<PAGE>
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary [ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CENDANT CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
================================================================================
<PAGE>
[CENDANT LOGO]
March 28, 2000
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cendant Corporation (the "Company"), which will be held at the Ramada Inn and
Conference Center, 130 Route 10 West, East Hanover, New Jersey 07936, on May
25, 2000 at 10:00 a.m., New York Time. We look forward to greeting as many of
our stockholders as possible.
This booklet includes the Notice of Annual Meeting and the Proxy
Statement. The Proxy Statement describes the business to be conducted at the
Annual Meeting and provides other information concerning the Company which you
should be aware of when you vote your shares.
Whether or not you attend the Annual Meeting, it is important that your
shares be represented and voted at the meeting. Stockholders of record can vote
their shares by using the telephone or by marking your votes on the enclosed
proxy card, signing, dating and mailing the proxy card in the enclosed
envelope. If you decide to attend the Annual Meeting and vote in person, you
may then withdraw your proxy.
Admission to the Annual Meeting will be by ticket only. If you are a
registered stockholder planning to attend the meeting, please check the
appropriate box on the proxy card and retain the bottom portion of the card as
your admission ticket. If your shares are held through an intermediary such as
a bank or broker, follow the instructions in the Proxy Statement to obtain a
ticket.
On behalf of the Board of Directors and the employees of Cendant
Corporation, I would like to express my appreciation for your continued
interest in the affairs of the Company.
Sincerely,
/s/ Henry R. Silverman
- -------------------------------------
Henry R. Silverman
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
CENDANT CORPORATION
9 WEST 57TH STREET
NEW YORK, NEW YORK 10019
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 25, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Cendant
Corporation (the "Company") will be held on Thursday, May 25, 2000 at 10:00
a.m., New York Time, at the Ramada Inn and Conference Center, 130 Route 10
West, East Hanover, New Jersey 07936 (the "Meeting") to consider and vote upon
the following matters:
1. To elect four directors for a three-year term expiring in 2003 and
until their successors are duly elected and qualified;
2. Ratification of the appointment of Deloitte & Touche LLP as the
auditors of the Company's financial statements for fiscal year 2000;
3. To approve the 2000 Move.com Employee Stock Purchase Plan; and
4. Approval of such other business as may properly come before the Meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 27, 2000
as the record date for the Meeting. Only stockholders of record at that time
are entitled to notice of, and to vote at, the Meeting and any adjournment or
postponement thereof. A list of stockholders entitled to vote at the Meeting
will be available for examination by any stockholders, for any purpose germane
to the Meeting, for 10 days prior to the Meeting during ordinary business hours
at the site of the Meeting.
Attendance at the Meeting will be limited to stockholders as of the record
date, their authorized representatives and guests of the Company. Admission
will be by ticket only. For registered stockholders, the bottom portion of the
proxy card enclosed with the Proxy Statement is their Meeting ticket.
Beneficial owners with shares held through an intermediary, such as a bank or
broker, should request tickets in writing from Investor Relations, Cendant
Corporation, 9 West 57th Street, New York, New York 10019, and include proof of
ownership, such as a bank or brokerage firm account statement or letter from
the broker, trustee, bank or nominee holding their stock, confirming beneficial
ownership. Stockholders who do not obtain tickets in advance may obtain them
upon verification of ownership at the Registration Desk on the day of the
Meeting. Admission to the Meeting will be facilitated if tickets are obtained
in advance. Tickets may be issued to others at the discretion of the Company.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached Proxy Statement for further information with
respect to the business to be transacted at the Meeting. The Board of Directors
urges you to date, sign and return the enclosed proxy promptly. This will
ensure the presence of a quorum at the Meeting. PROMPTLY SIGNING, DATING, AND
RETURNING THE PROXY WILL SAVE THE COMPANY THE EXPENSE AND EXTRA WORK OF
ADDITIONAL SOLICITATION. A reply envelope, for which no postage is required if
mailed within the United States, is enclosed for your convenience.
Alternatively, in lieu of returning signed proxy cards, the Company's
stockholders of record can vote their shares by calling a specially designated
telephone number set forth on the enclosed proxy card. You are cordially
invited to attend the Meeting in person. The return of the enclosed proxy will
not affect your right to vote if you attend the Meeting in person, as your
proxy is revocable at your option.
By Order of the Board of Directors
/s/ Jeanne M. Murphy
----------------------
JEANNE M. MURPHY
Secretary
Dated: March 28, 2000
<PAGE>
CENDANT CORPORATION
9 WEST 57TH STREET
NEW YORK, NEW YORK 10019
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON THURSDAY, MAY 25, 2000
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cendant Corporation, a Delaware
corporation (the "Company"), to be voted at the 2000 Annual Meeting of
Stockholders, and any adjournment or postponement thereof (the "Meeting"), to
be held on the date, at the time and place, and for the purposes set forth in
the foregoing notice. This Proxy Statement, the accompanying notice and the
enclosed proxy card are first being mailed to stockholders on or about March
28, 2000.
The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice, nor does the Board of
Directors know of any matters which anyone else proposes to present for action
at the Meeting. However, if any other matters properly come before the Meeting,
the persons named in the enclosed proxy, or their duly constituted substitutes
acting at the Meeting, will be authorized to vote or otherwise act thereon in
accordance with their judgment on such matters.
Shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), represented by proxies received by the Company (whether
through the return of the enclosed proxy card or by telephone), where the
stockholder has specified his or her choice with respect to the proposals
described in this Proxy Statement (including the election of directors), will
be voted in accordance with the specification(s) so made. If your proxy is
properly executed but does not contain voting instructions, or if you use
telephone voting without indicating how you want to vote, your shares will be
voted "FOR" the election of all four nominees for the Board of Directors, "FOR"
the ratification of the appointment of Deloitte & Touche LLP as auditors of the
Company's financial statements for the year ending December 31, 2000 and "FOR"
the approval of the 2000 Move.com Employee Stock Purchase Plan.
Except as provided below, any proxy may be revoked at any time prior to
its exercise by notifying the Secretary in writing, by delivering a duly
executed proxy bearing a later date or by attending the Meeting and voting in
person.
For participants in the Cendant Corporation Employee Savings Plan (the
"Employee Savings Plan") and the Cendant Membership Services, Inc. Savings
Incentive Plan (the "Savings Incentive Plan" and together with the Employee
Savings Plan, the "Savings Plans") with shares of Common Stock credited to
their accounts, voting instructions for the trustees of the Savings Plans are
also being solicited through this Proxy Statement. In accordance with the
provisions of the Savings Plans, the trustees will vote shares of Common Stock
in accordance with instructions received from the participants to whose
accounts such shares are credited. To the extent such instructions are not
received prior to twelve o'clock noon, New York Time, on May 18, 2000, the
trustee of the Employee Savings Plan will vote the shares with respect to which
it has not received instructions proportionately in accordance with the shares
for which it has received instructions, and the trustee under the Savings
Incentive Plan will abstain from voting such shares. Instructions given with
respect to shares in accounts of the Savings Plans may be changed or revoked
only in writing, and no such instructions may be revoked after twelve o'clock
noon, New York Time, on May 18, 2000. Participants in the Savings Plans are not
entitled to vote in person at the Meeting.
If a participant in a Savings Plan has shares of Common Stock credited to
his or her account in one of the Savings Plans and also owns other shares of
Common Stock, he or she should receive separate proxy cards for shares credited
to his or her account in the Savings Plans and any other shares that he or she
owns. All such proxy cards should be completed, signed and returned to the
transfer agent to register voting instructions for all shares owned by him or
her or held for his or her benefit in such Savings Plans' Cendant Stock Fund.
<PAGE>
The accompanying form of proxy is being solicited on behalf of the Board
of Directors of the Company. The expenses of solicitation of proxies for the
Meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone by directors,
officers and employees of the Company, who will receive no additional
compensation therefor. Upon request, the Company will reimburse brokers,
dealers, banks and trustees, or their nominees, for reasonable expenses
incurred by them in forwarding material to beneficial owners of shares of
Common Stock. The Company has retained Chase Mellon Shareholder Services to aid
in the solicitation of proxies. It is estimated that the fee for Chase Mellon
Shareholder Services will be approximately $15,000.00 plus reasonable
out-of-pocket costs and expenses. Such fee will be paid by the Company.
A copy of the Annual Report on Form 10-K filed by the Company with the
Securities and Exchange Commission for its latest fiscal year is available
without charge to stockholders upon written request to Cendant Corporation, 9
West 57th Street, New York, New York 10019, Attention: Investor Relations.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
VOTING SECURITIES AND PRINCIPAL HOLDERS ................................................. 1
Outstanding Shares and Voting Rights ................................................... 1
Security Ownership of Certain Beneficial Owners and Management ......................... 2
ELECTION OF DIRECTORS [Proposal 1] ...................................................... 3
General ................................................................................. 3
Information Regarding the Nominees for the Term Expiring in 2003 ....................... 4
Information Regarding Directors Whose Terms Expire in 2001 ............................. 5
Information Regarding Directors Whose Terms Expire in 2002 ............................. 6
Committees and Meetings of the Board of Directors ...................................... 7
EXECUTIVE OFFICERS ...................................................................... 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION ............................................ 11
Summary Compensation Table for the Named Executive Officers ............................ 11
Option Grants Table for the Named Executive Officers ................................... 13
Aggregated Option Exercises and Year-End Option Value Table for the Named Executive
Officers ............................................................................. 13
Ten Year Option/SAR Repricings ......................................................... 14
Employment Contracts and Termination, Severance and Change of Control Arrangements ..... 15
Compensation Committee Report on Executive Compensation ................................ 18
Compensation Committee Interlocks and Insider Participation ............................ 20
Performance Graph ...................................................................... 21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .......................................... 22
Relationship with Avis Rent A Car, Inc. ................................................ 22
Relationship with NRT .................................................................. 22
Relationship with NetMarket Group, Inc. ................................................ 24
Other Relationships .................................................................... 25
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT ....................................... 26
RATIFICATION OF APPOINTMENT OF AUDITORS [Proposal 2] .................................... 26
APPROVAL OF THE MOVE.COM 2000 EMPLOYEE STOCK PURCHASE PLAN
[Proposal 3] ........................................................................... 27
STOCKHOLDER PROPOSALS ................................................................... 30
ANNEX A -- MOVE.COM 2000 EMPLOYEE STOCK PURCHASE PLAN ................................... A-1
</TABLE>
i
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the Common Stock at the close of business on
March 27, 2000 are entitled to notice of, and to vote at, the Meeting. On that
date, the Company had outstanding 724,145,899 shares of Common Stock, held of
record by 9,417 stockholders.
The presence, in person or by proxy, of the holders of not less than
one-third of the Common Stock entitled to vote at the Meeting will constitute a
quorum. On all matters voted upon at the Meeting and any adjournment or
postponement thereof, the holders of the Common Stock vote together as a single
class, with each record holder of Common Stock entitled to one vote per share.
Directors shall be elected by a plurality of the votes of the shares of
Common Stock present at the Meeting, in person or by proxy, and entitled to
vote in the election of Directors. Under applicable Delaware law, in
determining whether such nominees have received the requisite number of
affirmative votes, abstentions and broker non-votes will have no effect on the
outcome of the vote.
Approval of the proposal relating to the ratification of the appointment
of auditors of the Company's financial statements requires the affirmative vote
of a majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Meeting. Under applicable Delaware law, in determining
whether such proposal has received the requisite number of affirmative votes,
abstentions and broker non-votes will be counted and will have the same effect
as a vote against the proposal.
Approval of the Move.com 2000 Employee Stock Purchase Plan requires the
affirmative vote of a majority of the shares of Common Stock present and
represented by proxy and entitled to vote at the Meeting. Under applicable
Delaware law, in determining whether such proposal has received the requisite
number of affirmative votes, abstentions and broker non-votes will be counted
and will have the same effect as a vote against the proposal.
In order that your shares of Common Stock may be represented at the
Meeting, you are requested to:
o indicate your instructions on the proxy;
o date and sign the proxy;
o mail the proxy promptly in the enclosed envelope; and
o allow sufficient time for the proxy to be received before the date of
the Meeting.
Alternatively, in lieu of returning signed proxy cards, the Company's
stockholders of record can vote their shares by calling a specially designated
telephone number. The phone voting procedure is designed to authenticate
stockholders' identities, to allow stockholders to provide their voting
instructions, and to confirm that their instructions have been recorded
properly. Specific instructions for stockholders of record who wish to use the
telephone voting procedure are set forth on the enclosed proxy card. A proxy
may be revoked at any time prior to the voting at the Meeting by submitting a
later dated proxy (including a proxy by telephone), by giving timely written
notice of such revocation to the Secretary of the Company or by attending the
Meeting and voting in person.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED AND THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROXY STATEMENT.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth on the following table is furnished as of March
15, 2000 (unless otherwise specified) with respect to any person (including any
"group" as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) who is known to the Company to be the
beneficial owner of more than 5% of any class of the Company's voting
securities, and as to those shares of the Company's equity securities
beneficially owned by each of its directors, certain of its executive officers,
and all of its executive officers and directors as a group.
<TABLE>
<CAPTION>
OF THE TOTAL
NUMBER OF SHARES
BENEFICIALLY
TOTAL AMOUNT OWNED, SHARES
OF SHARES PERCENT OF WHICH MAY BE
BENEFICIALLY COMMON STOCK ACQUIRED WITHIN
NAME OWNED (1) OWNED (2) 60 DAYS (3)
- ----------------------------------------------- -------------- -------------- -----------------
<S> <C> <C> <C>
PRINCIPAL STOCKHOLDERS:
Capital Research and
Management Company(4) 96,935,640 13.41% N/A
333 South Hope Street
Los Angeles, CA 90071
Massachusetts Financial
Services Company(5) 42,659,544 5.90% N/A
500 Boylston Street
Boston, MA 02116-3741
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS(6):
Henry R. Silverman 25,810,797 3.34% 24,310,722
Stephen P. Holmes(7) 2,859,981 * 2,699,493
Robert D. Kunisch(8) 1,804,733 * 1,723,430
Michael P. Monaco 2,864,590 * 2,847,994
James E. Buckman 2,476,789 * 2,457,689
Myra J. Biblowit 0 * 0
Leonard S. Coleman(9) 182,692 * 182,155
Martin L. Edelman(9) 122,692 * 122,155
Dr. Carole G. Hankin 62,737 * 62,000
Dr. John C. Malone 1,000,000 * 0
The Rt. Hon. Brian Mulroney, P.C. LLD(9) 182,692 * 182,155
Robert E. Nederlander(9) 182,692 * 182,155
Robert W. Pittman(9) 663,312 * 662,775
Sheli Z. Rosenberg 1,000 * 0
Leonard Schutzman(9) 187,492 * 169,327
Robert F. Smith(9)(10) 301,856 * 182,155
John D. Snodgrass(9)(11) 5,915,370 * 4,608,551
John W. Chidsey 908,188 * 903,438
David M. Johnson 859,665 * 766,665
Samuel L. Katz(12) 860,064 * 845,997
Richard A. Smith 1,950,346 * 1,939,196
Jon F. Danski 129,000 * 100,000
Executive Officers and Directors as a Group
(22 persons): 49,326,688 6.39% 44,948,052
</TABLE>
2
<PAGE>
- ----------
* Amount represents less than 1% of the outstanding Common Stock.
(1) Shares beneficially owned includes direct and indirect ownership of shares
and stock options that are currently exercisable or exercisable within 60
days.
(2) Based on 722,618,958 shares of Common Stock outstanding on March 15, 2000.
(3) Includes stock options that are currently exercisable plus stock options
that are exercisable within 60 days ("Vested Options").
(4) Based upon the information contained in a Form 13F dated February 10, 2000
by Capital Research and Management Company, a registered investment
advisor, Capital Research and Management Company beneficially owned
96,935,640 shares of Common Stock with sole power to vote none of such
shares and shared power to dispose all of such shares.
(5) Based upon the information contained in a Form 13F dated February 10, 2000
by Massachusetts Financial Services Company ("MFS"), a registered
investment adviser on behalf of itself and the other mutual funds and
institutional clients of MFS, such persons beneficially owned 42,659,544
shares of Common Stock with sole power to vote 42,654,644 of such shares
and sole power to dispose all of such shares.
(6) Such Director's and/or Executive Officer's Vested Options are deemed
outstanding for purposes of computing the percentages of the class for
such Director and/or Executive Officer.
(7) Includes 2,883 shares of Common Stock held by Mr. Holmes' children.
(8) Includes 80,766 shares held by Alibob Partners, L.P.
(9) Includes 537 shares held in the 1999 Non-Employee Directors Deferred
Compensation Plan.
(10) Includes 4,806 shares of Common Stock owned by a Keogh plan of which Mr.
Smith is the sole beneficiary and 95,134 shares of common stock held in a
401(k) plan account. Amount includes 19,224 shares of Common Stock held
in the name of the Smith Family Foundation of which Mr. Smith is
President, as to which Mr. Smith disclaims beneficial ownership.
(11) Amount includes 33,600 shares held by The Snodgrass Foundation of which
Mr. Snodgrass and his spouse are trustees but in which they have no
pecuniary interest and 40,681 shares held in a trust for the benefit of
Mr. Snodgrass's minor children. Mr. Snodgrass disclaims beneficial
ownership of all such shares. Also includes 232,000 shares held by Great
American Ventures LLC, of which Mr. Snodgrass is managing general
partner.
(12) Includes 180 shares of Common Stock held by Mr. Katz's spouse, 1,000
shares of Common Stock held by Mr. Katz's children and 9,787 shares held
by Mr. Katz in the Company's non-qualified deferred compensation plan.
ELECTION OF DIRECTORS
[PROPOSAL NO. 1]
GENERAL
The Board of Directors presently consists of fifteen members. Dr. Carole
G. Hankin and Mr. Monaco will retire from the Board of Directors immediately
following the Meeting. Effective as of March 31, 2000, Messrs. Kunisch and
Snodgrass will retire from the Board of Directors. Sheli Z. Rosenberg and Myra
J. Biblowit have been appointed by the Board to fill the vacancies left by
Messrs. Kunisch and Snodgrass for terms expiring at the 2001 Annual Meeting of
Stockholders. Mrs. Biblowit and Ms. Rosenberg have consented to being named in
this Proxy Statement and to serve as Directors from and after the Meeting.
Effective as of the date of the Meeting, the Board of Directors will be reduced
to thirteen members.
The Board of Directors proposed and recommended a vote "For" a proposal to
declassify the Board of Directors and provide for the annual election of all
members of the Board of Directors at the Special Meeting of Stockholders held
on March 21, 2000. However, an insufficient number of stockholders voted in
favor of such proposal and therefore the classification of the Board will
continue.
As a result, the Board is divided into three classes serving staggered
three-year terms. Directors for each class will be elected at the annual
meeting of stockholders held in the year in which in the term for such class
expires and will serve for three years. The Board of Directors has nominated
four candidates
3
<PAGE>
to be elected at the Meeting to serve as directors for a three-year term ending
at the 2003 annual meeting of stockholders and when their successors are duly
elected and qualified. All nominees are currently directors of the Company. The
terms of the remaining directors expire at the Company's annual meeting of
stockholders to be held in 2001 and 2002.
Each nominee has consented to being named in this Proxy Statement and to
serve if elected. If, prior to the Meeting, any nominee should become
unavailable to serve, the shares of Common Stock represented by a properly
executed and returned proxy (whether through the return of the enclosed proxy
card or by telephone) will be voted for such additional person as shall be
designated by the Board of Directors, unless the Board of Directors determines
to reduce the number of directors in accordance with the Company's Amended and
Restated Certificate of Incorporation and By-Laws.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE
AS DIRECTORS. UNLESS MARKED TO THE CONTRARY, PROXIES RECEIVED BY THE COMPANY
WILL BE VOTED FOR THE ELECTION OF THE FOUR NOMINEES LISTED BELOW.
Certain information regarding each nominee as of March 15, 2000, is set
forth below, including such individual's age and principal occupation, a brief
account of such individual's business experience during at least the last five
years and other directorships currently held.
INFORMATION REGARDING THE NOMINEES FOR THE TERM EXPIRING IN 2003
Henry R. Silverman James E. Buckman
Stephen P. Holmes Martin Edelman
MR. SILVERMAN, age 59, has been President and Chief Executive Officer and
Director of the Company since December 1997 and Chairman of the Board of
Directors and Chairman of the Executive Committee of the Board of Directors
since July 28, 1998. Mr. Silverman is also an officer and/or director of a
number of subsidiaries of the Company. Mr. Silverman was Chairman of the Board,
Chairman of the Executive Committee and Chief Executive Officer of HFS from May
1990 until December 1997. From November 1994 until February 1996, Mr. Silverman
also served as Chairman of the Board and Chief Executive Officer of Chartwell
Leisure Inc. ("Chartwell").
MR. BUCKMAN, age 55, has been a Vice Chairman since November 1998 and
General Counsel and a Director of the Company since December 1997. Mr. Buckman
was a Senior Executive Vice President of the Company from December 1997 until
November 1998. Mr. Buckman was the Senior Executive Vice President and General
Counsel and Assistant Secretary of HFS from May 1997 to December 1997, a
Director of HFS since June 1994 and was Executive Vice President, General
Counsel and Assistant Secretary of HFS from February 1992 to May 1997. Mr.
Buckman also serves as a director and officer of several subsidiaries of the
Company. From November 1994 to February 1996, Mr. Buckman served as the
Executive Vice President, General Counsel and Secretary of Chartwell and until
August 1996 he served as a director of Chartwell. Mr. Buckman also serves as a
Director of PHH Corporation, a wholly owned subsidiary of the Company, which
files reports pursuant to the Exchange Act.
MR. HOLMES, age 43, has been a Vice Chairman and Director of the Company
and Chairman and Chief Executive Officer of the Travel Division of the Company
since December 1997. Mr. Holmes was Vice Chairman of HFS from September 1996
until December 1997 and was a Director of HFS from June 1994 until December
1997. From July 1990 through September 1996, Mr. Holmes served as Executive
Vice President, Treasurer and Chief Financial Officer of HFS. Mr. Holmes also
serves as a director and officer of several subsidiaries of the Company. Mr.
Holmes is a director of the following corporations that file reports pursuant
to the Exchange Act: Avis Rent A Car, Inc. and PHH Corporation, a wholly owned
subsidiary of the Company. Mr. Holmes is also a Director of Avis Europe PLC.
See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS--Relationship with Avis
Rent A Car, Inc."
4
<PAGE>
MR. EDELMAN, age 58, has been a Director of the Company since December
1997. Mr. Edelman was a Director of HFS from November 1993 until December 1997.
He has been a partner with Battle Fowler, a New York City law firm, from 1972
through 1993 and since January 1, 1994 has been Of Counsel to that firm. Mr.
Edelman is also a partner of Chartwell Hotels Associates, Chartwell Leisure
Associates L.P., Chartwell Leisure Associates L.P. II, and of certain of their
respective affiliates. Mr. Edelman also serves as a director of the following
corporations which file reports pursuant to the Exchange Act: Avis Rent A Car,
Inc., Capital Trust and Arcadia Trust. Mr. Edelman was Chairman of the Board of
Directors of Avis Rent A Car, Inc. from December 1998 until November 1999. See
"CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS--Relationship with Avis Rent A
Car, Inc." and "--Other Relationships."
INFORMATION REGARDING DIRECTORS WHOSE TERMS EXPIRE IN 2001
Myra J. Biblowit* Dr. Carole G. Hankin*
Robert D. Kunisch* The Rt. Hon. Brian Mulroney, P.C., LL.D.
Robert W. Pittman Sheli Z. Rosenberg*
John D. Snodgrass*
* Dr. Hankin is retiring from the Board of Directors effective May 25,
2000. Messrs. Kunisch and Snodgrass are retiring from the Board of Directors
effective March 31, 2000. Mrs. Biblowit and Ms. Rosenberg have been appointed by
the Board of Directors to fill the vacancies left by Messrs. Kunisch and
Snodgrass effective as of May 25, 2000.
MS. BIBLOWIT, age 51, has been Vice Dean for External Affairs for the New
York University School of Medicine and Senior Vice President of the Mount
Sinai-NYU Health System since July 1997. From June, 1991 to June, 1997, Mrs.
Biblowit was Senior Vice President, and Executive Director of the Capital
Campaign for the American Museum of National History and prior to that, served
as Executive Vice President of the Central Park Conservancy from 1986 to 1991.
Mrs. Biblowit is currently a member of the Board of Directors of the Women's
Executive Circle, UJA Federation, a Trustee of the Historic House Trust of New
York City and a Trustee of the Columbia Land Conservancy. Mrs. Biblowit is a
former Director of Art Spaces and a founding Director of the City Parks
Foundation. Mrs. Biblowit is also a member of the Women's Forum.
MR. MULRONEY, age 61, has been a Director of the Company since December
1997. Mr. Mulroney was a Director of HFS from April 1997 until December 1997.
Mr. Mulroney was Prime Minister of Canada from 1984 to 1993 and is currently
Senior Partner in the Montreal-based law firm, Ogilvy Renault. He is a director
of the following corporations which file reports pursuant to the Exchange Act:
Archer Daniels Midland Company Inc., Barrick Gold Corporation, TrizecHahn
Corporation Ltd., Quebecor, Inc. and Quebecor Printing Inc.
MR. PITTMAN, age 46, has been a Director of the Company since December
1997. Mr. Pittman was a Director of HFS from July 1994 until December 1997.
Since February 1998, Mr. Pittman has been President and Chief Operating Officer
of America Online, Inc., a provider of internet online services. From October
1996 to February 1998, Mr. Pittman was President and Chief Executive Officer of
AOL Networks, a unit of America Online, Inc. From September 1995 through
October 1996, Mr. Pittman served as the Chief Executive Officer and Managing
Partner of the Company's subsidiary, Century 21 Real Estate Corporation. From
1990 until September 1995, Mr. Pittman served as President and Chief Executive
Officer of Time Warner Enterprises, a business development unit of Time Warner
Inc. and, from 1991 to September 1995, additionally, as Chairman and Chief
Executive Officer of Six Flags Entertainment Corporation, the parent of Six
Flags Theme Parks Inc. Mr. Pittman serves as a director of America Online,
Inc., which files reports pursuant to the Exchange Act. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS--Other Relationships."
MS. ROSENBERG, age 58, has been Vice Chairwoman of Equity Group
Investments, Inc., a privately held investment company which controls over 500
properties throughout the United States, since January 1, 2000. From October,
1994 to December, 1999, Ms. Rosenberg was President and Chief Executive Officer
of Equity Group Investments, Inc. Ms. Rosenberg serves as a Director of the
following
5
<PAGE>
companies which file reports pursuant to the Exchange Act: Anixter
International Inc., CVS Corporation, Capital Trust, Dynergy Inc., Manufactured
Home Communities, Inc., Equity Residential Properties Trust and Equity Office
Property Trust. Ms. Rosenberg also currently sits on the Boards of Illinois
Institute of Technology, The Chicago Network, National Partnership of Women &
Families, Women's Issue Network Foundation and Rush-Presbyterian-St. Luke's
Medical Center.
INFORMATION REGARDING DIRECTORS WHOSE TERMS EXPIRE IN 2002
Leonard S. Coleman Dr. John C. Malone
Robert E. Nederlander Leonard Schutzman
Robert F. Smith
MR. COLEMAN, age 51, has been a Director of the Company since December
1997. Mr. Coleman was a Director of HFS from April 1997 until December 1997.
Mr. Coleman is presently Senior Advisor to Major League Baseball. Mr. Coleman
was President of The National League of Professional Baseball Clubs from
1994-1999, having previously served since 1992 as Executive Director, Market
Development of Major League Baseball. Mr. Coleman is a director of the
following corporations which file reports pursuant to the Exchange Act: Avis
Rent A Car, Inc., Owens Corning, The Omnicom Group, New Jersey Resources, H.J.
Heinz Company and Radio Unica. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS--Relationship with Avis Rent A Car Inc."
DR. MALONE, age 58, has been Chairman of Liberty Media Group since 1999.
Prior to serving as Chairman of Liberty Media Group, Dr. Malone was the
Chairman (1996-1999), Chief Executive Officer (1994-1999), and President
(1994-1997) of Tele-Communications, Inc., Chief Executive Officer (1992-1994)
and President (1973-1994) of TCI Communications Inc. Dr. Malone is a Director
of Liberty Media Group, The Bank of New York, the CATO Institute, Discovery
Communications, Inc., BET Holdings II, Inc, At Home Corporation and USANi, LLC.
Dr. Malone also is a Director of AT&T Corporation and a Member of AT&T's
Governance and Nominating Committee and the Capital Stock Committee since March
1999.
MR. NEDERLANDER, age 66, has been a Director of the Company since December
1997. Mr. Nederlander was a Director of HFS from July 1995 to December 1997.
Mr. Nederlander has been President and Director since November 1981 of the
Nederlander Organization, Inc., owner and operator of one of the world's
largest chains of legitimate theaters. Mr. Nederlander has been Chairman of the
Board of Riddell Sports Inc. since April 1988 and was the Chief Executive
Officer of such corporation from 1988 through April 1, 1993. From February
until June 1992, Mr. Nederlander was also Riddell Sports Inc.'s interim
President and Chief Operating Officer. He served as the Managing General
Partner of the New York Yankees from August 1990 until December 1991, and has
been a limited partner since 1973. Mr. Nederlander has been President since
October 1985 of Nederlander Television and Film Productions, Inc.; Chairman of
the Board and Chief Executive Officer since January 1988 of Mego Financial
Corp. ("Mego") and Vice Chairman of the Board since February 1988 to early 1993
of Vacation Spa Resorts, Inc., an affiliate of Mego. Mr. Nederlander was a
director of Mego Mortgage Corp. from September 1996 until June 1998. Mr.
Nederlander also served as Chairman of the Board of Allis-Chalmers Corp. from
May 1989 to 1993 and as Vice Chairman of Allis-Chalmers Corp. from 1993 through
October 1996. He is currently a Director of Allis-Chalmers Corp. In October
1996, Mr. Nederlander became a director of New Communications, Inc., a
publisher of community oriented free circulation newspapers. See "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS--Other Relationships."
MR. SCHUTZMAN, age 53, has been a Director of the Company since December
1997. Mr. Schutzman was a Director of HFS from August 1993 until December 1997.
Mr. Schutzman is a professor at the William E. Simon Graduate School of
Business at the University of Rochester in Rochester, New York. Mr. Schutzman
was Senior Vice President of PepsiCo Inc. from February 1987 to April 1995.
Currently, Mr. Schutzman is Chairman of the Board of Directors of
SkyAuction.com.
MR. SMITH, age 67, has been a Director of the Company since December 1997.
Mr. Smith was a Director of HFS from February 1993 until December 1997. From
November 1994 until August 1996, Mr.
6
<PAGE>
Smith also served as a Director of Chartwell. Mr. Smith is the retired Chairman
and Chief Executive Officer of American Express Bank, Ltd. ("AEBL"). He joined
AEBL's parent company, the American Express Company, in 1981 as Corporate
Treasurer before moving to AEBL and serving as Vice Chairman and Co-Chief
Operating Officer and then President prior to becoming Chief Executive Officer.
Mr. Smith is currently an equity owner and Senior Managing Director of Car
Component Technologies, Inc., an automobile parts remanufacturer, located in
Bedford, New Hampshire.
Messrs. Holmes and Pittman were directors and Mr. Snodgrass was Chairman
of the Board of Directors of AMRE, Inc. ("AMRE") within two years prior to
January 20, 1997, the date on which AMRE filed for reorganization under Chapter
11 of the U.S. Bankruptcy Code. Although the Company had a minor investment in
AMRE, AMRE is not an affiliate of or otherwise related to the Company.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors held eight meetings during 1999. In 1999, all
incumbent directors attended at least 75% of the aggregate number of meetings
of the Board and committees of the Board on which they served that were held
after their appointment.
EXECUTIVE COMMITTEE
The Executive Committee is composed of Messrs. Silverman (Chairman),
Buckman, Holmes and Edelman (the "Executive Committee"). Mr. Monaco was a
member of the Executive Committee until his resignation in March 2000. The
Executive Committee has and may exercise all of the powers of the Board of
Directors when the Board is not in session, including the power to authorize
the issuance of stock, except that the Executive Committee has no power to (a)
alter, amend or repeal the By-Laws or any resolution or resolutions of the
Board of Directors, (b) declare any dividend or make any other distribution to
the stockholders of the Company, (c) appoint any member of the Executive
Committee, or (d) take any other action which legally may be taken only by the
full Board of Directors. The Chairman of the Board will serve as Chairman of
the Executive Committee. The Executive Committee held one meeting in 1999.
NOMINATING COMMITTEE
Pursuant to the By-Laws, prior to 2000, the Executive Committee acted as
the nominating committee of the Board of Directors, nominating persons for
election as directors. On January 1, 2000, a new nominating committee composed
of Messrs. Mulroney (Chairman), Coleman and Smith was elected. The Nominating
Committee did not exist in 1999.
AUDIT COMMITTEE
The Audit Committee is composed of Messrs. Coleman, Mulroney, Schutzman
and Smith. The Audit Committee reviews and evaluates the Company's internal
accounting and auditing procedures; recommends to the Board of Directors the
firm to be appointed as independent accountants to audit the Company's
financial statements; reviews with management and the independent accountants
the Company's year-end operating results; reviews the scope and results of the
audit with the independent accountants; reviews with management the Company's
interim operating results; and reviews the non-audit services to be performed
by the firm of independent accountants and considers the effect of such
performance on the accountants' independence. The Audit Committee held six
meetings in 1999.
COMPENSATION COMMITTEE
The Compensation Committee (the "Compensation Committee") is composed of
Messrs. Smith (Chairman), Schutzman and Coleman. The Compensation Committee has
the following powers and authority: (i) determining and fixing the compensation
for all senior officers of the Company and those of its subsidiaries that the
Compensation Committee shall from time to time consider appropriate, as well
7
<PAGE>
as all employees of the Company and its subsidiaries compensated at a rate in
excess of such amount per annum as may be fixed or determined from time to time
by the Board; (ii) performing the duties of the committees of the Board
provided for in any present or future stock option, incentive compensation or
employee benefit plan of the Company or, if the Compensation Committee shall so
determine, any such plan of any subsidiary; and (iii) reviewing the operations
of and policies pertaining to any present or future stock option, incentive
compensation or employee benefit plan of the Company or subsidiary that the
Compensation Committee shall from time to time consider appropriate. Each
resolution of the Compensation Committee requires the majority of the members
of such committee. The Compensation Committee held five meetings in 1999.
DIRECTOR COMPENSATION
Effective July 21, 1999, Non-Employee Directors (as defined in Rule
16b-3(b)(3) of the Exchange Act) of Cendant receive an annual retainer of
$40,000, plus $5,000 for chairing a committee and $3,000 for serving as a
member of a committee other than as Chairman. Effective January 1, 1999, 50% of
the annual stipend was paid to each Director in common stock of Cendant.
Effective January 1, 2000, 100% of the annual stipend is to be paid to each
Director in common stock of Cendant on a quarterly basis. The calculations of
stock paid to non-employee directors is made based on the average of the
closing price of Cendant common stock on the New York Stock Exchange on the
last five trading days of the calendar quarter to which such stock payment
relates. Cendant has implemented a program providing its Non-Employee Directors
the opportunity to defer the receipt of their annual stipend until their
separation of service from the Board. Non-Employee Directors also are paid
$1,000 for each Board of Directors meeting attended and $500 ($1,000 for
committee chair) for each board committee meeting if held on the same day as a
Board of Directors meeting and $1,000 ($2,000 for committee chair) for each
board committee meeting attended on a day on which there is no board meeting.
Non-Employee Directors are reimbursed for expenses incurred in attending
meetings of the Board of Directors and committees.
Cendant provides $100,000 of term life insurance coverage for each
Non-Employee Director to the beneficiary designated by such Non-Employee
Director. In addition, Cendant has purchased joint life insurance contracts in
the amount of $1 million for each Director. Upon the death of such Director,
while still in office, Cendant will donate an aggregate of $1 million to one or
more charitable organizations designated by such Director from the proceeds of
such insurance policy. With the exception of such joint life insurance
contracts, members of the Board of Directors who are officers or employees of
Cendant or any of its subsidiaries do not receive compensation or reimbursement
of expenses for serving in such capacity.
Non-Employee Directors have also received grants of stock options under
one or more of the following plans: 1990 Directors Stock Option Plan, 1992
Directors Stock Option Plan, 1994 Director Stock Option Plan, the 1997 Stock
Incentive Plan, the 1997 Stock Option Plan and the HFS Incorporated 1993 Stock
Option Plan. Non-Employee Directors did not receive any grants of stock options
in 1999.
Directors shall be elected by the affirmative vote of a plurality of the
shares of Common Stock present at the Meeting, in person or by proxy, and
entitled to vote in the election of directors. Pursuant to applicable Delaware
law, abstentions and broker non-votes will have no effect on the outcome of the
vote.
8
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company as of the date of this Proxy
Statement are set forth in the table below. All executive officers are
appointed at the annual meeting or interim meetings of the Board of Directors.
Each executive officer is appointed by the Board to hold office until his or
her successor is duly appointed and qualified:
<TABLE>
<CAPTION>
NAME OFFICE OR POSITIONS HELD
- -------------------- ---------------------------------------------------------------------
<S> <C>
Henry R. Silverman Chairman of the Board, President and Chief Executive Officer
James E. Buckman Vice Chairman, General Counsel and Assistant Secretary
Stephen P. Holmes Vice Chairman, Chairman and Chief Executive Officer, Travel Division
David M. Johnson Senior Executive Vice President and Chief Financial Officer
Richard A. Smith Chairman and Chief Executive Officer, Real Estate Division
John W. Chidsey Chairman and Chief Executive Officer, Direct Marketing Division
Samuel L. Katz Chief Executive Officer, Cendant Internet Group
Jon F. Danski Executive Vice President, Chief Accounting Officer
</TABLE>
9
<PAGE>
Other than as set forth below, for biographical information concerning the
Executive Officers of the Company, see "Election of Directors."
<TABLE>
<CAPTION>
NAME OFFICE OR POSITIONS HELD
- ------------------ ---------------------------------------------------------------------
<S> <C>
Richard A. Smith Mr. Smith, age 46, has been Chairman and Chief Executive Officer of
the Real Estate Division of the Company since December 1997.
Mr. Smith was President of the Real Estate Division of HFS from
October 1996 to December 1997 and Executive Vice President of
Operations for HFS Incorporated from February 1992 to October
1996. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS--Relationship with NRT."
David M. Johnson Mr. Johnson, age 39, has been Senior Executive Vice President and
Chief Financial Officer of the Company since November 1998. From
April 1998 until November 1998, Mr. Johnson was Executive Vice
President-Finance of the Company. For the 12 years preceding
April 1998, Mr. Johnson was employed at Merrill Lynch Pierce
Fenner & Smith Incorporated ("Merrill"), most recently as a
Managing Director of Merrill's Technology Investment Banking
Group. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS--Relationship with NetMarket Group, Inc."
John W. Chidsey Mr. Chidsey, age 37, has been Chief Executive Officer of the Direct
Marketing Division since March 2000. Mr. Chidsey was Chief
Executive Officer of the Diversified Services Division from
January 2000 until March 2000. Mr. Chidsey was Chairman and Chief
Executive Officer of the Insurance/Wholesale Division of the
Company from November 1998 until January 2000. From May 1998 to
November 1998, Mr. Chidsey was President and Chief Operating
Officer of the Alliance Marketing Division of the Company. From
December 1997 to May 1998, Mr. Chidsey was Executive Vice
President, Business Development of the Company. From 1995 to
December 1997, Mr. Chidsey was Senior Vice President, Preferred
Alliance Services for HFS. Prior to joining HFS, Mr. Chidsey was the
Chief Financial Officer at two divisions of PepsiCo Inc. with
responsibilities for international operations.
Samuel L. Katz Mr. Katz, age 34, has been Chief Executive Officer of the Cendant
Internet Group since January 2000. Mr. Katz was Senior Executive
Vice President, Strategic Development of the Company from July
1999 to January 2000, Executive Vice President, Strategic
Development from April 1998 until January 2000, and Senior Vice
President, Acquisitions from December 1998 to March 1998. Mr. Katz
was Senior Vice President, Acquisitions of HFS from January 1996 to
April 1998. From June 1993 to December 1995, Mr. Katz was Vice
President of Dickstein Partners Inc., a private investment firm.
Mr. Katz is a director of Specialty Catalog Corp. and NRT
Incorporated.
Jon F. Danski Mr. Danski, age 47, has been Executive Vice President, Chief
Accounting Officer of the Company since April 1999. From
March 1998 to April 1999 he was Senior Vice President and
Corporate Controller of Metropolitan Life Insurance Company. Prior
to that, he was Senior Vice President and Corporate Controller of
ITT Corporation.
</TABLE>
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth the 1997, 1998 and 1999 cash and noncash
compensation awarded to or earned by each person who served as Chief Executive
Officer of the Company during 1999 and the four other most highly compensated
executive officers of the Company (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation(1) Compensation
------------------------------------ ---------------
Awards
---------------
Securities
Underlying All Other
Name and Options/ Compensation
Principal Position Year Salary($) Bonus($)(2) SARs(#)(3)(4) ($)(5)
- ------------------------------ ------ ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Henry R. Silverman 1999 2,900,000 4,320,254 3,000,000 266,149
Chairman of the Board, 1998 1,610,367 1,207,775 18,908,920 77,626
President and Chief 1997 1,577,472 2,366,208 19,307,180 6,760
Executive Officer
Stephen P. Holmes 1999 661,050 660,880 600,000 84,902
Vice Chairman and 1998 647,115 388,269 2,436,948 55,667
Chairman and CEO, 1997 499,980 299,988 1,025,620 22,903
Travel Division
Michael P. Monaco 1999 661,050 660,880 600,000 111,345
Former Vice Chairman and 1998 647,115 388,269 3,247,994 55,537
Former Chairman and CEO, 1997 499,980 299,988 2,347,325 16,514
Direct Marketing Division (6)
James E. Buckman 1999 661,050 660,880 600,000 79,049
Vice Chairman and 1998 531,759 237,297 2,474,448 22,942
General Counsel 1997 499,980 299,988 1,075,620 6,258
Samuel L. Katz 1999 500,000 609,234 500,000 55,064
Chief Executive Officer, 1998 379,669 140,000 1,534,419 24,766
Cendant Internet Group 1997 313,171 250,527 540,310 18,811
</TABLE>
- ----------
(1) Prior to December 17, 1997, all cash compensation represents compensation
paid by HFS Incorporated.
(2) For 1999, bonus amounts include fiscal year 1999 profit-sharing bonuses
paid in February 2000.
(3) On September 23, 1998, the Compensation Committee approved the Senior
Management Program which effectively modified the terms of certain
Company stock options held by the Named Executive Officers. With respect
to approximately 25.8 million options held by Mr. Silverman, (a) 33% were
canceled, (b) 33% were exchanged for similar options with an exercise
price of $20 per share and (c) 33% were exchanged for similar options
with an exercise price per share equal to $9.8125 (the "New Price").
Although prior to the effectiveness of the Senior Management Program all
of Mr. Silverman's options were vested, the 17.2 million options granted
to Mr. Silverman in such exchange vest at the rate of 25% per year over a
four year period beginning in October 1999. With respect to an aggregate
of approximately 7.5 million options held by Messrs. Holmes, Monaco and
Buckman: (a) 25% were canceled, (b) 25% were exchanged for similar
options with an exercise price of $20 per share, and (c) 50% were
exchanged for similar options with an exercise price per share equal to
the New Price. With respect to approximately 1.0 million options held by
Mr. Katz: (a) 10% were cancelled, (b) 40% were exchanged for similar
options with an exercise price per share at 25% above the New Price and
(c) 50% were exchanged for similar options with an exercise price per
share equal to the New Price. In addition, to further align the Senior
Management's (including the Named Executive Officers) interests with that
of the Company's stockholders, the ability to obtain modified options was
subject to such officers' agreement to participate in an executive equity
incentive program, requiring such officers to acquire and hold Common
Stock having an aggregate market value based upon their base salary.
(4) As a result of the Senior Management Program, the following total number
of options granted in 1996, 1997 and 1998 were canceled: Mr. Silverman:
25,813,380; Mr. Holmes: 2,115,930; Mr. Monaco: 3,197,325; Mr. Katz:
970,465; and Mr. Buckman: 2,165,930.
11
<PAGE>
(5) Payments included in these amounts for the fiscal year ended December 31,
1999 consist of (i) Company matching contributions to the Employee
Savings Plan, which is a defined contribution salary reduction 401(k)
plan qualified under Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code") and/or under a non-qualified deferred
compensation plan maintained by the Company ("Defined Contribution
Match"), (ii) insurance premiums paid by the Company for life insurance
coverage, (iii) executive medical benefits and (iv) auto allowance.
Defined Contribution Match includes estimated contributions relating to
deferrals of fiscal year.
The foregoing amounts were as follows:
<TABLE>
<CAPTION>
Defined Life Executive
Contribution Insurance Medical Auto
Year Match($) Premium($) Benefits($) Allowance($)
------ -------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Mr. Silverman 1999 260,125 1,224 4,800 0
Mr. Holmes 1999 79,306 796 4,800 0
Mr. Monaco 1999 52,738 796 4,800 53,011
Mr. Buckman 1999 73,624 625 4,800 0
Mr. Katz 1999 53,268 490 720 0
</TABLE>
(6) Mr. Monaco resigned as a Vice Chairman and as Chairman and CEO of the
Direct Marketing Division in March 2000.
12
<PAGE>
OPTION GRANTS IN 1999
The following table summarizes option grants during the last fiscal year
made to the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Number of % of Total
Securities Options/SARS Exercise
Underlying Granted to Or Base Grant Date
Options/SARS Employees in Price Expiration Present
Name Granted (#)(1) Fiscal Year ($/sh) Date Value ($)(2)
- ---------------------- ---------------- -------------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Henry R. Silverman 3,000,000 9.52% $17.875 04/21/2009 33,780,000
Stephen P. Holmes 600,000 1.90% $17.875 04/21/2009 6,756,000
Michael P. Monaco(3) 600,000 1.90% $17.875 04/21/2009 6,756,000
James E. Buckman 600,000 1.90% $17.875 04/21/2009 6,756,000
Samuel L. Katz 500,000 1.59% $17.875 04/21/2009 5,630,000
</TABLE>
- ----------
(1) The vesting of these options accelerates under certain circumstances
(including a change of control of the Company under the terms of the
Named Executive Officers' respective employment agreements). See
"Employment Contracts and Termination, Severance and Change of Control
Arrangements."
(2) The values assigned to each reported option on this table are computed
using the Black-Scholes option pricing model. The calculations assume a
risk-free rate of return of 6.4%, which represents the ten-year yield of
United States Treasury Notes on the option grant date. The calculations
for all option grant dates assume a 60% volatility; however, there can be
no assurance as to the actual volatility of the Common Stock in the
future. The calculations for all grant dates also assume no dividend
payout and a 6.2 year expected life. In assessing these option values, it
should be kept in mind that no matter what theoretical value is placed on
a stock option on the date of grant to a Named Executive Officer, its
ultimate value will depend on the market value of the Common Stock at a
future date.
(3) Mr. Monaco resigned as a Vice Chairman and as Chairman and CEO of the
Direct Marketing Division in March 2000.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUE TABLE FOR NAMED
EXECUTIVE OFFICERS
The following table summarizes the exercise of options by the Named
Executive Officers during the last fiscal year and the value of unexercised
options held by such executives as of the end of such fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Value Options/SARs Options/SARs
On Exercise Realized at FY-End (#) at FY-End ($)(1)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------- ---------------- ----------- --------------------------- --------------------------
<S> <C> <C> <C> <C>
Henry R. Silverman 270,000(2) 4,745,146 27,318,852 / 12,906,690 534,239,222 / 150,443,603
Stephen P. Holmes 0 0 2,731,734 / 1,276,765 54,465,475 / 12,400,614
Michael P. Monaco(3) 0 0 1,923,992 / 1,074,002 28,912,575 / 8,323,138
James E. Buckman 0 0 2,556,841 / 1,307,390 49,416,290 / 12,805,341
Samuel L. Katz 100,000 1,140,000 775,207 / 1,189,832 10,422,958 / 15,144,474
</TABLE>
- ----------
(1) Based upon the closing price of the Common Stock on the New York Stock
Exchange on December 31, 1999.
(2) Mr. Silverman exercised 170,000 options on April 27, 1999, retaining
100,000 shares for investment purposes and disposing of 70,000 shares to
pay the exercise price for all such options and to pay taxes related to
such exercise. Mr. Silverman exercised 100,000 options on December 1,
1999 and retained all such shares for investment purposes.
(3) Mr. Monaco resigned as a Vice Chairman and as Chairman and CEO of the
Direct Marketing Division in March 2000.
13
<PAGE>
TEN YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Number of
Securities Length of
Underlying Market Price Exercise Original
Options/ of Stock Price Option Term
SARs at Time of at Time of New Remaining at
Repriced or Repricing or Repricing or Exercise Date of
Amended Amendment Amendment Price Repricing or
Name Date ($)(1) ($) ($) ($) Amendment
- ---------------------- ---------- ------------------ -------------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Henry R. Silverman, 10/14/98 4,806,200(2) 9.8125 16.78 9.8125 75 months
Chairman, President 10/14/98 3,798,260(2) 9.8125 23.88 9.8125 102 months
and Chief Executive 10/14/98 1,007,940(2) 9.8125 23.88 20.0000 102 months
Officer 10/14/98 7,596,520(2) 9.8125 31.375 20.0000 110 months
Stephen P. Holmes, 10/14/98 240,310(3) 9.8125 25.85 9.8125 91 months
Vice Chairman and 10/14/98 480,620(3) 9.8125 23.88 9.8125 102 months
Chairman and CEO, 10/14/98 337,036(4) 9.8125 31.375 9.8125 110 months
Travel Services 10/14/98 207,964(4) 9.8125 31.375 20.0000 110 months
Division 10/14/98 321,018(2) 9.8125 34.3125 20.0000 111 months
Michael P. Monaco, 10/14/98 1,441,860(3) 9.8125 25.44 9.8125 99 months
Former Vice 10/14/98 156,803(3) 9.8125 23.88 9.8125 102 months
Chairman and 10/14/98 203,662(3) 9.8125 23.88 20.0000 102 months
Former Chairman 10/14/98 545,000(4) 9.8125 31.375 20.0000 110 months
and CEO, 10/14/98 50,669(2) 9.8125 34.3125 20.0000 111 months
Direct Marketing
Division (7)
James E. Buckman, 10/14/98 240,310(3) 9.8125 25.85 9.8125 91 months
Vice Chairman 10/14/98 480,620(3) 9.8125 23.88 9.8125 102 months
and General 10/14/98 362,036(4) 9.8125 31.375 9.8125 98 months
Counsel 10/14/98 232,036(4) 9.8125 31.375 20.0000 98 months
10/14/98 308,518(2) 9.8125 34.3125 20.0000 111 months
John W. Chidsey, 10/14/98 240,310(3) 9.8125 23.88 9.8125 102 months
Chairman and 10/14/98 179,845(4) 9.8125 31.975 9.8125 110 months
Chief Executive 10/14/98 120,155(4) 9.8125 31.975 12.2656 110 months
Officer, Direct 10/14/98 215,969(4) 9.8125 34.3125 12.2656 111 months
Marketing Division 10/14/98 82,625(5) 9.8125 37.50 9.8125 113 months
David M. Johnson, 10/14/98 666,667(6) 9.8125 22.00 9.8125 114 months
Senior Executive 10/14/98 533,333(6) 9.8125 22.00 12.2656 114 months
Vice President and
Chief Financial
Officer
Samuel L. Katz, 10/14/98 120,155(3) 9.8125 25.85 9.8125 91 months
Chief Executive 10/14/98 240,310(3) 9.8125 23.88 9.8125 102 months
Officer, Cendant 10/14/98 119,768(4) 9.8125 31.375 9.8125 110 months
Internet Group 10/14/98 180,232(4) 9.8125 31.375 12.2656 110 months
10/14/98 203,954(4) 9.8125 34.3125 12.2656 111 months
10/14/98 10,000(5) 9.8125 37.50 9.8125 113 months
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Number of
Securities Length of
Underlying Market Price Exercise Original
Options/ of Stock Price Option Term
SARs at Time of at Time of New Remaining at
Repriced or Repricing or Repricing or Exercise Date of
Amended Amendment Amendment Price Repricing or
Name Date ($)(1) ($) ($) ($) Amendment
- ------------------- ---------- ---------------- -------------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Smith, 10/14/98 120,155(3) 9.8125 25.85 9.8125 91 months
Chairman and 10/14/98 120,155(3) 9.8125 30.69 9.8125 96 months
Chief Executive 10/14/98 240,310(3) 9.8125 23.88 9.8125 102 months
Officer, Real 10/14/98 59,690(4) 9.8125 31.375 9.8125 110 months
Estate Division 10/14/98 140,310(4) 9.8125 31.375 12.2656 110 months
10/14/98 291,938(4) 9.8125 34.3125 12.2656 111 months
</TABLE>
- ----------
(1) These options were effectively modified on October 14, 1998 and, other
than as specified below, have the same expiration date as specified in
the table. These options replace options that were cancelled under the
Senior Management Program.
(2) These options are scheduled to vest and become exercisable in yearly
increments of 25%, commencing in October 1999.
(3) These options are fully vested and exercisable.
(4) These options are scheduled to vest and become exercisable in yearly
increments of 20%, commencing in January 1999.
(5) These options represent bonus and salary replacement options, purchased
by the optionee through a deferred compensation plan previously offered
by the Company. These options are scheduled to vest and become
exercisable in yearly increments of one-third, commencing in January
1999.
(6) These options are scheduled to vest and become exercisable in yearly
increments of 25%, commencing in January 1999.
(7) Mr. Monaco resigned as a Vice Chairman and as Chairman and CEO of the
Direct Marketing Division in March 2000.
EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE OF CONTROL
ARRANGEMENTS
Each Named Executive Officer is employed by the Company pursuant to a
written agreement of employment. Mr. Monaco resigned as Vice Chairman and
Chairman and CEO of the Direct Marketing Division in March 2000.
Henry R. Silverman. Mr. Silverman is employed by the Company pursuant to
an employment agreement originally entered into as of September 30, 1991
between Mr. Silverman and HFS and amended and restated from time to time (the
"Silverman Employment Agreement"). The Silverman Employment Agreement was
amended by the Third Amendment to the Silverman Employment Agreement dated as
of December 31, 1998 (the "Third Amendment") and by the Fourth Amendment, dated
as of August 2, 1999 (the "Fourth Amendment"). Mr. Silverman serves the Company
as its President and Chief Executive Officer and, pursuant to the Third
Amendment, also as the Chairman of the Board and the Chairman of the Executive
Committee of the Board (such change was effective as of July 28, 1998).
Pursuant to the Third Amendment, the term of employment under the Silverman
Employment Agreement was extended through December 31, 2005, subject to earlier
termination or extension as provided therein; however, in connection with such
extension, an automatic annual renewal provision was removed from the Silverman
Employment Agreement.
In consideration of the additional duties assumed by Mr. Silverman
pursuant to the Third Amendment, the Silverman Employment Agreement, as
amended, provides for Mr. Silverman to receive an annual rate of base salary of
$1,500,000 for the period ending December 31, 1998, and $2,900,000 thereafter,
subject to further increases relating to the Consumer Price Index. The
Silverman Employment Agreement also provides Mr. Silverman an annual bonus
opportunity equal to the lesser of (i) 0.75% of the Company's' "EBITDA" (as
defined in the Silverman Employment Agreement) for the applicable fiscal year
or (ii) 150% of his annual base salary.
The Silverman Employment Agreement provides that if Mr. Silverman resigns
his employment in connection with a breach by the Company of the Silverman
Employment Agreement, or if he is terminated by the Company without Cause (as
defined in the Silverman Employment Agreement), he will be entitled to receive
a lump sum cash payment equal to (i) the lesser of (a) 150% of his annual base
salary or (b) the sum of his annual base salary plus 0.75% of EBITDA for the 12
months preceding the date of
15
<PAGE>
termination, multiplied by (ii) the number of years and partial years remaining
in the term of employment under the Silverman Employment Agreement. In
addition, Mr. Silverman would be entitled to continued health and welfare
benefits during the remaining term of employment and the vesting of any options
and restricted stock. The Fourth Amendment provides that after termination of
Mr. Silverman's employment with the Company other than due to death or for
Cause (but including a resignation for good reason), (i) the Company would
provide Mr. Silverman, through August 31, 2009, term life insurance in the
amount of $100 million, all premiums to be paid by the Company; and (ii) the
Company would provide him certain benefits for life, including office and
clerical support, executive transportation services (including use of
aircraft), security services, continued access to other general facilities and
services and reimbursement of any properly documented business expenses. During
such period, Mr. Silverman would be required to keep himself reasonably
available to the Company to render advice or to provide services for more than
30 days per year, in return for which he will be paid $30,000 per month.
The Silverman Employment Agreement further provides that Mr. Silverman
will be made whole on an after-tax basis with respect to certain excise taxes
in connection with a change of control of the Company which may, in certain
cases, be imposed upon payments thereunder and other compensation and benefit
arrangements.
Messrs. Monaco, Holmes and Buckman. The Company entered into employment
agreements with Messrs. Monaco, Holmes and Buckman dated as of September 12,
1997 (such agreements, respectively, the "Monaco Employment Agreement," the
"Holmes Employment Agreement" and the "Buckman Employment Agreement," and
collectively, the "1997 Employment Agreements"). Each of the 1997 Employment
Agreements originally provided for a period of employment through December 17,
2002; however, such agreements contain automatic extension periods which cause
each respective period of employment to be extended by a one year increment on
an annual basis (an extension of the period of employment through December 17,
2004 has taken effect under each of the 1997 Employment Agreements). Mr. Monaco
resigned as an employee of the Company in March 2000.
Each of the 1997 Employment Agreements specifies the position and duties
of the executive during the period of employment. The Monaco Employment
Agreement was amended as of December 23, 1998 to reflect Mr. Monaco's new
duties and responsibilities with the Company and the location of his place of
employment. The Buckman Employment Agreement was amended as of January 11, 1999
to reflect his additional duties and responsibilities with the Company and the
location of his place of employment. The Holmes Employment Agreement was
amended as of January 11, 1999 to reflect the location of his place of
employment. Currently (i) Mr. Holmes serves as Vice Chairman of the Company and
Chairman and Chief Executive Officer of the Travel Division and (ii) Mr.
Buckman serves as Vice Chairman and General Counsel of the Company.
Each of the 1997 Employment Agreements specifies the compensation and
benefits provided to the Executive during the period of employment. The Monaco
Employment Agreement and the Holmes Employment Agreement provide that each
Executive will be paid an annual base salary of $650,000 and will be eligible
for annual bonuses based on a target bonus of $650,000. The Buckman Employment
Agreement provides that Mr. Buckman will be paid an annual base salary of
$500,000, and will be eligible for an annual bonus based on a target bonus of
$500,000; however, in connection with the January 11, 1999 amendment to the
Buckman Employment Agreement, such salary and target bonus amounts were
increased to $650,000. Each of Messrs. Monaco, Holmes and Buckman will be
eligible to participate in all of the Company's other compensation and employee
benefit plans or programs and to receive officer perquisites.
Each of the 1997 Employment Agreements provides for certain payments in
the event of termination of the Executive's employment under various
circumstances. The Holmes Employment Agreement and the Monaco Employment
Agreement each provide that if, after December 31, 1999, the Executive's
employment is terminated by the Company other than for Cause or by the
Executive for Constructive Discharge or resignation, the Company will pay the
Executive a lump sum cash payment equal to 500% of the sum of (i) his annual
base salary and (ii) the highest annual bonus he has received for any of the
three preceding years (or $520,000, if higher) ("Salary plus Bonus"). In such
event, the Executive would
16
<PAGE>
also receive any earned but unpaid base salary and incentive compensation, his
benefits and perquisites would continue for 36 months and any stock options and
restricted stock would vest (and such options would remain outstanding for the
remainder of their terms without regard to such termination). Each such
agreement also provides that, in certain circumstances, the Executive's
employment would be deemed terminated for Constructive Discharge in the event
that Mr. Silverman's employment with the Company terminates or his
responsibilities are reduced. In such event, the Executive would receive
substantially similar payments and benefits as described above; however, his
cash payment would range from 200% to 400% of Salary plus Bonus, depending on
the date of such termination. Mr. Monaco received payment in accordance with
these provisions as a result of his resignation in March 2000.
The Buckman Employment Agreement provides that if, after December 31,
1999, Mr. Buckman's employment is terminated by the Company other than for
Cause or by Mr. Buckman for Constructive Discharge or resignation. The Company
will pay Mr. Buckman a lump sum cash payment equal to 500% of the sum of (i)
his annual base salary and (ii) the highest annual bonus he has received for
any of the three preceding years (or $500,000, if higher) ("Buckman Salary plus
Bonus"). Mr. Buckman may also resign at any time following such date and
receive a lump sum cash payment equal to 200% of Buckman Salary plus Bonus. In
any of the foregoing situations, Mr. Buckman would also receive any earned but
unpaid base salary and incentive compensation, his benefits and perquisites
would continue for 36 months and any stock options and restricted stock would
vest (and such options would remain outstanding for the remainder of their
terms without regard to such termination). The Buckman Employment Agreement
also provides that, in certain circumstances, his employment would be deemed
terminated for Constructive Discharge in the event that Mr. Silverman's
employment with the Company terminates or his responsibilities are reduced. In
such event, Mr. Buckman would receive substantially similar payments and
benefits as described above however his cash payment would range from 200% to
400% of Buckman Salary plus Bonus, depending on the date of such termination.
Each 1997 Employment Agreement provides that the Executive will be made
whole on an after-tax basis with respect to certain excise taxes in connection
with a change of control of the Company which may, in certain cases, be imposed
upon payments thereunder and other compensation and benefit arrangements.
Mr. Katz. Mr. Katz is employed by the Company pursuant to an employment
agreement dated as of April 1, 1999 (the "Katz Agreement"). The Katz agreement
provides that Mr. Katz will serve for a term of employment ending December 31,
2002. Mr. Katz currently serves as Chief Executive Officer of the Cendant
Internet Group.
The Katz agreement provides that during his term of employment, Mr. Katz
will be paid an annual base salary equal to $500,000 and will be eligible for
annual bonuses based on a target of 60% of annual base salary. Effective fiscal
year 2000, the Company agreed to increase Mr. Katz' annual bonus target to 100%
of his annual base salary. Mr. Katz will be eligible to participate in all of
the Company's other compensation and employee benefit plans or programs and to
receive officer perquisites.
The Katz Agreement provides for certain payments in the event of
termination of Mr. Katz's employment under various circumstances. The Katz
Agreement provides that if Mr. Katz's employment is terminated by the Company
other than for Cause (as defined therein) or by Mr. Katz for Constructive
Discharge (as defined therein), the Company will pay Mr. Katz a lump sum cash
payment equal to the sum of (i) his annual base salary and (ii) his target
annual bonus, multiplied by the greater of one (1) or the number of full and
partial years remaining in his term of employment under the Katz Agreement. In
addition, in such event, any stock options granted to Mr. Katz on or after the
date of the Katz Agreement will become fully vested and exercisable and will
remain exercisable until the first to occur of the third anniversary of the
date of Mr. Katz's termination and the original expiration date of such option.
The Katz Agreement provides that during his term of employment, and for a
period of two years thereafter, Mr. Katz will not be permitted to affiliate
himself with any entity that competes with the Company or its affiliates.
Other Change of Control Provisions. In connection with the merger of HFS
Incorporated and CUC International Inc., action was taken by the Company to
provide that any employee formerly with HFS
17
<PAGE>
Incorporated who incurs a golden parachute excise tax under Section 4999 of the
Code, if and to the extent applicable, incurred because of the vesting of
options granted prior to such merger, will be reimbursed by the Company for the
economic costs incurred by such employee, including a tax gross-up payment to
account for any additional golden parachute excise tax incurred by reason of
such reimbursement, if any. In addition, action was also taken by the Company
to provide for a similar reimbursement in the event a future corporate event
causes an excise tax liability.
Stock Options. Generally, all stock options granted to each of the Named
Executive Officers under any applicable stock option plan of the Company will
become fully and immediately vested and exercisable upon the occurrence of any
change of control transaction affecting the Company (as defined in each
employment agreement).
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act that might incorporate future filings, including
this Proxy Statement, in whole or in part, the following compensation committee
report on executive compensation and performance graph shall not be
incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
administering the Company's executive compensation policies and programs. The
Compensation Committee also reviews and approves the salaries and bonuses of
the Company's executive officers as well as all grants of options to purchase
shares of Common Stock.
Officer Compensation Policy. The Compensation Committee administers the
Company's executive compensation policies and programs. These policies include:
o aligning the interests of executive officers with the long-term
interests of the Company's stockholders;
o providing competitive levels of compensation which are, in large part,
conditioned on the Company's attainment of specified performance targets
and/or stock price appreciation; and
o attracting, motivating and retaining the best possible executive talent
for the benefit of the Company's stockholders.
Employment Agreements. Each of the Named Executive Officers is employed by
the Company pursuant to a written agreement of employment. Other executive
officers of the Company are also employed pursuant to employment agreements.
The Compensation Committee has considered the advisability of using employment
agreements and has determined that it is in the best interests of the Company
insofar as it permits the Company to achieve its desired goals of motivating
and retaining the best possible executive talent. The Compensation Committee
has determined that the use of employment agreements may be necessary in
certain cases to ensure the retention of key executive officers and to attract
additional executive talent to the Company. Each such employment agreement
separately reflects the terms that the Compensation Committee felt were
appropriate and/or necessary to retain the services of the particular executive
officer, within the framework of the Company's compensation policies.
Components of Executive Compensation. The material elements of the
Company's executive compensation arrangements include base salary, annual
performance bonus and stock options. Each executive officer's total
compensation package is designed to condition a significant portion of the
executive's overall anticipated compensation on the Company's success in
achieving specified performance targets and/or stock price appreciation.
Base Salaries. Salaries paid to executive officers, other than the Chief
Executive Officer, are reviewed annually by the Chief Executive Officer and the
Senior Vice President-Human Resources based upon their assessment of the nature
of the position and the contribution, experience and tenure of the executive
officer. The Compensation Committee is responsible for determining the salary
of the Chief Executive Officer. Because, as noted above, the Named Executive
Officers are party to employment agreements, their respective salary levels are
subject to the provisions of such employment agreements
18
<PAGE>
(the employment agreements with the Named Executive Officers are described more
fully under "Employment Contracts and Termination, Severance and Change of
Control Arrangements.") From time to time, the Compensation Committee engages
compensation consultants to advise on market rates of compensation for
executives similarly situated, and takes such advice into account in connection
with establishing salaries for executive officers.
Annual Bonus. The Named Executive Officers are entitled to annual
performance bonuses based upon the terms of their employment agreements (see
"Employment Contracts and Termination, Severance and Change of Control
Arrangements"). As described under "Employment Contracts and Terminations,
Severance and Change in Control Arrangements," Mr. Silverman's employment
agreement provides for an annual incentive bonus equal to the lesser of (i)
0.75% of the Company's EBITDA (as defined in such agreement) for the applicable
final year or (ii) 150% of his annual base salary. Under the Company's annual
incentive bonus plan, certain employees are eligible to earn bonuses equal to a
percentage of base salary based upon the degree of achievement of target levels
of earnings before interest, taxes, depreciation and amortization ("EBITDA").
Such percentages of base salary range from 5% for the lowest level of employees
if the minimum level of earnings is achieved, to a maximum of 100% for
Executive Vice Presidents and above, if the highest level of earnings is
achieved. In 1999, bonuses paid to executive officers of certain business units
were paid at less than the target level to the extent such business units did
not attain pre-established levels of EBITDA (or other relevant performance
measurement). The bonuses paid to the Named Executive Officers in respect of
1999 are set forth in the Summary Compensation Table.
Stock Options. The Compensation Committee believes that the most effective
way to align the interests of executives with those of stockholders is to
ensure that the executives hold material equity stakes in the Company.
Therefore, the Compensation Committee has determined that the continued use of
stock options is the best mechanism for long term incentive compensation of
executive officers. The Compensation Committee administers each of the
Company's stock option plans. Generally, option grants are approved by the
Compensation Committee upon the recommendation of the Chief Executive Officer
and the Senior Vice President-Human Resources, who determine the number of
shares subject to such grants and the applicable terms and conditions of such
grants. In general, to ensure that the use of stock options meets the intended
long-term goals of the Compensation Committee, most stock option grants vest
incrementally over a period of three to five years. In addition, absent special
circumstances, the Company does not grant options with exercise prices below
the fair market value of the Common Stock as of the date of grant. Information
with respect to option grants in 1999 to the Named Executive Officers is set
forth in the "Option Grants Table."
Chief Executive Officer Compensation. The compensation paid to Mr.
Silverman during 1999 is based upon the terms of his existing employment
agreement. Such agreement, and certain amendments made thereto during 1998 and
1999, are described under "Employment Contracts and Termination, Severance and
Change of Control Arrangements". Effective January 1, 1999, Mr. Silverman's
annual base salary was increased to $2.9 million. The Compensation Committee
determined that such increase was appropriate and in the best interests of the
stockholders after considering Mr. Silverman's overall importance to the
Company, as well as his increased responsibilities arising from his assumption
of the roles of Chairman of the Board and Chairman of the Executive Committee,
as well as the material increase in his efforts in connection with
extraordinary events occurring during 1998 and 1999. Mr. Silverman's annual
bonus, which is disclosed in the Summary Compensation Table, was determined
based on a formula set forth in his employment agreement, and is based directly
on the Company's attainment of EBITDA (as defined in such employment
agreement).
Deductibility of Compensation. In accordance with Section 162(m) of the
Code, the deductibility for federal corporate tax purposes of compensation paid
to certain individual executive officers of the Company in excess of $1 million
in any year may be restricted. The Compensation Committee believes that it is
in the best interests of the Company's stockholders to comply with such tax
law, while still maintaining the goals of the Company's executive compensation
program. However, where it is deemed necessary and in the best interests of the
Company to continue to attract and retain the best possible
19
<PAGE>
executive talent, and to motivate such executives to achieve the goals inherent
in the Company's business strategy, the Compensation Committee will recommend,
and the Company is expected to pay, compensation to executive officers which
may exceed the limits of deductibility.
The Compensation Committee
Robert F. Smith (Chair)
Leonard Schutzman Leonard S. Coleman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
After January 19, 1999, the Compensation Committee was comprised of
Messrs. Smith (Chairman), Schutzman and Coleman. The Rt. Hon. Brian Mulroney
served on the Compensation Committee until January 19, 1999. Messrs. Smith,
Mulroney, Coleman and Schutzman were not employees of the Company during 1998
or before.
20
<PAGE>
PERFORMANCE GRAPH
The following graph assumes $100 invested on December 31, 1994, and
compares (a) the yearly percentage change in the Company's cumulative total
shareholder return on the Common Stock (as measured by dividing (i) the sum of
(A) the cumulative amount of dividends, assuming dividend reinvestment during
the five years commencing on the last trading day before January 1, 1995, and
ending on December 31, 1999, and (B) the difference between the Company's share
price at the end and the beginning of the periods presented; by (ii) the share
price at the beginning of the periods presented) with (b) (i) the Standard &
Poor's 500 Index (the "S&P 500 Index"), and (ii) the Standard & Poor's Services
(Commercial & Consumer) Index (the "S&P SVCS Index").
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN *
AMONG CENDANT CORPORATION, THE S & P 500 INDEX
AND THE S & P SERVICES (COMMERCIAL & CONSUMER) INDEX
CUMULATIVE TOTAL RETURN
----------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
CENDANT CORPORATION 100 154 164 233 131 180
S & P 500 100 138 169 226 290 351
S & P SERVICES (COMMERCIAL & CONSUMER) 100 135 139 191 193 169
21
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH AVIS RENT A CAR, INC.
Upon entering into a definitive merger agreement to acquire Avis, Inc. in
July 1996, HFS (the Company's predecessor) announced its strategy to dilute its
interest in Avis's ("Avis") car rental operations while retaining assets
associated with the franchise business, including trademarks, reservation
system assets and franchise agreements. In September 1997, HFS completed an
initial public offering ("IPO") of Avis Rent A Car, Inc. ("ARAC"), the company
that operated the car rental operations of Avis, which diluted the Company's
equity interest in such subsidiary to approximately 27.5%. The Company received
no proceeds from the IPO. However, the Company licenses the Avis trademark to
ARAC pursuant to a 50-year master license agreement and receives royalty fees
based upon 4% of ARAC revenue, escalating to 4.5% of ARAC revenue over a 5-year
period. During 1997, 1998 and 1999, total franchise royalties earned by the
Company from ARAC were $82 million, $92 million and $102 million, respectively.
In addition, the Company operates the telecommunications and computer
processing system which services ARAC for reservations, rental agreement
processing, accounting and fleet control for which the Company charges ARAC at
cost. Messrs. Monaco, Holmes, Coleman and Edelman currently serve on the Board
of Directors of ARAC. On March 23, 1998, the Company sold 1,000,000 shares of
ARAC which reduced the Company's common equity interest to approximately 20%.
On January 15, 1999, the Company sold 1.3 million shares of ARAC to ARAC for
$24.25 per share or an aggregate of $31,525,000 which reduced the Company's
common equity interest in ARAC to approximately 20%. On April 24, 1999, the
Company sold 314,200 shares of ARAC for an aggregate of $9,268,990. On August
25, 1999, the Company sold 350,000 shares of ARAC for an aggregate of
$7,766,500 which reduced the Company's common equity interest in ARAC to
approximately 18%.
On June 30, 1999, the Company completed the disposition of its fleet
business segment ("fleet businesses") to ARAC. Pursuant to the agreement, ARAC
acquired the net assets of the fleet businesses through the assumption and
subsequent repayment of $1.44 billion of intercompany debt and the issuance to
us of $360 million of convertible preferred stock of Avis Fleet Leasing and
Management Corporation, a wholly-owned subsidiary of ARAC. Coincident to the
closing of the transaction, ARAC refinanced the assumed debt under management
programs which was payable to the Company. Accordingly, the Company received
additional consideration from ARAC comprised of $3.0 billion of cash proceeds
and a $30 million receivable.
RELATIONSHIP WITH NRT
Formation/Status. NRT Incorporated ("NRT") was incorporated in August 1997
by Apollo Management, L.P. ("Apollo") and the Company. Concurrent with its
formation, NRT acquired the real estate brokerage business and operations of
National Realty Trust (the "Trust") which included the brokerage offices
formerly owned by Coldwell Banker Corporation. In connection with the formation
of NRT, the Company acquired $182 million of preferred stock of NRT. In 1999,
the Company sold a portion of its preferred stock investment in NRT to NRT for
approximately $21,475,400.
Franchisee Status. NRT is the largest franchisee, based on gross
commission income, for each of the Company's real estate franchise systems.
NRT's status as a franchisee is governed by franchise agreements (the
"Franchise Agreements") with wholly owned subsidiaries of the Company (the
"Real Estate Franchisors") pursuant to which NRT has the non-exclusive right to
operate as part of the COLDWELL BANKER (Registered Trademark) , ERA (Registered
Trademark) and CENTURY 21 (Registered Trademark) real estate franchise
systems at locations specified in the Franchise Agreements. In February 1999,
NRT entered into new fifty-year franchise agreements with the Real Estate
Franchisors. During 1997, 1998 and 1999, total franchise royalties earned by
the Company from NRT and its predecessors were approximately $61 million, $122
million and $172 million, respectively.
Acquisition Arrangements. The Company has an agreement with NRT that
reduces NRT's effective purchase price for brokerage acquisitions in which the
Company agrees to participate. In such brokerage acquisitions, the Company
purchases the tradenames, trademarked operating names and, in some cases,
22
<PAGE>
mortgage operations of the brokerages being acquired by NRT, thereby paying a
substantial portion of the total purchase price that otherwise would be payable
by NRT. All other assets of the acquired brokerage are purchased by NRT.
Through December 31, 1999, with the exception of the Trust, the assets of which
were purchased solely with NRT's funds, the Company has provided between 9% and
90% of the total purchase price for each of the Company's brokerage
acquisitions involving a total purchase price in excess of $1 million, and has
provided an average of 61% of the total purchase price for all of NRT's
brokerage acquisitions. At the time of NRT's formation, the Company committed
to provide up to approximately $446 million in connection with NRT's brokerage
acquisitions, all of which had been provided through December 31, 1999. In
February 1999, the Company increased its commitment by up to $1 billion as
follows: $500 million is immediately available and the next $500 million will
become available upon the later to occur of (i) February 9, 2004 and (ii) such
time as the first $500 million has been paid in connection with brokerage
acquisitions. Approximately $91 million of this new commitment had been
provided through December 31, 1999. To date, the Company has participated in
each of the brokerage acquisitions completed by NRT. As with all of NRT's
existing brokerage offices, all future acquired offices are required to be
operated under the COLDWELL BANKER (Registered Trademark) , ERA (Registered
Trademark) or CENTURY 21 (Registered Trademark) brand name.
The Company acquired $216.1 million of certain intangible assets including
trademarks associated with real estate brokerage firms acquired by NRT in 1997.
Through December 31, 1999, the Company participated in each of NRT's 51
acquisitions of multi-office brokerages and 75 acquisitions of single-office
brokerages. Through December 31, 1999, the Company has paid NRT or the seller
an aggregate of approximately $537 million and NRT has paid an aggregate of
$294 million, in such transactions.
In connection with the amendments to the acquisition arrangements during
1999, the Company and NRT entered into an acquisition services agreement
pursuant to which the Company made an upfront payment of $30 million to NRT for
services to be provided by NRT to the Company related to the identification of
potential acquisition candidates, the negotiation of agreements and other
services in connection with future brokerage acquisitions by NRT. Such fee is
refundable in the event the services are not provided.
Lease Agreements. NRT leases from the Company an aggregate of
approximately 42,500 square feet of office space for its offices in Parsippany,
New Jersey and Mission Viejo, California pursuant to two leases dated August
11, 1997 (the "Leases"). Each Lease has an initial term of five years
commencing on September 1, 1997, with an option exercisable by NRT to extend
the term thereof for an additional five years upon 30 days' written notice to
the Company. Under the Leases, the Company is responsible for property taxes,
maintenance and insurance as well as various ancillary services. Rent is
payable under each Lease at a rate equal to the Company's total annual actual
costs of operating the leased premises. In addition, under each Lease, NRT is
permitted to amend the lease to increase or reduce the square footage of the
premises as needed and as space becomes available, provided that NRT gives 60
days' advance notice to the Company of its intent to do so and the rental
amount is adjusted accordingly. Each Lease is terminable by either party, with
or without cause, upon 180 days' written notice to the other party. During
1997, 1998 and 1999, an aggregate of $529,000, $853,000 and $1,659,000,
respectively, was paid by NRT to the Company under the Leases.
Mortgage Relationship. NRT and Cendant Mortgage Corporation ("Cendant
Mortgage") are parties to a Marketing Agreement (the "Marketing Agreement"),
pursuant to which NRT has agreed to assist Cendant Mortgage in the marketing of
its various mortgage programs and products through NRT's real estate brokerage
offices. Cendant Mortgage is required to pay NRT a marketing fee each quarter
based on NRT's total number of closed real estate transactions and the average
sales price of homes sold by NRT during such quarter. The term of the Marketing
Agreement is 40 years unless earlier terminated by Cendant Mortgage with or
without cause or, at NRT's option, in the event of Cendant Mortgage's material
breach or if a nationwide third party provider of mortgage services meeting
certain conditions offers NRT a comparable marketing arrangement and Cendant
Mortgage declines to match the economic terms. During the term of the Marketing
Agreement, NRT may not enter into any similar arrangement with another party.
During 1997, over the four-month period in which the Marketing Agreement was in
effect, an aggregate of $699,000 was paid to NRT under the Marketing Agreement.
During 1998 and 1999, an aggregate of $11,183,000 and $23,897,000
respectively,was paid to NRT under the Marketing
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Agreement. On February 24, 2000, subsidiaries of Cendant Mortgage and NRT
entered into a limited partnership agreement. Pursuant to this agreement, the
parties formed a new entity, Cendant Home Loans, L.P., which will originate
mortgage loans for customers of NRT real estate offices and others. The limited
partnership agreement terminates upon the termination of the last Franchise
Agreement to terminate. Upon commencement of the business operations of Cendant
Home Loans, L.P., which is expected by the second half of 2000, the Marketing
Agreement will be terminated.
Relocation Management. NRT has an arrangement with Cendant Mobility
Services Corporation, a wholly owned subsidiary of the Company ("Cendant
Mobility"), pursuant to which NRT provides its brokerage services to relocating
employees of the clients of Cendant Mobility, which are typically large
corporations and governmental agencies. Pursuant to such arrangement, when
receiving a referral from Cendant Mobility, NRT receives a commission on the
purchase or sale of the property but is obligated to pay Cendant Mobility a
portion of such commission as a referral fee. During 1997, 1998 and 1999 NRT
paid an aggregate $6,435,000, $11,631,000 and $20,962,000 respectively, in
referral fees to Cendant Mobility. The arrangement with NRT is not embodied in
a written agreement and, accordingly, may be subject to termination or
modification at any time.
Support Agreement. NRT and the Company are parties to a Support Agreement,
dated as of August 11, 1997 (the "Support Agreement"), pursuant to which the
Company has agreed to furnish NRT with certain computer and data related
information services. In consideration of the provision of such services, NRT
has agreed to reimburse the Company directly for certain actual costs incurred
by the Company on behalf of NRT. In addition, NRT was required to pay the
Company a monthly fee of $77,500 during 1997 and is required to pay a monthly
fee of $41,667 during 1998 and $12,500 during 1999. During 1997, 1998 and 1999,
an aggregate of $1,448,000, $1,978,000 and $670,000 respectively, was paid to
the Company under the Support Agreement. The Support Agreement terminated in
1999.
Development Advance. On January 14, 1997, the Company made an advance of
$20 million (the "Development Advance") to the Trust and one of its
subsidiaries. The Development Advance was assumed by NRT in August 1997, at
which time the term of the Development Advance was amended from 10 years to 40
years. Under the terms of the Development Advance, so long as there is no
material default under any of the Franchise Agreements and NRT maintains
certain levels of gross commissions income, 1/480th of the principal amount of
the Development Advance will be forgiven on a monthly basis over a 40-year
period.
Other. In addition to the above-mentioned agreements, NRT is party to
various other agreements and arrangements with the Company and its affiliates,
including an outsourcing agreement pursuant to which the Company acts as NRT's
exclusive agent in negotiating arrangements on behalf of NRT with third party
service and product providers, a stockholders agreement relating to the voting,
transfer and registration of shares of NRT's capital stock owned by Apollo and
the Company and certain other agreements and arrangements. Pursuant to these
agreements and arrangements, the Company, among other things, provides services
to NRT and receives revenues, directly or indirectly, in respect thereof.
Messrs. Katz, Johnson and Richard A. Smith serve on the Board of Directors
of NRT.
RELATIONSHIP WITH NETMARKET GROUP, INC.
On September 15, 1999, Netmarket Group, Inc. ("NGI"), a former subsidiary
of the Company, began operations as an independent company that pursues the
development of certain interactive businesses formerly within the Company's
direct marketing division. Prior to September 15, 1999, the Company's ownership
of NGI was restructured into common stock and preferred stock interests. On
September 15, 1999, the Company donated NGI's outstanding common stock to a
charitable trust, and NGI issued additional shares of its common stock to
certain of its marketing partners. Accordingly, as a result of the change in
ownership of NGI's common stock from the Company to independent third parties,
NGI's operating results are no longer included in the Company's Consolidated
Financial Statements. The Company retained the opportunity to participate in
NGI's value through the ownership of convertible preferred stock of NGI, which
is ultimately convertible, at the Company's option, after September 14, 2001,
into 78% of NGI's diluted common shares. The preferred stock accrues and
cummulates cash
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dividends of $5 million annually in the aggregate. The preferred stock dividend
will be recorded in income of the Company if and when it becomes realizable.
David M. Johnson and Michael P. Monaco serve on the Board of Directors of NGI.
OTHER RELATIONSHIPS
Mr. Edelman is of counsel to Battle Fowler, a New York City law firm.
Battle Fowler represented the Company in certain transactions in 1999. It is
expected that Battle Fowler will continue to represent the Company in
connection with certain matters from time to time in the future.
Mr. Edelman is also a partner in Chartwell Hotels Associates ("Chartwell
Hotels"), a general partnership affiliated with the Fisher Brothers and Gordon
Getty, and its affiliate Chequers Investment Associates, which have acquired
certain hotels and mortgages secured by hotels from the Resolution Trust
Corporation. In two transactions with Chartwell Hotels, entered into in
November 1992 and May 1993, and each amended in December 1994, which have
resulted in and will result in the addition of properties to the Company's
franchise systems, the Company has advanced approximately $10 million, and has
agreed to advance up to an additional $4 million if certain additional property
conversions and other requirements are met, in return for Chartwell Hotels
agreeing to franchise the properties with one of the Company's brands. All
Chartwell Hotels properties will pay royalties once they become part of the
Company's franchise systems and these royalties will be credited toward the
recovery of the advance. Certain properties which cannot be converted to
Company brands will also pay a percentage of gross room sales in lieu of
royalties as specified in the agreements. Each advance is required to be fully
recovered over a maximum five year period following the advance. In addition,
as individual properties convert to Company brands, the Company will make
additional advances to the franchisee of such properties to fund costs incurred
in connection with such conversion. Such advances are required to be repaid
with interest by the franchisee over a three year period and such repayment has
been guaranteed by Chartwell Hotels.
In April 1995, the Company and Ramada Franchise Systems, Inc. ("RFS"), a
wholly-owned subsidiary of the Company ("RFS"), entered into a license
agreement with Preferred Equities Corporation ("PEC"), the owner, developer and
operator of interval ownership resort facilities, pursuant to which PEC was
licensed to use certain Ramada servicemarks in connection with its facilities
in the United States. PEC has paid RFS $1 million in initial fees and will pay
a percentage of Gross Sales (as defined) of interval ownership interests during
the term of the agreement. Mr. Nederlander is the Chairman and a significant
shareholder of MEGO Financial Corp., of which PEC is a wholly-owned subsidiary.
The Company entered into an agreement with PEC during the second quarter of
1998 whereby RCI Travel, Inc. a subsidiary of the Company, will provide
corporate and leisure travel services to PEC, including its owners, members and
employees in exchange for fees payable by PEC to the Company.
Mr. Pittman is the President and Chief Operating Officer of America
Online, Inc. ("AOL"). Century 21 Real Estate Corporation, an indirect
wholly-owned subsidiary of the Company, is party to an agreement with AOL
pursuant to which the National Advertising Fund for the CENTURY 21 System is
committed to pay a $1,000,000 annual advertising fee to AOL for a period of
five years relating to exclusive advertising rights for the CENTURY 21 System
and for the CENTURY 21 CommunitiesSM Website on the AOL network. AOL also
serves as the exclusive on-line home of the CENTURY 21 System intranet site,
Century 21 Online (Registered Trademark) . It is expected that AOL and the
Company and its subsidiaries will enter into advertising arrangements and
Internet marketing arrangements from time to time in the ordinary course of
business in the future.
On June 3, 1997, the Company entered into an Interactive Marketing
Agreement with AOL pursuant to which the Company's former NetMarket subsidiary
markets its online automobile, shopping, travel and information/privacy
individual membership programs through prominent placement and promotions on
the AOL online services and AOL's Internet website, and also markets these
products to AOL subscribers through various other marketing mechanisms,
including inbound telemarketing, outbound telemarketing and direct mail.
Pursuant to such agreement, the Company made commission payments to AOL with
respect to membership fees and certain other transaction related revenue
received by the Company under this arrangement. The Company made an initial
payment to AOL of $45 million upon execution of the
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agreement, which will primarily be credited against future membership
commissions payable by the Company to AOL under such agreement. During 1998,
the Company made an additional $5 million payment pursuant to such agreement.
Until the contribution of NGI to a charitable trust in September 1999, the
Company made payments of $10 million during 1999.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the company's equity securities, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and
the New York Stock Exchange. Officers, directors and greater than ten percent
owners are required to furnish the Company with copies of all Forms 3, 4 and 5
they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file a Form 5 for a specified fiscal year, except as set
forth below, the Company believes that all its officers, directors, and greater
than ten percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during 1999.
On January 27, 1999, David M. Johnson resubmitted a Form 4 in respect of
an acquisition of shares of common stock during November 1998 which was
originally filed without a signature. On September 20, 1999, Robert F. Smith
filed a late Form 4 in respect of an acquisition of shares of common stock
during August 1999.
RATIFICATION OF APPOINTMENT OF AUDITORS
[PROPOSAL NO. 2]
Deloitte & Touche LLP has been appointed by the Board of Directors as the
auditors for the Company's financial statements for 2000. A representative of
Deloitte & Touche LLP is expected to be present at the Meeting and will have
the opportunity to make a statement if he desires to do so and will be
available to respond to appropriate questions of stockholders.
On January 20, 1998, in connection with the Company's previously announced
plan to name a successor independent accountant following the Merger with HFS
Incorporated, the Company engaged Deloitte & Touche LLP, the auditor of HFS
Incorporated prior to the Merger, as its new principal independent accountants.
Ernst & Young LLP, the Company's former principal independent accountants,
reported on the results of operations of the Company's former CUC businesses
for the year ended December 31, 1997. The reports of Ernst & Young LLP on the
financial statements for the past two fiscal years of the Company contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. The Audit Committee of
the Company's Board of Directors participated in and approved the decision to
change independent accountants. In connection with its audit for the two most
recent fiscal years and through May 11, 1998, there were no disagreements with
Ernst & Young LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Ernst & Young LLP would
have caused Ernst & Young LLP to make reference thereto in their report on the
financial statements for such years. During the two most recent fiscal years
and through May 11, 1998, there were no reportable events, as that term is
defined in Item 304 (a)(1)(v) of Regulation S-K. However, as previously
reported, the Audit Committee of the Board of Directors of the Company
conducted an investigation into accounting irregularities at former CUC
business units which were audited by Ernst & Young LLP. The results of such
investigation required a restatement of previously reported financial
statements of the Company. Such investigation may result in disagreements by
the Company with Ernst & Young LLP in the future with respect to previously
reported financial statements of the Company which were audited by Ernst &
Young LLP. The Company requested that Ernst & Young LLP furnish it with letters
addressed to the Commission stating whether or not it agrees with the above
statements. A copy of a letter, dated January 22, 1998, is filed as Exhibit 16
to the Company's Current Report on Form 8-K dated January 22, 1998. A copy of a
letter, dated May 15, 1998, is filed as Exhibit 16 to the Company's Current
Report on Form 8-K, dated May 18, 1998.
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During the fiscal years 1996 and 1997 and through January 20, 1998, the
Company did not consult with Deloitte & Touche LLP regarding either:
(i) the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Company's financial statements, and neither a written report
was provided to the registrant nor oral advice was provided that Deloitte &
Touche LLP concluded was an important factor considered by the Company in
reaching a decision as to the accounting, auditing or financial reporting
issue; or
(ii) any matter that was either the subject of a disagreement, as the term
is defined in Item 304 (a)(1)(iv) of Regulation S-K and the related
instructions to Item 304 of Regulation S-K, or a reportable event, as that term
is defined in Item 304 (a)(1)(v) of Regulation S-K.
Although stockholder action on this matter is not required, the
appointment of Deloitte & Touche LLP is being recommended to the stockholders
for ratification. Pursuant to applicable Delaware law, the ratification of the
appointment of auditors of the Company requires the affirmative vote of the
holders of a majority of the shares of Common Stock present or represented by
proxy and entitled to vote at the Meeting. Abstentions and broker non-votes
will be counted and will have the same effect as a vote against this proposal.
THE BOARD OF DIRECTORS UNAMIMOUSLY RECOMMENDS THAT
YOU VOTE FOR THIS PROPOSAL.
APPROVAL OF MOVE.COM 2000 EMPLOYEE STOCK PURCHASE PLAN
[PROPOSAL NO. 3]
GENERAL
The Move.com 2000 Employee Stock Purchase Plan (a "Section 423 Plan") was
unanimously adopted by the Executive Committee of the Board in March 2000,
subject to approval by stockholders. The Section 423 Plan is designed to
encourage the purchase by participants of shares of a series of Cendant Common
Stock designated Move.com Common Stock ("Move.com Stock"). The Section 423 Plan
is intended to comply with the requirements of Section 423 of the Internal
Revenue Code (the "Code"), and to assure the participants of the tax advantages
provided thereby (and described below in the section entitled "Certain Federal
Income Tax Consequences"). In order for the transfer of stock under the Section
423 Plan to qualify for this treatment, the Section 423 Plan must be approved
by stockholders of the Company within 12 months of the plan's adoption. A total
of 1,000,000 shares of Move.com Stock will be authorized for issuance under the
Section 423 Plan.
The number of shares of Move.com Stock initially authorized for issuance
under the Section 423 Plan are subject to adjustment by the Committee in the
event of a recapitaliztion, stock split, stock dividend or similar corporate
transaction.
Subject to certain procedural requirements, all employees of the Company
who have at least three months of service and work more than 20 hours per week
and more than 5 months per year will be eligible to participate in the Section
423 Plan, except that the Company has the right to exclude from participation
employees who are "highly compensated" within the meaning of Section
423(b)(4)(D) of the Code and employees who are five percent or more
stockholders of the Company or any subsidiary.
Pursuant to the Section 423 Plan, each eligible employee will be permitted
to purchase shares of the Move.com Stock through regular payroll deductions in
an amount equal to 2% to 10% of the employee's base pay (as elected by the
employee) for each payroll period. Participating employees will be able to
purchase shares of Move.com Stock with such accumulated payroll deductions at
the end of an offering period at a purchase price equal to the lesser of: (i)
no less than 85 percent of the fair market value of the Move.com Stock on the
date the offering period begins or (ii) no less than 85 percent of the fair
market
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value of Move.com Stock on the date the offering period ends. Under the Section
423 Plan, the fair market value of the shares of the Move.com Stock, in
combination with shares purchased under any similar plan of the Company, which
may be purchased by any employee during any calendar year may not exceed
$25,000.
The Company estimates that there are approximately 21,000 employees who
are potential participants in the Section 423 Plan.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS AT THE MEETING
APPROVE THE SECTION 423 PLAN.
The full text of the Section 423 Plan is set forth in Annex A to this
Proxy Statement, and the description of the Section 423 Plan set forth herein
is qualified in its entirety by reference to the text of such plan.
Approval of the Section 423 Plan will require the affirmative vote of a
majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Meeting. Under applicable Delaware law, in determining
whether such proposal has received the requisite number of affirmative votes,
abstentions and broker non-votes will be counted and will have the same effect
as a vote against this proposal.
ADDITIONAL INFORMATION REGARDING THE SECTION 423 PLAN
Since the amount of benefits to be received by each participant is
determined by his or her elections, the amount of future benefits to be
allocated to any individual or group of individuals under each Section 423 Plan
is not determinable. Similarly, the amount of benefits which would have been
received by or allocated to any individual or group of individuals for fiscal
1999 if the Section 423 Plan had been in effect is not determinable.
DESCRIPTION OF SECTION 423 PLAN
The following summary describes the Section 423 Plan which is submitted to
stockholders for approval by this Proposal.
PURPOSE. The purpose of the Section 423 Plan is to align employee and
shareholder long-term interests by facilitating the purchase of Move.com Stock
by employees and to enable employees to develop and maintain significant
ownership of Move.com Stock. An additional purpose of the Section 423 Plan is
to comply with the requirements of Section 423 of the Code, and thus to obtain
for the participants the tax advantages provided thereby (described below in
the section entitled "Certain Federal Income Tax Consequences").
ADMINISTRATION. The Section 423 Plan will be administered by the
Compensation Committee, which is comprised solely of non-employee directors who
are not eligible to participate in the Section 423 Plan. The Compensation
Committee may make such rules and regulations and establish such procedures for
the administration of the Section 423 Plan as it deems appropriate.
PARTICIPATION. Subject to certain procedural requirements, all employees
of the Company with three months of service and who are scheduled to work at
least 20 hours per week and at least five months per year will be eligible to
participate in the Section 423 Plan, except that the Company has the right to
exclude any officer who is a "highly compensated employee" within the meaning
of Section 423(b)(4)(D) of the Code. Employees who are five percent or more
stockholders of the Company or any subsidiary of the Company will not be
eligible to participate. Designations of corporations participating in the
Section 423 Plan may be made from time to time by the Compensation Committee
from among the subsidiary corporations of the Company, including corporations
which become subsidiaries after the adoption and approval of such Section 423
Plan.
PURCHASE OF SHARES. Pursuant to the Section 423 Plan, each eligible
employee will be permitted to purchase shares of the Move.com Stock through
regular payroll deductions (and/or cash payments) in an aggregate amount equal
to 2% to 10% of the employee's base pay (as elected by the employee) for each
payroll period.
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STOCK PURCHASE PRICE. Participating employees will be able to purchase
shares of Move.com Stock with payroll deductions (and/or cash payments) at the
end of an offering period at a purchase price equal to the lesser of: (i) no
less than 85 percent of the fair market value of Move.com Stock on the date the
performance period begins or (ii) no less than 85 percent of the fair market
value of Move.com Stock on the date the performance period ends.
NONTRANSFERABLE RIGHT TO PURCHASE. A right to purchase shares which is
granted to a participant under the Section 423 Plan is not transferable
otherwise than by will or the laws of descent and distribution, and is
exercisable, during the participant's lifetime, only by the participant.
TERM. No right to purchase shares may be granted under the Section 423
Plan with respect to any fiscal year after fiscal 2009. Rights to purchase
shares which are granted before or during fiscal 2009, however, may extend
beyond the end of fiscal 2009, and the provisions of the Section 423 Plan will
continue to apply thereto.
AMENDMENTS TO OR DISCONTINUANCE OF THE SECTION 423 PLAN. The Board may
from time to time amend or terminate the Section 423 Plan. No such amendment or
termination may adversely affect the rights of any participant without the
consent of such participant. To the extent required by any law, regulation or
stock exchange rule, no amendment shall be effective without the approval of
stockholders entitled to vote thereon.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
THE FOLLOWING DISCUSSION ADDRESSES ONLY THE GENERAL FEDERAL INCOME TAX
CONSEQUENCES OF AWARDS. IT DOES NOT ADDRESS THE IMPACT OF STATE AND LOCAL
TAXES, THE FEDERAL ALTERNATIVE MINIMUM TAX, AND SECURITIES LAWS RESTRICTIONS,
AND IS NOT INTENDED AS TAX ADVICE TO PARTICIPANTS IN THE SECTION 423 PLAN, WHO
SHOULD CONSULT THEIR OWN TAX ADVISORS.
The Section 423 Plan is intended to qualify as an "employee stock purchase
plan" as defined in Section 423 of the Code. Assuming such qualification, a
participant will not recognize any taxable income as a result of participating
in the Section 423 Plan, exercising options granted pursuant to the Section 423
Plan or receiving shares of Move.com Stock purchased pursuant to such options.
A participant may, however, be required to recognize taxable income as
described below.
If a participant disposes of any share of Move.com Stock purchased
pursuant to the Section 423 Plan after the later to occur of (i) two years from
the grant date for the related option and (ii) one year after the exercise date
for the related option (such disposition, a "Qualifying Transfer"), or if he or
she dies (whenever occurring) while owning any share purchased under the
Section 423 Plan, the participant generally will recognize compensation income,
for the taxable year in which such disposition or death occurs, in an amount
equal to the lesser of (i) the excess of the market value of the disposed share
at the time of such disposition over its purchase price, and (ii) 15% of the
market value of the disposed share on the grant date for the option to which
such disposed share relates. In the case of a Qualifying Transfer, (a) the
basis of the disposed share will be increased by an amount equal to the amount
of compensation income so recognized, and (b) the participant will recognize a
capital gain or loss, as the case may be, equal to the difference between the
amount realized from the disposition of the shares and the basis for such
shares.
If the participant disposes of any share other than by a Qualifying
Transfer, the participant generally will recognize compensation income in an
amount equal to the excess of the market value of the disposed share on the
date of disposition over its purchase price. In such event, the Company will be
entitled to a tax deduction equal to the amount of compensation income
recognized by the participant. Otherwise, the Company will not be entitled to
any tax deduction with respect to the grant or exercise of options under the
Section 423 Plan or the subsequent sale by participants of shares purchased
pursuant to the Section 423 Plan. A transfer by the estate of the participant
of shares purchased by the participant under the Section 423 Plan has the same
federal income tax effects on the Company as a Qualifying Transfer.
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STOCKHOLDER PROPOSALS
Proposals received from stockholders are given careful consideration by
the Company in accordance with Rule 14a-8 under the Exchange Act. Stockholder
proposals are eligible for consideration for inclusion in the proxy statement
for the Year 2001 Annual Meeting if they are received by the Company on or
before December 2, 2000. Any proposal should be directed to the attention of
the Eric J. Bock, Senior Vice President, Legal, Cendant Corporation, 9 West
57th Street, New York, New York 10019. In order for a shareholder proposal
submitted outside of Rule 14a-8 to be considered "timely" within the meaning of
Rule 14a-4(c) such proposal must be received by the Company on or prior to
March 13, 2001 and in order for a proposal to be timely under the Company's
By-Laws it must be received on or prior to March 13, 2001 but no earlier than
February 12, 2001.
By Order of the Board of Directors
/s/ Jeanne M. Murphy
-----------------------
JEANNE M. MURPHY
Secretary
Dated: March 28, 2000
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ANNEX A
MOVE.COM
2000 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Move.com Stock (as
defined in Section 2 below). It is the intention of the Company that the Plan
qualify as an "Employee Stock Purchase Plan" within the meaning of Section 423
of the Code, and the provisions of the Plan shall be construed in a manner
consistent with the requirements of such Section of the Code.
2. DEFINITIONS.
a. "Board" shall mean the Board of Directors of the Company.
b. "Change in Capitalization" shall mean any increase, reduction, or
change or exchange of shares of Move.com Stock (or such other class of common
stock of the Company) for a different number or kind of shares or other
securities of the Company by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, stock dividend, stock split or reverse
stock split, combination or exchange of shares, repurchase of shares, change in
corporate structure or otherwise.
c. "Change in Control of the Company" shall mean any transaction or series
of transactions pursuant to or as a result of which (i) during any period of
not more than 24 months, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a third party who has entered into an agreement to effect a transaction
described in clause (ii), (iii) or (iv) of this paragraph (c)) whose election
by the Board or nomination for election by the Company's stockholders was
approved by a vote of at least a majority of the directors then still in office
who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved (other than approval given
in connection with an actual or threatened proxy or election contest), cease
for any reason to constitute at least a majority of the members of the Board,
(ii) beneficial ownership of 50% or more of the outstanding common stock, par
value $0.01 per share (or other securities having generally the right to vote
for election of the Board) of the Company shall be sold, assigned or otherwise
transferred, directly or indirectly, other than pursuant to a public offering,
to a third party, whether by sale or issuance of such stock or other securities
or otherwise, (iii) the Company or any Subsidiary shall sell, assign or
otherwise transfer, directly or indirectly, assets (including stock or other
securities of Subsidiaries) having a fair market or book value or earning power
of 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any third party, other than the Company or
as a wholly-owned Subsidiary thereof, or (iv) control of 50% or more of the
business of the Company shall be sold, assigned or otherwise transferred
directly or indirectly to any third party.
d. "Code" shall mean the Internal Revenue Code of 1986, as amended.
e. "Committee" shall mean a committee of members of the Board appointed by
the Board to administer the Plan and to perform the functions set forth herein.
f. "Company" shall mean Cendant Corporation, a Delaware corporation.
g. "Compensation" shall mean the fixed salary or wage paid by the Company
to an Employee as reported by the Company to the United States government for
federal income tax purposes, including an Employee's portion of salary deferral
contributions pursuant to Section 401(k) of the Code and any amount excludable
pursuant to Section 125 of the Code, but excluding any bonus, fee, overtime
pay, severance pay, expenses or other special emolument or any credit or
benefit under any employee plan maintained by the Company.
h. "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the
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case of a leave of absence agreed to in writing by the Company (including, but
not limited to, military or sick leave), provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
i. "Designated Subsidiaries" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
j. "Employee" shall mean any person, including an officer, who is
regularly employed by the Company or one of its Designated Subsidiaries.
k. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
l. "Exercise Date" shall mean the last business day of each Offering
Period.
m. "Fair Market Value" per share of Move.com Stock as of a particular date
shall mean (i) the closing sales price per share of Move.com Stock on the
national securities exchange on which the Move.com Stock is principally traded,
on such date or on the last preceding date on which there was a sale of such
Move.com Stock on such exchange, or (ii) if the shares of Move.com Stock are
not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole discretion,
shall determine.
n. "Move.com Stock" shall mean shares of a series of common stock, par
value $.01 per share, of the Company, designated Move.com Common Stock.
o. "Offering Date" shall mean January 1, April 1, July 1, and October 1,
of each Plan Year, and/or such other date or dates determined by the Committee.
p. "Offering Period" shall mean each calendar quarter of each Plan Year
during the effectiveness of the Plan, commencing on each Offering Date, or such
other period or periods determined by the Committee.
q. "Parent Corporation" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the employer
corporation if, at the time of granting an option, each of the corporations
other than the employer corporation owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
r. "Participant" shall mean an Employee who participates in the Plan.
s. "Plan" shall mean this Move.com 2000 Employee Stock Purchase Plan, as
amended from time to time.
t. "Plan Year" shall mean the calendar year, and/or such other period or
periods determined by the Committee.
u. "Subsidiary Corporation" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the employer
corporation if, at the time of granting an option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
3. ELIGIBILITY.
a. Subject to the requirements of Section 4.b. hereof, any person who is
(i) an Employee as of an Offering Date and (ii) who is regularly scheduled to
work at least 20 hours per week and at least 5 months per year shall be
eligible to participate in the Plan and be granted an option for the Offering
Period commencing on such Offering Date if (iii) at the commencement of such
Offering Period such person has maintained Continuous Status as an Employee for
at least three months; provided, however, that the Company shall have the right
to exclude from eligibility and participation any officer of the Company who is
also a "highly compensated employee" within the meaning of Section 423(b)(4)(D)
of the Code.
b. Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose stock
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would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own stock and/or hold outstanding options to purchase stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any Subsidiary or Parent of the Company,
or (ii) which permits such Employee's right to purchase stock under all
employee stock purchase plans (as described in Section 423 of the Code) of the
Company and any Subsidiary or Parent of the Company to accrue at a rate which
exceeds twenty-five thousand dollars ($25,000) of Fair Market Value of such
stock (determined at the time such option is granted) for any calendar year in
which such option is outstanding at any time.
4. GRANT OF OPTION; PARTICIPATION.
a. On each Offering Date the Company shall commence an offer by granting
each eligible Employee an option to purchase shares of Move.com Stock, subject
to the limitations set forth in Sections 3.b. and 10 hereof.
b. Each eligible Employee may elect to become a Participant in the Plan
with respect to an Offering Period, only by filing an agreement with the
Company authorizing contributions (as set forth in Section 5 hereof). Such
authorization will remain in effect for subsequent Offering Periods, until
modified or terminated by the Participant.
c. The option price per share of the Move.com Stock subject to an offering
shall be the lesser of: (i) 85% (or such higher percentage determined by the
Committee) of the Fair Market Value of a share of Move.com Stock on the
Offering Date or (ii) 85% (or such other percentage determined by the
Committee) of the Fair Market Value of a share of Move.com Stock on the
Exercise Date.
5. PAYROLL DEDUCTIONS.
a. A Participant may, in accordance with rules adopted by the Committee,
authorize a payroll deduction (or such other method of payment determined by
the Committee) of any whole percentage from 2 percent to 10 percent of such
Participant's Compensation each pay period. A Participant may increase or
decrease such payroll deduction (including a cessation of payroll deductions)
at any time but not more frequently than once each six months, by filing a new
authorization form with the Committee. For purposes of this Plan, any reference
to contributions by payroll deduction is deemed to also include any other
method of contribution determined by the Committee from time to time.
b. All payroll deductions made by a Participant shall be credited to such
Participant's account under the Plan. A Participant may not make any additional
payments into such account.
6. EXERCISE OF OPTION.
a. Unless a Participant withdraws from the Plan as provided in Section 8
hereof, such Participant's option to purchase shares will be exercised
automatically on the Exercise Date, and the maximum number of shares subject to
such option will be purchased for such Participant at the applicable option
price with the accumulated payroll deductions and cash dividends (credited
pursuant to Section 9 hereof) in such Participant's account. During a
Participant's lifetime, a Participant's option to purchase shares hereunder is
exercisable only by such Participant.
b. If applicable, any cash balance remaining in a Participant's account
after the termination of an Offering Period will be carried forward to the
Participant's account for the purchase of Move.com Stock during the next
Offering Period unless the Participant elects to terminate participation in the
Plan under Section 8 hereof. Otherwise the Participant will receive a cash
payment equal to the balance of his or her account.
c. The shares of Move.com Stock purchased upon exercise of an option
hereunder shall be credited to the Participant's account under the Plan and
shall be deemed to be transferred to the Participant on the Exercise Date and,
except as otherwise provided herein, the Participant shall have all rights of a
stockholder with respect to such shares.
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7. DELIVERY OF MOVE.COM STOCK.
a. As promptly as practicable after receipt by the Committee of a written
request for withdrawal of Move.com Stock from any Participant, the Company
shall arrange the delivery to such Participant of a stock certificate
representing the shares of Move.com Stock which the Participant requests to
withdraw. Subject to paragraph b. of this Section 7, withdrawals (i) may not
occur prior to 90 days from the Exercise Date on which such shares of Move.com
Stock were purchased (the "Restricted Period"), (ii) may be made no more
frequently than once each Plan Year and (iii) may not occur prior to two (2)
years from the Offering Date on which such shares of Move.com Stock were
purchased (the "Holding Period"). Shares of Move.com Stock received upon stock
dividends or stock splits shall be treated as having been purchased on the
Exercise Date of the shares to which they relate.
b. Notwithstanding anything in paragraph a. of this Section 7 to the
contrary, Move.com Stock may be withdrawn by a Participant more than once
during a Plan Year and during the Holding Period (but in no event during the
Restricted Period) upon the written approval of the Committee, in its sole
discretion. In addition, Move.com Stock may be withdrawn by a Participant at
any time within sixty (60) days following a Change in Control of the Company.
Shares of Move.com Stock purchased pursuant to reinvestment of cash dividends
shall not be subject to the restriction in Section 7.a.(ii) hereof.
8. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
a. A Participant may withdraw all, but not less than all, the payroll
deductions and cash dividends credited to such Participant's account (that have
not been used to purchase shares of Move.com Stock) under the Plan at any time
by giving written notice to the Company received prior to the Exercise Date.
All such payroll deductions and cash dividends credited to such Participant's
account will be paid to such Participant promptly after receipt of such
Participant's notice of withdrawal and such Participant's option for the
Offering Period in which the withdrawal occurs will be automatically
terminated. No further payroll deductions for the purchase of shares of
Move.com Stock will be made for such Participant during such Offering Period
and for a period of 6 months following the end of such Offering Period, and any
additional cash dividends during the Offering Period will be distributed to the
Participant.
b. Upon termination of a Participant's Continuous Status as an Employee
during the Offering Period for any reason, including voluntary termination,
retirement or death, the payroll deductions and cash dividends credited to such
Participant's account (that have not been used to purchase shares of Move.com
Stock) will be returned (and any future cash dividends will be distributed) to
such Participant or, in the case of such Participant's death, to the person or
persons entitled thereto under Section 12 hereof, and such Participant's option
will be automatically terminated.
9. DIVIDENDS AND INTEREST.
a. Cash dividends paid on Move.com Stock held in a Participant's account
shall be credited to such Participant's account and used in addition to payroll
deductions to purchase shares of Move.com Stock on the Exercise Date. Dividends
paid in Move.com Stock or stock splits of the Move.com Stock shall be credited
to the accounts of Participants. Dividends paid in property other than cash or
Move.com Stock shall be distributed to Participants as soon as practicable.
b. No interest shall accrue on or be payable with respect to the payroll
deductions or credited cash dividends of a Participant in the Plan.
10. STOCK.
a. The maximum number of shares of Move.com Stock which shall be reserved
for sale under the Plan shall be 1,000,000, subject to adjustment upon Changes
in Capitalization of the Company as provided in Section 16 hereof. If the total
number of shares which would otherwise be subject to options granted pursuant
to Section 4.a. hereof on an Offering Date exceeds the number of shares then
available under the Plan (after deduction of all shares for which options have
been exercised or are then outstanding), the Committee shall make a pro rata
allocation of the shares remaining available for option grant in as
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uniform a manner as shall be practicable and as it shall determine to be
equitable. In such event, the Committee shall give written notice to each
Participant of such reduction of the number of option shares affected thereby
and shall similarly reduce the rate of payroll deductions, if necessary.
b. Shares of Move.com Stock to be delivered to a Participant under the
Plan will be registered in the name of the Participant or, at the election of
the Participant, in the name of the Participant and another person as joint
tenants with rights of survivorship.
11. ADMINISTRATION.
The Plan shall be administered by the Committee, and the Committee may
select an administrator to whom its duties and responsibilities hereunder may
be delegated. The Committee shall have full power and authority, subject to the
provisions of the Plan, to promulgate such rules and regulations as it deems
necessary for the proper administration of the Plan, to interpret the
provisions and supervise the administration of the Plan, and to take all action
in connection therewith or in relation thereto as it deems necessary or
advisable. Any decision reduced to writing and signed by a majority of the
members of the Committee shall be fully effective as if it had been made at a
meeting duly held. The Company will pay all expenses incurred in the
administration of the Plan. No member of the Committee shall be personally
liable for any action, determination, or interpretation made in good faith with
respect to the Plan, and all members of the Committee shall be fully
indemnified by the Company with respect to any such action, determination or
interpretation.
12. DESIGNATION OF BENEFICIARY.
a. A Participant may file, on forms supplied by and delivered to the
Company, a written designation of a beneficiary who is to receive any shares
and cash remaining in such Participant's account under the Plan in the event of
the Participant's death.
b. Such designation of beneficiary may be changed by the Participant at
any time by written notice. In the event of the death of a Participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such Participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the Participant
or, if no such executor or administrator has been appointed (to the knowledge
of the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
Participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
13. TRANSFERABILITY.
Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of an option or to receive shares under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided in
Section 12 hereof) by the Participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds in accordance with
Section 8 hereof.
14. USE OF FUNDS.
All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
15. REPORTS.
Individual accounts will be maintained for each Participant in the Plan.
Statements of account will be given to participating Employees as soon as
practicable following each Offering Period, which statements will set forth the
amounts of payroll deductions, the per share purchase price, the number of
shares of Move.com Stock purchased, the aggregate shares in the Participant's
account and the remaining cash balance, if any.
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16. EFFECT OF CERTAIN CHANGES.
In the event of a Change in Capitalization or the distribution of an
extraordinary dividend, the Committee shall conclusively determine the
appropriate equitable adjustments, if any, to be made under the Plan, including
without limitation adjustments to the number of shares of Move.com Stock which
have been authorized for issuance under the Plan but have not yet been placed
under option, as well as the price per share of Move.com Stock covered by each
option under the Plan which has not yet been exercised. In the event of a
Change in Control of the Company, the Offering Period will terminate unless
otherwise provided by the Committee.
17. AMENDMENT OR TERMINATION.
The Board may from time to time amend or terminate the Plan. No such
amendment or termination may adversely affect the rights of any Participant
without the consent of such Participant. To the extent required by any law,
regulation or stock exchange rule, no amendment shall be effective without the
approval of stockholders entitled to vote thereon.
18. NOTICES.
All notices or other communications by a Participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the
person, designated by the Company for the receipt thereof.
19. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
a. This Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Delaware
without giving effect to the choice of law principles thereof, except to the
extent that such law is preempted by federal law.
b. The obligation of the Company to sell or deliver shares of Move.com
Stock with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
c. The Plan is intended to comply with Rule 16b-3 under the Exchange Act
and the Committee shall interpret and administer the provisions of the Plan in
a manner consistent therewith. Any provisions inconsistent with such Rule shall
be inoperative and shall not affect the validity of the Plan.
20. WITHHOLDING OF TAXES.
If the Participant makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any share or
shares issued to such Participant pursuant to such Participant's exercise of an
option, and such disposition occurs within the two-year period commencing on
the day after the Offering Date or within the one-year period commencing on the
day after the Exercise Date, such Participant shall, within ten (10) days of
such disposition, notify the Company thereof and thereafter immediately deliver
to the Company any amount of Federal, state or local income taxes and other
amounts which the Company informs the Participant the Company is required to
withhold.
21. EFFECTIVE DATE.
The Plan shall be effective as of the date determined by the Company
subject to the approval of the Plan by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted.
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CENDANT CORPORATION
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Whether or not you plan to attend the Annual Meeting of Stockholders, you can
ensure your shares are represented at the Meeting by promptly completing,
signing and returning your proxy (attached below) to ChaseMellon Shareholder
Services L.L.C., in the enclosed postage-paid envelope. We urge you to return
your proxy as soon as possible. AS AN ALTERNATIVE TO COMPLETING THIS FORM, YOU
MAY ENTER YOUR VOTE INSTRUCTION BY TELEPHONE. CALL TOLL FREE 1-800-840-1208 AND
FOLLOW THE SIMPLE INSTRUCTIONS. Thank you for your attention to this important
matter.
CENDANT CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON MAY 25, 2000
The undersigned stockholder of Cendant Corporation ("Cendant") hereby appoints
Henry R. Silverman, James E. Buckman and Eric J. Bock, and each of them
individually, with full power of substitution, attorneys and proxies for the
undersigned and authorizes them to represent and vote, as designated below, all
of the shares of common stock of Cendant ("Cendant Common Stock") which the
undersigned may be entitled, in any capacity, to vote at the Annual Meeting of
Stockholders to be held at the Ramada Inn and Conference Center, 130 Route 10
West, East Hanover, New Jersey 07936, May 25, 2000, at 10:00 a.m. New York Time
and at any adjournments or postponements of such meeting, for the following
purposes, and with discretionary authority as to any other matters that may
properly come before the meeting, all in accordance with, and as described in,
the Notice and accompanying Proxy Statement. The undersigned acknowledges
receipt of the Notice of Annual Meeting of Stockholders dated March 28, 2000,
and the accompanying Proxy Statement. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NAMED NOMINEES AND FOR PROPOSALS
2 and 3.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY USING THE ENCLOSED ENVELOPE.) See Reverse Side
<PAGE>
[[X]] PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE.
1. Election Of Directors.
NOMINEES: Henry R. Silverman, James E. Buckman, Stephen P. Holmes,
Martin Edelman.
THE BOARD OF DIRECTORS OF CENDANT RECOMMENDS A VOTE FOR THE ELECTION AS
DIRECTORS OF EACH OF THE NOMINEES.
FOR ALL NOMINEES [ ] WITHHELD FOR ALL NOMINEES [ ]
For all nominees, except vote withheld from the following:
2. To ratify and approve the appointment of Deloitte & Touche LLP as the
Company's Independent Auditors for year ending December 31, 2000.
THE BOARD OF DIRECTORS OF CENDANT RECOMMENDS A VOTE FOR PROPOSAL 2.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the Move.com 2000 Employee Stock Purchase Plan.
THE BOARD OF DIRECTORS OF CENDANT RECOMMENDS A VOTE FOR PROPOSAL 3.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
I plan to attend the meeting [ ] I have noted an address change or comment
on the reverse side of the card [ ]
Please sign exactly as name appears. If signing for trusts,
estates or corporations, capacity or title should be stated.
If shares are owned jointly, both owners must sign. THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
DATED: , 2000
-----------------------------------------------------------
SIGNATURE(S):
-----------------------------------------------------------
SIGNATURE IF HELD JOINTLY:
<PAGE>
FOLD AND DETACH HERE
RETURN IN ENCLOSED ENVELOPE AFTER COMPLETING, SIGNING AND DATING
ADMISSION TICKET
CENDANT CORPORATION
2000 Annual Meeting of Shareholders
Thursday, May 25, 2000
10:00 A.M.
Ramada Inn and Conference Center
130 Route 10 West
East Hanover, New Jersey 07936
NON-TRANSFERABLE NON-TRANSFERABLE
SEE REVERSE SIDE FOR DIRECTIONS TO THE RAMADA INN AND CONFERENCE CENTER.
