William Erbey may be leaving Ocwen Financial (OCN) behind after being forced to resign from his position as executive chairman as part of a massive settlement with the New York Department of Financial Services, but he is not leaving empty-handed. Far from it, in fact.
According to a filing with the Securities and Exchange Commission, Ocwen will pay Erbey $1.2 million in a lump sum cash payment as part of his “retirement agreement.” The payment will come in the form a $725,000 cash payment for severance and an additional $475,000 “in lieu of certain relocation benefits.”
But that’s not all Erbey will get as leaves Ocwen and steps down as chairman of its related companies, Altisource Portfolio Solutions S.A. (ASPS), Altisource Residential Corporation (RESI), Altisource Asset Management Corporation (AAMC), and Home Loan Servicing Solutions, Ltd. (HLSS), after Ocwen settled with the NYDFS over allegations into the company’s servicing practices and its relationships with its affiliated companies.
Erbey will also receive a $725,000 dividend for his 100 shares of Ocwen Mortgage Servicing’s Class A Preferred Stock. “Promptly after payment of that dividend, OMS will redeem all of Mr. Erbey’s Class A Preferred Stock for $100,” Ocwen said in the filing.
Additionally, as of Erbey’s last day at Ocwen, which was Jan. 16, all stock options granted to Erbey by Ocwen prior to 2012 are now fully vested and exercisable. According to Ocwen’s SEC filing, Erbey holds 2,572,626 stock options from before 2012.
Erbey was granted 69,805 stock options in 2006, with a current exercise price of approximately $5.81 per share. Those options expire on March 8, 2016.
Erbey was also granted 102,821 stock options in 2007, with a current exercise price of approximately $7.16 per share. Those options expire May 10, 2017.
The largest portion of Erbey’s pre-2012 options also have the lowest exercise price. Erbey was granted 2.4 million stock options in 2008, with a current exercise price of approximately $4.82 per share. Those options expire on July 14, 2018.
All of those options have exercise prices under Ocwen’s current stock price, which is trading at $7.60 as of 3:24 p.m. Eastern on Tuesday. If Erbey chooses to exercise those options, he would be buying his shares for roughly $12.71 million. And at Ocwen’s current trading price, Erbey’s shares would be worth approximately $19.55 million. A sale of those shares would net Erbey roughly $6.84 million.
And that doesn’t include the 1 million stock options that Erbey was granted in 2012, although those options have a current exercise price of $24.38.
Ocwen also said that Erbey will be eligible for an annual bonus for the fiscal year 2014, based on the company’s determination of bonuses for its other senior executives.
As part of Erbey’s retirement agreement, he is prohibited from disclosing any confidential information about Ocwen or its affiliates. Erbey is also prohibited from “engaging in certain activities that are competitive” with Ocwen and its affiliates for two years.
Erbey is also not allowed to solicit any of Ocwen’s employees or independent contractors for a period of two years as well. He is also prohibited from using Ocwen trade secrets to solicit and of Ocwen’s “customers, vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents, or partners.”
As part of the retirement agreement, Erbey and his wife will also be entitled to continued medical coverage, Ocwen said in the filing.