UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

 

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

 

Wyndham Worldwide Corporation

(Name of Registrant as Specified In Its Charter)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTICE OF 2008

ANNUAL MEETING

OF SHAREHOLDERS AND

PROXY STATEMENT

 

Wyndham Worldwide Corporation

7 Sylvan Way

Parsippany, New Jersey 07054

 

March 14, 2008

 

Dear Shareholder of Wyndham Worldwide Corporation,

 

You are cordially invited to attend the 2008 Annual Meeting of Shareholders to be held on April 24, 2008, at 2:00 p.m. local time at the Birchwood Manor, 111 North Jefferson Road, Whippany, New Jersey 07981.

 

The annual meeting will begin with voting on the matters set forth in the accompanying notice of annual meeting and proxy statement and discussion on other business matters properly brought before the meeting followed by a brief report on our operations.

 

If you plan to attend the meeting, please follow the instructions provided in the proxy statement. An admission ticket is required for admission to the meeting.

 

Whether or not you plan to attend it is important that your shares be represented and voted at the meeting. To make it easier for you to vote your shares, you have a choice of voting over the Internet or by telephone, or by completing, signing, dating and returning your proxy card in the enclosed envelope. To vote your shares by Internet or telephone please refer to the instructions contained on the enclosed proxy card.

 

We appreciate your continued support of Wyndham Worldwide.

 

Very truly yours,

 

 

Stephen P. Holmes

Chairman and Chief Executive Officer

WYNDHAM WORLDWIDE CORPORATION

 

NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS

 

March 14, 2008

 

To the Shareholders:

 

Wyndham Worldwide Corporation’s 2008 Annual Meeting of Shareholders will be held at the Birchwood Manor, 111 North Jefferson Road, Whippany, New Jersey 07981, on April 24, 2008 at 2:00 p.m. local time for the following purposes:

 

 

The matters specified for voting above are more fully described in the attached proxy statement, which is hereby made a part of this Notice. Only shareholders of record at the close of business on March 3, 2008 will be entitled to notice of and to vote at the meeting and any adjournments.

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 24, 2008: the Proxy Statement and 2007 Annual Report to security holders on Form 10-K are available on our website at http://www.WyndhamWorldwide.com/investors/.

 

By Order of the Board of Directors

 

 

Lynn A. Feldman

Senior Vice President,

Deputy General Counsel and

Corporate Secretary

 

 

Even though you may plan to attend the meeting in person, please vote by telephone or the Internet, or complete and execute the enclosed proxy card and mail it promptly. A return envelope (which requires no postage if mailed in the United States) is enclosed for your convenience. Telephone and Internet voting information is provided on your proxy card. Should you attend the meeting in person, you may revoke your proxy and vote in person.

WYNDHAM WORLDWIDE CORPORATION

 

NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT

 

TABLE OF CONTENTS

 

WYNDHAM WORLDWIDE CORPORATION

 

 

The enclosed proxy materials are being sent at the request of the Board of Directors of Wyndham Worldwide Corporation to encourage you to vote your shares at our 2008 Annual Meeting of Shareholders. This Proxy Statement contains information on matters that will be presented at the meeting and is provided to assist you in voting your shares. References in this proxy statement to “we,” “us,” “our,” and “Wyndham Worldwide” refer to Wyndham Worldwide Corporation and our consolidated subsidiaries.

 

Our 2007 Annual Report on Form 10-K, containing our management’s discussion and analysis of financial condition and results of operations and audited financial statements, together with this proxy statement were distributed together beginning on or about March 21, 2008.

 

The annual meeting will be held on April 24, 2008 at 2:00 p.m. local time at the Birchwood Manor, 111 North Jefferson Road, Whippany, New Jersey 07981.

 

You are being asked to vote on the following:

 

 

We are not aware of any other matters that will be brought before the shareholders for a vote at the annual meeting. If any other matters are properly presented for a vote, the individuals named as proxies will have discretionary authority, to the extent permitted by law, to vote on such matters according to their best judgment.

 

All holders of record of our common stock as of the close of business on March 3, 2008 (the record date) are entitled to vote at the meeting. Each shareholder will have one vote for each share of our common stock held as of the close of business on the record date. As of the record date, 176,993,271 shares of our common stock were outstanding. There is no cumulative voting and the holders of our common stock vote together as a single class.

 

The holders of a majority of the outstanding shares of our common stock entitled to vote at the meeting, or 88,496,637 votes, must be present, in person or by proxy, at the meeting in order to constitute a quorum necessary to conduct the meeting. Abstentions and broker non-votes will be counted for the purposes of establishing a quorum at the meeting.

 

We urge you to vote by proxy even if you plan to attend the meeting so that we will know as soon as possible that a quorum has been achieved.

 

Even if you plan to attend the meeting you are encouraged to vote by proxy. You may vote by proxy in one of the following ways:

 

 

When you vote by proxy, your shares will be voted according to your instructions. If you sign your proxy card, vote by Internet or by telephone, but do not specify how you want your shares to be voted, they will be voted as the Board recommends.

 

If your shares are registered in the name of a bank, broker or other nominee, follow the proxy instructions on the form you receive from the nominee. The availability of telephone and Internet proxy will depend on the nominee’s proxy processes. However, you may not vote these shares in person at the meeting unless you bring with you a legal proxy from the stockholder of record.

 

For participants in the Wyndham Worldwide Corporation Employee Savings Plan, with shares of our common stock credited to their accounts, voting instructions for the trustees of the plan are also being solicited through this proxy statement. In accordance with the provisions of the plan, the trustee will vote shares of our common stock in accordance with instructions received from the participants to whose accounts the shares are credited.

 

The Board recommends the following votes:

 

 

In the election of directors, the affirmative vote of a plurality of the votes present in person or by proxy and entitled to vote at the meeting is required. In other words, the director nominees receiving the greatest number of votes will be elected. Abstentions will have no effect on the outcome of the vote.

 

For the proposal to ratify the selection of Deloitte & Touche LLP to serve as our independent registered public accounting firm, the affirmative vote of the holders of a majority of the shares represented at the meeting in person or by proxy and entitled to vote on the proposal will be required for approval. An abstention will have the effect of a vote against this proposal.

 

If your shares are registered in the name of a bank, broker or other nominee and you do not give your broker or other nominee specific voting instructions for your shares, under rules of the New York Stock Exchange your record holder has discretion to vote your shares on proposals relating to what are deemed to be “routine” matters, which include the election of directors and the ratification of auditors described in this proxy statement, and do not have discretion to vote on proposals relating to what are deemed to be “non-routine” matters. A “broker non-vote” occurs when a broker or other nominee submits a proxy that states that the broker does not vote for some or all of the proposals,

because the broker has not received instructions from the beneficial owner on how to vote on the proposals and does not have discretionary authority to vote in the absence of instructions.

 

Although broker non-votes will be considered as represented for purposes of determining a quorum, broker non-votes are not counted in the tabulation of the voting results for the election of directors or the ratification of our auditors. Thus, a broker non-vote will make a quorum more readily obtainable and will not count as a vote against a proposal that requires a majority of the votes represented at the meeting.

 

Attendance at the meeting will be limited to shareholders as of the record date, their authorized representatives and guests of Wyndham Worldwide. Admission will be by ticket only. For registered shareholders, please check the appropriate box on the proxy card and retain the bottom portion of the card as your admission ticket. Beneficial owners with shares held through a bank, broker or other nominee should request tickets in writing from the Corporate Secretary of Wyndham Worldwide Corporation, 7 Sylvan Way, Parsippany, New Jersey 07054, and include proof of ownership, such as a bank or brokerage firm account statement or letter from the broker, trustee, bank or nominee holding their stock, confirming beneficial ownership. Shareholders who do not obtain tickets in advance may obtain them on the meeting date at the registration desk upon verifying his or her stock ownership as of the record date. In accordance with our security procedures, all persons attending the meeting must present a picture identification along with their admission ticket or proof of beneficial ownership in order to gain admission. Admission to the meeting will be expedited if tickets are obtained in advance. Tickets may be issued to others at our discretion.

 

You may change or revoke your proxy at any time prior to the voting at the meeting by submitting a later dated proxy, by entering new instructions by Internet or telephone, by giving timely written notice of such change or revocation to the Corporate Secretary or by attending the meeting and voting in person and requesting that your prior proxy not be used.

 

Mellon Investor Services LLC has been retained to assist in soliciting proxies at a cost of $11,500 plus reasonable expenses. Proxies may also be solicited by our officers, directors and employees personally, by mail, telephone or other electronic means. We will pay all costs relating to the solicitation of proxies. We will also reimburse brokers, custodians, nominees and fiduciaries for reasonable expenses in forwarding proxy materials to beneficial owners of our common stock.

 

Shareholders interested in presenting a proposal for inclusion in our proxy statement and proxy relating to our 2009 Annual Meeting of Shareholders may do so by following the procedures prescribed in Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and our By-Laws. To be eligible for inclusion in next year’s proxy statement, shareholder proposals must be received by the Corporate Secretary at our principal executive offices no later than the close of business on November 13, 2008. In general, any shareholder proposal to be considered at next year’s annual meeting, but not included in the proxy statement, must be submitted in writing to and received by the Corporate Secretary at our principal executive offices not earlier than the close of business on December 28, 2008 and not later than the close of business on January 27, 2009. However, if the date of the 2009 Annual Meeting of Shareholders is not within 30 days before or after April 24, 2009, then a shareholder will be able to submit a proposal for consideration at the annual meeting not later than the 10th day following the day on which public disclosure of the date of the annual meeting was made or such notice of the date of such annual meeting was mailed, whichever occurs first. Any notification to bring any proposal before the 2008 Annual Meeting of the Shareholders must comply

with the requirements of our By-Laws. A shareholder may obtain a copy of our By-Laws on our website or by writing to our Corporate Secretary.

 

Our Corporate Governance Committee will take into consideration nominees for election to the Board submitted by shareholders in accordance with the criteria and procedures described in this proxy statement under “Director Nomination Process.” The Corporate Governance Committee will also consider shareholder recommendations for candidates to the Board sent to the Committee c/o the Corporate Secretary. In order to submit a nomination or a recommendation, a shareholder must comply with provisions of applicable law and our By-Laws.

 

The SEC has adopted rules governing the delivery of annual disclosure documents that permit us to send a single set of our annual report and proxy statement to any household at which two or more shareholders reside if we believe that the shareholders are members of the same family. This rule benefits both shareholders and us by reducing the volume of duplicate information received and our expenses. Each shareholder will continue to receive a separate proxy card. If your household received a single set of disclosure documents for this year, but you would prefer to receive your own copy, or if you share an address with another shareholder and together both of you wish to receive only a single set of our annual disclosure documents, please contact our transfer agent, BNY Mellon Shareowner Services, by calling their toll-free number (866) 540-5760 or through their website at www.bnymellon.com.

 

Strong corporate governance is an integral part of our core values. We are committed to having sound corporate governance principles and practices. Please visit our website at www.WyndhamWorldwide.com under the Investor Center page for the Board’s Corporate Governance Guidelines and Director Independence Criteria, the Board-approved charters for the Audit, Compensation and Corporate Governance committees and related information. These guidelines and charters may be obtained by writing to our Corporate Secretary at Wyndham Worldwide Corporation, 7 Sylvan Way, Parsippany, New Jersey 07054.

 

 

Our Board has adopted Corporate Governance Guidelines that, along with the charters of the Board committees, Director Independence Criteria and Code of Business Conduct and Ethics for Directors, provide the framework for our governance. The governance rules for companies listed on the New York Stock Exchange and those contained in the Sarbanes-Oxley Act of 2002 and related regulations are reflected in the guidelines. The Board will review these principles and other aspects of governance periodically. The Corporate Governance Guidelines are available on the Investor Center page of our website at www.WyndhamWorldwide.com.

 

 

The Board adopted the Director Independence Criteria set out below for its evaluation of the materiality of director relationships with us. The Director Independence Criteria contain independence standards that exceed the independence standards specified in the listing standards of the New York Stock Exchange. The Director Independence Criteria are available on the Investor Center page of our website at www.WyndhamWorldwide.com.

 

A director who satisfies all of the following criteria shall be presumed to be independent under our Director Independence Criteria:

 

 

 

The Corporate Governance Guidelines and Director Independence Criteria provide for director independence standards that meet or exceed those of the New York Stock Exchange. These standards require the Board to affirmatively determine that each director has no material relationship with Wyndham Worldwide other than as a director.

 

In accordance with these standards and criteria, the Board undertook its annual review of the independence of its directors. During this review, the Board considered whether there are any relationships between each director or any member of his or her immediate family and us and our subsidiaries. The Board also considered whether there were any transactions or relationships between directors or any member of their immediate family or any entity of which a director or an immediate family member is an executive officer, general partner or significant equity holder and us. The purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director is independent.

 

As a result of this review, the Board affirmatively determined that the following directors are independent of Wyndham Worldwide and its management as required by the New York Stock Exchange listing standards and the Director Independence Criteria: Myra J. Biblowit, George

Herrera, The Right Honourable Brian Mulroney, Pauline D.E. Richards and Michael H. Wargotz. Under New York Stock Exchange rules, Mr. Buckman, as a former executive officer of our former parent corporation, Cendant Corporation (now Avis Budget Group), may not be deemed to be independent until August 2009, three years from the effective date of the spin-off. All members of the Audit, Compensation and Corporate Governance committees are independent directors as required by the New York Stock Exchange listing standards, SEC rules as applicable and the Director Independence Criteria.

 

The Board follows a number of procedures to review, and if necessary and appropriate, ratify related party transactions. We maintain a written policy governing related party transactions that requires board approval of related party transactions exceeding $10,000. Each Board member answers a questionnaire designed to disclose conflicts and related party transactions. We also review our internal records for related party transactions. Based on a review of these standards and materials, none of the directors determined by the Board to be independent had or has any relationship with us other than as a director. Accordingly, the Board did not need to consider any director relationship with us to make its determination of director independence.

 

 

The following describes our Board Committees. The composition of the Committees is provided immediately after.

 

Audit Committee

 

Responsibilities include:

 

 

All members of the Audit Committee are independent directors under the Board’s Director Independence Criteria and applicable regulatory and listing standards. The Board in its business judgment has determined that each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements in accordance with applicable listing standards. The Board has also determined that both Pauline D.E. Richards and Michael H. Wargotz are audit committee financial experts within the meaning of applicable SEC rules.

 

See the Audit Committee Report below. The Audit Committee Charter is available on the Investor Center page of our website at www.WyndhamWorldwide.com.

 

Compensation Committee

 

Responsibilities include:

 

 

All members of the Compensation Committee are independent directors under the Board’s Director Independence Criteria and applicable regulatory and listing standards.

 

See the Compensation Committee Report below. The Compensation Committee Charter is available on the Investor Center page on our website at www.WyndhamWorldwide.com.

 

Corporate Governance Committee

 

Responsibilities include:

 

 

All members of the Corporate Governance Committee are independent directors under the Board’s Director Independence Criteria and applicable regulatory and listing standards.

 

The Corporate Governance Committee Charter is available on the Investor Center page on our website at www.WyndhamWorldwide.com.

 

Executive Committee

 

The Executive Committee may exercise all of the authority of the Board when the Board is not in session, including the authorization of the issuance of stock, except that the Executive Committee does not have the authority to alter, amend or repeal the by-laws or any resolution or resolutions of the Board, declare any dividend or make any other distribution to shareholders, appoint any member of the Executive Committee or take any other action which legally may be taken only by the full Board.

 

The following chart shows the current committee membership and the number of meetings that each committee held since January 1, 2007.

 

 

M = Member

  C = Chair

 

Directors fulfill their responsibilities not only by attending Board and committee meetings but also through communication with the Chairman and CEO and other members of management relative to matters of mutual interest and concern to Wyndham Worldwide.

 

Since January 1, 2007, the Board held seven meetings. Each director attended at least 75% of the meetings of the Board and the committees of the Board on which the director served.

 

The Board met three times during 2007 in executive session without any members of management present, whether or not they are directors. Directors meeting in executive session select a presiding director for each executive session.

 

Shareholders and other parties interested in communicating directly with the Board, an individual non-employee director or the non-employee directors as a group may do so by writing our Corporate Secretary at Wyndham Worldwide Corporation, 7 Sylvan Way, Parsippany, New Jersey 07054. The Corporate Secretary will forward the correspondence only to the intended recipients. However, prior to forwarding any correspondence, the Corporate Secretary will review it and, in her discretion, not forward correspondence deemed to be of a commercial nature.

 

The Board has adopted a Code of Business Conduct and Ethics for Directors with ethics guidelines specifically applicable to directors. In addition, we adopted Business Principles applicable to all our employees, including our CEO, CFO and Chief Accounting Officer. The Code of Business Conduct and Ethics for Directors and our Business Principles are available on the Investor Center page of our website at www.WyndhamWorldwide.com. Copies of these documents may also be obtained free of charge by writing to our Corporate Secretary. We will disclose on our website any amendment to or waiver from a provision of our Business Principles that applies to our CEO, CFO or Chief Accounting Officer.

 

As provided in the Board’s Corporate Governance Guidelines, directors are expected to attend our annual meeting of shareholders absent exceptional cause. All of our directors attended our 2007 annual meeting and are expected to attend the 2008 annual meeting.

 

Role of Corporate Governance Committee.  The Corporate Governance Committee considers the appropriate balance of experience, skills and characteristics required of the Board when considering potential candidates to serve on the Board. Nominees for director are selected on the basis of their depth and breadth of experience, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment and willingness to devote adequate time to Board duties.

 

Identification and Evaluation Process.  The process for identifying and evaluating nominees to the Board is initiated by identifying a candidate who meets the criteria for selection as a nominee and has the specific qualities or skills being sought based on input from members of the Board and, if the Corporate Governance Committee deems appropriate, a third-party search firm. These candidates will be evaluated by the Corporate Governance Committee by reviewing the candidates’ biographical information and qualifications and checking the candidates’ references. Qualified nominees will be interviewed by at least one member of the Corporate Governance Committee. Using the input from the interview and other information obtained by the Corporate Governance Committee, the Corporate Governance Committee evaluates whether the prospective candidate is qualified to serve as a director and whether the Corporate Governance Committee should recommend to the Board that the Board nominate this prospective candidate for election by the shareholders or to fill a vacancy on the Board.

 

Shareholder Nominations and By-Law Procedures.  The Corporate Governance Committee will consider written proposals from shareholders for nominees for director. Nominations should be submitted to the Corporate Governance Committee, c/o the Corporate Secretary, and include at least the following: name of the shareholder and evidence of the person’s ownership of our common stock, number of shares owned and the length of time of ownership, name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a director and the person’s consent to be named as a director if selected by the Corporate Governance Committee and nominated by the Board.

 

Our By-Laws establish procedures pursuant to which a stockholder may nominate a person for election to the Board. Our By-Laws are posted on our website under Investor Center at www.WyndhamWorldwide.com. To nominate a person for election to the Board, a stockholder must set forth all information relating to the nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14 under the Securities Exchange Act of 1934, as amended (and the related rules and regulations). Such notice must also contain information specified in the By-Laws as to the director nominee, information about the shareholder making the nomination, including name and address, number of shares owned, and representations regarding the intention to make such a nomination and to solicit proxies in support of it. We may require any proposed nominee to furnish information concerning his or her eligibility to serve as an independent director or that could be material to a reasonable shareholder’s understanding of the independence of the nominee.

 

To nominate a person for election to the Board at our annual meeting of stockholders, written notice of a stockholder nomination must be delivered to our Corporate Secretary not less than 90 nor more than 120 days prior to the anniversary date of the prior year’s annual meeting. However, if our annual meeting is advanced or delayed by more than 30 days from the anniversary date of the previous year’s meeting, a shareholder’s written notice will be timely if it is delivered by no later than the close of business on the 10th day following the day on which public disclosure of the date of the annual meeting is made or the notice of the date of the annual meeting was mailed, whichever occurs first. A

shareholder may make nominations of persons for election to the Board at a special meeting if the shareholder delivers written notice to our Corporate Secretary not later than the close of business on the 10th day following the day on which public disclosure of the date such special meeting was made or notice of such special meeting was mailed, whichever occurs first. At a special meeting of shareholders, only such business may be conducted as shall have been brought before the meeting pursuant to our notice of meeting.

 

Evaluation of Shareholder Recommendations of Nominees.  The Corporate Governance Committee intends to use a substantially similar evaluation process as discussed above to evaluate nominees for director recommended by shareholders.

 

The Audit Committee of the Board of Directors assists the Board in fulfilling its oversight responsibilities for the external reporting process and the adequacy of Wyndham Worldwide’s internal controls. Specific responsibilities of the Audit Committee are set forth in the Audit Committee Charter adopted by the Board on July 13, 2006. The Charter is available on the Investor Center page of our website at www.WyndhamWorldwide.com.

 

The Audit Committee is comprised of three directors, all of whom meet the standards of independence adopted by the New York Stock Exchange and the SEC. Subject to shareholder ratification, the Audit Committee appoints Wyndham Worldwide’s independent registered public accounting firm. The Audit Committee approves in advance all services to be performed by Wyndham Worldwide’s independent registered public accounting firm in accordance with SEC rules, subject to the de minimis exceptions for non-audit services.

 

Management is responsible for Wyndham Worldwide’s financial statements and reporting process, for establishing and maintaining adequate internal controls over financial reporting, and for assessing the effectiveness of Wyndham Worldwide’s internal controls over financial reporting. Deloitte & Touche LLP, Wyndham Worldwide’s independent registered public accounting firm, is responsible for the integrated audit of Wyndham Worldwide’s consolidated financial statements and internal control over financial reporting. The Audit Committee has reviewed and discussed Wyndham Worldwide’s 2007 annual report on Form 10-K, including the audited consolidated financial statements of Wyndham Worldwide for the year ended December 31, 2007, with management and with representatives of Deloitte & Touche LLP.

 

The Audit Committee has also discussed with Deloitte & Touche LLP matters required to be discussed by applicable standards of the Public Company Accounting Oversight Board (“PCAOB”), including Statement on Auditing Standards No. 61, “Communication with Audit Committees”, as amended, and as adopted by the PCAOB, as well as Rule 2-07 of Regulation S-X of the SEC — Communication with audit committees. The Audit Committee has received from Deloitte & Touche LLP the written disclosures required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees and has discussed with Deloitte & Touche LLP its independence.

 

The Audit Committee has also considered whether Deloitte & Touche LLP providing limited non-audit services to Wyndham Worldwide is compatible with maintaining its independence. The Audit Committee has satisfied itself as to the independence of Deloitte & Touche LLP.

 

Based on the Audit Committee’s review of the audited consolidated financial statements of Wyndham Worldwide and management’s annual report on internal control over financial reporting, and on the Audit Committee’s discussions with management of Wyndham Worldwide and with Deloitte & Touche LLP, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements and management’s annual report on internal control over financial reporting be

included in Wyndham Worldwide’s Annual Report on Form 10-K for the year ended December 31, 2007.

 

AUDIT COMMITTEE

 

Michael H. Wargotz (Chair)
George Herrera
Pauline D.E. Richards

 

Non-employee directors receive compensation for Board service designed to compensate directors for their Board responsibilities and align their interests with the long-term interests of shareholders. An employee director receives no additional compensation for Board service.

 

The following table describes compensation for non-employee directors for 2007.

 

2007 Director Compensation

 

 

 

 

2008 Director Compensation

 

The following describes compensation we will pay our non-employee directors in 2008:

 

Annual director retainer		$	150,000
Audit committee chair			20,000
Audit committee member			10,000
Compensation committee chair			15,000
Compensation committee member			7,500
Corporate governance committee chair			10,000
Corporate governance committee member			5,000
Executive committee member			8,000

The annual director retainer and committee chair and membership fees are paid on a quarterly basis 50% in cash and 50% in deferred stock units. The number of deferred stock units issued is based on our stock price on the quarterly determination date. Directors may elect to receive more than 50% of the retainer and fees in deferred stock units. Board members do not receive additional fees for meeting attendance.

 

We make available to each director a term life insurance policy owned by us with a $1.1 million death benefit payable $1 million to us, which benefit we will donate to a charitable beneficiary of the director’s choice, and $100,000 paid directly to a personal beneficiary of the director’s choice. In the event we undergo a change-in-control or a director retires, we will pay the premiums for the policies for one year from the date of the change-in-control or retirement as applicable.

 

We provide for a company match of a director’s qualifying charitable contributions in an amount up to $10,000 per year.

 

In 2007 we adopted a policy to make available to our directors the right to use annually one week at a Wyndham Vacation Ownership timeshare facility.

 

The Corporate Governance Guidelines require each non-employee director to own at least 1,000 shares of our common stock. As of December 31, 2007, all of our non-employee directors met or exceeded the ownership requirements.

 

The following table describes the beneficial ownership of our common stock for the following persons as of December 31, 2007 (and November 2, 2007 for Mr. May): each executive officer named in the Summary Compensation Table below (who we refer to as named executive officers), each person who to our knowledge beneficially owns in excess of 5% of our common stock; and all of our directors and executive officers as a group. The percentage values are based on 177,429,137 shares of our common stock outstanding as of December 31, 2007. The principal address for each director, nominee and executive officer of Wyndham Worldwide is 7 Sylvan Way, Parsippany, New Jersey 07054.

 

Under SEC rules, “beneficial ownership” includes shares for which the individual, directly or indirectly, has or shares voting or investment power, whether or not the shares are held for the individual’s benefit.

 

 

 

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Directors and executive officers are required to file reports of ownership and changes in ownership of our common stock with the SEC. In 2007, all reports were filed on time.

 

At the date of this proxy statement, the board of directors consists of seven members, six of whom are non-employee directors and five of whom are independent directors under applicable listing standards and our corporate governance documents. The board is divided into three classes, each with three-year terms. The terms of the classes are staggered so that one-third of the directors, or as near to one-third as possible, are elected at each annual meeting.

At this year’s meeting, two directors are to be elected for three-year terms. The Corporate Governance Committee of the board has nominated James E. Buckman and George Herrera, both of whom are presently our directors.

 

We do not know of any reason why any nominee would be unable to serve as a director. If any nominee is unable to serve, the shares represented by all valid proxies will be voted for the election of such other person as the Board may nominate.

 

The two nominees and the other present directors continuing in office after the meeting are listed below, with brief biographies.

 

Nominees for Election to the Board for a
Three-Year Term Expiring at the 2011 Annual Meeting

 

Directors Continuing in Office for a Term
Expiring at the 2009 Annual Meeting

 

Directors Continuing in Office for a Term
Expiring at the 2010 Annual Meeting

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ELECTION OF THE NOMINEES,
JAMES E. BUCKMAN AND GEORGE HERRERA

 

Wyndham Worldwide Compensation Committee.  Our Compensation Committee is responsible for establishing executive compensation policies and programs consistent with corporate objectives and shareholder interests. The Compensation Committee operates under a written charter adopted by the Board. The charter is reviewed on an annual basis and revised as appropriate. The Committee’s membership is determined by the Board and is composed entirely of independent directors. The Compensation Committee Chair reports on Compensation Committee actions and recommendations at our Board meetings.

 

Executive Compensation Consultant.  For 2007 and 2008, Hewitt Associates was retained by our Compensation Committee as a third-party advisor to provide independent advice, research, and evaluation related to executive compensation. In this capacity, our Compensation Committee utilizes reports and analyses prepared by Hewitt Associates. Hewitt Associates was retained to provide our Compensation Committee with competitive market pay analyses including total compensation measurement services, proxy data studies and market trends.

 

Management’s Role.  Our management plays a significant role in our executive compensation process including evaluating executive performance, recommending performance targets for incentive compensation and recommending salary increases and equity awards. Our CEO works with the Compensation Committee in establishing the agenda for committee meetings and management prepares and distributes meeting information to committee members. Our CEO also participates in Compensation Committee meetings at the committee’s request to provide background information regarding our strategic objectives, his evaluation of the performance of the senior executives and compensation recommendations for senior executives (other than himself). Our CEO

is not involved in setting his own compensation, which is the exclusive responsibility of the Compensation Committee.

 

Overview

 

Our Executive Total Compensation Strategy is designed to achieve the following objectives:

 

 

In summary, the compensation decisions and other actions relevant to our named executive officers for 2007 were as follows:

 

 

The compensation decisions relevant to our named executive officers for 2008 were as follows:

 

 

 

Executive Total Compensation Strategy

 

In February 2007, we adopted our Executive Total Compensation Strategy with the following principles and objectives as they apply to our named executive officers:

 

 

Determining Executive Compensation

 

Annual Evaluation.  An important aspect of the Compensation Committee’s annual work relates to the determination of compensation for our senior executives. The Compensation Committee meets each year to evaluate the performance of the named executive officers, to consider and review their base salaries for potential annual increases, approve annual incentive compensation and funding models and to consider and approve any grants to them of long-term incentive compensation. Since Mr. Anderson became a named executive officer as a result of Mr. May’s departure in November 2007, the Compensation Committee did not perform a review of certain elements of Mr. Anderson’s compensation during the 2007 compensation review process, which took place in the first and second quarters of 2007.

Employment Agreements.  In connection with our 2006 spin-off from Cendant, Cendant’s compensation committee approved the employment agreement for Mr. Holmes. In July 2006, we entered into employment agreements with Mr. Holmes, Mr. Rudnitsky, Mr. May, Mr. Hanning and Ms. Wilson. In August 2006, we provided an employment letter to Mr. Anderson. In October 2006, our Compensation Committee reviewed the actions of Cendant’s compensation committee as they applied to Mr. Holmes and ratified the employment agreements of our other named executive officers. The employment agreements and arrangements for our named executive officers established the executives’ 2006 base salary, target annual incentive compensation and long-term incentive award. Since the employment agreements expire in July 2009, the terms of the agreements similarly form the basis for 2007 and 2008 base salary and annual incentive compensation. Long-term incentive awards for 2007 and 2008 were approved in the discretion of the Compensation Committee. The employment agreements are described in further detail below under Agreements with Named Executive Officers.

 

Compensation Committee Discretion.  Based on the above, although the Compensation Committee annually reviews and approves all elements of the compensation of the named executive officers, for 2007 the committee exercised primary discretion over annual base salary merit increases, approval of EBIT targets and funding models for annual incentive compensation, grants of long-term incentive awards and perquisites. Accordingly, for these elements, the committee has discretion to determine the size of any award or payment. For 2007, the committee generally based their decisions on a combination of management’s recommendations (other than with respect to our CEO), the external market data provided by our management and compensation consultant and such other factors they deemed appropriate in their discretion.

 

Performance Compensation.  Performance-based compensation for our named executive officers includes base salary merit increases, annual incentive compensation and long-term incentive compensation.

 

Base Salary.  Base salary is a critical element of executive compensation because it provides executives with a base level of monthly income designed to attract and retain superior managers. Merit increases in base salary reward successful individual performance and seek to create incentives for retention. Under our annual performance review process, to receive a 2007 base salary merit increase an executive must achieve a “Key Contributor” or “Exceptional Contributor” performance rating. Executives who receive a “Low Contributor” rating are not eligible for a 2007 base salary merit increase. An “Exceptional Contributor” exhibits exceptional contributions and personal leadership above the norm. A “Key Contributor” fully and consistently meets position requirements, objectives and expectations. A “Low Contributor” does not achieve or only intermittently achieves the responsibilities of the position and the goals of the individual’s performance and development plan.

 

We based the 2007 merit increases on the market analysis described below and a review of the 2006 individual performance of the named executive officers against these performance ratings. Elements of individual performance considered by the Compensation Committee and management in such review include business unit or function results of operations, achievement of non-financial objectives and leadership characteristics. The 2007 base salary merit increases for our named executive officers are described below under 2007 Executive Compensation Elements and Decisions — Base Salary.

 

Annual Incentive Compensation.  Our annual incentive compensation program is designed to create incentives for our executives to drive our financial and operating performance and thus create value for our shareholders. Target performance objectives for annual incentive compensation are established on the basis of total company (corporate) and/or business unit Earnings Before Interest and Taxes (EBIT), a standard measure of our profitability. The EBIT targets may be adjusted for special items or circumstances. The EBIT targets under the funding models for the corporation and business units are recommended by management and approved by our Compensation Committee based on approved operating budgets consistent with our strategic plan.

 

An executive’s annual incentive compensation may be higher or lower than the target payment (down to zero) depending on corporate and business unit performance. For example, the annual incentive payment could be as high as 125% of the target if the operating unit results exceed 106% of the EBIT target or as low as zero if the operating unit results are less than 95% of the EBIT target. Accordingly, consistent with the principle of our Executive Total Compensation Strategy that compensation should

be linked with actual corporate and business unit performance as applicable, target annual incentive compensation is paid to our named executive officers only if target levels are achieved.

 

Executives must receive at least a “Key Contributor” performance rating to be eligible for 2007 annual incentive compensation. For our CEO, CFO and Mr. Anderson, the 2007 annual incentive payment was based 100% on our corporate target. For our business unit chief executives, the 2007 annual incentive payment was weighted 25% for the corporate target and 75% for the business unit target. Although individual performance may be considered by the Compensation Committee and management in awarding annual incentive compensation to our eligible executives, for 2007 the named executive officers earned annual incentive compensation based solely on corporate and business unit EBIT performance as applicable.

 

A discussion of our 2007 EBIT targets and results at the corporate and business unit levels is presented below under 2007 Executive Compensation Elements and Decisions — Annual Incentive Compensation. The Non-Equity Incentive Plan column of the Summary Compensation Table below lists the annual incentive compensation we paid our named executive officers for 2007.

 

Long-term Incentive Compensation.  Our Compensation Committee annually approves an aggregate budget available for long-term incentive awards. We link performance to our long-term incentive awards by using the relative contribution of each business unit’s performance to our overall corporate results to allocate 25% of the aggregate budget among our operating units. The remainder of the aggregate budget is allocated based on the relative number of eligible executives in the operating units. Equity awards are then made to the operating unit executives based on individual performance review and future potential. Elements of individual performance considered by the Compensation Committee and management in such review include business unit or function results of operations, achievement of non-financial objectives and leadership characteristics.

 

Long-term incentive awards are granted under our 2006 Equity and Incentive Plan. The long-term incentive awards we made to our named executive officers in 2007 are listed in the Grants of Plan-Based Awards Table.

 

Compensation Benchmarking.  We believe that information regarding compensation practices at other companies is useful in evaluating compensation of our named executive officers. We recognize that our compensation practices must be competitive in the market to attract and retain superior senior managers. In addition, this market information is a key factor that we consider in assessing the reasonableness of the compensation of our executives. Accordingly, we review compensation levels for our named executive officers against benchmarked compensation levels at peer companies and industry surveys recommended by management and our compensation consultant.

 

Peer Groups.  For 2007, our management provided our Compensation Committee a competitive market assessment of the market median (or 50th percentile) and 75th percentile of the compensation of the named executive officers and senior executives of peer companies focusing on base salary, annual incentive compensation and long-term incentive compensation. For Mr. Holmes, our competitive assessment utilized external market data based on Choice Hotels International, Inc., Hilton Hotels Corporation, Interstate Hotels and Resorts, Inc., Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc. (hotel peer group). This peer group was used because we believe these companies comprise our most closely comparable competitors. For our named executive officers other than Mr. Holmes and Mr. Anderson (who was not reviewed), our competitive assessment utilized external market data based on Choice Hotels International, Inc., Harrah’s Entertainment, Inc., Hilton Hotels Corporation, Interstate Hotels and Resorts, Inc., Marriott International, Inc., MGM MIRAGE and Starwood Hotels & Resorts Worldwide, Inc. (hospitality peer group). This peer group was used because we believe these companies comprise our most closely comparable competitors and include companies from the gaming industry, which we believe to increasingly be a competitor for our senior management talent. For 2007 base salary merit increases and perquisites, our management provided the Compensation Committee with compensation survey data prepared by national human resources consulting firms. As we are a relatively new public company, our management expects to continue to review our peer groups with our Compensation Committee and make changes if appropriate.

Base Salary.  In January 2007, our compensation consultant reviewed Mr. Holmes’ 2006 actual base salary against the hotel peer group and found his base salary to approximate the benchmark median base salary. In December 2006, our management reviewed the 2006 actual base salaries of the named executive officers other than Mr. Holmes and Mr. Anderson (who was not reviewed) against the hospitality peer group and found their base salaries to be consistent with the benchmark 50th percentile base salary.

 

For 2007 base salary merit increases, our management provided our Compensation Committee with a market assessment of annual salary increases utilizing external market data from World at Work, Hewitt Associates and Mercer annual salary increase surveys. Based on this review, management determined that U.S. salaries were projected to increase by 4% in 2007 and we accordingly established a 4% 2007 merit increase budget. Base salary merit increases may exceed the merit increase budget for “Exceptional Contributors.”

 

Annual Incentive Compensation.  In January 2007, our compensation consultant reviewed Mr. Holmes’ 2007 target annual incentive compensation against the hotel peer group and found his annual incentive compensation to be consistent with the benchmark 75th percentile. In December 2006, our management reviewed the 2007 target annual incentive compensation of the named executive officers other than Mr. Holmes and Mr. Anderson (who was not reviewed) against the hospitality peer group and found their annual incentive compensation to exceed the benchmark 50th percentile but to be below the benchmark 75th percentile annual incentive compensation.

 

Long-term Incentive Compensation.  Our 2007 competitive assessment focused on potential long-term incentive award mix including stock options, restricted stock, stock-settled stock appreciation rights; target award values; and plan design such as vesting and performance. In January 2007, our compensation consultant reviewed Mr. Holmes’ 2006 actual long-term incentive compensation against the hotel peer group and found his long-term incentive compensation to be consistent with the benchmark median long-term incentive compensation. In December 2006, our management reviewed the 2006 actual long-term incentive compensation of the named executive officers other than Mr. Holmes and Mr. Anderson (who was not reviewed) against the hospitality peer group and found their long-term incentive compensation to be consistent with the benchmark 50th percentile of long-term incentive compensation.

 

Perquisites.  For 2007, our management provided our Compensation Committee with a market assessment of competitive perquisite practices utilizing widely available market data publications from Hewitt Associates, Watson Wyatt and other service providers. Based on this review, we found our existing executive perquisites program to be consistent with market practices.

 

Total Compensation.  In connection with the annual evaluation of the compensation of the named executive officers, management provides the Compensation Committee with prior year total compensation summaries for the named executive officers so the committee may evaluate how each compensation element fits into our overall compensation objectives and affects decisions regarding other elements. In addition, based on the external market data for the individual compensation elements discussed above, management provides the Compensation Committee with a market assessment of total compensation of each of the named executive officers against the peer group data.

 

In January 2007, our compensation consultant reviewed Mr. Holmes’ 2006 actual total compensation against the hotel peer group and found his total compensation to be consistent with the competitive norms (defined to be plus or minus 15% of the benchmark median). In December 2006, our management reviewed the 2006 actual total compensation of the other named executive officers (other than Mr. Anderson, who was not reviewed) against the hospitality peer group and found their total compensation to be consistent with the benchmark 50th percentile total compensation. In February 2007, the Compensation Committee reviewed the external market data prepared by our management as described above in considering each compensation element against total compensation, and although individual elements may have approached or been consistent with the benchmark 75th percentile for a particular named executive officer, the Compensation Committee was satisfied that 2007 targeted total compensation was consistent with our Executive Total Compensation Strategy.

As discussed in detail above, each of our executive compensation elements is designed to accomplish different objectives. Base salary is designed to attract and retain our executives. Annual incentive compensation is designed to create incentives for executives to drive financial and operating performance and thus create value for shareholders. Long-term incentive compensation similarly creates performance incentives and encourages retention. As each element has specific objectives, the Compensation Committee determinations with respect to one element generally do not influence decisions regarding the other elements to the extent total compensation is consistent with our Executive Total Compensation Strategy. Since the external market data confirmed that each element of compensation as well as total compensation of our CEO and other named executive officers are market competitive and within compensation benchmarks consistent with our Executive Total Compensation Strategy, and given the significant scope and responsibilities of the CEO which are greater than those of the other named executive officers, we believe any differences between the individual compensation elements and the total compensation of our CEO and the other named executive officers is appropriate.

 

2007 Executive Compensation Elements and Decisions

 

Base Salary.  In February 2007, based on the factors discussed above, our Compensation Committee approved 2007 base salary merit increases for each of our named executive officers. Mr. Rudnitsky, Mr. May and Ms. Wilson received a 4% base salary merit increase for 2007 based on a “Key Contributor” performance rating. Mr. Hanning received a 5% increase based on the operating performance of his business unit, Wyndham Vacation Ownership, and his performance rating of “Exceptional Contributor”. While our compensation consultant concluded that it was not necessary for the Compensation Committee to approve a merit increase for Mr. Holmes’ 2007 base salary to remain market competitive, in the Compensation Committee’s discretion, the Compensation Committee approved a 4% merit increase for Mr. Holmes consistent with other named executive officers and to reflect the Compensation Committees’ evaluation of Mr. Holmes’ performance as exceptional.

 

The base salaries we paid to our named executive officers in 2007 are listed in the Summary Compensation Table below.

 

Annual Incentive Compensation.  In February 2007, our Compensation Committee approved the funding models applicable to our corporate and business unit named executive officers. The 2007 funding models for corporate and the business units excluded separation and related expenses as well as legacy matters. In February 2008, based on the corporate and business unit operating results described below, our Compensation Committee approved 2007 annual incentive compensation that was paid to the named executive officers in February 2008. The 2007 annual incentive compensation paid to our named executive officers is listed in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table below.

 

For 2007, the corporate adjusted EBIT target was approximately $674 million and actual adjusted corporate EBIT was approximately $687 million or approximately 102% of the adjusted target which resulted in an annual incentive payment of 107% of target for Mr. Holmes, Ms. Wilson and Mr. Anderson under the 2007 corporate funding model. The annual incentive compensation paid to Mr. Holmes, Ms. Wilson and Mr. Anderson was weighted 100% on the corporate adjusted payout level.

 

For 2007, the Wyndham Hotel Group (WHG) adjusted EBIT target was approximately $186 million and actual adjusted WHG EBIT was approximately $189 million or approximately 102% of the adjusted target. The annual incentive compensation paid to Mr. Rudnitsky for 2007 was weighted 25% on the corporate adjusted EBIT payout level and 75% on the WHG adjusted EBIT payout level which resulted in an annual incentive payment of 106% of target for Mr. Rudnitsky under the 2007 blended corporate and WHG funding models.

 

For 2007, the Wyndham Vacation Ownership (WVO) EBIT target was approximately $323 million and actual adjusted WVO EBIT was approximately $339 million or approximately 105% of target. The annual incentive compensation paid to Mr. Hanning for 2007 was weighted 25% on the corporate adjusted EBIT payout level and 75% on the WVO EBIT payout level which resulted in an annual

incentive payment of 120.5% of target for Mr. Hanning under the 2007 blended corporate and WVO funding models.

 

Our EBIT targets under the funding models are recommended by management and approved by our Compensation Committee based on operating budgets consistent with our strategic plan. We believe that the EBIT targets represent appropriate goals for our executives to achieve business growth and create shareholder value. Consistent with our performance-driven compensation strategy, we believe that using our annual incentive compensation program to provide incentives to our named executive officers to achieve our profit targets is a critical tool to create shareholder value.

 

Long-Term Incentive Compensation.  Our 2007 long-term incentive award plan focused on the following objectives: further strengthen the alignment between shareholder interests and the named executive officers; achieve competitiveness with the external market; foster retention; and reward and recognize the key talent contributions of our named executive officers.

 

Based on the factors described above under Determining Executive Compensation, the Compensation Committee determined to heavily weight our CEO’s 2007 long-term incentive award toward stock settled stock appreciation rights in relation to restricted stock units to provide maximum leverage and create incentives to drive long-term share price appreciation. A stock settled stock appreciation right is similar to a stock option and gives the executive the right to receive an amount in shares of common stock equal to the excess of the fair market value of a share of our common stock on the date of exercise over the exercise price of the stock appreciation right. A restricted stock unit represents the right to receive a share of our common stock on a set vesting date. For our other named executive officers, long-term incentives are weighted between stock settled stock appreciation rights and restricted stock units to drive performance and encourage retention.

 

We granted the stock settled stock appreciation rights and restricted stock units to our named executive officers as described in the Grants of Plan-Based Awards Table below.

 

Perquisites.  We provide our senior executive officers with perquisites that we believe are reasonable, competitive and consistent with our overall executive compensation program. We believe that our perquisites help us to retain the best managers and allow them to operate more effectively.

 

In 2007, based on external market data provided by our management and the other factors described above, our Compensation Committee approved perquisites for the named executive officers consistent with our existing program including a leased automobile and financial planning services. For each of these perquisites the executive receives a “tax gross-up” payment, which means the executive receives additional compensation to reimburse them for the amount of taxes owed on the compensation imputed for the perquisite. We also provided Mr. Holmes and Mr. Hanning with limited personal use of company aircraft for which we imputed income without a tax gross-up. Perquisites provided to the named executive officers in 2007 are described in the All Other Compensation Table below.

 

Officer Deferred Compensation Plan.  Our officer deferred compensation plan permits named executive officers to defer salary, commission and bonus compensation. We match executive contributions to the plan up to 6% of salary, commission and bonus. The executive may elect a single lump-sum payment of his or her account or may elect payments in annual installments up to ten years. The participant’s entire account balance is 100% vested. The contributions to our officer deferred compensation plan applicable to our named executive officers are listed below under the 2007 Deferred Compensation Table.

 

401(k) Plan.  We provide employees, including our named executive officers, with a 401(k) plan. Our 401(k) plan permits named executive officers to defer salary. We provide named executive officers and other participants a company match of salary contributed up to 6% of salary. The company match is 100% vested.

 

Savings Restoration Plan.  We adopted a savings restoration plan, which allows executives to defer compensation in excess of the amounts permitted by the Internal Revenue Code under our 401(k) plan, but there are no matching contributions for these deferrals.

Severance Arrangements.  The employment agreements of our named executive officers provide for payments as a percentage of base salary and annual incentive compensation as well as accelerated equity award vesting if the executive’s employment is terminated without cause or for a constructive discharge. These payments and terms are discussed below under Agreements with Named Executive Officers.

 

The severance terms for the named executive officers were negotiated in connection with their employment agreements consistent with Cendant peer executives and prevailing market practices based on market data provided by Cendant’s compensation consultant. The primary focus of the severance terms is generally on the termination of employment and thus the value of these terms only arises in the context of imminent termination. The severance terms do not enhance an executive’s current income and therefore are independent of the annual compensation review.

 

Change-in-Control Arrangements.  Mr. Holmes’ employment agreement provides for payments related to base salary and bonus as well as accelerated equity vesting in the event of a change-in-control. The other named executive officers receive payments only if their employment is terminated without cause or for constructive discharge following a change-in-control. These payments and terms are discussed below under Agreements with Named Executive Officers. In addition, equity grants made to all key employees, including the named executive officers, under our 2006 Equity and Incentive Plan fully vest on a change-in-control.

 

The change-in-control terms for Mr. Holmes were negotiated in connection with his employment agreement consistent with Cendant peer executives and based on market data provided by Cendant’s compensation consultant. Since a potential change-in-control transaction generally results in increased shareholder value, we believe that it is important to provide incentives to motivate Mr. Holmes to pursue and complete potential transactions should they arise. Like the severance arrangements, the value of the change-in-control arrangements only arises in the context of an imminent change-in-control. The terms do not enhance Mr. Holmes’ current income and therefore are independent of his annual compensation review.

 

Policies and Practices for Pricing and Timing of Equity Grants.  In February 2008, our Board amended our Policy on Granting Equity Awards to provide that grants of equity awards to our eligible executives, including the named executive officers, will be made annually within twenty New York Stock Exchange trading days of the date on which we publicly announce our annual results of operations as opposed to within 10 trading days of the date on which we release our first quarter results of operations as provided under the policy prior to amendment. These amendments align the timing of our long-term incentive award grant process with the rest of the annual executive compensation review cycle so that salary planning, annual incentive compensation planning and long-term incentive award determination may be more efficiently considered as a whole. Under our amended Policy on Granting Equity Awards, we observe the following relating to the timing of equity grants:

 

 

Resignation of Named Executive Officer

 

Effective November 2, 2007, we entered into a termination agreement with Mr. May. Consistent with Mr. May’s employment agreement, we paid Mr. May cash severance of $2.2 million, an amount equal to 200% of the sum of his 2007 base salary and target annual incentive compensation, and any of

Mr. May’s long-term incentive awards that would have otherwise vested within one year of November 2, 2007 vested immediately. As a result of this acceleration of the vesting dates, Mr. May was vested with the following stock settled stock appreciation rights that would have otherwise vested on May 2, 2008: 23,963 with an exercise price of $31.85 and 9,508 with an exercise price of $36.70, all of which expire November 9, 2009. Similarly, Mr. May was vested with 12,533 restricted stock units net of income tax withholding that would have otherwise vested on May 2, 2008.

 

Mr. May will continue to hold two tranches of stock options as described below in the Outstanding Equity Awards at 2007 Fiscal Year-End Table. Mr. May will be paid a lump sum deferred compensation amount of approximately $56,844 on or about June 2, 2008 under the guidelines of our Officer Deferred Compensation Plan.

 

Mr. May executed a customary release agreement with us pursuant to which Mr. May released us from claims arising in connection with, among other things, his employment with us and the termination agreement. Under the termination agreement, Mr. May will remain subject to certain provisions of his employment agreement including two year non-competition and non-solicitation restrictions, as well as indemnification, cooperation and confidentiality provisions.

 

Executive Officer Stock Ownership Guidelines

 

Our Executive Officer Stock Ownership Guidelines are intended to align further the financial interests of executive officers with the interests of shareholders. The guidelines apply to our CEO and the other executive officers who report directly to him, including the named executed officers.

 

The following guidelines specify the amount of our common stock that the following officers must beneficially own: CEO: four (4) times base salary; Business Unit CEO: two (2) times base salary; CFO: two (2) times base salary; and other executive officers who report directly to the CEO: one (1) times base salary.

 

Compliance with the individual guidelines is calculated as follows: the product of the multiple and the applicable base salary is divided by the highest closing price of our common stock on the New York Stock Exchange for the 12 month period prior to the date of determination. Compliance is evaluated on a twice-per-year basis, as of June 30 and December 31 of each year, and not on a running basis.

 

Share ownership that counts towards satisfaction of the guidelines includes: shares owned outright by the executive or his or her immediate family members residing in the same household; shares held in our 401(k) savings plan or Officer Deferred Compensation Plan; restricted stock or restricted stock units; and shares held in trust by the executive or his or her immediate family members residing in the same household.

 

As of December 31, 2007, all of the named executive officers were in compliance with these guidelines.

 

2008 Executive Compensation Decisions

 

Base Salary.  In February 2008, our Compensation Committee approved 2008 base salary merit increases for each of our named executive officers. Mr. Holmes received a 4.33% merit increase for 2008 consistent with other named executive officers and to reflect the Compensation Committees’ evaluation of Mr. Holmes’ performance as exceptional. Mr. Hanning received a 4.94% increase based on an “Exceptional Contributor” rating. Mr. Rudnitsky and Ms. Wilson received 4.04% and 4.05% merit increases, respectively, for 2008 based on a “Key Contributor” performance rating. Mr. Anderson received a 5.0% increase based on a “Key Contributor” rating and an assessment of his responsibilities and value-added performance. Consistent with the executives’ employment agreements, and taking into account 2008 merit increases, 2008 base salaries are as follows:

 

Annual Incentive Compensation.  In February 2008, our Compensation Committee approved corporate and business unit EBIT targets and funding models that will be used to determine any 2008 annual incentive compensation. Like 2007, management established performance objectives for 2008 annual incentive compensation based on corporate and/or business unit EBIT targets. These targets are based on approved operating budgets consistent with our strategic plan. The EBIT targets may be adjusted for special items or circumstances if appropriate. Consistent with our past results, we believe that the EBIT targets represent appropriate goals for our executives to achieve business growth and create shareholder value.

 

For our CEO, CFO and Mr. Anderson, the 2008 annual incentive payment will be weighted 100% on the corporate target. For our business unit chief executives, the 2008 annual incentive payment will be weighted 25% for the corporate target and 75% for the business unit target.

 

Consistent with the executives’ employment agreements, and based on the 2008 base salaries described above, the possible threshold, target and maximum annual incentive compensation payouts payable to the named executive officers for 2008 are as follows:

 

 

Long-term Incentive Compensation.  In February 2008, based on external market data and consistent with our 2007 practices for long-term incentive awards, our Compensation Committee approved 2008 long-term incentive compensation for each of our named executive officers in the following amounts.

 

 

 

 

 

Perquisites.  In February 2008, based on external market data, our Compensation Committee approved 2008 executive perquisites consistent with our 2007 perquisite program.

 

Equity Grant Practices.  In February 2008, our Board amended our Policy on Granting Equity Awards as described above under Policies and Practices for Pricing and Timing of Granting Equity Awards.

 

Section 162(m) of the Internal Revenue Code of 1986

 

Section 162(m) of the Internal Revenue Code generally disallows a federal income tax deduction to public companies for compensation in excess of $1,000,000 paid to the CEO and certain highly compensated executive officers during any taxable year, unless such compensation is performance based and meets certain requirements. We expect to claim an income tax deduction for 2007 compensation paid to our CEO and executive officers to the extent permitted by this section of the Internal Revenue Code.

 

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. The Compensation Committee is satisfied that the Compensation Discussion and Analysis fairly and completely represents the philosophy, intent, and actions of the Compensation Committee with regard to executive compensation. We recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for filing with the Securities and Exchange Commission.

 

 

COMPENSATION COMMITTEE

 

The Right Honourable Brian Mulroney (Chair)
Myra J. Biblowit
Pauline D.E. Richards

 

The following table describes compensation paid to our named executive officers for 2007. The 2006 amounts reported include compensation attributable to employment with Cendant prior to the spin-off.

 

 

 

 

 

The All Other Compensation in the Summary Compensation Table above includes the following components. The total compensation amounts for 2006 and 2007 are provided in the “All Other Compensation” column of the Summary Compensation Table above.