PHH CORP, PRE 14A, 1996-07-03

PHH CORP
PRE 14A, 1996-07-03
AUTO RENTAL & LEASING (NO DRIVERS)

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PHH Corporation 11333 McCormick Road
Hunt Valley, Maryland 21031

[PHH logo]

July 15, 1996
To the Stockholders:
You are invited to attend the Annual Meeting of Stockholders of PHH
Corporation, which will be held on Monday, August 19, 1996, at 10 o'clock a.m.
(E.D.T.), at the PHH Corporation Headquarters Building, 11333 McCormick Road,
Hunt Valley, Maryland 21031. The accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement describe in detail the matters to be considered
and acted upon, and you should read such material carefully.
We hope you will be able to attend the meeting, but, if you cannot do so,
it is important that your shares be represented. ACCORDINGLY, WE URGE YOU TO
MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY. You may, of course,
withdraw your proxy if you attend the meeting and choose to vote in person.

Sincerely yours,

/s/ ROBERT D. KUNISCH

ROBERT D. KUNISCH
Chairman of the Board, Chief
Executive Officer
and President

<PAGE>

PHH Corporation 11333 McCormick Road
Hunt Valley, Maryland 21031

[PHH LOGO]
Notice of Annual Meeting of Stockholders
To Be Held August 19, 1996
To the Stockholders:
The Annual Meeting of Stockholders of PHH Corporation (the "Company") will
be held at the PHH Corporation Headquarters Building, 11333 McCormick Road, Hunt
Valley, Maryland 21031, on Monday, August 19, 1996, at 10 o'clock a.m. (E.D.T.),
for the following purposes:
1. To elect four Group A Directors, to hold office for three years, and
until their successors are elected and qualified;
2. To vote upon a proposed amendment to the Company's Charter to increase
the number of authorized shares of Common Stock from 50,000,000 to 75,000,000;
and
3. To act upon such other matters as may properly come before the meeting.
You are entitled to vote all shares of common stock of the Company
registered in your name at the close of business on June 24, 1996, the record
date fixed for the determination of the stockholders entitled to notice of and
to vote at the meeting. IF YOU CANNOT PERSONALLY ATTEND THE MEETING, WE URGE YOU
TO SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTPAID ENVELOPE
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.

By Order of the Board of Directors,
SAMUEL H. WRIGHT
Secretary
July 15, 1996

<PAGE>
PROXY STATEMENT

General Information

This Proxy Statement is being sent to the stockholders of PHH Corporation
(the "Company"), 11333 McCormick Road, Hunt Valley, Maryland 21031
(410-771-3600) on approximately July 15, 1996, in connection with the
solicitation of proxies by the Company to be used at the Annual Meeting of
Stockholders which will be held on August 19, 1996 (the "Annual Meeting"). The
solicitation of proxies will generally be by mail, and in some instances,
solicitation may be made by telephone or facsimile, the cost of which will be
borne by the Company. The Company will supply proxies and proxy materials to
brokerage houses and other custodians, nominees and fiduciaries for transmission
to the beneficial owners of its stock, and the Company may reimburse them for
reasonable out-of-pocket and clerical expenses in so doing. The Company also has
retained Georgeson & Company, Inc., to aid in the solicitation of proxies and to
verify certain records related to the solicitation at a cost estimated to be
$8,000 plus expenses.
Any proxy given pursuant to this solicitation may be revoked by the
stockholder at any time prior to exercise of the proxy. Such right of revocation
is not limited or subject to compliance with any formal procedure.

As of June 24, 1996, the Company had issued and outstanding 17,380,972
shares of Common Stock. Each such outstanding share entitles the holder of
record thereof at the close of business on that date to one vote at the meeting
or any adjournment thereof. The two-for-one stock split payable on July 31, 1996
to stockholders of record of July 5, 1996 does not increase or otherwise affect
the shares of Common Stock which a holder of record may be entitled to vote at
the meeting. The shares represented by all properly executed proxies will be
voted in accordance with the terms thereof. The election of Directors requires a
plurality of the votes cast with a quorum present. For purposes of the election
of Directors, abstentions and broker non-votes are not considered to be votes
cast and have no effect on the plurality vote required for the election of
Directors. The proposed amendment to the Company's Charter to increase the
number of authorized shares requires the affirmative vote of a majority of the
outstanding shares of Common Stock entitled to be voted.

It is the policy of the Company that all stockholder votes, whether by
proxy or in person, will be handled in a manner that protects individual
stockholder voting privacy. Only the proxy solicitor, independent tabulator and
the few other persons engaged in the receipt and tabulation of proxies and
ballots have access to them and such persons are required to keep all voting
information confidential. Under the policy, no vote of any individual
stockholder will be disclosed to the Company except when required by law, when
disclosure is voluntarily made or requested by a stockholder, in certain
circumstances in a proxy contest, or when there is a bona fide dispute as to the
authenticity or tabulation of votes.

1. ELECTION OF DIRECTORS

The Company's Charter and By Laws provide for a classified Board of
Directors consisting of 12 Directors to serve in three groups: Group A, Group B
and Group C.

At the meeting, four Group A Directors will be elected to hold office for a
three-year term and until their successors are elected at the 1999 Annual
Meeting of Stockholders. Each of the nominees was elected at the 1993 Annual
Meeting of Stockholders except for Mr. Hoblitzell who was re-elected to the
Board of Directors in January 1995. Mr. Hoblitzell had previously served as a
Director from 1970 to 1994. Management does not expect that any nominee will be
unable to serve as a Director, but if that should occur for any reason prior to
the meeting, the proxy holders reserve the right to vote for another person of
their choice. The nominees for election as Group A Directors are as follows:

<PAGE>
Group A Directors to be Elected.

<TABLE>
<CAPTION>
Name and Age Principal Occupation and Other Information
<S> <C>
GEORGE L. BUNTING, JR., 55 President, Bunting Management Group, a financial services firm, Timonium,
Maryland, since 1991. Formerly, Chairman of the Board and Chief Executive
Officer of the Noxell Corporation, a wholly owned subsidiary of The
Procter & Gamble Company, a proprietary drug, toiletries and cosmetics
manufacturer, Hunt Valley, Maryland, from 1986 to 1990. Director of Crown
Central Petroleum Company, Mercantile Bankshares Corporation, USF&G
Corporation and Guilford Pharmaceuticals. Director of the Company since
1989; member of the Audit, Compensation, Executive and Nominating
Committees.
ALAN P. HOBLITZELL, JR., 65 Executive Vice President and Chief Financial Officer of The Ryland Group,
Inc., a home-building services company, Columbia, Maryland, from 1991 to
1994. Chairman of the Board and Chief Executive Officer of MNC Financial,
Inc. from 1983 to 1990. Director of Fidelity and Deposit Company of
Maryland. Director of the Company from 1970 to 1994 and re-elected in
1995; member of the Finance Committee.
DONALD J. SHEPARD, 49 Chairman of the Board of AEGON USA, Inc., a holding company owning
insurance and insurance-related companies, Baltimore, Maryland, since
1992; President and Chief Executive Officer since 1989, Executive Vice
President and Chief Operating Officer from 1985 to 1989. Member of the
Executive Board of AEGON N.V. since 1992. Director of Mercantile
Bankshares Corporation. Director of the Company since 1993; member of the
Compensation, Executive and Finance Committees.
ALEXANDER B. TROWBRIDGE, 66 President of Trowbridge Partners, Inc., a consulting firm, Washington,
D.C., since 1990. President of the National Association of Manufacturers
from 1980 to 1990. Director of New England Mutual Life Insurance Co., WMX
Technologies Inc., The Rouse Company, SunResorts Inc., Harris Corp., The
Sun Co., The Gillette Company, ICOS Corporation, and the Warburg-Pincus
Counselors Funds. Director of the Company since 1984; member of the
Nominating Committee.
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS APPROVE THE
PROPOSAL TO ELECT ALL GROUP A DIRECTORS. APPROVAL OF THE ELECTION OF THESE
DIRECTORS REQUIRES THE AFFIRMATIVE VOTE OF A PLURALITY OF THE SHARES OF THE
COMPANY'S COMMON STOCK CAST WITH A QUORUM PRESENT.

Continuing Directors. The balance of the current 12-member Board of
Directors consists of four Group B Directors and four Group C Directors, none of
whom are nominees for election at the meeting and all of whom will continue in
office after the meeting for the terms shown below. All of the Group B Directors
listed below were elected at the 1994 Annual Meeting of Stockholders, except for
Ms. Tatlock who was elected at the 1995 Annual Meeting of Stockholders, and all
of the Group C Directors listed below were elected at the 1995 Annual Meeting of
Stockholders.

<PAGE>
Group B Directors -- Term expiring at the 1997 Annual Meeting.

<TABLE>
<CAPTION>
Name and Age Principal Occupation and Other Information
<S> <C>
ANDREW F. BRIMMER, 69 President of Brimmer & Company, Inc., an economic and financial consulting
firm, Washington, D.C., since 1976. Director of BankAmerica Corporation,
Carr Realty Corporation, BlackRock Investment Income Trust, Inc., E. I.
duPont de Nemours & Company, Gannett Company, Navistar International
Corporation and Airborne Express. Director of the Company since 1990;
member of the Finance Committee.
PAUL X. KELLEY, 67 Vice Chairman of Cassidy and Associates, Inc., a government relations
firm, Washington, D.C., since 1987. Commandant of the United States Marine
Corps from 1983 to 1987. Director of Allied-Signal, Inc., GenCorp, Inc.,
The Wackenhut Corporation, The Holden Group, UST, Inc., Sturm, Ruger &
Company, Inc., Saul Centers, Inc., London Insurance Group and London Life
Insurance Company of London, Ontario. Director of the Company since 1987;
Chairman of the Audit Committee and member of the Executive and Nominating
Committees.
ROBERT D. KUNISCH, 55 Chairman of the Board of the Company since 1989, Chief Executive Officer
since 1988, President since 1984. Formerly Chief Operating Officer from
1984 to 1987, President of PHH Homequity Corporation from 1976 to 1984.
Director of Mercantile Bankshares Corporation, CSX Corporation and
GenCorp, Inc. Director of the Company since 1984; Chairman of the
Executive Committee.
ANNE M. TATLOCK, 57 President of Fiduciary Trust Company International, an investment firm,
New York, New York, since 1994; Executive Vice President from 1990 to
1994, and Director from 1989 to present. Director of American General
Corp. and American Brands, Inc. Director of the Company since 1995; member
of the Audit and Finance Committees.
</TABLE>

Group C Directors -- Term expiring at the 1998 Annual Meeting
<TABLE>
<CAPTION>
Name and Age Principal Occupation and Other Information
<S> <C>
JAMES S. BEARD, 55 Vice-President of Caterpillar, Inc., a manufacturer of earth-moving
equipment, since 1990. Director and President of Caterpillar Financial
Services Corporation, a wholly owned subsidiary of Caterpillar Inc.,
Nashville, Tennessee, and its predecessor, Caterpillar Leasing Co., from
1984 to present. Director of the Company since 1992; member of the Audit
and Finance Committees.
L. PATTON KLINE, 67 Vice Chairman of Marsh & McLennan Incorporated, an insurance services
company, New York, New York, from 1985 to 1988. Director of Marsh &
McLennan Companies, Inc., from 1975 to 1988 and President from 1980 to
1984; President and Chairman of Marsh & McLennan, Inc., from 1975 to 1980;
Director of Utilicorp United. Director of the Company since 1983; Chairman
of the Compensation Committee.
</TABLE>
3

<PAGE>

<TABLE>
<S> <C>
FRANCIS P. LUCIER, 68 Director and Principal of Hartland & Co., a pension finance consulting
company, Cleveland, Ohio, since 1989; Chairman of the Board from 1989 to
1996; Management Consultant since 1985; Chairman of the Board of The Black
& Decker Corporation from 1979 to 1984 and President from 1972 to 1979;
Director of Beckman Instruments, Inc., and Miami Subs Corporation.
Director of the Company since 1973; Chairman of the Nominating Committee
and member of the Compensation Committee.
KENT C. NELSON, 58 Chairman of the Board and Chief Executive Officer of United Parcel Service
of America, Inc., a consolidated parcel delivery company, Atlanta,
Georgia, since 1989; Vice Chairman in 1989, Executive Vice President from
1986 to 1989 and Director and Senior Vice President from 1983 to 1985.
Director of the Company since 1989; Chairman of the Finance Committee and
member of the Nominating Committee.
</TABLE>

Certain Information Concerning the Board of Directors

The Board of Directors held seven meetings during the fiscal year ended
April 30, 1996. All Directors attended at least 75% of the aggregate number of
meetings of the Board and the Committees on which they served during the fiscal
year. Among the standing committees of the Board of Directors of the Company are
the Audit, Compensation, Finance and Nominating Committees.
The Audit Committee, comprised of Messrs. Kelley (Chairman), Beard, Bunting
and Ms. Tatlock, held three meetings during the fiscal year ended April 30,
1996. The duties of the Audit Committee include: making recommendations
concerning the appointment of the Company's independent auditors, their fees and
the scope of their audits; approving the performance of certain non-audit
services; conferring with the independent auditors; receiving and reviewing
reports of the independent auditors; and determining the duties and
responsibilities of the Company's internal auditing staff and monitoring the
adequacy of the Company's internal controls.
The Compensation Committee, comprised of Messrs. Kline (Chairman), Bunting,
Lucier and Shepard held four meetings during the fiscal year ended April 30,
1996. The duties of the Compensation Committee include: reviewing and approving
the policies concerning compensation of the directors and officers; making
recommendations concerning compensation of Company officers; reviewing and
approving performance targets and awards under certain incentive plans;
administering the Company's director and executive compensation plans and
appointing members of the Employee Benefits Committee which administers the
Company's pension, 401(k) and health benefit plans.
The Finance Committee, comprised of Messrs. Nelson (Chairman), Beard,
Brimmer, Hoblitzell, Shepard and Ms. Tatlock held five meetings during the
fiscal year ended April 30, 1996. The duties of the Finance Committee include:
reviewing and monitoring policies underlying the financial plans and structure
of the Company; reviewing proposed capital plans and budgets; establishing and
maintaining a dividend policy, including such elements as a proper dividend
payout ratio; and reviewing proposed major financing activities and all
offerings of equity securities.
The Nominating Committee, comprised of Messrs. Lucier (Chairman), Bunting,
Kelley, Nelson and Trowbridge, held two meetings during the fiscal year ended
April 30, 1996. The duties of the Nominating Committee include: selecting and
submitting to the Board for its approval qualified candidates to fill vacancies
on the Board; reviewing the slate of directors to be elected at the Company's
annual stockholders' meeting; receiving and reviewing the qualifications of
candidates for key corporate offices; acting as an advisory board to management
concerning manpower planning and reviewing policies concerning the structure of
the Board of Directors. The
4

<PAGE>
Nominating Committee will consider nominees recommended by stockholders for
election to the Board of Directors. Recommendations by stockholders should be
forwarded to the Secretary of the Company and should identify the nominee by
name and provide pertinent information concerning the nominee's background and
experience.

Compensation of Directors

Directors who are not employees of the Company received, in fiscal year
1996, a $30,000 annual retainer fee plus $1,000 for each Board or Committee
meeting attended, and each Committee Chairman received an additional $3,000
annual fee. The Directors' compensation has remained unchanged since fiscal year
1994. In fiscal year 1997, Directors will receive $1,250 for each Board or
Committee meeting attended and each Committee Chairman will receive an annual
retainer fee of $4,000. No change will be made to the Directors' annual retainer
fee. One-third of the annual retainer was paid in the Company's Common Stock and
deferred under the Directors Deferred Stock Plan (the "Mandatory Deferral").
Directors may elect to have all or any part of the remaining portion of the
annual retainer as well as the meeting fees and Committee Chairman retainer fee
deferred either under the Company's Directors Deferred Compensation Plan in one
or more mutual funds or under the Directors Deferred Stock Plan in the Company's
Common Stock. Under the terms of the Directors Deferred Stock Plan, the Company
matched, in shares of PHH Common Stock, a portion of the Directors' Mandatory
Deferrals for fiscal year 1996 based on the Company's achievement of the
threshold minimum earnings per share targets established by the Board of
Directors at the beginning of Fiscal Year 1996. Under both Plans, amounts
elected to be deferred are not included in a Director's gross income for Federal
income tax purposes until actually distributed to the Director.

Non-employee Directors are also eligible to receive stock options pursuant
to the PHH Corporation Outside Directors Stock Option Plan (the "Directors
Option Plan"). Options to acquire shares of the Company's Common Stock have been
granted to the Directors pursuant to the Directors Option Plan which was
approved by stockholders and became effective in August of 1990. The Directors
Option Plan is administered by the Compensation Committee of the Board of
Directors and stock options representing an aggregate of not more than 100,000
shares of Common Stock are available to be granted under the Directors Option
Plan.
Options to purchase 1,500 shares of Common Stock are granted to each
Director under the Directors Option Plan upon the first anniversary of the
Director's election to the Board. In addition, on May 1 of each year, each
Director is automatically granted an option to purchase 500 shares of Common
Stock. The option exercise price is the fair market value of the shares of
Common Stock represented by the stock option on the date of grant. The option
may not be exercised prior to the first anniversary of the date of grant and may
not be exercised after the earlier of (a) 10 years following the date of grant
or (b) one year following the date the Director ceases to be a director;
provided that a stock option shall become immediately exercisable in full upon
either the retirement of the Director with the consent of the Board or the death
or permanent disability of the Director.
Payment of the option exercise price shall be made at the time the option
is exercised in cash or shares of the Company's Common Stock owned by the
optionee, or in a combination of cash and such owned shares. When the Company's
Common Stock is used in full or partial payment of the exercise price, it is
valued at its fair market value on the date of option exercise.
5

<PAGE>
Security Ownership of Certain Beneficial Owners and Management

The only person known to the Company to be the beneficial owner of more
than five percent of the Company's Common Stock is:

<TABLE>
<CAPTION>
Name and Address Amount and Nature of
Title of Class of Beneficial Owner Beneficial Ownership (1) Percent of Class
<S> <C> <C> <C>
PHH Corporation Fund Asset Management, Inc., 3,430,000 9.9%
Common Stock a subsidiary of Merrill Lynch & Co.
800 Scudders Mills Road
Plainsboro, New Jersey 08536
</TABLE>

(1) Information reported is derived from Form 13F of Fund Asset Management,
Inc., a subsidiary of Merrill Lynch & Co., as filed with the Securities and
Exchange Commission on April 24, 1996. As reported in Form 13F, the person
filing the statement had (i) shared dispositive power as to 3,430,000 shares
and (ii) sole voting power as to 3,340,000 shares. As reported in Form 13F,
the information is given as of March 31, 1996. The share number and the
corresponding percent of the Company's Common Stock reflect the two-for-one
Common Stock Split payable on July 31, 1996.

The PHH Corporation Employee Investment Plan, which owns slightly less than
five percent of the Company's Common Stock, is the second largest beneficial
owner of the Company's Common Stock.
6

<PAGE>
The following table shows, as of June 6, 1996, the shares of Common Stock
of the Company beneficially owned by all Directors of the Company, by nominees
for director, by each of the executive officers named in the Summary
Compensation Table and by the Directors and executive officers as a group.
<TABLE>
<CAPTION>
Number of Shares
and
Nature of
Beneficial
Name Ownership(a)(b)(i)
<S> <C>
William F. Adler........................................................................ 271,864 (e)
Eugene A. Arbaugh....................................................................... 232,486 (e)
James S. Beard.......................................................................... 12,182 (h)
Andrew F. Brimmer....................................................................... 10,752 (h)
George L. Bunting, Jr................................................................... 23,078 (h)
Alan P. Hoblitzell, Jr.................................................................. 8,530 (h)
Paul X. Kelley.......................................................................... 11,944 (c)(h)
L. Patton Kline......................................................................... 11,344 (d)(h)
Robert D. Kunisch....................................................................... 812,034 (e)(f)
Francis P. Lucier....................................................................... 12,344 (g)(h)
Roy A. Meierhenry....................................................................... 251,438 (e)
H. Robert Nagel......................................................................... 242,064 (e)
Kent C. Nelson.......................................................................... 15,694 (h)
Donald J. Shepard....................................................................... 11,872 (h)
Anne M. Tatlock......................................................................... 2,856 (h)
Alexander B. Trowbridge................................................................. 10,544 (h)
All Directors and executive officers as a group (23 persons)............................ 2,274,740 (e)
</TABLE>

(a) Except for Mr. Kunisch, who beneficially owns 2.29% of the Company's
outstanding Common Stock, no individual Director, nominee or executive
officer beneficially owns more than 1% of the Company's outstanding Common
Stock. Directors and executive officers as a group beneficially own 6.23% of
the Company's outstanding Common Stock. Except as otherwise indicated, all
beneficial ownership is direct ownership.
(b) Includes shares subject to stock options which may be exercised within 60
days of June 6, 1996, as follows: Mr. Kunisch, 653,840 shares; each other
Director (with the exception of Messrs. Beard, Hoblitzell, and Shepard and
Ms. Tatlock), 8,000 shares; Mr. Beard, 7,000 shares; Mr. Shepard, 5,000; Mr.
Hoblitzell and Ms. Tatlock 1,000 shares; Mr. Arbaugh 184,200 shares; Mr.
Meierhenry, 203,100 shares; Mr. Adler 214,700 shares; Mr. Nagel 210,900
shares and all Directors and executive officers as a group, 1,794,558
shares.
(c) Includes 1,384 shares owned directly by Mr. Kelley and 616 shares owned
jointly with his wife.
(d) Includes 1,400 shares in an inter vivos trust in which Mr. Kline has a
beneficial interest.
(e) Includes shares allocated to the accounts of participants in the Company's
Employee Investment Plan as of June 6, 1996.
(f) Includes 5,000 shares owned directly by Mr. Kunisch's wife.
(g) Includes 2,000 shares in a pension plan and trust in which Mr. Lucier has a
beneficial interest.

(h) Includes shares payable with respect to amounts deferred under the
Directors' Deferred Stock Plan as of June 6, 1996.

(i) References to number of shares and corresponding percent of Common Stock
reflect the two-for-one Common Stock split payable on July 31, 1996.
7

<PAGE>
EXECUTIVE COMPENSATION

The following table (the "Summary Compensation Table") sets forth for the
Company's fiscal years ended April 30, 1996, 1995 and 1994, annual and long-term
compensation information as to the Chief Executive Officer and the four other
most highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 during fiscal year 1996. No stock appreciation rights (SARs)
were granted during fiscal years 1994 to 1996, nor have any SARs been granted at
any time in prior years.
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Payouts
Awards
Other Securities All
Annual Underlying Other
Name and Fiscal Compensation Options LTIP Compensation
Principal Position Year Salary(1) Bonus(1) (2) (3) (#) (4) Payouts(1) (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C>
Robert D. Kunisch 1996 $776,923 $1,030,000 $ 0 60,000 $ 0 $7,875
President and Chief 1995 698,462 395,560 0 60,000 658,471 6,750
Executive 1994 658,462 553,580 0 40,000 359,730 8,283
Officer
Eugene A. Arbaugh 1996 341,346 390,681 7,069 35,000 0 9,086
Senior Vice President 1995 274,038 154,643 8,202 20,000 150,849 7,096
1994 248,731 219,195 6,766 16,000 68,520 8,814
Roy A. Meierhenry 1996 348,654 310,019 2,817 12,000 0 8,419
Senior Vice President, 1995 314,039 143,743 2,641 20,000 194,644 7,096
Chief Financial 1994 289,615 205,597 2,491 12,000 111,345 8,986
Officer and Treasurer
William F. Adler 1996 363,269 249,476 7,019 20,000 0 8,602
Senior Vice President 1995 319,038 145,168 0 20,000 194,644 7,096
1994 294,423 226,860 0 12,000 128,475 9,188
H. Robert Nagel 1996 348,462 223,108 3,417 12,000 0 8,431
Senior Vice President 1995 308,846 118,052 3,864 50,000 356,895 7,165
1994 278,846 250,986 4,699 64,000 42,825 9,209
</TABLE>

(1) Includes amounts deferred under the PHH Corporation Executive Deferred
Compensation Plan.

(2) For fiscal years 1994 through 1996, perquisites and other personal benefits
to the named executive officers were less than either $50,000 or 10% of the
total annual Salary and Bonus reported for the named executive officers,
and, therefore, information has not been included.

(3) Amounts shown represent reimbursement for taxes paid by the named executive
officers in connection with company-provided transportation and, in the case
of Mr. Adler, the amount shown for fiscal year 1996 represents the value of
bonus vacation which was earned on the basis of length of service, but was
not taken during the fiscal year.

(4) Number of shares shown reflect the two-for-one Common Stock split payable on
July 31, 1996.

(5) Long-Term Incentive Awards are granted on a biennial basis. There was no
Long-Term Incentive Plan for the FY94-95-96 period. Therefore, there was no
Long-Term Incentive Award payable in fiscal year 1996.
(6) Amounts shown represent the value of the Company's matching cash
contribution to the PHH Corporation Employee Investment (401(k)) Plan.
8

<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table provides information on option grants in fiscal year
1996 to the named executive officers. The number of shares underlying options
and stock prices listed below reflect the two-for-one Common Stock split payable
on July 31, 1996.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option Grant Date Present
Individual Grants Term (10 Years) (4) (5) Value (5) (6)
% of
Total
No. of Options
Securities Granted
Underlying To Exercise Grant Grant
Options Employees Price Date Date
Granted in FY ($/Share) Expiration Present Present
Name (1)(#) 1996(2) (3) Date 5% 10% Value-5 Yrs. Value-10 Yrs.
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert D. Kunisch...... 60,000 16.28% $19.94 05/01/05 $752,315 $1,906,514 $253,800 $333,000
Eugene A. Arbaugh...... 35,000 9.50 19.94 05/01/05 188,079 476,629 63,450 83,250
-- -- 23.13 10/16/05 290,864 737,106 88,100 114,900
Roy A. Meierhenry...... 12,000 3.26 19.94 05/01/05 150,463 381,303 50,760 66,600
William F. Adler....... 20,000 5.43 19.94 05/01/05 250,772 635,505 84,600 111,000
H. Robert Nagel........ 12,000 3.26 19.94 05/01/05 150,463 381,303 50,760 66,600
All Stockholders (7)... N/A N/A N/A N/A $423,649,905 $1,073,651,833 N/A N/A
</TABLE>

(1) The stock options were granted for a ten-year term under the PHH Corporation
Amended and Restated Stock Compensation Plan of 1990 (the "Stock Option
Plan"). The stock options were granted on May 1, 1995 and, in the case of
Mr. Arbaugh, an additional grant was made on October 16, 1995. The stock
options become exercisable one year after the date of grant, except that in
the event of a change in control (as defined in the Stock Option Plan) the
options shall become immediately exercisable.

(2) The total includes options granted to employees which have been canceled due
to termination of employment.

(3) Exercise price equals the market price of the Company's Common Stock at date
of grant. In the case of Mr. Arbaugh, an option to purchase 15,000 shares
was granted on May 1, 1995, and an option to purchase an additional 20,000
shares was granted on October 16, 1995.

(4) The 5% and 10% appreciation over 10 years option valuation method assumes a
stock price of $32.48 and $51.72 respectively, at May 1, 2005 and $37.67 and
$59.98 respectively, at October 15, 2005, the expiration dates of the
options granted in fiscal year 1996.

(5) The potential realizable value and grant date present value of options have
been calculated in conformity with Securities and Exchange Commission
regulations, and are not intended to either forecast possible future
appreciation or to provide a true assessment of present option values,
respectively. The Company is not aware of any formula, except for the actual
market price, which will either predict or determine with reasonable
accuracy the future appreciation or present value based on future unknown or
volatile factors. No gain to optionees is possible without stock price
appreciation, which will benefit all stockholders commensurately. A zero
percent gain in stock price appreciation will result in zero dollars for the
optionee.

(6) The present value of options granted has been reported using the
Black-Scholes option pricing model. These values assume: (a) a grant date of
May 1, 1995 and October 16, 1995; (b) an exercise price of $19.94 and $23.13
(the closing market price on May 1, 1995 and October 16, 1995, the
respective dates of grant); (c) an exercise date of May 1, 2000 and October
16, 2000 based on a five year exercise period and May 1, 2005 and October
16, 2005 for a ten year exercise period; (d) a risk-free interest rate of
6.90% and 7.09% based on a five- and ten-year exercise period, respectively;
(e) a dividend yield of 3.45% and (f) volatility of .198, resulting in an
option pricing value of $4.23 and $4.41 based on a five-year exercise period
and $5.55 and $5.75 based on a ten-year exercise period, respectively.

(7) Based on 33,783,884 shares outstanding on May 1, 1995 adjusted to reflect
the two-for-one stock split payable on July 31, 1996.

<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

The following table provides information on option exercises in fiscal year
1996 by the named executive officers and the value of such officers' unexercised
options. The numbers of shares listed below reflect the two-for-one Common Stock
split payable on July 31, 1996.

<TABLE>
<CAPTION>
No. of Securities Value of
Underlying Unexercised
Unexercised Options In-the-Money Options
at April 30, 1996 (#) at April 30, 1996 (1)

Shares Acquired Value
Name on Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Robert D. Kunisch.............. 0 $ 0 593,840 60,000 $6,862,445 $310,000
Eugene A. Arbaugh.............. 0 0 169,200 35,000 1,973,288 233,750
Roy A. Meierhenry.............. 0 0 191,100 12,000 2,257,725 102,000
William F. Adler............... 9,200 39,682 194,700 20,000 2,307,281 170,000
H. Robert Nagel................ 8,200 52,912 198,900 12,000 2,043,768 102,000
</TABLE>

(1) An "In-the-Money" option is an option for which the option price of the
underlying stock is less than the market price at April 30, 1996, and all of
the value shown reflects stock price appreciation since the granting of the
option.
PENSION PLANS

The Company has a non-contributory Pension Plan for employees providing for
fixed benefits commencing at normal retirement age of 65 (or earlier, with
reduced payments, upon early retirement or disability). The Pension Plan
benefits paid to executives are supplemented by an Excess Benefit Plan, which
provides for the payment to certain executives, commencing at the time benefits
are paid under the Pension Plan, of benefits that would otherwise be paid to
them under the Pension Plan but for certain limitations imposed by the Internal
Revenue Code. The Company also maintains a Supplemental Executive Retirement
Plan (the "SERP") which provides supplemental retirement income benefits for
certain executives commencing as early as age 60 (or earlier, with reduced
payments, upon early retirement or disability) after completing at least five
credited years of executive service.

PENSION TABLE

The following table shows the estimated aggregate benefits payable under
the Pension Plan, the Excess Benefit Plan and the SERP (collectively, the
"Pension Plans") for persons retiring at age 60, calculated on a straight-life
annuity basis under various assumptions as to years of credited service and
final average compensation and without regard to offsets for Social Security
benefits or any benefits payable under former employers' plans.

<TABLE>
<CAPTION>
Final
Average Years of Credited Service
Compensation 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 500,000 300,000 300,000 300,000 300,000 300,000
550,000 330,000 330,000 330,000 330,000 330,000
600,000 360,000 360,000 360,000 360,000 360,000
650,000 390,000 390,000 390,000 390,000 390,000
700,000 420,000 420,000 420,000 420,000 420,000
750,000 450,000 450,000 450,000 450,000 450,000
800,000 480,000 480,000 480,000 480,000 480,000
1,000,000 600,000 600,000 600,000 600,000 600,000
1,200,000 720,000 720,000 720,000 720,000 720,000
1,400,000 840,000 840,000 840,000 840,000 840,000
1,600,000 960,000 960,000 960,000 960,000 960,000
1,800,000 1,080,000 1,080,000 1,080,000 1,080,000 1,080,000
2,000,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
2,200,000 1,320,000 1,320,000 1,320,000 1,320,000 1,320,000
</TABLE>

<PAGE>

The actual aggregate benefits provided under the Pension Plans to the
executive officers named in the Summary Compensation Table are based upon years
of credited executive service and final average compensation, and are offset by
Social Security benefits and any benefits payable under retirement plans of
former employers acquired by the Company. The maximum aggregate benefit provided
to each of the named executive officers under the Pension Plans is equal to 60%
of the executive officer's Final Average Compensation, assuming he has 15 or
more years of credited executive service. Final Average Compensation for
purposes of computing aggregate benefits payable to the named executive officers
under the Pension Plans is the average, for the five years of executive service
prior to retirement or other termination of employment, of base salary and bonus
as reported under the "Salary" and "Bonus" columns in the Summary Compensation
Table, although the grant-date cash-equivalent value of stock options granted in
1992 in lieu of merit salary increases or annual bonuses is also included. The
Company has entered into Supplemental Executive Retirement Agreements (the
"Supplemental Agreements") with eight current executives, including the named
executive officers, which establish a floor for Final Average Compensation and,
in some cases, grant additional years of credited executive service for purposes
of the SERP and for purposes of calculating aggregate benefits under the Pension
Plans. Taking into account these Supplemental Agreements, for purposes of the
SERP and for purposes of calculating aggregate benefits under the Pension Plans,
the named executive officers are deemed to have Final Average Compensation as
follows: Mr. Kunisch $1,204,247; Mr. Arbaugh $449,777, Mr. Meierhenry $480,373;
Mr. Adler $478,307 and Mr. Nagel $448,557. Each of the named executive officers
is vested in the SERP and each of them currently has or is deemed to have at
least 15 years of credited executive service other than Mr. Adler who has 12
years of credited executive service.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS

The Company has entered into Senior Executive Severance Agreements
("Severance Agreements") with nine current executives, including the executive
officers named in the Summary Compensation Table, pursuant to its Senior
Executive Severance Plan originally adopted in 1984 and subsequently amended.
The Company's obligations under each Severance Agreement are triggered if the
executive's employment is terminated either (a) within two years of a change in
control (as defined) either by the Company without cause (as defined) or by the
executive for good reason (as defined) or (b) within the 30-day period following
the first anniversary of a change in control by the executive for any reason
(other than death, disability or normal retirement). Under each Severance
Agreement, the terminated executive would receive a cash severance payment equal
to the sum of (a) three times the highest amount of salary and incentive
compensation (as defined) paid to the executive during any consecutive 12 months
in the three-year period preceding termination, (b) the maximum amount to which
the executive would have been entitled assuming attainment of certain corporate
performance levels (as specified) under the current long-term incentive plans in
which the executive was participating, and (c) the value of three additional
years' worth of retirement benefits. The Severance Agreements also provide for
the continuation for up to three years of health care and life insurance and
certain other benefits, and protect the executives against the assessment of
certain income and excise taxes. In addition, in the event of an actual or
potential change in control, the Company would be required to fund a grantor
trust in an amount sufficient to cover the Company's possible obligations during
the Severance Agreements' two-year employment protection period. The monies in
the trust would revert to the Company if or to the extent such obligations were
not triggered.

For purposes of these Severance Agreements, a change in control would occur
when a third party or group becomes the owner of stock of the Company entitled
to cast 20% or more of general voting power of the Company's stock or where, as
a result of one or more tender offers, mergers, other acquisitions or proxy
contests, a majority of the Board of Directors has changed.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No Director or executive officer of the Company is a director or executive
officer of any other corporation that has a director or executive officer who is
a member of the Compensation Committee of the Company.
11

<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of independent outside directors who are not eligible to
participate in any of the executive compensation plans that it administers.
Donald J. Shepard, who was appointed to the Committee in June 1995, did not
participate as a Committee member in decisions relating to executive
compensation paid in fiscal year 1996, except for approval of the annual and
long term incentive awards under the incentive plans previously approved by the
Committee.
The Committee is responsible for establishing the Company's executive
compensation philosophy and the compensation of executives in accordance with
that philosophy in a manner designed to attract and retain qualified, motivated
executives and to closely align their financial interests with those of the
Company's stockholders. Prior to the commencement of each fiscal year of the
Company, the Committee reviews the Company's executive compensation philosophy
and strategic business plan performance goals and establishes the executive
compensation structure, the targets for awards under the Company's incentive
plans, and the range of potential individual payments in accordance with that
philosophy and those goals. The Committee considers the recommendations of the
Company's Human Resources Department, the Chief Executive Officer (except with
regard to his own compensation) and its outside compensation consultant. The
Committee also reviews the factors on which such recommendations are based,
including previous Company performance and strategic business objectives,
performance of individual executives, data on executive compensation paid by
similarly situated companies in comparable industries and published surveys on
executive compensation. The Committee reviews with the Board of Directors on an
annual basis the executive compensation structure and programs, and submits for
Board approval its recommendations as to compensation of executive officers.
Company performance is generally expressed in terms of the Company's return
on beginning equity ("ROBE") for the relevant fiscal year based upon the
Committee's belief that ROBE is the best measure of achieving long-term
shareholder value. ROBE is determined by dividing (a) the Company's net income,
including a deduction for the amount of any incentive to be paid, by (b) the
beginning shareholders' equity for the relevant fiscal year. Individual
executive performance is generally evaluated on the basis of the executive's
attainment of performance objectives identified at the beginning of the fiscal
year. Other measures of Company and individual performance may also be taken
into account; however, except as specifically noted in the description of the
Annual Incentive Plan below, no specific weighting is assigned to any particular
factor.

The competitive nature of the Company's executive compensation is
determined by reference to publicly available data on companies in the business
and financial services industries, including those in the leasing and mortgage
banking industries (the "Comparison Group"), and to published executive
compensation surveys. The report of the Company's independent compensation
consultant compares this data to the compensation of the Company's executives in
terms of total cash compensation, financial performance, executive officer stock
ownership levels and stock option grant practices. Nearly one-half of the
companies in the S&P MidCap Commercial Services (Specialized) Index shown in the
Stock Performance Chart on page 17 are included in the Comparison Group
companies. The Committee believes that the companies included in the Comparison
Group are the Company's most direct competitors for executive talent, and,
therefore, serve as better indicators of competitive levels of executive
compensation than those companies included in the S&P MidCap Commercial Services
(Specialized) Index used in the Stock Performance Chart.

Tax Considerations

Section 162(m) of the Internal Revenue Code imposes limits on the
deductibility of compensation in excess of $1 million paid in any taxable year
to any of the chief executive officer or other executive officers of public
companies named in the summary compensation table of the proxy statement. The
Company first became subject to those limitations in fiscal year 1994. Deferred
compensation payable to such an individual after he ceases to be covered by the
limitation is not subject to the $1 million deductibility limit. Almost all
compensation earned by executive officers for fiscal year 1996 should be fully
deductible under Section 162(m) when paid, due to the

<PAGE>

deferral by executives of a portion of their salary and incentive compensation
under the PHH Corporation Executive Deferred Compensation Plan.

Options granted under the Amended and Restated Stock Compensation Plan of
1990 currently satisfy the requirements for an exception to Section 162(m)
limits for certain performance-based compensation. However, the Company's Annual
Incentive Plan and Long-Term Incentive program described below have
discretionary elements which will not satisfy the requirements for
performance-based compensation. The Committee believes that amendment of the
Company's incentive plans to satisfy the performance-based requirements of
Section 162(m) would reduce the flexibility under the plans desired by the
Company's executive compensation philosophy. While the Committee wishes to
maximize deductibility of certain compensation elements, the Committee does not
believe the tax law requirements are fully consistent with sound executive
compensation policy and incentives to improve stockholder value. The Committee,
therefore, reserves the right to make incentive payments that may not qualify
for deduction if the recipient's compensation exceeds the $1 million limit.

Executive Compensation Philosophy

The Company's philosophy is to respond to the interests of stockholders in
the payment of executive compensation, and specifically, to link the interests
of executives to the interests of stockholders. The Company's executive
compensation is structured to (a) align executive compensation with Company and
individual performance, (b) ensure fairness and consistency in executive
compensation in accordance with both competitive market levels and individual
responsibilities and performance, (c) promote flexibility for growth in new
markets and/or services, (d) ensure the maintenance of sound and adequate
financial reporting and accounting controls on executive compensation and (e)
emphasize both short- and long-term Company performance.

Consistent with this philosophy, the Company is committed to providing
total executive compensation which attracts and retains executives qualified and
motivated to fulfill the Company's business strategy and to deliver enhanced
stockholder value. Accordingly, the Company has consistently adhered in both
principle and practice to the concept of pay-for-performance and relies heavily
on incentive compensation programs designed to motivate executives to achieve
the Company's short and long-term business objectives.
In furtherance of its philosophy to link the interests of executives to the
interests of stockholders, the Company encourages executives to acquire and hold
a significant level of PHH Common Stock. The Company's executive compensation
programs are designed to assist and reward executives in achieving that
objective.

Executive Compensation Structure

The executive compensation structure consists of salary, annual incentives,
long-term incentives, stock options and other benefits generally available to
all employees. Each component is offered to executives in combinations designed
to meet strategic business objectives and to provide risk-based pay
opportunities which reflect individual and Company performance. Within this
structure, total compensation, including base salary, for individual executives
varies equitably with their individual responsibilities and performance.

Base Salary

The base salary is determined in accordance with that paid to persons
holding similar positions in the Comparison Group companies and companies whose
data are reported in published executive compensation surveys. In assessing the
competitive position of the Company's salaries for fiscal year 1996, the target
level used was the median (50th percentile) of the companies surveyed, including
the Comparison Group companies. Actual salaries for each position are based on
the positioning of base salary within the competitive range, individual
performance in relation to the executive's responsibilities during the previous
year, the value each executive is expected to contribute to the Company during
the next fiscal year and the financial performance of the operations directed by
the executive, with consideration given to strategic initiatives and economic
trends. The Committee does not

<PAGE>

assign a specific weighting to any particular factor, but rather applies its
collective business judgment to recommend for approval by the full Board of
Directors a base salary that it deems fair to the Company and its stockholders.
For fiscal year 1996, actual base salaries paid to the executive officers named
in the Summary Compensation Table, other than the Chief Executive Officer,
varied within 10% of the median (50th percentile) of competitive rates, based on
the factors outlined above.

Annual Incentive Program

Annual incentive awards are targeted between the 50th and 75th percentile
of competitive incentive awards paid to persons holding similar positions in the
companies surveyed, including the Comparison Group companies, and vary with
measures of Company and individual performance.

Executives designated by the Committee are eligible to participate in an
annual cash incentive plan (the "Annual Incentive Plan") which is designed both
to encourage the achievement of the Company's short-term strategic business
objectives and to recognize specific contributions by executives to the
attainment of the Company's performance goals by providing direct cash
incentives. The level of targeted payout of the formula-derived annual incentive
award for executive officers is up to 50% of base salary for the named executive
officers and is 65% of base salary for the Chief Executive Officer and
President, thereby placing a greater percentage of compensation at risk for
those with greater responsibilities.

The annual incentive award to executives is based primarily on the
attainment of specific business performance objectives, expressed in terms of
the Company's ROBE (the "formula-derived award"), which are established by the
Committee prior to the commencement of the relevant award period. Before any
formula-derived award can be paid out under the Annual Incentive Plan, the
Company must achieve a threshold minimum ROBE, with increasing amounts to be
awarded if the Company achieves or exceeds the target ROBE. A small portion of
the formula-derived award is attributable to the Committee's collective
subjective evaluation of individual performance provided the Company's net
income targets in addition to ROBE targets have been attained.
For fiscal year 1996, the Company achieved a ROBE of 15.12% and net income
of $81.6 million, which exceeded the target objectives under the Annual
Incentive Plan and resulted in a formula-derived award to the named executive
officers equal to 116% of target under the Fiscal Year 1996 Annual Incentive
Plan. The Chief Executive Officer and, with respect to the Chief Executive
Officer's award, the Committee without any input from the Chief Executive
Officer, exercises discretionary authority under the Annual Incentive Plan to
adjust individual formula-derived awards based on his or its subjective
determination of individual performance, including the level of stock ownership.
For fiscal year 1996, the Committee approved a discretionary incentive for the
named executive officers based on these factors, as well as to competitively
reward those executives who successfully performed multiple responsibilities. No
particular weighting is accorded to any one factor; the Committee instead
applies its collective subjective business judgment to reach a decision on
compensation that it deems fair to the Company and its stockholders.

Long-Term Incentive Program

The Company's long-term incentive program consists of both biennial
long-term incentive awards based on the Company's performance over the
three-fiscal year period designated by the Committee and stock options. Awards
and stock option grants to executives under the long-term incentive program are
targeted between the 50th and 75th percentile of incentive awards paid to
persons holding similar positions in the companies surveyed, including the
Comparison Group companies. Awards to executives under the long-term incentive
plan vary with position level and measures of Company performance. Stock option
grants are based upon position level, individual performance, responsibilities
and stock ownership level.

Long-Term Incentive Plan

Executives designated by the Committee participate in biennial long-term
incentive plans (collectively the "Long-Term Incentive Plans") which are
designed to encourage the achievement of the Company's long-term
14

<PAGE>

objectives by providing direct cash, stock grants or stock option incentives.
Awards under each Long-Term Incentive Plan are based wholly on the Company's
achievement of threshold minimum business performance objectives, expressed in
terms of the Company's average annual ROBE, with increasing amounts to be
awarded if the Company achieves or exceeds the average annual ROBE targets.
Average annual ROBE targets are established by the Committee under the Long-Term
Incentive Plan prior to the commencement of the relevant award period consisting
of three complete fiscal years of the Company. As with the Annual Incentive
Plan, the level of targeted payout for executive officers under the Long-Term
Incentive Plan is expressed as a percentage of average base salary paid during
the relevant award period, which increases for higher positions within the
Company, thereby placing a greater percentage of compensation at risk for those
with greater responsibilities. The Long-Term Incentive Plans are implemented on
a biennial basis, and since there is not a Long-Term Incentive Plan with an
award period scheduled to end with fiscal year 1996, no Long-Term Incentive
awards are payable for fiscal year 1996.

Stock Option Grants

Both nonqualified stock options and incentive stock options, as defined in
the Internal Revenue Code of 1986, are granted periodically to executive
officers designated by the Committee as a means of further aligning the
interests of executives with the long-term interests of stockholders. Executives
are encouraged to exercise options and to hold those shares received upon the
exercise of options. It is the Company's objective to achieve a significant
level of stock ownership by executives through this program.
The options are granted pursuant to the Amended and Restated Stock
Compensation Plan of 1990 (the "1990 Compensation Plan"). Options generally may
not be exercised prior to the first anniversary of the date of grant and expire
ten years after the date of grant. Options granted by the Company have an
exercise price equal to the fair market value of the Company's Common Stock on
the date of grant and, accordingly, the value of the option will be dependent on
the appreciation in the market value of the Company's Common Stock.
The actual number of stock options granted to each executive in fiscal year
1996 is based on the executive's position level, the Committee's collective
subjective evaluation of the executive's performance and responsibilities and
the executive's existing level of stock ownership. No particular weighting is
accorded to any one factor.

Other Employee Benefits

Executive officers are also eligible to participate in other benefit plans
generally available to all employees (including medical, dental, 401(k) and
pension), as well as certain other perquisites and benefits designed to promote
business development and financial planning, and to replace benefit
opportunities lost due to regulatory limits on qualified retirement plan
participation. The Committee believes that these benefits are competitive with
those offered in the marketplace and are essential to attract and retain key
executives.

Compensation of Chief Executive Officer

The Committee meets without the Chief Executive Officer to evaluate his
performance and to determine his total annual compensation. The Committee
determined Mr. Kunisch's fiscal year 1996 total compensation in a manner
consistent with the structure and guidelines discussed above. Specifically, the
Committee considered the report of the Company's outside compensation consultant
on the competitiveness of the Chief Executive Officer's total compensation with
that offered to other chief executive officers of the companies surveyed,
including the Comparison Group companies. The Committee also considered the
Company's achievement of strategic business performance and financial
objectives, and Mr. Kunisch's performance in meeting those objectives. In
reviewing the Company's performance, the Committee takes into account the
Company's revenue, net income, earnings per share and ROBE. The Committee does
not assign a specific weighting to any particular factor, but rather applies its
collective subjective business judgment to reach a decision on compensation that
it deems fair to the Company and its stockholders.
15

<PAGE>

The Committee was pleased with the progress of the Company and determined
that an increase in Mr. Kunisch's salary for fiscal year 1996 was warranted in
view of both Mr. Kunisch's and the Company's performance for fiscal year 1995.
Mr. Kunisch's salary for fiscal year 1996 was approximately the median (50th
percentile) of salaries paid to chief executive officers in the companies
surveyed, including the Comparison Group companies. The Committee considered the
extensive efforts and dedication of the Chief Executive Officer in providing
leadership to the Company, and in developing significant opportunities for
expansion. Specifically, the Committee recognized the strong performance of the
vehicle management services and real estate services businesses which balanced
the slowed growth of the mortgage banking business in 1995. This strong
performance was due in part to the development of fee-generating services,
expanded affinity relationships and cost management activities. The Committee
also noted, that as a result of the Company's performance and delivery of
quality service, the Company received numerous awards as an industry leader,
including the Arthur D. Little "Best of Best" Process Management Practitioners
award, the Fleet News magazine naming PHH as the "Best Fleet Management Company
in the UK" and "Best Fuel Management Company" in the UK, and the Sears' 1994
"Partners in Progress Award." PHH Mortgage Services was ranked as one of the top
five wholesalers out of 95 firms reviewed in an independent survey of 55 US
mortgage brokers. The leadership and vision provided by Mr. Kunisch was
recognized as well as his fulfillment of the key roles of Chief Executive
Officer and President of the Company in addition to that of Chairman of the
Board of Directors. As a result of Mr. Kunisch's direction, the Company
continues to transition to a greater percentage of service fee-based, versus
capital-intensive asset-based, revenues. In addition, the Company has further
developed its strategic partnerships and cross-marketing initiatives to develop
new market opportunities. The Committee also considered the achievement of
increased financial returns to the Company's stockholders, largely as a result
of strategic business decisions made by Mr. Kunisch. The Company's net income
for fiscal year 1995 grew to $71.7 million, an increase of 11% over fiscal year
1994, and earnings per share increased 14% to $4.15. The Company has also
maintained its "A+" financial rating, which the Committee viewed as the best
example of the Company's management policies, profit performance, financial
returns and quality of its client base.

The award paid to Mr. Kunisch under the Fiscal Year 1996 Annual Incentive
Plan was based primarily upon the Company's achievement of a ROBE of 15.12%,
which exceeded target objectives for fiscal year 1996. The Committee also
approved a discretionary adjustment to the formula-derived award based upon Mr.
Kunisch's excellent performance, including his stock ownership level, in fiscal
year 1996; specifically the significant increase in the market price of PHH
Common Stock. The level of the annual incentive award as a percentage of Mr.
Kunisch's salary is consistent with the executive compensation philosophy of
placing a greater percentage of compensation at risk for those with greater
responsibility. The Long-Term Incentive Plan is implemented on a biennial basis.
Since the Company did not have a Long-Term Incentive Plan with an award period
scheduled to end with fiscal year 1996, no long-term incentive award was paid to
Mr. Kunisch.

The fiscal year 1996 stock options granted to Mr. Kunisch are based upon
his position level and the Committee's evaluation of Mr. Kunisch's existing
level of stock ownership, performance and challenges to be faced in the next
fiscal year. Mr. Kunisch's total compensation for fiscal year 1996 is set forth
in the Summary Compensation Table appearing on page 8.

PHH CORPORATION
COMPENSATION COMMITTEE
L. Patton Kline, Chairman
George L. Bunting, Jr.
Francis P. Lucier
Donald J. Shepard
16

<PAGE>
STOCK PERFORMANCE GRAPH

The graph below compares the total return of the Company's Common Stock,
the S&P 500 Index and the S&P MidCap Commercial Services (Specialized) Index
during the five fiscal years ended April 30, 1996. The cumulative total return
is calculated assuming $100 was invested on April 30, 1991, in the Company's
Common Stock and in each of the foregoing indices. The graph also assumes that
all dividends were reinvested.

There can be no assurance as to the future trends in the cumulative total
return of the Company's Common Stock or of the following indices. The Company
does not make nor does it endorse any predictions as to future stock
performance.

[GRAPH]

<TABLE>
<CAPTION>
Apr-91 Apr-92 Apr-93 Apr-94 Apr-95 Apr-96
<S> <C>
PHH Corporation $100 $145 $165 $149 $175 $255

S&P 500(REGISTERED MARK) $100 $114 $125 $131 $154 $201

S&P(REGISTERED MARK)
MidCap Commercial Services
(Specialized) Index $100 $115 $122 $145 $173 $242

</TABLE>

<PAGE>

Certain Relationships and Related Transactions

Certain Directors and officers of the Company, members of their immediate
families or entities with which they are associated, entered into transactions
with the Company, including the Company's services for obtaining residential
mortgage loans, home relocation and vehicle leasing and/or management, during
fiscal year 1996. All such transactions were made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, that prevailed at the time for comparable transactions with other
persons and did not involve more than the normal risk of collectibility or have
other features unfavorable to the Company.

Compliance with Exchange Act Filing Requirements

Section 16 of the Securities Exchange Act of 1934 requires the Company's
executive officers and Directors, and any persons owning more than 10% of the
Company's common stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the New York Stock Exchange. In
fiscal year 1996, Terence W. Edwards, an officer of the Corporation, was late in
filing Form 4 reflecting his stock ownership. Other than the late report
mentioned above, the Company does not know of any reports that were either not
filed or not timely filed.

2. PROPOSAL TO AMEND ARTICLE FIFTH OF THE COMPANY'S CHARTER TO
INCREASE AUTHORIZED SHARES OF COMMON STOCK

The Board of Directors has recommended and declared advisable an amendment
to the Company's Charter to authorize for issuance additional shares of Common
Stock, which would replenish authorized but heretofore unissued shares which
will be depleted by the two-for-one stock split to be effected July 31, 1996
pursuant to Board of Directors authorization of June 24, 1996. Authorization of
these additional shares of Common Stock would provide the Company with a
sufficient number of shares which could be used in connection with possible
acquisitions, the raising of additional capital and other corporate purposes,
and to avoid in each particular case the necessity of individual amendments to
the Charter and the delay and expense involved in obtaining stockholder approval
for amendments unless required by law, regulation or by stock exchange rule. At
present, the Company has authorized to issue 50,000,000 shares of Common Stock
without par value and 3,000,000 shares of Preferred Stock without par value. The
Charter is proposed to be amended to authorize the issuance of 75,000,000 shares
of Common Stock. The proposed amendment does not affect any terms or rights of
the Common or Preferred Stock or the amount of authorized Preferred Stock. The
text of the proposed amendment is included in Exhibit A to this Proxy Statement.

At the present time, other than the pending two-for-one and outstanding
stock option grants stock split, there are no agreements, understandings or
arrangements for the issuance of any of the additional shares of the Common
Stock. The Board of Directors believes that the availability of such shares will
provide flexibility in negotiations relating to the issuance of Common Stock if,
and when, the need arises.

The adoption of the proposed amendment will make available for issuance
upon authorization by the Board of Directors [ ] shares of Common Stock in
excess of the outstanding shares and those which are required to be reserved for
issuance under the Company stock option plans, Employee Investment (401(k) Plan,
and Directors Deferred Stock Plan.

No financial statements are included herein since, in the opinion of
management, they are not material to the exercise of prudent judgment with
regard to the proposed amendment. A copy of the Company's Annual Report,
including financial statements for the fiscal year ended April 30, 1996, is
being mailed concurrently with this Proxy Statement to stockholders of record
for the Annual Meeting of Stockholders to be held on August 19, 1996.
18

<PAGE>

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS APPROVE THE
PROPOSAL TO AMEND ARTICLE FIFTH OF THE COMPANY'S CHARTER TO INCREASE AUTHORIZED
SHARES OF COMMON STOCK. APPROVAL TO AMEND THE COMPANY'S CHARTER TO INCREASE
AUTHORIZED SHARES OF COMMON STOCK REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF
THE OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK ENTITLED TO BE VOTED.

ACCOUNTING MATTERS

KPMG Peat Marwick LLP served as the independent auditors of the Company for
the fiscal year ended April 30, 1996, and the Board of Directors has selected
that firm to continue as the Company's independent auditors for the current
fiscal year. Representatives of KPMG Peat Marwick LLP are expected to be present
at the Annual Meeting, will have an opportunity to make a statement if they
desire to do so, and will be available to respond to appropriate questions.

DEADLINE FOR STOCKHOLDERS' PROPOSALS
FOR 1997 ANNUAL MEETING

All stockholder proposals for action at the 1997 Annual Meeting must be
received by the Secretary of PHH Corporation, 11333 McCormick Road, Hunt Valley,
Maryland 21031, by March 14, 1997, and must otherwise comply with the rules of
the Securities and Exchange Commission in order to be eligible to be included in
the Company's proxy statement for the 1997 Annual Meeting.

ANNUAL REPORT

The Annual Report of the Company for the fiscal year ended April 30, 1996,
which does not constitute a part of this Proxy Statement, is being mailed to all
persons who were stockholders of record on June 24, 1996, together with the
mailing of this Notice of Annual Meeting and Proxy Statement.

OTHER MATTERS

The Board of Directors does not know of any matters which will be brought
before the meeting other than those set forth in the notice thereof. However, if
any matter properly comes before the meeting, it is intended that the persons
named in and acting under the enclosed form of proxy will vote thereon in
accordance with their best judgment.
19

<PAGE>
Exhibit A
2. Resolution to be Submitted to Stockholders to Increase
Authorized Shares of Common Stock

RESOLVED that, as recommended and declared advisable by the Board of
Directors, the charter of the Corporation be amended by striking out the first
full paragraph of Article FIFTH thereof in its entirety, and substituting in
lieu thereof the following:

"FIFTH: The total number of shares which the Corporation has authority
to issue is Seventy-Eight Million (78,000,000) shares, without par
value, consisting of Seventy-Five Million (75,000,000) shares of
Common Stock without par value and Three Million (3,000,000) shares of
Preferred Stock without par value."

<PAGE>

PHH CORPORATION

PROXY FOR ANNUAL STOCKHOLDERS' MEETING-1996

This Proxy is solicited on behalf of the Board of Directors

The undersigned hereby acknowledges receipt of the Notice of Meeting
and Proxy Statement relating to the Annual Meeting of Stockholders
of PHH Corporation, called to convene on August 19, 1996, at 10:00 A.M.
(E.D.T.), and hereby constitutes and appoints ROBERT D. KUNISCH, ROY A.
MEIERHENRY and SAMUEL H. WRIGHT, and any one or all of them, the true
and lawful attorneys and proxies of the undersigned with full power
of substitution to each, to vote all the shares of Common Stock of said
corporation which the undersigned is entitled to vote at said meeting
and at any adjournment thereof. The undersigned further gives the proxies
authority to vote according to their best judgment in respect of any
other matters properly coming before the meeting.

Election of Group A Directors (three year terms), Nominees:
George L. Bunting, Jr., Alan P. Hoblitzell, Jr., Donald J.
Shepard and Alexander B. Trowbridge

SEE REVERSE
SIDE

<PAGE>

[X] PLEASE MARK YOUR
VOTES AS IN THE
EXAMPLES

This proxy is to be voted in the manner directed herein and in the
discretion of the proxies on any other business coming before the meeting. If
no direction is given this Proxy is to be voted FOR all of the Board of
Directors' nominees and FOR the proposal to amend the Company's Charter to
increase Shares of Common Stock.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.

<TABLE>
<S> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Proposal to Amend the Company's [ ] [ ] [ ]
Directors Charter to increase Shares of
(See Persons) Common Stock.
</TABLE>

Vote FOR all nominees, except

_______________________________

You are encouraged to apply your choices
by marking the appropriate boxes. You
need not mark any boxes if you wish to
vote in accordance with the Board of
Directors' recommendations.

Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.

______________________________________

_______________________________________
SIGNATURE(S) DATE