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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022
OR
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER: 001-36063
Altisource Asset Management Corporation
(Exact name of registrant as specified in its charter)
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U.S. Virgin Islands |
66-0783125 |
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(State or other jurisdiction of incorporation or
organization) |
(I.R.S. Employer Identification No.) |
5100 Tamarind Reef
Christiansted, U.S. Virgin Islands 00820
(Address of principal executive office)
(704) 275-9113
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class |
Trading Symbol(s) |
Name of Exchange on which Registered |
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Common stock, par value $0.01 per share |
AAMC |
NYSE American |
Securities registered pursuant to Section 12(g) of the
Act:
None.
Indicate by check if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes
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No
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Indicate by check if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes
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No
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Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
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No
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Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required
to submit such files). Yes
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No
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Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large Accelerated Filer |
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Accelerated Filer |
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Non-Accelerated Filer |
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Smaller Reporting Company |
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
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Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report.
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Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
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No
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The aggregate market value of common stock held by non-affiliates
of the registrant was $58.5 million, based on the closing share
price as reported on the New York Stock Exchange on April 21,
2023 and the assumption that all Directors and executive officers
of the registrant and their families and beneficial holders of 10%
of the registrant's common stock are affiliates (other than mutual
funds). This determination of affiliate status is not necessarily a
conclusive determination for any other purpose.
As of April 21, 2023, 1,758,421 shares of our common stock
were outstanding (excluding 1,675,873 shares held as treasury
stock).
Altisource Asset Management Corporation
December 31, 2022
Table of Contents
EXPLANATORY NOTE
Altisource Asset Management Corporation (“we,” “us,” “our,” “AAMC,”
or the “Company”) is filing this Amendment No. 1 on Form 10-K/A
(this “Amendment”) to its Annual Report on Form 10-K for the fiscal
year ended December 31, 2022 (the “Original Form 10-K”), which
was originally filed with the Securities and Exchange Commission
(the “SEC”) on March 27, 2023 solely to include the information
required in Part III (Items 10, 11, 12, 13 and 14) of Form 10-K
that was previously omitted from the Original Form 10-K. Except as
expressly set forth herein, this Amendment does not reflect events
occurring after the date of the Original Form 10-K or modify or
update any of the other disclosures contained in the Original Form
10-K in any way. Accordingly, this Amendment should be read in
conjunction with the Original Form 10-K and our other filings with
the SEC. This Amendment consists solely of the preceding cover page
and table of contents, this explanatory note, Part III (Items 10,
11, 12, 13 and 14), the signature page and the certifications
required to be filed as exhibits to this Amendment.
Part III
Item 10. Directors, Executive Officers and Corporate
Governance
Our Directors and executive officers are as follows:
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Name
(1)
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Age |
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Position |
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John P. de Jongh, Jr. |
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65 |
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Lead Director and Chairman |
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Ricardo C. Byrd |
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Director |
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John A. Engerman |
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Director |
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Jason Kopcak |
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Director and Chief Executive Officer |
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Stephen R. Krallman |
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Chief Financial Officer |
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Kevin F. Sullivan
(2)
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General Counsel and Chief Compliance Officer |
___________
(1)Except
as otherwise indicated, all information set forth herein is as of
December 31, 2022, and all stock ownership and equity award
information for Messrs. Kopcak, Krallman and Sullivan are based
solely upon their Form 3 and 4 filings with the SEC.
(2)Kevin
F. Sullivan resigned on March 6, 2023. Mr. Sullivan executed a
Notice of Termination, Separation and General Release Agreement
(“Separation Agreement”) on March 9, 2023.
John P. de Jongh, Jr.
John P. de Jongh, Jr., the former Governor of the United States
Virgin Islands, was appointed to our Board of Directors in December
2016. Governor de Jongh, Jr. currently is the Managing Member of
Chilmark Advisory, LLC (‘‘Chilmark’’), a U.S. Virgin Islands-based
financial advisory firm. From January 2007 to January 2015,
Governor de Jongh, Jr. served two terms as the Governor of the U.S.
Virgin Islands. From 2003 to 2006, Governor de Jongh, Jr. served as
the Managing Member of Chilmark in the same capacities as his
current position, with engagements in Barbados, the British Virgin
Islands, Dominica and Saint Lucia. From 1996 to 2002, Governor de
Jongh, Jr. served as President, Chief Operating Officer and a
member of the board of directors of Lockhart Companies
Incorporated, a holding company with ownership of commercial real
estate, insurance companies and specialty financial services in the
U.S. Virgin Islands, the British Virgin Islands and Turks &
Caicos and Caribbean region. He also served three terms as the
President of the St. Thomas-St. John Chamber of Commerce and the
Community Foundation of the Virgin Islands. From 1993 to 1995, he
was a Senior Managing Consultant for Public Financial Management,
Inc., a municipal advisory firm. Prior to 1993, Governor de Jongh,
Jr. served in multiple capacities for the Government of the U.S.
Virgin Islands, including Commissioner of Finance, Director of
Finance for the Virgin Islands Public Finance Authority, Executive
Assistant to the Governor and Chairman of the Virgin Islands Water
and Power Authority, and was a Vice President for The Chase
Manhattan Bank, N.A.. Governor de Jongh, Jr. received his Bachelor
of Arts in Economics from Antioch College.
Governor de Jongh, Jr.’s substantial political and business
experience in the U.S. Virgin Islands, as well as his financial and
real estate-related experience in general, bring strong targeted
knowledge to our Company and drive a diverse and local
understanding to our Board of Directors for the jurisdiction in
which we are located.
Ricardo C. Byrd.
Mr. Byrd was elected to our Board of Directors in June 2015. Mr.
Byrd has served as the Executive Director of the National
Association of Neighborhoods (“NAN”), one of the nation’s largest
and oldest multi-issue membership associations of grass-roots
neighborhood organizations, since 1995. He has over thirty years of
management experience in directing grass-roots programs. On
America’s social and economic development challenges, he has served
as a public policy catalyst, a community outreach strategist and
resource person to the White House, Congressional, state and local
government officials, corporations and neighborhood leaders. Mr.
Byrd is a native Washingtonian, educated in the District of
Columbia Public Schools, and holds a Bachelor of Arts degree from
Howard University.
Mr. Byrd’s diverse experience will further enable the Company to
consider other business opportunities and their related
benefits.
John A. Engerman.
Mr. Engerman was elected to our Board of Directors in June 2019.
Since 2019, Mr. Engerman has been Chief Executive Officer and
Chairman of The Strategy Group VI, a professional services firm in
St. Thomas, and has continued to serve in that role since March
2020 following its acquisition of BDO USVI, LLC (“BDO USVI”), a
full-service accounting and advisory services firm located in St.
Thomas, USVI. From July 2016 to March 2020, Mr. Engerman was
Managing Partner of BDO USVI. From 2017 to 2018, Mr. Engerman
served as the Territorial Campaign Manager for the successful
Albert Bryan and Tregenza Roach Gubernatorial Team for the U.S.
Virgin Islands. From January 2014 to June 2016, Mr. Engerman was
Executive Vice President, Finance & Planning for International
Capital & Management Company, a finance and analytics firm
located in St. Thomas, USVI. From February 2001 to January 2014,
Mr. Engerman was a Managing Member of ARI Group, LLC, a government
and business advisory firm located in Fort Washington, MD. Mr.
Engerman commenced his career in
various accounting, auditing and advisory roles for
PricewaterhouseCoopers, Ernst & Young and Capgemini (now part
of Ernst & Young). Mr. Engerman also served for five years in
the United States Navy. Mr. Engerman holds a Bachelor degree in
Business Administration – Accounting from Howard University in
Washington, DC and is a Certified Public Accountant.
Mr. Engerman brings extensive finance and accounting experience to
the Board that enables him to provide valuable insight to the Audit
Committee and guidance to the Board in overseeing the financial
reporting and accounting aspects of our business.
Jason Kopcak.
Jason Kopcak was appointed to our Board of Directors in July 2022.
Mr. Kopcak has also served as our Chief Executive Officer since
July 2022. Mr. Kopcak joined the Company in March 2022 and served
as our President and Chief Operating Officer prior to his
appointment as Chief Executive Officer. Prior to joining the
Company, Mr. Kopcak was employed with Morgan Stanley beginning in
September 2018, as an Executive Director of the residential
mortgage team within Global Capital Markets. He was involved in all
facets of the mortgage and alternative lending business from
trading, warehousing, securitization to investment banking. Prior
to his employment at Morgan Stanley, Mr. Kopcak worked at Nomura, a
global financial services group, from May 2012 until September 2018
in a similar capacity. Mr. Kopcak has more than twenty-five years
of experience in the mortgage business.
Mr. Kopcak’s broad and deep experience in the mortgage and
alternative lending business make him well suited to assist the
Board in the oversight of the Company’s mortgage and alternative
lending businesses.
Stephen Krallman.
Mr. Krallman has served as our Chief Financial Officer since June
2021. Mr. Krallman was the Vice President, Corporate Controller,
for Diamond Resorts International (“DRI”), an international
hospitality and vacation ownership company with over $4.0 billion
in assets. Mr. Krallman was responsible for the accounting,
reporting, and internal control functions at DRI and supervised a
staff of over 50 personnel. Prior to joining DRI in 2015, MR.
Krallman had over 20 years of experience in the real estate,
financial services, and manufacturing industries where his
positions and responsibilities included SEC reporting for initial
public offerings, SEC annual and quarterly reporting, business
combination and acquisitions, and system integrations. Mr. Krallman
hold a Bachelor of Business Administration in Accounting from the
University of San Diego.
Kevin Sullivan.
Mr. Sullivan served as our General Counsel and Chief Compliance
Officer from September 2021 until his resignation on March 6, 2023.
Prior to joining the Company, Mr. Sullivan served as Vice President
and Senior Counsel for Goldman Sachs & Co. LLC (“Goldman
Sachs”) and Assistant Secretary of The Goldman Sachs Group Inc.,
the parent company of Goldman Sachs. During his more than 15 years
at Goldman Sachs, Mr. Sullivan was responsible for advising Goldman
Sachs in a multitude of areas, including financial reporting,
disclosure and internal controls, corporate treasury, securities
offerings, investor and media relations and investment banking.
Prior to joining Goldman Sachs, Mr. Sullivan was an associate at
Skadden, Arps, Slate, Meagher & Flom LLP in New York working in
the corporate finance and mergers and acquisitions practice areas.
Mr. Sullivan holds a J.D. from the University of Virginia School of
Law and a B.A. from Amherst College.
None of our Directors and executive officers is related to any
other Director and/or executive officer of AAMC or any of its
subsidiaries by blood, marriage or adoption.
Board of Directors
Our Amended and Restated Bylaws provide that our Board of Directors
shall consist of no less than three (3) members with the exact
number to be determined by vote of a majority of the Board of
Directors. As of December 31, 2022, our Board of Directors
consisted of four (4) members.
Meetings of the Board of Directors
The Board plays an active role in overseeing management and
representing the interests of the stockholders. Directors are
expected to attend all meetings of the Board and the meetings of
committees on which they serve. Directors are also consulted for
advice and counsel between formal meetings. Our current Board held
nine (9) meetings in 2022. Each incumbent Director attended at
least 75% of the aggregate of (1) the total number of Board
meetings in 2022 held during the period for which they were a
Director and (2) the total number of meetings in 2022 of all
committees of our Board on which the Director served during the
periods they served. We do not have a formal policy regarding
Director attendance at the Annual Meetings of Stockholders.
However, all of the incumbent members of our Board attended our
2022 Annual Meeting of Stockholders.
Independence of Directors
Our Corporate Governance Guidelines provide that our Board must be
comprised of a majority of Directors who qualify as independent
Directors under the standards of the New York Stock Exchange (the
“NYSE”), which governs the NYSE American where our common stock is
listed.
Our Board periodically reviews the direct and indirect
relationships that we have with each Director. The purpose of this
review is to determine whether any such transactions or
relationships are inconsistent with a determination that the
Director is independent. Only those Directors who are determined by
our Board to have no material relationship with the Company are
considered independent. This determination is based in part on the
analysis of questionnaire responses that follow the independence
standards and qualifications established by NYSE rules and law. Our
current Board has determined that each of our directors, Messrs.
Byrd, Engerman, and Governor de Jongh, Jr. is an independent
Director and was an independent Director for their full 2021-2022
service year. Mr Kopcak, serving as our Chief Executive Officer, is
not considered an independent director.
Board Leadership Structure
In April 2021, Governor de Jongh, Jr. assumed the role of interim
Chairman, and was named Chairman at our Annual Meeting on December
14, 2022.
Committees of the Board of Directors
Our Board has established the following standing committees: an
Audit Committee, a Compensation Committee and a
Nomination/Governance Committee. Each of our Audit Committee
charter, Compensation Committee charter and Nomination/Governance
Committee charter is available on our website at
www.altisourceamc.com. A brief description of these committees is
provided below.
Audit Committee.
The Audit Committee of our Board oversees the relationship with our
independent registered public accounting firm, reviews and advises
our Board with respect to reports by our independent registered
public accounting firm and monitors our compliance with laws and
regulations applicable to our operations, including the evaluation
of significant matters relating to the financial reporting process
and our system of accounting, internal controls, auditing and
federal securities law matters and the review of the scope and
results of the annual audit conducted by the independent registered
public accounting firm.
The members of the Audit Committee since October 2020 have been
Governor de Jongh, Jr. and Messrs. Byrd and Engerman. Governor de
Jongh, Jr. has served as the Chair of the Audit Committee since May
2018. For the 2023 service year, Governor de Jongh, Jr. is expected
to continue to serve as the Chair of the Audit Committee, and
Messrs. Byrd and Engerman will continue to serve as a member of the
Audit Committee. Each member of our Audit Committee is independent
as defined in regulations adopted by the SEC and NYSE listing
standards. Our Board has determined that, throughout the 2022-2023
service years, all members of our Audit Committee are, and have
been, “financially literate” as defined in SEC rules. Our Board has
also determined that each of Mr. Engerman and Governor de Jongh,
Jr. qualifies as an “audit committee financial expert” as that term
is defined in SEC rules.
Our Audit Committee operates under a written charter approved by
our Board of Directors, a copy of which is available on our website
at www.altisourceamc.com and is available in print to any
stockholder who requests it. On an annual basis, the Audit
Committee reviews and approves its charter. The Audit Committee
also evaluates its performance under its charter periodically and
delivers a report to the Board setting forth the results of its
evaluation, including an assessment of the adequacy of its charter
and any recommendations for amendments. The Audit Committee met
four (4) times in 2022.
Compensation Committee.
The Compensation Committee of our Board oversees our Board and
employee compensation and employee benefit plans and practices. The
Compensation Committee also evaluates and makes recommendations to
our Board for human resource and compensation matters relating to
our named executive officers (“NEOs”). With respect to all officers
and employees of the Company, other than the Chief Executive
Officer, the Compensation Committee reviews with the Chief
Executive Officer and subsequently approves all executive
compensation plans, any executive severance or termination
arrangements and any equity compensation plans that are not subject
to stockholder approval. The Compensation Committee also has the
power to review our other compensation plans, including the goals
and objectives thereof and to recommend changes to these plans to
our Board. The Compensation Committee has authority for the
administration of awards under the 2020 Equity Incentive Plan (the
“2020 Equity Plan”). The Compensation Committee has the authority
to retain independent counsel or other advisers as it deems
necessary in connection with its responsibilities at our expense.
The Compensation Committee may request that any of our Directors,
officers or employees, or other persons attend its meetings to
provide advice, counsel or pertinent information as the
Compensation Committee requests.
The members of the Compensation Committee in 2022 were Messrs.
Byrd, Engerman and Governor de Jongh, Jr. with Mr. Engerman serving
as the Chair of the Compensation Committee since June 2019. Mr.
Engerman will continue to serve as the
Chair of the Compensation Committee, and Mr. Byrd and Governor de
Jongh, Jr. will continue to serve as Compensation Committee
members. Each member of the Compensation Committee is independent
as defined by NYSE listing standards. While we have no specific
qualification requirements for members of the Compensation
Committee, our members have knowledge and experience regarding
compensation matters as developed through their respective business
experience in both management and advisory roles, including general
business management, executive compensation and employee benefits
experience.
Our Compensation Committee operates under a written charter
approved by our Board, a copy of which is available on our website
at www.altisourceamc.com and is available in print to any
stockholder who requests it. On an annual basis, the Compensation
Committee reviews and approves its charter. The Compensation
Committee also evaluates its performance under its charter
periodically and delivers a report to the Board setting forth the
results of its evaluation, including an assessment of the adequacy
of its charter and any recommendations for amendments. The
Compensation Committee met five (5) times in 2022.
Nomination/Governance Committee.
The Nomination/Governance Committee of our Board makes
recommendations to our Board of individuals qualified to serve as
Directors and committee members for our Board; advises our Board
with respect to Board composition, procedures and committees;
develops and recommends to the Board a set of corporate governance
principles; and oversees the evaluation of our Board and our
management.
The members of the Nomination/Governance Committee since October
2020 were Messrs. Byrd, Engerman, and Governor de Jongh, Jr. Mr.
Byrd has served as the Chair of the Nomination/Governance Committee
since May 2017. For the 2023 service year, Mr. Byrd will continue
to serve as Chair of the Nomination/Governance Committee, and Mr.
Engerman and Governor de Jongh, Jr. will continue to serve as
members of the Nomination/Governance Committee. Each member of our
Nomination/Governance Committee is independent as defined in the
NYSE listing standards.
Our Nomination/Governance Committee operates under a written
charter approved by our Board of Directors, a copy of which is
available on our website at www.altisourceamc.com and is available
in print to any stockholder who requests it. On an annual basis,
the Nomination/Governance Committee reviews and approves its
charter. The Nomination/Governance Committee also evaluates its
performance under its charter periodically and delivers a report to
the Board setting forth the results of its evaluation, including an
assessment of the adequacy of its charter and any recommendations
for amendments. The Nomination/Governance Committee met two (2)
times in 2022.
It is the policy of our Nomination/Governance Committee to consider
candidates for Director recommended by our stockholders. In
evaluating all nominees for Director, our Nomination/Governance
Committee will take into account the applicable requirements for
Directors under the Exchange Act and NYSE listing standards. In
addition, our Nomination/Governance Committee will take into
account AAMC’s best interests as well as such factors as knowledge,
experience, skills, expertise, diversity and the interplay of the
candidate’s experience with the background of other members of our
Board of Directors.
The Nomination/Governance Committee will consider diversity when it
recommends Director nominees to the Board of Directors, viewing
diversity in an expansive way to include differences in prior work
experience, viewpoint, education and skill set. In particular, the
Nomination/Governance Committee will consider diversity in
professional experience, skills, expertise, training, broad-based
business knowledge and understanding of our business environment
when recommending Director nominees to the Board of Directors, with
the objective of achieving a Board with diverse business and
educational backgrounds. Board members should have individual
backgrounds that, when combined, provide a portfolio of experience
and knowledge that will serve our governance and strategic needs.
The Nomination/Governance Committee will periodically review the
skills and attributes of Board members within the context of the
current make-up of the full Board as the Nomination/Governance
Committee deems appropriate.
The Nomination/Governance Committee will regularly assess the
appropriate size of the Board and whether any vacancies on the
Board are anticipated. Various potential candidates for Director
will then be identified. Candidates may come to the attention of
the Nomination/Governance Committee through current members of the
Board, professional search firms, stockholders, management or
industry sources.
In connection with this evaluation, one or more members of the
Nomination/Governance Committee, and others as appropriate, will
interview prospective nominees. After completing this evaluation
and interview, the Nomination/Governance Committee will make a
recommendation to the full Board as to the persons who should be
nominated by the Board. The Board will determine the nominees after
considering the recommendation and report of the
Nomination/Governance Committee. Should a
stockholder recommend a candidate for Director, our
Nomination/Governance Committee would evaluate such candidate in
the same manner that it evaluates any other nominee.
A stockholder who wants to recommend persons for consideration by
our Nomination/Governance Committee as nominees for election to our
Board, can do so by writing to our Corporate Secretary at
Altisource Asset Management Corporation, 5100 Tamarind Reef,
Christiansted, United States Virgin Islands 00820. The
recommendation should provide each proposed nominee’s name,
biographical data and qualifications. The recommendation should
also include a written statement from the proposed nominee
consenting to be named as a nominee and, if nominated and elected,
to serve as a director.
Corporate Governance Guidelines
The Corporate Governance Guidelines adopted by our Board provide
guidelines for us and our Board to ensure effective corporate
governance. The Corporate Governance Guidelines cover topics such
as Director qualification standards, Board and committee
composition, Director responsibilities, Director access to
management and independent advisors, Director compensation,
Director orientation and continuing education, management
succession and annual performance appraisal of the
Board.
Our Nomination/Governance Committee reviews our Corporate
Governance Guidelines at least once a year and, if necessary,
recommends changes to our Board. Our Corporate Governance
Guidelines are available on our website at www.altisourceamc.com
and are available to any stockholder who requests them by writing
to our Corporate Secretary at Altisource Asset Management
Corporation, 5100 Tamarind Reef, Christiansted, United States
Virgin Islands 00820.
Executive Sessions of Non-Management Directors
To the extent there are management directors, non-management
Directors meet in executive session without management
representatives periodically.
Communications with Directors
If a stockholder should desire to contact our Board or any
individual Director regarding AAMC, he or she may do so by mail
addressed to our Corporate Secretary at Altisource Asset Management
Corporation, 5100 Tamarind Reef, Christiansted, United States
Virgin Islands 00820. All stockholder communications received in
writing will be distributed to our full Board if addressed to the
full Board or to individual Directors if addressed to any of them
individually.
Code of Ethics
We adopted a Code of Business Conduct and Ethics that applies to
our Directors, executive officers and employees (including our
principal executive officer). We also adopted a Code of Ethics for
Senior Financial Officers that applies to our principal financial
officer and principal accounting officer. Any waivers from the Code
of Business Conduct and Ethics or the Code of Ethics for Senior
Financial Officers must be approved by our Board or the Audit
Committee and will be subsequently disclosed when required by SEC
or applicable exchange rules. Our Nomination/Governance Committee
reviews our Code of Business Conduct and Ethics and the Code of
Ethics for Senior Financial Officers at least once a year and, if
necessary, recommends changes to our Board. The Code of Business
Conduct and Ethics and the Code of Ethics for Senior Financial
Officers are available on our website at www.altisourceamc.com and
are available to any stockholder who requests a copy by writing to
our Corporate Secretary at Altisource Asset Management Corporation,
5100 Tamarind Reef, Christiansted, United States Virgin Islands
00820. Any amendments to the Code of Business Conduct and Ethics or
the Code of Ethics for Senior Financial Officers, as well as any
waivers that are required to be disclosed under SEC or exchange
rules, will either be posted on our website at
www.altisourceamc.com or otherwise disclosed in accordance with
such rules.
Risk Management and Oversight Process
Our Board and each of its committees are involved with the
oversight of the Company’s risk management.
The Board and the Audit Committee oversee AAMC’s credit risk,
liquidity risk, regulatory risk, operational risk and enterprise
risk by regular reviews with management and internal and external
auditors. In its periodic meetings with internal and external
auditors, the Audit Committee discusses the scope and plan for the
internal audit and includes management in its review of accounting
and financial controls, assessment of business risks and legal and
ethical compliance programs.
In its periodic meetings with the external auditors, the Audit
Committee discusses the external audit scope, the external
auditors’ responsibility under the standards of the Public Company
Accounting Oversight Board (“PCAOB”), accounting policies and
practices and other required communications. In addition, through
regular reviews with management and, at times, certain employees of
AAMC, the Nomination/Governance Committee assists the Board in
overseeing the Company’s governance and succession risks, and the
Compensation Committee assists the Board in overseeing our
compensation policies and related risks.
The Board's role in risk oversight is consistent with the Company’s
leadership structure, with the Chief Executive Officer and other
members of senior management having responsibility for assessing
and managing the Company’s risk exposure, and the Board and its
committees providing oversight in connection with these efforts.
Our Investment Committee, which is comprised of our Lead
Independent Director and our Chief Executive Officer, has
responsibility for assessing and managing the Company’s risk
exposure with respect to transactional and counterparty
risk.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers,
Directors and persons who beneficially own more than 10% of our
common stock to file reports of ownership and changes in ownership
with the SEC. Executive officers, Directors and greater than 10%
stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file.
Based upon the Company’s review of Section 16(a) reports and
related written representations, the Company believes that there
were no late filings during 2022.
Item 11. Executive Compensation
This section discusses the material components of our executive
compensation program for our NEOs. We believe an effective
executive compensation program aligns executives’ interests with
stockholders by rewarding performance designed to increase
stockholder value. We seek to promote individual service longevity
and to provide our executives with long-term incentive
opportunities that promote consistent, high-level performance. The
Compensation Committee evaluates both performance and compensation
periodically to ensure that we maintain our ability to attract and
retain superior employees in key positions and that compensation
provided to key employees remains competitive relative to the
compensation paid to similarly situated executives of peer
companies, subject to consideration of the Company’s own financial
performance. To achieve these objectives, we generally believe
executive compensation packages should include both cash and
equity-based compensation that rewards performance as measured
against established goals.
For 2022, our NEOs and their positions as of December 31, 2022
were as follows:
•Jason
Kopcak,
Chief Executive Officer
•Thomas
K. McCarthy,
Interim Chief Executive Officer
•Stephen
R. Krallman,
Chief Financial Officer
•Kevin
F. Sullivan,
Former General Counsel and Chief Compliance Officer
The Company experienced changes in executive management during
2022. The Board appointed Mr. McCarthy as interim Chief Executive
Officer on April 19, 2021 as it conducted a search for a permanent
Chief Executive Officer. On July 1, 2022, the Board appointed Mr.
Kopcak as Chief Executive Officer of the Company. Mr. McCarthy
resigned from the Company on May 31, 2022, and Mr. Sullivan
resigned from the Company on March 6, 2023.
Summary Compensation Table
The following table discloses compensation received by our NEOs for
the fiscal years 2022 and 2021.
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Name
and Principal Position |
Year |
|
Salary |
|
Bonus |
|
Stock Awards (1) |
|
Option Awards (1) |
|
Non-Equity Incentive Compensation (2) |
All Other Compensation
(3) |
|
Total |
|
Jason Kopcak,
(4),
Chief Executive Officer
|
2022 |
|
$ |
358,269 |
|
(5) |
|
$ |
50,000 |
|
(6) |
|
$ |
222,413 |
|
(6) |
|
$ |
— |
|
|
|
$ |
575,000 |
|
(7) |
$ |
270,634 |
|
(8) |
|
$ |
1,476,316 |
|
|
Thomas K. McCarthy
(9),
Interim Chief Executive Officer
|
2022 |
|
$ |
290,769 |
|
(10) |
|
$ |
250,000 |
|
(11) |
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
$ |
93,566 |
|
(12) |
|
$ |
634,335 |
|
|
2021 |
|
$ |
467,308 |
|
(13) |
|
$ |
— |
|
|
|
$ |
— |
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$ |
— |
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$ |
— |
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|
$ |
10,034 |
|
(14) |
|
$ |
477,342 |
|
|
Stephen R. Krallman
(15),
Chief Financial Officer
|
2022 |
|
$ |
325,000 |
|
(16) |
|
$ |
— |
|
|
|
$ |
— |
|
|
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$ |
— |
|
|
|
$ |
275,000 |
|
(17) |
$ |
104,321 |
|
(18) |
|
$ |
704,321 |
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|
2021 |
|
$ |
162,500 |
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(19) |
|
$ |
200,000 |
|
(20) |
|
$ |
98,177 |
|
(20) |
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$ |
— |
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$ |
100,000 |
|
(21) |
$ |
219,145 |
|
(22) |
|
$ |
779,822 |
|
|
Kevin F. Sullivan
(23),
Former General Counsel and Chief Compliance Officer
|
2022 |
|
$ |
450,000 |
|
(24) |
|
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
|
|
|
|
$ |
112,756 |
|
(25) |
|
$ |
562,756 |
|
|
2021 |
|
$ |
121,154 |
|
(26) |
|
$ |
100,000 |
|
(27) |
|
$ |
74,475 |
|
(27) |
|
$ |
— |
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$ |
250,000 |
|
(28) |
$ |
30,888 |
|
(29) |
|
$ |
576,517 |
|
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Indroneel Chatterjee
(30),
Former Chief Executive Officer
|
2021 |
|
$ |
207,693 |
|
(31) |
|
$ |
— |
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$ |
1,591,208 |
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(32) |
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$ |
— |
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$ |
— |
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$ |
53,445 |
|
(33) |
|
$ |
1,852,346 |
|
|
Christopher Moltke-Hansen
(34),
Former Chief Financial Officer
|
2021 |
|
$ |
82,308 |
|
(35) |
|
$ |
250,000 |
|
(36) |
|
$ |
320,221 |
|
(36) |
|
$ |
— |
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|
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$ |
— |
|
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$ |
16,169 |
|
(37) |
|
$ |
668,698 |
|
|
P. Graham Singer,
(38),
Former General Counsel and Secretary
|
2021 |
|
$ |
81,731 |
|
(39) |
|
$ |
350,000 |
|
(40) |
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$ |
345,085 |
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(40) |
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$ |
— |
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$ |
— |
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$ |
13,261 |
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(41) |
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$ |
790,077 |
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_______________
(1)Amounts
represent the aggregate grant date fair value of restricted shares
and option awards granted to our NEOs, calculated in accordance
with FASB ASC 718. Such grant date fair value does not take into
account any estimated forfeitures. The assumptions used in
calculating the grant date fair value of restricted shares and
option awards are set forth in Note 9 to our Consolidated Financial
Statements for the year ended December 31, 2022. The amount
reported in this column reflects the accounting cost for these
awards and does not correspond to the actual economic value that
may be received by the NEO upon the vesting of the restricted
shares, the exercise of the stock options, or any sale of the
underlying shares of common stock.
(2)Consists
of the cash annual incentive compensation related to performance in
each year and generally awarded in the first half of the following
year.
(3)Consists
of contributions from AAMC to each executive officer for relocation
expenses, as applicable; supplemental living expenses, as
applicable; car allowances, as applicable; education allowances, as
applicable; travel allowances, as applicable; vacation benefits
upon termination, as applicable; and medical benefits and preferred
stock dividends, as detailed more fully in the respective footnotes
below.
(4)Mr.
Kopcak joined the Company in March 2022 and served as our President
and Chief Operating Officer prior to his appointment as Chief
Executive Officer in July 2022. Mr. Kopcak’s hire date was May 12,
2022.
(5)The
amount reported for 2022 represents Mr. Kopcak’s base salary of
$575,000 from his hire date of May 12, 2022 to December 31,
2022.
(6)Pursuant
to Mr. Kopcak’s employment agreement, he was entitled to a signing
bonus of $250,000. The Compensation Committee of the Company agreed
to bifurcate the payment into a cash payment of $50,000 and a
preferred dividend of $200,000. The amount reported for 2022
represents Mr. Kopcak’s $50,000 cash signing bonus paid on May 27,
2022. The amounts reported as Stock Awards include equity
inducement grants consisting of 22,500 shares of service-based
restricted stock with a grant date fair value of $222,413, which
was determined based on the average of the high and low sales price
of our common stock on the date of the grant. Mr. Kopcak’s signing
bonus was paid pursuant to his employment agreement as described
under “Employment Agreements.”
(7)The
amount reported for 2022 includes Mr. Kopcak’s $575,000 annual cash
incentive compensation earned for 2022 performance, which has been
accrued and pending payment as of April 30, 2023.
(8)The
amount reported for 2022 includes: $200,000 preferred stock
dividends on 1,000 shares Preferred Stock Series N paid on December
29, 2022, which the Compensation Committee approved as payment in
lieu of a cash payment of Mr. Kopcak’s signing bonus payable
pursuant to his employment agreement. In addition, the amount
reported for 2022 includes $40,000 for supplemental living expenses
related to Mr. Kopcak's employment in the U.S. Virgin Islands,
$3,019 in relocation expenses, $9,150 in 401-K contributions and
$18,465 in medical and life insurance benefits.
(9)Mr.
McCarthy joined the Company on April 19, 2021 as Interim Chief
Executive Officer. Mr. McCarthy's last day in his term as Interim
Chief Executive Officer was May 31, 2022.
(10)The
amount reported for 2022 represents Mr. McCarthy's base salary of
$675,000 from January 1, 2022 until his termination on May 31,
2022.
(11)The
amount reflects a cash bonus of $250,000 that the Company agreed to
pay Mr. McCarthy in connection with his departure from the Company
in recognition of his contribution to the Company during his
tenure. This cash bonus was paid on June 10, 2022.
(12)The
amount reported for 2022 includes: $51,923 in vacation benefits
paid upon Mr. McCarthy’s termination, $13,408 in 401-K
contributions and $28,235 in medical and life insurance
benefits.
(13)The
amount reported for 2021 represents Mr. McCarthy's base salary of
$675,000 from his hire date of April 19, 2021 to December 31,
2021.
(14)The
amount reported for 2021 includes: $8,700 in 401-K contributions
and $1,334 in life insurance benefits.
(15)
Mr. Krallman joined the Company on June 28, 2021 as Chief Financial
Officer.
(16)The
amount reported for 2022 represents Mr. Krallman’s base salary of
$325,000 from January 1, 2022 to December 31, 2022.
(17)The
amount reported for 2022 reflects Mr. Krallman’s $275,000 annual
cash incentive compensation earned for 2022 performance, which has
been accrued and pending payment as of April 30, 2023.
(18)The
amount reported for 2022 includes: $60,000 for supplemental living
expenses related to Mr. Krallman’s employment in the U.S. Virgin
Islands, $10,000 in 401-K contributions and $34,321 in medical and
life insurance benefits.
(19)The
amount reported for 2021 represents Mr. Krallman’s base salary of
$325,000 from his hire date of June 28, 2021 to December 31,
2021.
(20)The
amount reported for 2021 represents Mr. Krallman's $200,000 signing
bonus, and equity inducement grants consisting of 5,000 shares of
service-based restricted stock with a grant date fair value of
$98,177, which was determined based on the average of the high and
low sales price of our common stock on the date of the grant. Mr.
Krallman's signing bonus was paid pursuant to his employment
agreement as described under “Employment Agreements.”
(21)Pursuant
to Mr. Krallman’s employment agreement, he is entitled to an annual
cash incentive compensation of $275,000. The Compensation Committee
of the Company agreed to bifurcate the payment into a cash payment
of $100,000 and a preferred dividend of $175,000. The amount
reported for 2021 reflects $100,000 in annual cash incentive
compensation paid to Mr. Krallman on June 8, 2022.
(22)The
amount reported for 2021 includes: $175,000 preferred stock
dividends on 1,000 shares Preferred Stock Series O paid on December
29, 2022, which the Compensation Committee approved as payment in
lieu of a cash payment of Mr. Krallman’s annual cash incentive
compensation pursuant to his employment agreement. In addition, the
amount reported for 2022 includes $30,000 for supplemental living
expenses relating to Mr. Krallman’s employment in the U.S. Virgin
Islands, $4,720 in 401-K contributions, and $9,425 in medical and
life insurance benefits.
(23)Mr.
Sullivan joined the Company on September 20, 2021 as General
Counsel and Chief Compliance Officer and resigned on March 6,
2023.
(24)The
amount reported for 2022 represents Mr. Sullivan’s base salary of
$450,000 from January 1, 2022 to December 31, 2022.
(25)The
amount reported for 2022 represents Mr. Sullivan’s Other
Compensation from housing allowance while in the USVI of $40,000,
401-K contributions of $18,150 and medical and life insurance
benefits of $54,606.
(26)The
amount reported for 2021 represents Mr. Sullivan’s base salary of
$450,000 from his hire date of September 20, 2021 to December 31,
2021.
(27)The
amount reported for 2021 represents Mr. Sullivan’s signing bonus of
$100,000, and equity inducement grants consisting of 3,000 shares
of service-based restricted stock with a grant date fair value of
$74,475, which was determined based on the average of the
high
and low sales price of our common stock on the date of the grant.
Mr. Sullivan's signing bonus was paid pursuant to his employment
agreement as described under “Employment Agreements.”
(28)The
amount reported for 2021 reflects $250,000 in annual cash incentive
compensation earned for 2021 performance and paid to Mr. Sullivan
on June 8, 2022.
(29)The
amount reported for 2021 includes: $15,000 for supplemental living
expenses relating to Mr. Sullivan’s employment in the U.S. Virgin
Islands, $2,379 in 401-K contributions, and $13,509 in medical and
life insurance benefits.
(30)Mr.
Chatterjee joined the Company on January 13, 2020 as Co-Chief
Executive Officer, and upon resignation of Mr. Ellison on December
29, 2020, became the sole Chief Executive Officer of the Company.
Mr. Chatterjee was terminated for cause on April 16,
2021.
(31)The
amount reported for 2021 represents Mr. Chatterjee's base salary of
$675,000 from January 1, 2021 until his termination on April 16,
2021.
(32)The
amount reported for 2021 represents 60,606 shares of restricted
stock granted to Mr. Chatterjee. This stock had a weighted average
grant date fair value per share of $26.25 and vested
immediately.
(33)The
amount reported for 2021 includes: $27,193 for supplemental living
expenses relating to Mr. Chatterjee’s employment in the U.S. Virgin
Islands, $8,700 in 401-K contributions, and $17,552 in medical and
life insurance benefits.
(34)Mr.
Moltke-Hansen served as Chief Financial Officer from January 1,
2021 until his resignation on April 24, 2021.
(35)The
amount reported for 2021 represents Mr. Moltke-Hansen’s base salary
of $250,000 from January 1, 2021 until his resignation on April 24,
2021.
(36)The
amount reported for 2021 represents Mr. Moltke-Hansen’s $250,000
signing bonus, and (a) 8,523 shares of restricted stock granted to
Mr. Moltke-Hansen, which had a weighted average grant date fair
value per share of $26.25 and vested immediately and (b) equity
inducement grants consisting of 5,000 shares of service based
restricted stock with a grant date fair value of $96,450, which was
determined based on the average of the high and low sales price of
our common stock on the date of the grant. Mr. Moltke-Hansen
forfeited all of his service-based restricted stock upon his
resignation without good reason.
(37)The
amount reported for 2021 includes: $8,700 in 401-K contributions
and $7,469 in medical and life insurance benefits.
(38)Mr.
Singer served as General Counsel and Secretary from January 1, 2021
until his resignation on April 23, 2021.
(39)The
amount reported for 2021 represents Mr. Singer’s base salary of
$250,000 from January 1, 2021 until his resignation on April 23,
2021.
(40)The
amount reported for 2021 represents Mr. Singer's $350,000 signing
bonus, and (a) 9,470 shares of restricted stock granted to Mr.
Singer, which had a weighted average grant date fair value per
share of $26.25 and vested immediately and (b) equity inducement
grants consisting of 5,000 shares of service-based restricted stock
with a grant date fair value of $96,450, which was determined based
on the average of the high and low sales price of our common stock
on the date of the grant. Mr. Singer forfeited all of his
service-based restricted stock up on his resignation without good
reason.
(41)The
amount reported for 2021 includes: $10,335 in 401-K contributions
and $2,926 in medical and life insurance benefits.
Elements of Compensation
Compensation Philosophy.
We employ a number of practices that reflect our
pay-for-performance
compensation philosophy and related approach to executive
compensation.
We believe that our executive compensation program encourages and
motivates our executive officers to achieve sustainable, long-term
operating financial performance and aligns with the creation of
long-term stockholder value.
Our compensation philosophy is best described as
pay-for-performance, which rewards both financial and operational
successes as well as actions that drive stockholder value creation.
The following are the objectives of our compensation
program:
•attracting
and retaining qualified and dedicated executives who are essential
to our long-term success;
•providing
compensation packages that are competitive with the compensation
arrangements offered by comparable companies, including our
competitors;
•tying
a significant portion of an executive officer’s compensation to the
Company’s and the individual’s performance; and
•aligning
the interests of management with the interests of our stockholders
through stock-based compensation arrangements.
In 2022, the compensation package for our NEOs consisted of base
salary and annual cash incentive compensation, as well as certain
restricted stock awards. This compensation structure was developed
in order to provide each NEO with a competitive salary while
emphasizing a cash incentive compensation element that is tied to
the achievement of corporate goals and strategic initiatives as
well as individual performance. Our compensation programs are
structured to motivate and reward our executives to increase
stockholder value and provide balanced incentives for achieving our
objectives without incentivizing executives to take excessive
risks. The Compensation Committee also may, from time to time,
grant equity compensation awards to the NEOs in order to further
align their interests with AAMC’s stockholders. We believe that the
following elements of compensation are appropriate in light of our
strategic initiatives, industry, current challenges and
environment.
The following highlights practices that we utilize in support of
our pay-for-performance philosophy:
What We Do
•align
executive pay with Company performance;
•establish
performance metrics that correlate to stockholder value
creation;
•mitigate
undue risk in compensation programs;
•include
meaningful vesting periods on equity awards;
•establish
a performance gate that must be achieved as a condition to any
payout of short-term incentive compensation;
•set
maximum payout limits on all variable, performance-based
compensation programs;
•utilize
an independent compensation consultant when deemed necessary by the
Compensation Committee; and
•provide
reasonable post-employment/change in control provisions in
employment/separation agreements.
What We Don’t Do
•reprice
underwater stock options;
•exchange
underwater stock options for cash;
•grant
multi-year guaranteed bonuses;
•provide
excessive perquisites; or
•permit
hedging, pledging or short-sale transactions by our executive
officers and directors.
Base Salary.
Base salaries for our NEOs are established based on individual
qualifications and job responsibilities while taking into account
compensation levels at similarly situated companies for similar
positions.
Base salaries of the NEOs are expected to be reviewed annually
during the performance appraisal process with adjustments made
based on market information, internal review of the executive
officer’s compensation in relation to other officers, the
individual performance of the executive officer and our corporate
performance. Salary levels are also considered upon a promotion or
other change in job responsibility. Salary adjustment
recommendations will be based on our overall performance and an
analysis of compensation levels necessary to maintain and attract
quality personnel. The Compensation Committee will set the base
salary for the Chief Executive Officer and approve the base
salaries for all other NEOs.
Annual Cash Incentive Compensation.
Pursuant to our annual incentive philosophy, our executives can
earn cash awards as determined by the Compensation Committee. Our
philosophy provides the Compensation Committee and our management
with the authority to establish incentive award guidelines, which
are further discussed below.
Equity Awards.
The Company adopted the 2020 Equity Incentive Plan, which
superseded the 2012 Equity Incentive Plan (together with the 2012
Equity Incentive Plan, the “Equity Incentive Plans”), to afford an
incentive to officers, non-employee directors, employees, advisors
and consultants of the Company and its affiliates to continue as
officers, non-employee directors, employees, advisors or
consultants, to increase their efforts on behalf of AAMC and to
promote the success of AAMC’s business. From time to time, the
Compensation Committee, as administrator, grants awards to our NEOs
in addition to their annual cash incentive compensation. Our
Compensation Committee reviews and determines the appropriate
equity awards to be used that align with our business needs, our
pay-for-performance philosophy and the practices of our peer
group.
Employee Relocation Program.
In order to enable us to recruit top talent and incentivize key
personnel to relocate, we offer a relocation package to individuals
who relocate to the U.S. Virgin Islands (the “Employee Relocation
Program”). The Employee Relocation Program includes relocation
benefits such as moving expenses, home sale support, a housing
allowance, payment of applicable children’s school tuition fees and
payment of “home leave” travel for return trips to the continental
United States, in each case subject to certain limits and
exceptions. Upon a participant’s departure after at least one year
of service or termination without cause, such participant is
eligible to receive reimbursement for relocation costs back to the
continental United States. We believe that our Employee Relocation
Program is necessary to attract and retain talent that is critical
to our success.
2022 Compensation Determinations
Under AAMC’s annual cash incentive compensation plan, our NEOs can
earn cash incentive compensation awards as determined by the
Compensation Committee. The Compensation Committee and management
have the authority to establish incentive compensation award
guidelines. Each NEO has a targeted annual cash incentive award
that is expressed as a percentage of his or her annual cash total
target compensation. In 2022, 100% of the total annual cash target
compensation was payable to our NEOs upon achievement of certain
Company and individual performance levels with the exception of the
2022 annual cash incentive to Mr. Sullivan per the Separation
Agreement.
Our annual incentive-based cash compensation is structured to
motivate executives to achieve key performance objectives by
rewarding the executives for such achievement. We seek to
accomplish this by utilizing a balanced methodology that
incorporates multiple financial and non-financial performance
objectives developed through our annual strategic planning process.
The annual incentive-based cash compensation can be distributed as
a cash payment or as a preferred stock dividend which is offered to
employees based in the USVI.
For 2022, corporate goals were developed by our Compensation
Committee and included targets pertaining to (a) building out the
initial operations of the Alternative Lending Group, (b) attempting
to restructure the $250 million Series A Preferred Stock for the
benefit of the common shareholders, (c) building and retaining a
strong management team to acquire or build the future business
lines of AAMC, and (d) continuing to maintain the EDC status of the
company as domiciled in the USVI.
2022 Equity Awards
On May 12, 2022, we granted 22,500 shares of restricted stock to
management with a weighted average grant date fair value per share
of $9.89. The restricted stock units will vest in three equal
annual installments on May 12, 2023, 2024, and 2025 subject to
forfeiture or acceleration.
2021 Equity Awards
On September 20, 2021, we granted 3,000 shares of restricted stock
to management with a weighted average grant date fair value per
share of $24.83. 1,000 shares of this grant vested on September 20,
2022. The vesting of the additional 2,000 restricted stock units
were accelerated to March 9, 2023 per the Separation
Agreement.
On June 28, 2021, we granted 5,000 shares of restricted stock to
management with a weighted average grant date fair value per share
of $19.64. 1,667 shares of this grant vested on June 28, 2022. The
remaining restricted stock units will vest in two equal annual
installments on June 28, 2023 and 2024 subject to forfeiture or
acceleration.
In determining the awards for our NEOs, the Compensation Committee
considered the valuable and substantial contributions they had made
to achieving AAMC’s strategic objectives, the importance to the
Company of retaining and incentivizing them and the desire to have
their cash compensation reduced and converted into the restricted
stock awards so that the benefits of such grants only would be
realized if the Company’s stock price were to
increase.
Stock Ownership Policies
Although we do not have stock ownership requirements, our
philosophy is that equity ownership by our directors and executives
is important to attract, motivate, retain and to align their
interests with the interests of our stockholders. The Compensation
Committee believes that our various equity incentive plans are
adequate to achieve this philosophy. We also maintain an insider
trading policy detailing our trading window period for directors,
executive officers and other employees.
Other Compensation
The Compensation Committee’s policy with respect to other employee
benefit plans is to provide benefits to our employees, including
executive officers that are comparable to benefits offered by
companies of a similar size to ours. A competitive comprehensive
benefit program is essential to achieving the goal of attracting
and retaining highly qualified employees.
Employment Agreements
Jason Kopcak, Chief Executive Officer
In accordance with his employment agreement, Mr. Kopcak is entitled
to an annual base salary of $575,000, an annual bonus of $575,000,
and participation in employee benefit programs of the Company on
the same terms as other similarly situation employees. In addition,
Mr. Kopcak will receive a $250,000 signing bonus (subject to 100%,
66.67% or 33.33% recoupment if Mr. Kopcak terminates his employment
without Good Reason (as defined in the Employment Agreement) or the
Company terminates Mr. Kopcak for Cause (as defined in the
Employment Agreement) during the first, second or third years of
employment, respectively). For the avoidance of doubt, the amounts
the Employee is required to repay pursuant to the preceding
sentence are the entire amount of the Signing Bonus paid by the
Company, or (66.67%) or (33.33%) of such amount less any taxes paid
by the Employee. Mr. Kopcak will receive a one-time equity award
grant of 22,500 restricted shares of Company common stock, which
will vest in three equal installments on the first three
anniversaries of the Start Date. In the event Mr. Kopcak's
employment is terminated by the Company without Cause or he resigns
for Good Reason he would be entitled to, among other things, a
separation payment in the amount of one-half of his annual base
salary, one-half of his target annual bonus and accelerated vesting
of his restricted shares.
The Employment Agreement contains customary covenants on
non-competition (for 12 months if termination is for Cause or
without Good Reason), non-solicitation of employees (for 12 months)
and non-solicitation of customers (for 12 months) by Mr. Kopcak and
requires that all disputes be determined by binding
arbitration.
Stephen R. Krallman, Chief Financial Officer
In accordance with his employment agreement, Mr. Krallman is
entitled to receive an annual base salary of $325,000, with
reduction in salary only as part of an across the board reduction
in base salary of AAMC’s executives which is no more than 20%. Upon
his relocation to the U.S. Virgin Islands, Mr. Krallman has
received a housing allowance of $5,000 per month for living
expenses. His annual target incentive bonus is $275,000, subject to
Compensation Committee approval. Mr. Krallman received a cash
signing bonus of $200,000 subject to an obligation to repay 100% of
the signing bonus if terminated by the Company for Cause (as
defined in his employment agreement) or without Good Reason (as
defined in his employment agreement) within the first year
following June 28, 2021 or 50% of such signing bonus if terminated
by the Company for Cause or without Good Reason during the second
year following June 28, 2021. Mr. Krallman received an initial
equity award of 5,000 service-based restricted shares under the
guidelines of the 2020 Equity Incentive Plan. The restricted shares
will vest annually over a three-year period following the date of
grant. He is eligible to participate in the Company’s health, life
insurance, disability, retirement and other welfare plans on the
same terms available to other senior executives. Upon termination
of employment, Mr. Krallman will be eligible to receive accrued
salary and benefits payable through the date of termination. He
will be subject to customary confidentiality and non-disparagement
obligations, as well as a twelve-month obligation not to solicit
clients, customers or employees. In addition, if his employment is
terminated by the Company for Cause or by Mr. Krallman without Good
Reason, he will be subject to a twelve- month non-competition
obligation. If his employment is terminated by the Company without
Cause or by Mr. Krallman for Good Reason, Mr. Krallman will be
entitled to receive severance equal to the sum of half his annual
base salary and half his annual target bonus, payable in a lump sum
60 days after his termination date, and accelerated vesting of his
equity awards (except as prohibited by the 2020 Equity Incentive
Plan), in each case, subject to his execution of a customary
release, providing, among other things, confirmation of his
confidentiality, non-disparagement and non-solicitation
obligations.
Kevin F. Sullivan, Former General Counsel, Corporate
Secretary
In accordance with his employment agreement, Mr. Sullivan was
entitled to receive an annual base salary of $450,000 and an annual
target incentive bonus of $250,000. Mr. Sullivan received an
initial equity award of 3,000 service-based restricted shares under
the guidelines of the 2020 Equity Incentive Plan which were to vest
over a three-year period following the date of the grant. He was
eligible to participate in the Company’s health and other welfare
benefit plans on the same terms available to other senior
executives.
On March 6, 2023, Mr. Sullivan resigned. Mr. Sullivan executed a
Notice of Termination, Separation and General Release Agreement
(“Separation Agreement”) on March 9, 2023, whereby certain terms of
Mr. Sullivan’s employment contract were modified. Per the
Separation Agreement, in 2023, Mr. Sullivan shall receive an
aggregate payment of $350,000, which shall
consist of (i) an amount equal to $225,000, plus (ii) an amount
equal to one-half (0.5) times Mr. Sullivan’s annual target
incentive or $125,000, (iii) reimbursement of 100% of the COBRA
premiums incurred for Mr. Sullivan and his dependents under the
Company’s health plan for six months following his termination
date, (iv) waiver of the obligation for Mr. Sullivan to repay the
signing bonus, and (v) acceleration of the vesting of any unvested
restricted shares. Mr. Sullivan is subject to customary
confidentiality and non-disparagement obligations.
Thomas K. McCarthy, Interim Chief Executive Officer
In accordance with his amended employment agreement, Mr. McCarthy
was entitled to receive an annual base salary of $675,000. He was
eligible to participate in the Company’s health and other welfare
benefit plans on the same terms available to other senior
executives. Upon termination of employment, Mr. McCarthy was
eligible to receive only amounts accrued and unpaid as of the date
of termination. He is subject to customary confidentiality and
non-disparagement obligations.
Mr. McCarthy’s last day in his term as Interim Chief Executive
Officer was May 31, 2022. On May 17, 2022, the Company entered into
an amendment to his employment agreement, wherein the Company
agreed to pay Mr. McCarthy a bonus of $250,000 in recognition of
his contribution to the Company during his tenure as Interim Chief
Executive Officer subject to Mr. McCarthy releasing the Company
from all claims arising from his employment and the termination of
his employment with the Company, effective May 31,
2022.
Each of our executives during the 2022 calendar year had executed
an Employee Intellectual Property and Confidentiality Agreement at
the time they joined AAMC that contains covenants to maintain our
confidential information and that all developments by such
executive shall be our property.
Preferred Stock Plan
Following stockholder approval at the 2016 Annual Meeting of
Stockholders, we implemented AAMC's 2016 Employee Preferred Stock
Plan (the “Preferred Stock Plan”). The Preferred Stock Plan
authorizes the grant of restricted non-voting Preferred Stock to
AAMC's U.S. Virgin Islands employees. The Preferred Stock Plan was
created to induce certain employees to relocate and work in the
U.S. Virgin Islands, remain in the employ of AAMC and provide
additional incentive to promote the success of AAMC. On December
30, 2022, our Board of Directors authorized the acquisition of
1,000 shares of Series N Preferred Stock by Mr. Kopcak at $10.00
per share and 1,000 shares of Series O Preferred Stock by Mr.
Krallman at $10.00 per share. In December 2022, the Company
declared and paid dividends on the Preferred Stock held by Messrs.
Kopcak and Krallman. Details regarding the dividends paid to
Messrs. Kopcak and Krallman are set forth in the footnotes to the
“Other Compensation” column of the “Summary Compensation Table”
above. Because Mr. Sullivan was not located in the U.S. Virgin
Islands, he was not eligible to participate in the Preferred Stock
Plan.
Potential Payments upon Termination or Change in
Control
The termination benefits payable to our current NEOs are described
above under “Employment Agreements.”
The Compensation Committee may in its discretion revise, amend or
add to the benefits of each executive officer. None of our
executive officers currently has an arrangement in which they would
be entitled to a payment on a change of control of AAMC, other than
payments for termination described above to the extent the
surviving party in a change of control transaction assumes the
employment arrangements described above.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information regarding outstanding
equity awards held by our NEOs as of December 31,
2022:
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STOCK AWARDS |
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Name
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|
|
Number of Shares
or Units of Stock That
Have Not Vested |
|
Market Value of
Shares or Units of
Stock That Have
Not Vested (1) |
|
Stephen R. Krallman |
|
|
|
|
|
|
|
3,333 |
|
(2) |
|
$ |
67,493 |
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|
Kevin F. Sullivan |
|
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|
|
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|
|
2,000 |
|
(3) |
|
40,500 |
|
|
Jason Kopcak |
|
|
|
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|
|
22,500 |
|
(4) |
|
455,625 |
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______________
(1)Represents
the fair market value of the restricted shares as of December 31,
2022, based on the closing price of AAMC’s common stock, as quoted
on NYSE American, of $20.25 per share on December 31,
2022.
(2)Mr.
Krallman's inducement restricted stock awards are subject to
service-based vesting requirements and have or will vest ratably on
each of June 28, 2023, and 2024.
(3)The
vesting of Mr. Sullivan's inducement restricted stock awards was
accelerated to March 9, 2023 per the Separation
Agreement.
(4)Mr.
Kopcak's inducement restricted stock awards are subject to
service-based vesting requirements and have or will vest ratably on
each of May 12, 2022, 2023, and 2024.
Option Exercises
There were no outstanding options for NEOs for the year ended
December 31, 2022.
Pay versus Performance
The following table shows the past two (2) fiscal years’ total
compensation for our named executive officers as set forth in the
Summary Compensation Table, the “compensation actually paid” to our
named executive officers (as determined under SEC rules), our total
shareholder return (TSR), and our net income (loss).
SEC rules require certain adjustments be made to the Summary
Compensation Table totals to determine Compensation Actually Paid
as reported in the Pay Versus Performance Table. Compensation
Actually Paid does not necessarily represent cash and/or equity
value transferred to the applicable named executive officer without
restriction, but rather is a valuation calculated under applicable
SEC rules. In general, Compensation Actually Paid is calculated as
summary compensation table total compensation adjusted to (a)
include the value of any pension benefit (or loss) attributed to
the past fiscal year, including on account of any amendments
adopted during such year; and (b) include the fair market value of
equity awards as of December 31, 2022 or, if earlier, the vesting
date (rather than the grant date) and factor in dividends and
interest accrued with respect to such awards. For purposes of the
disclosure below, no pension valuation adjustments were
required.
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Year |
Summary Compensation Table Total for PEO
($)(1) |
Compensation Actually Paid to PEO
($)(2) |
Average Summary Compensation Table for Non-PEO Named Executive
Officers
($)(1) |
Average Compensation Actually Paid to Non-PEO Named Executive
Officers
($)(3) |
Value of Initial Fixed $100 Investment Based on Total Shareholder
Return
($)(4) |
Net Income (Loss)
($)
(in thousands)
(5) |
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2022 |
$ |
2,110,651 |
|
$ |
2,121,450 |
|
$ |
633,494 |
|
$ |
648,193 |
|
$ |
85.88 |
|
$ |
(15,934) |
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|
2021 |
$ |
2,329,688 |
|
$ |
1,615,955 |
|
$ |
703,779 |
|
$ |
682,222 |
|
$ |
75.91 |
|
$ |
(6,004) |
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(1)For
2022, Jason Kopcak and Thomas K. McCarthy were our principal
executive officers (“PEO”) and our non-PEO NEOs for 2022 were
Stephen R. Krallman and Kevin F. Sullivan. For 2021, our PEOs were
Thomas K. McCarthy and Indroneel Chatterjee and our non-PEO NEOs
were Stephen R. Krallman, Kevin F. Sullivan, Christopher
Moltke-Hansen and P. Graham Singer.
(2)The
amounts disclosed reflect the adjustments listed in the tables
below to the amounts reported in the Summary Compensation Table for
PEO:
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Adjustments to Determine Compensation Actually Paid to
PEO |
|
2022 |
2021 |
|
Deduction for amounts reported under the Stock Awards column of the
SCT |
|
$ |
(222,413) |
|
$ |
(1,591,208) |
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|
|
|
Stock awards vested in current year |
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— |
1,853,408 |
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|
Increase in the fair value of awards granted during the year that
vest during the year |
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233,212 |
185,200 |
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|
Deduction of fair value of awards granted prior to year that were
forfeited during the year |
|
— |
(1,161,133) |
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Total Adjustments |
|
10,799 |
(713,733) |
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(3)The
amounts disclosed reflect the adjustments listed in the tables
below to the amounts reported in the Summary Compensation Table for
our non-PEO NEOs:
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|
Adjustments to Determine Compensation Actually Paid to Non-PEO
NEOs |
|
2022 |
2021 |
|
Deduction for amounts reported under the Stock Awards column of the
SCT |
|
$ |
— |
|
$ |
(209,490) |
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|
Stock awards vested in current year |
|
$ |
28,779 |
|
$ |
236,158 |
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|
Increase/deduction for change in fair value from prior year-end to
current year-end awards granted prior to year that were outstanding
and unvested as of year-end |
|
$ |
(3,551) |
|
$ |
— |
|
|
Increase/deduction for change in fair value from prior year-end to
vesting date of awards granted prior to the year that vested during
year |
|
$ |
(10,573) |
|
$ |
— |
|
|
Deduction of fair value of awards granted prior to year that were
forfeited during the year |
|
$ |
— |
|
$ |
(48,225) |
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Total Adjustments |
|
$ |
14,655 |
|
$ |
(21,557) |
|
(4)Total
Shareholder Return illustrates the value, as of the last day of the
indicated fiscal year, of an investment of $100 in AAMC common
stock on December 31, 2020.
(5)The
dollar amounts reported represent the amount of net income (loss)
reflected in our consolidated audited financial statements for the
applicable year.
Analysis of the Information Presented in the Pay Versus Performance
Table
Compensation Actually Paid and Net Income (Loss).
Due to the nature of our Company’s consolidated financial
statements and historical focus on asset management services, our
Company has not historically utilized net income (loss) as a
performance measure for our executive compensation program. From
2021 to 2022, our net loss increased and the Compensation Actually
Paid our PEO and Non-PEO NEOs also decreased between those
years.
PEO and Non-PEO NEO Compensation Actually Paid and Company Total
Shareholder Return (“TSR”).
The following chart sets forth the relationship between
Compensation Actually Paid to our PEO, the average of Compensation
Actually Paid to our Non-PEO NEOs, and the Company’s TSR over the
period covering fiscal years 2021 and 2022. A large component of
our executive compensation is equity-based to align compensation
with performance, but also includes other appropriate incentives
such as cash bonuses that are designed to incentivize our
executives to achieve annual corporate goals. We believe the
equity-based compensation strongly aligns our PEO and Non-PEOs’
interests with those of our shareholders to maximize long-term
value and encourages long-term employment.
Compensation Risk Assessment
We believe that although a portion of the compensation provided to
our executive officers and other employees is performance-based,
our executive compensation program does not encourage excessive or
unnecessary risk taking. Our compensation programs are designed to
encourage our executive officers and other employees to remain
focused on both short-term and long-term strategic goals. As a
result, we do not believe that our compensation programs are
reasonably likely to have a material adverse effect on the
Company.
Board of Directors Compensation
The following table discloses compensation received by each
non-management member of our Board of Directors who served as a
Director during fiscal year 2022. Management members of our Board
of Directors do not receive compensation for their service as a
Director.
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Name |
|
Fees Earned
or Paid in Cash |
|
Stock Awards
(1)
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Total |
|
Ricardo C. Byrd
(2)
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$ |
90,000 |
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$ |
60,011 |
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$ |
150,011 |
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John A. Engerman
(2)
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90,000 |
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60,011 |
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150,011 |
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John P. de Jongh Jr.
(2)
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145,000 |
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60,011 |
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205,011 |
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___________
(1)Each
of Messrs. Byrd, Engerman, and Governor de Jongh, Jr. were granted
2,412 restricted shares of common stock of AAMC on November 14,
2021 for service on the Board. These shares were vested and paid in
2022. The number of shares granted was based on a share price of
$24.88, which was the average of the high and low sales prices of
our common stock on November 14, 2021, and represents the grant
date fair value of such shares under FASB ASC 718. The amount
reported in this column reflects the accounting cost for these
restricted shares and does not correspond to the actual economic
value that may be received by the directors upon the vesting of the
restricted shares, or any sale of the underlying shares of common
stock.
(2)As
of December 31, 2022, each of Messrs. Byrd, Engerman, and
Governor de Jongh, Jr. held 2,857 unvested shares of time-based
restricted stock.
On December 14, 2022, Messrs. Byrd and Engram and Governor de
Jongh, Jr. being the non-management members of the Board serving as
of such date, were each awarded 2,857 shares of restricted stock
under the Company’s 2020 Equity Incentive Plan for their service to
the Board for the period commencing December 14, 2022 to the date
of the 2023 Annual Meeting of Stockholders. Upon vesting, each such
Director will receive 2,857 shares of our common stock. Such number
of shares was determined by dividing $60,000 by the average of the
high and low prices, or $21.00 per share, of AAMC common stock on
December 14, 2022 and represents the grant date fair value
calculated in accordance with FASB ASC 718.
Cash Compensation
As set forth above, we provide the following cash compensation to
our non-management Directors in quarterly installments, paid in
arrears for their services for the prior quarter:
•an
annual retainer of $75,000;
•an
additional $20,000 to the Lead Independent Director of the Board of
Directors, only if the Chairman of the Board is a management
Director (if the Chairman of the Board is a non-management
director, the Chairman shall receive $50,000);
•an
additional $20,000 to the Audit Committee chairperson;
•an
additional $10,000 to all committee chairpersons (other than the
Audit Committee chairperson); and
•an
additional $5,000 to all Audit Committee members.
Equity Compensation
The 2020 Equity Incentive Plan was approved at the Annual Meeting
of Stockholders on October 12, 2020, which supersedes the 2012
Equity Incentive Plan. The 2020 Equity Incentive Plan is described
below in “Equity Compensation Plan Information”. As part of
Director compensation, our non-management Directors have received
annually restricted shares of common stock of AAMC with a Fair
Market Value of $60,000 pursuant to the 2012 Equity Incentive Plan
and 2020 Equity Incentive Plan. “Fair Market Value” is defined as
the average of the high and low prices of our common stock as
reported on the applicable securities exchange on which AAMC is
listed or quoted on the first day of the service year. Equity
compensation is granted for the prior year of service after each
annual organizational meeting of the Board, which typically follows
the
Annual Meeting of Stockholders. Shares of our common stock will be
awarded if the Director attends an aggregate of at least 75% of all
meetings of the Board and committees thereof of which the Director
is a member during the service year. Grants of restricted shares to
our Directors vest on the date of the Annual Meeting of
Stockholders of the following year during which they were
granted.
For Directors serving less than a full year, such Directors receive
a pro rata portion of $60,000 of restricted shares of our common
stock based on the high and low sales prices on the first day of
his or her service year, multiplied by a fraction, the numerator of
which is the number of days served and the denominator of which is
365 days.
Other Compensation
Directors are reimbursed for reasonable travel and other expenses
incurred in connection with attending meetings of the Board and its
committees.
Any Director compensation may be prorated for a Director serving
less than a full one (1) year term as in the case of a Director
joining the Board after an Annual Meeting of Stockholders but
during the service year.
Recoupment/Clawback Policies
The Sarbanes-Oxley Act of 2002 subjects incentive compensation and
stock sale profits of our CEO and CFO to forfeiture in the event of
an accounting restatement resulting from any non-compliance, as a
result of misconduct, with any financial reporting requirement
under GAAP and SEC rules. We acknowledge the SEC’s new Rule 10D-1
regarding clawback policies and the NYSE’s Proposed NYSE Manual
Section 303A.14. Once final, we will comply
accordingly.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the
information contained in this Item 11 with management. Based on
such review and discussions, the Compensation Committee recommended
to the Board that the information contained in this Item 11 be
included in the Annual Report on Form 10-K and the Company’s next
Proxy Statement.
John A. Engerman
Governor John P. de Jongh, Jr.
Ricardo C. Byrd
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of April 21, 2023
by:
•Each
Director and NEO of AAMC,
including former NEOs who worked for the Company during 2021 and/or
2022;
•All
Directors and executive officers of AAMC as a group;
and
•All
persons known by AAMC to own beneficially 5% or more of the
outstanding common stock.
The table is based upon information supplied to us by directors,
executive officers and principal stockholders and filings under the
Exchange Act and is based on an aggregate of 1,758,421 shares
issued and outstanding as of April 21, 2023, which does not include
1,675,875 shares held by us in treasury. Unless otherwise
indicated, the address of our Directors and executive officers is:
Altisource Asset Management Corporation, 5100 Tamarind Reef,
Christiansted, United States Virgin Islands 00820.
Shares Beneficially Owned as of April 21, 2023
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Name of Beneficial Owner: |
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Amount |
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Percent |
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William C. Erbey
(1)
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805,749 |
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45.8% |
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Theodore Walker Cheng-De King
(2)
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194,610 |
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11.1% |
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Directors and NEOs: |
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Amount |
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Percent |
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Indroneel Chatterjee
(3)
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58,027 |
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3.3% |
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Christopher D. Moltke-Hansen
(4)
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4,774 |
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* |
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P. Graham Singer
(5)
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5,303 |
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* |
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Ricardo C. Byrd
(6)
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13,735 |
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* |
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John A. Engerman
(6)
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9,517 |
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* |
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John P. de Jongh, Jr.
(6)
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10,689 |
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* |
|
Thomas K. McCarthy |
|
— |
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— |
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Jason Kopcak
(7)
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27,500 |
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1.6% |
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Stephen R. Krallman
(8)
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7,000 |
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* |
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Kevin Sullivan
(9)
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3,000 |
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* |
|
All Directors and Executive Officers as a Group
(6 persons) (10)
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71,441 |
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4.1% |
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___________
* Less than 1%
(1)Based
on information contained in a Schedule 13D/A filed with the SEC on
August 15, 2022 by Mr. Erbey. Includes 805,749 shares of common
stock held by E. Elaine Erbey, Mr. Erbey's spouse, for which Mr.
and Mrs. Erbey claim shared voting and dispositive
power.
(2)Based
on information contained in a Schedule 13G/A filed withe the SEC on
February 17, 2023 by Mr. Cheng-de King.
(3)Based
on information contained in a Form 4 filed by Mr. Chatterjee on
February 26, 2021. Does not include the 40,000 unvested restricted
shares of common stock, which were forfeited upon Mr. Chatterjee's
termination for cause.
(4)Based
on information contained in a form 4 filed by Mr. Moltke-Hansen on
February 26, 2021. Does not include 5,000 unvested restricted
shares of common stock, which were forfeited upon Mr.
Moltke-Hansen's resignation.
(5)Based
on information contained in a Form 4 filed by Mr. Singer on
February 26, 2021. Does not include 5,000 unvested restricted
shares of common stock, which were forfeited upon Mr. Singer's
resignation.
(6)Does
not include the 2,857 shares issued to each of Messrs. Byrd and
Engerman and Governor de Jongh, Jr. for service on our Board for
the 2022 to 2023 service year that will vest in 2023 pursuant to
the AAMC 2020 Equity Incentive Plan.
(7)Based
on information contained in a Form 3 filed by Mr. Kopcak on May 20,
2022. Additionally, pursuant to Mr. Kopcak's employment contract,
on March 16, 2022, Mr. Kopcak received an initial equity award
consisting of 22,500 restricted shares. The restricted shares are
to vest annually over a three-year period following the start date
of this employment on May 15, 2022. Mr. Kopcak also owns 1,000
shares of Series N Preferred Stock, which are excluded from the
table above because such shares are not transferable and have no
voting power.
(8)Based
on information contained in a Form 4 filed by Mr. Krallman on April
27, 2022. Additionally, pursuant to Mr. Krallman's employment
contract, on June 28, 2021, Mr. Krallman received an initial equity
award consisting of 5,000 restricted shares. 1,667 shares vested on
June 28, 2022, with the remaining 3,333 shares to vest annually
over a two-year period following the date of the grant. Mr.
Krallman also owns 1,000 shares of Series O Preferred Stock, which
are excluded from the table above because such shares are not
transferable and have no voting power.
(9)Based
on information contained in a Form 3 filed by Mr. Sullivan on
September 29, 2021. Pursuant to Mr. Sullivan's employment contract,
on September 20, 2021, Mr. Sullivan received an initial equity
award consisting of 3,000 restricted shares. 1,000 shares vested on
September 20, 2022 and the remaining 2,000 shares vested on March
9, 2023 per the Separation Agreement.
(10)Includes
Messrs. Byrd, Engerman, de Jongh, Jr., Kopcak, Krallman and
Sullivan.
Equity Compensation Plan Information
The following table sets forth information as December 31,
2022 with respect to compensation plans under which our equity
securities are authorized for issuance (other than the 2016
Employee Preferred Stock Plan).
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Plan Category |
|
Number of Securities to be Issued upon Exercise of Outstanding
Options, Warrants, and Rights (a) |
|
Weighted Average Exercise Price of Outstanding Options, Warrants
and Rights (b) |
|
Number of Securities Remaining Available for Future Issuance under
Equity Compensation Plans (Excluding Securities Reflected in Column
(a)) |
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|
|
|
|
|
|
|
| Equity
Compensation Plans Approved by Security Holders: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 Equity Incentive Plan |
|
— |
|
|
$ |
— |
|
|
51,217 |
|
|
|
|
|
|
|
|
|
Equity Compensation Plans Not Approved by Security
Holders: |
|
Option Award Agreement and Restricted Stock Award
Agreement |
|
— |
|
|
— |
|
|
40,000 |
|
|
Total |
|
— |
|
|
$ |
— |
|
|
91,217 |
|
The Equity Incentive Plans allow for grants to be made in a number
of different forms, including but not limited to options,
restricted stock, restricted stock units and stock appreciation
rights. Other than the grant of these options, we have granted
restricted shares of common stock under the 2020 Equity Incentive
Plan. We have also issued shares of common stock to our
non-management Directors in connection with their service on our
Board as described above in “Director Compensation.”
During 2022, 22,500 restricted shares were issued with a weighted
average grant date value per share of $9.89. These shares of
service-based restricted stock awards were granted either as
inducement awards or under our Equity Incentive Plans to members of
management. These grants will vest in three equal installments
based on the grant dates(s), subject to forfeiture or
acceleration.
During 2021, 8,000 restricted shares were issued with a weighted
average grant date value per share of $21.58. These shares of
service-based restricted stock awards were granted either as
inducement awards or under our Equity Incentive Plans to members of
management. Of the 8,000 shares issued, 2,667 shares vested in
2022, 2,000 vested in March 2023 due to vesting acceleration, with
the remaining 3,333 shares to vest in two equal annual installments
based on the grant date(s), subject to forfeiture or
acceleration.
During 2021, 5,850 options were exercised at a weighted average
price of $4.36. As of December 31, 2022, we had no outstanding
options.
2016 Employee Preferred Stock Plan
On May 26, 2016, the 2016 Employee Preferred Stock Plan (the
“Employee Preferred Stock Plan”) was approved by our stockholders.
Pursuant to the Employee Preferred Stock Plan, the Company may
grant one or more series of non-voting preferred stock, par value
$0.01 per share, in the Company to induce certain employees to
become employed and remain employees of the Company in the USVI,
and any of its future USVI subsidiaries, to encourage ownership of
shares in the Company by such USVI employees and to provide
additional incentives for such employees to promote the success of
the Company’s business.
Pursuant to our stockholder approval of the Employee Preferred
Stock Plan, on December 29, 2016, the Company authorized 14
additional series of preferred stock of the Company, consisting of
Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, Series G Preferred Stock, Series H Preferred Stock, Series I
Preferred Stock, Series J Preferred Stock, Series K Preferred
Stock, Series L Preferred Stock, Series M Preferred Stock, Series N
Preferred Stock and Series O Preferred Stock, and each series shall
consist of up to an aggregate of 1,000 shares.
We have issued shares of preferred stock under the Employee
Preferred Stock Plan to certain of our USVI employees. These shares
of preferred stock are mandatorily redeemable by us in the event of
the holder's termination of service with the Company for any
reason. At December 31, 2022 and 2021, we had 3,200 and 1,200 and
shares outstanding, respectively In 2022, Mr. Kopcak and Mr.
Krallman each had been issued 1,000 shares of preferred
stock.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
Related Party Transaction Policy
The Board has adopted policies and procedures for the review,
approval and monitoring of transactions involving AAMC and related
persons (Directors, nominees for election as Director and NEOs or
their immediate family members or stockholders owning 5% or greater
of the Company’s outstanding stock or their immediate family
members) within our written Code of Business Conduct and Ethics,
which is available at www.altisourceamc.com. The policies and
procedures are not limited to related person transactions that meet
the threshold for disclosure under the relevant SEC rules as the
policies and procedures broadly cover any situation in which a
conflict of interest may arise.
Any situation that potentially involves a conflict of interest is
to be immediately disclosed to the Company’s General Counsel who,
in consultation with management and the Audit Committee chair and
with outside counsel, as appropriate, must assess the nature and
extent of any concern and then recommend any follow up action, as
needed. The General Counsel will notify the Chair of the Audit
Committee if any such situation requires notice to or approval of
the Audit Committee of the Board of Directors.
Related persons are required to obtain the approval of the Audit
Committee of the Board for any transaction or situation that may
pose a conflict of interest. In considering a transaction, the
Audit Committee will consider all relevant factors including, but
not limited to, (i) whether the transaction is in the best
interests of AAMC; (ii) alternatives to the related-person
transaction; (iii) whether the transaction is on terms comparable
to those available to third parties; (iv) the potential for the
transaction to lead to an actual or apparent conflict of interest
and any safeguards imposed to prevent such actual or apparent
conflicts; and (v) the overall fairness of the transaction to
AAMC.
Putnam Transaction
On July 18, 2022, AAMC entered into an agreement (the ‘‘Purchase
Agreement’’) with Putnam Equity Spectrum Fund and Putnam Capital
Spectrum Fund (collectively, ‘‘Putnam’’) in which the Company
repurchased 286,873 shares of common stock owned by Putnam. The
aggregate purchase price for such shares of common stock was
$2,868,730 or $10 per share.
Pursuant to the Purchase Agreement, the Company and Putnam also
agreed to terminate the most favored nation clause granted to
Putnam in the settlement agreement between Putnam and the Company
dated February 17, 2021 (the ‘‘Settlement Agreement’’) requiring
the Company to pay Putnam the difference, subject to certain terms
and conditions, if the Company enters into a mutually agreed
settlement with another holder of the Company’s Series A preferred
stock (the ‘‘Preferred Shares’’) at a higher value per Preferred
Share than provided to Putnam under the Settlement Agreement. The
Company and Putnam also agreed to terminate all of Putnam’s
shareholder voting obligations included in the Settlement
Agreement.
Executive Arbitrations
Former Chief Executive Officer, Indroneel Chatterjee
On December 29, 2022, the arbitrator entered a final order which
granted an additional award of fees and costs to the Company in the
amount of over $1 million, bringing the Company's total judgment
against Mr. Chatterjee to approximately $1.6 million.
In the arbitrator’s final award, he also included the amounts he
had previously awarded to the Company in his October 19, 2022
order, which were $400,000 plus interest at the U.S. Virgin
Islands’ 9% statutory rate for contractual claims (since Mr.
Chatterjee’s termination on April 16, 2021) and approximately
$140,000 as reimbursement to the Company for all expenses the
Company incurred directly and solely as a result of Mr.
Chatterjee’s misconduct in the arbitration.
The Company intends to enforce the judgment against Mr.
Chatterjee.
Former General Counsel, Graham Singer
On June 25, 2021, Mr. Singer commenced an arbitration against the
Company and its subsidiary AAMC US, Inc. regarding his compensation
and the terms of his employment. The Company had previously
demanded that Mr. Singer return his signing bonus in accordance
with the terms of his employment agreement. The Company and Mr.
Singer settled all claims and counterclaims and the Company paid
Mr. Singer’s counsel $70,000 in 2022.
Item 14. Principal Accountant Fees and Services
Our independent registered public accounting firm is Ernst &
Young LLP, Atlanta, GA, Auditor Firm ID: 42. The following table
shows the aggregate fees billed to AAMC for professional services
by Ernst & Young LLP with respect to our fiscal year ended
December 31, 2022 and 2021:
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|
|
|
|
|
|
Category |
|
2022 |
|
2021 |
|
Audit Fees |
|
$ |
515,000 |
|
|
$ |
472,494 |
|
|
Audit-Related Fees |
|
15,594 |
|
|
— |
|
|
Tax Fees |
|
— |
|
|
16,640 |
|
|
All Other Fees |
|
50,000 |
|
|
— |
|
|
Total |
|
$ |
580,594 |
|
|
$ |
489,134 |
|
Audit Fees.
This category includes the aggregate fees and expenses billed for
professional services rendered for the audits of AAMC’s
consolidated financial statements for the fiscal years ended
December 31, 2022 and 2021, for reviews of the financial statements
included in AAMC’s quarterly reports on Form 10-Q during those
fiscal years and for services that are normally provided by the
independent registered public accounting firm and affiliates in
connection with statutory and regulatory filings or engagements for
the relevant fiscal year.
Audit-Related Fees.
This category includes the aggregate fees billed for audit-related
services by the independent registered public accounting firm that
are reasonably related to the performance of the audits or reviews
of the financial statements and are not reported above under “Audit
Fees.”
Tax Fees.
This category would include the aggregate fees billed for
professional services rendered by the independent registered public
accounting firm for tax compliance and tax planning.
All Other Fees.
This category would include the aggregate fees billed for products
and services provided by the independent registered public
accounting firm that are not reported above under “Audit Fees,”
“Audit-Related Fees” or “Tax Fees.” We did not incur any such other
fees for the years ended December 31, 2022 and 2021. Additionally,
we have excluded reimbursed expenses.
The Audit Committee considered the fees paid to Ernst & Young
LLP for the fiscal year ended December 31, 2022 and determined that
the services and fees are compatible with the independence of Ernst
& Young LLP.
Audit Committee Pre-Approval Policy
The Audit Committee is required to pre-approve the audit and
(unless the de minimus exception of applicable law permits)
non-audit services performed by the independent registered public
accounting firm in order to assure that the provision of such
services does not impair the independent registered public
accounting firm’s independence. Unless a type of service to be
provided by the independent registered certified public accounting
firm has received general pre-approval, it will require specific
pre-approval by the Audit Committee. For the fiscal years ended
December 31, 2021 and 2020, all fees associated with the
independent registered public accounting firm’s services were
pre-approved by the Audit Committee.
The Audit Committee may delegate pre-approval authority to one or
more of its members. The member or members to whom such authority
is delegated will report any pre-approval decisions to the Audit
Committee at its next scheduled meeting. The Audit Committee does
not delegate its responsibilities to pre-approve services performed
by the independent registered public accounting firm to
management.
Part IV
Item 15. Exhibits
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Exhibit Number |
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Description |
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Separation Agreement, dated as of December 21, 2012, between
Altisource Asset Management Corporation and Altisource Portfolio
Solutions S.A. (incorporated by reference to Exhibit 2.1 of the
Registrant's Current Report on Form 8-K filed with the SEC on
December 28, 2012). |
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Amended and Restated Articles of Incorporation of Altisource Asset
Management Corporation (incorporated by reference to Exhibit 3.1 of
the Registrant's Current Report on Form 8-K filed with the SEC on
January 5, 2017). |
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Fifth Amended and Restated Bylaws of Altisource Asset Management
Corporation (incorporated by reference to Exhibit 3.2 of the
Registrant's Current Report on Form 8-K filed with the SEC on July
6, 2022). |
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Certificate of Designations establishing the Company’s Series A
Convertible Preferred Stock (incorporated by reference to Exhibit
3.1 of the Registrant’s Current Report on Form 8-K filed with the
SEC on March 19, 2014). |
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Master Repurchase Agreement between Altisource Asset Management
Corporation and Grapetree Lending LLC and NexBank, dated December
2, 2022 (portions redacted). |
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Description of Registrant's Securities. |
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Altisource Asset Management Corporation 2012 Equity Incentive Plan
(incorporated by reference to Exhibit 10.11 of the Registrant's
Amendment No. 4 to Form 10 filed with the SEC on December 18,
2012). |
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Amended and Restated Asset Management Agreement, dated as of May 7,
2019, by and among Front Yard Residential Corporation, Front Yard
Residential, L.P. and Altisource Asset Management Corporation
(incorporated by reference to Exhibit 10.1 of the Registrant's
Current Report on Form 8-K filed with the SEC on May 8,
2019). |
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Asset Management Agreement, dated March 31, 2015, among Front Yard
Residential Corporation (f/k/a Altisource Residential Corporation),
Front Yard Residential L.P. (f/k/a Altisource Residential, L.P.)
and Altisource Asset Management Corporation (incorporated by
reference to Exhibit 10.1 of the Registrant's Current Report on
Form 8-K filed with the SEC on April 2, 2015). |
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Amendment to Asset Management Agreement, dated April 7, 2015, among
Front Yard Residential Corporation (f/k/a Altisource Residential
Corporation), Front Yard Residential L.P. (f/k/a Altisource
Residential, L.P.) and Altisource Asset Management Corporation
(incorporated by reference to Exhibit 10.1 of the Registrant's
Current Report on Form 8-K filed with the SEC on April 13,
2015). |
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Altisource Asset Management Corporation 2016 Preferred Stock Plan
(incorporated by reference to Exhibit 10.22 of the Registrant's
Annual Report on Form 10-K filed with the SEC on March 1,
2017). |
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Form of Preferred Stock Agreement under 2016 Employee Preferred
Stock Plan (incorporated by reference to Exhibit 10.1 of the
Registrant's Current Report on Form 8-K filed with the SEC on
January 5, 2017). |
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Altisource Asset Management Corporation 2020 Equity Incentive Plan
(incorporated by reference to Exhibit 4.3 of the Registrant's Form
S-8 filed with the SEC on December 21, 2020). |
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Employment Agreement of Jason Kopcak, dated as of March 16, 2022.
(incorporated by reference to Exhibit 10.1 to the Registrant's
Current Report on Form 8-K filed with the SEC on March 18,
2022.) |
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Settlement Agreement dated as of February 17, 2021, between
Altisource Asset Management Corporation and Putnam Focused Equity
Fund, a series of Putnam Funds Trust, dated as of February 17, 2021
(incorporated by reference to Exhibit 10.1 to the Registrant's
Current Report on Form 8-K filed with the SEC on February 18,
2021). |
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Settlement Agreement dated as of August 27, 2021, between
Altisource Asset Management Corporation and
Ithan Creek Master Investors (Cayman) L.P., Bay Pond Investors
(Bermuda) L.P., Bay Pond Partners, L.P. and Wellington Management
Company LLP (together, the “Wellington Parties”).
(incorporated by reference to Exhibit 10.1 to the Registrant's
Current Report on Form 8-K filed with the SEC on August 30,
2021).
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Schedule of Subsidiaries. |
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Consent of Ernst & Young LLP. |
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24
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Power of Attorney (incorporated by reference to the signature page
of the Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 filed on March 27, 2023). |
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Certification of Interim Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act |
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Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act |
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Certification of Interim CEO Pursuant to Section 906 of the
Sarbanes-Oxley Act. |
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Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley
Act. |
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101.INS* |
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Inline XBRL Instance Document. |
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101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL* |
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Inline XBRL Taxonomy Extension Calculation Linkbase
Document. |
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101.DEF* |
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Inline XBRL Taxonomy Extension Definition Linkbase
Document. |
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101.LAB* |
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Inline XBRL Extension Label Linkbase Document. |
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101.PRE* |
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Inline XBRL Taxonomy Extension Presentation Linkbase
Document. |
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104 |
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Cover page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101). |
__________
* Filed herewith.
† Denotes management contract or compensatory
arrangement.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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Altisource Asset Management Corporation |
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Date: |
May 1, 2023 |
By: |
/s/ |
Jason Kopcak |
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Jason Kopcak |
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Interim Chief Executive Officer |
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Date: |
May 1, 2023 |
By: |
/s/ |
Stephen Ramiro Krallman |
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Stephen Ramiro Krallman |
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Chief Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons on behalf of the registrant and in the capacities
indicated:
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Signature |
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Title |
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Date |
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* |
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Director |
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May 1, 2023 |
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John P. de Jongh, Jr. |
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* |
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Director |
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May 1, 2023 |
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Ricardo C. Byrd |
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* |
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Director |
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May 1, 2023 |
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John A. Engerman |
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/s/ Jason Kopcak |
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Chief Executive Officer |
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May 1, 2023 |
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Jason Kopcak |
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/s/ Stephen Ramiro Krallman |
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Chief Financial Officer (Principal Financial Officer and
Principal Accounting Officer) |
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May 1, 2023 |
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Stephen Ramiro Krallman |
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__________
* A signed Power of Attorney authorizing Jason Kopcak and Stephen
Ramiro Krallman each of them severally, to sign the annual report
on Form 10-K for the fiscal year ended December 31, 2022 and
any amendments thereto as attorneys-in-fact for certain directors
and officers of the registrant is included herein as Exhibits 24,
incorporated by reference to Exhibit 24 of the Form 10-K filed by
the Company on March 27, 2023.
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