PARSIPPANY, N.J- July 28, 1998
Cendant Corporation (NYSE:CD) today announced that Walter A. Forbes
resigned as Chairman of the Company and as a member of the Board of Directors,
effective immediately. Henry R. Silverman, Chief Executive Officer of Cendant,
was unanimously elected by the Board of Directors to be Chairman and will
continue to serve as CEO and President.
Nine members of the Board formerly associated with CUC International,
including Mr. Forbes, also resigned effective immediately. One other Board
member formerly associated with CUC will leave the Board by year end, leaving
Cendant with 18 directors.
The Board also voted to eliminate the governance plan adopted as part
of the CUC-HFS merger, including the 80% super-majority provisions of the
Company's By-Laws which include limitations on the removal of the Chairman
and the CEO. In addition, the Board rescheduled Cendant's annual meeting
of shareholders for October 1, 1998.
Mr. Silverman said, "Walter Forbes's decision and the corporate governance
changes approved today end any uncertainty about the future direction and
leadership of Cendant. That uncertainty was a serious impediment to conducting
our business and the process of restoring trust in our company.
"Now we can focus all of our energies on rebuilding confidence in our
Company and value for Cendant's shareholders," Mr. Silverman added. "The
company's earnings and cash flow remain strong. We have some of the most
valuable businesses in the world.
Most importantly, we have outstanding people who are passionate about
Cendant and its future."
Commenting on his action, Mr. Forbes said, "I leave with tremendous
confidence in the future success of Cendant. The vision and rationale behind
its creation remain as compelling as ever. Its business fundamentals are
strong. The operations are sound and profitable. The opportunities for
synergy are numerous. The action I am taking today eliminates speculation
about the future leadership of Cendant and helps the company focus all
of its attention and resources on restoring the faith of its shareholders,
its customers and its people."
Statement from Walter Forbes Chairman, Cendant
Corporation
Together with many talented, hard working and decent people, I devoted
25 years of my life to creating and building CUC International, which became
an innovative force in developing and marketing consumer services. In combining
with HFS, another great company, CUC became part of an enterprise with
extraordinary energy and vision - and an unsurpassed ability to capitalize
on rapidly changing consumer markets.
However, the people of Cendant and its shareholders have suffered in
recent months as a result of fraudulent conduct and the uncertainty it
has created. Today, it is apparent that the actions of a few have profoundly
hurt us all. And, as I have said on many occasions, I had absolutely no
knowledge of the accounting irregularities. However, I now believe it is
in the best interest of our shareholders and employees to resolve this
uncertainty.
I leave with tremendous confidence in the future success of Cendant.
The vision and rationale behind its creation remain as compelling as ever.
Its business fundamentals are strong. The operations are sound and profitable.
The opportunities for synergy are numerous. The action I am taking today
eliminates speculation about the future leadership of Cendant and helps
the company focus all of its attention and resources on restoring the faith
of its shareholders, its customers and its people.
I am proud to have helped create one of the most dynamic consumer enterprises
in the world. I am grateful to all those bright, dedicated individuals
with whom I have had the chance to work. I have an unshakable faith in
Cendant's ability to create value for its shareholders, business partners
and customers for many years to come. I wish everyone associated with the
company the very best as it fulfills that mission. |
Terms of Severance Agreement with Mr. Forbes
Outlined
The severance agreement reached with Mr. Forbes gives him the benefits
required by his contract should he be terminated for reasons other than
for cause. These benefits total $35 million in cash and include the grant
of certain options. In addition, the Company provided a limited release
for Mr. Forbes. The payments to Mr. Forbes will cause Cendant to record
an unusual expense of approximately $0.03 per share in the third quarter.
Board Members Resign, Size of Board Reduced
The immediate departure of nine Directors formerly associated with CUC,
and the planned departure of one additional CUC Director, Frederick D.
Green, will result in Cendant having a Board with 18 Directors. Mr. Green,
Chairman of the Audit Committee, has agreed to resign effective upon completion
of the final Audit Committee report.
Statement from Henry Silverman Chief Executive
Officer, Cendant Corporation
During the past three months, the shareholders and people of Cendant
have suffered unfairly from an unconscionable fraud perpetrated against
the company by a few individuals at the former CUC International. It has
tarnished our company's reputation and created public uncertainty and speculation
about the future leadership of Cendant.
Like every other shareholder and employee, I am outraged at what has
transpired. We intend to take appropriate action against those who conducted
these fraudulent activities, and will continue cooperating fully with law
enforcement authorities.
At the same time, we have an obligation to our shareholders and everyone
associated with
Cendant to move ahead with the business of our company. We must do everything
we can to put this episode behind us, to eliminate the cloud hanging over
this company, to dispel all of the uncertainty generated by recent events.
As others have noted, it has been difficult for Cendant to rebuild trust
in our company while this uncertainty exists.
The corporate governance changes approved today by our Board of Directors
end any uncertainty about the future direction and leadership of Cendant.
We can now rebuild trust in our company. We can focus all of our energies
on rebuilding value for Cendant's shareholders. The company's earnings
and cash flow remain strong. We have some of the most valuable businesses
in the world. Most importantly, we have outstanding people who are passionate
about Cendant and its future.
I look forward to working with all of the people of Cendant to move
our company forward, build on our unique combination of strengths and realize
the full potential of this great enterprise. |
Cendant Implements Middle
Managemnt Retention Program
Parsippany, NJ and Stamford, CT, July 28, 1998 - Cendant Corporation
(NYSE: CD) today
announced affirmative steps to retain middle management and other key
employees. Most notably, Cendant will reset the exercise price of incentive
stock options granted to middle management and other key employees in the
period between December 1997 and March 1998. Cendant does not plan to reset
incentive options granted to executive management, business unit heads
or senior staff executives.
The options to be reset were granted with exercise prices between $31.375
and $37.50 per share,
significantly above Cendant's July 27, 1998 closing price of $15.75
per share. The company also plans to reset the exercise price of options
granted to employees who voluntarily exchanged cash compensation for an
equivalent value of options in the first quarter of 1998. The new exercise
price will be set in early August based on market prices at that time.
"This action addresses the heart of Cendant, the employees whose dedicated
and unstinting efforts have built a solid core of businesses that will
deliver earnings approaching $1 billion this year," said Henry R. Silverman,
President & CEO. "Equity incentives and option grants are part of the
fabric of our company and an integral part of many employees' compensation.
These employees have been deprived of a material portion of their overall
compensation by events totally beyond their control. We would be derelict
in our duties as custodians of shareholder value if we did not take steps
to retain these key employees.
"We do not believe it is appropriate to nor will we reset the terms
of the options awarded as compensation to our most senior executives, a
group of approximately 50 persons," Silverman continued. "However, equity
incentives extend far within Cendant to many other valuable persons we
must retain to continue our earnings growth and build shareholder value
into the future."
Cendant (NYSE: CD) is the world's premier provider of consumer and business
services. Cendant operates in three principal segments: Alliance Marketing,
Travel and Real Estate Services. Headquartered in Stamford, CT and Parsippany,
NJ, the company has more than 40,000 employees, operates in over 100 countries
and makes approximately 100 million customer contacts annually.
Certain matters discussed in this news release and the
attached statements are forward-looking statements, as defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
are subject to a number of known and unknown risks and uncertainties including,
but not limited to, the outcome of the Audit Committee's investigation;
uncertainty as to the Company's future profitability; the Company's ability
to develop and implement operational and financial systems to manage rapidly
growing operations; competition in the Company's existing and potential
future lines of business; the Company's ability to integrate and operate
successfully acquired businesses and the risks associated with such businesses;
the Company's ability to obtain financing on acceptable terms to finance
the Company's growth strategy and for the Company to operate within the
limitations imposed by financing arrangements; uncertainty as to the future
profitability of acquired businesses; and other factors. Other factors
and assumptions not identified above were also involved in the derivation
of these forward-looking statements, and the failure of such other assumptions
to be realized as well as other factors may also cause actual results to
differ materially from those projected. The Company assumes no obligation
to update these forward-looking statements to reflect actual results, changes
in assumptions or changes in other factors affecting such forward-looking
statements.
Cendant is the world's premier provider of consumer and
business services. Cendant operates in three principal segments: Alliance
Marketing, Travel and Real Estate Services. Headquartered in Parsippany,
NJ, the company has more than 40,000 employees, operates in over 100 countries
and makes approximately 100 million customer contacts annually. |