PHH chief would be paid $11.6 million if forced out Kunisch to join board of HFS, get options

March 28, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

PHH Corp. Chairman and CEO Robert D. Kunisch, who negotiated the $1.7 billion sale of the Hunt Valley company to HFS Inc. of New Jersey, will be eligible for $11.6 million in severance pay if he is dismissed by the combined company.

Kunisch, who will join HFS' board, will also be able to exercise stock options worth $6.74 million as a result of the merger. When he leaves HFS' board, Kunisch will receive $12.9 million over six years as part of an agreement not to compete with HFS.

PHH spokesman Peter Brinch would not discuss executive compensation yesterday, referring questions to the proxy statement.

"We are looking forward to the consummation of the merger and achieving the meaningful revenue opportunities we have identified over the last four months across our companies' business segments," Kunisch and HFS Chairman and CEO Henry R. Silverman said in a joint statement yesterday.

Shareholders of both companies will vote on the merger proposal in separate meetings on April 30, which is the anticipated closing date of the transaction.

The two companies announced the merger last November. The acquisition by HFS is valued at $49.50 per share for PHH shareholders -- 61 percent higher than the $30.75 price before the announcement.

HFS is a rapidly growing franchiser of hotels and real estate brokerages. Founded in Baltimore 51 years ago, PHH provides vehicle management, mortgage banking and corporate relocation services.

PHH employs about 1,250 people in Hunt Valley and 5,000 worldwide. The merger will not affect the roughly 1,100 people who work in the company's Hunt Valley-based vehicle management division, Brinch said.

He said the roughly 150 people employed at PHH's corporate headquarters will leave the company, join HFS or move to vehicle management.

Under severance agreements between PHH and eight executives, termination by a new owner under a defined set of circumstances would result in severance payments that would be at least three times the executive's highest annual pay since 1994.

In addition to Kunisch, who would be eligible for $11.6 million, other executives and the amounts they would receive include Eugene A. Arbaugh, chief marketing officer and corporate secretary, $4.5 million; Roy A. Meierhenry, chief financial officer, $4.1 million; William F. Adler, president of vehicle management, $3.7 million; and H. Robert Nagel, president of mortgage services, $4 million.

According to the proxy statement, the merger will accelerate the top executives' ability to exercise stock options granted within the past year. Under that provision, Kunisch will be able to exercise 320,000 options at $28.4375 per share with a value of $6.74 million. The other executives and the value of their options include Arbaugh, $2.45 million; Meierhenry, $2.38 million; Adler, $2 million; and Nagel, $1 million.

Pub Date: 3/28/97

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