PHH CORPORATION
CEO & PRESIDENT INCENTIVE PLAN
FY 1997
The purpose of this plan is to encourage the achievement of the annual business
objectives of PHH Corporation and its shareholders, by providing incentive
opportunities to the CEO & President of PHH Corporation.
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 fiscal year
beginning May 1, 1996 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 ROBE result for the fiscal year in the plan. Determination
of the performance measure results shall be made by the Committee following the
close of fiscal 1997.
D) The "Committee" shall mean the Compensation Committee of the Board of
Directors.
E) CEO & President" shall mean the Chief Executive Officer and President of PHH
Corporation.
F) "Salary" shall mean the annual base salary paid during the term.
G) "Target Incentive" shall be fixed at that level of ROBE result determined by
the Committee as constituting 100% of incentive payout and shall be expressed as
a percent of salary.
PARTICIPATION
Participation in the plan is limited to the CEO & President.
EMPLOYMENT STATUS AND GRADE CHANGES
Any participant designated as of May 1, 1996 as a plan participant and actively
employed on or before February 1, 1997 is eligible to participate in this
program. A participant who is hired or transferred during the plan year is
eligible to be considered for a prorated award. An individual transferred during
the period will be eligible for a prorated award proportionate to the full
months worked in the previous and transferred Company. An individual hired
between February 1, 1997 and April 30, 1997 shall not be eligible to participate
in this plan for FY 1997. A participant who has been promoted or demoted after
May 1, 1996, but before February 1, 1997, will be considered for a prorated
payout based on the schedules in effect for each position. A plan participant
who becomes disabled (as determined by the Committee) and is out of work in
excess of 30 days during the plan year, is eligible to be considered for a
prorated award as determined by the Committee.
FY 1997 CEO & PRESIDENT INCENTIVE PLAN
PAGE 2
COMPANY PERFORMANCE MEASUREMENT
Exhibit A sets forth the Company ROBE results which must be obtained in order
for the corresponding percentage of the Target Incentive to be payable to a
participant. 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. Incentive payouts under this plan are contingent upon achievement of
the Company's stated leverage target in effect at the close of FY 1997. The
aggregate incentive amounts which may be paid out under the plan are designated
and approved by the Committee.
PAYMENT OF INDIVIDUAL INCENTIVE AMOUNTS
The determination of the total available incentive amount, if any, which might
be paid to any plan participant, shall be determined by the Committee in its
sole discretion following the close of FY 1997 and shall be based upon the
achievement of the related ROBE result as shown on Exhibit A. 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.
No participant has any vested interest in the plan and must be actively employed
as of April 30, 1997 to be eligible for incentive award distribution. A
participant may elect to defer receipt of all or a portion of any cash incentive
payment as provided in the form of Deferral Elections approved from time to time
by the Committee. Payments in the form of PHH stock may not be deferred. Such
deferral election must be made by the participant in accordance with applicable
deferred compensation plans and in a manner consistent with applicable federal,
state and local tax laws.
ADMINISTRATION
The plan adopted by the Committee 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, including any
discretionary cash payments in excess of available incentive amounts calculated
hereunder.
If a "change of control" (as defined in the Company's Stock Compensation Plan)
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 or, if no such trust has been established, paid in
full by the Company as soon as practicable following the "change of control".
REVISION OR CANCELLATION OF THE PLAN
This Incentive Plan shall not 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 at any time, in whole or in
part without liability to any participant.
NON-TRANSFERABILITY
A participant may not pledge, assign, sell, encumber, or transfer or otherwise
dispose of any rights or interests under the plan and any attempted disposition
shall be null and void.