighted depending upon their relative importance to overall organization success. These priorities are outlined in the Performance Assessments section below.
Individual Performance Multiplier
The Compensation Committee is accountable for reviewing and approving the full-year performance evaluations and recommended performance appraisal ratings for each member of the executive leadership team, including the CEO. The Compensation Committee considers recommendations from the CEO in determining performance appraisal ratings of the other NEOs. The CEO’s performance appraisal rating is determined by the Compensation Committee in consultation with the other independent directors.
The documentation provided to the Compensation Committee includes the executives’ self-assessments capturing their views on their performance against each of the objectives they and the CEO agreed to at the start of the year, as well as those that may have been introduced as a result of emerging priorities during the year. The objectives for all employees, including NEOs, fell into three weighted categories:
|●||Key Business Unit and Functional Priorities (50% weight) reflected individual goals required to meet the objectives contained in the Corporate Scorecards;|
|●||Risk and Compliance (25% weight) assessed executive performance in promoting a culture of appropriate risk and compliance through training and policy review and adherence, remediating of any identified issues, and lack of any material findings relating to audit, protocols under the Sarbanes-Oxley Act or examination matters; and|
|●||Leadership Expectations and Behaviors (25% weight, described below).|
Leadership expectations and behaviors for our executive team require them to:
|●||Behave as a leadership role model and lead by example, demonstrate integrity, create a culture in which we keep our promises, treat all with respect and dignity, and build trust within and outside the organization.|
|●||Build strong working relationships in which they solicit, consider and appropriately incorporate perspectives from others.|
|●||Drive and deliver exceptional results by proactively anticipating situations that require a plan of action, identifying critical issues and assuming personal ownership for driving their resolution.|
|●||Lead efforts on diversity and inclusion by creating, promoting and sustaining an inclusive work environment in which diversity, inclusiveness and respect are integral parts of our culture and work environment.|
|●||Build and motivate a high performing team by identifying and securing top talent to increase performance while also actively holding people accountable for results and behaviors.|
|●||Lead change by providing a visible anchor for others and helping resolve breakdowns in times of transition and uncertainty, and by convincing others of the need for change to support critical organizational objectives.|
The Compensation Committee then evaluates the proposed results and performance appraisal recommendations and determines the final incentive compensation awards for each executive. Each executive receives an individual Performance Appraisal rating against a 4-point scale with an “individual performance multiplier” that is applied to their funded Annual Incentive, as described above.
The value for the multiplier is determined by the Compensation Committee using a value from the range shown in the chart below.
|Individual Performance Rating||Individual Performance Multiplier|
|Fully Meets Expectations||95-105||%|
|Sometimes Meets Expectations||70-95||%|
|Does Not Meet Expectations||0||%|
Performance Assessments and Calculation of Total 2020 AIP Awards and Additional Cash Bonuses
Outlined below are the payout results for each NEO, expressed as a percentage of target annual incentive, calculated by multiplying the Organizational Performance Funding determined by the Corporate Scorecard achievement and Business Unit allocation by the Individual Performance Multiplier, equaling the total payout.
After careful consideration, the Compensation Committee - and the full Board, in the case of the CEO - determined that each NEOs’ performance, as described below, warranted an Exceeds Expectations performance rating in 2020, and assigned Individual Performance Multipliers reflective of Risk and Compliance objectives and Leadership Expectations and Behaviors that further differentiated their performance, as described below.
The AIP limits payouts to 150% of individual targets. The Compensation Committee elected to reward certain executives for exceptional performance by providing an additional lump-sum bonus of up to 50% of his or her individual target.
|Name||Organizational Performance Funding||Individual Performance Multiplier||Final AIP Payout (% of Target)||Additional Bonus (% of Target)||Total Combined Payout (% of Target)|
|Glen A. Messina||141.1||%||141.8||%||150||%||50||%||200.0||%|
|Scott W. Anderson||135||%||115||%||150||%||5.3||%||155.3||%|
|John V. Britti||155||%||112||%||150||%||23.6||%||173.6||%|
|June C. Campbell||135||%||110||%||149||%||—||%||148.5||%|
The following summarizes the performance of each executive and his or her respective Business Unit:
As CEO, Mr. Messina received Organizational Performance Funding equivalent to the Corporate Scorecard results, or 141.1%. His exceptional performance during the year, highlighted below, warranted maximum AIP payout and an additional bonus of 50% of target.
|●||Led the team through the pandemic and made decisions necessary to exceed all Corporate Scorecard plan and profitability objectives that were committed to shareholders, additionally achieving significant cost savings and improved strategic options.|
|●||Shifted the organization’s focus and priorities to maximize originations volume opportunity created by low interest rates caused by the pandemic. Focused servicing and enabling functions on right-sizing the servicing platform and aggressively reducing overhead costs in response to portfolio runoff.|
|●||Implemented a comprehensive strategic review process to explore all options and engaged in various negotiations with external parties to maximize value for shareholders.|
|●||Realigned the leadership team to create focus and bandwidth, and built a new Capital Markets function.|
|●||Maintained high levels of employee engagement and productivity in a difficult year of cost cutting, layoffs, operating changes and the strategic review, compounded by the move to a remote work environment and uncertainty caused by the pandemic.|
|●||Successfully attracted new investors as a result of an expanded shareholder relations effort, and actively engaged with the Mortgage Bankers Association and the Housing Policy Council on the evaluation and responses to key regulatory and investor proposals that may materially impact our industry.|
Mr. Anderson’s key priorities for the Servicing organization included developing the Reverse Servicing business, maintaining first-line compliance performance, and improving customer satisfaction scores. Under his leadership, Servicing earned 135% Organizational Performance Funding and he was awarded the maximum payout under the AIP and an additional bonus of 5.3% of target, with key accomplishments described below.
|●||Responded and adapted to extensive regulatory changes from federal, state and government agencies, including over 1,700 COVID-related compliance bulletins, more than a third of which required process, correspondence or technology changes, frequently with an effective date of “immediately.”|
|●||Maintained better-than-industry call center metrics (i.e. average speed to answer, abandonment rate) despite moving 98% of employees to remote work environment in less than two weeks when pandemic lock-downs were implemented.|
|●||Exceeded customer satisfaction expectations, even after factoring in responses on those related to COVID-impacted borrowers, with strong defect rates and all-time-low numbers of Consumer Financial Protection Bureau complaints.|
|●||Implemented process improvements to improve recovery timeline for modification-related advances and develop one-month forbearance plans, which contributed to exceeding balance sheet optimization targets.|
|●||Exceeded Direct Cost to Service target by 109 basis points in 2020 despite increased volumes and regulatory changes|
Mr. Britti’s key priorities for the Corporate Development organization included sourcing capital for sustainable growth and optimizing the availability and funding of corporate assets. He also supported growth objectives more generally by supporting development of originations channels and evaluating strategic transactions. Based on the achievements of the function and his individual performance, highlighted below, he received the maximum AIP payout and was awarded an additional bonus of 23.6% of target.
|●||Led strategic review processes, resulting in expanding Ocwen’s sources of capital and securing funding for the planned MSR asset vehicle.|
|●||Built originations channels in Freddie Mac Cash Window and Flow that significantly contributed to improving Ocwen’s profitability.|
|●||Secured additional advance financing to mitigate challenges from COVID-related uncertainties, and managed debt restructuring efforts that resulted in lower debt expense.|
|●||Led industry efforts to improve Housing Policy Council, Mortgage Bankers Association and Urban Institute responses to Conference of State Bank Supervisors and Federal Housing Finance Agency capital requirements that resulted in key changes to their positions.|
|●||Led various corporate efforts that led to improved profitability and liquidity as well as cost reductions.|
Ms. Campbell’s key priorities for the Finance organization included financial reporting and forecasting, cash management and balance sheet optimization, and process design. Organizational Performance Funding allocated to Finance was 135% and she received an Individual Performance Multiplier of 110%, with key accomplishments described below.
|●||Introduced new systems and processes to drive to best-in-class timing for financial updates to the investment community, which helped attract early investor attention and interest.|
|●||Redesigned shareholder relations programs, including hosting 40+ virtual investor meetings to improve Ocwen’s market visibility and credibility, which resulted in adding new analysts and institutional investors expanding their positions.|
|●||Developed data-driven analytics models supporting strategic decision making in Servicing and Originations.|
|●||Created a new Cash Management Program which delivered on-target, end-of-quarter cash balances and generated surplus cash for investment.|
Mr. Zeleny’s key priorities as Chief Administrative Officer included executing a range of enabling functions associated with our growth and cost reduction initiatives, in addition to longer-range strategic imperatives associated with organization and human capital changes, engagement, and diversity and inclusion. The exceptional performance of the functions he led and his individual performance, highlighted below, warranted maximum AIP payout and an additional bonus of 50% of target.
|●||Co-led rapid enterprise recovery efforts enabling a remote operating model, including down-stream implications for people, policies, and procedures.|
|●||Assumed responsibility for Information Technology, Project Management, Sourcing and Offshore Operations, and exceeded goals and stretch budget targets.|
|●||Enhanced communications by promoting our business turnaround to external stakeholders, the investment community, media and employees, helping enhance our reputation and shape our perception in the industry.|
|●||Led talent enhancement across all levels of the company, executed key organization changes and sponsored initiatives to foster a high-performing culture, achieving employee engagement survey results that significantly exceeded industry benchmarks and realizing significant strides in diversity representation, including improvements to hiring, promotion and attrition metrics relating to women in leadership positions, both in U.S. and APAC.|
2020 Long-Term Incentive (LTIP) Awards
The annual grant of LTIP awards is designed to promote actions and decisions aligned with our strategic objectives and reward our executives and other program participants for long-term value creation for our shareholders in a manner that is consistent with our pay-for-performance philosophy. The Compensation Committee periodically reviews the granting of equity awards to employees based on such factors as Company performance, market competitive conditions and advice from its independent compensation consultant.
Ocwen’s long-term incentive opportunity for eligible employees, including executive officers, through equity awards is provided under the 2017 Performance Incentive Plan (the “2017 Plan”). The 2017 Plan authorizes the grant of restricted stock, restricted stock units, options, stock appreciation rights or other equity-based awards, including cash-settled awards, to our employees (including executive officers), directors, advisors and consultants. To date, we have made grants under the 2017 Plan only to employees and directors. We implemented the 2017 Plan to motivate employees to make extraordinary efforts to achieve significant improvements to shareholder value, support retention of key employees and align the interests of our employees with the interests of our shareholders.
2020 LTIP awards include both a time-vesting component for retention purposes and performance-based component to align with pay-for-performance objectives. Half of the target value is granted as restricted stock units (“RSUs”) vesting in equal thirds on the first, second and third anniversaries of the grant, and half is granted as performance-restricted stock units (“PRSUs”) vesting on the third anniversary of the grant based on Total Shareholder Return (“TSR”) compared to our compensation peer group at the time of grant, described earlier.
The PRSUs use four distinct weighted performance periods to measure overall performance – three annual periods and one three-year period, as shown below. This structure assigns a weight more than three times greater to the three-year period while also providing incentive for year-over-year improvements compared to the peer group.
|Period #||Measurement Period||% of Target PRSUs Assigned to Measurement Period|
|1||March 30, 2020 – March 30, 2021||15||%|
|2||March 30, 2021 – March 30, 2022||15||%|
|3||March 30, 2022 – March 30, 2023||15||%|
|4||March 30, 2020 – March 30, 2023||55||%|
If the Company achieves relative TSR at the (i) 25th percentile of its peer group for any measurement period (threshold level), 50% of the target PRSUs are eligible to vest, (ii) 50th percentile of its peer group for any measurement period (target level), 100% of the target PRSUs are eligible to vest, and (iii) 100th percentile, or ranked first overall, of its peer group for any measurement period (maximum level), 200% of the target PRSUs are eligible to vest. The number of target PRSUs that may be eligible to become vested based on relative TSR performance during each measurement period is interpolated between the applicable performance levels. No PRSUs will be earned for a specific measurement period if TSR is below threshold. Units credited based on TSR for any performance period are subject to continued service through the third anniversary of the grant.
Ocwen’s TSR during the first measurement period was 87.6%, the 71st percentile of the peer group, which resulted in 141.1% of the target PRSUs assigned to the period becoming eligible to vest, subject to the award recipient’s continued employment through the third anniversary of the grant.
All NEOs received 2020 LTIP awards. With the exception of Mr. Messina’s award, these awards will be cash-settled to avoid share dilution but were granted as share-based units to align final award value with share performance.
To account for the volatility of the market at the time of grant and mitigate share dilution, target values were denominated into units based on the 30-trading-day average closing share price ending on the March 30, 2020 grant date of $15.00 rather than the $7.95 closing share price on that date, resulting in a 42% reduction in initial grant date fair value compared to the grant date fair value that would have resulted using $7.95 to determine the number of units subject to the awards.
The table below shows the annual target value opportunities for our NEOs and the grant date fair values of equity awards granted to our NEOs in 2020.
|Name||Annual Target Value |
|Annual Target Grant Date Fair Value Granted as Restricted Stock Units|
|Annual Target Grant Date Fair Value Granted as Performance Restricted Stock Units|
|Total Grant Date Fair Value of Annual Awards|
|Variance of Grant Date Fair Value to Target Value|
|Variance of Grant Date Fair Value to Target Value|
|Glen A. Messina||2,250,000||596,250||720,000||1,316,250||(933,750||)||(42||)%|
|Scott W. Anderson||300,000||79,500||96,000||175,500||(124,500||)||(42||)%|
|John V. Britti||270,000||71,550||86,400||157,950||(112,050||)||(42||)%|
|June C. Campbell||380,000||100,700||121,600||222,300||(157,700||)||(42||)%|
Special RSU and Cash Awards
On September 10, 2020, all NEOs except Mr. Messina received a combination of cash and equity-based awards to bolster incentives encouraging their commitment to the Company during a period in which the Company was evaluating strategic options, and to recognize their exceptional performance navigating the business through the pandemic, returning to profitability, servicing our customers, growing the originations platform, and keeping our workforce engaged and productive.
The Compensation Committee, with the input of its independent consultant, considered a range of variables in determining the structure of these awards, including:
|●||the duration of time that would be needed to ensure that NEOs remained with the Company not only to explore a full range of potential strategic outcomes, but also to execute against their delivery;|
|●||the retentive and motivational effect of the award, which influenced the mix between cash and restricted stock units; and|
|●||market prevalence of these type of awards.|
After reviewing these factors, the Compensation Committee determined that it was in the best interests of the Company to lock in the leadership team that has led the Company through the remarkable turn-around over the prior 18 months with awards where the target values were split 70% as cash retention and 30% as cash-settled restricted stock units, with both awards vesting and payable after 18 months, subject to continued employment through such 18-month period. The cash emphasis of the awards mitigated uncertainty in award value that would stem from a yet to be concluded strategic review process. The table below outlines the value of these awards to our NEOs.
|Name||Grant Date Fair Value Granted as Restricted Stock Units|
|Grant Date Fair Value Granted as Cash Awards|
|Total Grant Date Fair Value of Special Awards|
|Scott W. Anderson||149,988||350,000||499,988|
|John V. Britti||116,991||273,000||389,991|
|June C. Campbell||101,998||238,000||339,998|
Our policy with respect to employee benefit plans generally is to provide benefits to our employees, including our executive officers, which are comparable to benefits offered by companies of a similar size. We believe that a competitive comprehensive benefit program is essential to achieving the goal of attracting and retaining highly-qualified employees. Our NEOs participate in the benefit plans offered to our salaried employees, generally, including medical, dental, life and disability insurance plans, and a 401(k) plan.
Stock Ownership and Prohibition against Short Sales, Hedging and Margin Accounts
Although we do not have stock ownership requirements for our executives, our philosophy is that equity ownership by our executives is important to attract, motivate and retain executives, as well as to align their interests with those of our shareholders. The Compensation Committee believes that the Company’s equity plans are adequate to achieve this philosophy.
We maintain an Insider Trading Prevention Policy that governs the timing of transactions in securities of the Company by directors and executives. In addition, this policy prohibits any director, officer or employee from engaging in any short sale of the Company’s stock, establishing and using a margin account with a broker-dealer for the purpose of buying or selling Company stock, pledging Company securities as collateral for a loan, buying or selling puts or calls on the Company’s stock and engaging in any other transaction that hedges the economic risk associated with the ownership of the Company’s securities. This policy is designed to encourage investment in the Company’s stock for the long term and to discourage active trading or short-term speculation.
The Company maintains an incentive compensation clawback policy that allows our Board of Directors or the Compensation Committee to recoup incentive compensation if the Company restates its financial statements. Under this policy, in the event of a restatement due to intentional misconduct, the Chief Executive Officer and Chief Financial Officer must reimburse or forfeit to the Company the amount of bonus or incentive compensation (whether cash-based or equity-based) such officer received during the fiscal year immediately preceding the year the restatement is determined to be required, to the extent that such bonus or incentive compensation exceeds what the officer would have received based on an applicable restated performance measure or target. In addition, in the event that the Company is required to prepare restated financial statements as a result of intentional misconduct or material noncompliance with financial reporting requirements under securities laws, the Compensation Committee may require reimbursement or forfeiture of the amount of bonus or incentive compensation any executive officer received during the three fiscal years preceding the year the restatement is determined to be required, to the extent that such bonus or incentive compensation exceeds what the officer would have received based on an applicable restated performance measure or target. The Company’s rights to recoupment under the clawback policy are in addition to any other rights of recoupment under the terms of any equity incentive plan or individual award.
All of our NEOs have executed an intellectual property and non-disclosure agreement. This agreement requires the NEO to hold all “confidential information” in trust for us and prohibits the NEO from using or disclosing such confidential information except as necessary in the regular course of our business or as otherwise required by law. In connection with the special cash awards described above, all of our NEOs (other than Mr. Messina) agreed to (i) certain non-compete covenants during their term of employment and (ii) certain covenants relating to the non-solicitation of employees and non-interference with business relationships until September 10, 2023 (whether or not employed by the Company during such period). From time to time, we enter into separation agreements with executive officers that contain non-competition and non-solicitation provisions. In addition, certain of our equity award agreements contain provisions that provide that post-retirement vesting or exercise of the award, as applicable, is dependent on compliance with certain covenants.
Section 162(m) of the Internal Revenue Code generally disallows public companies a tax deduction for compensation in excess of $1,000,000 paid to its “covered employees.” Prior to federal tax reform enacted in December 2017, Section 162(m) included an exception to this limitation on deductibility for qualifying “performance-based compensation,” provided that certain performance and other requirements are met. Under the 2017 tax legislation, for taxable years beginning after December 31, 2017, there is no longer an exception to the deductibility limit for qualifying “performance-based compensation” unless the compensation qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. Also under the 2017 legislation, the definition of “covered employees” has been expanded to include a company’s chief financial officer (in addition to the chief executive officer and three other most highly paid executive officers), plus any individual who has been a “covered employee” in any taxable year beginning after December 31, 2016. As one of the factors in its consideration of compensation matters, the Compensation Committee considers the anticipated tax treatment to the Company of various payments and benefits, including the impact of Section 162(m). However, we reserve the right to design programs that may not be deductible under Section 162(m) if we believe they are nevertheless appropriate to help achieve our executive compensation program objectives, and in any case, there can be no assurance that any compensation paid by the Company will be fully deductible.
CEO Pay-Ratio Disclosure
Pursuant to the Securities Exchange Act of 1934, as amended, we are required to disclose in this proxy statement the ratio of the total annual compensation of our CEO to the median of the total annual compensation of all of our employees (excluding our CEO). Based on Securities and Exchange Commission rules for this disclosure and applying the methodology described below, we have determined that Mr. Messina’s total compensation for 2020 was $4,587,915 and the median of the total 2020 compensation of all of our employees (including our India and Philippines operations and excluding our CEO) was $35,997 (after applying a cost-of-living adjustment and converting foreign currency to U.S. dollars, as described below). Accordingly, we estimate the cost-of-living-adjusted ratio of our CEO’s total compensation for 2020 to the median of the total 2020 compensation of all of our employees (excluding our CEO) to be 127 to 1.
We identified the median employee by taking into account the total compensation paid during 2020 to all individuals, excluding our CEO, who were employed by us or one of our subsidiaries on December 31, 2020. We included all employees, whether employed on a full-time, part-time, or seasonal basis. We did not annualize the compensation for any employees who were not employed by us for all of 2020. We applied a cost of living adjustment to employees employed outside of the United States as described below. Once the median employee was identified as described above, that employee’s total compensation was determined using the same rules that apply to reporting the compensation of our Named Executive Officers (including our CEO) in the “Total” column of the Summary Compensation Table. The total compensation amounts included in the first paragraph of this pay-ratio disclosure were determined based on that methodology (in the case of the median employee’s compensation, as adjusted for cost-of-living and currency conversion as described below).
If we only considered our U.S.-based employees (excluding our CEO) in identifying the median employee using the methodology otherwise described above, we determined that our median U.S.-based employee’s total compensation was $64,001. Accordingly, we estimate the resulting ratio of our CEO’s total compensation to the median of the total compensation of all our U.S.-based employees (excluding our CEO) to be 72 to 1.
In calculating the compensation of our employees in the Philippines, we applied a currency conversion factor based on the U.S. dollar to Philippines Peso exchange rate as of December 31, 2020. In calculating the compensation of our employees in India, we applied a currency conversion factor based on the U.S. dollar to Indian Rupee exchange rate as of December 31, 2020.1 As permitted under SEC rules, in identifying the median employee and in presenting the median employee’s total 2020 compensation above, we applied a cost-of-living adjustment to the compensation of employees outside the United States based on a purchasing power parity conversion factor published by The World Bank for 2019.2 Using this methodology, we determined that our median employee is employed in India. If we had determined the median employee and total compensation as described above but had not applied a cost-of-living adjustment to identify our median employee or calculate our median employee’s total compensation, the median of the total compensation of all of our employees (excluding our CEO) would have been $12,398 and we estimate the resulting ratio of our CEO’s total compensation to the median of the total compensation of all of our employees (excluding our CEO) would have been 370 to 1.
1 As reported by the U.S. Bureau of the Fiscal Service Treasury Reporting Rates of Exchange as of December 31, 2020, the Indian Rupee to U.S. Dollar to conversion rate was 73.03:1 and the Philippines Peso to U.S. Dollar to conversion rate was 48.17:1.
2 The “price level ratio of PPP conversion factor (GDP) to market exchange rate” published by the World Bank indicates how many U.S. dollars are needed to buy one U.S. dollar’s worth of goods in a particular country. For 2019, the most recent data accessible, the ratios reported for India and the Philippines were 0.3 and 0.4, respectively, meaning the local currency equivalent of $1 purchased $3.33 and $2.50 worth of goods in those countries. Accordingly, we multiplied the 2020 compensation of each employee based in India by 3.33 and in the Philippines by 2.5 prior to identifying the employee with the median of the total compensation and in presenting such employee’s total compensation in order to reflect a cost-of-living adjustment.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis of this proxy statement with management.
Based on the review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
|April 16, 2021||Compensation Committee:|
|DeForest B. Soaries, Jr., Chair|
|Jenne K. Britell, Director|
|Jacques J. Busquet, Director|
Summary Compensation Table - 2018, 2019 and 2020
The following table provides information concerning the compensation of our named executive officers for the 2020, 2019 and 2018 fiscal years.
|Name and Principal Position||Year|
Non-Equity Incentive Plan Compensation(3)
All Other Compensation(4)
|Glen A. Messina||2020||900,000||590,779||1,316,250||—||1,772,336||8,550||4,587,915|
|President and Chief||2019||900,000||—||2,518,950||—||1,529,974||2,613,406||7,562,330|
|June C. Campbell|
Executive Vice President
|and Chief Financial Officer||2019||370,673||253,757||153,986||51,432||468,583||120,113||1,418,545|
|Scott W. Anderson||2020||500,000||23,625||325,488||—||675,000||—||1,524,113|
|Executive Vice President,||2019||500,000||—||538,002||—||592,207||—||1,630,208|
|Chief Servicing Officer||2018||500,000||—||—||—||314,236||—||814,236|
Executive Vice President
|and Chief Administrative Officer||2019||176,539||350,000||409,539||—||163,879||426,000||1,525,956|
John V. Britti
Executive Vice President
|and Chief Investment||2019||450,000||—||484,201||—||472,901||8,642||1,415,744|
|(1)||Amounts for 2020 represent lump-sum bonuses paid to our NEOs (other than Ms. Campbell) approved by the Compensation Committee to reward such executives for exceptional performance.|
|(2)||Represents the aggregate grant date fair value of stock awards and stock options, computed in accordance with FASB ASC 718. These amounts do not represent the actual amounts paid to or realized by the executive. We based the grant date fair value of stock awards with a service condition on the closing prices of our common stock as reported on the New York Stock Exchange on the date of grant of the awards. The grant date fair value of stock unit awards with both a service condition and a market-based vesting condition is based on the output of a Monte Carlo simulation. Additional detail regarding the calculation of these values is included in Note 22 to our audited financial statements for the fiscal year ended December 31, 2020, which are included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2021. As to the stock awards granted in 2020 with market-based vesting conditions, the grant date fair value of each of these awards (calculated based on the output of a Monte Carlo simulation, which is the value of these awards included in the Summary Compensation Table above) is presented in the “Grants of Plan-Based Awards for 2020” table below, and the value of these awards assuming that the highest level of performance conditions will be achieved is $1,192,500 for Mr. Messina, $201,400 for Ms. Campbell, $159,000 for Mr. Anderson, $225,250 for Mr. Zeleny and $143,100 for Mr. Britti.|
|(3)||Represents annual incentive compensation earned in the corresponding year and paid in the first quarter of the following year.|
|(4)||Amounts shown in this column are set forth in the supplemental “All Other Compensation” table below.|
For more information about the elements of the compensation paid to our named executive officers, see “Compensation Discussion and Analysis” above.
All Other Compensation
The following table provides additional information about the amounts that appear in the “All Other Compensation” column in the Summary Compensation Table.
401(k) Matching Contributions(1)
|Glen A. Messina||8,550||—||8,550|
|June C. Campbell(2)||7,673||129,415||137,089|
|Scott W. Anderson||—||—||—|
|John V. Britti(3)||8,550||346||8,896|
|(1)||Reflects employer matching contributions made under the Ocwen Financial Corporation 401(k) Savings Plan.|
|(2)||“Other” reflects the value of temporary commuting and relocation benefits paid under the Ocwen Relocation Plan pursuant to Ms. Campbell’s March 4, 2019 offer letter, including amounts to gross-up for taxable expenses.|
|(3)||“Other” reflects the value of stipends to cover telecommuting expenses under a program that was discontinued in May 2020.|
Grants of Plan-Based Awards for 2020
The following table provides information related to awards granted in 2020 under our 2017 Performance Incentive Plan and our 1998 Annual Incentive Plan, as amended. Unit counts for awards granted prior to the August 13, 2020 reverse stock split have been adjusted proportionate to the 1:15 split ratio.
Estimated Possible Payouts
Incentive Plan Awards(1)
Incentive Plan Awards
|All Other Stock Awards: Number of Shares of Stock||All Other Option Awards: Number of Securities Underlying||Exercise or Base Price of Option||Grant Date Fair Value of Stock and Option|
|Glen A. Messina||3/30/2020||(3)||—||—||—||37,500||75,000||150,000||—||—||—||720,000|
|June C. Campbell||3/30/2020||(3)||—||—||—||6,333||12,667||25,333||—||—||—||121,600|
|Scott W. Anderson||3/30/2020||(3)||—||—||—||5,000||10,000||20,000||—||—||—||96,000|
|John V. Britti||3/30/2020||(3)||—||—||—||4,500||9,000||18,000||—||—||—||86,400|
|(1)||These amounts represent the potential non-equity compensation that would have been earned by each respective executive officer for 2020 service under the different achievement levels under their 2020 annual incentive opportunity, which are more fully discussed in “Compensation Discussion and Analysis,” pursuant to our 1998 Annual Incentive Plan. Under our current compensation structure, all non-equity incentive compensation is paid to the executive officer in the first quarter of the year following the year in which service was rendered. The actual amount of non-equity incentive compensation that was paid to our named executive officers for 2020 service is set forth in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” above.|
|(2)||See footnote (2) under “Summary Compensation Table” above for detail regarding the methodology used to calculate Grant Date Fair Value.|
|(3)||PRSU awards are earned based on the Company’s TSR relative to its peer group during multiple performance periods spanning March 30, 2020 through March 30, 2023, and vest at the third anniversary of the respective grant dates. Awards for all but Mr. Messina will settle in cash, if earned. Refer to “Compensation Discussion and Analysis - 2020 Long-Term Incentive Awards” for additional details.|
|(4)||RSU awards granted March 30, 2020 vest in three equal installments on the first, second and third anniversary dates of the grant, subject to continued employment. Awards for Mr. Messina settle in equity, but they do not have any rights of a stockholder with respect to any of the shares subject to the award until such units are vested. Awards for other named executive officers will settle in cash.|
|(5)||RSU awards granted September 10, 2020 vest in full on the 18-month anniversary date of the grant, subject to continued employment. Awards will settle in cash.|
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding outstanding equity awards at December 31, 2020 for Ocwen’s named executive officers.
|Option Awards||Stock Awards|
Number of Securities
Equity Incentive Plan
Awards: Number of
Number of Shares or Units of Stock That Have Not Vested
Market Value of Shares or Units of Stock That Have Not Vested
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
|Glen A. Messina||11,866||5,933||(5)||-||61.80||10/4/2028||-||-||-||-|
|June C. Campbell||-||1,474||(12)||-||32.55||3/4/2029||-||-||-||-|
|Scott W. Anderson||1,500||-||-||501.75||5/14/2024||-||-||-||-|