Operating Expenses

12 Months Ended

Dec. 31, 2022

Other Income and Expenses [Abstract]

Components of our general and administrative expenses, portfolio management costs, loan acquisition costs, and other expenses for the years ended December 31, 2022, 2021 and 2020 are presented in the following table.

Table 22.1 – Components of Operating Expenses


	Years Ended December 31,
(In Thousands)	2022		2021		2020
General and Administrative Expenses
Fixed compensation expense(1)	$	63,642	$	46,328	$	46,689
Annual variable compensation expense	12,873		58,569		14,116
Long-term incentive award expense (2)	23,101		19,938		12,439
Acquisition-related equity compensation expense (3)	—		3,813		4,848
Systems and consulting	14,193		14,445		11,728
Office costs	8,574		7,837		7,794
Accounting and legal	6,644		4,975		7,928
Corporate costs	3,675		3,388		2,829
Other	8,206		5,925		5,127
Total General and Administrative Expenses	140,908		165,218		113,498

Portfolio Management Costs	7,951		5,758		4,204

Loan Acquisition Costs
Commissions	7,154		7,116		4,321
Underwriting costs	3,368		7,645		2,447
Transfer and holding costs	1,244		1,458		1,757
Total Loan Acquisition Costs	11,766		16,219		8,525

Other Expenses
Goodwill impairment expense	—		—		88,675
Amortization of purchase-related intangible assets	13,969		15,304		15,925
Other	1,621		1,391		4,185
Total Other Expenses	15,590		16,695		108,785
Total Operating Expenses	$	176,215	$	203,890	$	235,012

(1)Includes $7 million of severance and transition-related expenses for the year ended December 31, 2022.

(2)For the years ended December 31, 2022 and 2021, long-term incentive award expense includes $20 million and $14 million, respectively, of expense for awards settleable in shares of our common stock and $3 million and $6 million, respectively, of expense for awards settleable in cash.

(3)Acquisition-related equity compensation expense relates to 588,260 shares of restricted stock that were issued to members of CoreVest management as a component of the consideration paid to them for our purchase of their interests in CoreVest in 2019.

During the third and fourth quarters of 2022, we initiated various expense management initiatives, including the restructuring of our Business Purpose Mortgage Banking management team, and incurred $7 million of employee severance and related transition expenses, which were incurred almost entirely at our Business Purpose Mortgage Banking segment.

Cash-Settled Deferred Stock Units

During the years ended December 31, 2022, 2021 and 2020, $3 million, $4 million and $2 million of cash-settled deferred stock units, respectively, were granted to certain executive officers and non-executive employees that will vest over the next four years through 2026. These awards will be fully vested and payable in cash with a vested award value based on the closing market price of our common stock on their respective final vesting dates. These awards are classified as liabilities in Accrued expenses and other liabilities on our consolidated balance sheets, and are being amortized over their respective vesting periods on a straight-line basis, adjusted for changes in the value of our common stock at the end of each reporting period. For the years ended December 31, 2022, 2021 and 2020, we recognized an expense of $1 million, $2 million and $0.1 million, respectively, for cash-settled deferred stock units in "Long-term incentive award expense," as presented in Table 22.1 above. At December 31, 2022 and December 31, 2021, the unamortized compensation cost of cash-settled deferred stock units was $5 million and $7 million, respectively. The compensation costs associated with these awards are adjusted for changes in the value of our common stock at the end of each reporting period.

Long-Term Cash-Based Awards

During the years ended December 31, 2022, 2021 and 2020, $3 million, $1 million and $8 million of long-term cash-based retention awards were granted to certain executive and non-executive employees, respectively, that will vest and be paid over one to three-year periods, subject to continued employment through the vesting periods through 2023 and 2024. During the year ended December 31, 2022, $2 million of cash-based retention awards that were granted during 2020 and 2022 were forfeited due to employee terminations. Additionally, during 2020, Cash Performance Awards with an aggregate granted award value of $2 million, were granted to certain executive and non-executive employees that will vest between 0% to 400% of granted award value based on a relative total stockholder return measure, and are contingent on continued employment over a three-year service period.

The value of long-term cash-based awards is being amortized into expense on a straight-line basis over each award's respective vesting period. The Cash Performance Awards are amortized on a straight-line basis over three years; however, they are remeasured at fair value each quarter-end and the cumulative straight-line expense is trued-up in respect to their updated value. For the years ended December 31, 2022, 2021 and 2020, General and administrative expenses included $1 million, $3 million and $5 million of aggregate expense, respectively, related to long-term cash-based awards and the Cash Performance awards.