PHH Corp. senior managers have canceled scheduled raises and bonuses for themselves after a lukewarm performance in company earnings.
"With the earnings at a rate of decline, it seemed inappropriate to get a raise or a bonus," said Robert D. Kunisch, chief executive officer of PHH.
"We will postpone bonuses until the company has substantial growth."
Hunt Valley-based PHH specializes in vehicle and real estate management services for businesses.
For the first quarter ending July 31, PHH's earnings dropped 6.2 percent compared with the same period last year. The company reported a net income of $11.2 million, or 66 cents a share, compared with income of $11.9 million, or 70 cents a share, for the first quarter in 1990.
The company also announced that its board of directors declared a quarterly dividend of 30 cents a share. The dividend is payable Oct. 31 to shareholders of record Oct. 11, 1991.
Kunisch said that although the first quarter was better than expected in light of the economy, senior managers would not get any raises or bonuses. He did say they would received stock options in lieu of raises and bonuses.
Last year, for example, Kunisch received $746,494 with pay incentives. This year the company's proxy statement indicated that Kunisch would receive $596,684.
Between 30 and 40 executives will not get a raise or bonus for the next six to 18 months, according to Peter Brinch, a spokesman for the company.
PHH's board can distribute a minimum of $660,300 if the company's earnings grow by at least 12.6 percent. If earnings growth reaches 15.5 percent or greater, a maximum of $2.6 million in cash bonuses can be distributed among 14 key executives.
If PHH's earnings grow by at least 12.6 percent, the board can distribute a minimum of $660,300 in cash bonuses among 14 key executives. If earnings growth reaches 15.5 percent or more, up to $2.6 million in bonuses can be distributed.
Kunisch said management didn't react fast enough to the recession and, although the company's year-end and first quarter results were "respectable," they were not within the company's normal growth of between 8 and 15 percent.
"This has been the worse recession in the 45 years PHH has been in business, Kunisch said during the company's annual meeting yesterday. "This recession ran much deeper and was much more challenging."
In other matters, stockholders re-elected its first black board member in the company's 45-year history.
Andrew F. Brimmer, who is president of his own economic and consulting firm based in Washington, was re-elected to a three-year term on the board. Brimmer was first elected to the board last October.
Brimmer, 64, serves as director for several nationally known companies including BankAmerica Corp., DuPont, Mercedes-Benz, N.A. and the Gannett Corp., as well as MNC Financial Inc.