PHH CORPORATION
CORPORATE LONG-TERM INCENTIVE PLAN
FY 1995-96-97
The purpose of this plan is to encourage the achievement of the long-term
objectives of PHH Corporation and its shareholders, by providing incentive
opportunities to designated senior key executives.
DEFINITIONS
A) The "Company" shall mean PHH Corporation, or its successor in interest.
B) The "term" shall mean the term of this plan which shall be the three
fiscal years, beginning May 1, 1994 through April 30, 1997
C) "Return on beginning equity (ROBE)" shall mean the Company's annual net
income after taxes, after giving effect for any incentive to be paid,
computed in accordance with generally accepted accounting principles,
divided by the beginning shareholders' equity for the fiscal year. The
performance measure for the plan shall be the average of the ROBE results
for each of the three fiscal years in the plan. Determination of the
performance measure results shall be made by the Committee following the
close of fiscal 1997.
D) The "Board of Directors" shall mean the Board of Directors of PHH
Corporation.
E) The "Committee" shall mean the Compensation Committee of the Board of
Directors.
F) The "Chairman & CEO" shall mean the Chairman & Chief Executive Officer of
PHH Corporation.
PARTICIPATION AND EMPLOYMENT STATUS
Participation in the plan is limited to key senior executives of the Company
specifically designated by the Chairman & CEO and approved by the Committee.
None of the members of the Committee may participate in the plan. Initially
designated participants must be actively employed as of May 1, 1994 in order
to be eligible to receive any incentive under the plan. Except as otherwise
determined by the Committee pursuant to the plan, additional participants
may be approved prior to May 1, 1995, to be considered for a prorated award,
based on their service during the plan term. Incentive targets for the
designated participants shall be determined by the Committee at the
beginning of the plan term. No participant has any vested rights or
interest under the plan and must be actively employed as of April 30, 1997
or have terminated employment by reason of retirement, death or disability
(as determined by the Committee) during the term to be eligible for any
incentive payment under the plan.
In the discretion of the Committee, awards may be granted in relation to a
non qualified stock option granted under the Amended and Restated Stock
Compensation Plan of 1990 of the Company ("Stock Compensation Plan"), in
which event, at the end of the term, a participant shall make a written
election either to receive payment of the award or to retain the related non
qualified stock option. Awards granted in relation to non qualified stock
options shall be canceled, to the extent determined in the discretion of the
Committee, (i) if the related non qualified stock option is exercised prior
to the end of the term or (ii) if at the end of the term, the participant
elects to retain the related non qualified stock option.
FY 1995-96-97 CORPORATE LONG-TERM INCENTIVE PLAN
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COMPANY PERFORMANCE MEASUREMENT
Exhibit A sets forth the ROBE results which the Committee determines must be
obtained in order for the corresponding percentage of the target incentive
to be payable to participants. The performance measure is the average of
the ROBE results for each of the three fiscal years of the term. In
determining whether ROBE targets have been met, the Committee may take into
account one time charges or other factors, if any, as it deems relevant.
The aggregate incentive amounts which may be paid out for the designated
participants under the plan are set forth on Exhibit A, including the
maximum amounts which may be paid out for the designated participants under
the plan. Failure to meet the minimum ROBE results will result in no
payment to the participant.
INDIVIDUAL INCENTIVE PAYMENTS
Payments of individual incentive amounts, if any, will be made following the
determination of the ROBE results by the Committee. At the determination of
the Committee, payment may be made in cash and/or in shares of Common Stock
of the Company awarded pursuant to the Stock Compensation Plan. A
participant may elect to defer receipt of all or a portion of any incentive
payment as provided in the form of Deferral Election approved from time to
time by the Committee. Such deferral election must be made by the
participant in accordance with applicable deferred compensation plans
established by the Company and in a manner consistent with federal, state
and local tax laws.
ADMINISTRATION
The plan, adopted by the Board of Directors, shall be administered by the
Committee. The Committee is authorized to promulgate rules relating to
administration of the plan and to make determinations with respect thereto.
The Company shall have the right to deduct from all awards paid under the
plan all federal, state, local and other taxes required by law to be
withheld with respect to such payments.
Where a "change of control" (as defined in the Company's Stock Compensation
Plan) occurs during the term, the Company shall pay to participants an
incentive under the plan based on ROBE results up until such date of such
change of control as if such ROBE result constituted the three-year average
ROBE result provided for herein multiplied by the fraction, the denominator
of which shall be thirty-six (36) months and the numerator of which shall be
that number of full months elapsed from the beginning of the term up until
such date. If a change of control occurs after the term, all incentive
payments which the participant had elected to defer under the terms of any
unfunded deferred compensation plan established by the company shall be
either contributed in full by the Company under any such deferred
compensation plan trust or, if no such trust has been established, paid in
full by the Company as soon as practicable following the change of control.
In case of separations from the Company for the following reasons, the
following provisions will apply.
Retirement, Death or Disability - Awards will be prorated based on the
nearest full quarter of the fiscal year of active employment. The incentive
award payment will be made following the end of the term of the plan after
full-term results are known. Disability will be defined in the same manner
as provided in qualified plan provisions in effect at the time of
disability.
FY 1995-96-97 CORPORATE LONG-TERM INCENTIVE PLAN
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Voluntary Resignation - Awards will be forfeited when executives voluntarily
resign before the end of the term.
Termination or other Resignation - Awards, if any, will be made as
determined by the Compensation Committee in its sole discretion.
No member of the Board of Directors or the Committee nor any officer,
employee or agent of the Company shall have any liability to any person
based on or arising out of the plan, absent bad faith or willful misconduct.
Nothing contained in the plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any participant, beneficiary,
legal representative or any other person. To the extent that any person
acquires a right to receive payments from the Company under the plan, such
right shall be no greater than the right of an unsecured general creditor of
the Company. All payment to be made hereunder shall be paid from the
general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of
such amounts.
REVISION OR CANCELLATION OF THE PLAN
Nothing in the plan shall be deemed to create any rights of participation of
any employee. The Committee shall have the full authority in its sole
discretion to unilaterally modify, terminate or cancel the plan, in whole or
in part, or with respect to any designated participant, at any time without
liability to any participant.
NON-TRANSFERABILITY
A participant may not assign, sell, encumber, transfer or otherwise dispose
of any rights or interests under the plan and any attempted disposition
shall be null and void.