ALTISOURCE PORTFOLIO SOLUTIONS SA
For the period ended May 30, 2024. Filed Apr 17, 2024.
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May 30, 2024 · Filed Apr 17, 2024
Contents
PROXY SUMMARY
Proxy Summary
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all information you should consider. Please read this entire proxy statement carefully before voting.
Meeting Information
Date: Thursday, May 30, 2024
Annual Meeting Time: 9:00 a.m. Central European Time
Place: 33, Boulevard Prince Henri, L-1724 Luxembourg City, Grand Duchy of Luxembourg
Record Date: April 3, 2024
Agenda: The meeting will cover the proposals listed below, and any other business that may properly come before the meeting
Annual Meeting, Voting Matters and Recommendations of our Board of Directors
| | Annual Meeting of Shareholders | | |||
|---|---|---|---|---|---|
| | Proposals | | | Recommendation | |
| | (1) Election of Directors | | | ✓ FOR each nominee | |
| | (2) Appointment of our Independent Registered Certified Public Accounting Firm and Certified Auditor | | | ✓ FOR | |
| | (3) Approval of our Luxembourg Statutory Accounts | | | ✓ FOR | |
| | (4) Receipt and Approval of our Directors’ report for the Luxembourg Statutory Accounts and Receipt of the Supervisory Auditor’s report for the Luxembourg Annual Accounts | | | ✓ FOR | |
| | (5) Allocation of the Results in the Luxembourg Annual Accounts | | | ✓ FOR | |
| | (6) Discharge of our Directors and Supervisory Auditor | | | ✓ FOR | |
| | (7) Advisory Vote on Executive Compensation (“Say-on-Pay”) | | | ✓ FOR | |
| | (8) Amendment of our 2009 Equity Incentive Plan (the “Plan”) to increase the number of shares of common stock reserved for issuance under the Plan by an additional 3.3 million shares | | | ✓ FOR | |
Highlights
Altisource is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve. Traded on the Nasdaq Global Select Market under the symbol “ASPS,” Altisource is organized under the laws of the Grand Duchy of Luxembourg.
Set forth below is a partial summary of Altisource’s 2023 performance. Please refer to our 2023 Annual Report filed on Form 10-K for a more complete description of our 2023 performance.
Corporate and Financial
Spent 2023 focused on building a product and sales pipeline, improving operational efficiencies, reducing costs, and strengthening the balance sheet as the Company continued to seek to mitigate the impacts of the COVID-19 pandemic, governmental moratoriums and loss mitigation measures that affect the timing of the recovery of the market for default-related services
Improved total Company loss from operations by $16.4 million in 2023 compared to 2022 by (i) improving operating income as a percentage of service revenue in the Servicer and Real Estate and Origination segments to 19.1% in 2023 from 13.2% in 2022, and (ii) reducing the operating loss from certain corporate functions as a percentage of total Company service revenue to (31.4)% in 2023 from (36.1)% in 2022, primarily through efficiency initiatives and cost savings measures
Amended the senior secured term loans and revolving credit facility to, among other things, extend the maturity dates to April 2025, with the Company’s option to extend the maturity dates to April 2026, subject to certain conditions. The conditions to the extensions to April 2026 include (i) par paydown of the senior secured term loans of at least $30 million, which condition was satisfied in September 2023, (ii) payment of
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a 2% payment-in-kind extension fee on or before April 30, 2025, (iii) representations and warranties being true and correct as of such date, and (iv) there being no default or event of default as of such date
Generated $38.8 million in net proceeds from the sale of common stock and used $30 million to partially repay the term loans; details are as follows:
On February 14, 2023, we closed on an underwritten public offering to sell 4,550,000 shares of our common stock (inclusive of 550,000 shares that were sold pursuant to the underwriters’ full exercise of their option to purchase additional shares of common stock), out of our treasury shares, at a price of $5.00 per share, generating net proceeds of approximately $21.2 million, after deducting the underwriting discounts and commissions and other offering expenses; we used $20 million of the net proceeds to repay the term loans
On September 12, 2023, we closed an underwritten public offering of 5,590,277 shares of our common stock (inclusive of 729,166 shares that were sold pursuant to the underwriters’ exercise of their option to purchase additional shares), out of our treasury shares, at a price to the public of $3.60 per share, generating net proceeds of approximately $18.3 million, after deducting the underwriting discounts and commissions and other offering expenses; we used $10 million of the net proceeds to repay the term loans
As of the Record Date, Altisource holds 3,010,088 shares of common stock as treasury shares under Luxembourg law
Ended the year with $32.5 million of cash and cash equivalents, $15.0 million available under a revolving credit facility and $191.6 million of net debt
Business Segments
In the face of serious market headwinds, service revenue in the Servicer and Real Estate segment was only down 4% and service revenue in the Origination segment outperformed the overall market with a decline of 11% compared to a 36% decline in industrywide residential origination volume
Improved income from operations in the Business Segments by $7.0 million to $26.1 million, representing 19.1% of service revenue, in 2023 compared to $19.0 million, representing 13.2% of service revenue, in 2022, primarily through efficiency and cost cutting initiatives
Ended 2023 with a weighted average sales pipeline between $43 million and $53 million of potential estimated revenue on a stabilized basis based upon forecasted probability of closing (comprised of between $27 million and $33 million in the Servicer and Real Estate segment and between $16 million and $20 million in the Origination segment)
Generated 2023 sales wins which we estimate represent potential annualized revenue on a stabilized basis of $58.4 million for the Servicer and Real Estate segment and $10.3 million for the Origination segment
Industry:
Industrywide foreclosure initiations were 4% lower in 2023 compared to 2022 (and 31% lower than the same pre-COVID-19 period in 2019)
Industrywide foreclosure sales were 8% higher in 2023 compared to 2022 (and 46% lower than the same pre-COVID-19 period in 2019)
Industrywide early-stage mortgage delinquencies (30-days late) increased by 15% and borrowers who have missed two payments (60-days past due) increased by 16% in December 2023 compared to December 2022
Industrywide mortgage origination volume decreased by 36% in 2023 compared to 2022
Industrywide seriously delinquent mortgage rate (90+ day past due and loans in foreclosure) decreased to 1.3% in December 2023 compared to 1.6% in December 2022
Corporate Culture and Community
Our vision and mission statements, together with our core values, which are regularly referenced in our employee communications, guide our conduct and those of our employees.
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Vision statement: Drive innovation that powers the mortgage and real estate lifecycle.
Mission statement: To be the trusted provider of mortgage and real estate solutions that help our customers thrive.
Our Core Values:
Act with Integrity—Exhibit unwavering integrity, compliance and ethical conduct at all times
Energize People—Enable exceptional people to inspire their teams and drive results
Empower Innovation—Reward the relentless creation of innovative and compliant solutions to achieve our mission and generate value for our customers
Exceed Customer Expectations—Deliver best-in-class results and customer service
Win as a Team—Embrace the passion, energy and power of our global teams to win as “One-Altisource”
Enrich Communities—Create positive impacts for the communities where we live and serve
To create a positive impact in the communities where we live and serve, we undertook several initiatives to support the underprivileged.
In the United States, we sponsored numerous events and charitable organizations supporting and addressing the housing needs of veterans. We also partnered with a foundation to help provide scholarships to teen cancer survivors.
In India, we partnered with the Sankalp India Foundation to help provide equipment for the Blood and Thalassemia Centre, provided medicine support for 451 children and provided partial support toward bone marrow transplants for 11 children. We also continued to partner with the Akshaya Patra Foundation, to provide meals to underprivileged students.
During 2023, we did not use corporate funds for the purpose of political advocacy or campaign contributions.
Environment
We recognize the scientific consensus that climate change is a reality and that human activities are responsible for increasing the concentration of heat-trapping gases in the atmosphere. We acknowledge that we and our vendors impact the environment through our activities, in particular those related to transport and selection of materials, employee and vendor travel, and disposal of IT assets. In accordance with our Environmental Policy (available athttp://www.altisource.com/environmental-policy), we are taking action to reduce such impact and our vendor code of conduct requires our vendors to comply with the same Environmental Policy.
A substantial portion of carbon emissions associated with employees commuting to and from work locations was eliminated due to our transition to remote work for most employees.
During 2023, we reduced the square footage of our office locations and continued with our efforts to reduce the use of paper, energy, and water, and achieved our goal of reducing our greenhouse gas emissions by 10% compared to 2022.
At the recommendation of the Corporate Responsibility Management Committee, our Board of Directors established a 2024 target of reducing our greenhouse gas emissions by 5% compared to 2023.
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Sustainability Report (estimates):
| · · · · 2019 · · · 2020 · · · 2021 · · · 2022 · · · 2023 · | ||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| · Facilities · · · % of Facilities · | ||||||||||||||||||||||||||||||||
| | Certified Facilities(1) | | | | | 33% | | | | | | 33% | | | | | | 50% | | | | | | 50% | | | | | | 25% | | |
| | Low-Flow Plumbing | | | | | 56% | | | | | | 67% | | | | | | 67% | | | | | | 67% | | | | | | 75% | | |
| | Rainwater Harvesting | | | | | 11% | | | | | | 17% | | | | | | 33% | | | | | | 50% | | | | | | 75% | | |
| | Carbon Footprint/Greenhouse Gas (direct) | | | CO2 Emitted | | |||||||||||||||||||||||||||
| | Transport – Employee Commuting | | | | | 3,765,000 | | | | | | 1,494,000 | | | | | | 304,000 | | | | | | 200,000 | | | | | | 299,000(3) | | |
| | Refrigeration and Air Conditioning(2) | | | | | 274,000 | | | | | | 325,000 | | | | | | 202,000 | | | | | | 104,000 | | | | | | 70,000 | | |
| | Fire Suppression(2) | | | | | 5,000 | | | | | | 5,000 | | | | | | 5,000 | | | | | | 290 | | | | | | 290 | | |
| | Business Travel | | | | | 424,000 | | | | | | 115,000 | | | | | | 54,000 | | | | | | 70,000 | | | | | | 25,000 | | |
| | Carbon Footprint/Greenhouse Gas (indirect) | | | Units Consumed | | |||||||||||||||||||||||||||
| | Paper Cups (number) | | | | | 178,507 | | | | | | 26,640 | | | | | | 3,960 | | | | | | 3,700 | | | | | | 4,410(3) | | |
| | Paper Sheets (number) | | | | | 1,508,190 | | | | | | 223,300 | | | | | | 70,280 | | | | | | 50,800 | | | | | | 36,540 | | |
| | Paper Towels (units) | | | | | 40,388 | | | | | | 8,491 | | | | | | 896 | | | | | | 420 | | | | | | 974(3) | | |
| | Power (kWh) | | | | | 5,542,196 | | | | | | 1,512,392 | | | | | | 1,071,843 | | | | | | 1,351,618 | | | | | | 445,899 | | |
| | Water (liters) | | | | | 27,921,888 | | | | | | 6,191,957 | | | | | | 3,103,890 | | | | | | 2,248,190 | | | | | | 1,346,016 | | |
| | Recycle and Reduce | | | % Of Total Facilities | | |||||||||||||||||||||||||||
| | Plastic Recycling | | | | | 56% | | | | | | 50% | | | | | | 67% | | | | | | 83% | | | | | | 67% | | |
| | Paper Recycling | | | | | 56% | | | | | | 50% | | | | | | 67% | | | | | | 83% | | | | | | 75% | | |
| | Permanent Kitchenware | | | | | 56% | | | | | | 67% | | | | | | 67% | | | | | | 67% | | | | | | 50%(4) | | |
| | E-Recycling | | | | | 78% | | | | | | 83% | | | | | | 100% | | | | | | 100% | | | | | | 100% | | |
(1)
Facilities which have obtained industry standard certifications such as BREEAM (the Building Research Establishment Environmental Assessment Method), LEED (Leadership in Energy and Environmental Design), ENERGY STAR® or similar certifications demonstrating energy efficient practice. During 2023, we closed a certified facility, which reduced the 2023 percentage.
(2)
Refrigeration, air conditioning and fire suppression use materials which contribute to greenhouse gas emissions. We will be identifying any possible opportunities to reduce our carbon footprint from these emissions.
(3)
Increase attributable to an increase in the number and frequency ofemployees present in certain facilities.
(4)
Reduction due to changes to facility mix, reducing number of facilities at which plastic and paper recycling occurs and at which the use of permanent kitchenware is available.
Emissions by Region:
| · Country · · · U.S. · · · India · · · Uruguay · · · Luxembourg · | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Percentage of Altisource Direct GHG Contribution by Country | | | | | 19.3% | | | | | | 11.4% | | | | | | 68.5% | | | | | | 0.8% | | |
In 2024, we intend to continue to assess our real estate portfolio, telecommuting and transport programs to evaluate ways to further reduce our impact on the environment, including by implementing and continuing to foster remote working arrangements.
Human Rights
We acknowledge that our business activities may pose certain risks on human rights in relation to workplace safety and fair conditions of employment.
We have undertaken several efforts to reduce and mitigate these risks and remain committed to the respect of human rights as described in our Human Rights Statement (available atwww.altisource.com/humanrights). Among other things, this document reaffirms the Company’s commitment to respect all applicable legal rights of freedom of association and collective bargaining as applicable in the different locations where we operate, to provide a safe and healthy workplace, foster socially responsible businesses in which women and minorities can
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participate on an equal basis and adhere to applicable laws intended to promote human rights. Consistent with the principles set forth in our Code of Business Conduct and Ethics, and other policies and procedures, our Human Rights Statement prohibits forced labor and child labor. We have developed policies and procedures to establish and foster an equal opportunity and non-discrimination culture.
Our Vendor Code of Business Conduct and Ethics (available athttps://www.altisource.com/vendorscodeofconduct), which is generally made a part of our vendor agreements, requires vendors to embed respect for human rights into their business operations and prohibits: (i) the employment of child labor; and (ii) the use of any compulsory, involuntary or forced labor which includes slavery, forced contract, human trafficking and any other form of work that is done against a worker’s will.
Workforce and Diversity
Our global workforce consists of various diverse talent groups. The majority of our employees support our Servicer and Real Estate, and Origination businesses; we also have a significant number of technology employees developing and maintaining our technology-enabled solutions and infrastructure. As of December 31, 2023, we had 1,071 employees. In the United States, in addition to supporting operations, a number of our employees fill roles that require professional licenses and work in product, sales and marketing, and corporate functions. In India, our workforce primarily comprises the teams that support operations, technology, and corporate functions, while in Uruguay, the workforce supports operations and several corporate functions. The executive management team is largely based in Luxembourg, our headquarters.
Our people practices aim to develop our workforce and retain high performers. In 2023, we retained 92% of employees deemed high performers, excluding Company initiated separations. We had regular touchpoints through the employee life cycle, including one-on-one connects, skip meetings and employee surveys to understand the employee needs and align our people practices accordingly to meet these needs. During the year, our human resources team continued to implement initiatives to expand diversity, equity and inclusion. Initiatives included training and awareness sessions for managers, women leadership talks, mentoring initiatives for the diverse population, awareness campaigns on pride, and mental health and cultural history months. There were also several events focusing on both physical and mental wellness in a remote environment.
We continued to emphasize employee development and training. Each of our employees on average undertook 21 hours of training in 2023, including a mix of functional, compliance and behavioral learning programs. We expanded our learning modules in 2023, which include podcasts, behavioral learning programs and several other self-paced online programs, in addition to our regular online trainings.
Gender Distribution:
We believe that our globally diverse, inclusive, and collaborative workforce makes us a more innovative and creative organization. We are an equal opportunity employer, and our policies prohibit unlawful discrimination
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or harassment of any kind, including on the basis of race, color, caste, creed, religion, national origin, ancestry, citizenship status, age, sex or gender (including pregnancy, childbirth, and related medical conditions), gender identity or expression (including transgender status), sexual orientation, marital status, military service and veteran status, physical or mental disability, protected medical condition as defined by applicable law, genetic information, or any other characteristic protected by applicable law. At Altisource, everyone is valued and appreciated for their distinct contributions to the growth and sustainability of our business. The same principles are included in our Vendor Code of Business Conduct and Ethics.
In the United States, 24% of leadership roles (Director and above) are held by women and 24% by people of color, while 47% of employees are women and 41% are people of color. Our focus on creating awareness through diversity learning workshops, panel discussions with employees and promotion of a diversity statement helps to provide a comprehensive ecosystem for diversity to flourish.
We value diversity among our supply chain, the overall percentage of minority, LGBTQ+, disabled and veteran owned businesses that provide services to the Company has grown steadily over the past three years.
As highlighted in our Human Rights Statement, employee health and well-being are critical to us. We did not receive any formal employee complaints regarding health and safety during 2023, and to our knowledge, we have not experienced any work-related accidents during the last three years.
As a result of the pandemic’s impact on the default market and our default related businesses, and the impact that higher interest rates had on certain of our origination related businesses, we made the difficult decision to reduce our global workforce in 2023 to better align our staffing levels to revenue. These initiatives impacted approximately 33% of our global workforce throughout the year.
Shareholder Engagement
We seek to engage with our shareholders and analysts through our quarterly earnings calls, which typically follow our quarterly financial filings with the Securities and Exchange Commission (“SEC”). During 2023, we met with shareholders collectively representing a majority of our outstanding shares, as well as analysts, to discuss a variety of matters, including Company strategy, business performance and operations, compensation practices and capital structure.
Board Composition and Experience
Our Board of Directors and Nomination/Governance Committee are committed to ensuring that our Board of Directors is comprised of directors who collectively provide a significant breadth of experience, the ability to effectively chart the strategic course of the Company, represent the interests of shareholders and reflect our corporate values of integrity and ethical conduct. During 2023, when discussing the future of our Board of Directors, our Nomination/Governance Committee continued to consider the potential benefits of onboarding candidates with relevant experience that reflect the diversity of the society where we operate.
Our Board of Directors has nominated all our current directors for reelection at the Annual Meeting.
Current Board of Directors’ skills and expertise:
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Our Board of Directors also believes that having directors with a mix of tenure helps to maintain and leverage institutional knowledge while providing different experiences and perspectives.
Board of Directors’ tenure and current members:
Corporate Governance Practices
✓
Annual election of directors
✓
Majority of independent directors
✓
Active shareholder engagement
✓
Shareholder meetings can be called by shareholders owning at least 10% of our share capital
✓
Share ownership requirements for non-management Directors and the Chief Executive Officer
✓
Annual self-evaluations of our Board of Directors and Committee
✓
Lead Independent Director role facilitates independent Board of Directors’ oversight of management
✓
Regular executive sessions of independent directors
✓
Regular executive sessions of the Audit Committee members with the Company’s internal auditor
✓
Regular executive sessions of the Audit Committee members with the Company’s external auditor
✓
Board of Directors’ engagement in strategic objectives
✓
Board of Directors’ evaluation of the Chief Executive Officer’s performance
✓
Board of Directors’ engagement in long-term succession planning for executives
✓
Board of Directors oversees strategy, financial performance, and risk management and controls
✓
No shareholder rights plan (“poison pill”)
✓
Board of Directors’ involvement in corporate social responsibility and sustainability efforts
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Executive Compensation Highlights
✓
Aligns executive compensation with the interests of our shareholders
✓
Annual opportunity for shareholders to provide feedback through an advisory Say-on-Pay vote on executive compensation
✓
Based on a pay-for-performance philosophy
✓
Maintains a clawback policy, updated in 2023 in accordance with Nasdaq listing standards and SEC rules
✓
More than 50% of our named executive officers’ target compensation is linked to individual and Company performance metrics
✓
A substantial portion of our named executive officers’ target compensation is in the form of long-term equity awards
✓
A portion of our named executive officers’ long-term equity awards vest based on Company performance against designated financial metrics multiplied by the total shareholder return over a designated period, as benchmarked against the Russell 2000®, which multiplier may increase or decrease the value of such award
✓
Determination of the annual incentive compensation pool is based on the Company’s performance against established financial objectives
✓
Determination of annual incentive compensation is based on performance against a scorecard with defined goals
✓
Eligibility for payment of annual incentive compensation is tied to financial effectiveness, compliance performance and leadership effectiveness
✓
Includes components based on Company and stock performance over a multi-year period
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.