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Employee Compensation and Benefit Plans | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Employee Compensation and Benefit Plans | Note 22 — Employee Compensation and Benefit Plans We maintain defined contribution plans to provide post-retirement benefits to our eligible employees and one non-contributory defined benefit pension plan which is frozen and covers certain eligible active and former employees. We also maintain additional incentive compensation plans for certain employees. We designed these plans to facilitate a pay-for-performance culture, further align the interests of our officers and key employees with the interests of our shareholders and to assist in attracting and retaining employees vital to our long-term success. These plans are summarized below. Defined Contribution Savings Plans We sponsor defined contribution savings plans for eligible employees in the U.S (401(k) plans) and India (Provident Fund). Contributions of participating employees to the plans are matched on the basis specified by these plans. For the 401(k) plans, we match 50% of the first 6% of each eligible participant’s contribution to the 401(k) plans with maximum aggregate matching of $9,900 for 2023. For the Provident Fund, both the employee and the employer are required to make minimum contributions to the fund at a predetermined rate (currently 12%) applied to a portion of the employee's salary. Employers are not required to make contributions beyond this minimum. Our contributions to these plans were $4.3 million, $5.0 million and $5.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. Defined Benefit Pension Plans As of December 31, 2023, Ocwen sponsors a non-contributory defined benefit pension plan for which benefits are based on an employee’s years of credited service and a percentage of final average compensation, or as otherwise described by the Plan. The Plan is frozen and only accrues additional benefits for a limited number of employees while no additional employees are eligible for participation in the plan. The following table shows the total change in the benefit obligation, plan assets and funded status for the pension plan(s):
| December 31, |  |  |  |
| 2023 |  | 2022 |  |  |  |
Projected benefit obligation | $ | 42.2 |  |  | $ | 40.9 |  |  |  |  |
Fair value of plan assets | 39.6 |  |  | 37.5 |  |  |  |  |
Unfunded status recognized in Other liabilities | $ | (2.6) |  |  | $ | (3.4) |  |  |  |  |
Amounts recognized in Accumulated other comprehensive loss | $ | 1.0 |  |  | $ | 2.2 |  |  |  |  |
The rate used to discount the projected benefit obligation of the PHH Corporation Plan decreased from 5.25% in 2022 to 4.75% in 2023, resulting in an increase of $1.9 million in the PHH Corporation Plan’s benefit obligation. The net periodic benefit cost related to the defined benefit pension plans, included in Other expenses, was $0.4 million, $(0.9) million and $(0.9) million for 2023, 2022 and 2021 respectively. As of December 31, 2023, future expected benefit payments to be made from the assets of the PHH Corporation Plan is $3.5 million, for each of the years ending December 31, 2024 and 2025, $3.0 million for the year ending December 31, 2026, and $3.1 million for each of the years ending December 31, 2027 and 2028. The expected benefit payments to be made for the subsequent five years ending December 31, 2028 through 2032 are $15.4 million. Ocwen contributes to the defined benefit pension plans amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws as well as additional amounts at their discretion. Our contributions to the defined benefit pension plans were $0, $0.1 million and $1.0 million for 2023, 2022 and 2021, respectively. Gratuity Plan In accordance with India law, OFSPL provides for a defined benefit retirement plan (Gratuity Plan) covering all of its employees in India. The Gratuity Plan provides a lump-sum payment to vested employees at retirement or termination of employment based upon the respective employee’s salary and years of employment. OFSPL provides for the gratuity benefit through actuarially determined valuations. The following table shows the total change in the benefit obligation, plan assets and funded status for the Gratuity Plan:
| December 31, |  |  |  |
| 2023 |  | 2022 |  |  |  |
Benefit obligation | $ | 6.7 |  |  | $ | 5.9 |  |  |  |  |
Fair value of plan assets | — |  |  | — |  |  |  |  |
Unfunded status recognized in Other liabilities | $ | (6.7) |  |  | $ | (5.9) |  |  |  |  |
During the years ended December 31, 2023, 2022 and 2021, benefits of $0.5 million, $0.7 million, and $0.8 million were paid by OFSPL. As of December 31, 2023, future expected benefit payments to be made from the assets of the Gratuity Plan, which reflect expected future service, is $0.9 million, $0.8 million, $0.8 million, $0.8 million and $0.7 million for the years ending December 31, 2024, 2025, 2026, 2027 and 2028, respectively. The expected benefit payments to be made for the subsequent five years ending December 31, 2028 through 2032 are $2.9 million. Annual Incentive Plan The Ocwen Financial Corporation Amended 1998 Annual Incentive Plan and the 2021 Equity Incentive Plan (the 2021 Equity Plan) are our primary incentive compensation plans for executives, management and other eligible employees. Previously issued equity awards remain outstanding under the 2017 Performance Incentive Plan (the 2017 Equity Plan) and the 2007 Equity Incentive Plan (the 2007 Equity Plan). Under the terms of these plans, participants can earn cash and equity-based awards as determined by the Compensation and Human Capital Committee of the Board of Directors (the Committee). The awards are based on objective and subjective performance criteria established by the Committee. The Committee may at its discretion adjust performance measurements to reflect significant unforeseen events. We recognized $18.7 million, $13.1 million and $23.6 million of compensation expense during 2023, 2022 and 2021, respectively, related to annual incentive compensation awarded in cash. The 2007 Equity Plan, the 2017 Equity Plan and the 2021 Equity Plan authorize the grant of stock options, restricted stock, stock units or other equity-based awards, including cash-settled awards, to employees. Effective with the approval of the 2021 Equity Plan by Ocwen shareholders on May 25, 2021, no new awards have been, or will be, granted under the 2017 Equity Plan. The number of remaining shares available for award grants under the 2017 Equity Plan became available for award grants under the 2021 Equity Plan effective upon shareholder approval. At December 31, 2023, there were 334,763 shares of common stock remaining available for future issuance under these plans. Equity Awards Outstanding equity awards granted under the 2007 Equity Plan, the 2017 Equity Plan and 2021 Equity Plan had the following characteristics in common:
Type of Award |  | Percent of Total Equity Award |  | Vesting Period
2014 Awards: |  |  |  |
Options: |  |  |  |
Servicing Condition - Time-based |  | 25 | % |  | Ratably over four years (25% on each of the four anniversaries of the grant date)
Market Condition: |  |  |  |
Market performance-based |  | 50 |  |  | Over three years beginning with 25% vesting on the date that the stock price has at least doubled over the exercise price and the compounded annual gain over the exercise price is at least 20% and then ratably over three years (25% on each of the next three anniversaries of the achievement of the market condition)
Extraordinary market performance-based |  | 25 |  |  | Over three years beginning with 25% vesting on the date that the stock price has at least tripled over the exercise price and the compounded annual gain over the exercise price is at least 25% and then ratably over three years (25% on each of the next three anniversaries of the achievement of the market condition)
Total Award |  | 100 | % |  |
Type of Award |  | Percent of Total Equity Award |  | Vesting Period
2015 - 2023 Awards: |  |  |  |
Options: |  |  |  |
Service Condition - Time-based |  | 1 | % |  | Ratably over four years (25% vesting on each of the first four anniversaries of the grant date.)
Service Condition - Time-based |  | 3.2 |  |  | Ratably over three years (one-third vesting on each of the first three anniversaries of the grant date).
Stock Units: |  |  |  |
Service Condition - Time-based |  | 30 |  |  | Ratably over three years with one-third vesting on each of the first three anniversaries of the grant date.
Service Condition - Time-based |  | 5 |  |  | Ratably over four years with 25% vesting on each of the first four anniversaries of the grant date.
Market Condition: |  |  |  |
Time-based vesting schedule and Market performance-based vesting date |  | 50 |  |  | Cliff-vest 100% after three years. Vesting of units credited based on Total Shareholder Return (TSR) for any performance period is subject to continued service through the third anniversary of the grant. There is no interim or ratable vesting. The number of performance-based awards that will vest is determined by Ocwen’s TSR, either absolute or relative to a performance peer group, during each performance period.
Time-based vesting schedule and Market performance-based vesting date |  | 10 |  |  | Cliff-vest 100% after one year. Vesting of units credited based on TSR for any performance period is subject to continued service through the first anniversary of the grant.
Total Award |  | 100 | % |  |
The contractual term of all options granted is ten years from the grant date, except where employment terminates by reason of death, disability or retirement, in which case, the agreement may provide for an earlier termination of the options. The terms of the market-based options do not include a retirement provision. Stock units have a one year, three-year or four-year term. All our market-based stock units provide that if the market conditions are not met by the end of the applicable performance measurement period of the award, those units terminate on that date.
| Years Ended December 31,
Stock Options | 2023 |  | 2022 |  | 2021
| Number of Options |  | Weighted Average Exercise Price |  | Number of Options |  | Weighted Average Exercise Price |  | Number of Options |  | Weighted Average Exercise Price
Outstanding at beginning of year | 39,157 |  |  | $ | 141.27 |  |  | 114,658 |  |  | $ | 281.89 |  |  | 124,866 |  |  | $ | 274.30 |
Forfeited / Expired (1) | — |  |  | — |  |  | (75,501) |  |  | 354.83 |  |  | (10,208) |  |  | 189.00 |
Outstanding at end of year (2)(3) | 39,157 |  |  | $ | 141.27 |  |  | 39,157 |  |  | $ | 141.27 |  |  | 114,658 |  |  | $ | 281.89 |
Exercisable at end of year (2)(3)(4) | 34,657 |  |  | $ | 94.46 |  |  | 34,657 |  |  | $ | 94.46 |  |  | 108,754 |  |  | $ | 273.97 |
(1)Includes 74,834 and 10,208 options which expired unexercised in 2022 and 2021, respectively, because their exercise price was greater than the market price of Ocwen’s stock. (2)At December 31, 2023, 4,500 options with a market condition for vesting based on an average common stock trading price of $501.75, had not met their performance criteria. Outstanding and exercisable stock options at December 31, 2023 have a net aggregate intrinsic value of zero . A total of 4,500 market-based options were outstanding at December 31, 2023, of which none were exercisable. (3)At December 31, 2023, the weighted average remaining contractual term of options outstanding and options exercisable was 2.56 years and 2.84 years, respectively. (4)The total fair value of stock options that vested and became exercisable during 2023, 2022 and 2021, based on grant-date fair value, was $0.0 million, $0.0 million and $0.3 million, respectively. In 2019, Ocwen established an annual Long-Term Incentive (LTI) program in connection with changes made by the Committee to the compensation structure of Ocwen’s executives and management. The LTI program is designed to promote actions and decisions aligned with our strategic objectives and reward our executives and other program participants for long-term value creation for our shareholders in a manner that is consistent with our pay-for-performance philosophy. The program includes both a time-vesting component for retention purposes and a performance component to align with pay-for-performance objectives, using TSR as the performance metric. For annual awards granted during 2020 through 2023, market-based performance is measured based on TSR relative to performance peer groups. The LTI awards are granted under the 2021 Equity Incentive Plan and 2017 Equity Plan. The CEO's PRSU award granted in 2021 under the LTI contains a provision that will allow Ocwen to settle a portion of the units in cash in the unlikely event of above-target market-based performance levels resulting in a shortfall of shares available in the equity plan. This will only occur if market-based performance is significantly above target. The hybrid awards granted to certain Ocwen executives contain a provision that will allow Ocwen to settle some or all share units in shares rather than cash, subject to the availability of shares for issuance under the 2017 Equity Plan. We determined that in the case of the hybrid awards, Ocwen has sole discretion in the choice of settlement in shares or cash and it has both the intent and the ability to deliver the shares, therefore we accounted for the hybrid awards as equity-settled awards. Of the annual awards granted under the LTI program in 2023, 2022 and 2021, 50% were performance-based with a market condition and the remaining were time-based. The time-based awards vest equally on the first, second and third anniversaries of the award grant date if the continued employment condition is met. The recurring annual performance-based awards cliff-vest 100% after three years subject to meeting the market-based performance conditions and continuing employment. Because the cash-settled awards must be settled in cash, they are classified as liabilities (Other liabilities) in the consolidated balance sheets and remeasured at fair value at each reporting date with adjustments recorded as Compensation expense in the consolidated statements of operations. In addition to the annual awards granted under the LTI program in 2023, 89,664 performance-based awards with a market condition were granted under the 2021 Equity Plan in July 2023. These awards cliff-vest 100% after one year subject to meeting the market-based performance conditions and continuing employment.
Stock Units - Equity-Classified Awards | Years Ended December 31,
2023 |  | 2022 |  | 2021
| Number of Stock Units |  | Weighted Average Grant Date Fair Value |  | Number of Stock Units |  | Weighted Average Grant Date Fair Value |  | Number of Stock Units |  | Weighted Average Grant Date Fair Value
Unvested at beginning of year | 603,889 |  |  | $ | 27.19 |  |  | 416,226 |  |  | $ | 25.97 |  |  | 261,647 |  |  | $ | 21.74 |
Granted (1) (2) | 421,074 |  |  | 31.40 |  |  | 373,614 |  |  | 28.43 |  |  | 236,593 |  |  | 33.50 |
Vested (3)(4) | (251,810) |  |  | 17.17 |  |  | (109,077) |  |  | 23.11 |  |  | (71,855) |  |  | 33.43 |
Forfeited/Cancelled (5) | (16,215) |  |  | 36.22 |  |  | (76,874) |  |  | 32.42 |  |  | (10,159) |  |  | 39.74 |
Unvested at end of year (6)(7) | 756,938 |  |  | $ | 32.67 |  |  | 603,889 |  |  | $ | 27.19 |  |  | 416,226 |  |  | $ | 25.97 |
(1)Stock units granted in 2023, 2022 and 2021 include 168,950, 147,058 and 115,173 units, respectively, granted to Ocwen’s CEO. Stock units granted in 2023, 2022 and 2021 include 57,515, 13,091 and 4,623 units, respectively, added as a result of a performance factor. Stock units granted in 2022 includes 436 units reclassified from liability-classified awards. (2)Includes 89,664 one-time market performance based awards granted in 2023 to certain employees in connection with their employment. Also, includes 57,187 one-time equity-classified awards granted in 2022, of which 51,546 vest ratably over four years (25% vesting on each of the first four anniversaries of the grant date) and 5,641 awards vest ratably over four years (one-third vesting on each of the first three anniversaries of the grant date). Stock units granted in 2021 includes 117,233 hybrid awards granted to certain Ocwen executives. (3)The total intrinsic value of stock units vested, which is defined as the weighted market value of the stock on the date of vesting, was $6.5 million, $2.2 million and $2.1 million for 2023, 2022 and 2021, respectively. (4)The total fair value of the stock units that vested during 2023, 2022 and 2021, based on grant-date fair value, was $4.3 million, $2.5 million and $2.4 million, respectively. (5)Stock units forfeited/cancelled in 2023 and 2022 includes 11,319 and 42,885 units, respectively, forfeited due to market-based performance under the LTI program. (6)Excluding the 478,263 market-based stock awards that have not met their market-based performance criteria (and time-vesting requirements, where applicable), the net aggregate intrinsic value of stock awards outstanding at December 31, 2023 was $8.6 million. At December 31, 2023, the market-based performance for 396,507 stock units is measured based on TSR relative to Ocwen’s compensation peer group TSR over the four performance periods. (7)At December 31, 2023, the weighted average remaining contractual term of share units outstanding was 1.7 years.
| Years Ended December 31,
Stock Units - Liability-Classified Awards | 2023 |  | 2022 |  | 2021
Unvested units at beginning of year | 620,559 |  |  | 758,626 |  |  | 728,373 |
Granted | 198,624 |  |  | 246,018 |  |  | 233,056 |
Vested | (410,752) |  |  | (191,728) |  |  | (105,974) |
Forfeited/Cancelled (1) | (61,093) |  |  | (204,158) |  |  | (111,507) |
Other (2) | 119,083 |  |  | 11,801 |  |  | 14,678 |
Unvested units at end of year | 466,421 |  |  | 620,559 |  |  | 758,626 |
(1)Units forfeited/cancelled in 2023, 2022 and 2021 include 6,005, 105,552 and 35,000 units, respectively, forfeited due to market-based performance under the LTI program. (2)Includes 118,834, 12,204 and 14,681, units added during 2023, 2022 and 2021, respectively, as a result of market-based performance. The number of performance-based awards that will vest under the annual LTI program awards for 2023, 2022 and 2021 is determined by Ocwen’s TSR relative to a performance peer group (15-18 companies selected by the Committee, unique group for each grant year) during each performance period. Median (50 th percentile) TSR performance will earn the target number of performance-based awards. The awards use four distinct weighted performance periods to measure overall market-based performance – for example for 2023, the period would be three annual periods ending April 3, 2024, 2025, 2026 and one three-year period ending April 3, 2026. Note that the awards do not vest at the end of each performance period. Vesting of units credited based on the TSR for any performance period is subject to continued service through the third anniversary of the grant date. There is no interim or ratable vesting. For all performance-based awards, the number of units earned depends on the level of market-based performance achieved (Threshold = 50%; Target = 100%; Maximum = 200%, with results between levels interpolated). No units will be awarded for performance below the Threshold level. TSR is calculated using the average closing stock prices during the 30 trading days up to and including the beginning and end date of each performance period. The performance-based awards granted in July 2023 will vest on the first anniversary of the grant date based on Ocwen’s TSR compared to the same performance peer group selected for the annual awards, as outlined above for the annual awards. For these awards, the number of units earned depends on the level of market-based performance achieved (Threshold = 50%; Target = 100%; Maximum = 150%, with results between levels interpolated). For performance below the Threshold level, 50% of the target units will be earned. Compensation expense related to all stock-based awards is initially measured at fair value on the grant date using an appropriate valuation model based on the vesting conditions of the awards. Awards classified as liabilities are subsequently remeasured at fair value at each reporting date, as described above. The fair value of the time-based option awards was determined using the Black-Scholes options pricing model. Stock unit awards with only a service condition are valued at their intrinsic value, which is the market value of the stock on the date of the award. The fair value of stock unit awards with both a service condition and a market-based vesting condition is based on the output of a Monte Carlo simulation. The following assumptions were used to value awards:
Monte Carlo | 2023 |  | 2022 |  | 2021
Risk-free interest rate | 3.73% - 5.37% |  | 1.31% - 4.66% |  | 0.01% - 0.77%
Expected stock price volatility (1) | 55.5% - 75.4% |  | 93.8% - 94.7% |  | 95% - 96.4%
Expected dividend yield | —% |  | —% |  | —%
Expected life (in years) | (2) |  | (2) |  | (2)
Fair value | $36.91 - $37.07 |  | $26.53 - $50.99 |  | 36.09 - $62.03
(1)We generally estimate volatility based on the historical volatility of Ocwen’s common stock over the most recent period that corresponds with the estimated expected life of the option. For awards valued using a Monte Carlo simulation, volatility is computed as a blend of historical volatility based on daily stock price returns and implied volatility based on traded options on Ocwen’s common stock. (2)The stock units that contain both a service condition and a market-based condition are valued using the Monte Carlo simulation. The expected term is derived from the output of the simulation and represents the expected time to meet the market-based vesting condition. For equity awards with both service and market conditions, the requisite service period is the longer of the derived or explicit service period. In this case, the explicit service condition (vesting period) is the requisite service period, and the graded vesting method is used for expense recognition. The following table summarizes Ocwen's stock-based compensation expense included as a component of Compensation and benefits expense in the consolidated statements of operations:
| Years Ended December 31,
| 2023 |  | 2022 |  | 2021
Compensation expense - Equity-classified awards |  |  |  |  |
Stock option awards | $ | — |  |  | $ | (0.1) |  |  | $ | 0.3 |
Stock awards | 9.7 |  |  | 4.7 |  |  | 4.5 |
| $ | 9.7 |  |  | $ | 4.6 |  |  | $ | 4.7 |
Compensation expense - Liability-classified awards | $ | 2.7 |  |  | $ | 2.2 |  |  | $ | 15.1 |
Excess tax benefit related to share-based awards | $ | 1.9 |  |  | $ | 0.4 |  |  | $ | 0.5 |
As of December 31, 2023, no unrecognized compensation costs remained related to non-vested stock options. Unrecognized compensation costs related to non-vested stock units as of December 31, 2023 amounted to $12.3 million, which will be recognized over a weighted-average remaining life of 1.7 years. Unrecognized compensation costs related to unvested liability awards as of December 31, 2023 amounted to $6.8 million, which will be recognized over a weighted-average remaining life of 1.0 years.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 710 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//710/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 712 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//712/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 715 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//715/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 718 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//718/tableOfContent + Details
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