Altisource reshuffles executive compensation with equity focus

Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), whose stock has declined over 75% in the past year and currently trades near $0.69, has made significant changes to its executive compensation structure, according to a recent 8-K filing with the Securities and Exchange Commission. According to InvestingPro analysis, the company appears undervalued despite its challenging market performance, with additional insights available through their comprehensive Pro Research Report. On Monday, the company’s Compensation Committee approved incentive compensation awards for executive officers under the 2024 Annual Incentive Plan (AIP), which was adopted on December 19, 2023.

Under the 2024 AIP, CEO William B. Shepro was set to receive a target annual incentive compensation of $1,425,530, while CFO Michelle D. Esterman and Chief Legal Officer Gregory J. Ritts had targets of $300,000 and $246,000, respectively. Performance metrics for the plan included objectives related to Consolidated Service Revenue, Adjusted EBITDA, and Support Function Budget, with varying contributions to each executive’s bonus. The company’s latest financial data shows revenue of $153.28 million for the last twelve months, with a gross profit margin of 29.7%.

The Committee determined that the performance metrics were partially achieved, with approximately 84% for Service Revenue and 87% for Adjusted EBITDA. As a result, Shepro, Esterman, and Ritts achieved 60.4%, 70.6%, and 67.2% of their target incentives, respectively, translating to earned compensations of $861,475, $211,663, and $165,210.

However, in a notable shift, the entire 2024 annual incentive compensation for these officers was paid in Restricted Stock Units (RSUs), rather than the usual mix of cash and RSUs. The RSUs will vest over two years, contingent on continued employment, with 60% vesting on the first anniversary and the remaining 40% on the subsequent anniversary.

The total Bonus Pool (NASDAQ:POOL) for the 2024 AIP was initially set at $4.742 million. Still, the Committee established the total number of RSUs available for distribution at 1.827 million, approximately 2.1% of the company’s outstanding shares. This adjustment created a Bonus Pool value of $1,297,170, based on a share price of $0.71.

Shepro voluntarily recommended a reallocation of his earned RSUs, reducing his share by 76.7% to redistribute to other employees. Consequently, Esterman and Ritts received additional RSUs for their roles in the company’s recent financial transactions.

Looking ahead, the 2025 AIP was also adopted on Monday, featuring performance metrics focused on Adjusted EBITDA, strategic objectives, and Support Function Budget. The target bonus amounts for the NEOs remain the same as in 2024.

This strategic move to adjust executive compensation reflects Altisource’s focus on aligning leadership incentives with company performance and shareholder interests. The information is based on the SEC filing by Altisource Portfolio Solutions S.A.

In other recent news, Altisource Portfolio Solutions has experienced several notable developments. The company received a credit rating upgrade from S&P Global Ratings to ’CCC+’ due to a successful distressed debt exchange that reduced its debt and extended maturity to April 2030. This exchange, however, was initially viewed as distressed by S&P, resulting in an earlier downgrade to ’SD’. The rating agency now anticipates Altisource will generate positive cash flow but expects liquidity to remain constrained. Additionally, Altisource made significant changes to its corporate structure, reducing the par value of its common stock from $1.00 to $0.01 and expanding the board’s authorization to issue up to 250 million shares. In executive compensation news, Altisource’s top executives, including CEO William B. Shepro, reverted to receiving full salaries in cash, reversing a previous cost-cutting measure. Furthermore, new Management RSUs have been granted to incentivize management, contingent upon the closing of pending term loan restructuring transactions. These strategic moves highlight Altisource’s efforts to adjust its financial and corporate strategy amid ongoing challenges.

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