UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registration [ ] Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy [ ] Statement[ ]
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
PHH CORPORATION
----------------------------
(Name of Registrant as Specified In Its Charter)
PENNANT CAPITAL MANAGEMENT, LLC
PENNANT OFFSHORE PARTNERS, LTD.
PENNANT ONSHORE PARTNERS, LP
PENNANT ONSHORE QUALIFIED, LP
PENNANT SPINNAKER FUND LP
PENNANT WINDWARD FUND, LP
PENNANT WINDWARD FUND, LTD.
ALAN FOURNIER
ALLAN Z. LOREN
GREGORY J. PARSEGHIAN
-------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): [X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
- --------------------------------------------------------------------------------
Pennant 26 Main Street, Suite 203, Chatham, NJ 07928
Capital Phone 973-701-1100, Fax 973-701-9005
Management, LLC
VOTE TO STRENGTHEN THE PHH BOARD AT THIS CRITICAL TIME
VOTE THE GOLD PROXY CARD FOR NEEDED CHANGE AT PHH
May 19, 2009
To Our Fellow PHH Stockholders:
In just three short weeks, at PHH Corporation's 2009 Annual Meeting, you
will be asked to make a decision that is critical to the Company's future. As
you may know, Pennant Capital is seeking to elect two Independent Nominees to
PHH's Board of Directors, in opposition to two of the Board's three nominees. We
are writing to explain why we are taking this step, and why we believe it is
essential that you vote on our GOLD proxy card in favor of Allan Loren and Greg
Parseghian, the highly qualified Independent Nominees.
Investment funds managed by Pennant Capital own 9.94% of PHH's common stock
and have a significant stake in the future success of the Company. We have been
a PHH stockholder for more than three years, and are a long-term holder seeking
to create long-term value for all PHH stockholders. Over the past year, as
increasing challenges have confronted and threatened the Company, we have
concluded that PHH's current Board and management have failed to meet those
challenges in important ways. As a result, we believe that change on the Board
is necessary, and that the fresh perspective and expertise that the Independent
Nominees will bring to the Board can better position the Company to meet its
present and future challenges.
A FRESH APPROACH IS NEEDED
We have detailed in our proxy statement and elsewhere why we believe PHH,
under the leadership of Board Chairman A.B. Krongard and CEO Terence Edwards,
has been poorly managed. We believe that PHH must, at a minimum, take the
following steps in order to position the Company for success:
o Build a more flexible cost structure targeted for profitability in all
environments.
o Establish compensation arrangements that base management incentives on
factors that are within management's control.
o Fully evaluate the profitability of each existing and potential client
contract, with a view toward profitable growth.
o Understand and publicly articulate the normalized earnings power of
the Company.
We believe that it is the responsibility of the Board to carefully consider and
take these and other steps to enhance long-term stockholder value, and we
believe that Allan Loren and Greg Parseghian can play a vital role in
implementing needed change at PHH.
THE TIME FOR CHANGE IS NOW
In approximately 18 months, PHH's unsecured credit facility - with nearly
$1 billion drawn at March 31, 2009 - will come due. Given the recent declines in
PHH Fleet's profitability and the lack of sustained profitability at PHH
Mortgage in recent years, lenders may question the Company's prospects for
long-term sustained profitability, and that may affect its ability to refinance
the credit facility on commercially acceptable terms. With only a year and a
half left before this debt has to be refinanced, we believe that now is the time
to revitalize the Board with the fresh perspective, experience and expertise
that the Independent Nominees can provide.
Moreover, Messrs. Krongard and Edwards are seeking re-election to new,
three-year terms. After the 2009 Annual Meeting, stockholders will not have an
opportunity to vote again on their leadership until 2012, when their new Board
terms would expire. We believe that change on the Board cannot wait that long,
and that the re-election of Messrs. Krongard and Edwards would send the wrong
message to the Board by suggesting that stockholders approve of the job that
management and the Board are doing and that change at PHH is not necessary.
THE CURRENT PHH BOARD LACKS IMPORTANT
EXPERIENCE AND EXPERTISE
Non-management directors on a corporate board play an extremely important
role in evaluating, guiding and serving as a sounding board for the company's
CEO and management. To play that role at PHH, we believe non-management
directors should have, as suggested by PHH's own Corporate Governance
Guidelines, "diverse professional and personal backgrounds" combining "a broad
spectrum of experience and expertise."
Surprisingly, however, not a single non-management Board member appears
ever to have served as CEO of a public Company. We believe this glaring lack of
experience deprives the Board of an invaluable understanding, perspective and
source of stature and credibility from which the independent members of the
Board can provide guidance to, and serve as a sounding board for, the Company's
CEO.
In addition, only one non-management director seems to have had any
specific business background in the mortgage industry. Apparently, this lack of
experience and expertise has been of serious concern to the Board as well, based
on the Company's April 2, 2009 announcement that it had established an
"important relationship" by retaining a consultant whose "extensive mortgage
industry and other experience" the Board believed would "prove extremely
valuable to the Board and the Company." While hiring a consultant with essential
- 2 -
expertise that is broadly lacking on the Board is a step in the right direction,
we believe that this additional expertise should reside in members of the Board,
who owe fiduciary duties directly to stockholders, rather than only being
supplied by a paid consultant who owes his job to management and the Board.
THE INDEPENDENT NOMINEES FILL IMPORTANT GAPS
IN THE EXPERIENCE AND EXPERTISE OF THE BOARD
We strongly believe that each of the Independent Nominees will bring
valuable experience and expertise to the Board and will make it more likely that
the Board can drive the process of creating long-term value for all
stockholders. The Independent Nominees do not have, and have not had, any
financial or compensatory business relationship with us, and were chosen by us
specifically because they are independent and not beholden to us and because we
have great confidence in the experience, expertise and energy they will bring to
the PHH Board.
We identified Greg Parseghian as a candidate for the Board because of his
extensive background in the mortgage industry, including his having served as
Chief Investment Officer, and ultimately Chief Executive Officer, of Freddie
Mac. We are very impressed with Greg's deep understanding of all aspects of the
industry, including the production and servicing segments in which the Company
operates, as well as the secondary markets for mortgage loans. Given our belief
that significant changes need to be made at PHH Mortgage in order to achieve
profitability in all market environments, we think it is extremely important at
this juncture to have an expert of Greg's stature sitting at the Board table
when these changes are discussed and acted on. In particular, we believe that
Greg's background as Chief Investment Officer of Freddie Mac will enable him to
make valuable contributions to the Company's efforts to manage its mortgage
servicing rights, which have resulted in significant losses in recent quarters.
We identified Allan Loren as a candidate for the Board from among many
candidates introduced to us by an executive search firm. Allan currently serves
as an Executive Coach to CEOs and served as both Chairman and Chief Executive
Officer of Dun & Bradstreet, where he was instrumental in refocusing D&B's
business and creating and implementing its "Blueprint for Growth" strategy.
During his five years leading that company, Allan grew D&B's earnings per share
from $1.71 to $2.98, increased free cash flow from $164 million to $239 million
per year, and produced a total stockholder return of 378%. Having served for
five years as CEO of a well-known public company that successfully underwent a
turnaround during his tenure, we believe that Allan's experience will be
invaluable for PHH as it seeks to change to meet the challenges it faces. In
particular, Allan's experience in turning around D&B positions him to provide
valuable input into efforts to cut costs and build a more flexible cost
structure at PHH. Allan also brings to the table an incredible diversity of
business experience as a former member of senior management, in a variety of key
positions, at American Express Company, Galileo International, Apple Computer
and Cigna.
- 3 -
VOTE THE GOLD PROXY CARD TO BRING MUCH NEEDED CHANGE -
FRESH VOICES AND FRESH IDEAS - TO THE PHH BOARD
By asking you to vote the GOLD proxy card, we are not asking you to hand
over control of PHH. We are only asking that you elect two new directors to a
seven-member board so that ALL stockholders will be represented by at least two
independent directors who have been nominated by stockholders for the express
purpose of enhancing stockholder value and who in no way are beholden to
management.
If you have any questions, or need assistance voting your GOLD proxy card,
please contact MacKenzie Partners, Inc., which is assisting us in this
solicitation, at (800) 322-2885 (toll-free) or (212) 929-5500 (call collect) or
by email at proxy@mackenziepartners.com. You may also be able to vote by
telephone or internet by following the instructions on the enclosed voting form.
On behalf of Pennant Capital Management, LLC,
Sincerely,
/s/ Alan Fournier
Alan Fournier
Managing Member
- --------------------------------------------------------------------------------
If you have questions or need assistance voting the GOLD proxy card please
contact:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
proxy@mackenziepartners.com
Call Collect: (212) 929-5500
or
Toll-Free (800) 322-2885
- --------------------------------------------------------------------------------
- 4 -