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This excerpt taken from the WYN DEF 14A filed Mar 17, 2008. 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
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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.
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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:
This excerpt taken from the WYN DEF 14A filed Mar 13, 2007. 2006 Executive
Compensation Elements and Decisions
Base Salary. Base salary is a critical element
of executive compensation because it provides executives with a
base level of monthly income needed to be market competitive. We
set base salaries at a level designed to attract and retain
superior managers. Base salaries for our executives are
established based on the scope of their responsibilities, taking
into account historical compensation, competitive market
compensation paid by other companies for similar positions as
well as salaries paid to the executives’ peers within the
company.
The base salaries we (and Cendant) paid to our named executive
officers in 2006 are listed in the Summary Compensation Table
below. These amounts include compensation paid by Cendant prior
to the spin-off.
Mr. Holmes’ base salary was targeted to the
75th percentile of the peer group selected by
Cendant’s compensation consultant. The base salaries of our
other named executive officers were set relative to
Mr. Holmes’ base salary and each other.
Annual Incentive Compensation. We pay annual
incentive compensation to incent and reward superior performance
for the year. Annual incentive compensation is paid in cash in
the first quarter for the prior year’s performance. Annual
incentive awards are granted under our 2006 Equity and Incentive
Plan. Consistent with their employment agreements, we paid our
named executive officers the annual incentive compensation
listed in the Summary Compensation Table below.
Mr. Holmes’ target annual incentive compensation was
set by Cendant to the 75th percentile of the peer group
used by Cendant’s compensation consultant and consistent
with his historical compensation. The target annual incentive
compensation eligible paid to our other named executive officers
were set relative to their base salaries and each other. The
possible threshold, target and maximum annual incentive
compensation payouts payable to the named executive officers for
2006 are described below in the Grants of Plan Based Awards
Table.
The annual incentive compensation paid to Mr. Holmes and
Ms. Wilson for 2006 was weighted 100% on a corporate
adjusted EBIT target. We achieved at least 102.3% of the
corporate adjusted EBIT target which resulted in an annual
incentive payment of 105% of target for Mr. Holmes and
Ms. Wilson under the established corporate funding models.
The annual incentive compensation paid to Mr. May and
Mr. Rudnitsky for 2006 was weighted 50% for the corporate
target and 50% for the business unit target. Each of these
executives received 105% of
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50% of his target annual incentive compensation based on the
corporate results as described above. Mr. May’s
business unit, RCI Global Vacation Network, did not achieve at
least 97% of the adjusted EBIT target which resulted in him
receiving 0% of 50% of his target annual incentive compensation
under the established business unit funding models.
Mr. Rudnitsky’s business unit, Wyndham Hotel Group,
achieved at least 103.2% of the adjusted EBIT target which
resulted in him receiving 105% of 50% of his target annual
incentive compensation under the established business unit
funding models.
The annual incentive compensation paid to Mr. Hanning for
2006 was weighted 100% for the business unit target.
Mr. Hanning’s business unit, Wyndham Vacation
Ownership, achieved at least 110.3% of the adjusted EBIT target
which resulted in him receiving 125% of his target annual
incentive compensation under the established business unit
funding models.
Long-Term Incentive Compensation. The purpose
of long-term incentives for our named executive officers is to
align their interests with shareholders through meaningful
equity participation and long-term ownership. Long-term
incentives should help balance a short-term performance focus
and encourage retention. Long-term incentive awards are granted
under our 2006 Equity and Incentive Plan.
At the CEO level, long-term incentives are heavily weighted
toward stock settled stock appreciation rights to provide
maximum leverage and 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. For our other named executive officers,
long-term incentives are weighted between stock settled stock
appreciation rights and restricted stock units to encourage
retention. A restricted stock unit represents the right to
receive a share of our common stock on a set vesting date.
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. The
grant made to our CEO was designed to equal 200% of his prior
year award intended to provide increased retention incentive and
consistent with the CEOs of the other companies being separated
from Cendant. The grants made to our other named executive
officers were set relative to Mr. Holmes’ grant and
each other.
Officer Deferred Compensation Plan. We adopted
an officer deferred compensation plan that permits named
executive officers to defer salary and bonus compensation. We
match executive contributions to the plan up to 6% of salary and
bonus. The executive may elect a single lump-sum payment of his
or her account or may elect payments over time subject to
5-year
vesting. The participant’s entire account balance will vest
and be paid in a single lump sum following a
change-in-control
or in the event that the executive’s employment terminates.
401(k) Plan. We provide employees, including
our named executive officers, with a 401(k) plan. We provide
named executive officers and other participants a company match
of salary contributed up to 6% of salary. If an executive elects
to participate in both the Officer Deferred Compensation Plan
and the 401(k) plan, the executive must elect to defer salary in
one or the other of the plans but not both.
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.
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.
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In 2006 we provided our named executives perquisites consistent
with Cendant’s historical practices 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
our CEO with limited personal use of company aircraft for which
we imputed income for our incremental costs without a tax
gross-up.
Perquisites provided in 2006 are described in the All Other
Compensation Table below.
Severance Arrangements. The employment
agreements of our named executive officers provide for payments
related to base salary and bonus as well as accelerated equity
vesting if the executive’s employment is terminated without
cause or for a constructive discharge. The payments and terms
vary in certain respects between the individual executives.
These payments and terms are discussed below under Agreements
with Named Executive Officers.
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 employment agreements of our other named executive officers
provide for accelerated equity vesting based on certain vesting
schedules in the event of a
change-in-control.
The payments and terms vary in certain respects between the
individual executives. These payments and terms are discussed
below under Agreements with Named Executive Officers. In
addition, equity grants made to all employees, including the
named executive officers, under our 2006 Equity and Incentive
Plan fully vest on a
change-in-control.
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