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Employee Compensation and Benefit Plans | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Employee Compensation and Benefit Plans | Note 23 — 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) plan) 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 $10,350 for 2024. 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. Our contributions to these plans were $4.3 million, $4.3 million and $5.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. Defined Benefit Pension Plan As of December 31, 2024, Onity sponsors the PHH Corporation Pension Plan (The Plan), 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 benefit obligation, plan assets and funded status for the Plan:
| December 31, |  |  |  |
| 2024 |  | 2023 |  |  |  |
Projected benefit obligation | $ | 18.2 |  |  | $ | 42.2 |  |  |  |  |
Fair value of plan assets | 19.1 |  |  | 39.6 |  |  |  |  |
Overfunded (unfunded) status recognized in Other liabilities | $ | 0.9 |  |  | $ | (2.6) |  |  |  |  |
Amounts recognized in Accumulated other comprehensive income (loss) | $ | 1.3 |  |  | $ | (1.0) |  |  |  |  |
In May 2024, the Plan purchased $17.0 million annuities to transfer to a third party the obligation to pay benefits to selected participants or their beneficiaries. This partial settlement resulted in a reduction in the Plan's assets and the projected benefit obligation, representing the fair value of the assets at the time of the annuity purchase. The rate used to discount the projected benefit obligation of the Plan increased from 4.75% in 2023 to 5.50% in 2024, contributing to a decrease of $2.8 million in the Plan’s benefit obligation. The net periodic benefit cost related to the defined benefit pension plans, included in Other expenses, was $(0.6) million, $0.4 million and $(0.9) million for 2024, 2023 and 2022 respectively. As of December 31, 2024, future expected benefit payments to be made from the assets of the Plan is $1.4 million, for each of the years ending December 31, 2025 and 2026, $1.5 million for each of the years ending December 31, 2027, 2028 and 2029. The expected benefit payments to be made for the subsequent five years ending December 31, 2030 through 2034 are $7.1 million. Onity contributes to the defined benefit pension plan 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 $0.6 million, $0.0 million and $0.1 million for 2024, 2023 and 2022, respectively. If PHH Corporation completes a full settlement of the Plan in the future, it may be required to make additional contributions for any unfunded obligation at that time. 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 benefit obligation, plan assets and funded status for the Gratuity Plan:
| December 31, |  |  |  |
| 2024 |  | 2023 |  |  |  |
Benefit obligation | $ | 7.6 |  |  | $ | 6.7 |  |  |  |  |
Fair value of plan assets | — |  |  | — |  |  |  |  |
Unfunded status recognized in Other liabilities | $ | (7.6) |  |  | $ | (6.7) |  |  |  |  |
During the years ended December 31, 2024, 2023 and 2022, benefits of $0.4 million, $0.5 million, and $0.7 million were paid by OFSPL. As of December 31, 2024, future expected benefit payments to be made from the assets of the Gratuity Plan, which reflect expected future service, is $1.1 million, $1.1 million, $1.0 million, $0.9 million and $0.8 million for the years ending December 31, 2025, 2026, 2027, 2028 and 2029, respectively. The expected benefit payments to be made for the subsequent five years ending December 31, 2030 through 2034 are $3.2 million. Annual Incentive Plan The Onity Group Inc. 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 $29.0 million, $18.7 million and $13.1 million of compensation expense during 2024, 2023 and 2022, 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 Onity 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, 2024, there were 542,752 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
2015 - 2024 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 |  |  | Ratably over three years (one-third vesting on each of the first three anniversaries of the grant date).
Stock Units: |  |  |  |
Service Condition - Time-based |  | 38 |  |  | Ratably over three years with one-third vesting on each of the first three anniversaries of the grant date.
Service Condition - Time-based |  | 4 |  |  | Ratably over four years with 25% vesting on each of the first four anniversaries of the grant date.
Service Condition - Time-based |  | 1 |  |  | Cliff-vest 100% after one year, six months from the grant date.
Type of Award |  | Percent of Total Equity Award |  | Vesting Period
Market Condition: |  |  |  |
Time-based vesting schedule and Market performance-based vesting date |  | 53 |  |  | 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 Onity’s TSR, either absolute or relative to a performance peer group, during each performance period.
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 | 2024 |  | 2023 |  | 2022
| 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 |  |  | 39,157 |  |  | $ | 141.27 |  |  | 114,658 |  |  | $ | 281.89 |
Forfeited / Expired (1) | (11,426) |  |  | 278.79 |  |  | — |  |  | — |  |  | (75,501) |  |  | 354.83 |
Outstanding at end of year (2)(3) | 27,731 |  |  | $ | 84.61 |  |  | 39,157 |  |  | $ | 141.27 |  |  | 39,157 |  |  | $ | 141.27 |
Exercisable at end of year (2)(3)(4) | 27,731 |  |  | $ | 84.61 |  |  | 34,657 |  |  | $ | 94.46 |  |  | 34,657 |  |  | $ | 94.46 |
(1)Includes 11,426 and 74,834 options which expired unexercised in 2024 and 2022, respectively, because their exercise price was greater than the market price of Onity’s stock. (2)Outstanding and exercisable stock options (all are service condition time-based), at December 31, 2024 have a net aggregate intrinsic value of zero . (3)At December 31, 2024, the weighted average remaining contractual term of options outstanding and options exercisable was 2.5 years and 2.5 years, respectively. (4)The total fair value of stock options that vested and became exercisable during 2024, 2023 and 2022, based on grant-date fair value, was $0.0 million for each of the years. In 2019, Onity established an annual Long-Term Incentive (LTI) program in connection with changes made by the Committee to the compensation structure of Onity’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 2024, 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. Of the annual awards granted under the LTI program in 2024, 2023 and 2022, 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 2024, 9,147 (liability-classified) and 7,405 (equity-classified) time-based units with a service condition were granted under the 2021 Equity Plan to certain employees in connection with their employment. The equity-classified awards cliff-vest 100% after one and one-half years subject continuing employment. The liability-classified awards vest ratably over periods ranging from nine months to three years, subject to continuing employment.
Stock Units - Equity-Classified Awards | Years Ended December 31,
2024 |  | 2023 |  | 2022
| 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 | 756,938 |  |  | $ | 32.67 |  |  | 603,889 |  |  | $ | 27.19 |  |  | 416,226 |  |  | $ | 25.97 |
Granted (1) (2) | 315,165 |  |  | 30.57 |  |  | 421,074 |  |  | 31.40 |  |  | 373,614 |  |  | 28.43 |
Vested (3)(4) | (280,589) |  |  | 33.08 |  |  | (251,810) |  |  | 17.17 |  |  | (109,077) |  |  | 23.11 |
Forfeited/Cancelled (5) | (95,189) |  |  | 36.76 |  |  | (16,215) |  |  | 36.22 |  |  | (76,874) |  |  | 32.42 |
Unvested at end of year (6)(7) | 696,325 |  |  | $ | 30.93 |  |  | 756,938 |  |  | $ | 32.67 |  |  | 603,889 |  |  | $ | 27.19 |
(1)Stock units granted in 2024, 2023 and 2022 include 153,080, 168,950 and 147,058 units, respectively, granted to Onity’s CEO. Stock units granted in 2024, 2023 and 2022 include 8,153, 57,515 and 13,091 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 7,405 one-time service condition based awards granted in 2024 to certain employees in connection with their employment. 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). (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 $7.4 million, $6.5 million and $2.2 million for 2024, 2023 and 2022, respectively. (4)The total fair value of the stock units that vested during 2024, 2023 and 2022, based on grant-date fair value, was $9.3 million, $4.3 million and $2.5 million, respectively. (5)Stock units forfeited/cancelled in 2024, 2023 and 2022 includes 95,189, 11,319 and 42,885 units, respectively, forfeited due to market-based performance. (6)Excluding the 385,690 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, 2024 was $9.5 million. . (7)At December 31, 2024, the weighted average remaining contractual term of share units outstanding was 1.8 years.
| Years Ended December 31,
Stock Units - Liability-Classified Awards | 2024 |  | 2023 |  | 2022
Unvested units at beginning of year | 466,421 |  |  | 620,559 |  |  | 758,626 |
Granted | 213,588 |  |  | 198,624 |  |  | 246,018 |
Vested | (187,056) |  |  | (410,752) |  |  | (191,728) |
Forfeited/Cancelled (1) | (72,045) |  |  | (61,093) |  |  | (204,158) |
Other (2) | 6,884 |  |  | 119,083 |  |  | 11,801 |
Unvested units at end of year | 427,792 |  |  | 466,421 |  |  | 620,559 |
(1)Units forfeited/cancelled in 2024, 2023 and 2022 include 43,899, 6,005 and 105,552 units, respectively, forfeited due to market-based performance under the LTI program. (2)Includes 8,228, 118,834 and 12,204, units added during 2024, 2023 and 2022, respectively, as a result of market-based performance. The number of performance-based awards that will vest under the annual LTI program awards for 2024, 2023 and 2022 is determined by Onity’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 vested on the first anniversary of the grant date based on Onity’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 depended on the level of market-based performance achieved (Threshold = 50% or less; Target = 100%; Maximum = 150% or more, with results between levels interpolated). 50% of the target units were 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 | 2024 |  | 2023 |  | 2022
Risk-free interest rate | 4.40% |  | 3.73% - 5.37% |  | 1.31% - 4.66%
Expected stock price volatility (1) | 50.6% |  | 55.5% - 75.4% |  | 93.8% - 94.7%
Expected dividend yield | —% |  | —% |  | —%
Expected life (in years) | (2) |  | (2) |  | (2)
Fair value | $33.57 |  | $36.91 - $37.07 |  | 26.53 - $50.99
(1)We generally estimate volatility based on the historical volatility of Onity’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 Onity’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 straight-line method is used for expense recognition. The following table summarizes Onity's stock-based compensation expense included as a component of Compensation and benefits expense in the consolidated statements of operations:
| Years Ended December 31,
| 2024 |  | 2023 |  | 2022
Compensation expense - Equity-classified awards |  |  |  |  |
Stock option awards | $ | — |  |  | $ | — |  |  | $ | (0.1) |
Stock awards | 7.8 |  |  | 9.7 |  |  | 4.7 |
| $ | 7.8 |  |  | $ | 9.7 |  |  | $ | 4.6 |
Compensation expense - Liability-classified awards | $ | 3.9 |  |  | $ | 2.7 |  |  | $ | 2.2 |
Excess tax benefit related to share-based awards | $ | (0.2) |  |  | $ | 1.9 |  |  | $ | 0.4 |
As of December 31, 2024, no unrecognized compensation costs remained related to non-vested stock options. Unrecognized compensation costs related to non-vested stock units as of December 31, 2024 amounted to $11.1 million, which will be recognized over a weighted-average remaining life of 1.8 years. Unrecognized compensation costs related to unvested liability awards as of December 31, 2024 amounted to $7.7 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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