Cendant Corporation 8K dated June 20, 2006
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) June
20, 2006 (June 15, 2006)
Cendant
Corporation
(Exact
name of Registrant as specified in its charter)
| |
Delaware
(State
or other jurisdiction
of
incorporation)
|
1-10308
(Commission
File No.)
|
06-0918165
(I.R.S.
Employer
Identification
Number)
|
| |
9
West 57th
Street
New
York, NY
(Address
of principal
executive
office)
|
|
10019
(Zip
Code)
|
Registrant's
telephone number, including area code (212)
413-1800
None
|
(Former
name or former address if changed since last
report)
|
|
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))
|
|
Item
1.01
|
Entry
into a Material Definitive
Agreement.
|
On
June
15, 2006, the Compensation Committee of our Board of Directors approved a
long-term equity incentive grant for Richard A. Smith, one of our five most
highly compensated executive officers, with a value of $5 million. Upon the
completion of the distribution by Cendant to its stockholders of all of its
shares of common stock of Realogy Corporation, our wholly owned subsidiary
that
holds the assets and liabilities associated with our Real Estate Services
businesses, the grant will convert into two equity incentive awards relating
to
Realogy’s common stock.
As
described in Realogy’s Registration Statement on Form 10, one of these awards
will be in the form of stock-settled stock appreciation rights with a per share
exercise price equal to the value of a share of Realogy’s common stock as of the
date of grant (the closing price on the first day of trading following the
date
of Realogy’s distribution), will have a value on the date of grant of $3
million, and will vest (or not vest) on such date or dates and subject to
Realogy’s attainment of pre-established performance goals relating to Realogy’s
financial success, in each case as determined by Realogy’s Board of Directors or
Compensation Committee prior to the distribution date, and further subject
to
Mr. Smith’s continued employment with Realogy through such vesting date(s). The
other of these awards will be in the form of restricted stock units, will have
a
value on the grant date of $2 million and will vest in equal installments on
each of the first four anniversaries of May 2, 2006, subject to Mr. Smith’s
continued employment with Realogy through each such vesting date. The number
of
shares of Realogy common stock covered by Mr. Smith’s grant will equal the
aggregate value of each such grant divided by (i) in the case of restricted
stock units, the fair market value of Realogy common stock and (ii) in the
case
of stock appreciation rights, the Black-Scholes value of a right, in each case
as of the date of grant of such award (the closing price on the first day of
trading following the date of Realogy’s distribution). The award will be granted
under Realogy’s 2006 Equity and Incentive Plan.
If,
however, Realogy’s distribution does not occur, the grant will become an award
relating to Cendant common stock on December 31, 2006, and the terms of the
grant will be determined by the Compensation Committee of our Board of
Directors.
On
June
15, 2006, the Compensation Committee of our Board of Directors also approved
an
employment agreement between Realogy and Mr. Smith, which will become effective
as of the date of Realogy’s distribution.
As
described in Realogy’s Registration Statement on Form 10, the employment
agreement will have a term ending on the third anniversary of the distribution;
provided, that such term will automatically extend for one additional year
unless Realogy or Mr. Smith provides notice to the other party of non-renewal
at
least six months prior to such third anniversary. Pursuant to Realogy’s by-laws,
its Board of Directors may terminate Mr. Smith’s employment at any time. Upon
expiration of the employment agreement, Mr. Smith will be an employee at will
unless the agreement is renewed or a new agreement is executed. In addition
to
providing for a minimum base salary of $1 million and employee benefit plans
generally available to Realogy’s executive officers, Mr. Smith’s agreement
will provide for an annual incentive award with a target amount equal to 200%
of
his base salary, subject to attainment of performance goals, and grants of
long-term incentive awards, upon such terms and conditions as determined by
Realogy’s Board of Directors or Compensation Committee. Mr. Smith’s
agreement will provide that if his employment with Realogy is terminated by
Realogy without “cause” or due to a “constructive discharge” (each term as
defined in Mr. Smith’s agreement), he will be entitled to a lump sum
payment equal to 299% of the sum of his then-current base salary plus his
then-current target annual bonus. In addition, in this event, all of
Mr. Smith’s then-outstanding Realogy equity awards will become fully vested
(and any Realogy stock options and stock appreciation rights granted on or
after
the distribution date will remain exercisable until the earlier of three years
following his termination of employment and the original expiration date of
such
awards). Options granted prior to the distribution
will
remain exercisable in accordance with Mr. Smith’s prior agreement with Cendant.
Mr. Smith’s employment agreement will also provide him and his dependents
with medical benefits through his age 75. The employment agreement will provide
Mr. Smith with the right to claim a constructive discharge if, among other
things, (i) a person other than Mr. Silverman becomes Realogy’s Chief Executive
Officer, (ii) prior to December 31, 2007, Mr. Smith does not report to the
Chief
Executive Officer, (iii) following December 31, 2007, Mr. Smith is not the
Chief
Executive Officer or does not report directly to Realogy’s Board of Directors,
(iv) Realogy fails to nominate Mr. Smith to be a member of Realogy’s Board of
Directors, or (v) Realogy notifies Mr. Smith that Realogy will not
extend the term of the employment agreement for an additional fourth year.
Mr. Smith’s agreement will provide for post-termination non-competition and
non-solicitation covenants which will last for two years following
Mr. Smith’s employment with Realogy.
Mr.
Smith’s employment agreement and the plan used in connection with Mr. Smith’s
grant are set forth below as Exhibits 10.1 and 10.2 and
incorporated by reference herein.
|
Item 7.01
|
Regulation
FD Disclosure.
|
On
June
20, 2006, we announced the commencement of meetings with institutional investors
in connection with the planned spin-off of Wyndham Worldwide Corporation.
A
copy of
the press release is attached hereto as Exhibit
99.1 and
is
incorporated by reference herein.
The
slides to be presented during the investor meetings may be accessed on Cendant’s
website at www.cendant.com
.
|
Item
9.01
|
Financial
Statements and
Exhibits.
|
|
10.1
|
|
Employment
Agreement Between Realogy Corporation and Richard A.
Smith.
|
|
10.2
|
|
2006
Equity and Incentive Plan of Realogy Corporation (incorporated by
reference to Exhibit 10.5 to Realogy Corporation’s Registration Statement
on Form 10 (File No. 001-32852)).
|
|
99.1
|
|
Press
Release dated June 20, 2006.
|
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.
| |
CENDANT
CORPORATION
|
|
By:
|
/s/
Eric J. Bock
|
| |
Eric
J. Bock
Executive
Vice President, Law
and
Corporate Secretary
|
Date:
June 20, 2006
CENDANT
CORPORATION
CURRENT
REPORT ON FORM 8-K
Report
Dated June 20, 2006 (June 15, 2006)
EXHIBIT
INDEX
|
10.1
|
|
Employment
Agreement Between Realogy Corporation and Richard A. Smith.
|
|
10.2
|
|
2006
Equity and Incentive Plan (incorporated by reference to Exhibit 10.5
to
Realogy Corporation’s Registration Statement on Form 10 (File No.
001-32852))
|
|
99.1
|
|
Press
Release dated June 20, 2006.
|