CENDANT CORP. PRESS RELEASE (JULY 28, 1998)
Walter Forbes Steps Down as Cendant Chairman
CEO Henry Silverman Elected New Chairman
Nine CUC Board Members Resign
One Additional Director to Leave by Year-End
80% Vote on Corporate Governance Provisions Eliminated
PARSIPPANY, NJ, 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."
(Note: full statements by Mr. Silverman and Mr. Forbes are
attached.)
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.
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.