Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Cendant Corporation (NYSE:CD) -- Ignore unavailable to you. Want to Upgrade?

To: VALUESPEC who wrote (1110)	7/17/1998 9:13:00 AM
From: Wowzer	Read Replies (2) \| Respond to of 3627

Poor guy I am sure he is accepting donations. What kind DD did they do before they bought CUC. Silverman isn't completely in the clear either. From the Wall Street Journal: Cendant CEO's Massive Wealth Melts With Drop of Share Price By MARK MAREMONT Staff Reporter of THE WALL STREET JOURNAL How does it feel to lose nearly $1 billion in three months? Ask Henry R. Silverman. In early April, the chief executive of Cendant Corp. was sitting on more than 46 million stock options, with a paper value of almost $1.2 billion. By any measure, it was one of the largest options positions ever amassed, far outstripping those of such noted options kingpins as Walt Disney Co.'s Michael Eisner and Sanford Weill of Travelers Group Inc. But with the recent meltdown of Cendant's stock price after revelations of widespread accounting fraud at its CUC International unit, Mr. Silverman suddenly has turned into a relative pauper. His options now are worth about $250 million. "I can tell you, it doesn't feel good," Mr. Silverman says. Winning Negotiations Don't feel too sorry for him, though. To build his enviable options holdings, the 57-year-old tax attorney-turned-dealmaker deftly negotiated and renegotiated ever-richer options packages with his boards of directors. In one unusual decision, the board of HFS Inc. -- which Mr. Silverman ran and merged into CUC to form Cendant late last year -- canceled a provision that would have required him to wait several years to exercise millions of options. It was deals like that that helped give Mr. Silverman 11% of HFS shares at the time of the merger with CUC. Mr. Silverman's directors "definitely have been very generous," says Carol Bowie, director of research at Executive Compensation Advisory Services, a Springfield, Va., company that tracks executive pay. "It's unusual for any corporation to feed the CEO that amount of equity." Few large companies grant options covering more than 10% of their shares to all executives combined. For his part, Mr. Silverman says he "worked his tail off," in running the company and has created "enormous value for shareholders." And Robert F. Smith, an outside director who has headed the compensation committees of both HFS and Cendant since 1993, says Mr. Silverman deserved all of his options. He calls the Cendant CEO "one of the best financial managers I have ever seen," and says he believes people producing superb results should be compensated accordingly. Mr. Silverman's initial options date back to the formation of HFS in the early 1990s. Then a partner of Blackstone Group, a New York private-equity firm, he hatched a plan to create a hotel-franchising company by acquiring the Ramada, Howard Johnson's and Days Inn brands. Mr. Silverman became the chief executive of the newly formed company, and Blackstone gave him options as an incentive. The initial options, amounting to about 6% of HFS stock, had tough provisions. They would vest in portions over five years, and the strike price -- the price Mr. Silverman would have to pay to exercise them -- would rise 9% per year. Some corporate governance experts like such "indexed" options, because they don't reward executives for stock that rises with the market. Helpful Changes Blackstone sold its stake in 1993, and Mr. Silverman stayed on. Soon after, the board retroactively changed the 9% indexing feature of the options in Mr. Silverman's favor, so that the option strike price ceased to rise for a tranche once it vested. Mr. Smith says the board relied on outside compensation experts, who said the indexing feature was "not normal" for a public company.