This excerpt taken from the WYN DEF 14A filed Apr 2, 2009.
Our shareholders are being asked to approve the amendment and restatement of the Wyndham Worldwide Corporation 2006 Equity and Incentive Plan (Plan) and the performance goals thereunder primarily for the purpose of Section 162(m) of the Code. The Plan was originally adopted by the Board and our sole shareholder on July 13, 2006, prior to our spin-off from Cendant Corporation and subject to such separation. The purpose of the Plan is to afford an incentive to our non-employee directors, selected officers and other employees, advisors and consultants to continue in their respective roles, to increase their efforts on behalf of us and our affiliates and to promote the success of our business.
We relied on a transition rule under Section 162(m) of the Code that applies to spun-off companies and provides that awards are exempt from the corporate tax deduction limits under Section 162(m) of the Code for a limited transition period. However, due to the expiration of the transition period, we are asking our shareholders to approve the Plan, including the Section 162(m) performance goals under the Plan (as described below) so that incentive awards granted under the Plan to certain of our named executive officers may qualify as deductible performance-based compensation under Section 162(m) of the Code. Section 162(m) of the Code otherwise generally disallows the corporate tax deduction for certain compensation paid in excess of $1 million annually to each of the chief executive officer and the three other most highly paid executive officers of publicly-held companies (other than the chief financial officer).
In consultation with our compensation consultant, we reviewed the aggregate share reserve in the Plan in light of applicable RiskMetrics Group guidelines and determined that it would be appropriate to reduce the share reserve by 6.8 million shares from 43.5 million shares to 36.7 million shares. We believe that such reduction would be consistent with our commitment to efficiently manage our equity compensation share reserve. As of February 28, 2009, the Plan had 15,710,449 shares remaining available for future issuance (with no available shares remaining under any of our other equity plans). Also, as of February 28, 2009, we had total outstanding awards of 13,251,901 options and stock appreciation rights (SARs), with a weighted average exercise price of $32.86 and a weighted average remaining contractual term of 2.24 years, and 10,181,534 full-value awards. Accordingly, if the Plan is approved by shareholders, the authorized share reserve in the Plan, as amended and restated, will be 36.7 million (of which approximately 8,900,000 shares shall remain available for future issuance), which we anticipate will be sufficient for issuances under the Plan for the near future.
In addition, the term of the Plan will be extended until the tenth anniversary of the earlier of the date the Plan is adopted by the Board and the effective date of the Plan, provided that awards that are intended to be performance-based under Section 162(m) of the Code may not be granted after May 12, 2014, unless the performance goals under the Plan are re-approved by our shareholders. The Plan will also reflect certain other clarifying amendments as well as amendments to reflect recent developments in applicable law (such as Code Sections 409A and 162(m)) and equity compensation practices which include, among other things, amendments providing for:
The Board recommends that shareholders approve the amendment and restatement of the Plan and the performance goals thereunder. If the requisite shareholder approval of the amendment and restatement of the Plan is not obtained, the Plan, as amended and restated, will not take effect. If such approval is not obtained, we may continue to grant awards under the Plan in accordance with its current terms. However, certain awards under the Plan may not constitute performance-based
compensation under Code Section 162(m), and accordingly, may not be deductible by us depending on the facts and circumstances.
The following section summarizes the Plan, as amended and restated, and is qualified in its entirety by the full text of the Plan, which is included in Appendix A to this proxy statement.
This excerpt taken from the WYN 8-K filed Jul 19, 2006.
The following is a summary of information concerning our capital stock. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of our amended and restated certificate of incorporation or of our amended and restated by-laws. The summary is qualified in its entirety by reference to these documents, which you must read for complete information on our capital stock. Our amended and restated certificate of incorporation and by-laws are included as exhibits to our registration statement on Form 10.