submitting a properly executed proxy bearing a later date; or
appearing at the Annual Meeting of Shareholders and giving the Corporate Secretary notice of your intention to vote in person.
You are entitled to vote at the Annual Meeting of Shareholders or any adjournment of the Annual Meeting of Shareholders if you are a holder of record of our Common Stockcommon stock at the close of business on March 15, 2011.2012. At the close of business on March 15, 2011,2012, there were 24,864,20023,320,637 shares of Common Stockcommon stock issued, outstanding and able to be voted and no other class of equity securities outstanding. Each share of our Common Stockcommon stock is entitled to one (1) vote at the Annual Meeting of Shareholders on all matters properly presented. Abstentions and broker “non-votes” will be treated as present for purposes of a quorum.
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Quorum and Voting Information
The presence at the Annual Meeting of Shareholders of a majority of the votes of our Common Stockcommon stock entitled to be cast, represented in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.
Meeting of Shareholders.Assuming a quorum, the five (5) nominees for Director will be elected as Directors of Altisource so long as the votes cast in favor of each such person exceed the votes cast to withhold authority for such person. You may vote in favor of or withhold authority to vote for one (1) or more nominees for Director.
The following proposals will be approved if the votes cast in favor of the action exceed the votes cast opposing the action: the proposal to approve the appointment of Deloitte & Touche LLP (“Deloitte”), to be our independent registered certified public accounting firm for 2011,2012 and Deloitte Audit S.à r.l. to be our certified auditor for all statutory accounts as required by Luxembourg law for the same period; the proposal to approve a share repurchase program whereby Altisource may repurchase outstanding shares of its common stock within certain limits; the proposal to approve the Directors’ report (“rapport de gestion”) onCompany’s annual accounts prepared in accordance with Luxembourg GAAP and the Luxembourg statutory accountsCompany’s consolidated financial statements prepared in accordance with U.S. GAAP including a footnote reconciliation of equity and net income to IFRS, in each case for the year ended December 31, 2010,2011; the proposal to receive and approve the Directors’ reports on the Luxembourg statutory accountsStatutory Accounts for the year ended December 31, 2010 and2011; the proposal to allocate the results of the year ended December 31, 2010,2011; the proposal to approve the discharge of each of the current and past Directors of Altisource for the performance of their mandate during the year ended December 31, 2010, the advisory vote to approve the compensation of Altisource’s named executive officers as disclosed in the Proxy Statement (Say-on-Pay), the proposal to approve the change in Directors’ compensation2011; and any other matter properly submitted for your consideration at the Annual Meeting of Shareholders (other than the election of Directors), will be approved if the votes cast in favor of the action exceed the votes cast opposing the action. The advisory vote on the frequency that an advisory vote on executive compensation should be presented to the shareholders will be determined based on the frequency that receives the most votes.
.Abstentions and broker “non-votes” will not be counted in determining the votes cast in connection with the foregoing matters. A broker “non-vote” occurs when a shareholder has not provided voting instructions to the broker on a non-routine item. In such cases,Other than with respect to the NASDAQ Stock Market precludesapproval of our independent registered accounting firm, in the event of a broker non-vote, brokers from giving a proxy tomay not vote on non-routine items.
While our Boardbehalf of Directors intends to carefully considertheir clients on the shareholder votes resulting from the Say on Pay and Frequency proposals, the final votes will not be binding on us and are advisory in nature.
above proposals.If the shares you own are held in “street name” by a bank or brokerage firm, your bank or brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. To vote your shares, you will need to follow the directions your bank or brokerage firm provides you. You will receive a Notice of Internet Availability of Proxy Materials that will tell you how to access our proxy materials and vote your shares via the Internet. It also will tell you how to request a paper or e-mail copy of our proxy material. Please contact your bank or brokerage firm for further information.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Meetings of the Board of Directors
The Board of Directors plays an active role in overseeing management and representing the interests of the shareholders. Directors are expected to attend all meetings of the Board meetings,of Directors, the meetings of committees on which they serve and the Annual Meeting of Shareholders. Directors are also consulted for advice and counsel between formal meetings.
Our Board of Directors held six (6) meetings during 2010.in 2011. Each incumbent Director attended at least 75% of these meetings as well as the meetings held by all Committeescommittees of our Board of Directors on which they served during the period. Although we do not have a formal policy regarding Director attendance at the Annual Meeting of Shareholders, our Directors are expected to attend. All of the incumbent members of our Board of Directors attended our 20102011 Annual Meeting.
Meeting of Shareholders.Independence of Directors
Our Corporate Governance Guidelines provide that our Board of Directors must be comprised of a majority of Directors who qualify as independent Directors under the NASDAQ listing standards of the NASDAQ Stock Market and applicable law.
Our Board of Directors annually reviews the direct and indirect relationships that we have with each Director. The purpose of this review is to determine whether any such transactions or relationships are inconsistent with a determination that the Director is independent. Only those Directors who are determined by our Board of Directors to have no material relationship with Altisource are considered independent. This determination is based in part on the analysis of questionnaire responses that follow the independence standards and qualifications established by the NASDAQ Stock Market and applicable law. The Board of Directors also considers beneficial ownership of our Common Stockcommon stock by each of the Directors, as set forth under “Security Ownership of Certain Beneficial Owners and Related Shareholder Matters”, although our Board of Directors generally believes that stock ownership tends to further align a Director’s interests with those of our other shareholders. Our current Board of Directors has determined that Mr.Messrs. Müller-Ineichen, Mr. Vättö and Mrs. Andresen-KienzLinn are independent Directors and Mr. Linn will be an independent Director if he is elected.
Directors.Board Leadership Structure
Our Board of Directors has no fixed policy with respect to the separation of the offices of Chairman of the Board of Directors and Chief Executive Officer. Our Board of Directors retains the discretion to make this determination on a case-by-case basis from time to time as it deems to be in the best interests of the Company and our shareholders at any given time. The Board of Directors currently believes that separating the positions of Chief Executive Officer and Chairman is the best structure to fit the Company’s needs. As our Chief Executive Officer, Mr. Shepro is responsible for our day-to-day operations and for formulating and executing our long-term strategies in collaboration with the Board.Board of Directors. As Chairman of the Board of Directors, Mr. Erbey leads the Board and oversees meetings of the Board meetingsof Directors and the delivery of information necessary for the Board’s informed decision-making.
Committees of the Board of Directors
Our Board of Directors has established an Executive Committee, an Audit Committee, a Compensation Committee, and a Nomination/Governance Committee and an Executive Committee. A brief description of these Committeescommittees is provided below.
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. On September 22, 2009, our Board of Directors authorized the Committee to approve and/or to designate in writing certain individuals to approve ordinary course of business actions that are required to be documented by counter parties but do not require action by the Board of Directors or its Committees. Such actions would include approving, signing and executing checks and electronic funds transmissions, dissolving or merging our wholly-owned subsidiaries and performing such other ministerial actions on such terms, conditions and limits as the Committee deems appropriate in its sole discretion. In 2010, no transactions were approved in this manner on behalf of the Board of Directors.
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Certain executives are involved in the design and implementation of our executive compensation programs, including the Chief Executive Officer and Chief Administration Officer, who may be present at Compensation Committee meetings. These executives annually review the performance of each executive officer (other than the Chief Executive Officer whose performance is reviewed by the Compensation Committee with consultation of the Chairman) and present their conclusions and recommendations regarding incentive award amounts to the Compensation Committee for its consideration and approval. The Committee can exercise its discretion in accepting, rejecting and/or modifying any such executive compensation recommendations; however, executive compensation matters are generally delegated to the Chief Executive Officer and Chief Administration Officer for development and execution.
| (1) | Ms. Andresen-Kienz was a member of this Committee through May 18, 2011. |
| (2) | Mr. Linn was a member of this Committee from May 18, 2011. |
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Compensation Committee Interlocks and Insider Participation.No member of the Compensation Committee was at any time during the 20102011 fiscal year or at any other time an officer or employee of the Company, and no member had any relationship with us requiring disclosure under Item 404 of Securities and Exchange CommissionSEC Regulation S-K. None of our named executive officers has served on the Board of Directors or compensation committee of any other entity that has or had one (1) or more named executive officers who served as a member of our Board of Directors or our Compensation Committee during the 20102011 fiscal year.
Nomination/Governance Committee.The Nomination/Governance Committee of our Board of Directors makes recommendations to our Board of Directors of individuals qualified to serve as Directors and committee members for our Board of Directors; advises our Board of Directors with respect to Board of Directors composition, procedures and committees; develops and presents our Board of Directors with a set of corporate governance principles and oversees the evaluation of our Board of Directors and our management. Other than
The members of the Nomination/Governance Committee for 2011 were Messrs. Erbey, Müller-Ineichen and Vättö. In 2012, Mr. Linn replaced Mr. Erbey eachon the Committee and now serves as Chairman. Each member of our Nomination/Governance Committee is independent as defined in the NASDAQ listing standards of the NASDAQ Stock Market. The Board of Directors found that, on the basis of exceptional circumstances, Mr. Erbey’s membership on the Nomination/Governance Committee is in the best interests of Altisource and its shareholders. In making this finding of exceptional circumstances, the Board found that the size of the Board of Directors following the separation from Ocwen, as well as Mr. Erbey’s extensive management and industry domain experience necessitated his inclusion on the Nomination/Governance Committee. standards.
Our Nomination/Governance Committee operates under a written charter approved by our Board of Directors, a copy of which is available on our web sitewebsite atwww.altisource.com and is available in print to any shareholder who requests it. Annually, the Nomination/Governance Committee reviews and approves its charter. The charter was last reviewed and approved by the Nomination/Governance Committee in March 2012. This Committee met three (3)four (4) times in 2010.
2011.It is the policy of our Nomination/Governance Committee to consider candidates for Director recommended by you, our shareholders. In evaluating all nominees for Director, our Nomination/Governance Committee takes into account the applicable requirements for Directors under the Securities Exchange Act of 1934, as amended, and the NASDAQ listing standards of the NASDAQ Stock Market.standards. In addition, our Nomination/Governance Committee takes into account our best interests as well as such factors as knowledge, experience, skills, expertise, diversity and the interplay of the candidate’s experience with the background of other members of our Board of Directors.
Pursuant to the Company’s Diversity Policy, the Nomination/Governance Committee considers diversity when it recommends Director nominees to the Board of Directors, viewing 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 boardBoard with diverse business and educational andbackgrounds. Board members should have individual backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve the Company’s governance and strategic needs. The Nomination/Governance Committee periodically reviews the skills and attributes of DirectorsBoard members within the context of the current make-up of the full Board of Directors periodically as the Nomination/Governance Committee deems appropriate. The Nomination/Governance Committee does not discriminate against Director candidates for the Board of Directors based on race, color, religion, sex, sexual orientation or national origin.
The Nomination/Governance Committee regularly assesses the appropriate size of the Board of Directors and whether any vacancies on the Board of Directors are anticipated. Various potential candidates for Director are then identified. Candidates may come to the attention of the Nomination/Governance Committee through current members of the Board of Directors, members, professional search firms, shareholders or industry sources.
In evaluating thea 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 expertise and the evaluationsevaluation of other prospective nominees.
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In connection with this evaluation, one or more members of the Nomination/Governance Committee, and others as appropriate, interview prospective nominees. After completing this evaluation and interview, 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 and report of the Nomination/Governance Committee. Should you 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 owning more than 5% of our Common Stockcommon stock has put forth any Director nominees.
If you want to recommend persons for consideration by our Nomination/Governance Committee as nominees for election to our Board of Directors, you can do so by writing to our Corporate Secretary at Altisource Portfolio Solutions S.A., 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg. You should provide each proposed nominee’s name, biographical data and qualifications. Your recommendation should also include a written statement from the proposed nominee consenting to be named as a nominee and, if nominated and elected, to serve as a Director. For consideration at the 20122013 Annual Meeting of Shareholders, we must receive your recommendations by November 1, 2011.
30, 2012.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. Our Board of Directors has authorized the Committee to approve and/or to designate in writing certain individuals to approve ordinary course of business actions that are required to be documented by counterparties but do not require action by the Board of Directors or its committees. Such actions would include approving, signing and executing checks and electronic funds transmissions, dissolving or merging our wholly-owned subsidiaries and performing such other ministerial actions on such terms, conditions and limits as the Committee deems appropriate in its sole discretion.
Corporate Governance Guidelines
The Corporate Governance Guidelines adopted by our Board of Directors provide guidelines for us and our Board of Directors to ensure effective corporate governance. The Corporate Governance Guidelines cover topics such as: Director qualification standards, Board of Directors and committee composition, Director responsibilities, Director access to management and independent advisors, Director compensation, Director orientation and continuing education, management succession and annual performance appraisal of the Board of Directors.
Our Nomination/Governance Committee reviews our Corporate Governance Guidelines at least once a year and, if necessary, recommends changes to our Board of Directors. Our Corporate Governance Guidelines are available on our web sitewebsite atwww.altisource.com and are available to any shareholder who requests them by writing to our Corporate Secretary at Altisource Portfolio Solutions S.A., 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg.
Executive Sessions of Non-Management Directors
Non-management Directors met in executive session without management five (5) times during 2010.
in 2011.Communications with Directors
If you desire to contact our Board of Directors or any individual Director regarding Altisource, you may do so by mail addressed to our Corporate Secretary at Altisource Portfolio Solutions S.A., 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg. Communications received in writing are distributed to our Board of Directors or to individual Directors, as appropriate, depending on the facts and circumstances outlined in the communication received.
We have adopted a Code of Business Conduct and Ethics that applies to our Directors, officers and employees as required by the NASDAQ Stock Market rules. Any waivers from the Code of Business Conduct and Ethics for Directors or named executive officers must be approved by our Board of Directors or a Board committee and must be promptly disclosed to you. We have also adopted a Code of Ethics for Senior Financial Officers that applies to our Chief Executive Officer and our Chief Financial Officer. The Code of Business Conduct and Ethics and the Code of Ethics for Senior Financial Officers are available on our website atwww.altisource.com and are available to any shareholder who requests a copy by writing to our Corporate Secretary at 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg. 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 CommissionSEC or the NASDAQ, Stock Market, will be posted on our website.
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COMPENSATION DISCUSSION AND ANALYSIS
Introduction, Philosophy and Objectives
We believe an effective executive compensation program aligns executives’ interests with shareholders by rewarding performance that achieves or exceeds specific financial targets and strategic goals designed to improve shareholder value. We seek to promote individual service longevity and to provide our executives with long-term incentive opportunities that promote consistent, high-level financial performance. The Compensation Committee evaluates both performance and compensation annually to ensure that we maintain our ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of our peer companies. To achieve these objectives, we generally believe executive compensation packages should include both cash and equity-based compensation that rewards performance as measured against established goals.
This compensation discussion and analysis provides information regarding the following:
compensation programs for our Chief Executive Officer, Chief Financial Officer and Chief Administration Officer and General Counsel;
overall objectives of our compensation program and what it is designed to reward;
each element of compensation that we provide; and
the reasons for the compensation decisions we have made regarding these individuals.
Our named executive officers for 20102011 are:
| | |
Name | | Position |
Name | | Position |
William B. Shepro | | Chief Executive Officer |
Robert D. Stiles(1) | | Chief Financial Officer |
Kevin J. Wilcox | | Chief Administration Officer and General Counsel |
| (1) | Mr. Stiles resigned as Chief Financial Officer effective March 1, 2012 and is no longer with the Company. |
Role of Executive Officers in Compensation Decisions
Certain executives are involved in the design and implementation of our executive compensation programs including the Chief Executive Officer and Chief Administration Officer, who are typically present at Compensation Committee meetings. These executives annually review the performance of each executive officer (other than the Chief Executive Officer whose performance is reviewed by the Compensation Committee) and present their conclusions and recommendations regarding incentive award amounts to the Compensation Committee for its consideration and approval. The Committee can exercise its discretion in accepting, rejecting and/or modifying any such executive compensation recommendations; however, executive compensation matters are generally delegated to the Chief Executive Officer and Chief Administration Officer for development and execution.
Role of Compensation Consultant
To further the objectives of our compensation program, in December 2010, our Compensation Committee, pursuant to its authority under its Committee Charter, retained an independent compensation consultant, Exequity, to provide advice on executive compensation matters and to assist the Committee and management in their review of the compensation for our named executive officers, other key executives and our Board of Directors.
Our continuing engagement with Exequity will be project-based and in response to the needs of our Compensation Committee. Pursuant to the terms of our engagement with Exequity, Exequity will report directly to the Compensation Committee, receive compensation only for compensation advisory services provided to the Compensation Committee and will have no other business relationship with the Company.
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As part of its analysis, Exequity provided research and presented information to the Committee related to compensation trends and “best practices” in executive and director compensation among peer group companies in a similar line of business and of similar size to Altisource. Executive compensation data and other resources provided by Exequity set the foundation for the Committee’s review and analysis of Executive and Director Compensation levels. Please see “Setting Compensation Levels” for information on the peer group companies the Compensation Committee used in its analysis.
Employment Agreements
As required by Luxembourg law, Altisource has entered into employment agreements with William B. Shepro, our Chief Executive Officer, Robert D. Stiles, our Chief Financial Officer and Kevin J. Wilcox, our Chief Administration Officer and General Counsel.Counsel, Robert D. Stiles, our Chief Financial Officer during fiscal year 2011 and Michelle D. Esterman, our current Chief Financial Officer. The employment terms continue indefinitely until the executive’s separation.separation from the Company. The contracts provide for a base salary and annual incentive compensation based on the satisfaction of relevant performance criteria. In addition, the executives may receive benefits such as health care or a contributory retirement plan. Altisource reimburses each executive for reasonable costs properly incurred by such executive in the course of his or her employment with the Company including, without limitation, reimbursement of relocation expenses and the provision of certain allowances as described in the Executive Compensation section below.
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In order to terminate the contract, each party must provide notice in accordance with the time periods set forth in article L.124-1 of the Luxembourg Labour Code. In the event of the executive’s termination by the Company for “cause” (as such term is defined in the employment agreement), no notice is required. In addition, in the event that the executive’s employment is terminated by the Company without “cause” (as such term is definedor, in the employment agreement) orsome instances, the executive resigns for “good reason” (as such term is defined in the employment agreement), the executive will receive severance benefits. Furthermore, the executive may be entitled to receive redundancy payments in accordance with article L.124-7 of the Luxembourg Labour Code upon certain terminations.
The contracts also provide for a covenant to maintain our confidential information and to enter into an intellectual property agreement. In addition, the executive is bound by a non-solicitation covenant for a period of one (1) year following the termination of the contract. The agreements are governed in accordance with the laws of the Grand Duchy of Luxembourg.
The current compensation package for our named executive officers consists of base salary and annual incentive compensation. This compensation structure was developed in order to provide each named executive officer with a competitive salary while emphasizing an incentive compensation element that is tied to the achievement of corporate goals and strategic initiatives as well as individual performance. We believe that the following elements of compensation are appropriate in light of our performance, industry, current challenges and environment.
Base Salary.Base salaries for our named executive officers are established based on individual qualifications and job responsibilities while taking into account compensation levels at similarly situated companies for similar positions.
Base salaries of the named executive officers are reviewed annually during the performance appraisal process with adjustments made based on market information, internal review of the executive officer’s compensation in relation to other officers, individual performance of the executive officer and corporate performance. Salary levels are also considered upon a promotion or other change in job responsibility. Salary adjustment recommendations are based on our overall performance and an analysis of compensation levels necessary to maintain and attract quality personnel. While the Compensation Committee sets the base salary for the Chief Executive Officer, the base salaries for all other executive officers are established and reviewed by the Chief Executive Officer and Chief Administration Officer.
Additionally, under Luxembourg law, all salaries are required to be adapted based upon the cost of living index in the Grand Duchy of Luxembourg. On July 1, 2010 and on October 1, 2011 there was a required 2.5% increase in all salaries pursuant to this law. Our Chief Executive Officer and named executive officers’ salaries were adjusted accordingly.
Annual Incentive Compensation.Pursuant to Altisource’san annual incentive plan, a participant can earn cash, restricted stock and stock option awards as determined by the Compensation Committee. The plan provides the Compensation Committee and our management with the authority to establish incentive award guidelines which are further discussed below.
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| | | | | | | | | | | | | | |
| | | | | | | | Achievement Levels | | |
Name | | % | | | 2010 Scorecard Elements | | Threshold | | Target | | Outstanding | | Level Achieved |
| | | | | | | | | | | | | | |
Kevin J. Wilcox | | | 25 | % | | Achieve EPS Target | | $1.53 Diluted EPS | | $1.70 diluted EPS | | $1.87 Diluted EPS | | $1.88 Diluted EPS |
| | | | | | | | | | | | | | |
| | | 20 | % | | Achieve Revenue Target of $272.0 million (35% increase over prior year) | | $244.8 million | | $272.0 million | | $299.2 million | | $301.4 million |
| | | | | | | | | | | | | | |
| | | 30 | % | | Successfully complete the key strategic initiatives | | 90% of weighted average | | 100% of weighted average | | 110% of weighted average | | Achieved 101.6% weighted average score |
| | | | | | | | | | | | | | |
| | | 25 | % | | Optimize legal structure | | Executive Committee Discretion of average improvement achieved by year-end | | Executive Committee Discretion of average improvement achieved by September 30 | | Executive Committee Discretion of material improvement achieved by September 30 | | Completed in June 2010 at Outstanding |
Executives have 20% of their incentive compensation determined by their performance appraisal for the service year. Each of our executive officers performs a self-assessment as to his or her performance against his or her goals for the applicable year. Our Chief Executive Officer utilizes these assessments, as well as his or her own observations to prepare a written performance appraisal for each of the other executive officers. These performance appraisals rate performance on objective criteria related to two key factors: (i) the executive’s ability to improve and develop their organization throughout the year, and (ii) the executive’s strategic contributions to the direction of the Company.
The Chief Executive Officer’s scorecard performance and personal performance appraisal are determined by the Compensation Committee in consultation with the Chairman taking into consideration whether the Company’s performance as a whole compared with the Chief Executive Officer’sand corresponding incentive presentsresults present a fair representation of the Chief Executive Officer’s performance.
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For our executives other than the Chief Executive Officer, the Chief Executive Officer, in conjunction with the Chief Administration Officer, presents the personal scorecard performance and the performance appraisal scores to the Compensation Committee and makes recommendations as to the incentive compensation for each executive officer. The Compensation Committee evaluates the recommendations in light of the Company’s overall performance and the executive’s business unit or support unit’s performance and makes the final compensation award determinations for each executive. Annual incentive compensation is paid to our executives and other incentive-eligible employees following this determination. For 2010,2011, incentive compensation was awarded accordingly.
Please see the Summary Compensation Table under Executive Compensation for the actual amounts awarded in 2011.Generally, at the first Board of Directors meeting of the fiscal year, the Compensation Committee approves the corporate scorecard and annual incentive components for the Chief Executive Officer and other executives for the upcoming year. Key performance indicators for the Company for 20112012 have been developed.
The corporate scorecard for 20112012 includes achieving an overall revenue target, achieving business segment specific revenue and pre-tax income targets and increasing earnings per share. In addition, the corporate scorecard provides for successful completion of strategic initiatives established to enhance long-term corporate and shareholder value.
The 20112012 corporate strategic initiatives relate to:
Improving performance through operational effectiveness and efficiency;
Expanding the Company’s service offerings;
Balancing the Company’s service offerings; and
Organizational development.
21Diversifying our revenue and customer base; and
Setting Compensation Levels
We believe our executive compensation programs are effectively designed and working well in alignment with the interests of our shareholders and are instrumental to achieving our business strategy. In determining executive compensation for fiscal year 2011, our Compensation Committee considered the overwhelming shareholder support that the “Say-on-Pay” proposal received at our May 18, 2011 Annual Meeting of Shareholders. As a result, our Compensation Committee continued to apply the same effective principles and philosophy it has used in previous years in determining executive compensation and will continue to consider shareholder concerns and feedback in the future.
From time to time, the Company conducts benchmarking on Chief Executive Officer and other named executive officer compensation among peer companies of comparable size, industry, location and similar attributes that may compete with Altisource for qualified management talent. In 2010, our
Our Compensation Committee retainedmost recently conducted benchmarking through an independent compensation consultant, Exequity to assistLLP (“Exequity”), in the fourth quarter of 2010 and first quarter of 2011. The consultant assisted the Compensation Committee in reviewing the compensation levels for our Executivenamed executive officers and Directors.
Exequity conducted an analysis of our named executive officer and director compensation levels compared to pay levels among our peer companies to help identify the competitive positioning of our pay practices.
In order to provide a robust array of pay benchmarking data, Exequity reviewed executive pay among two independent sets of companies:
A primary peer group of 14 similarly-sized (revenues ranging from $95MM — $1.7B) companies with similar operational dynamics as Altisource from the Mortgage Services, Business Process Outsourcing (BPO) and Application Software / Software Systems sectors. This peer group consists of the following companies: Bottomline Technologies Inc., Cass Information Systems, EXLService Holdings, Inc., Fleetcor Technologies Inc., Genpact Ltd., Hackett Group Inc., iGate, Online Resources Corp., Prommis Solutions Holding Corp. Stewart Information Services, TNS Inc., Virtusa Corp., WNS (Holdings) Ltd. and Wright Express Corp.
A secondary peer group of 8 companies that have a more direct operational match to Altisource, but which includes companies larger than Altisource (revenues ranging between $1.1B—$5.8B). The peer group consists of the following companies: Equifax Inc., Fidelity National Financial, Fidelity National Information Services, First American Financial Corporation, Fiserv Inc., Genpact Ltd., Lender Processing Services and Stewart Information Services.
All information was obtained from publicly available proxy disclosures. The information gathered from these companiesdisclosures and included base salary, cash incentive compensation and long-term equity incentive compensation.
The Compensation Committee believes this methodology of peer group benchmarking provides a fair representation of the competitive arena for executive talent and is an effective approach to setting compensation levels to ensure that the Company’s pay practices allow it to attract and retain executive employees of the highest quality.
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Based on the benchmarking, performance, retention and other relevant considerations, the Compensation Committee reviewsreviewed recommendations and determinesdetermined appropriate base salary and annual incentive compensation targets for the Chief Executive Officer and other named executive officers. The Compensation Committee generally makes its determinations during
Additionally, under Luxembourg law, all salaries are required to be adapted based upon the second quartercost of living index in the year; however, they may make adjustments at other times as appropriate. Grand Duchy of Luxembourg. On July 1, 2010 and on October 1, 2011 there was a required 2.5% increase in all salaries pursuant to this law and our Chief Executive Officer and named executive officers’ salaries were adjusted accordingly.
No changes wereto Chief Executive Officer’s or named executive officers’ compensation are recommended for 2012 other than any legally mandated adjustments pursuant to the Company’s Executive compensation pay practices by the independent compensation consultant.
Please see “Role of Compensation Consultant” for further information regarding our use of an independent compensation consultant based on its analysis of the peer companies.
Luxembourg law.Equity Incentive Plan
The Compensation Committee, in cooperation with senior management, implemented the 2009 Equity Incentive Plan. The purpose of the 2009 Equity Incentive Plan is to provide additional incentives to key employees to make extraordinary contributions to the Company, to assist with the retention of key employees and to align the interests of our employees with the interests of our shareholders. The 2009 Equity Incentive Plan is administered by the Compensation Committee and authorizes the grantaward of restricted stock, options, stock appreciation rights, stock purchase rights or other equity-based awards to our employees. Options grantedawarded under the plan2009 Equity Incentive Plan may be either “incentive stock options” as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options, as determined by the Compensation Committee.
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In January 2010, we granted option awards to fifteen (15) key employees who we identified as employees that can have a meaningful impact on the rapid and profitable growth of Altisource. The grants ranged from 10,000 options to 80,000 options for a total grant of 407,500 options. As part of these awards, Robert D. Stiles was granted 46,667options. These options have an exercise price of $22.01, the stock price at close on the grant date. Twenty-five percent of the options vest over time in equal installments over four years and seventy-five percent of the options will vest based on applicable Company performance. If at any time the shareholders have achieved a 20% annualized rate of returnand two times their investment (as measured by a hypothetical investment at the strike price on the grant date), two-thirds of the performance options will vest. If at any time the investors have achieved a 25% annualized rate of returnand three times their investment (as measured by a hypothetical investment at the strike price on the grant date), 100% of the Performance Grant will vest. At the time the performance hurdles are achieved the options will vest over three years (25% immediately and 25% on each anniversary date of the performance hurdle being met). If the employee voluntarily resigns or is terminated, the employee loses the right to any unvested awards.
The grant of options to this broader set of employees allowed us to incent the long term success of the Company by creating further alignment to an increase in shareholder value. Additionally, the long term vesting of the options provides a significant retention tool for these key employees.
In May 2010, we awarded 480,000 primarily performance-based options to our named executive officers, consisting of an award of 240,000 options to William B Shepro, 120,000 options to Robert D. Stiles and 120,000 options to Kevin J. Wilcox. These options have an exercise price of $24.85. The performance based vesting terms of these options require exceptional returns for the shareholders before vesting would begin for the executives. We determined that these equity amounts would bring management in-line with amounts which we believe to be comparable to the management teams of publicly traded competitors.
Because of the long-term equity incentive opportunity now available to our named executive officers, we do not intend to grant such awards on an annual basis. With seventy-five percent of the awards tied to performance and requiring a doubling or tripling of the stock price to vest, these options incent Management to make extraordinary contributions to the long-term success of the Company. Additionally, as noted above, the long-term vesting of the options provides a significant retention tool for our named executive officers.
Each award granted under the plan2009 Equity Incentive Plan is evidenced by a written award agreement between the participant and us, which describes the award and states the terms and conditions to which the award is subject. If any shares subject to award are forfeited or if any award terminates, expires or lapses without being exercised, shares of Common Stockcommon stock subject to such award will again be available for future grant.
award.Based upon a review of current outstanding awards, and finding that these awards adequately meet the objectives of our compensation philosophy, no equity awards were granted to our Chief Executive Officer or other named executives pursuant to the 2009 Equity Incentive Plan during the 2011 fiscal year.
Stock Ownership Policies
Although we do not have stock ownership requirements, our philosophy is that equity ownership by our Directors and executives is important to attract, motivate, retain and to align their interests with the interests of our shareholders. The Compensation Committee believes that the Company’s various equity incentive plans are adequate to achieve this philosophy. We also maintain a management directive detailing our trading window period policy for Directors, executive officers and other employees and our insider trading policy.
The Compensation Committee’s policy with respect to other employee benefit plans is to provide benefits to our employees, including our executive officers, that are comparable to benefits offered by companies of a similar size to ours. A competitive comprehensive benefit program is essential to achieving the goal of attracting and retaining highly qualified employees.
23
Potential Payments upon Termination or Change in Control
Below is a description of the amounts payable to each named executive officer assuming the executive’s employment had terminated under various scenarios, or a change of control had occurred, on December 31, 201030, 2011 (the last business day of fiscal year 2010)2011). Due to the number of factors that affect the nature and amount of any benefits under the various scenarios, actual amounts paid or distributed may be different.
23
As noted above, our Chief Executive Officer, Chief Financial Officer and Chief Administration Officer and General Counsel have entered into employment agreements with the Company. Under these agreements, if employment is terminated by the executive’s retirement or disability, as defined therein, the Company will pay all standard relocation costs to relocate the officer to the United States. If the Company terminates the employment of the officer other than for “cause”, or the officer terminates and, in some instances, where employment is terminated for “good reason”, as defined therein, by the officer, the Company is obligated to make a cash payment of one year’s salary plusbetween four and twelve months’ salary. In the case of the Chief Executive Officer and Chief Administration Officer, the Company will be obligated to pay one year’s target incentive compensation.compensation in such instance. In these instances, the Company will also pay all standard relocation costs to relocate the named executive officer to the United States. If the named executive officer is terminated by the Company for “cause”, the Company may terminate without notice and with no liability to make any further payment to the executive, other than amounts accrued and unpaid at the date of termination.
All named executive officers have options undergranted pursuant to the 2009 Equity Incentive Plan. As described in the Equity Incentive Plan section above, aA portion of the options vest over time in equal installments (the “Time-Based“Service-based Options”), and the remaining options will vest based on applicable Company performance (the “Performance-Based“Market-based Options”). UnlessUpon termination of an executive officer has been terminatedofficer’s employment other than for cause, the executive officer would be entitled to retain any vested portion of prior equity awards granted through the 2009 Equity Incentive Plan.granted. Generally, for termination not due to death, disability or retirement, the executive officer has six (6) months within which to exercise stock options pursuant to our stock option agreements. Any portion of an equity award not vested will be forfeited in eitherany circumstance unless alternate arrangements are made in the discretion of the Compensation Committee. Furthermore, pursuant to each stock option agreement granting an equity award, upon termination of an executive for cause, all outstanding stock options grantedawarded pursuant to such stock option agreement are forfeited.
Certain of the stock option agreements provide for accelerated vesting as set forth below. Upon a named executive officer’s retirement, disability, death, termination by the Company without “cause” or termination by the named executive officer for “good reason,” as defined in the applicable stock option agreement, all Time-BasedService-based Options will immediately vest. Additionally, pursuant to these certain agreements, if there is a “change of control event,” as defined in the applicable stock option agreement, all options, including Time-BasedService-based Options and Performance-BasedMarket-based Options, will vest.
Upon his retirement, disability, death, termination by the Company without “cause” or termination by Mr. Shepro for “good reason,” Mr. Shepro would receive $890,393$1,838,242 from the accelerated vesting of options. Upon a “change in control,” Mr. Shepro would receive $3,196,158$6,911,549 from the accelerated vesting of options.
Upon his retirement, disability, death, termination by the Company without “cause” or termination by Mr. Stiles for “good reason,” Mr. Stiles would receive $284,969 from the accelerated vesting of options. Upon a “change in control,” Mr. Stiles would receive $394,328 from the accelerated vesting of options.
Upon his retirement, disability, death, termination by the Company without “cause” or termination by Mr. Wilcox for “good reason,” Mr. Wilcox would receive $610,886$1,094,765 from the accelerated vesting of options. Upon a “change in control,” Mr. Wilcox would receive $2,343,698$4,334,057 from the accelerated vesting of options.
Ms. Esterman was not an employee as of December 31, 2011 and therefore would not have received any benefit from the accelerated vesting of options.
Mr. Stiles resigned as Chief Financial Officer effective March 1, 2012 and is no longer with the Company. In exchange for executing a separation agreement, he received a severance payment of $100,000 and was permitted to use a Company-owned car and rented apartment through March 31, 2012. Pursuant to the separation agreement, he will also receive a tax equalization and preparation payment for 2011 and 2012 consistent with past practice during the term of his employment. In addition, he will receive reimbursement for relocation expenses back to the United States, including business class airfare and movement of household goods. Mr. Stiles retained his vested options in accordance with the terms of his outstanding option agreements.
Tax Considerations
The timing of compensation decisions is driven by a variety of tax considerations. Under Section 162(m) of the Internal Revenue Code, of 1986, as amended (the “Code”), the tax deduction by corporate taxpayers is limited with respect to the compensation of certain executive officers up to $1,000,000 per covered executive unless such compensation is based upon the attainment of performance objectives meeting certain regulatory criteria or is otherwise excluded from the limitation.
24
In order to satisfy the deductibility requirements under Section 162(m) of the Code, performance objectives must be established in the first 90 days of the performance period. For annual incentive awards, this means performance objectives must be established no later than the end of March. In addition, in order to avoid being considered deferred compensation under Section 409A of the Code and to be deductible for the prior tax year, our annual incentive awards with respect to the prior year must be paid out by March 15 for employees of the Company who are U.S. taxpayers.
24
Report of the Compensation Committee
The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis included on pages 15 through 25 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.
| | | | |
| | | | Compensation Committee: |
| March, 2012 | | | | Timo Vättö, Chairman |
| | | | W. Michael Linn, Director |
| | | | Roland Müller-Ineichen, Director |
25
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table discloses compensation received by our Chief Executive Officer, our Chief Financial Officer and our Chief Administration Officer and General Counsel for fiscal years 2009, 2010 and 2010.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Non-Equity | | | | | | | |
| | | | | | | | | | | | | | | Incentive | | | All Other | | | | |
| Name and | | | | | | | | | | Option | | | Compen- | | | Compen- | | | | |
| Principal Position | | Year | | | Salary(1) | | | Awards(2) | | | sation(3) | | | sation(4) | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
William B. Shepro | | | 2009 | | | $ | 383,816 | (5) | | | — | | | $ | 853,205 | | | $ | 221,254 | (6) | | $ | 1,458,275 | |
| Chief Executive Officer and Director | | | 2010 | | | $ | 445,471 | | | $ | 2,892,000 | | | $ | 994,500 | | | $ | 106,425 | (7) | | $ | 4,438,396 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Robert D. Stiles | | | 2009 | | | $ | 215,171 | (8) | | $ | 171,248 | (9) | | $ | 218,960 | | | $ | 27,169 | (10) | | $ | 632,548 | |
| Chief Financial Officer | | | 2010 | | | $ | 272,065 | | | $ | 1,960,737 | | | $ | 243,800 | | | $ | 56,890 | (11) | | $ | 2,533,492 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Kevin J. Wilcox | | | 2009 | | | $ | 316,084 | (12) | | | — | | | $ | 450,938 | | | $ | 30,426 | (13) | | $ | 797,448 | |
| Chief Administration Officer and General Counsel | | | 2010 | | | $ | 363,632 | | | $ | 1,446,000 | | | $ | 500,500 | | | $ | 150,076 | (14) | | $ | 2,460,208 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary(1) | | | Option
Awards(2) | | | Non-Equity
Incentive
Compen-sation(3) | | | All Other
Compen-
sation(4) | | | Total | |
William B. Shepro Chief Executive Officer | | | 2009 | | | $ | 383,816 | | | | — | | | $ | 853,205 | | | $ | 221,254 | | | $ | 1,458,275 | |
| | | 2010 | | | $ | 445,471 | | | $ | 2,892,000 | | | $ | 994,500 | | | $ | 106,425 | | | $ | 4,438,396 | |
| | | 2011 | | | $ | 455,888 | | | | | | | $ | 854,789 | | | $ | 274,584 | (5) | | $ | 1,585,261 | |
Robert D. Stiles Chief Financial Officer | | | 2009 | | | $ | 215,171 | | | $ | 171,248 | | | $ | 218,960 | | | $ | 27,169 | | | $ | 632,548 | |
| | | 2010 | | | $ | 272,065 | | | $ | 1,960,737 | | | $ | 243,800 | | | $ | 56,890 | | | $ | 2,533,492 | |
| | | 2011 | | | $ | 284,672 | | | | | | | | — | | | $ | 90,588 | (6) | | $ | 375,260 | |
Kevin J. Wilcox Chief Administration Officer and General Counsel | | | 2009 | | | $ | 316,084 | | | | — | | | $ | 450,938 | | | $ | 30,426 | | | $ | 797,448 | |
| | | 2010 | | | $ | 363,632 | | | $ | 1,446,000 | | | $ | 500,500 | | | $ | 150,076 | | | $ | 2,460,208 | |
| | | 2011 | | | $ | 375,437 | | | | | | | $ | 425,182 | | | $ | 131,143 | (7) | | $ | 931,762 | |
| | |
| (1) | | Represents amounts earned in corresponding year. |
|
| (2) | | For awards of options, the amount disclosed represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. We based the grant date fair value of stock awards in 2009 and 2010 on the closing price of our Common Stock.common stock. We estimated the grant date fair value of stock option awards in 2009 and 2010 using thea Black-Scholes option-pricing model and a binomial option pricing model utilizing the following assumptions: |
Service Condition Awards — Black-Scholes Option Pricing Model
| | | | | | | | | | | | | | | | | | | | | |
| Performance | | Expected Volatility | | | Expected Dividend | | | Exercise Price | | | Risk-Free Interest | | | Expected Term in | |
| Year | | (%) | | | Yield (%) | | | ($) | | | Rate (%) | | | Years | |
| 2009 | | | 39 | % | | | 0 | | | $ | 14.15 | | | | 2.64 | % | | | 5.0 | |
| 2010 | | | 47% - 50 | % | | | 0 | | | $ | 22.01 - $24.85 | | | | 2.82% - 3.12 | % | | | 7.0 | |
| | | | | | | | | | | | | | | | | | | | |
| Service-based Awards - Black-Scholes Option Pricing Model | |
| | | | | |
Performance Year | | Expected
Volatility
(%) | | | Expected
Dividend Yield
(%) | | | Exercise Price
($) | | | Risk-Free
Interest
Rate (%) | | | Expected Term
in
Years | |
2009 | | | 39% | | | | — | | | $ | 14.15 | | | | 2.64% | | | | 5.0 | |
2010 | | | 47%—50% | | | | — | | | | $22.01—$24.85 | | | | 2.82%—3.12% | | | | 7.0 | |
2011 | | | — | | | | — | | | | — | | | | — | | | | — | |
25
| | | | | | | | | | | | | | | | | | | | |
| Market-based Awards - Binomial Option Pricing Model | |
| | | | | |
Performance Year | | Expected
Volatility
(%) | | | Expected
Dividend Yield
(%) | | | Exercise Price
($) | | | Risk-Free
Interest
Rate (%) | | | Contract Term
in
Years | |
2009 | | | 38%—46% | | | | — | | | | $14.15 | | | | 0.50%—3.86% | | | | 10 | |
2010 | | | 51%—52% | | | | — | | | | $22.01—$25.85 | | | | 0.02%—3.66% | | | | 13 | |
2011 | | | — | | | | — | | | | — | | | | — | | | | — | |
Market Condition Awards — Binomial Option Pricing Model
| | | | | | | | | | | | | | | | | | | | | |
| Performance | | Expected Volatility | | | Expected Dividend | | | Exercise Price | | | Risk-Free Interest | | | Contract Term in | |
| Year | | (%) | | | Yield (%) | | | ($) | | | Rate (%) | | | Years | |
| 2009 | | | 38% - 46 | % | | | 0 | | | $ | 14.15 | | | | 0.5% - 3.86 | % | | | 10 | |
| 2010 | | | 51% - 52 | % | | | 0 | | | $ | 22.01 - $25.85 | | | | 0.02% - 3.66 | % | | | 13 | |
| | |
| (3) | | Consists of the cash portion of incentive compensation bonus related to performance measures satisfied in the year indicated and awarded in the first quarter of the following year. |
|
| (4) | | Consists of contributions by Ocwen and Altisource pursuant to their 401(k) Savings Plan for each executive officer group term life insurance, relocation expenses,for car allowances, housing allowances, goods and utilitiesservices allowance, educational allowances and tax equalization allowance as detailed below. |
|
| (5) | | As set forth in Mr. Shepro’s employment agreement, following the separation of Altisource from Ocwen, Mr. Shepro’s base salary was converted from US Dollars to Euros at the average exchange rate for US Dollars to Euros for 2009 up to August 24, 2009. This amount includes a 30% cost of living adjustment effective as of August 24, 2009, the date of Mr. Shepro’s relocation to Luxembourg. |
|
(6) | | Includes $186,924 for relocation expenses, $27,571$55,412 for housing allowance, $1,748$7,344 for a car allowance, $4,900$124,969 for 401(k) contributions2010 and $111 for group term life contributions. Mr. Shepro also has access to an additional Company car while in Luxembourg. |
|
(7) | | Includes $67,519 for housing allowance, $14,175 for a car2011 education allowance and $24,731$24,001 for goods and services allowance.allowance, $25,487 for travel allowance and a $37,372 tax equalization allowance for 2009 and 2010 earnings. Mr. Shepro also has access to a Company car while in Luxembourg. |
|
(8)(6) | | Mr. Stiles joined Altisource in March of 2009; consequently, his base salary isIncludes $23,182 for housing allowance, $24,001 for goods and services allowance and a partial year. As set forth in Mr. Stiles’ employment agreement, following the separation of Altisource from Ocwen, Mr. Stiles’ base salary was converted from US Dollars to Euros at the average exchange rate for US Dollars to Euros$43,405 tax equalization allowance for 2009 up to August 24, 2009. |
|
(9) | | Altisource agreed to grant Mr. Stiles these option awards in Mr. Stiles’ offer of employment dated January 22, 2009. |
|
(10) | | Includes $16,749 for relocation expenses and $10,421 for housing allowance.2010 earnings. Mr. Stiles also hashad access to a Company car while in Luxembourg. |
|
(11)(7) | | Includes $32,159$28,700 for housing allowance, and $24,731$2,672 for storage allowance, $24,001 for goods and services allowance. Mr. Stiles also has access toallowance and a Company car while in Luxembourg. |
|
(12) | | As set forth in Mr. Wilcox’s employment agreement, following the separation of Altisource from Ocwen, Mr. Wilcox’s base salary was converted from US Dollars to Euros at the average exchange rate for US Dollars to Euros$75,770 tax equalization allowance for 2009 up to August 24, 2009. This amount includes a 30% cost of living adjustment effective as of August 24, 2009, the date of Mr. Wilcox’s relocation to Luxembourg. |
|
(13) | | Includes $16,775 for relocation expenses, $8,585 for housing allowance and $4,900 for 401(k) contributions and $166 for group term life contributions.2010 earnings. Mr. Wilcox also has access to a Company car while in Luxembourg. |
|
(14) | | Includes $81,350 for relocation expenses, $43,995 for housing allowance and $24,731 for goods and services allowance. Mr. Wilcox also has access to a Company car while in Luxembourg. |
We have employment agreements with our Chief Executive Officer, Chief Financial Officer and Chief Administration Officer and General Counsel (see discussion above). For more information about the elements of the compensation paid to our named executive officers, see “Compensation Discussion and Analysis” above.
26
Grants of Plan Based Awards for 2010
The following table provides information related to non-equity incentive compensation pursuant2011No plan based equity awards (or any other types of awards) were granted to our annual incentive compensation and our 2009 Equity Incentive Plan for services rendered innamed executive officers during the 2011 fiscal year 2010 by the individuals named in the Summary Compensation Table.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Awards: | | | | | | | |
| | | | | | | Estimated Future Payouts | | | | | | | | | | | | | | | Number of | | | Exercise or | | | Grant Date | |
| | | | | | | Under Non-Equity | | | Estimated Future Payouts Under | | | Securities | | | Base Price | | | Fair Value of | |
| | | Grant | | | Incentive Plan Awards(1) | | | Equity Incentive Plan Awards | | | Underlying | | | of Option | | | Stock and | |
| Name | | Date | | | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | | | Options(2) | | | $ / Share | | | Option Awards | |
| William B. Shepro | | | 5/19/10 | | | $ | 331,500 | | | $ | 663,000 | | | $ | 994,500 | | | | | | | | | | | | | | | | 60,000 | | | $ | 24.85 | | | $ | 780,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 120,000 | | | $ | 24.85 | | | $ | 1,482,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 60,000 | | | $ | 24.85 | | | $ | 630,000 | |
| Robert D. Stiles | | | 1/25/10 | | | $ | 92,000 | | | $ | 184,000 | | | $ | 276,000 | | | | | | | | | | | | | | | | 11,667 | | | $ | 22.01 | | | $ | 139,421 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23,333 | | | $ | 22.01 | | | $ | 258,063 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,667 | | | $ | 22.01 | | | $ | 117,253 | |
| | | | 5/19/10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000 | | | $ | 24.85 | | | $ | 390,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 60,000 | | | $ | 24.85 | | | $ | 741,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000 | | | $ | 24.85 | | | $ | 315,000 | |
| Kevin J. Wilcox | | | 5/19/10 | | | $ | 182,000 | | | $ | 364,000 | | | $ | 546,000 | | | | | | | | | | | | | | | | 30,000 | | | $ | 24.85 | | | $ | 390,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 60,000 | | | $ | 24.85 | | | $ | 741,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000 | | | $ | 24.85 | | | $ | 315,000 | |
| | | | | | | | | | | | | | | | |
Name | | Award
Date | | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1) | |
| | | Threshold | | | Target | | | Outstanding | |
William B. Shepro | | | n/a | | | | $341,916 | | | | $683,832 | | | | $1,025,748 | |
Robert D. Stiles | | | n/a | | | | $97,262 | | | | $194,523 | | | | $291,785 | |
Kevin J. Wilcox | | | n/a | | | | $187,718 | | | | $375,437 | | | | $563,156 | |
| | |
| (1) | | These figures represent the potentialpossible non-equity compensation that may have been earned by each respective executive officer in 20102011 under the different achievement levels presented on their personal scorecards which are more fully discussed in our Compensation Discussion and Analysis. 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 2010 is set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above. |
|
(2) | | The vesting schedule for these options has a time-based component, in which 25% of the options vest in equal increments over four years, and a performance-based component, in which up to 75% of the options could vest in equal increments, with 25% vesting immediately upon the achievement of certain performance criteria related to ASPS’ stock price and its annualized rate of return and the remaining 75% vesting over the next three years. Two-thirds of the performance-based options would commence vesting if the stock price realizes a compounded annual gain of at least 20% over the exercise price, so long as the stock price is at least double the exercise price. The remaining third of the performance-based options would commence vesting if the stock price realizes a 25% compounded annual gain, so long as it is at least triple the exercise price. |
27
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding outstanding equity awards at December 31, 20102011 for the individuals named in the Summary Compensation Table.
| | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | |
| | | | | | | | | | | Equity Incentive | | | | | | | |
| | | | | | | | | | | Plan Awards: | | | | | | | |
| | | Number of | | | Number of | | | Number of | | | | | | | |
| | | Securities | | | Securities | | | Securities | | | | | | | |
| | | Underlying | | | Underlying | | | Underlying | | | | | | | |
| | | Unexercised | | | Unexercised | | | Unexercised | | | | | | | |
| | | Options | | | Options | | | Unearned | | | Option | | | Option | |
| Name | | Exercisable | | | Unexercisable(1) | | | Options(2) | | | Exercise Price | | | Expiration Date | |
| William B. Shepro | | | 13,334 | | | | | | | | | | | $ | 14.97 | | | | 10/31/2011 | |
| | | | 4,866 | | | | | | | | | | | $ | 6.91 | | | | 1/31/2012 | |
| | | | 6,577 | | | | | | | | | | | $ | 8.35 | | | | 1/31/2012 | |
| | | | 679 | | | | | | | | | | | $ | 2.23 | | | | 1/31/2013 | |
| | | | 7,018 | | | | | | | | | | | $ | 3.35 | | | | 1/31/2013 | |
| | | | 1,993 | | | | | | | | | | | $ | 7.37 | | | | 1/31/2014 | |
| | | | 7,969 | | | | | | | | | | | $ | 12.80 | | | | 1/31/2014 | |
| | | | 12,051 | | | | | | | | | | | $ | 9.59 | | | | 1/31/2015 | |
| | | | 13,230 | | | | | | | | | | | $ | 11.50 | | | | 1/31/2016 | |
| | | | 9,459 | | | | | | | | | | | $ | 14.17 | | | | 5/10/2017 | |
| | | | 17,188 | | | | 51,562 | (3) | | | | | | $ | 9.55 | | | | 7/14/2018 | |
| | | | 68,750 | | | | 68,750 | (4) | | | | | | $ | 9.55 | | | | 7/14/2018 | |
| | | | 34,376 | | | | 34,375 | (5) | | | | | | $ | 9.55 | | | | 7/14/2018 | |
| | | | | | | | | | | | 120,000 | (6) | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | | | | | 60,000 | (7) | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | 60,000 | (8) | | | | | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | | | | | | | | | | | | | | |
| Robert D. Stiles | | | 2,083 | | | | 6,250 | (9) | | | | | | $ | 14.15 | | | | 9/22/2019 | |
| | | | | | | | | | | | 8,333 | (10) | | $ | 14.15 | | | | 9/22/2019 | |
| | | | 4,167 | | | | 12,500 | (11) | | | | | | $ | 14.15 | | | | 9/22/2019 | |
| | | | | | | | | | | | 23,333 | (12) | | $ | 22.01 | | | | 1/25/2020 | |
| | | | | | | | | | | | 11,667 | (13) | | $ | 22.01 | | | | 1/25/2020 | |
| | | | | | | | 11,667 | (14) | | | | | | $ | 22.01 | | | | 1/25/2020 | |
| | | | | | | | | | | | 60,000 | (6) | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | | | | | 30,000 | (7) | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | 30,000 | (8) | | | | | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | | | |
Name | | Option Awards |
| | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1) | | Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options(2) | | Option
Exercise Price | | Option
Expiration Date |
William B. Shepro | | 679 | | | | | | $2.23 | | 1/31/2013 |
| | 7,018 | | | | | | $3.35 | | 1/31/2013 |
| | 1,993 | | | | | | $7.37 | | 1/31/2014 |
| | 7,969 | | | | | | $12.80 | | 1/31/2014 |
| | 12,051 | | | | | | $9.59 | | 1/31/2015 |
| | 13,230 | | | | | | $11.50 | | 1/31/2016 |
| | 9,459 | | | | | | $14.17 | | 5/10/2017 |
| | 34,376 | | 34,374(3) | | | | $9.55 | | 7/14/2018 |
| | 103,125 | | 34,375(4) | | | | $9.55 | | 7/14/2018 |
| | 51,564 | | 17,187(5) | | | | $9.55 | | 7/14/2018 |
| | 30,000 | | 90,000(6) | | | | $24.85 | | 5/19/2020 |
| | | | | | 60,000(7) | | $24.85 | | 5/19/2020 |
| | 15,000 | | 45,000(8) | | | | $24.85 | | 5/19/2020 |
Kevin J. Wilcox | | 1,766 | | | | | | $2.23 | | 1/31/2013 |
| | 2,649 | | | | | | $3.35 | | 1/31/2013 |
| | 749 | | | | | | $7.37 | | 1/31/2014 |
| | 2,996 | | | | | | $12.80 | | 1/31/2014 |
| | 4,798 | | | | | | $9.59 | | 1/31/2015 |
| | 5,948 | | | | | | $11.50 | | 1/31/2016 |
| | 8,130 | | | | | | $14.17 | | 5/10/2017 |
| | 25,834 | | 25,833(3) | | | | $9.55 | | 7/14/2018 |
| | 77,501 | | 25,833(4) | | | | $9.55 | | 7/14/2018 |
| | 38,751 | | 12,916(5) | | | | $9.55 | | 7/14/2018 |
| | 15,000 | | 45,000(6) | | | | $24.85 | | 5/19/2020 |
| | | | | | 30,000(7) | | $24.85 | | 5/19/2020 |
| | 7,500 | | 22,500(8) | | | | $24.85 | | 5/19/2020 |
28
| | | | | | | | | | | | | | | | | | | | |
Name | | Option Awards | |
| | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1) | | | Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options(2) | | | Option
Exercise Price | | | Option
Expiration Date | |
Robert D. Stiles(9) | | | 4,166 | | | | 4,167 | | | | | | | $ | 14.15 | | | | 9/22/2019 | |
| | | 2,083 | | | | 6,250 | | | | | | | $ | 14.15 | | | | 9/22/2019 | |
| | | 8,334 | | | | 8,333 | | | | | | | $ | 14.15 | | | | 9/22/2019 | |
| | | 5,833 | | | | 17,500 | | | | | | | $ | 22.01 | | | | 1/25/2020 | |
| | | | | | | | | | | 11,667 | | | $ | 22.01 | | | | 1/25/2020 | |
| | | 2,917 | | | | 8,750 | | | | | | | $ | 22.01 | | | | 1/25/2020 | |
| | | 15,000 | | | | 45,000 | | | | | | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | | | | 30,000 | | | $ | 24.85 | | | | 5/19/2020 | |
| | | 7,500 | | | | 22,500 | | | | | | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | |
| | | | | | | | | | | Equity Incentive | | | | | | | |
| | | | | | | | | | | Plan Awards: | | | | | | | |
| | | Number of | | | Number of | | | Number of | | | | | | | |
| | | Securities | | | Securities | | | Securities | | | | | | | |
| | | Underlying | | | Underlying | | | Underlying | | | | | | | |
| | | Unexercised | | | Unexercised | | | Unexercised | | | | | | | |
| | | Options | | | Options | | | Unearned | | | Option | | | Option | |
| Name | | Exercisable | | | Unexercisable(1) | | | Options(2) | | | Exercise Price | | | Expiration Date | |
| Kevin J. Wilcox | | | 13,334 | | | | | | | | | | | $ | 14.97 | | | | 10/31/2011 | |
| | | | 3,217 | | | | | | | | | | | $ | 6.91 | | | | 1/31/2012 | |
| | | | 2,144 | | | | | | | | | | | $ | 8.35 | | | | 1/31/2012 | |
| | | | 1,766 | | | | | | | | | | | $ | 2.23 | | | | 1/31/2013 | |
| | | | 2,649 | | | | | | | | | | | $ | 3.35 | | | | 1/31/2013 | |
| | | | 749 | | | | | | | | | | | $ | 7.37 | | | | 1/31/2014 | |
| | | | 2,996 | | | | | | | | | | | $ | 12.80 | | | | 1/31/2014 | |
| | | | 4,798 | | | | | | | | | | | $ | 9.59 | | | | 1/31/2015 | |
| | | | 5,948 | | | | | | | | | | | $ | 11.50 | | | | 1/31/2016 | |
| | | | 8,130 | | | | | | | | | | | $ | 14.17 | | | | 5/10/2017 | |
| | | | 12,917 | | | | 38,750 | (3) | | | | | | $ | 9.55 | | | | 7/14/2018 | |
| | | | 51,668 | | | | 51,666 | (4) | | | | | | $ | 9.55 | | | | 7/14/2018 | |
| | | | 25,834 | | | | 25,833 | (5) | | | | | | $ | 9.55 | | | | 7/14/2018 | |
| | | | | | | | | | | | 60,000 | (6) | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | | | | | 30,000 | (7) | | $ | 24.85 | | | | 5/19/2020 | |
| | | | | | | | 30,000 | (8) | | | | | | $ | 24.85 | | | | 5/19/2020 | |
| | |
| (1) | | Options awarded where the performance hurdles have been hitachieved but remain subject to additional time basedService-based criteria. |
|
| (2) | | Options awarded where the performance hurdles have not been hit.achieved. |
|
| (3) | Options vest in two (2) equal installments on June 15, 2012 and June 15, 2013. |
| (4) | Options vest on December 23, 2012. |
| (5) | Options vest on July 14, 2012. |
| (6) | Options vest in three (3) equal installments on June 15, 2011, June 15,December 6, 2012, and June 15, 2013. |
|
(4) | | Options vest in two (2) equal installments on December 23, 20116, 2013 and December 23, 2012.6, 2014. |
|
(5) | | Options vest in two (2) equal installments on July 14, 2011 and July 14, 2012. |
|
(6) | | 25% of options vest upon Altisource achieving a stock price of $49.70 and an annual rate of return of 20% over the exercise price with the balance vesting 25% each subsequent anniversary thereof. |
|
| (7) | | 25% of options vest upon Altisource achieving a stock price of $74.55 and an annual rate of return of 25% over the exercise price with the balance vesting 25% each subsequent anniversary thereof. |
|
| (8) | | Options vest in four (4)three (3) equal installments on May 19, 2011, May 19, 2012, May 19, 2013 and May 19, 2014. |
|
| (9) | | Options vest in three (3) equal installments on September 22, 2011, September 22,Mr. Stiles resigned as Chief Financial Officer effective March 1, 2012 and September 22, 2013.is no longer with the Company. Pursuant to his Separation Agreement, Mr. Stiles was entitled to retain any vested options in accordance with the terms of his outstanding option agreements and any unvested options have been forfeited. Accordingly, Mr. Stiles retained 48,750 vested options. |
29
| | |
(10) | | 25% of options vest upon Altisource achieving a stock price of $42.45 and an annual rate of return of 25% over the exercise price with the balance vesting 25% each subsequent year. |
|
(11) | | Options vest in three (3) equal installments on June 14, 2011, June 14, 2012 and June 14, 2013 |
|
(12) | | 25% of options vest upon Altisource achieving a stock price of $44.02 and an annual rate of return of 20% over the exercise price with the balance vesting 25% each subsequent anniversary thereof. |
|
(13) | | 25% of options vest upon Altisource achieving a stock price of $66.03 and an annual rate of return of 25% over the exercise price with the balance vesting 25% each subsequent anniversary thereof. |
|
(14) | | Options vest in three (3) equal installments on January 25, 2011, January 25, 2012, January 25, 2013 and January 25, 2014. |
Option Exercises
The following table provides information regarding the exercise of stock options during the fiscal year ended December 31, 20102011 for our named executive officers:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | No. | | | | | | | | | | | | | | | | | | | | |
| | | Shares | | | | | | | | | | | | | | | | | | | | |
| | | Acquired | | | | | | | | | | | | | | | | | | | Value | |
| | | on | | | Exercise | | | Exercise | | | Market | | | Market | | | Realized on | |
| Name | | Exercise1 | | | Price | | | Amount | | | Price | | | Value | | | Exercise | |
| William B. Shepro | | | 3,276 | | | $ | 8.83 | | | $ | 28,924.56 | | | $ | 26.9203 | | | $ | 88,190.90 | | | $ | 59,266.35 | |
| Kevin J. Wilcox | | | 788 | | | $ | 8.83 | | | $ | 6,957.43 | | | $ | 26.8201 | | | $ | 21,134.24 | | | $ | 14,176.81 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Name | | No. Shares
Acquired on
Exercise | | | Exercise
Price | | | Exercise
Amount | | | Market
Price | | | Market
Value | | | Value Realized
on Exercise | |
William B. Shepro | | | 13,334 | (1) | | $ | 14.97 | | | $ | 199,661.98 | | | $ | 29.97 | | | $ | 399,619.98 | | | $ | 199,958.00 | |
William B. Shepro | | | 6,577 | (2) | | $ | 8.35 | | | $ | 54,931.10 | | | $ | 40.52 | | | $ | 266,500.04 | | | $ | 211,568.94 | |
William B. Shepro | | | 4,866 | (2) | | $ | 6.91 | | | $ | 33,609.95 | | | $ | 40.52 | | | $ | 197,170.32 | | | $ | 163,560.37 | |
Kevin J. Wilcox | | | 13,334 | (1) | | $ | 14.97 | | | $ | 199,661.98 | | | $ | 29.97 | | | $ | 399,619.98 | | | $ | 199,958.00 | |
Kevin J. Wilcox | | | 2,144 | (2) | | $ | 8.35 | | | $ | 17,906.69 | | | $ | 40.14 | | | $ | 86,060.16 | | | $ | 68,153.47 | |
Kevin J. Wilcox | | | 3,217 | (2) | | $ | 6.91 | | | $ | 22,220.14 | | | $ | 40.14 | | | $ | 129,130.38 | | | $ | 106,910.24 | |
| (1) | | |
1 | | These options were awarded as a result of the separation from Ocwen Financial Corporationdue to options that had originally been awarded while the executive was employed at Ocwen and would have expired as of October 31, 2011 if not exercised. |
| (2) | These options were awarded as a result of the separation from Ocwen due to options that had originally been awarded while the executive was employed at Ocwen and would have expired as of January 31, 20112012 if not exercised. |
30
Report of the Compensation Committee
The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis included on pages 15 through 30 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 Altisource’s annual report on Form 10-K for the year ended December 31, 2010 and in this proxy statement.
| | |
|
| | Compensation Committee: |
April _____, 2011 | | Timo Vättö, Chairman |
| | Silke Andresen-Kienz, Director |
| | Roland Müller-Ineichen, Director |
31
APPOINTMENT OF
INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM
(Proposal Two)
The Audit Committee of our Board of Directors has appointed Deloitte & Touche LLP and Deloitte S.A. (together “Deloitte”), to be our independent registered certified public accounting firm for the year ending December 31, 20112012 and Deloitte Audit S.à r.l. to be our certified auditor for the Luxembourgall statutory accounts described below.as required by Luxembourg law for the same period (together “Deloitte”). The Audit Committee has further directed that such appointment be submitted for approval by our shareholders at the Annual Meeting. If the shareholders do not approve the appointmentMeeting of Deloitte, the Audit Committee may, in its sole discretion, reevaluate the engagement of the independent auditors.
Shareholders.Representatives of Deloitte will be present at the Annual Meeting of Shareholders, will be given the opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions from you.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE “FOR” THE APPOINTMENT OF DELOITTE & TOUCHE LLP AND DELOITTE S.A.
(TOGETHER “DELOITTE”) AS THE INDEPENDENT
REGISTERED CERTIFIED PUBLIC
ACCOUNTING FIRM FOR 2011
AS THE CERTIFIED AUDITOR FOR ALL STATUTORY ACCOUNTS AS REQUIRED BY
LUXEMBOURG LAW FOR THE SAME PERIOD
32
Report of the Audit Committee
The Audit Committee of the Board of Directors has:
Reviewed and discussed with management Altisource’s audited financial statements as of and for the year ended December 31, 2010;2011;
Discussed with Deloitte & Touche LLP, (“Deloitte”), Altisource’s independent registered certified public accounting firm, the matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit Committees”; and
Received and reviewed the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) regarding the independent registered certified public accounting firm’s communications with the audit committeeAudit Committee concerning independence and discussed with Deloitte & Touche LLP their independence.
In reliance on the review and discussion referred to above, the Committee recommended to the Board of Directors that the audited financial statements be included in Altisource’s annual report on Form 10-K for the year ended December 31, 2010.
2011. | | | | | | |
| | |
|
| | Audit Committee: |
April _____, 2011March ___, 2012 | | | | Roland Müller-Ineichen, Chairman |
| | Silke Andresen-Kienz, | | W. Michael Linn, Director |
| | | | Timo Vättö, Director |
33
Deloitte & Touche LLP Fees
The following table shows the aggregate fees billed to Altisource for professional services by Deloitte & Touche LLP (“Deloitte”), in fiscal years 20092010 and 2010:
| | | | | | | | | |
| | | 2009 | | | 2010 | |
Audit Fees | | $ | 525,000 | | | $ | 986,105 | |
Audit Related Fees | | $ | 0 | | | $ | 0 | |
Tax Fees | | $ | 0 | | | $ | 128,040 | |
All Other Fees | | $ | 0 | | | $ | 213,689 | |
| | | | | | | |
Total | | $ | 525,000 | | | $ | 1,327,834 | |
| | | | | | | |
Changes in Independent Registered Certified Public Accounting Firm.Prior to Altisource’s separation from Ocwen on August 10, 2009, the independent public accounting firm for Ocwen was PricewaterhouseCoopers LLP (“PwC”). On September 22, 2009, at the initial meeting of the Board of Directors of Altisource following the separation from Ocwen, the Board of Directors engaged Deloitte as Altisource’s independent registered public accounting firm for the year ending December 31, 2009, subject to the completion of their customary client acceptance procedures.
The report of PwC on Ocwen’s consolidated financial statements for each of the two years in the period ended December 31, 2008, which was included in Ocwen’s 2008 Annual Report on Form 10-K, did not contain any adverse opinion or disclaimer of opinion, nor was such report qualified or modified as to uncertainty, audit scope or accounting principle.
During each of the two years in the period ended December 31, 2008 and through August 10, 2009 (the date Altisource separated from Ocwen), there were no (i) disagreements between Ocwen and PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference to the subject matter of the disagreements in connection with its reports on the financial statements for such years, and (ii) “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.
During each of the two years in the period ended December 31, 2009 and through August 10, 2010, neither the Company nor anyone on its behalf consulted with Deloitte with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and no written report or oral advice was provided by Deloitte to the Company that Deloitte concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to that Item) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
Ocwen requested that PwC furnish Ocwen with a letter addressed to the Securities Exchange Commission stating whether or not PwC agrees with the above statements that are related to PwC. A copy of PwC’s letter, dated September 3, 2009, is attached to that certain Current Report on Form 8-K filed by Ocwen on September 3, 2009.
2011: | | | | | | | | |
Category | | 2010 | | | 2011 | |
Audit Fees | | $ | 986,105 | | | $ | 1,189,928 | |
Audit-Related Fees | | $ | 85,000 | | | | — | |
Tax Fees | | $ | 256,729 | | | $ | 215,403 | |
All Other Fees | | | — | | | | — | |
Total | | $ | 1,327,834 | | | $ | 1,405,331 | |
Audit Fees.This category includes the aggregate fees and expenses billed for professional services rendered for the audits of Altisource’s consolidated financial statements for fiscal years 20092010 and 2010,2011, for the reviews of the financial statements included in Altisource’s quarterly reports on Form 10-Q during fiscal years 20092010 and 20102011 and for services that are normally provided by the independent registered certified public accounting firm and affiliates in connection with statutory and regulatory filings or engagements for the relevant fiscal year.
Audit-Related Fees.This category includes the aggregate fees billed forin fiscal years 20092010 and 20102011 for assurance and relatedaudit-related services by the independent registered certified public accounting firm that are reasonably related to the performance of the audits or reviews of the financial statements and are not reported above under “Audit Fees” and generally consist of fees for other attest engagements under professional auditing standards, internal control-related matters, audits of employee benefit plans and due diligence.
34
Tax Fees.This category includes the aggregate fees billed forin fiscal years 20092010 and 20102011 for professional services rendered by the independent registered certified public accounting firm for tax compliance, tax planning and tax advice.
All Other Fees.This category includes the aggregate fees billed forin fiscal years 20092010 and 20102011 for products and services provided by the independent registered certified public accounting firm that are not reported above under “Audit Fees,” “Audit-Related Fees” or “Tax Fees.”
The Audit Committee considered the compatibility of the non-audit-related services provided by and fees paid to Deloitte & Touche LLP in fiscal years 20092010 and 20102011 and determined that such services and fees are compatible with the independence of Deloitte.
Deloitte & Touche LLP.The Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered certified public accounting firm in order to assure that the provision of such services does not impair the independent registered certified public accounting firm’s independence. Unless a type of service to be provided by the independent registered certified public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee. In fiscal years 20092010 and 2010,2011, all fees associated with the independent registered certified public accounting firm’s services were pre-approved by the Audit Committee.
Representatives from Deloitte & Touche LLP will be present at the shareholders meetingAnnual Meeting of Shareholders and will be available to respond to questions from shareholders.
Audit Committee Pre-Approval Policy.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated shall report any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent auditor to management.
35
RECEIPTAPPROVAL OF THE DIRECTORS’ REPORT (“RAPPORT DE GESTION”) ON THE LUXEMBOURG
STATUTORY ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2010
(THE “DIRECTORS’ REPORT”)SHARE REPURCHASE PROGRAM(Proposal Three)
At the Annual Meeting of Shareholders on May 19, 2010, our shareholders approved a share repurchase program authorizing up to fifteen percent (15%) of the outstanding shares of the Company’s stock to be repurchased. Under that program, shares are eligible for repurchase at a minimum price of one dollar ($1.00) per share and a maximum price of seventy-five dollars ($75.00) per share. As further described in Proposal Four below, Luxembourg law requiresof March 15, 2012, the total number of shares repurchased under the program amounted to 10.7% of Altisource’s 25,412,748 outstanding shares. On March, 15, 2012, the closing trading price of the Company’s common stock was sixty-five dollars and fifty-three cents ($65.53), near the upper repurchase limitation of the program. We anticipate that we maintain Luxembourg statutory accounts for Altisource. Under Luxembourg law,could exceed the repurchase limitations of the program prior to the 2013 Annual Meeting of Shareholders. Therefore, the Board of Directors of Altisource has approved presenting a legal obligation to prepare an annual Directors’ Report that presents the Luxembourg statutory account figures for the relevant fiscal year, provides an explanation as to the results, and makes a proposalnew share repurchase program (the “Share Repurchase Program”) to the shareholders for approval whereby the Board of Altisource asDirectors is empowered to purchase outstanding shares of the Company’s stock.
The Share Repurchase Program shall be subject to Luxembourg law and provides for the equal treatment of shareholders. The term of authorization to the allocationBoard of such results for such fiscal year. This Directors’ Report must be available to and approved by the shareholders of Altisource at the annual general meeting. Altisource’s Directors’ Report for the year ended December 31, 2010Directors will be available from April 15, 2011 at Altisource’s registered office. Following shareholder approvalfive (5) years. The maximum number of shares authorized to be repurchased will be up to fifteen percent (15%) of shares outstanding as of the Directors’ Report, this documentdate of the shareholder approval. Shares will be filed witheligible for purchase at a minimum price of one dollar ($1.00) per share and a maximum price of one hundred and twenty-five dollars ($125.00) per share. The purchase volumes will be subject to daily volume restrictions per SEC regulations. The Board of Directors shall be empowered to give authority to the Luxembourg trade registry as a public document. If Altisource does not receive shareholder approvalCompany’s Chief Executive Officer to decide within the limits of the Directors’ Report, we cannot make this filing withauthorization set out above, the Luxembourg trade registry that is required by Luxembourg law.
timing and conditions of the Share Repurchase Program.In lieu of accumulating cash, which provides a low rate of return to shareholders, or paying dividends, which are often subject to double taxation, the Board of Directors believes the Share Repurchase Program will be an effective use of Altisource’s cash earnings to generate shareholder value.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE “FOR” THE
APPROVAL AND RATIFICATION OF THE DIRECTORS’ REPORT
SHARE REPURCHASE PROGRAM
34
APPROVAL OF THE COMPANY’S ANNUAL ACCOUNTS
PREPARED IN ACCORDANCE WITH LUXEMBOURG GAAP AND THE
COMPANY’S CONSOLIDATED FINANCIAL STATEMENTS
PREPARED IN ACCORDANCE WITH U.S. GAAP
INCLUDING A FOOTNOTE RECONCILIATION OF EQUITY AND
NET INCOME TO IFRS, IN EACH CASE
FOR THE YEAR ENDED DECEMBER 31, 2010.
2011
36
APPROVAL OF THE LUXEMBOURG STATUTORY ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2010
AND ALLOCATION OF THE RESULTS OF THE YEAR ENDED DECEMBER 31, 2010
(Proposal Four)
Pursuant to Luxembourg law, the Luxembourg statutory accountsAnnual Accounts and the Consolidated Accounts must be submitted each year to the general meetingAnnual Meeting of the shareholdersShareholders for approval. These
The Luxembourg statutory accountsAnnual Accounts are prepared in accordance with Luxembourg GAAP and consist of a balance sheet, a profit and loss account and the notes to the Luxembourg statutory accounts.Annual Accounts. There is no statement of movements in equity or statement of cash flow included in the Luxembourg statutory accountsAnnual Accounts under Luxembourg GAAP; consequently, profits earned by the subsidiaries of Altisource are not included in Altisource’s Luxembourg statutory accountsAnnual Accounts unless such amounts are distributed to Altisource.
As of December 31, 2011, the Luxembourg Annual Accounts for Altisource show a balance sheet total of $78.9 million and a loss for the year then ended of $1.4 million.The Consolidated Accounts are prepared in accordance with U.S. GAAP including a footnote reconciliation of equity and net income to IFRS, and consist of a balance sheet, statement of operations, statement of changes in stockholders’ equity, statement of cash flows and the accompanying notes to these financial statements. The Consolidated Accounts present the financial position and results of operations for Altisource Portfolio Solutions S.A. (the parent entity) and all of its subsidiaries as if the individual entities were a single company. As of December 31, 2011, the Consolidated Accounts show equity of $165.9 million and net income for the year then ended of $78.3 million.
Following shareholder approval of the Luxembourg Statutory Accounts, they must be filed with the Luxembourg trade registry as public documents pursuant to Luxembourg law. If Altisource does not receive shareholder approval of the Luxembourg Statutory Accounts, we cannot make this filing.
Altisource’s Luxembourg Statutory Accounts for the year ended December 31, 2011 will be available to shareholders from April 15, 2012 at Altisource’s registered office.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” THE APPROVAL OF THE LUXEMBOURG STATUTORY ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2011.
35
RECEIPT AND APPROVAL OF THE DIRECTORS’ REPORTS ON THE
LUXEMBOURG STATUTORY ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2011
(Proposal Five)
Under Luxembourg law, the Board of Directors is required to prepare annual Directors’ reports for the Company’s Luxembourg Statutory Accounts (the “Directors’ Reports”). The Directors’ Reports present the figures for the relevant fiscal year, provide an explanation as to the results and certain other Company matters as required and make a proposal to the shareholders of Altisource as to the allocation of such results for such fiscal year.
The Directors’ Reports will be available to shareholders of Altisource from April 15, 2012 at Altisource’s registered office. Following shareholder approval of the Luxembourg Statutory Accounts, the Directors’ reports will be filed with the Luxembourg trade registry as public documents.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE “FOR” THE RECEIPT AND APPROVAL OF THE DIRECTORS’ REPORTS
FOR THE YEAR ENDED DECEMBER 31, 2011.
36
ALLOCATION OF THE RESULTS OF THE YEAR ENDED DECEMBER 31, 2011
(Proposal Six)
The shareholders of Altisource must ratifyapprove the allocation of theAltisource’s results ofas determined by the Luxembourg statutory accountsAnnual Accounts of Altisource each year. Luxembourg law requires that at least five percent (5%) of the net profits, if any, for the Luxembourg statutory accountsAnnual Accounts be apportioned to a legal reserve; provided, however that this allocation shall cease to be compulsory under Luxembourg law when the reserve attains 10%ten percent (10%) of the share capital of Altisource but shall again become compulsory as soon as the reserve amount falls below this threshold. Following shareholder approval ofAs the Company made a net loss pursuant to its Luxembourg statutory accounts,Annual Accounts for the Directors Report described in Proposal Three above will be filed with the Luxembourg trade registry as a public document. If Altisource does not receive shareholder approval of the Luxembourg statutory accounts, we cannot make this filing with the Luxembourg trade registry that is required by Luxembourg law.
The Board of Directors proposes to carry forward the results of Altisource as set forth below.
For the fiscal year ended December 31,
2010,2011, there is no requirement to make such allocation.As of December 31, 2011, the Luxembourg statutory accountsAnnual Accounts for Altisource show a balance sheet total of US $40.4$78.9 million and a loss for the year then ended of US $1.9$1.4 million. As noted earlier,in Proposal Four above, profits earned by subsidiaries of Altisource are not included in the calculation of net profits for Altisource’s Luxembourg statutory accountsAnnual Accounts unless such profits have been distributed to Altisource.
Altisource’sThe Board of Directors proposes to allocate the loss reflected in the Luxembourg statutory accounts for the year ended December 31, 2010 will be available from April 15, 2011 at Altisource’s registered office.
Annual Accounts to results brought forward.OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” THE APPROVAL OF THE LUXEMBOURG STATUTORY ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2010 AND
ALLOCATION OF THE RESULTS
OF THE YEAR ENDED DECEMBER 31, 2010.
2011.
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DISCHARGE OF EACH OF THE CURRENT AND PAST DIRECTORS OF ALTISOURCE
FOR THE PERFORMANCE OF THEIR MANDATE DURING THE
YEAR ENDED DECEMBER 31, 2010
2011
(Proposal Five)
Seven)Pursuant to Luxembourg law, shareholders must approve the individual discharge of all of the current and past Directors for the performance of their mandate during the relevant fiscal year. As required pursuant to Luxembourg law, after the adoption of the Luxembourg statutory accountsStatutory Accounts (as discussed in Proposal FourSix above), the shareholders of Altisource shall vote whether to discharge Altisource’s Directors for the performance of their mandate during the relevant fiscal year. If the shareholders grant the discharge of Directors for the relevant fiscal year, Altisource will not be able to initiate a liability claim against such Directors in connection with the performance of their mandate for the relevant fiscal year. However, such discharge will not be valid if the Luxembourg statutory accounts contain an omission or false information concerning Altisource’s position. Furthermore, such discharge will not be valid with respect to any acts taken by a Director which fall outside the scope of Altisource’s Articles of Association unless such actions have been disclosed to the shareholders and approved by them. For fiscal year 2010,2011, Altisource believes none of the Directors have taken any actions outside the scope of Altisource’s Articles of Association.
During part or all of the fiscal year ended December 31, 2010,2011, the following persons served as Directors:
William C. Erbey;
William B. Shepro;
W. Michael Linn;
Roland Müller-Ineichen;
Timo Vättö;
Robert L. DeNormandie; and
Silke Andresen-Kienz
Andresen-Kienz.OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
DISCHARGE OF EACH OF THE CURRENT AND PAST DIRECTORS OF ALTISOURCE FOR THE
PERFORMANCE OF THEIR MANDATE DURING THE YEAR ENDED DECEMBER 31, 2010.
2011.
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ADVISORY VOTE ON EXECUTIVE COMPENSATION
“SAY ON PAY”
(Proposal Six)
As required pursuant to Section 14A of the Securities Exchange Act, the Company is presenting this proposal, which gives shareholders the opportunity to approve or not approve our pay program for named executive officers.
As described in detail under the heading “Executive Compensation — Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, incent and retain our named executive officers, who are critical to our success. Pursuant to these programs, the Company seeks to reward the named executive officers for achieving strategic business goals. Please read the “Compensation Discussion and Analysis” for additional details about our executive compensation programs, including information about the fiscal year 2010 compensation of our named executive officers. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2011 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure, and any related material disclosed in this Proxy Statement.”
While our Board of Directors intends to carefully consider the shareholder vote resulting from this proposal, the final vote will not be binding on us and is advisory in nature.
You may vote for or against the approval of the compensation of the Company’s named executive officers as disclosed in the Compensation Discussion and Analysis, the compensation tables and the related disclosure contained in the Proxy Statement.
39
ADVISORY VOTE ON FREQUENCY OF EXECUTIVE COMPENSATION VOTE
(Proposal Seven)
As required pursuant to Section 14A of the Securities Exchange Act, the Company is presenting this proposal which gives you as a shareholder the opportunity to inform the Company as to how often you wish the Company to include a proposal, similar to Proposal Six, in our Proxy Statement.
While our Board of Directors intends to carefully consider the shareholder vote resulting from this proposal, the final vote will not be binding on us and is advisory in nature.
You may vote to include an advisory vote on the compensation of the Company’s named executive officers pursuant to Section 14A of the Securities Exchange Act every one (1), two (2) or three (3) years or you may abstain.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
OPTION OF “EVERY THREE (3) YEARS” AS THE FREQUENCY WITH WHICH SHAREHOLDERS
ARE PROVIDED AN ADVISORY VOTE ON THE COMPENSATION OF NAMED EXECUTIVE
OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.
ACCORDINGLY, SIGNED PROXIES RETURNED WITHOUT SPECIFIC VOTING DIRECTIONS
WILL BE VOTED FOR A FREQUENCY OF THREE YEARS.
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APPROVAL OF CHANGE IN DIRECTORS’ COMPENSATION
(Proposal Eight)
The Compensation Committee of our Board of Directors has recommended a change in Directors’ compensation for our non-management members of our Board of Directors. As discussed in the “Board of Directors Compensation” section of this proxy statement, the Compensation Committee wishes to establish Director pay levels that are consistent with those of our peer group companies to ensure we can attract and retain the best possible candidates for our Board of Directors. Luxembourg law requires the Company to submit this proposed change in Directors’ compensation to our shareholders.
We are proposing that cash compensation to our non-management Directors be increased by increasing our annual cash retainer by $9,000 from $40,000 to $49,000.
We are also proposing a one-time award of 500 shares of Common Stock to newly elected non-management Directors that will vest 25% each year on the date of our Annual General Meeting. This one-time award will also be provided to all non-management Directors elected at the 2011 Annual General Meeting.
We are proposing that all other Directors’ compensation amounts remain unchanged.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” THE APPROVAL OF A CHANGE IN DIRECTORS’ COMPENSATION
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BUSINESS RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Board of Directors has adopted a policy and procedure for review, approval and monitoring of transactions involving Altisource and related persons (Directors and named executive officers or their immediate family members or shareholders owning five percent (5%)5% or greater of the Company’s outstanding stock) within our written Code of Business Conduct and Ethics which is available atwww.altisource.com. This policy and procedure is not limited to related person transactions that meet the threshold for disclosure under the relevant Securities and Exchange Commission,SEC rules, as it broadly covers any situation in which a conflict of interest may arise.
Any situation that potentially qualifies as a conflict of interest is to be immediately disclosed to the Compliance Officer and/or the General Counsel to assess the nature and extent of any concern as well as the appropriate next steps. The Compliance Officer and/or the General Counsel will notify the Chairman of the Board of Directors if any such situation requires approval of the Board.Board of Directors. Related persons are required to obtain the prior written approval of the Audit Committee of the Board of Directors before participating in any transaction or situation that may pose a conflict of interest. In considering a transaction, the Audit Committee will consider all relevant factors including (i) whether the transaction is in the best interests of Altisource; (ii) alternatives to the related person transaction; (iii) whether the transaction is on terms comparable to those available to third parties; (iv) the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflicts and (v) the overall fairness of the transaction to Altisource. The Committee will periodically monitor any approved transactions to ensure that there are no changed circumstances that would render it advisable for the Company to amend or terminate the transaction.
As of December 31, 2010,2011, our Chairman owns or controls more than 10%13.68% of Ocwen’s Common Stockcommon stock and 25%23.34% of our Common Stock.common stock. Therefore, transactions between the Company and Ocwen are related party transactions.
For the year ended December 31,
2010,2011, we generated
approximately 51%$223.2 million of
our revenuesMortgage Services, $0.3 million of Financial Services and $21.8 million of Technology Services segment revenue from Ocwen.
These revenues were generated from services provided to Ocwen or sales derived from Ocwen’s loan servicing portfolio. Services provided to Ocwen included residential property valuation, real estate
asset management and sales, trustee management services, property inspection and preservation, closing and
titleinsurance services, charge-off second mortgage collections, core technology back office support and multiple business technologies including our
REALSuiteREALSuite™ of products.
We provided all services at rates we believe to be comparable to market rates.Additionally, for the year ended December 31, 2011, Altisource billed Ocwen $1.8$2.6 million and Ocwen billed Altisource $1.1$1.9 million for services provided under a Transition Services Agreement. Altisource’s relationship with Ocwen was contemplated at the time of the separation and was implemented prior to the adoption of the related party transaction policy and procedure discussed above.
For further information with regard to related party transactions between the Company and Ocwen, please see the Company’s Form 10-K filed on February 18, 2011.
16, 2012.SHAREHOLDER PROPOSALS
Any proposal which a shareholder desires to have included in our proxy materials relating to our next Annual Meeting of Shareholders, which is scheduled to be held on May 16, 2012,15, 2013, must be received at our executive offices no later than, 2011. November 30, 2012. All shareholder proposals for the 20122013 Annual Meeting of Shareholders should be directed to our Corporate Secretary at Altisource Portfolio Solutions S.A., 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg. We recommend that you send any shareholder proposal by certified mail, return-receipt requested.
For any proposal that is not submitted for inclusion in the 20122013 proxy statement, but is instead sought to be presented directly at the 20122013 Annual Meeting Securities and Exchange Commissionof Shareholders, SEC rules permit management to vote proxies in its discretion if we:
| (1) | | receive notice of the proposal before the close of business on February 13, 20122013 and advise shareholders in the 20122013 proxy statement about the nature of the matter and how management intends to vote on such matter, or |
| (2) | | do not receive notice of the proposal prior to the close of business on February 13, 2012.2013. |
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Notice of intent to present a proposal at the 20122013 Annual Meeting of Shareholders should be directed to our Corporate Secretary at Altisource Portfolio Solutions S.A., 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg.
We did not receive notice of any shareholder proposals relating to the 20112012 Annual Meeting.Meeting of Shareholders. At the 20112012 Annual Meeting of Shareholders, our management may exercise discretionary authority when voting on any properly presented shareholder proposal that is not included as an agenda item in this proxy statement.
A copy of our annual report to shareholders on Form 10-K for the year ended December 31, 20102011 was made available to shareholders on or about February 18, 2011.16, 2012. The annual report can be found on our websitewww.altisource.com under Investor Relations.
We will furnish without charge to each person whose proxy is solicited and to eachany beneficial owner entitled to vote as of the record date for the meeting, on written request, a copy of our annual report on Form 10-K for the year ended December 31, 2010,2011, required to be filed by us with the Securities and Exchange CommissionSEC under the Securities Exchange Act of 1934, as amended. Such requests should be directed to Investor Relations, Altisource Portfolio Solutions S.A., 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg.
Proxies will be solicited on behalf of the Board of Directors by mail or electronic means, and we will pay the solicitation costs. Copies of the annual report for 20102011 and this proxy statement will be made available to brokers, dealers, banks and voting trustees, or their nominees, for the purpose of soliciting proxies from beneficial owners. In addition to solicitations by mail or electronic means, our Directors, officers and employees may solicit proxies personally or by telephone without additional compensation.
The shares represented by all valid proxies received by phone, by Internet or by mail will be voted in the manner specified. Where specific choices are not indicated, the shares represented by all valid proxies received will be voted: (1) for the nominees for Director named earlier in this proxy statement,statement; (2) for the ratificationapproval of the selection of the independent auditor,auditor; (3) for the approval of a share repurchase program whereby Altisource may repurchase outstanding shares of its common stock within certain limits; (4) for the Directors’ report (“rapport de gestion”approval of the Company’s annual accounts prepared in accordance with Luxembourg GAAP (the “Luxembourg Annual Accounts”) onand the Luxembourg statutory accountsCompany’s consolidated financial statements prepared in accordance with U.S. GAAP including a footnote reconciliation of equity and net income to IFRS (the “Consolidated Accounts”), in each case for the year ended December 31, 2010, (4)2011 (together the “Luxembourg Statutory Accounts”); (5) for the approval ofproposal to receive and approve the Directors’ reports on the Luxembourg statutory accountsStatutory Accounts for the year ended December 31, 2010 and2011; (6) for the proposal to allocate the results of the year ended December 31, 2010, (5)2011; and (7) for the approval of the discharge of all of the current and past Directors of Altisource for the performance of their mandate during the year ended December 31, 2010, (6) for approval of executive compensation as disclosed in the proxy statement; (7) for three years to be the frequency that an advisory vote on executive compensation be presented to the shareholders and (8) for the approval of the change in Directors’ compensation.2011. Should any matter not described above be properly presented at the meeting, the persons named in the proxy form will vote in accordance with their judgment.
If you are the beneficial owner, but not the record holder of shares of our Common Stockcommon stock and have requested a copy of this proxy statement, your broker, bank or other nominee may only deliver one (1) copy of this proxy statement and our 20102011 annual report to multiple shareholders who share an address unless that nominee has received contrary instructions from one (1) or more of the shareholders. Shareholders at an address to which a single copy of this proxy statement and our 20102011 annual report was sent may request a separate copy by contacting Investor Relations, Altisource Portfolio Solutions S.A., 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg. Beneficial owners sharing an address who are receiving multiple copies and who wish to receive a single copy of the materials in the future will need to contact their broker, bank or other nominee to request that only a single copy of each document be mailed to all shareownersshareholders at the shared address.
This proxy statement and our 20102011 annual report may be viewed online atwww.altisource.com under Investor Relations. In addition, this proxy statement and our 20102011 annual report are available atwww.proxyvote.com. If you are a shareholder of record, you can elect to access future annual reports and proxy statements electronically by following the instructions provided if you vote by Internet or by telephone. If you choose this option, you will receive a notice by mail listing the website locations, and your choice will remain in effect until you notify us by mail that you wish to resume mail delivery of these documents. If you hold your Common Stockcommon stock through a bank, broker or another holder of record, refer to the information provided by that entity for instructions on how to elect this option.
43
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
C/O PROXY SERVICES
P.O.BOX 9142
FARMINGDALE, NY 11735
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by Altisource Portfolio Solutions S.A. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| | |
ALTISOURCE PORTFOLIO SOLUTIONS S.A. C/O PROXY SERVICES P.O. BOX 9142 FARMINGDALE, NY 11735 | | VOTE BY INTERNET -www.proxyvote.com Use the lnternet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
| | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by Altisource Portfolio Solutions S.A. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. |
| VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. |
| VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
| | | | |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | |
| | M32049-P07803 | | KEEP THIS PORTION FOR YOUR RECORDS |
| | THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | DETACH AND RETURN THIS PORTION ONLY |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ALTISOURCE PORTFOLIO SOLUTIONS S.A. | | | | | | | | | | | | | | | | | | | | | | |
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
| | For
All | | Withhold
All | | For All
Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | |
| The Board of Directors recommends you vote FOR the following:
| | | | | | | | | | | | | | | | | | | | |
1. | | Election of Directors | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | |
| | Nominees: | | | | | | | | | | |
| | 01) William C. Erbey | | | | | | | | | | | | | | | | | | | | | | | | |
| | 02) William B. Shepro | | | | | | | | | | | | | | | | | | | | | | | | |
| | 03) W. Michael Linn | | | | | | | | | | | | | | | | | | | | | | | | |
| | 04) Roland Müller-Ineichen | | | | | | | | | | | | | | | | | | | | | | | | |
| | 05) Timo Vättö | | | | | | | | | | |
| 1. | Election of Directors. | | | | o | | o | | o | | | |
| | Nominees:
01) William C. Erbey
02) William B. Shepro
03) Roland Müller-Ineichen
04) Timo Vättö
05) W. Michael Linn | | | | | | | | | | | | |
| | | | | | |
The Board of Directors recommends you vote FOR the following proposals:
| | For | | Against | | Abstain |
| | | | | | |
2. Proposal to ratify the appointment of Deloitte & Touche LLP and Deloitte S.A. (together “Deloitte”) as our independent registered certified public accounting firm for the fiscal year ending December 31, 2011 | | o | | o | | o |
| | | | | | |
3. Proposal to approve and ratify the Directors’ report for the year ended December 31, 2010 | | o | | o | | o |
| | | | | | |
4. Proposal to approve the Luxembourg statutory accounts for the year ended December 31, 2010 and to allocate the results of the year ended December 31, 2010 | | o | | o | | o |
| | | | | | |
For address changes and/or comments, please check this box and write them on the back where indicated. | | | | o |
| | | | | | |
Please indicate if you plan to attend this meeting. | | o | | o | | |
| | | | | | |
| | Yes | | No | | |
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
| | | | | | | | |
| | | | | For | | AgainstFor | | Against | | Abstain | | | | |
| The Board of Directors recommends you vote FOR the following proposals: | | | | | | | | | | | | | | |
2. Proposal to approve the appointment by the Audit Committee of our Board of Directors of Deloitte & Touche LLP to be our independent registered certified public accounting firm for the year ending December 31, 2012 and Deloitte Audit S.à r.l. to be our certified auditor for all statutory accounts as required by Luxembourg law for the same period | | ¨ | | ¨ | | ¨ | | | | |
3. Proposal to approve a share repurchase program whereby Altisource Portfolio Solutions S.A. may repurchase outstanding shares of its common stock within certain limits | | ¨ | | ¨ | | ¨ | | | | |
4. Proposal to approve Altisource Portfolio Solutions S.A.’s annual accounts prepared in accordance with Luxembourg GAAP and its consolidated financial statements prepared in accordance with U.S. GAAP including a footnote reconciliation of equity and net income to IFRS, in each case for the year ended December 31, 2011 (together the “Luxembourg Statutory Accounts”) | | ¨ | | ¨ | | ¨ | | | | |
5. Proposal to receive and approve the Directors’ reports on the Luxembourg Statutory Accounts for the year ended December 31, 2011 | | ¨ | | ¨ | | ¨ | | | | |
6. Proposal to allocate the results of the year ended December 31, 2011 | | ¨ | | ¨ | | ¨ | | | | |
7. Proposal to discharge each of the current and past Directors of Altisource Portfolio Solutions S.A. for the performance of their mandate during the year ended December 31, 20102011 | | o¨ | | o¨ | | o¨ | | | | |
8. In their discretion, upon such other matters that may properly come before the meeting or any adjournment or adjournments thereof | | ¨ | | ¨ | | ¨ | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For address changes and/or comments, please check this box and write them on the back where indicated. | | ¨ | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | | | | | | |
6. An advisory vote on executive compensation | oPlease indicate if you plan to attend this meeting. | | o | | o¨ | | ¨ | | | | | | | | | | | | | |
| | | | | | | | | | | Yes | | No | | | | |
The Board of Directors recommends that you vote FOR “Three Years” on the following proposal:
| | 1 Year | | 2 Years | | 3 Years | | Abstain | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
7. An advisory vote on the frequency of holding an advisory vote on executive compensation | | o | | o | | o | | o |
| | | | | | | | |
| | | | | For | | Against | | Abstain |
| | | | | | | | | | | | |
8. Proposal to approve a change in Directors’ Compensation | oSignature [PLEASE SIGN WITHIN BOX] | | o | | o |
| | | | | | | | |
NOTE:Such other business as may properly come before the meeting or any adjournment thereof.
| | |
| Date | | | | | | | | | | | | |
| Signature (Joint Owners) | | Date | | | | | | | | |
Signature [PLEASE SIGN WITHIN BOX] | Date | | | | | | Signature (Joint Owners) | Date | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com.
M32050-P07803
www.proxyvote.com.ALTISOURCE PORTFOLIO SOLUTIONS S.A.
291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALTISOURCE PORTFOLIO SOLUTIONS S.A. FOR USE ONLY AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 18, 2011, AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints William C. Erbey, William B. Shepro and Kevin J. Wilcox, or any of them, as proxy, with full powers of substitution, and hereby authorizes them to represent and vote, as designated on the reverse side, all the shares of common stock (“Common Stock”) of Altisource Portfolio Solutions S.A. (the “Company”) held of record by the undersigned on March 15, 2011 at the Annual Meeting of Shareholders to be held at the offices of the Company located at 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg on Wednesday, May 18, 2011, at 10:00 a.m., Central European Time and at any adjournment thereof. Shares of Common Stock of the Company will be voted as specified.
If you execute and return this proxy without specific voting instructions, this proxy will be voted FOR the election of each of the Board of Directors’ nominees to the Board of Directors, FOR the ratification of the appointment of Deloitte & Touche LLP and Deloitte S. A. (together “Deloitte”) as the independent registered certified public accounting firm, FOR the proposal to approve the Directors’ report (“rapports de gestion”) on the Luxembourg statutory accounts for the year ended December 31, 2010, FOR the proposal to approve the Luxembourg statutory accounts for the year ended December 31, 2010 and to allocate the results of the year ended December 31, 2010, FOR the proposal to approve the discharge of each of the current and past Directors of the Company for the performance of their mandate during the year ended December 31, 2010, FOR an advisory vote on executive compensation, FOR “Three Years” to be the frequency of holding an advisory vote on executive compensation and FOR the approval of a change in Directors’ compensation. You may revoke this proxy at any time prior to the time it is voted at the Annual Meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders of Altisource Portfolio Solutions S.A. to be held on May 18, 2011, or any adjournment thereof, a Proxy Statement for the Annual Meeting and the 2010 Annual Report to Shareholders of the Company prior to the signing of this proxy.
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| | ALTISOURCE PORTFOLIO SOLUTIONS S.A. 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg REVOCABLE PROXY | | | | | | |
| | THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALTISOURCE PORTFOLIO SOLUTIONS S.A. FOR USE ONLY AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 16, 2012, AND AT ANY ADJOURNMENT THEREOF. The undersigned hereby appoints William C. Erbey, William B. Shepro and Kevin J. Wilcox, or any of them, as proxy, with full powers of substitution, and hereby authorizes them to represent and vote, as designated on the reverse side, all the shares of common stock (“Common Stock”) of Altisource Portfolio Solutions S.A. (the “Company”) held of record by the undersigned on March 15, 2012 at the Annual Meeting of Shareholders to be held at the offices of the Company located at 291, route d’Arlon, L-1150 Luxembourg City, Grand Duchy of Luxembourg on Wednesday, May 16, 2012, at 9:00 a.m., Central European Time and at any adjournment thereof. Shares of Common Stock of the Company will be voted as specified. If you execute and return this proxy without specific voting instructions, this proxy will be voted FOR the election of each of the Board of Directors’ nominees to the Board of Directors; FOR the approval of the appointment of Deloitte & Touche LLP to be our independent registered certified public accounting firm for 2012 and Deloitte Audit S.à r.l. to be our certified auditor for all statutory accounts as required by Luxembourg law for the same period; FOR the approval of a share repurchase program whereby Altisource Portfolio Solutions S.A. may repurchase outstanding shares of its Common Stock within certain limits; FOR the approval of the Company’s annual accounts prepared in accordance with Luxembourg GAAP and the Company’s consolidated financial statements prepared in accordance with U.S. GAAP including a footnote reconciliation of equity and net income to IFRS, in each case for the year ended December 31, 2011 (together the “Luxembourg Statutory Accounts”); FOR the receipt and approval of the Directors’ report on the Luxembourg Statutory Accounts for the year ended December 31, 2011; FOR the allocation of the results of the year ended December 31, 2011; and FOR the approval of the discharge of each of the current and past Directors of Altisource for the performance of their mandate during the year ended December 31, 2011. You may revoke this proxy at any time prior to the time it is voted at the Annual Meeting. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders of Altisource Portfolio Solutions S.A. to be held on May 16, 2012, or any adjournment thereof, a Proxy Statement for the Annual Meeting and the 2011 Annual Report to Shareholders of the Company prior to the signing of this proxy. | | |
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| | | | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be dated and signed on the reverse side | | | | | | |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
