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SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION | SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Share Repurchase Program On May 16, 2023, our shareholders approved the renewal and amendment of the share repurchase program previously approved by the shareholders on May 15, 2018. Under the program, we are authorized to purchase up to 3.1 million shares of our common stock, based on a limit of 15% of the outstanding shares of common stock on the date of approval, at a minimum price of $1.00 per share and a maximum price of $25.00 per share, for a period of five years from the date of approval. As of September 30, 2023, approximately 3.1 million shares of common stock remain available for repurchase under the program. There were no purchases of shares of common stock during the nine months ended September 30, 2023 and 2022. Luxembourg law limits share repurchases to the balance of Altisource Portfolio Solutions S.A. (unconsolidated parent company) retained earnings, less the value of shares repurchased. As of September 30, 2023, we can repurchase up to approximately $60 million of our common stock under Luxembourg law. Under the Amended Credit Agreement, we are not permitted to repurchase shares except for limited circumstances. Public offerings of Common Stock On February 14, 2023, Altisource closed on an underwritten public offering to sell 4,550,000 shares of its common stock, at a price of $5.00 per share, generating net proceeds of $20.5 million, after deducting the underwriting discounts and commissions and other offering expenses. On September 7, 2023, Altisource closed on an underwritten public offering to sell 5,590,277 shares of its common stock, at a price of $3.60 per share, generating net proceeds of $18.4 million, after deducting the underwriting discounts and commissions and other offering expenses. Share-Based Compensation We issue share-based awards in the form of stock options, restricted shares and restricted share units for certain employees, officers and directors. We recognized share-based compensation expense of $3.9 million and $3.9 million for the nine months ended September 30, 2023 and 2022, respectively ($1.2 million and $1.3 million for the third quarter of 2023 and 2022, respectively). As of September 30, 2023, estimated unrecognized compensation costs related to share-based awards amounted to $3.2 million, which we expect to recognize over a weighted average remaining requisite service period of approximately 1.16 years. Stock Options Stock option grants are composed of a combination of service-based, market-based and performance-based options. Service-Based Options. These options generally vest over three or four years with equal annual vesting and generally expire on the earlier of ten years after the date of grant or following termination of service. A total of 182 thousand service-based options were outstanding as of September 30, 2023. Market-Based Options. These option grants generally have two components, each of which vests only upon the achievement of certain criteria. The first component, which we refer to as “ordinary performance” grants, generally consists of two-thirds of the market-based grant and begins to vest if the stock price is at least double the exercise price, as long as the stock price realizes a compounded annual gain of at least 20% over the exercise price. The remaining third of the market-based options, which we refer to as “extraordinary performance” grants, generally begins to vest if the stock price is at least triple the exercise price, as long as the stock price realizes a compounded annual gain of at least 25% over the exercise price. Market-based options vest in three or four year installments with the first installment vesting upon the achievement of the criteria and the remaining installments vesting thereafter in equal annual installments. Market-based options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service or in the final three years of the option term, in which case vesting will generally continue in accordance with the provisions of the award agreement. A total of 96 thousand market-based options were outstanding as of September 30, 2023. Performance-Based Options. These option grants generally will vest if certain specific financial measures are achieved; typically with one-fourth vesting on each anniversary of the grant date. The award of performance-based options is adjusted based on the level of achievement specified in the award agreements. If the performance criteria achieved is above threshold performance levels, participants generally have the opportunity to vest in 50% to 200% of the option grants, depending upon performance achieved. If the performance criteria achieved is below a certain threshold, the options are canceled. The options generally expire on the earlier of ten years after the date of grant or following termination of service, unless the performance criteria is met prior to termination of service in which case vesting will generally continue in accordance with the provisions of the award agreement. There were 461 thousand performance-based options outstanding as of September 30, 2023. There were no stock option grants during the nine months ended September 30, 2023. The Company granted 105 thousand stock options (at a weighted average exercise price of $11.86 per share) for the nine months ended September 30, 2022. The fair values of the performance-based options are determined using the Black-Scholes option pricing model. The following assumptions were used to determine the fair values as of the grant date:
|  | Nine months ended September 30, 2022 |  |  |  |
|  | Black-Scholes |  |  |  |  |  |
Risk-free interest rate (%) |  | 1.62 |  |  |  |  |  |  |
Expected stock price volatility (%) |  | 67.75 |  |  |  |  |  |  |
Expected dividend yield |  | — |  |  |  |  |  |  |
Expected option life (in years) |  | 6 |  |  |  |  |  |
Fair value |  | $ | 7.27 |  |  |  |  |  |  |
We determined the expected option life of all service-based stock option grants using the simplified method, determined based on the graded vesting term plus the contractual term of the options, divided by two. We use the simplified method because we believe that our historical data does not provide a reasonable basis upon which to estimate expected option life. The following table summarizes the grant date fair value of stock options that vested during the periods presented:
|  | Nine months ended September 30,
(in thousands, except per share data) |  | 2023 |  | 2022
Weighted average grant date fair value of stock options granted per share |  | $ | — |  |  | $ | 8.19 |
Intrinsic value of options exercised |  | — |  |  | — |
Grant date fair value of stock options that vested |  | 83 |  |  | 1,031 |
The following table summarizes the activity related to our stock options:
| Number of options |  | Weighted average exercise price |  | Weighted average contractual term (in years) |  | Aggregate intrinsic value (in thousands)
Outstanding as of December 31, 2022 | 745,277 |  |  | $ | 27.03 |  |  | 4.83 |  | $ | — |
Granted | — |  |  | — |  |  |  |  |
Forfeited | (6,088) |  |  | 25.26 |  |  |  |  |
Outstanding as of September 30, 2023 | 739,189 |  |  | 27.04 |  |  | 4.09 |  | — |
Exercisable as of September 30, 2023 | 543,701 |  |  | 25.27 |  |  | 3.50 |  | — |
Other Share-Based Awards The Company’s other share-based and similar types of awards are comprised of restricted shares and restricted share units. The restricted shares and restricted share units are comprised of a combination of service-based awards, performance-based awards, market-based awards and performance and market-based awards. Service-Based Awards. These awards generally vest over one-to-four-year periods. A total of 907 thousand service-based awards were outstanding as of September 30, 2023. Performance-Based Awards. These awards generally vest if certain specific financial measures are achieved; generally one-third vests on each anniversary of the grant date or cliff-vest on the third anniversary of the grant date. The number of performance-based restricted shares and restricted share units that may vest is based on the level of achievement as specified in the award agreements. If the performance criteria achieved is above certain financial performance levels and Altisource’s share performance is above certain established criteria, participants have the opportunity to vest in up to 150% of the restricted share unit award for certain awards. If the performance criteria achieved is below certain thresholds, the award is canceled. A total of 141 thousand performance-based awards were outstanding as of September 30, 2023. Market-Based Awards. 50% of these awards generally vest if certain specific market conditions are achieved over a 30-day period and the remaining 50% of these awards generally vest on the one year anniversary of the initial vesting. The Company estimates the grant date fair value of these awards using a lattice (binomial) model. A total of 112 thousand market-based awards were outstanding as of September 30, 2023. Performance-Based and Market-Based Awards. These awards generally vest if certain specific financial measures are achieved and if certain specific market conditions are achieved. If the performance criteria achieved is above certain financial performance levels and Altisource’s share performance is above certain established criteria, participants have the opportunity to vest in up to 300% of the restricted share unit award for certain awards. If the performance criteria or the market criteria is below certain thresholds, the award is canceled. The Company estimates the grant date fair value of these awards using a Monte Carlo simulation model. A total of 125 thousand performance-based and market-based awards were outstanding as of September 30, 2023. The Company granted 891 thousand restricted share units (at a weighted average grant date fair value of $4.82 per share) during the nine months ended September 30, 2023. These grants include 57 thousand awards that include both a performance condition and a market condition and 57 thousand performance-based awards, for the nine months ended September 30, 2023. The Company granted 46 thousand awards that include both a performance condition and a market condition and 46 thousand performance-based awards, for the nine months ended September 30, 2022. The following table summarizes the activity related to our restricted shares and restricted share units:
| Number of restricted shares and restricted share units
Outstanding as of December 31, 2022 | 755,006 |
Granted | 890,810 |
Issued | (213,576) |
Forfeited/canceled | (147,241) |
Outstanding as of September 30, 2023 | 1,284,999 |

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- Definition The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//505/tableOfContent Reference 2: 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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