SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant[ ]
Filed by a Party other than the Registrant[X]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or
ss. 240.14a-12
PHH Corporation
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(Name of Registrant as Specified In Its Charter)
Pennant Capital Management, LLC
Pennant Spinnaker Fund LP
Pennant Offshore Partners, Ltd.
Pennant Onshore Partners, LP
Pennant Onshore Qualified, LP
Pennant Windward Fund, LP
Pennant Windward Fund, Ltd.
Alan Fournier
Allan Z. Loren
Gregory J. Parseghian
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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PRELIMINARY COPIES
PHH CORPORATION
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MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 2009
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PROXY STATEMENT OF PENNANT CAPITAL MANAGEMENT, LLC; PENNANT SPINNAKER FUND LP;
PENNANT OFFSHORE PARTNERS, LTD.; PENNANT ONSHORE PARTNERS, LP; PENNANT ONSHORE
QUALIFIED, LP; PENNANT WINDWARD FUND, LP; PENNANT WINDWARD FUND, LTD.; ALAN
FOURNIER; ALLAN Z. LOREN; AND GREGORY J. PARSEGHIAN.
April __, 2009
To Our Fellow PHH Corporation Stockholders:
We are furnishing this Proxy Statement to holders of the common stock, par
value $0.01 per share ("Common Stock"), of PHH Corporation, a Maryland
corporation (the "Company"), in connection with our solicitation of proxies for
use at the 2009 Annual Meeting of Stockholders of the Company and at any and all
adjournments or postponements thereof (the "Annual Meeting"). The Company has
stated that the Annual Meeting will be held at _____________________________, on
June 10, 2009, at _______ local time, and the board of directors of the Company
(the "Board of Directors" or "Board") has fixed April 22, 2009, as the record
date (the "Record Date") for determining the stockholders entitled to receive
notice of and to vote at the Annual Meeting. This Proxy Statement is first being
sent or given to stockholders on or about April __, 2009.
This solicitation is being conducted by Pennant Capital Management, LLC
("Pennant Capital"); Pennant Spinnaker Fund LP ("Spinnaker"); Pennant Offshore
Partners, Ltd. ("Offshore"); Pennant Onshore Partners, LP ("Onshore"); Pennant
Onshore Qualified, LP ("Qualified"); Pennant Windward Fund, LP ("Windward LP");
Pennant Windward Fund, Ltd. ("Windward Ltd." and, together with Spinnaker,
Offshore, Onshore, Qualified and Windward LP, the "Funds"); Alan Fournier ("Mr.
Fournier" and, together with the Funds and Pennant Capital, the "Pennant
Entities" or "Pennant"); Allan Z. Loren ("Mr. Loren"); and Gregory J. Parseghian
("Mr. Parseghian"). The Pennant Entities, Mr. Loren and Mr. Parseghian are
hereinafter from time to time collectively referred to as the "Soliciting
Persons."
The Pennant Entities collectively own 5,407,141 shares, representing
approximately 9.97% of the outstanding Common Stock, making us the Company's
largest stockholder as of the Record Date. We are soliciting proxies to be used
at the Annual Meeting for the following actions:
(i) To elect Mr. Loren and Mr. Parseghian (the "Independent Nominees")
as two of the three Class I directors of the Company to hold office
until the Company's 2012 annual meeting of stockholders, and until
their respective successors are duly elected and qualified;
(ii) To ratify the selection of Deloitte & Touche LLP as the Company's
independent registered public accounting firm for the fiscal year
ending December 31, 2009; and
(iii) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
We urge you to vote in favor of the Independent Nominees because we believe
they will bring to the Board substantial mortgage industry experience and a
proven track record of creating stockholder value and implementing change. We
believe that this experience and track record, together with a new voice and
fresh perspective on the Board, will best serve the interests of the Company and
its stockholders. Accordingly, we urge you to sign and date the GOLD proxy card
supplied by the Soliciting Persons and return it in the enclosed postage-page
envelope whether or not you plan to attend the meeting.
The Company has nominated three incumbent directors to stand for
re-election at the Annual Meeting. By voting on the GOLD proxy card, you will be
able to vote at the Annual Meeting for three candidates - the two Independent
Nominees and the Company Nominee other than Terence W. Edwards and A.B.
Krongard. As discussed more fully in this Proxy Statement, we are soliciting for
this third Company Nominee rather than for Mr. Edwards or Mr. Krongard because
we believe that as Chief Executive Officer and Non-Executive Chairman,
respectively, Messrs. Edwards and Krongard bear significant responsibility for a
number of the self-inflicted problems facing the Company and because we have
lost confidence in their ability to effectively and expeditiously handle future
challenges and opportunities for the Company.
If your shares are held in the name of a brokerage firm, bank or nominee,
only that entity can vote such shares and then only upon receipt of your
specific instruction. Accordingly, we urge you to contact the person responsible
for your account and instruct that person to execute the GOLD proxy card on your
behalf.
YOUR VOTE IS IMPORTANT. If you agree with the reasons for the Soliciting
Persons' solicitation set forth in this Proxy Statement and believe that the
election of the Independent Nominees to the Board of Directors can make a
difference, please vote FOR the election of the Independent Nominees, no matter
how many or how few shares you own.
THE SOLICITING PERSONS URGE YOU NOT TO SIGN ANY PROXY CARD THAT IS SENT TO
YOU BY THE COMPANY, EVEN AS A FORM OF PROTEST. By executing the GOLD proxy card,
you will authorize us to vote FOR the election of the Independent Nominees, FOR
the candidate to the Board of Directors who has been nominated by the Company
other than A.B. Krongard and Terence W. Edwards and FOR the ratification of
Deloitte & Touche LLP as the Company's independent registered public accounting
firm for the fiscal year ending December 31, 2009. If you have already signed a
proxy card sent to you by the Company, you may revoke that proxy at any time
prior to the time a vote is taken by (i) submitting a duly executed proxy
bearing a later date to the Corporate Secretary of the Company, (ii) filing with
the Corporate Secretary of the Company a later dated written revocation or (iii)
attending and voting at the Stockholder Meeting in person.
Thank you for your support,
On behalf of the Soliciting Persons,
Sincerely,
Alan Fournier
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IF YOU HAVE ANY QUESTIONS, REQUIRE ASSISTANCE IN VOTING THE GOLD PROXY CARD
OR NEED ADDITIONAL COPIES OF OUR PROXY MATERIALS, PLEASE CALL:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2855
Email: proxy@mackenziepartners.com
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GENERAL
The Board of Directors currently consists of seven directors divided into
three classes having staggered three-year terms. According to the Company's
proxy statement (the "Company Proxy Statement"), filed in preliminary form on
______ __, 2009, three Class I directors are to be elected to the Board at the
Annual Meeting for terms ending at the Company's 2012 annual meeting of
stockholders. The Company has nominated three incumbent members of the Board
(the "Company Nominees") to stand for re-election at the Annual Meeting.
We are seeking to elect the Independent Nominees - Allan Z. Loren and
Gregory J. Parseghian - to the Board. Unless otherwise indicated thereon, we
will use the authority granted to us by the GOLD proxy card to vote FOR the
election of the Independent Nominees as directors, FOR the Company Nominee other
than A.B. Krongard and Terence W. Edwards, and FOR the ratification of the
selection of Deloitte & Touche LLP as the Company's independent registered
public accounting firm for the fiscal year ending December 31, 2009. We are
soliciting for the third Company Nominee rather than for Mr. Edwards or Mr.
Krongard because, for the reasons discussed below, we believe that as Chief
Executive Officer and Non-Executive Chairman, respectively, Messrs. Edwards and
Krongard bear significant responsibility for a number of the self-inflicted
problems facing the Company and because we have lost confidence in their ability
to effectively and expeditiously handle future challenges and opportunities for
the Company.
For information concerning voting procedures at the Annual Meeting, see
"Voting and Proxy Procedures."
BACKGROUND OF THIS SOLICITATION
For more than a year, the Pennant Entities have made consistent efforts to
encourage the Board and senior management of the Company ("Management") to focus
more keenly and effectively on the creation of long-term stockholder value.
On April 2, 2008, representatives of Pennant met with Mr. Terence W.
Edwards, President and Chief Executive Officer of the Company ("Mr. Edwards"),
and certain other members of Management for a wide ranging discussion of the
Company's businesses. Among other things, the Pennant representatives expressed
concern that the Company's compensation arrangements for Management failed to
adequately incentivize Management to create significant value for stockholders.
In the meeting, the Pennant representatives stated that they would support a
more effective incentive compensation arrangement for Management, including an
aggressive options package tied to long-term stock performance, and sought to
encourage Management to ensure that incentives were more productively aligned
with stockholder interests.
On May 9, 2008, following the Company's first quarter 2008 earnings call,
representatives of Pennant expressed their concern to Mr. Edwards about his and
other Management members' public communications regarding the Company's results
of operations. The Pennant representatives told Mr. Edwards that the Company's
first quarter 2008 earnings release and conference call had been harmful to the
interests of the Company because they had painted a confusing and overly
pessimistic picture of the Company and had failed to describe adequately to
investors, customers, potential outsourcing partners and funding sources that,
despite the tumultuous economic environment, the Company had done relatively
well compared to much of the mortgage industry, particularly in the mortgage
production and servicing segments, due to the Company's business model as an
outsourced services provider rather than a balance sheet lender like many others
in the industry.
On May 12, 2008, Pennant followed up the May 9, 2008 conversation with a
letter to Mr. Edwards reiterating Pennant's concerns and encouraging Management
to present a more open and balanced discussion of the Company's underlying
earnings results and normalized profit potential. The letter pointed out that
the Company's mortgage results for the first quarter of 2008 were affected, in
particular, by a number of unusual negative impacts and that the Company's
earnings release and conference call seemed to paint a picture of the Company as
just another deeply troubled mortgage company. The letter raised Pennant's
concerns that the Company's overly negative communications could adversely
affect the availability and cost of funding, make it more difficult for the
rating agencies to understand the earnings power of the Company's businesses,
make it harder to convince potential
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outsourcing clients to partner with the Company, and hurt staff morale. The
letter also encouraged Mr. Edwards to hire a Chief Financial Officer who would
be an effective communicator with investors, preferably with public company
experience, and who has a track record of driving long-term stockholder value.
On June 4, 2008, a representative of Pennant spoke with Mr. Edwards and
another member of Management at an industry conference following a Company
presentation. In response to a request for Management's view on the Company's
earnings power, and a range of potential earnings, in a normalized operating
environment, Mr. Edwards replied that there is no such thing as "normal" in the
mortgage industry anymore.
On August 19, 2008, in the context of discussing with A.B. Krongard,
Chairman of the Board ("Mr. Krongard"), the type of leadership and expertise
they thought was lacking at the Company, representatives of Pennant mentioned
Mr. Parseghian as a mortgage industry expert whom Pennant believed would bring
to the Company tremendous experience, energy and credibility at a critical time
for the Company. Although Mr. Parseghian was not available at that time for an
executive position with the Company, Mr. Krongard indicated he was interested in
Mr. Parseghian's background and in meeting with him as a potential Board member.
Also at the August 19, 2008 meeting with Mr. Krongard, in the context of
discussing the Company's ongoing search for a new chief financial officer
("CFO") and concerns about the impact of such a hire on the Company's management
team, the Pennant representatives suggested that a generous goal-oriented
incentive compensation package could be useful in exciting the Company's
management team about the hiring of a strong CFO from outside the Company. Mr.
Krongard agreed and stated that they were working on such a package in tandem
with their efforts to hire a new CFO. Although a new CFO has been hired, the
Company has not revamped its compensation arrangements to strengthen incentives.
On November 19, 2008, representatives of Pennant met for the first time
with Sandra Bell, who had joined Management as Chief Financial Officer on
October 13, 2008. Ms. Bell advised Pennant that she was undertaking an in-depth
assessment of the Company's businesses and operations and its strategic plans
and options. The Pennant representatives were favorably impressed with Ms.
Bell's understanding of, and perspective on, the Company and with the approach
she described to her ongoing assessment of the Company's plans and options.
While the Pennant representatives believed that Ms. Bell might conclude that the
Company must be managed with a much greater focus on current market conditions
and opportunities, the Pennant representatives were concerned that, as a new and
junior member of Management, her ability to cause immediate change in the
direction of the Company would be limited.
On November 24, 2008, representatives of Pennant spoke with Mr. Krongard to
discuss the foregoing concerns with respect to the Company and the capability
and plans of Management to deal with those concerns. In the discussion, the
Pennant representatives noted their belief that the Company's stock price was
trading at approximately 20% of book value and their concern that the Company's
$1.3 billion unsecured credit facility would mature in January 2011. The Pennant
representatives also expressed their belief that Management, with some
exceptions, has little credibility in the market and that the Company's November
10, 2008 earnings conference call had been reckless and damaging.
Also in their November 24, 2008 conversation with Mr. Krongard, which
followed a November 21, 2008 meeting between Mr. Krongard and Mr. Parseghian,
the Pennant representatives proposed to Mr. Krongard that the Company
immediately add Mr. Parseghian to the Board. In addition, Pennant proposed to
Mr. Krongard that the Board form a special committee of non-management
directors, which would include Mr. Parseghian, to underscore the importance and
urgency of Ms. Bell's strategic review of the Company's businesses, operations,
plans and options and to ensure that the Company's efforts in that regard
receive prompt and focused Board-level attention. In response, Mr. Krongard
dismissed the suggestion of a special committee of non-management directors and
advised Pennant that the Board was considering adding a new director to the
Board, that he had been impressed with Mr. Parseghian at their recent meeting,
but that other members of the Board had expressed concern about Mr. Parseghian's
past association with The Federal Home Loan Mortgage Corporation ("Freddie Mac")
and that two other candidates for the Board were being seriously considered
ahead of Mr. Parseghian.
On March 11, 2009, Spinnaker sent a formal notice to the Company, in
accordance with the requirements of the Company's bylaws, that Spinnaker
intended to nominate the Independent Nominees for election to the Board at the
Annual Meeting.
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REASONS FOR THIS SOLICITATION
Pennant believes that the Company has been poorly managed and that the
election of the Independent Nominees - who would bring to the Board substantial
mortgage industry experience and a proven track record of creating stockholder
value and implementing change - will best serve the interests of the Company and
its stockholders. Pennant acquired shares of Common Stock beginning in April
2006 because Pennant believed the shares were undervalued and represented an
attractive investment opportunity. Notwithstanding the record loss for 2008
recently reported by the Company, Pennant remains optimistic about the Company's
businesses for the following, among other, reasons:
o The Company is the only private label mortgage outsourcer of size in
the United States, and in many cases it may be the only profitable
option for subscale institutions to offer a mortgage product to their
customers without outsourcing to a competitor. Historically,
outsourcing activity for the Company's mortgage origination segment
("PHH Mortgage Production") has tended to be strongest in the wake of
mortgage industry downturns, and Pennant expects that the recent deep
industry downturn will result in great opportunity for the Company. As
a result of this downturn, 11 of the top 30 industry competitors as of
2006 have failed and 8 more have been acquired as of December 2008,
leaving the Company as the 5th largest retail originator of
residential mortgages and the 10th largest overall residential
mortgage originator. Moreover, with the recently improved market for
refinancing and the intense focus by the federal government on the
housing market crisis, including the recently announced Homeowner
Affordability and Stability Plan and changes to the government
sponsored enterprise (GSE) refinancing requirements, Pennant believes
the Company will have even greater opportunities.
o The Company's fleet management services segment ("PHH Fleet") is the
2nd largest player in the fleet management industry. The Company's
largest competitor, GE Commercial Finance Fleet Services, has begun to
scale down its business in light of GE-specific balance sheet issues,
leaving plenty of opportunities for PHH Fleet to pick up profitable
new clients.
Despite these and other positives for the Company's businesses, the Common
Stock has recently traded at substantially less than the Company's tangible net
book value - not more than 50% of tangible net book value in the months prior to
Pennant's disclosure of the intention to nominate the Independent Nominees for
election to the Board. Since the Company marks substantially all of its assets
to market or fair value, Pennant believes that tangible net book value
represents a reasonable proxy for runoff value and that the market has therefore
been expressing the view that the Company is worth more "dead than alive."
Pennant believes, however, that the Company's prospects are substantially
undervalued by its current market capitalization and that they considerably
exceed the Company's potential runoff value. In that regard, Pennant believes
that the fair value of the Company is in excess of $40 per share based on a 10x
multiple applied to potential normalized earnings of approximately $4 per share
or more (resulting from an assumed 40 basis point pre-tax margin for PHH
Mortgage Production on annual volume of over $40 billion, a 10 basis point
pre-tax margin for the mortgage servicing segment of the Company ("PHH Mortgage
Servicing"), and PHH Fleet adjusted pre-tax earnings returning to 2007's level
of $106 million).
Pennant believes that the Company's current depressed market valuation
reflects a dim view of the Company's stewardship by the Board, a view that
Pennant shares. In a meeting on August 19, 2008, Mr. Krongard told
representatives of Pennant that the Board was "tired" and that some directors
were open to being replaced as a result of their efforts in connection with the
Company's accounting restatement and the mortgage market downturn. While the
economic climate in general, and the housing and financing markets in
particular, have presented serious challenges, Pennant believes that the Board
has poorly managed the Company through these difficult times:
o Failure to Understand Normalized Earnings Potential. Based on
discussions with members of the Board over the past year, it has
appeared to Pennant that the Board failed to develop a view of the
normalized earnings power of the Company. Both CEO Edwards and Board
Chairman Krongard have been unable to describe to Pennant the
normalized earnings power of the Company, and on June 4, 2008, Mr.
Edwards even stated that in this economy he is not sure that there is
such a thing as normalized earnings power. Subsequently, in November
2008, a member of Management did tell Pennant that the Board is
looking into developing a view as to the normalized earnings power of
the Company. Pennant
5
believes that without such an understanding, the Board cannot
adequately set targets to track Management's performance, cannot
establish effective incentive structures for Management, cannot
explain to investors the Company's long-term earnings potential and
cannot make fully informed capital allocation decisions.
o Less than Effective Management Incentives. The management incentive
plans for the Company, PHH Mortgage Production and PHH Fleet are based
upon the achievement of specified pre-tax income targets (after
minority interest) for the relevant unit. Pennant believes that these
incentive plans fail to provide proper incentives for employees,
particularly in the current market environment, because they fail to
distinguish between factors that employees can and cannot control. For
example, the PHH Mortgage Production management incentive plan target
for a particular year is typically set in March of that year. Whether
this target is met will depend on many factors that are beyond the
participating employees' control and not known ahead of time, such as
future interest rates and market-driven gain-on-sale margins. In years
where such factors make the target unattainable despite the employees'
best efforts and achievements, no award will be paid; conversely, in
years where such factors make attainment of the target likely almost
without regard to employee performance, an award will be made whether
or not deserved. Particularly in a challenging environment such as the
one the Company has experienced in the last few years, management
incentive plans should be geared toward providing incentives for
employee performance by focusing on parameters that are largely within
their control, such as efficiency and cost structure.
o Insufficient Focus on Profitability. In discussions with
representatives of the Board and Management since the beginning of
2008, it has been readily apparent to Pennant that until recently the
Board and Management have not focused on the profitability of
individual clients. In fact, in conversations with Company
representatives in November 2008, the Company conveyed its suspicion
that some of its clients were insufficiently profitable across the
business cycle. Pennant believes that for far too long Management and
the Board have focused on growing the Company with too little regard
for profitability. Without having appropriate metrics in place,
Pennant believes that Management and the Board have been unable to
evaluate whether existing clients are sufficiently profitable and
whether potential new clients would be sufficiently profitable to
pursue.
o Too Slow to Reduce Mortgage Production Costs. In the last three
completed fiscal years, PHH Mortgage Production did not have a single
profitable quarter, and was only able to break even in the fourth
quarter of 2008. While Management has, along the way, made relatively
modest cuts in PHH Mortgage Production expenses, Pennant believes that
Management was slow to address profitability concerns, especially in
2008 after termination of the merger agreement with General Electric
Capital Corporation and as it became ever more clear that the
deepening housing and mortgage crisis would lead to lower mortgage
origination volumes. In the last several months, some recovery in
origination volumes and healthier gain-on-sale margins have led to
profitable operations for PHH Mortgage Production, but Pennant
believes that this goal should have been achieved earlier, or losses
should have been reduced, with more aggressive cost cutting on the
part of Management.
o Too Slow to Reduce Fleet Funding Costs. PHH Fleet relies on external
financing to purchase vehicles for its clients, and its client
agreements use published indices to pass these financing costs through
to its clients. In the past, these indices have tended to track PHH
Fleet's funding costs, but in the second half of 2007, when the
asset-backed funding markets suffered severe disruption, these indices
no longer reflected the Company's true costs of funding and began to
significantly reduce the profitability of PHH Fleet. While Management
has continuously disclosed this adverse impact on the Company in its
public filings since at least November 2007, the Board failed to
ensure that concrete steps were taken to mitigate this impact until
well into the fourth quarter of 2008.
o Public Communications Failures. With short-term results falling far
short of the Company's long-term earnings potential in part due to the
market environment, it is critically important for Management to
educate investors about the Company's long-term earnings potential.
Pennant has been encouraging Management to provide such goals for more
than a year, without success. Management's failure to communicate
long-term earnings goals has made it exceedingly difficult for
investors to value the Company based on its underlying earnings power
and may account, in part, for the Company's depressed market
valuation.
6
Management's failure to communicate the Company's long-term earnings
potential may also jeopardize the ability of PHH Mortgage Production
and PHH Fleet to recruit and retain outsourcing clients in today's
environment. With the Company's shares trading at a steep discount to
tangible book value, the outsourcing market may view the Company as
being at risk of liquidation. Since stability of an outsourcing
partner is critical to businesses that outsource important business
functions, this perception could significantly affect confidence in
the Company, may negatively affect the signing of new clients and may
motivate existing clients to seek outsourcing alternatives that they
view to be more stable.
Another communications failure by Management is its failure to
highlight the critical differences between the Company and failed and
failing financial institutions, some of which are or have been
competitors of the Company. Unlike many competitors of the Company
that take substantial balance sheet risks in their business models,
the Company is a service business that sells substantially all of its
mortgage production and passes most fleet funding costs through to its
clients. In several conversations during the fourth quarter of 2008,
Board Chairman Krongard has even justified the Company's performance
by making comparisons to Lehman Brothers, distressed balance sheet
lenders, and General Motors. The balance sheet risk inherent in these
businesses is not comparable to that of the Company, and Pennant
believes that such comparisons only serve to perpetuate the Company's
depressed valuation. Moreover, in earnings conference calls, CEO
Edwards has consistently referred to industry problems without
highlighting that the Company is an outsourced service provider, not a
balance sheet lender, and as such the impact of these problems on the
Company is not comparable to that of the many troubled financial
concerns that make the news headlines on a daily basis.
For more than a year, Pennant has made consistent efforts to encourage the
Board and Management to focus more keenly and effectively on the creation of
long-term stockholder value. Pennant believes that, as the U.S. and global
financial crisis has deepened, the Company has been faced with significant
challenges that the Board and Management have failed to meet and has been
offered valuable opportunities that the Board and Management have failed to
embrace. As a result of these past concerns, the Board's and Management's lack
of responsiveness to Pennant's suggestions, and the concern that many of the
failures of the Board and Management have not been addressed for the future,
Spinnaker, one of the Pennant Entities, intends to nominate Messrs. Loren and
Parseghian for election to the Board at the Annual Meeting.
Allan Z. Loren has a proven track record of creating stockholder value
and implementing change. As Chairman and Chief Executive Officer of The Dun
& Bradstreet Corporation ("D&B") from 2000 through 2004, and as Chairman in
2005, Mr. Loren was instrumental in refocusing D&B's business and creating
and implementing D&B's "Blueprint for Growth" strategy. During his five
years leading the company, Mr. Loren grew D&B's earnings per share from
$1.71 to $2.98, increased free cash flow from $164 million to $239 million
per year, and produced a total stockholder return of 378%.
Gregory J. Parseghian has deep experience in the financial and
mortgage industries. After serving in executive positions at First Boston
Corp., BlackRock Financial Management and Salomon Brothers from 1982
through 1995, Mr. Parseghian became Chief Investment Officer of Freddie Mac
in 1996, rising to Chief Executive Officer of Freddie Mac before he left
that company at the end of 2003.
Neither of the Independent Nominees has had in the past any financial or
compensatory business or other relationship with the Pennant Entities, and the
Pennant Entities do not intend to establish any such relationship with either of
the Independent Nominees if they are elected to the Board. Pennant has
identified the Independent Nominees as nominees for the Board based on their
belief that the Independent Nominees will bring to the Board substantial
industry and operating experience and that, as outsiders elected by the
Company's stockholders without having been hand-picked by the current Board, the
Independent Nominees will bring a needed fresh perspective to the Board.
In nominating the two Independent Nominees to a Board that currently
consists of seven directors, Pennant is not seeking to control the management
and policies of the Company. Pennant believes that the Board should manage and
set policy for the Company, but that the Board should be responsive to the
Company's stockholders and
7
that the presence on the Board of directors not nominated by the Board will
encourage greater responsiveness and focus on stockholder value.
The Independent Nominees do not anticipate that they will have any
conflicts of interest with respect to the Company, if elected, and recognize
their fiduciary obligations to all stockholders. Neither of the Independent
Nominees has any contract, arrangement or understanding with the Company, other
than through the interest of each Independent Nominee in being elected to serve
as a director of the Company and other than as elsewhere described in this Proxy
Statement.
THE SOLICITING PERSONS RECOMMEND A VOTE FOR THE ELECTION OF THE INDEPENDENT
NOMINEES.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Proposal No. 1-
Election of the Independent Nominees as Directors of the Company
The Company's Board of Directors currently consists of seven directors
divided into three classes having staggered three-year terms. The terms of the
three incumbent Class I directors expire at the Annual Meeting. On March 11,
2009, Spinnaker, one of the Pennant Entities, gave notice to the Company of its
intention to nominate the Independent Nominees for election at the Annual
Meeting as two of the three Class I directors of the Company.
The Company has nominated three incumbent directors to stand for
re-election at the Annual Meeting. By voting on the GOLD proxy card, you will be
able to vote at the Annual Meeting for three candidates - the two Independent
Nominees and the Company Nominee other than Mr. Edwards and Mr. Krongard. We are
soliciting for this third Company Nominee rather than for Mr. Edwards or Mr.
Krongard because, as described above, we believe that as Chief Executive Officer
and Non-Executive Chairman, respectively, Messrs. Edwards and Krongard bear
significant responsibility for a number of the self-inflicted problems facing
the Company and because we have lost confidence in their ability to effectively
and expeditiously handle future challenges and opportunities for the Company.
Each of the Independent Nominees has consented to being named as a nominee
in this Proxy Statement. Pennant does not expect that either of the Independent
Nominees will be unable to stand for election, but in the event that a vacancy
in the slate of Independent Nominees should occur, Pennant may seek to nominate
a replacement nominee to fill the vacancy in the slate. In any such case,
Pennant will supplement this Proxy Statement and the persons named as proxies on
the GOLD proxy card will use the discretionary authority granted thereby to vote
for such replacement nominee. If, however, a vacancy in the slate of Independent
Nominees occurs and Pennant cannot supplement this Proxy Statement at least 5
business days before the Annual Meeting, the persons named as proxies on the
GOLD proxy cards will use the discretionary authority granted thereby either to
vote for the Independent Nominee who is unable to stand for election or they
will not vote to fill that particular Board seat.
Biographical Information Regarding the Independent Nominees
The following information concerning age, principal occupation and business
experience during the last five years, and current directorships has been
furnished to Pennant by the Independent Nominees, each of whom has consented to
serve on the Board of Directors if elected. For information regarding the
nominees designated by the Company, please refer to the Company's definitive
proxy statement.
Allan Z. Loren, age 70, currently serves as an Executive Coach to Chief
Executive Officers. Mr. Loren served as both Chairman and Chief Executive
Officer of D&B from 2000 through 2004 and as Chairman in 2005. Mr. Loren was
instrumental in refocusing D&B's business and creating and implementing D&B's
"Blueprint for Growth" strategy. During his five years leading the company, Mr.
Loren grew D&B's earnings per share from $1.71 to $2.98, increased free cash
flow from $164 million to $239 million per year, and produced a total
stockholder return of 378%. Prior to joining D&B, Mr. Loren served as Executive
Vice President and Chief Information Officer of American Express from 1994 to
2000, as President and Chief Executive Officer of Galileo International from
8
1991 to 1994, as President of Apple Computer USA from 1988 to 1990 and as Chief
Information Officer of Apple Computer from 1987 to 1988. Mr. Loren was also the
Chief Administrative Officer and Chief Information Officer of Cigna from 1979 to
1987 and 1971 to 1987, respectively. Mr. Loren graduated with a B.S. in
Mathematics from Queens College, City University of New York in 1960 and
undertook graduate studies in mathematics and statistics at American University
from 1961 to 1964. Mr. Loren also attended Stanford University's Executive
Management Program in 1979. Mr. Loren currently serves on the board of directors
of Fair Isaac Corporation and on the Board of Trustees of Queens College, City
University of New York as a director. Mr. Loren previously served on the board
of directors of Hershey Foods, Reynolds & Reynolds, U.S. Cellular, and Venator
Group (currently known as Foot Locker, Inc.). He also served as Distinguished
Executive in Residence at Rutgers University Business School.
Gregory J. Parseghian, age 48, is currently a private investor and from
September 2007 through December 2008 served as Director of Research for Brahman
Capital, a hedge fund managing in excess of $1 billion of its clients' capital.
Mr. Parseghian has substantial experience in the financial and mortgage
industries, having served in executive positions at First Boston Corp.,
BlackRock Financial Management and Salomon Brothers from 1982 through 1995.
During that time, Mr. Parseghian was ranked first on Institutional Investor
magazine's fixed income and mortgage strategy polls on six occasions. In 1996,
Mr. Parseghian became Chief Investment Officer of Freddie Mac and served in that
position until June 2003. As Chief Investment Officer of Freddie Mac, Mr.
Parseghian led a team of more than 200 professionals responsible for management
of that firm's $600 billion retained mortgage portfolio, its $120 billion
non-mortgage contingency and liquidity portfolio, its issuance of debt and
mortgage-backed securities and its asset/liability risk management. In June
2003, Mr. Parseghian was promoted by Freddie Mac's board of directors to Chief
Executive Officer following an investigation into accounting irregularities
under his predecessor. He left Freddie Mac at the end of 2003 after Freddie
Mac's board of directors was directed to seek his resignation by that company's
federal regulator, the Office of Federal Housing Enterprise Oversight, which
itself was under pressure by Congress for failing to detect the accounting
irregularities at Freddie Mac. Mr. Parseghian currently serves on the board of
directors of the Armenian Church Endowment Fund and The Langley School, both of
which are non-profit organizations, and Everquest Financial, Ltd., a specialty
finance holding company. Mr. Parseghian holds a B.S. in Economics and a Masters
in Business Administration in Finance from The Wharton School, University of
Pennsylvania.
If elected, each Independent Nominee would receive such directors' fees as
may be payable by the Company in accordance with its practice at the time.
Except as described below, there are no understandings or arrangements between
the Pennant Entities and any Independent Nominee relating to the matters
contemplated by this Proxy Statement. The Funds have entered into agreements
with each of the Independent Nominees pursuant to which the Funds have agreed to
indemnify and hold harmless each Independent Nominee from any and all damages,
settlements, losses, fees, costs and expenses incurred by such Independent
Nominee resulting from any claim, action or demand that arises out of or in any
way relates to running for election to the Board of Directors, to the extent not
otherwise indemnified by the Company or any other source of Company-related
indemnification or insurance. This indemnity will apply, however, only so long
as the action or failure to act by such Independent Nominee does not constitute
fraud, bad faith, willful misconduct or gross negligence as found by a court of
competent jurisdiction.
Additional information concerning the Independent Nominees is set forth in
Appendix A to this Proxy Statement.
Proposal No. 2 - Ratification of The Appointment of Independent Auditors
According to the Company Proxy Statement, the Company is soliciting proxies
for the ratification of the selection of Deloitte & Touche LLP as the Company's
independent registered public accounting firm for the fiscal year ended December
31, 2009. Please refer to the Company's definitive proxy statement for a
detailed discussion of this proposal, including various arguments in favor of
and against such proposal. We urge you to vote on the GOLD proxy card FOR the
ratification of the selection of Deloitte & Touche LLP as the Company's
independent registered public accounting firm for the fiscal year ended December
31, 2009. If you do not indicate any voting instruction, we will vote the GOLD
proxy card FOR this proposal.
9
INFORMATION ABOUT THE SOLICITING PERSONS
The present principal business of Pennant Capital is to serve as investment
manager or adviser to a variety of funds (including Spinnaker, Onshore,
Offshore, Qualified, Windward LP and Windward Ltd.) and to control the investing
and trading in securities of such funds. Mr. Fournier is the managing member of
Pennant Capital and controls its business activities. The present principal
occupation of Mr. Fournier is to act as the managing member of Pennant Capital
and control its business activities. The principal business of each of
Spinnaker, Onshore, Offshore, Qualified, Windward LP and Windward Ltd is to
invest and trade in securities. The present principal occupation of Mr. Loren is
to serve as an Executive Coach to Chief Executive Officers. Mr. Parseghian is
currently a private investor.
Appendix A includes (i) the name and business address of each of the
Soliciting Persons (including the Independent Nominees), and (ii) the class and
number of securities of the Company which are owned beneficially, directly or
indirectly, by each of the Soliciting Persons or any of their respective
affiliates or associates (as defined in Rule 14a-1 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")).
Appendix B sets forth, with respect to all securities of the Company
purchased or sold by a Soliciting Persons within the past two years, the date on
which they were purchased or sold and the amount purchased or sold on such date.
Each Soliciting Person used its own investment capital to purchase all such
securities listed therein as purchased by such Soliciting Person.
All of the Common Stock and 4% Convertible Senior Notes due 2012 of the
Company (the "Convertible Notes") set forth in Appendix B were purchased in
margin accounts from the Funds' general working capital and margin account
borrowings loaned in the ordinary course of business by various financial
institutions, which have extended margin credit to the Funds in amounts from
time to time required to open or carry the aggregate positions in such margin
accounts, subject to applicable Federal margin regulations, stock exchange rules
and each firm's credit policies. The aggregate positions held in such margin
accounts (including the shares of Common Stock and securities of other issuers)
are pledged as collateral security for the repayment of any debit balances that
may be outstanding from time to time in such accounts. The Shares currently held
of record by Spinnaker are neither subject to margin credit nor pledge.
Except as set forth below, none of the Soliciting Persons is, or has been
within the past year, a party to any contract, arrangement or understanding with
any person with respect to any securities of the Company, including, but not
limited to, joint ventures, loan or option arrangements, puts or calls,
guarantees against loss or guarantees of profits, division of losses or profits,
or the giving or withholding of proxies.
The Funds have entered into several standardized, cash-settled swap
agreements with Morgan Stanley Capital Services, Inc. as the counterparty (the
"Swap Agreements"), for which the Common Stock is the reference security, with
respect to an aggregate of 1,505,700 notional shares of Common Stock. Under each
Swap Agreement, the Funds have taken the "long" side of the swap and therefore
are entitled to the economic benefits, and are subject to the economic risks, of
owning the Common Stock, but have no rights or powers with respect to any shares
of Common Stock as a result of the agreement. None of the Pennant Entities is
the beneficial owner, within the meaning of Section 13(d) of the Exchange Act,
of any shares of Common Stock as a result of the Swap Agreements, and,
accordingly, the number of shares of Common Stock stated as beneficially owned
by the Pennant Entities herein does not include any ownership as a result of the
Swap Agreements. Information with respect to the Swap Agreements, including
reference prices and expiration dates, is set forth in Appendix B.
On March 4, 2009, Pennant received a determination letter from the State of
New York Insurance Department confirming that the solicitation and voting of
proxies to elect two independent nominees to the Board would not cause the
Pennant Entities to "control" Atrium within the meaning of New York Insurance
Law ss.1501(a)(2) and permitting the Pennant Entities, among other things, to
solicit revocable proxies for use at the Annual Meeting provided, that (i) the
proxies are revocable; (ii) the proxies are limited in duration and will be
valid only until the conclusion of the Annual Meeting; (iii) the proxies are
limited in scope, in that they will not provide the Pennant Entities with
discretionary authority as to the casting of votes in the election of directors;
(iv) the Pennant Entities maintain their ownership of the voting stock below
10%; (v) the Pennant Entities maintain a total economic interest in the Company
of less than 15%; (vi) the Pennant Entities will have no right to replace any
independent nominee that may resign or leave the Board for any reason; (vii) the
Pennant Entities will not have any special right of access to the independent
nominees, and will not seek to obtain any confidential Company
10
information from the independent nominees, if they are elected to the Board;
(viii) neither the Pennant Entities nor any of their personnel, agents, or
designees will seek or accept a seat on the Board or observer rights to Board
meetings or proceedings; (ix) the Pennant Entities will not enter into business
transactions with the Company without the prior approval of the Department; and
(x) the Pennant Entities will not enter into any agreements with any other
stockholders of the Company to act in concert with respect to the acquisition,
holding, voting or disposition of the Company's voting stock.
No Soliciting Person (including any Independent Nominee) or, to the best
knowledge of the Soliciting Persons, any associate thereof has entered into any
agreement or has any arrangement or understanding with any person respecting any
future employment with the Company or any of its affiliates or respecting any
future transactions to which the Company or any of its affiliates will or may be
a party.
Additional information concerning the Soliciting Persons is set forth in
Appendix A and Appendix B to this Proxy Statement.
SOLICITATION; EXPENSES
Proxies may be solicited by mail, advertisement, telephone, facsimile, the
Internet, telegraph and/or personal solicitation. No additional compensation
will be paid to the Independent Nominees or the other Soliciting Persons for the
solicitation of proxies. Banks, brokerage houses and other custodians, nominees
and fiduciaries will be requested to forward the Soliciting Persons'
solicitation materials to their customers for whom they hold shares, and Pennant
will reimburse them for their reasonable out-of-pocket expenses.
In connection with the solicitation of proxies, Pennant Capital may employ
one or more of its investment professionals to assist in its solicitation of
security holders. Such investment professionals may be involved in personal
solicitation by Pennant Capital of certain security holders but will not be paid
any amounts for such solicitation in addition to their regular compensation from
Pennant Capital.
Pennant Capital, on behalf of the Soliciting Persons, has retained
MacKenzie Partners, Inc. (the "Soliciting Agent") to assist in the solicitation
of proxies and for related services. In connection with its retention of the
Soliciting Agent, Pennant Capital has agreed to pay the Soliciting Agent a fee
of up to $75,000. In addition, Pennant Capital has agreed that it will reimburse
the Soliciting Agent for its reasonable out-of-pocket expenses and indemnify it
in respect of certain claims in connection with its retention. Pennant Capital
expects that approximately 40 persons will be used by the Soliciting Agent in
its solicitation efforts.
The entire expense of preparing, assembling, printing and mailing this
Proxy Statement and related materials and the cost of soliciting proxies will be
borne by the Funds. In the event the Independent Nominees are elected to the
Board at the Annual Meeting, Pennant Capital does not intend to seek
reimbursement of such expenses from the Company.
Pennant Capital currently estimates that the total expenditures relating to
this proxy solicitation incurred by the Soliciting Persons will be approximately
$600,000, approximately $275,000 of which has been incurred to date.
VOTING AND PROXY PROCEDURES
The Soliciting Persons believe that the Independent Nominees should be
elected at the Annual Meeting because they will bring to the Board substantial
mortgage industry experience and a proven track record of creating stockholder
value and implementing change. Pennant believes that this experience and track
record, together with a new voice and fresh perspective on the Board that the
Independent Nominees can provide, will best serve the interests of the Company
and its stockholders. THE SOLICITING PERSONS RECOMMEND A VOTE FOR THE ELECTION
OF THE NOMINEES.
How do I vote by proxy?
For the proxy solicited hereby to be voted, the GOLD proxy card to be
supplied by the Soliciting Persons must be signed, dated and returned to
Soliciting Persons, c/o MacKenzie Partners, Inc. in the enclosed envelope in
11
time to be voted at the Annual Meeting. If you wish to vote for the Independent
Nominees, you must submit the GOLD proxy card supplied by the Soliciting Persons
and must NOT submit the Company's proxy card.
What if I am not the record holder of my shares?
If your shares are held in the name of a brokerage firm, bank or nominee,
only that entity can vote those shares and only upon receipt of your specific
instruction. Accordingly, we urge you to contact the person responsible for your
account and instruct that person to execute the GOLD proxy card on your behalf.
If I plan to attend the Annual Meeting, should I still submit a GOLD proxy?
Whether or not you plan to attend the Annual Meeting, we urge you to submit
a GOLD proxy. Returning the enclosed proxy card will not affect your right to
attend and vote at the Annual Meeting.
What if I want to revoke my proxy or change my vote?
Any proxy may be revoked at any time prior to the voting at the Annual
Meeting by (i) submitting a later dated proxy, (ii) giving timely written notice
of such revocation to the Corporate Secretary of the Company or (iii) attending
the Annual Meeting and voting in person. However, if you hold shares in "street
name" (through a broker or bank), you may not vote these shares in person at the
Annual Meeting unless you bring with you a legal proxy from the stockholder of
record. Attendance at the Annual Meeting will not in and of itself constitute a
revocation.
What should I do if I receive a proxy card solicited by the Company?
If you submit a proxy to us by signing and returning the enclosed GOLD
proxy card, do not sign or return the proxy card solicited by the Company or
follow any voting instructions provided by the Company unless you intend to
change your vote, because only your latest dated proxy will be counted.
If you have already sent a proxy card to the Company, you may revoke it and
provide your support to the Independent Nominees by signing, dating and
returning the enclosed GOLD proxy card.
Who can vote?
The Board of Directors has established April 22, 2009 as the Record Date
for the Annual Meeting. Only stockholders of record of Common Stock on the
Record Date, or their duly appointed proxies, will be entitled to vote at the
Annual Meeting. If you are a stockholder of record on the Record Date, you will
retain your voting rights in connection with the Annual Meeting even if you sell
such shares after the Record Date. Accordingly, it is important that you vote
the shares of Common Stock held by you on the Record Date, or grant a proxy to
vote such shares on the GOLD proxy card, even if you sell such shares after such
date.
What is the required quorum?
According to the Company Proxy Statement, the holders of a majority of
shares of Common Stock entitled to vote at the Annual Meeting, present in person
or represented by proxy, constitute a quorum.
What vote is required to elect the Independent Nominees?
According to the Company Proxy Statement:
o directors are elected by the affirmative vote of a plurality of the
shares of Common Stock cast at the Annual Meeting, in person or by
proxy, and entitled to vote in the election of directors; and
o abstentions and broker non-votes will be counted as "present" when
determining whether there is a quorum, but will not be counted toward
a nominee's attainment of a plurality. A majority vote is not
required.
12
How will my shares be voted?
Shares of Common Stock represented by a valid, unrevoked GOLD proxy card
will be voted in accordance with the recommendations made in this Proxy
Statement unless otherwise marked thereon. Except for the proposals set forth in
this Proxy Statement, the Soliciting Persons are not aware of any other matter
to be considered at the Annual Meeting. However, if the Soliciting Persons learn
of any other proposals made before the Annual Meeting, the Soliciting Persons
will either supplement this Proxy Statement and obtain voting instructions from
you on such matters or the persons named as proxies on the GOLD proxy card will
not exercise discretionary authority with respect to your shares on such
matters. However, as to any matters incidental to the conduct of the Annual
Meeting, the persons named as proxies on the GOLD proxy card will vote proxies
solicited hereby in their discretion.
INFORMATION ABOUT THE COMPANY
Based upon documents publicly filed by the Company, the mailing address of
the principal executive offices of the Company is 3000 Leadenhall Road, Mt.
Laurel, NJ 08054.
Appendix C to this Proxy Statement sets forth information obtained from the
Company's public filings related to the beneficial ownership of shares of Common
Stock.
Except as otherwise noted herein, the information in this Proxy Statement
concerning the Company has been taken from or is based upon documents and
records on file with the SEC and other publicly available information. Although
the Soliciting Persons do not have any knowledge indicating that any statement
contained herein is untrue, we do not take any responsibility, except to the
extent imposed by law, for the accuracy or completeness of statements taken from
public documents and records that were not prepared by or on behalf of the
Soliciting Persons, or for any failure by the Company to disclose events that
may affect the significance or accuracy of such information.
OTHER MATTERS
Except for the proposals set forth in this Proxy Statement, the Soliciting
Persons are not aware of any other matter to be considered at the Annual
Meeting. However, if the Soliciting Persons learn of any other proposals made
before the Annual Meeting, the Soliciting Persons will either supplement this
Proxy Statement and obtain voting instructions from you on such matters or the
persons named as proxies on the GOLD proxy card will not exercise discretionary
authority with respect to your shares on such matters. However, as to any
matters incidental to the conduct of the Annual Meeting, the persons named as
proxies on the GOLD proxy card will vote proxies solicited hereby in their
discretion.
Pennant Capital Management, LLC
Pennant Spinnaker Fund LP
Pennant Offshore Partners, Ltd.
Pennant Onshore Partners, LP
Pennant Onshore Qualified, LP
Pennant Windward Fund, LP
Pennant Windward Fund, Ltd.
Alan Fournier
Allan Z. Loren
Gregory J. Parseghian
April __, 2009
13
Appendix A
INFORMATION CONCERNING PARTICIPANTS IN THE PROXY SOLICITATION
Set forth below is (i) the name and business address of each of the
Soliciting Persons (including the Independent Nominees) and (ii) the number of
shares of Common Stock and the aggregate principal amount of the Convertible
Notes owned beneficially by each of the Soliciting Persons as of the date
hereof. Mr. Fournier and Pennant Capital beneficially own Common Stock and
Convertible Notes indirectly pursuant to the arrangements described in the
accompanying Proxy Statement. All of the Funds own their shares of Common Stock
and Convertible Notes directly. As of the date hereof, none of the Soliciting
Persons, directly or indirectly, owns any securities of the Company other than
as set forth herein. Pennant Capital is a Delaware limited liability company;
Spinnaker, Onshore, Qualified and Windward LP are Delaware limited partnerships;
Offshore and Windward Ltd. are Cayman Island companies; and Messrs. Fournier,
Loren and Parseghian are citizens of the United States of America.
------------------------------------------------------------- -----------------------------------------------------
Number of Shares of Common Stock and Aggregate
----------------------------------------------
------------------------------------------------------------ Principal Amount of Convertible Notes Owned
-------------------------------------------
Beneficially and Nature of Beneficial Ownership
-----------------------------------------------
Name and Address of Participant (Percent of Class)
------------------------------- ------------------
------------------------------------------------------------- ----------------------------- -----------------------
Mr. Alan Fournier 5,407,141 Common Stock $25,000,000 aggregate
c/o Pennant Capital Management, LLC (9.97%) through Pennant principal amount of
26 Main Street, Suite 203 Capital and the Funds (1) Convertible Notes (10%)
Chatham, New Jersey 07928 through Pennant Capital
and the Funds (2)
------------------------------------------------------------- ----------------------------- -----------------------
Pennant Capital Management, LLC 5,407,141 Common Stock $25,000,000 aggregate
26 Main Street, Suite 203 (9.97%) through the Funds principal amount of
Chatham, New Jersey 07928 (1) Convertible Notes (10%)
through the Funds (2)
------------------------------------------------------------- ----------------------------- -----------------------
Pennant Spinnaker Fund, LP 228,146 Common Stock $1,435,849 aggregate
c/o Pennant Capital Management, LLC (0.42%) directly (1) principal amount of
26 Main Street, Suite 203 Convertible Notes
Chatham, New Jersey 07928 (0.57%) directly (2)
------------------------------------------------------------- ----------------------------- -----------------------
Pennant Offshore Partners, Ltd. 869,977 Common Stock $4,342,386 aggregate
c/o Pennant Capital Management, LLC (1.60%) directly (1) principal amount of
26 Main Street, Suite 203 Convertible Notes
Chatham, New Jersey 07928 (1.74%) directly (2)
------------------------------------------------------------- ----------------------------- -----------------------
Pennant Onshore Partners, LP 253,723 Common Stock $1,257,193 aggregate
c/o Pennant Capital Management, LLC (0.47%) directly (1) principal amount of
26 Main Street, Suite 203 Convertible Notes
Chatham, New Jersey 07928 (0.50%) directly (2)
------------------------------------------------------------- ----------------------------- -----------------------
Pennant Onshore Qualified, LP 522,992 Common Stock $2,644,115 aggregate
c/o Pennant Capital Management, LLC (0.96%) directly (1) principal amount of
26 Main Street, Suite 203 Convertible Notes
Chatham, New Jersey 07928 (1.06%) directly (2)
------------------------------------------------------------- ----------------------------- -----------------------
Pennant Windward Fund, LP 1,191,058 Common Stock $5,503,827 aggregate
c/o Pennant Capital Management, LLC (2.20%) directly (1) principal amount of
------------------------------------------------------------- ----------------------------- -----------------------
A-1
------------------------------------------------------------- -----------------------------------------------------
Number of Shares of Common Stock and Aggregate
----------------------------------------------
------------------------------------------------------------ Principal Amount of Convertible Notes Owned
-------------------------------------------
Beneficially and Nature of Beneficial Ownership
-----------------------------------------------
Name and Address of Participant (Percent of Class)
------------------------------- ------------------
------------------------------------------------------------- ----------------------------- -----------------------
26 Main Street, Suite 203 Convertible Notes
Chatham, New Jersey 07928 (2.20%) directly (2)
------------------------------------------------------------- ----------------------------- -----------------------
Pennant Windward Fund, Ltd. 2,341,245 Common Stock $9,816,630 aggregate
c/o Pennant Capital Management, LLC (4.32%) directly (1) principal amount of
26 Main Street, Suite 203 Convertible Notes
Chatham, New Jersey 07928 (3.93%) directly (2)
------------------------------------------------------------- ----------------------------- -----------------------
Mr. Allan Z. Loren 0 shares of Common Stock 0 Convertible Notes
110 Central Park South, Apt. 11B
New York, New York 10019
------------------------------------------------------------- ----------------------------- -----------------------
Mr. Gregory J. Parseghian 0 shares of Common Stock 0 Convertible Notes
8121 Spring Hill Farm Drive
McLean, Virginia 22102
------------------------------------------------------------- ----------------------------- -----------------------
(1) The percentages used herein were calculated based on 54,256,294 shares of
Common Stock issued and outstanding as of February 13, 2009, as reported by
the Company in its Annual Report on Form 10-K for the year ended December
31, 2008, as filed with the Commission on March 2, 2009.
(2) The percentages were calculated based on the Company's representation that
Convertible Notes with an aggregate principal amount of $250 million are
issued and outstanding, as reported by the Company in its Annual Report on
Form 10-K for the year ended December 31, 2008, as filed with the
Commission on March 2, 2009.
------------------------------------------------
Other than as set forth in the accompanying Proxy Statement, in the
Appendices hereto or filings of the Soliciting Persons pursuant to Section 13 of
the Exchange Act, to the best knowledge of the Soliciting Persons, none of the
Soliciting Persons (including the Independent Nominees), nor any associate
thereof (as such term is defined in Rule 14a-1 of the Exchange Act) or affiliate
of any Soliciting Person, nor any of their respective family members is either a
party to any transaction or series of transactions since the beginning of the
Company's last fiscal year or has knowledge of any currently proposed
transaction or series of proposed transactions, (i) to which the Company or any
of its affiliates was or is to be a party, (ii) in which the amount involved
exceeds $120,000, and (iii) in which any Soliciting Person or associate thereof
or any member of his or her immediate family has, or will have, a direct or
indirect material interest.
None of the Soliciting Persons (including any Independent Nominee) or any
of their respective affiliates or associates has any material or substantial
interest, direct or indirect, by security holdings or otherwise, in any matter
to be acted upon at the Annual Meeting, other than (i) by reason of their
ownership of shares of Common Stock, (ii) the interest of each Independent
Nominee in being elected to serve as a director of the Company and other than as
elsewhere described in the accompanying Proxy Statement, in the Appendices
hereto or filings of the Pennant Entities pursuant to Section 13 of the Exchange
Act.
No Independent Nominee has failed to file reports related to the Company
that are required by Section 16(a) of the Exchange Act.
None of the corporations or organizations in which any of the Independent
Nominees has conducted his or her principal occupation or employment was a
parent, subsidiary or other affiliate of the Company, and none of the
Independent Nominees holds any position or office with the Company. Under the
rules applicable to companies listed on The New York Stock Exchange, the
independence of directors must be determined by a company's board of directors
on a case by case basis. The Soliciting Persons believe that none of the
Independent Nominees is subject to any of the disqualifying circumstances set
forth in the applicable rules relating to independence.
A-2
Appendix B
TRANSACTIONS IN SECURITIES OF PHH CORPORATION
The following table sets forth information with respect to all purchases
and sales of Common Stock by the Soliciting Persons during the past two years
(numbers in parentheses indicate sales), all of which were transactions in
Common Stock:
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
Date Offshore(1) Onshore(2) Qualified(3) Spinnaker(4) Windward Windward Parseghian(7)
LP(5) Ltd.(6)
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
3/15/2007 15,460 4,210 9,470 5,930 19,830 30,100 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
3/16/2007 3,640 990 2,230 1,400 4,670 7,070 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
4/20/2007 87,320 23,750 53,500 33,500 112,010 169,920 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
4/26/2007 106,320 28,910 65,140 40,780 136,370 206,880 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
4/27/2007 8,020 2,180 4,920 3,080 10,290 15,610 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
4/30/2007 111,390 30,840 68,560 25,920 53,570 81,220 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
6/1/2007 - - - - (9,950) 9,950 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
7/25/2007 26,940 7,350 16,520 9,770 31,220 48,200 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
7/26/2007 9,620 2,620 5,900 3,490 11,150 17,220 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
7/27/2007 9,620 2,620 5,900 3,500 11,160 17,200 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
7/30/2007 3,850 1,050 2,360 1,400 4,460 6,880 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
7/31/2007 4,810 1,310 2,950 1,750 5,580 8,600 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
8/1/2007 59,250 16,130 36,260 15,220 69,250 107,090 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
8/8/2007 26,360 7,450 16,320 6,720 33,150 50,000 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
8/9/2007 28,250 7,980 17,490 7,200 35,520 53,560 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
8/10/2007 10,730 3,030 6,650 2,740 13,500 20,350 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
8/15/2007 9,420 2,660 5,830 2,400 11,840 17,850 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
8/16/2007 24,980 6,830 15,330 8,700 29,150 44,917 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/14/2007 (14,860) (4,060) (9,120) (5,180) (17,350) (26,730) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/17/2007 13,460 3,680 8,260 4,690 15,710 24,200 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/19/2007 (33,900) (9,270) (20,800) (11,810) (39,560) (60,968) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/20/2007 (6,860) (1,880) (4,210) (2,390) (8,010) (12,342) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/24/2007 (16,540) (4,520) (10,150) (5,760) (19,300) (29,730) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/25/2007 (11,540) (3,150) (7,080) (4,020) (13,460) (20,750) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/26/2007 (24,980) (6,830) (15,320) (8,700) (29,150) (44,920) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/27/2007 (11,940) (3,260) (7,330) (4,160) (13,940) (21,470) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
9/28/2007 (7,690) (2,100) (4,720) (2,680) (8,980) (13,830) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/1/2007 (6,210) (1,700) (3,810) (2,160) 17,757 (36,177) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/2/2007 (2,380) (650) (1,460) (830) (2,850) (4,230) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/3/2007 (2,940) (800) (1,810) (1,020) (3,520) (5,210) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/4/2007 (1,920) (530) (1,180) (670) (2,300) (3,400) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/19/2007 5,080 1,390 3,120 1,770 6,070 9,004 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/22/2007 80 20 50 30 90 130 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/24/2007 9,620 2,630 5,900 3,350 11,490 17,010 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/25/2007 9,620 2,630 5,900 3,350 11,490 17,010 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
10/30/2007 9,620 2,620 5,900 3,340 11,480 17,040 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
11/1/2007 4,810 1,310 2,950 1,670 5,740 8,520 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
11/5/2007 4,810 1,310 2,950 1,670 5,740 8,520 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
11/6/2007 - 8,000 - - 68,000 102,000 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
11/7/2007 - - - - 3,750 21,250 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
11/9/2007 16,610 4,680 10,190 5,780 21,130 31,610 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/18/2007 5,260 1,480 3,230 1,830 6,690 10,010 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/19/2007 5,540 1,560 3,400 1,930 7,040 10,530 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/20/2007 11,070 3,120 6,790 3,860 14,080 21,080 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/21/2007 14,770 4,160 9,060 5,140 18,780 28,090 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/26/2007 550 160 340 190 700 1,060 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
B-1
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/27/2007 4,890 1,380 3,000 1,700 6,220 9,310 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/28/2007 2,860 810 1,760 1,000 3,640 5,430 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
12/31/2007 2,770 780 1,700 960 3,520 5,270 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
1/2/2008 - - - - (11,806) 11,806 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
7/23/2008 - - - - - - (4000)
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
8/21/2008 2,070 580 1,270 720 2,600 3,960 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
1/2/2009 (9,059) 6,980 30 - (78,301) 80,350 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
2/2/2009 - - - - 12,800 (12,800) -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
3/2/2009 (76,244) (22,998) (49,324) (119,334) 42,443 225,457 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
4/1/2009 (42,670) (11,599) (39,944) - (43,315) 137,528 -
---------------- -------------- -------------- -------------- --------------- ------------- ------------- ----------------
----------------------------------
(1) Pennant Offshore Partners, Ltd.
(2) Pennant Onshore Partners, LP
(3) Pennant Onshore Qualified, LP
(4) Pennant Spinnaker Fund, LP
(5) Pennant Windward Fund, LP
(6) Pennant Windward Fund, Ltd.
(7) Mr. Gregory J. Parseghian
B-2
TRANSACTIONS IN CONVERTIBLE NOTES OF PHH CORPORATION
The following table sets forth information with respect to all purchases
and sales of the Convertible Notes by the Participants during the past two years
(numbers in parentheses indicate sales):
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
Date Offshore(1) Onshore(2) Qualified(3) Spinnaker(4) Windward Windward Ltd(6)
LP(5)
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
3/28/2008 1,570,000 440,000 960,000 550,000 1,980,000 3,000,000
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
3/28/2008 1,660,000 470,000 1,020,000 580,000 2,090,000 3,180,000
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
3/28/2008 190,000 50,000 110,000 70,000 230,000 350,000
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
3/28/2008 650,000 180,000 400,000 220,000 810,000 1,240,000
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
4/2/2008 555,000 155,460 339,550 193,640 696,820 1,059,530
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
1/6/2009 (45,000) 30,000 - - (277,000) 292,000
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
3/2/2009 265,000 80,000 172,000 436,000 (193,000) (760,000)
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
4/1/2009 (502,614) (148,267) (357,435) (613,791) 167,007 1,455,100
--------------- -------------- ------------- -------------- ---------------- -------------- ------------------
----------------------------------
(1) Pennant Offshore Partners, Ltd.
(2) Pennant Onshore Partners, LP
(3) Pennant Onshore Qualified, LP
(4) Pennant Spinnaker Fund, LP
(5) Pennant Windward Fund, LP
(6) Pennant Windward Fund, Ltd.
B-3
SWAP AGREEMENTS WITH RESPECT TO PHH CORPORATION
COMMON STOCK
The following table sets forth information with respect to standardized,
cash-settled swap agreements entered into between the Funds and Morgan Stanley
Capital Services, Inc., for which the Common Stock is the reference security,
upon the terms described in the accompanying letter. The numbers in the table
indicate the date of each swap agreement, the number of notional shares of
Common Stock covered by each of the agreements, the reference price for the
Common Stock covered by each agreement and the termination date of each
agreement.
------------------- ------------------- ------------------- --------------------
Date Notional Shares Reference Price Termination Date*
------------------- ------------------- ------------------- --------------------
8/29/2008 250,000 15.30 9/2/2010
------------------- ------------------- ------------------- --------------------
9/2/2008 113,600 15.86 9/4/2010
------------------- ------------------- ------------------- --------------------
9/3/2008 50,900 15.95 9/7/2010
------------------- ------------------- ------------------- --------------------
9/4/2008 85,500 15.49 9/8/2010
------------------- ------------------- ------------------- --------------------
9/15/2008 100,000 14.01 9/14/2010
------------------- ------------------- ------------------- --------------------
9/16/2008 50,000 13.77 9/15/2010
------------------- ------------------- ------------------- --------------------
9/17/2008 50,000 13.46 9/22/2010
------------------- ------------------- ------------------- --------------------
9/18/2008 5,000 12.97 9/23/2010
------------------- ------------------- ------------------- --------------------
9/29/2008 100,000 12.73 10/4/2010
------------------- ------------------- ------------------- --------------------
9/30/2008 19,400 12.23 10/5/2010
------------------- ------------------- ------------------- --------------------
10/1/2008 50,000 11.75 10/6/2010
------------------- ------------------- ------------------- --------------------
10/2/2008 50,000 9.25 10/7/2010
------------------- ------------------- ------------------- --------------------
10/3/2008 80,600 8.99 10/8/2010
------------------- ------------------- ------------------- --------------------
10/6/2008 219,700 8.25 10/11/2010
------------------- ------------------- ------------------- --------------------
10/7/2008 50,000 8.74 10/12/2010
------------------- ------------------- ------------------- --------------------
10/8/2008 200,000 8.27 10/13/2010
------------------- ------------------- ------------------- --------------------
10/9/2008 31,000 7.32 10/14/2010
------------------- ------------------- ------------------- --------------------
----------------------------------
* Swap agreement terminates on this date or upon written notice of either party
B-4
Appendix C
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of the Soliciting Persons
based on a review of publicly available information filed with the SEC, each
person reported to own beneficially more than 5% of the outstanding Common
Stock, the number of shares of outstanding Common Stock beneficially owned by
each such person and the number of shares of outstanding Common Stock
beneficially owned by each of the Company's directors and executive officers and
all directors and executive officers as a group as of March 31, 2009:
----------------------------------------------------------------------------------------- ------------------ ---------------------
Shares Percent of
Beneficially Common Stock
Name Owned(1) Outstanding(2)
---- -------- --------------
----------------------------------------------------------------------------------------- ------------------ ---------------------
Principal Stockholders:
----------------------------------------------------------------------------------------- ------------------ ---------------------
Pennant Capital Management, LLC
40 Main Street
Chatham, NJ 07928 5,407,141 9.97 %
----------------------------------------------------------------------------------------- ------------------ ---------------------
Wellington Management Company, LLP(3)
75 State Street
Boston, MA 02109................................................................. 5,361,001 9.88 %
----------------------------------------------------------------------------------------- ------------------ ---------------------
BlackRock, Inc.(4)
40 East 52nd Street
New York, NY 10022............................................................... 5,273,322 9.72 %
----------------------------------------------------------------------------------------- ------------------ ---------------------
Third Point LLC, LLC(5)
390 Park Avenue
New York, NY 10022............................................................... 5,210,000 9.60 %
----------------------------------------------------------------------------------------- ------------------ ---------------------
Dimensional Fund Advisors LP(6)
Palisades West, Building One
6300 Bee Cave Road
Austin, TX 78746................................................................. 3,578,659 6.60 %
----------------------------------------------------------------------------------------- ------------------ ---------------------
Elm Ridge Capital Management, LLC(7)
3 West Main Street, 3rd Floor
Irvington, NY 10533............................................................... 3,329,163 6.13 %
----------------------------------------------------------------------------------------- ------------------ ---------------------
Hotchkis and Wiley Capital Management, LLC(8)
725 South Figueroa Street, 39th Floor
Los Angeles, CA 90017............................................................. 3,187,200 5.87 %
----------------------------------------------------------------------------------------- ------------------ ---------------------
Directors and Named Executive Officers:
----------------------------------------------------------------------------------------- ------------------ ---------------------
Terence W. Edwards(9).................................................................. [449,752] *
----------------------------------------------------------------------------------------- ------------------ ---------------------
George J. Kilroy(10)................................................................... [34,360] *
----------------------------------------------------------------------------------------- ------------------ ---------------------
----------------------------------
* Represents less than one percent.
(1) Based upon information contained in filings made with the SEC. For
purposes of this table, if a person has or shares voting or investment
power with respect to any of the Company's Common Stock, then such
common stock is considered beneficially owned by that person under the
SEC rules. Shares of the Common Stock beneficially owned include
direct and indirect ownership of shares, stock options and restricted
stock units granted to executive officers and director restricted
stock units granted to directors which are vested or are expected to
vest within 60 days of March 31, 2009. Unless otherwise indicated in
the table, the address of all listed stockholders is c/o PHH
Corporation, 3000 Leadenhall Road, Mt. Laurel, New Jersey, 08054.
(2) Based upon 54,256,294 shares of Common Stock outstanding as of
February 13, 2009 as reported in the Company's Annual Report on Form
10-K for the period ended December 31, 2008 filed with the SEC on
March 2, 2009. Shares which vest or are expected to vest within 60
days of March 31, 2009 are deemed outstanding for the purpose of
computing the percentage ownership for the named stockholder.
(3) Reflects beneficial ownership of shares of Common Stock as reported in
a Schedule 13G filed with the SEC by Wellington Management Company,
LLP on behalf of itself and its affiliates on February 17, 2009.
C-1
(4) Reflects beneficial ownership of shares of Common Stock as reported in
a Schedule 13G filed with the SEC by BlackRock, Inc. on behalf of
itself and its affiliates on February 10, 2009.
(5) Reflects beneficial ownership of shares of Common Stock as reported in
a Schedule 13G/A filed with the SEC by Third Point LLC on behalf of
itself and its affiliates on January 5, 2009.
(6) Reflects beneficial ownership of shares of Common Stock as reported in
a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP on
behalf of itself and its affiliates on February 9, 2009.
(7) Reflects beneficial ownership of shares of Common Stock as reported in
a Schedule 13G filed with the SEC by Elm Ridge Capital Management, LLC
on behalf of itself and its affiliates on February 13, 2009.
(8) Reflects beneficial ownership of shares of Common Stock as reported in
a Schedule 13G/A filed with the SEC by Hotchkis and Wiley Capital
Management, LLC on behalf of itself and its affiliates on February 13,
2009.
(9) Represents [77,731] shares of Common Stock directly held by Mr.
Edwards, [5,000] shares of Common Stock held by his wife and
exercisable options to purchase [367,021] shares of Common Stock.
(10) Represents [30,257] shares of Common Stock directly held by Mr.
Kilroy, [635] shares of Common Stock held in his 401(k) account and
exercisable options to purchase [3,468] shares of Common Stock.
C-2
----------------------------------------------------------------------------------------- ------------------ ---------------------
Shares Percent of
Beneficially Common Stock
Name Owned(1) Outstanding(2)
---- -------- --------------
----------------------------------------------------------------------------------------- ------------------ ---------------------
Directors and Named Executive Officers:
----------------------------------------------------------------------------------------- ------------------ ---------------------
Mark R. Danahy(11)..................................................................... [95,681] *
----------------------------------------------------------------------------------------- ------------------ ---------------------
William F. Brown(12)................................................................... [85,926] *
----------------------------------------------------------------------------------------- ------------------ ---------------------
A.B. Krongard(13)...................................................................... [32,139] *
----------------------------------------------------------------------------------------- ------------------ ---------------------
Ann D. Logan(13)....................................................................... [16,082] *
----------------------------------------------------------------------------------------- ------------------ ---------------------
James W. Brinkley(14).................................................................. [15,812] *
----------------------------------------------------------------------------------------- ------------------ ---------------------
Jonathan D. Mariner(13)................................................................ [15,288] *
Francis J. Van Kirk(13)................................................................ [13,927] *
Sandra Bell............................................................................ -- --
All Directors and Executive Officers as a Group (10 persons)........................... [758,967] [1.40] %
----------------------------------
* Represents less than one percent.
(11) Represents [16,125] shares of Common Stock directly held by Mr. Danahy
and exercisable options to purchase [79,556] shares of Common Stock.
(12) Represents [18,230] shares of Common Stock directly held by Mr. Brown
and exercisable options to purchase[67,696] shares of Common Stock.
(13) Represents Director Restricted Stock Units of the Company which are
immediately vested and represent a right to receive one share of
Common Stock for each Director Restricted Stock Unit payable one year
after cessation of service as a member of the Board of Directors. A
portion of Mr. Krongard's Director Restricted Stock Units are payable
in shares of Common Stock 200 days after cessation of service as a
director.
(14) Represents [15,562] Director Restricted Stock Units and [250] shares
of Common Stock held by Brinkley Investments, LLC, a partnership among
Mr. Brinkley, his wife and his children.
C-3
PRELIMINARY COPIES
GOLD PROXY CARD
PHH CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF PENNANT CAPITAL MANAGEMENT, LLC; PENNANT
SPINNAKER FUND LP; PENNANT OFFSHORE PARTNERS, LTD.; PENNANT ONSHORE PARTNERS,
LP; PENNANT ONSHORE QUALIFIED, LP; PENNANT WINDWARD FUND, LP; PENNANT WINDWARD
FUND, LTD.; ALAN FOURNIER; ALLAN Z. LOREN; AND GREGORY J. PARSEGHIAN (THE
"SOLICITING PERSONS").
The undersigned stockholder of PHH Corporation (the "Company") hereby appoints
Alan Fournier and Michael Marone and each of them, attorney, agent and proxy of
the undersigned, each with full power of substitution, to vote all shares of
common stock of the Company that the undersigned would be entitled to cast if
personally present at the 2009 annual meeting of stockholders of the Company (or
at any special meeting held in lieu thereof) and at any adjournment(s) or
postponement(s) thereof, and with discretionary authority as to any other
matters that may properly come before such annual (or special) meeting, all in
accordance with, and to the extent described in, the Proxy Statement of the
Soliciting Persons. The undersigned stockholder hereby revokes any proxy or
proxies heretofore given.
This proxy will be voted as directed by the undersigned stockholder. UNLESS
OTHERWISE MARKED HEREON, THIS PROXY WILL BE VOTED (1) "FOR" THE ELECTION OF
ALLAN Z. LOREN, GREGORY J. PARSEGHIAN AND THE CANDIDATE NOMINATED BY THE BOARD
OF DIRECTORS OF THE COMPANY OTHER THAN A.B. KRONGARD AND TERENCE W. EDWARDS AND
(2) "FOR" THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2009, AND (3) IN ACCORDANCE WITH THE DETERMINATION OF THE
PROXY HOLDERS AS TO OTHER MATTERS, SUBJECT TO ANY LIMITATIONS DESCRIBED IN THE
PROXY STATEMENT OF THE SOLICITING PERSONS. The undersigned stockholder hereby
acknowledges receipt of the Soliciting Persons' Proxy Statement.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS IN THIS EXAMPLE: [X]
Withhold
For Authority
all nominees to vote for
listed all nominees
-------------- --------------
1. Election of Directors -- Class I Nominees:
01 Allan Z. Loren [ ] [ ]
02 Gregory J. Parseghian
For all nominees, except vote withheld from the following:
------------------------------------------------------------------------
The Soliciting Persons intend to use this proxy to vote (i) FOR Messrs. Loren
and Parseghian and (ii) FOR the candidate who has been nominated by the Company
to serve as a director other than A.B. Krongard and Terence W. Edwards.
For Against Abstain
------------ ------------ -----------
2. Proposal to ratify the selection of Deloitte & Touche LLP as the
Company's independent registered public accounting firm for the fiscal
year ending December 31, 2009.
In their discretion, the proxy holders are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournments
or postponements thereof, all in accordance with, and to the extent described
in, the Proxy Statement of the Soliciting Persons.
Please date this proxy and sign your name exactly as it appears on this form.
Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian, or trustee, please add your title
as such. If executed by a corporation, the proxy should be signed by a duly
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
YOUR SIGNATURE ACKNOWLEDGES THE STATEMENTS ON THE REVERSE SIDE OF THIS CARD.
------------------------------------------------------ -----------------
Signature (PLEASE SIGN WITHIN BOX) Date
Title or Authority:
----------------------------------
------------------------------------------------------ -----------------
Signature (PLEASE SIGN WITHIN BOX) Date
Title or Authority:
----------------------------------