UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
____________
Form
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
____________
Date
of
Report (Date of earliest event reported) July
18, 2005 (July 22, 2005)
Cendant
Corporation
(Exact
name of Registrant as specified in its charter)
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Delaware
(State
or other jurisdiction
of
incorporation)
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1-10308
(Commission
File No.)
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06-0918165
(I.R.S.
Employer
Identification
Number)
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9
West 57th
Street
New
York, NY
(Address
of principal
executive
office)
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10019
(Zip
Code)
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Registrant's
telephone number, including area code (212)
413-1800
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None
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||
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(Former
name or former address if changed since last report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
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Item
1.01
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Entry
into a Material Definitive
Agreement.
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On
July
19, 2005, our Compensation Committee approved amendments to our Amended
and
Restated 2004 Performance Metric Long Term Incentive Plan. The purpose
of the
plan is to provide performance-based equity incentive grants to designated
key
employees. The amendments to the plan relate to (i) the calculation of
"Adjusted
EBITDA" and (ii) an increase of both the Disposition Premium Amortization
Period
and Acquisition Premium Amortization Period from four years to five years.
A
copy of such plan, as so amended, is attached as Exhibit 10 and incorporated
by
reference herein.
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Item
5.02
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Departure
of Directors or Principal Officers; Election of Directors; Appointment
of
Principal Officers.
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On
July
18, 2005, our Board of Directors elected Ms. Louise T. Blouin MacBain as a
director, effective immediately. Ms. MacBain is the Chairman of LTB Holding
Ltd., an art magazine publisher and art information provider.
Ms.
MacBain will stand for re-election by shareholders at our 2006 Annual Meeting.
As previously disclosed, commencing with our 2006 Annual Meeting, the entire
Board of Directors will stand for election by shareholders each year. Ms.
MacBain is not expected to be assigned to any committees of the Board of
Directors at this time.
The
Board
of Directors has determined that Ms. MacBain is an independent director under
the New York Stock Exchange Listing Standards and our director independence
criteria.
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Item
8.01
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Other
Events.
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On
July
19, 2005, we announced that our board of directors formally declared a regular
quarterly cash dividend of $0.11 per common share, payable September 13, 2005
to
stockholders of record as of August 22, 2005. The $0.11 per share dividend
represents a 22% increase from the $0.09 per share regular quarterly dividend
previously paid to stockholders. A copy of such announcement is attached as
Exhibit
99 and
is
incorporated by reference herein.
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Item
9.01
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Financial
Statements and Exhibits.
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(c)
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Exhibits
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| 10 |
2004
Performance Metric Long Term Incentive Plan, Amended and Restated
as of
July 19, 2005.
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99
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Press
Release: Cendant’s Board of Directors Approves Quarterly Cash Dividend of
$0.11 Per Common Share Implementing Previously Announced Plan to
Increase
Regular Quarterly Dividend by
22%.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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CENDANT
CORPORATION
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By:
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/s/
Eric J. Bock
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Eric
J. Bock
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Executive
Vice President, Law
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and
Corporate Secretary
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Date:
July 22, 2005
Exhibit
10
CENDANT
CORPORATION
2004
PERFORMANCE
METRIC
LONG
TERM
INCENTIVE PLAN
Amended
and Restated as of July 19, 2005
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1.
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Purpose.
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The
purpose of the Cendant Corporation 2004 Performance Metric Long Term Incentive
Plan is to provide a performance-based incentive grant intended to promote
the
Company’s efforts (i) to align the interests of key management personnel with
the interests of the Company’s stockholders, and incentivize key management
personnel to create stockholder value and (ii) to retain key management
personnel over a long-term period. Unless otherwise approved by the Committee,
awards granted under the Plan shall vest upon both the Company’s attainment of
pre-established performance goals determined by the Committee, and Participants’
continuous employment with the Company.
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2.
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Definitions.
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The
following terms, as used herein, shall have the following meanings:
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(a)
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"Cendant"
shall mean Cendant Corporation, a Delaware
corporation.
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(b)
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"Award
Agreement" shall mean a written agreement between Cendant and a
Participant evidencing an award of Restricted Stock Units or Stock
Options.
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(c)
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"Board"
shall mean the Board of Directors of
Cendant.
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(d)
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"Committee"
shall mean the Compensation Committee of the
Board.
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(e)
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"Company"
shall mean, collectively, Cendant and its
subsidiaries.
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(f)
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"Participant"
shall mean an officer or key employee of the Company who is, pursuant
to
Section 4 of the Plan, selected and designated by the Committee in
writing
to participate herein, and who has been provided an Award
Agreement.
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(g)
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"Plan"
shall mean this Cendant Corporation 2004 Performance Metric Long
Term
Incentive Plan.
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(h)
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“Change-of-Control
Transaction” 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) whose election by
the
Board or nomination for election by Cendant'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) any person or entity is or becomes, directly
or
indirectly, the beneficial owner of 50% or more of the common stock
of
Cendant (or other securities of Cendant having generally the right
to vote
for election of the Board), (iii) Cendant 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
Cendant and its subsidiaries (taken as a whole) to any third party,
other
than Cendant or a wholly-owned subsidiary thereof, (iv) control of
50% or
more of the business of Cendant shall be sold, assigned or otherwise
transferred directly or indirectly to any third party, (v) there
is
consummated a merger or consolidation of Cendant with any other
corporation, other than (A) a merger or consolidation which would
result
in the voting securities of Cendant outstanding immediately prior
to such
event continuing to represent (either by remaining outstanding or
by being
converted into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined voting power of the securities
of
Cendant or such surviving entity or any parent thereof outstanding
immediately after such event or (B) a merger or consolidation effected
to
implement a recapitalization of Cendant (or similar transaction)
in which
no person or entity becomes the beneficial owner or more than 50%
or more
of the combined voting power of Cendant’s then outstanding securities or
(vi) the stockholders of Cendant approve a plan of liquidation or
dissolution.
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(i)
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“Award”
shall mean an award of Restricted Stock Units or Stock Options granted
pursuant to this Plan.
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(j)
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“Restricted
Stock Unit” shall mean an Award granted pursuant to Section 5(c) of this
Plan.
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(k)
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“Stock
Option” shall mean an Award granted pursuant to Section 5(b) of this
Plan.
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(l)
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“Cendant
Stock Plans” shall mean the following stock plans maintained by Cendant,
as amended from time to time: (1) 1999 Broad-Based Employee Stock
Option
Plan; (2) 1997 Stock Option Plan and (3) Galileo International 1999
Equity
and Performance Incentive Plan.
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2
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(m)
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“Cendant
Stock” shall mean common stock of Cendant, par value $0.01 per share, of
the series designated CD Common
Stock.
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(n)
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“Disability”
shall mean a Participant’s termination of employment by reason of
“Disability” within the meaning of the Company-sponsored Long Term
Disability Plan, as in effect from time to time, providing eligibility
to
employees of Cendant Operations,
Inc.
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(o)
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“Performance
Goals” shall mean a set of pre-established performance goals relating to
the financial performance of Cendant and/or any of its subsidiaries
or
divisions, including without limitation,
TUG.
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(p)
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“TUG”
or “Total Unit Growth” shall mean, in respect of any performance period,
as the percentage change in the Company’s Adjusted EBITDA, as defined
below, plus,
the Company’s Free Cash Flow Yield, as defined
below.
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EBITDA
means the Company’s “income before taxes and minority interest,” (as reported);
plus “non-program interest expense (net of interest income and including early
extinguishment of debt)” (as reported); plus “non-program related depreciation
and amortization” (as reported); plus “acquisition and integration related
costs: amortization of pendings and listings” (as reported). “Adjusted EBITDA”
means EBITDA as adjusted solely to disregard (i) “gains and losses on
disposition of businesses” (as reported); (ii) any financial impact relating to
costs, liabilities, revenue, or income in respect of any change in the reserves
relating to the CUC accounting irregularities and related litigation and the
existing BNP Paribas litigation (as reported); (iii) “Acquisitions and
Dispositions” in the manner described on Annex A hereto and (iv) any and all
costs, liabilities and expenses relating to awards granted under this Plan
(but
only those awards which vest subject to the attainment of Performance Goals).
To
the
extent that the Financial Accounting Standards Board issues new accounting
literature relating to “Business Combinations,” Adjusted EBITDA will be further
adjusted to exclude (i) deal related costs currently capitalized under existing
accounting literature that would be required to be expensed in the Company’s
Income Statement (as reported); (ii) exit related costs as defined by E.I.T.F.
95-3 that would be required to be expensed in the Company’s Income Statement
relating to acquisitions (as reported) and (iii) any change in contingent
consideration liability required to be recorded in the Company’s Income
Statement that was previously recorded as purchase price (as reported).
3
“Free
Cash Flow Yield” means the Company’s “Free Cash Flow” divided by the Company’s
“Market Value.” “Free Cash Flow” means “net cash provided by (used in) operating
activities exclusive of management (and mortgage) programs” (as reported); plus
“management (and mortgage) programs: cash provided by (used in) operating
activities” (as reported) plus non-program related interest actually paid; plus
“management (and mortgage) programs: cash provided by (used in) investing
activities” (as reported); plus “management (and mortgage) programs: cash
provided by (used in) financing activities” (as reported); less “property and
equipment additions” (as reported); less “cash utilized for net assets acquired
and acquisition related payments” (as reported), adjusted to exclude the cash
impact of CUC accounting irregularities and related litigation and the existing
BNP Paribas litigation (as reported); less “provision for income taxes”
calculated assuming a 27% aggregate effective tax rate (such taxes calculated
on
Adjusted EBITDA, less “non-program related depreciation and amortization” (as
reported) (plus cash taxes actually paid); less “acquisition and integration
related costs: amortization of pendings and listings” (as
reported)).
“Market
Value” equals the Company’s prior year Adjusted EBITDA multiplied by the
applicable “enterprise value multiple,” which the Committee has determined to
equal 9 (once set in respect of any grant, such enterprise value multiple may
not be changed for any reason in respect of such grant).
Vesting
will be determined by comparing the cumulative compounded TUG over the term
of a
particular grant to the Performance Goals. For example, in Year 1, vesting
will
be determined by comparing the TUG for Year 1 to the Year 1 Performance Goals.
In Year 2, vesting will be determined by multiplying Year 1 TUG+1, by Year
2
TUG+1, and then subtracting 1 from the product, and comparing such product
to
the Year 2 cumulative Performance Goals. In Year 3, vesting will be determined
by multiplying Year 1 TUG+1, by Year 2 TUG+1, by Year 3 TUG+1, and then
subtracting 1 from the product, and comparing such product to the Year 3
cumulative Performance Goals. In Year 4, vesting will be determined by
multiplying Year 1 TUG+1, by Year 2 TUG+1, by Year 3 TUG+1, by Year 4 TUG+1,
and
then subtracting 1 from the product, and comparing such result to the Year
4
cumulative Performance Goals.
4
Once
determined for a particular year, TUG or cumulative TUG used to determine
vesting is fixed and is not adjusted as a result of acquisitions, dispositions
or other transactions.
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(q)
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“as
reported” shall mean as disclosed in the Company’s Annual Report on Form
10-K or, if combined within another line item or immaterial to disclose
separately, as set forth in the Company’s books and
records.
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3.
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Administration.
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The
Plan
shall be administered by the Committee. The Committee shall have the authority
in its sole discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers
and authorities either specifically granted to it under the Plan or necessary
or
advisable in the administration of the Plan, including, without limitation,
the
authority to grant Awards; to determine the persons to whom and the time or
times at which Awards shall be granted; to determine the terms, conditions
and
restrictions relating to any Award; to determine whether, to what extent, and
under what circumstances an Award may be settled, canceled, forfeited, or
surrendered; to determine the terms and provisions of Award Agreements; and
to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
All
determinations of the Committee shall be made by a majority of its members
either present in person or participating by conference telephone at a meeting
or by written consent. The Committee may delegate to one or more of its members
or to one or more agents such administrative duties as it may deem advisable.
All decisions, determinations and interpretations of the Committee shall be
final and binding on all persons, including the Company, the Participant (or
any
person claiming any rights under the Plan from or through any Participant)
and
any stockholder.
Without
limiting the generality of the foregoing, the Committee shall have the full
and
absolute authority (i) to determine and establish any and all applicable
Performance Goals and (ii) to determine whether any Performance Goals have
been
attained and to certify to such attainment.
No
member
of the Board or the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
hereunder.
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4.
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Eligibility.
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5
Awards
may be granted to key personnel of the Company in the sole and absolute
discretion of the Committee. No employee of the Company or any other person
shall have any right to participate in the Plan absent an express designation
by
the Committee.
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5.
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Terms
of Awards.
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Awards
granted pursuant to the Plan shall be evidenced by Award Agreements
substantially in such form as the Committee shall from time to time approve
and
the terms and conditions of such Awards shall be set forth therein. Awards
under
the Plan may not be memorialized or evidenced other than pursuant to an Award
Agreement.
(a) Participation.
The
Committee shall grant participation in the Plan to key personnel of the Company
in its sole and absolute discretion. The Committee may determine that
participation in the Plan is subject to and contingent upon:
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(i)
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the
Participant executing a covenant not to compete and confidentiality
agreement in such form as the Committee shall prescribe;
and/or
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(ii)
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the
Participant executing a covenant to devote his or her best efforts
to
create and deliver value to the stockholders of Cendant;
and/or
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(iii)
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such
other conditions as the Committee shall determine in its sole
discretion.
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(b) Stock
Options.
The
Committee may grant to a Participant an Award of Stock Options which shall
become vested subject to (i) the Participant remaining continuously employed
in
good standing with the Company through one or more dates determined by the
Committee and/or (ii) the Company’s attainment of Performance Goals. All such
Awards shall be evidenced by an Award Agreement. Except as set forth in Section
5(e) below or as otherwise determined by the Committee in its sole discretion,
such Awards shall not vest and shall immediately terminate if such Participant's
employment terminates prior to an applicable vesting date, irrespective of
the
reason for termination of employment. Upon the occurrence of a Change-of-Control
Transaction, each Award granted pursuant to this paragraph shall become
immediately and fully vested and payable; provided,
that
the Participant (i) remains employed with the Company (or its successor) during
a 90 day transition period immediately following such Change-of-Control
Transaction or (ii) is terminated during such 90 day transition period by the
Company or its successor. Awards granted hereunder shall be granted pursuant
to
and in accordance with any one or more of the Cendant Stock Plans, as determined
by the Committee and set forth in an Award Agreement, and accordingly such
Awards shall be subject to the terms of such Cendant Stock Plan (except as
otherwise provided in this Plan), including without limitation all provisions
regarding stock options, the exercising of stock options and restrictions
thereto, tax withholding obligations and equitable adjustment provisions.
Notwithstanding the foregoing, the Committee shall have the sole discretion
to
accelerate the vesting of any Award granted pursuant to this paragraph at any
time and for any reason.
6
(c) Restricted
Stock Unit Awards.
The
Committee may grant to a Participant an Award of Restricted Stock Units which
shall become vested subject to (i) the Participant remaining continuously
employed in good standing with the Company through one or more dates determined
by the Committee and/or (ii) the Company’s attainment of Performance Goals.
Except as set forth in Section 5(e) below or as otherwise determined by the
Committee in its sole discretion, such Awards shall not vest and shall
immediately terminate if such Participant's employment terminates prior to
an
applicable vesting date, irrespective of the reason for termination of
employment. Upon the occurrence of a Change-of-Control Transaction, each Award
granted pursuant to this paragraph shall become immediately and fully vested
and
payable; provided,
that
the Participant (i) remains employed with the Company (or its successor) during
a 90 day transition period immediately following such Change-of-Control
Transaction or (ii) is terminated during such 90 day transition period by the
Company or its successor. Notwithstanding the foregoing, the Committee shall
have the sole discretion to accelerate the vesting and payment of an Award
granted pursuant to this paragraph at any time and for any reason. Awards
granted hereunder shall be granted pursuant to and in accordance with any one
or
more of the Cendant Stock Plans, as determined by the Committee and set forth
in
an Award Agreement, and accordingly such Awards shall be subject to the terms
of
such Cendant Stock Plan (except as otherwise provided in this Plan), including
without limitation any equitable adjustment provisions. As soon as practicable
following the vesting of each Restricted Stock Unit, the Participant shall
be
entitled to receive one share of Cendant Stock; provided,
however,
that
the Participant shall remain required to remit to the Company such amount that
the Company determines is necessary to meet all required minimum withholding
taxes. In the event that Cendant shall determine to pay a dividend in respect
of
Cendant Stock, a cash dividend-equivalent in respect of each then outstanding
Restricted Stock Unit shall be paid to the holder thereof; provided,
however,
that
any such dividend-equivalents shall be subject to the same vesting schedules,
Performance Goals, forfeiture provisions and deferral elections as the
Restricted Stock Unit to which it relates.
(d) Performance
Based Vesting.
Unless
otherwise approved by the Committee and set forth in writing in an Award
Agreement, Awards granted hereunder will vest only upon the attainment of
Performance Goals (as well as any other additional vesting
requirements).
7
(e) Disability.
A
Participant’s Award shall immediately vest upon his or her termination of
employment by reason of Disability.
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6.
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General
Provisions.
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(a) Compliance
with Legal Requirements.
The
Plan and the granting and payment of Awards, and the other obligations of the
Company under the Plan and any Award Agreement or other agreement, entered
into
pursuant hereto, shall be subject to all applicable federal and state laws,
rules and regulations, and to such approvals by any regulatory or governmental
agency as may be required. The selling of shares of Cendant Stock and the
exercise of Stock Options may be restricted by virtue of any “blackout period”
or any other restrictive policy imposed by the Company for any reason or for
no
reason. No Participant shall have any actual or implied right to sell Cendant
Stock or exercise any Stock Option at any particular time or particular date,
and any such transactions may be limited or delayed by the Company at any time,
with or without prior notice to the Participant, for any reason or for no
reason. The foregoing specifically includes the Company’s discretionary
determination to suspend any such transactions during a Company investigation
of
any Participant’s alleged misconduct.
(b) Nontransferability.
Awards
shall not be transferable by a Participant for any reason whatsoever, other
than
pursuant to the applicable laws of descent and distribution.
(c) No
Right To Continued Employment.
Nothing
in the Plan, any Award or any Award Agreement or other agreement entered into
pursuant hereto shall confer upon any Participant the right to continue in
the
employ of the Company or to be entitled to any remuneration or benefits not
set
forth in the Plan or such Award Agreement or other agreement or to interfere
with or limit in any way the right of the Company to terminate such
Participant's employment.
(d) Withholding
Taxes.
All
Awards hereunder, and the vesting thereof, are subject to any and all required
minimum withholding taxes and similar required withholding obligations.
(e) Amendment,
Termination and Duration of the Plan.
The
Board or the Committee may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any
Participant, without such Participant's consent, under any Award theretofore
granted under the Plan.
8
(f) Participant
Rights.
No
Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment for
Participants.
(g) Unfunded
Status of Awards.
The
Plan is intended to constitute an "unfunded" plan for incentive and deferred
compensation for a select group of management and highly compensated employees.
Nothing contained in the Plan or any Award shall give any such Participant
any
rights that are greater than those of a general creditor of the Company. The
Plan is not intended to provide retirement benefits, retirement income or
welfare benefits.
(h) Deferral.
Cendant
may (but is not obligated to) establish procedures pursuant to which certain
designated Participants may elect to defer, until a time or times later than
the
vesting of a Restricted Stock Unit, receipt of all or a portion of the shares
of
Cendant Stock deliverable in respect of a Restricted Stock Unit, all on such
terms and conditions as Cendant shall determine in its sole discretion. If
any
such deferrals are permitted for some or all Participants, then notwithstanding
any provision of this Plan to the contrary, a Participant who elects such
deferral shall not have any rights as a stockholder with respect to any such
deferred shares of Cendant Stock unless and until certificates representing
such
shares are actually delivered to the Participant, except to the extent otherwise
determined by the Committee.
(i) Other
Provisions.
Notwithstanding any other provision of the Plan, an Award Agreement or any
other
agreement (written or oral) to the contrary, for purposes of the Plan and any
Award hereunder, a termination of employment shall be deemed to have occurred
on
the date upon which the Participant ceases to perform active employment duties
for the Company following the provision of any notification of termination
or
resignation from employment, and without regard to any period of notice of
termination of employment (whether expressed or implied) or any period of
severance or salary continuation. Notwithstanding any other provision of the
Plan, an Award Agreement or any other agreement (written or oral) to the
contrary, a Participant shall not be entitled (and by accepting any Award,
thereby irrevocably waives any such entitlement), by way of compensation for
loss of office or otherwise, to any sum or other benefit to compensate the
Participant for the loss of any rights under the Plan as a result of the
termination or expiration in of any Award in connection with any termination
of
employment. No amounts earned pursuant to the Plan or any Award shall be deemed
to be eligible compensation in respect of any other plan of Cendant Corporation
or any of its subsidiaries.
9
(j) Governing
Law.
The
Plan and all determinations made and actions taken pursuant hereto shall be
governed by the laws of the State of Delaware without giving effect to the
conflict of laws principles thereof.
(k) Effective
Date.
The
Plan shall take effect upon its adoption by the Committee.
10
Annex
A
Adjustments
to EBITDA and Free Cash Flow for
Acquisitions
and Dispositions
Dispositions
of Subsidiaries and Business Units
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1.
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If
a disposition is accounted for as “discontinued operations” in accordance
with U.S. GAAP, then all historical years of EBITDA and Free Cash
Flow
shall be adjusted by eliminating (i) the historical results of the
disposed entity in the manner reported on the Company’s Annual Report on
Form 10-K and (ii) any one-time costs or benefits directly related
to such
disposition. Further, any assets, cash or other consideration (if
any)
received in connection with such disposition shall not be considered
Free
Cash Flow.
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2.
|
If
a disposition with greater than $50 million of “total consideration” (as
defined below) is not accounted for as “discontinued operations” in
accordance with U.S. GAAP, then all historical years of EBITDA and
Free
Cash Flow shall be adjusted by the Company by eliminating (i) the
historical results of the disposed entity by making such appropriate
adjustments which would have otherwise been made assuming the disposition
was accounted for as “discontinued operations” and (ii) any one-time costs
or benefits directly related to such disposition. Further, any assets,
cash or other consideration (if any) received in connection with
such
disposition shall not be considered Free Cash Flow.
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If
a
disposition with $50 million or less of total consideration is not accounted
for
as discontinued operations in accordance with U.S. GAAP, then there shall be
no
adjustment made to EBITDA and Free Cash Flow. In this case, the total
consideration received will be included as a cash inflow to Free Cash
Flow.
For
any
disposition described in 1 or 2 above (but excluding pursuant to a direct
dividend, spin-off or distribution to Company stockholders), the total
consideration received by the Company is in excess of the “enterprise value
multiple” (determined by the Committee to equal 9), multiplied by EBITDA of such
disposed of entity (relating to the latest 12 month results immediately
preceding the month of the disposition), if any, shall be referred to as the
“Disposition Premium.” Commencing in the year of the disposition (the “Base
Year”), 20% of the Disposition Premium shall be included as a cash inflow in the
calculation of Free Cash Flow in such Base Year and in each of the four years
immediately following such Base Year (such 5 year period, the “Disposition
Premium Amortization Period”). Additional disposition payments (such as earn-out
payments) and disposition-related payments (i) shall be added to the Disposition
Premium if received by the Company during the Disposition Premium Amortization
Period and shall be amortized ratably over the remaining years in the
Disposition Premium Amortization Period and (ii) shall be included as a cash
inflow in the calculation of Free Cash Flow in the year received by the Company
if received by the Company in any year following the Disposition Premium
Amortization Period. Notwithstanding the foregoing, in any calendar year, the
aggregate value of all Disposition Premiums applied to Free Cash Flow may not
exceed the aggregate value of all Acquisition Premiums applied to Free Cash
Flow. The value of any Disposition Premiums not applied to Free Cash Flow in
any
calendar year by virtue of the operation of the preceding sentence shall be
applied in the following calendar year (or in subsequent years until applied).
11
|
3.
|
Once
determined for a particular year, TUG or cumulative TUG used to determine
vesting is fixed and is not adjusted as a result of acquisitions,
dispositions or other transactions.
|
Acquisitions
of Subsidiaries and Business Units
|
1.
|
There
shall be no adjustment to EBITDA or Free Cash Flow in respect of
any
acquisition with a “total consideration” of $15 million or less (“Small
Acquisitions”) (specifically, Free Cash Flow will be reduced by such
“total consideration” in the year of acquisition). The “total
consideration” will consist of the total cash cost of the acquisition (as
reported) (i.e.,
total cash dispersed less cash acquired) plus non-amortization related
acquisition and integration related costs and any assumed debt and
any
equity issued (stock issued and conversion of stock options, valued
as of
the closing or as otherwise provided under
GAAP).
|
|
2.
|
For
acquisitions other than Small Acquisitions, EBITDA shall be adjusted
in
order to neutralize the impact of such acquisition in the year of
such
acquisition.
|
For
such
acquisitions, EBITDA shall be adjusted to exclude the results of the acquired
entity for the entirety of the fiscal year in which the acquisition occurs.
The
amount of the EBITDA adjustment will be exactly as set forth in the applicable
Cendant Investment Committee Memorandum (all such acquisitions require
presentation of key financial projections in a memorandum to such committee)
used to review and approve the transaction (the “ICM”). Notwithstanding Company
procedure, for purposes of this Plan, in the event that any acquisition closes
more than 90 days following the date of the ICM, or in the event that an
acquisition closes in the calendar year following the date of the ICM, then
an
updated ICM will be required. For all adjustments made pursuant to any ICM,
whether an original ICM or an updated ICM, the financial information set forth
in the ICM shall be pro rated to account for the period of time which elapses
following the date of the ICM through the date of closing. The EBITDA noted
in
the ICM for the current year (relating to the period owned by the Company)
will
be removed from the actual results of the Company without regard to the actual
results of the acquired entity. However, solely for purposes of determining
EBITDA growth in the following year, the EBITDA for the year in which the
acquisition occurred shall be adjusted to include the results of the acquired
entity as if it was owned for the full year (for such purpose, the EBITDA for
the period the acquired entity is not owned by the Company will equal the EBITDA
for such period indicated in the ICM; note: the EBITDA for the period the
acquired entity is owned by the Company will equal the actual EBITDA for such
period). Also, with respect to this EBITDA adjustment, if the acquired entity
does not report on a GAAP basis, reasonable adjustments will be made to the
extent necessary and appropriate to align the financial statements of the
acquired entity with GAAP. Any such adjustments should be included within the
ICM. TUG calculated for prior years shall not be adjusted due to this
calculation.
12
|
3.
|
For
such acquisitions other than Small Acquisitions, Free Cash Flow shall
be
adjusted to exclude the free cash flow results of the acquired entity
for
the entirety of the fiscal year in which the acquisition occurs.
The
amount of the Free Cash Flow adjustment will be exactly as set forth
in
the applicable ICM used to review and approve the transaction.
Notwithstanding Company procedure, for purposes of this Plan, in
the event
that any acquisition closes more than 90 days following the date
of the
ICM, or in the event that an acquisition closes in the calendar year
following the date of the ICM, then an updated ICM will be required.
For
all adjustments made pursuant to any ICM, whether an original ICM
or an
updated ICM, the financial information set forth in the ICM shall
be pro
rated to account for the period of time which elapses following the
date
of the ICM through the date of closing. The Free Cash Flow noted
in the
ICM for the current year will be removed from the actual results
of the
Company without regard to the actual results of the acquired entity.
Free
Cash Flow will be adjusted to exclude the total cash cost of the
acquisition (as reported) (i.e.,
total cash dispersed less cash acquired) plus non-amortization related
acquisition and integration related
costs.
|
|
4.
|
For
acquisitions other than Small Acquisitions, but only those for which
the
Company pays “total consideration” in excess of the “enterprise value
multiple” (determined by the Committee to equal 9), multiplied by the
acquired entity’s prior calendar year GAAP earnings before interest,
taxes, depreciation and amortization (as set forth in the ICM) (“Acquiree
EBITDA”), Free Cash Flow shall be adjusted.
|
13
For
such
acquisitions, the total consideration paid by the Company in excess of the
“enterprise value multiple” (determined by the Committee to equal 9), multiplied
by Acquiree EBITDA (relating to the latest 12 month results immediately
preceding the month of the acquisition), if any, shall be referred to as the
“Acquisition Premium.” The Acquisition Premium shall not exceed “total
consideration” as defined above. Commencing in the year following the
acquisition (the “Base Year”), 20% of the Acquisition Premium shall be included
as a cash outflow from Free Cash Flow in such Base Year and in each of the
four
years immediately following Base Year (such 5 year period, the “Acquisition
Premium Amortization Period”). Additional acquisition payments (such as earn-out
payments) and acquisition-related payments (i) shall be added to the Acquisition
Premium if paid by the Company during the Acquisition Premium Amortization
Period and shall be amortized ratably over the remaining years in the
Acquisition Premium Amortization Period and (ii) shall be included as a cash
outflow in the calculation of Free Cash Flow in the year paid by the Company
if
paid by the Company in any year following the Acquisition Premium Amortization
Period.
|
5.
|
Once
determined for a particular year, TUG or cumulative TUG used to determine
vesting is fixed and is not adjusted as a result of acquisitions,
dispositions or other transactions.
|
14
Exhibit
99
CENDANT'S
BOARD OF DIRECTORS APPROVES
QUARTERLY CASH DIVIDEND OF $0.11 PER COMMON SHARE IMPLEMENTING PREVIOUSLY
ANNOUNCED PLAN TO INCREASE REGULAR QUARTERLY
DIVIDEND BY 22%
NEW
YORK 07-19-2005
--
Cendant Corporation (NYSE: CD) today announced that its board of directors
formally declared a regular quarterly cash dividend of $0.11 per common share,
payable September 13, 2005 to stockholders of record as of August 22, 2005.
The
$0.11 per share dividend represents a 22% increase from the $0.09 per share
regular quarterly dividend previously paid to stockholders.
About
Cendant Corporation
Cendant
Corporation is primarily a provider of travel and residential real estate
services. With approximately 80,000 employees, New York City-based Cendant
provides these services to business and consumers in over 100 countries. More
information about Cendant, its companies, brands and current SEC filings may
be
obtained by visiting the Company's Web site at http://www.cendant.com.
Media
Contacts:
Elliot
Bloom
(212)
413-1832
Kelli
Segal
(212)
413-1871
Investor
Contacts:
Sam
Levenson
(212)
413-1834
Henry
A.
Diamond
(212)
413-1920