Components of Operating Expenses

3 Months Ended

Mar. 31, 2024

Other Income and Expenses [Abstract]

Components of our general and administrative expenses, portfolio management costs, loan acquisition costs, and other expenses for the three months ended March 31, 2024 and 2023 are presented in the following table.

Table 22.1 – Components of Operating Expenses


	Three Months Ended March 31,
(In Thousands)	2024		2023
General and Administrative Expenses
Fixed compensation expense (1)	$	16,257	$	15,359
Annual variable compensation expense	2,917		4,005
Long-term incentive award expense (2)	6,487		7,942
Systems and consulting	3,201		3,112
Office costs	2,082		2,040
Accounting and legal	1,217		919
Corporate costs	872		929
Other	1,536		1,249
Total General and Administrative Expenses	34,569		35,555

Portfolio Management Costs	3,597		3,510

Loan Acquisition Costs
Commissions	881		828
Underwriting costs	682		242
Transfer and holding costs	674		219
Total Loan Acquisition Costs	2,237		1,289

Other Expenses

Amortization of purchase-related intangible assets	2,805		3,107

Other	556		577
Total Other Expenses	3,361		3,684
Total Operating Expenses	$	43,764	$	44,038

(1)Includes $2 million and $1 million of severance and transition-related expenses for the three months ended March 31, 2024 and 2023, respectively.

(2)Includes $1 million and $0.1 million of equity amortization expense related to employee terminations during the three months ended March 31, 2024 and March 31, 2023, respectively. For the three months ended March 31, 2024 and 2023, long-term incentive award expense included $6 million and $6 million of expense, respectively, for awards settleable in shares of our common stock, and $1 million and $2 million of expense, respectively, for awards settleable in cash.

Cash Settled Deferred Stock Units ("csDSUs")

Cash-settled deferred stock units that were granted 2020, 2021, and 2022, each vest over four-year periods and are subject to continued employment through the vesting periods through 2026. These awards will be fully vested and payable in cash with a vested award value based on the closing market price of our common stock on their respective final vesting dates. These awards are classified as liabilities in Accrued expenses and other liabilities on our consolidated balance sheets, and are being amortized over their respective vesting periods on a straight-line basis, adjusted for changes in the value of our common stock at the end of each reporting period. At March 31, 2024, 980,407 csDSUs were outstanding, the liability associated with these awards was $3 million, and the unamortized compensation cost was $3 million. The expense associated with these awards is included in "Long-term incentive award expense," as presented in Table 22.1 above.

Refer to Note 22 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, for additional information regarding long-term cash-based awards and cash-settled deferred stock units.

Cash-Settled Restricted Stock Units ("csRSUs")

During the year ended December 31, 2023, $4 million of csRSUs were granted to certain executive officers that will vest over the next four years through 2027. On each vesting date over the four-year vesting period, cash in an amount equal to the value of the common stock underlying the csRSUs that vest on such vesting date will be distributed to the recipients. These awards are classified as liabilities in Accrued expenses and other liabilities on our consolidated balance sheets, and are being amortized over their respective vesting periods on a straight-line basis, adjusted for changes in the value of our common stock at the end of each reporting period. At March 31, 2024, 535,620 csRSUs were outstanding, the liability associated with these awards was $0.3 million, and unamortized compensation cost of the csRSUs was $3 million. The expense associated with these awards is included in "Long-term incentive award expense," as presented in Table 22.1 above.

Cash Settled Performance Stock Units

During the three months ended March 31, 2023, $6 million of cash-settled performance stock units ("csPSUs") were granted to certain executive and non-executive employees which vest over approximately three years through January 1, 2026. The target number of csPSUs that were granted totaled 663,499 units based on a per unit grant-date fair value of $9.75. The equivalent number of underlying shares of common stock that vest and that the recipient becomes entitled to receive at the time of vesting will generally range from 0% to 250% of the target number of csPSUs granted, with the target number of csPSUs granted being adjusted to reflect the value of any dividends declared on our common stock during the vesting period. Upon vesting, the recipient will receive the settlement of the vested shares in cash based on the closing market price of our common stock on the final vesting date. These awards are classified as liabilities in Accrued expenses and other liabilities on our consolidated balance sheets, and are being amortized over their respective vesting periods on a straight-line basis, adjusted for changes in the value of the csPSUs at the end of each reporting period. At March 31, 2024, the liability associated with these awards was $2 million, and unamortized compensation cost of the csPSUs was $3 million. The expense associated with these awards is included in "Long-term incentive award expense," as presented in Table 22.1 above.

Long-Term Cash-Based Awards

Cash-based retention awards were granted to certain executive and non-executive employees between 2020 and 2023 that vest over one- to three-year periods, and are subject to continued employment through the vesting periods through 2025. At March 31, 2024, the liability associated with these awards was $1 million and the unamortized compensation cost of long-term cash-based awards was $1 million. The expense associated with these awards is included in "Long-term incentive award expense," as presented in Table 22.1 above.