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) October 26, 2005 (October 24,
2005)
Cendant
Corporation
(Exact
name of Registrant as specified in Charter)
|
Delaware
(State
or Other Jurisdiction
of
Incorporation)
9
West 57th
Street
New
York, NY
(Address
of principal
executive
office) |
1-10308
(Commission
File No.) |
06-0918165
(I.R.S.
Employer
Identification
Number)
10019
(Zip
Code) |
Registrant's
telephone number, including area code (212) 413-1800
(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
October 24, 2005, Cendant Corporation (the "Company") announced that its Board
of Directors has approved a plan to separate the Company into four
companies--one for each of the Company's real estate, travel network,
hospitality and vehicle rental businesses. In order to encourage the retention
of key employees through the completion of the proposed separation, the Board of
Directors of the Company, upon recommendation of the Company's Compensation
Committee, approved a retention program pursuant to which restricted stock units
("RSUs") (including cash-based dividend equivalents relating to these units) and
stock options granted during the period from 2003 to date, to the Company's
employees, including the "named executive officers" (but not including the
Company's Chairman and Chief Executive Officer, who was not granted any such
awards during this period), will vest as follows, provided the employee remains
in employment through the applicable vesting date:
| · |
upon
completion of the proposed separation, 50% of all outstanding RSUs and
stock options which had not previously vested will become vested, and
|
| · |
the
remaining unvested RSUs and stock options will become vested at the
earlier of six months following completion of the proposed separation and
December 31, 2006 (in each case, subject to acceleration if a
participant's employment is terminated under certain circumstances).
|
Under
this program, those RSUs and stock options that vest based upon the attainment
of performance goals will vest based on the assumption that performance goals
have been met at 100% of target; accelerated vesting will not apply to the
"above-target" portion of performance-based awards (which will be cancelled upon
completion of the proposed separation).
As of
October 24, 2005, (1) an aggregate of 23.7 million unvested RSUs were
outstanding, of which 10.2 million were performance-based RSUs relating to
"target performance, " 11.3 million were performance-based RSUs relating to
"above-target" performance which will be cancelled, and 2.2 million were
non-performance-based RSUs; and (2) an aggregate of 3.5 million unvested stock
options were outstanding of which 0.8 million were performance-based options
relating to target performance, 0.9 million were performance-based options
relating to "above-target" performance which will be cancelled, and 1.8 million
were non-performance-based options.
A portion
of the currently unvested equity awards described above will vest in accordance
with their existing terms prior to completion of the proposed
separation.
Although
no action has been taken by our Compensation Committee, it is expected that all
employee stock options, including options held by our current Chief Executive
Officer, each other executive officer and each director, will be adjusted to
reflect the transaction in an equitable manner, resulting in all options being
treated equivalently to the treatment of shares of our common stock held by our
stockholders at the time of separation. The result will be that each holder of
Corporation options will receive options in each of the four new companies, but
in a manner whereby the aggregate intrinsic value of the four new options
following the transaction will equal the intrinsic value of the Corporation
stock option prior to the transaction. No executive officer or director will
receive different or preferential treatment with respect to the equitable
adjustment of his or her outstanding options. Accordingly, options outstanding
as a percentage of diluted shares outstanding for each of the four new companies
resulting from the equitable adjustment of options outstanding on the date of
separation will not be greater than the percentage applicable to the Corporation
prior to the transaction.
No
determinations have been made regarding new equity awards that may be granted to
employees of the new companies, and no such determinations are expected to be
made until it becomes necessary and appropriate to address employee retention
and incentive issues. Neither the Corporation nor the four new companies will
grant any new awards relating to the common stock of the four new companies to
our current Chief Executive Officer in connection with the
transaction.
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:
October 26, 2005