DEF 14A 1 y83643def14a.htm DEF 14A def14a
Table of Contents

 
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:
 
         
o Preliminary Proxy Statement
   
o Confidential, For Use of the Commission Only
 
x Definitive Proxy Statement
      (as permitted by Rule 14a-6(e)(2))  
o Definitive Additional Materials
       
o Soliciting Material Pursuant to §240.14a-12
       
 
Wyndham Worldwide Corporation
(Name of Registrant as Specified In Its Charter)
 
Payment of Filing Fee (Check the appropriate box):
 
x  No fee required.
 
o  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
  (1)  Title of each class of securities to which the transaction applies:
 
  (2)  Aggregate number of securities to which the transaction applies:
 
  (3)  Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
  (4)  Proposed maximum aggregate value of the transaction:
 
  (5)  Total fee paid:
 
o  Fee paid previously with preliminary materials.
 
o  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
  (1)  Amount Previously Paid:
 
  (2)  Form, Schedule or Registration Statement No.:
 
  (3)  Filing Party:
 
  (4)  Date Filed:
 
 


Table of Contents

(WYNDHAM LOGO)
 
NOTICE OF 2010 ANNUAL MEETING
OF SHAREHOLDERS AND
PROXY STATEMENT


Table of Contents

(WYNDHAM LOGO)
 
Wyndham Worldwide Corporation
22 Sylvan Way
Parsippany, New Jersey 07054
 
April 1, 2010
 
Dear Shareholder of Wyndham Worldwide Corporation,
 
You are cordially invited to attend the 2010 Annual Meeting of Shareholders to be held on Thursday, May 13, 2010.
 
The meeting will start at 2:00 p.m. local time at the Birchwood Manor, 111 North Jefferson Road, Whippany, New Jersey 07981.
 
I appreciate your continued support of Wyndham Worldwide Corporation and look forward to seeing you on May 13, 2010.
 
Very truly yours,
 
-s- Stephen P. Holmes
 
Stephen P. Holmes
Chairman and Chief Executive Officer


Table of Contents

(WYNDHAM LOGO)
 
WYNDHAM WORLDWIDE CORPORATION
 
NOTICE OF 2010 ANNUAL MEETING OF SHAREHOLDERS
 
April 1, 2010
 
     
Date:
  Thursday, May 13, 2010
Time:
  2:00 p.m. local time
Place:
  Birchwood Manor
111 North Jefferson Road
Whippany, New Jersey 07981
 
Purposes of the meeting:
 
to elect two directors for a three-year term;
 
to vote on a proposal to ratify the appointment of Deloitte & Touche LLP to serve as our independent registered public accounting firm for fiscal year 2010;
 
to vote on a proposal to approve the amendment of the Wyndham Worldwide Corporation 2006 Equity and Incentive Plan (amended and restated as of May 12, 2009); and
 
to transact any other business that may be properly brought before the meeting or any adjournment or postponement of the meeting.
 
The matters specified for voting above are more fully described in the attached proxy statement. Only our shareholders of record at the close of business on March 17, 2010 will be entitled to notice of and to vote at the meeting and any adjournments.
 
Who may attend the meeting:
 
Only shareholders, persons holding proxies from shareholders, invited representatives of the media and financial community and other guests of Wyndham Worldwide Corporation may attend the meeting.
 
What to bring:
 
If you received (or requested and received) a printed copy of the proxy materials, you should bring the enclosed Admission Ticket to gain admission to the meeting. If you received a Notice of Internet Availability of Proxy Materials (Notice) or voting instructions and will not be requesting a printed copy of the proxy materials, please bring the Notice or voting instructions with you as your Admission Ticket. You must bring with you a picture identification such as a valid driver’s license or passport for purposes of personal identification.
 
If your shares are held in the name of a broker, trust, bank or other nominee, you will also need to bring a proxy, letter or recent account statement from that broker, trust, bank or nominee that confirms that you are the beneficial owner of those shares.


Table of Contents

Record Date:
 
March 17, 2010 is the record date for the meeting. This means that owners of Wyndham Worldwide common stock at the close of business on that date are entitled to:
 
receive notice of the meeting; and
 
vote at the meeting and any adjournments or postponements of the meeting.
 
Information About the Notice of Internet Availability of Proxy Materials:
 
Instead of mailing a printed copy of our proxy materials, including our Annual Report, to all of our shareholders, we provide access to these materials in a fast and efficient manner via the Internet. This reduces the amount of paper necessary to produce these materials, as well as the costs associated with mailing these materials to all shareholders. Accordingly, on or about April 8, 2010, we will begin mailing a Notice to all shareholders owning less than 1,000 shares as of March 17, 2010, and will post our proxy materials on the website referenced in the Notice. As more fully described in the Notice, shareholders may choose to access our proxy materials on the website referred to in the Notice or may request to receive a printed set of our proxy materials. In addition, the Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
 
Householding Information:
 
We have adopted a procedure approved by the Securities and Exchange Commission called “householding.” Under this procedure, shareholders of record who have the same address and last name and have not previously requested electronic delivery of proxy materials will receive a single envelope containing the Notices for all shareholders having that address. The Notice for each shareholder will include that shareholder’s unique control number needed to vote his or her shares. This procedure will reduce our printing costs and postage fees.
 
If, in the future, you do not wish to participate in householding and prefer to receive your Notice in a separate envelope, please contact Broadridge Financial Solutions, by calling their toll-free number at (800) 542-1061 or through Broadridge Financial Solutions, Attn.: Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
 
For those shareholders who have the same address and last name and who request to receive a printed copy of the proxy materials by mail, we will send only one copy of such materials to each address unless one or more of those shareholders notifies us, in the same manner described above, that they wish to receive a printed copy for each shareholder at that address.
 
Beneficial shareholders may request information about householding from their banks, brokers or other holders of record.
 
Proxy Voting:
 
Your vote is important. Please vote your proxy promptly so your shares can be represented, even if you plan to attend the annual meeting. You can vote by Internet, by telephone, by requesting a printed copy of the proxy materials and using the enclosed proxy card or in person at the annual meeting.
 
Our proxy tabulator, Broadridge Financial Solutions, must receive any proxy that will not be delivered in person to the annual meeting by 11:59 p.m., Eastern Daylight Time on Wednesday, May 12, 2010.
By order of the Board of Directors,
 
-s- Scott G. McLester
 
Scott G. McLester
Corporate Secretary


 

 
TABLE OF CONTENTS
 
         
    1  
       
    1  
    1  
    1  
    1  
    2  
    2  
    2  
    2  
    3  
    3  
    3  
    4  
    4  
       
    5  
    5  
    5  
    6  
    6  
    9  
    9  
    10  
    10  
    10  
    10  
    10  
    10  
    11  
    11  
    13  
    14  
    14  
    15  
       
    16  
    16  
    17  
    18  
    19  
       
    20  
    20  
    29  
    30  
    31  
    32  
    33  
    34  
    34  
    35  
    38  
    39  
       
    41  
       
    42  
       
    A-1  


i


Table of Contents

WYNDHAM WORLDWIDE CORPORATION
 
 
PROXY STATEMENT
 
The enclosed proxy materials are provided to you at the request of the Board of Directors of Wyndham Worldwide Corporation (Board) to encourage you to vote your shares at our 2010 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 Board made these materials available to you over the Internet or, upon your request, mailed you printed versions of these materials in connection with our 2010 annual meeting. We will mail a Notice of Internet Availability of Proxy Materials (Notice) to our shareholders beginning on or about April 8, 2010 and will post our proxy materials on our website referenced in the Notice on that same date. We are, on behalf of our Board, soliciting your proxy to vote your shares at our 2010 annual meeting of shareholders. We solicit proxies to give all shareholders of record an opportunity to vote on matters that will be presented at the annual meeting.
 
FREQUENTLY ASKED QUESTIONS
 
When and where will the annual meeting be held?
 
The annual meeting will be held on Thursday, May 13, 2010 at 2:00 p.m. local time at the Birchwood Manor, 111 North Jefferson Road, Whippany, New Jersey 07981.
 
What am I being asked to vote on at the meeting?
 
You are being asked to vote on the following:
 
the election of two directors for a three-year term; nominations for director must comply with our by-laws including the applicable notice requirements;
 
the ratification of the appointment of Deloitte & Touche LLP to serve as our independent registered public accounting firm for fiscal year 2010;
 
to approve the amendment of the Wyndham Worldwide Corporation 2006 Equity and Incentive Plan (amended and restated as of May 12, 2009); and
 
to transact any other business that may be properly brought before the meeting or any adjournment or postponement of the meeting.
 
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.
 
Who may vote and how many votes does a shareholder have?
 
All holders of record of our common stock as of the close of business on March 17, 2010 (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, 180,190,792 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.


1


Table of Contents

 
How many votes must be present to hold the meeting?
 
The holders of a majority of the outstanding shares of our common stock entitled to vote at the meeting, or 90,095,397 shares (also known as a “quorum”), 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.
 
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.
 
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.
 
How do I vote?
 
Even if you plan to attend the meeting you are encouraged to vote by proxy.
 
If you are a shareholder of record, also known as a registered shareholder, you may vote by proxy in one of the following ways:
 
by telephone by calling the toll-free number (800) 690-6903 (have your Notice or proxy card in hand when you call);
 
by Internet at http://www.proxyvote.com (have your Notice or proxy card in hand when you access the website);
 
if you received (or requested and received) a printed copy of the annual meeting materials, by returning the enclosed proxy card (signed and dated) in the envelope provided; or
 
in person at the annual meeting (please see below under “How do I attend the meeting?”).
 
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 bank, broker or other nominee. You may also vote in person at the annual meeting (please see below under “How do I attend the meeting?”).
 
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.
 
What if I am a participant in the Wyndham Worldwide Corporation Employee Savings Plan?
 
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. If you do not instruct the plan trustee on how to vote the shares of our common stock credited to your account, the trustee will vote those shares in proportion to the shares for which instructions are received.
 
How does the Board recommend that I vote?
 
The Board recommends the following votes:
 
FOR the election of each of the director nominees;


2


Table of Contents

 
FOR the ratification of the appointment of Deloitte & Touche LLP to serve as our independent registered public accounting firm for fiscal year 2010; and
 
FOR the approval of the amendment of the Wyndham Worldwide Corporation 2006 Equity and Incentive Plan (amended and restated as of May 12, 2009).
 
How many votes are required to approve each proposal?
 
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 all other proposals, 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 any of these proposals.
 
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 ratification of auditors and do not have discretion to vote on proposals relating to what are deemed to be “non-routine” matters, which include the election of Director nominees and the amendment of our 2006 Equity and Incentive Plan (amended and restated as of May 12, 2009).
 
Effective January 1, 2010, your broker will no longer be permitted to vote on your behalf on the election of directors unless you provide specific instructions by completing and returning the voting instruction or proxy card or following the instructions provided to you to vote your shares by telephone or the Internet. For your vote to be counted, you now will need to communicate your voting decisions to your broker, bank or other financial institution before the date of the annual meeting.
 
How do I attend the meeting?
 
If you received (or requested and received) a printed copy of the proxy materials, you should bring the enclosed Admission Ticket to gain admission to the meeting. If you received a Notice or voting instructions and will not be requesting a printed copy of the proxy materials, please bring the Notice or voting instructions with you as your Admission Ticket. You must bring with you a picture identification such as a valid driver’s license or passport for purposes of personal identification.
 
If your shares are held in the name of a broker, trust, bank or other nominee, you will also need to bring a proxy, letter or recent account statement from that broker, trust, bank or nominee that confirms that you are the beneficial owner of those shares.
 
Can I change or revoke my vote?
 
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.


3


Table of Contents

 
How are proxies solicited?
 
Georgeson Inc. has been retained to assist in soliciting proxies at a cost of $9,000 plus reasonable expenses. Proxies may also be solicited by our directors, officers 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.
 
How do I make a shareholder proposal for the 2011 meeting?
 
Shareholders interested in presenting a proposal for inclusion in our proxy statement and proxy relating to our 2011 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 December 4, 2010. 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 January 13, 2011 and not later than the close of business on February 12, 2011. However, if the date of the 2011 Annual Meeting of Shareholders is not within 30 days before or after May 13, 2011, 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 2010 Annual Meeting of 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.


4


Table of Contents

 
GOVERNANCE OF THE COMPANY
 
Strong corporate governance is an integral part of our core values. Our Board is committed to having sound corporate governance principles and practices. Please visit our website at www.WyndhamWorldwide.com under the Investor Relations/Corporate Governance 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, 22 Sylvan Way, Parsippany, New Jersey 07054.
 
Corporate Governance Guidelines
 
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 reviews these principles and other aspects of governance periodically. The Corporate Governance Guidelines are available on the Investor Relations/Corporate Governance page of our website at www.WyndhamWorldwide.com.
 
Director Independence Criteria
 
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 Corporate Governance 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:
 
Wyndham Worldwide does not currently employ, and has not within the last three years employed, the Director or any of his or her immediate family members (except, in the case of immediate family members, in a non-executive officer capacity).
 
The Director is not currently, and has not within the last three years been, employed by Wyndham Worldwide present auditors, nor has any of his or her immediate family members been so employed (except in non-professional capacity not involving Wyndham Worldwide business).
 
Neither the Director, nor any of his or her immediate family members, is, or has been within the last three years, part of an “interlocking directorate” in which an executive officer of Wyndham Worldwide serves on the compensation (or equivalent) committee of another company that employs the Director or his or her immediate family member as an executive officer.
 
The Director is not a current employee, nor is an immediate family member a current executive officer, of a company that has made payments to, or received payments from, Wyndham Worldwide for property or services in an amount in any of the last three fiscal years, exceeding the greater of $750,000 or 1% of such other company’s consolidated gross revenues.
 
The Director currently does not have, or had within the past three years, a personal services contract with Wyndham Worldwide or its executive officers.
 
The Director has not received, and such Director’s immediate family member has not received, during any twelve-month period within the last three years, more than $100,000 in direct compensation from Wyndham Worldwide (other than Board fees).


5


Table of Contents

 
The Director is not currently an officer or director of a foundation, university or other non-profit organization to which Wyndham Worldwide within the last three years gave directly or indirectly through the provision of services more than the greater of (i) 1% of the consolidated gross revenues of such organization during any single fiscal year or (ii) $100,000.
 
Guidelines for Determining Director Independence
 
Our 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 and affiliates. 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 us and our management as required by the New York Stock Exchange listing standards and the Director Independence Criteria: Myra J. Biblowit, James E. Buckman, George Herrera, The Right Honourable Brian Mulroney, Pauline D.E. Richards and Michael H. Wargotz. All members of the Audit, Compensation and Corporate Governance Committees are independent Directors as required by the New York Stock Exchange listing standards, Securities and Exchange Commission (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.
 
Committees of the Board
 
The following describes our Board Committees and related matters. The composition of the Committees is provided immediately after.
 
Audit Committee
 
Responsibilities include:
 
Appoints our independent registered public accounting firm, subject to shareholder ratification, to perform an integrated audit of our consolidated financial statements and internal control over financial reporting.
 
Pre-approves all services performed by our independent registered public accounting firm.
 
Provides oversight on the external reporting process and the adequacy of our internal controls.


6


Table of Contents

 
Reviews the scope, planning, staffing and budgets of the audit activities of the independent registered public accounting firm and our internal auditors and evaluates audit efforts of both, including reviews of reports.
 
Reviews services provided by our independent registered public accounting firm and other disclosed relationships as they bear on the independence of our independent registered public accounting firm and establishes clear hiring policies with respect to employees or former employees of the independent auditor.
 
Reviews the Code of Business Conduct and Ethics and related compliance activities.
 
Establishes procedures for the receipt, retention and resolution of complaints regarding accounting, internal controls or auditing matters.
 
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.
 
The Audit Committee Charter is available on the Investor Relations/Corporate Governance page of our website at www.WyndhamWorldwide.com.
 
Audit Committee Report
 
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 Relations/Corporate Governance 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 reporting process, including our system of internal controls, and for the preparation of consolidated financial statements in compliance with generally accepted accounting principles, applicable laws and regulations. In addition, management is responsible for establishing, maintaining 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 expressing an opinion on Wyndham Worldwide’s consolidated financial statements and the effectiveness of Wyndham Worldwide’s internal control over financial reporting. The Audit Committee has reviewed and discussed Wyndham Worldwide’s 2009 Annual Report on Form 10-K, including the audited consolidated financial statements of Wyndham Worldwide for the year ended December 31, 2009, with management and with representatives of Deloitte & Touche LLP. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews or procedures.
 
The Audit Committee has also discussed with Deloitte & Touche LLP matters required to be discussed by applicable standards and rules of the PCAOB and the SEC. The Audit Committee has also received from Deloitte & Touche LLP the written disclosures required by applicable standards and rules of the PCAOB


7


Table of Contents

and the SEC regarding Deloitte & Touche LLP’s communications with the Audit Committee concerning independence, and has discussed with Deloitte & Touche LLP the independence of Deloitte & Touche LLP.
 
The Audit Committee has also considered whether the limited non-audit services provided by Deloitte & Touche LLP to Wyndham Worldwide is compatible with Deloitte & Touche LLP maintaining its independence. The Audit Committee has satisfied itself as to the independence of Deloitte & Touche LLP.
 
Based on the Audit Committee’s review and discussions described above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited consolidated financial statements and management’s 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, 2009.
 
AUDIT COMMITTEE
 
Michael H. Wargotz (Chair)
George Herrera
Pauline D.E. Richards
 
Compensation Committee
 
Responsibilities include:
 
Establishes executive compensation policy consistent with corporate objectives and shareholder interests.
 
Reviews and approves elements of Chief Executive Officer (CEO) and other senior management compensation.
 
Approves grants of long-term incentive compensation under our compensation plans.
 
All members of the Compensation Committee are independent Directors under the Board’s Director Independence Criteria and applicable regulatory and listing standards.
 
The Compensation Committee Report is provided below under “Executive Compensation”. The Compensation Committee Charter is available on the Investor Relations/Corporate Governance page on our website at www.WyndhamWorldwide.com.
 
Corporate Governance Committee
 
Responsibilities include:
 
Recommends to the Board nominees for election to the Board.
 
Reviews principles, policies and procedures affecting Directors and the Board’s operation and effectiveness.
 
Oversees evaluation of the Board and its effectiveness.
 
Reviews and approves Director compensation.
 
All members of the Corporate Governance Committee are independent Directors under the Board’s Director Independence Criteria and applicable regulatory and listing standards.


8


Table of Contents

The Corporate Governance Committee Charter is available on the Investor Relations/Corporate Governance 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 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.
 
Committee Membership
 
The following chart provides the current committee membership and the number of meetings that each committee held since January 1, 2009.
 
                         
      Audit
    Compensation
    Governance
    Executive
Director     Committee     Committee     Committee     Committee 
Myra J. Biblowit
          M     M      
                         
James E. Buckman
                      M
                         
George Herrera
    M           C      
                         
Stephen P. Holmes
                      C
                         
The Right Honourable Brian Mulroney
          C     M      
                         
Pauline D.E. Richards
    M     M            
                         
Michael H. Wargotz
    C                 M
                         
Number of Meetings in 2009
    15     12     5    
                         
 
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, Lead Director and other members of management relative to matters of mutual interest and concern to Wyndham Worldwide.
 
The Board held seven meetings during 2009. Each Director attended at least 75% of the meetings of the Board and the committees of the Board on which the Director served.
 
Board Leadership Structure
 
The Board believes that Wyndham Worldwide’s CEO is best situated to serve as Chairman because he is the Director most familiar with our business and industry, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. Independent Directors and management have different perspectives and roles in strategy development. Our independent Directors bring experience, oversight and expertise from outside the company and industry, while the CEO brings company-specific experience and expertise. The Board believes that the combined role of Chairman and CEO promotes strategy development and execution, and facilitates information flow between management and the Board, all of which are essential to effective governance.
 
One of the key responsibilities of the Board is to develop strategic direction and hold management accountable for the execution of strategy once it is developed. The Board believes the combined role of Chairman and CEO, together with an independent Lead Director having the duties described below, is


9


Table of Contents

in the best interest of stockholders because it provides the appropriate balance between strategy development and independent oversight of management.
 
Lead Director
 
James E. Buckman, an independent Director who serves as a member of the Executive Committee, was selected by the Board to serve as the Lead Director for all meetings of the non-management directors. The Lead Director has the responsibility of chairing executive sessions of the non-management Directors and providing feedback from such sessions to the Chairman; chairing meetings of the Board in the absence of the Chairman; and reviewing in advance, in consultation with the Chairman, the schedule and agenda for all Board meetings as well as materials distributed to the Directors in connection with such meetings.
 
Oversight of Risk Management
 
The Board has an active role, as a whole and also at the committee level, in overseeing management of our risks. The Board regularly reviews information regarding and risks associated with our credit, liquidity, operations and strategy. Our Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation. The Audit Committee oversees management of financial reporting and compliance risks. The Corporate Governance Committee oversees the management of risks associated with the independence of the Board and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of risks, the entire Board of Directors is regularly informed through committee reports about our risks.
 
Executive Sessions of Non-Management Directors
 
The Board meets regularly without any members of management present. The Lead Director chairs these sessions.
 
Communications with the Board and Directors
 
Shareholders and other parties interested in communicating directly with the Board, an individual non-management Director or the non-management Directors as a group may do so by writing our Corporate Secretary at Wyndham Worldwide Corporation, 22 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 his discretion, not forward correspondence deemed to be of a commercial nature or otherwise not appropriate for review by the Directors.
 
Director Attendance at Annual Meeting of Shareholders
 
As provided in the Board’s Corporate Governance Guidelines, Directors are expected to attend our annual meeting of shareholders absent exceptional cause. A majority of our directors attended our 2009 annual meeting and are expected to attend the 2010 annual meeting.
 
Code of Business Conduct and Ethics
 
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 associates, 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 Relations/Corporate Governance page of our website at www.WyndhamWorldwide.com. Copies of these documents may


10


Table of Contents

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.
 
2010 Recognition For Ethics
 
Wyndham Worldwide has been listed in Ethisphere Institute’s 2010 List of the World’s Most Ethical Companies. The designation is awarded to companies that have demonstrated leading ethics and compliance programs compared to industry peers.
 
Director Nomination Process
 
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, skills, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment and willingness to devote adequate time to Board duties.
 
The Corporate Governance Committee also focuses on issues of diversity, such as diversity of gender, race and national origin, education, professional experience and differences in viewpoints and skills. The Corporate Governance Committee does not have a formal policy with respect to diversity; however, the Board and the Corporate Governance Committee believe that it is essential that the Board members represent diverse viewpoints. In considering candidates for the Board, the Corporate Governance Committee considers the entirety of each candidate’s credentials in the context of these standards. With respect to the nomination of continuing Directors for re-election, the individual’s contributions to the Board are also considered.
 
All our Directors bring to our Board a wealth of executive leadership experience derived from their service as senior executives of large organizations. Many of our Directors also bring extensive board experience. Certain individual qualifications, experience and skills of our Directors that led the Board to conclude that each nominee or Director should serve as our Director are described below under “Election of Directors”.
 
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 the 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


11


Table of Contents

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 shareholder may nominate a person for election to the Board. Our By-Laws are posted on our website under Investor Relations/Corporate Governance at www.WyndhamWorldwide.com. To nominate a person for election to the Board, a shareholder 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 shareholders, written notice of a shareholder 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.


12


Table of Contents

 
Compensation of Directors
 
Non-management 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. A management Director receives no additional compensation for Board service.
 
The following table describes 2009 compensation for non-management Directors:
 
                         
      Fees Paid
    Stock
    All Other
     
Name
    in Cash
    Awards
    Compensation
    Total
  
    ($)     ($)(a)(b)(c)     ($)     ($)
Myra J. Biblowit
    81,258     81,227     9,316     171,801
                         
James E. Buckman
    79,021     78,975     10     158,006
                         
George Herrera
    85,018     84,979     10     170,007
                         
The Right Honourable Brian Mulroney
    85,019     84,979     8,913     178,911
                         
Pauline D.E. Richards
    83,773     83,714     3,030     170,517
                         
Michael H. Wargotz
    89,023     88,974     24     178,021
                         
 
 
(a) Represents the aggregate grant date fair value of stock and option awards computed in accordance with ASC 718.
 
(b) Shares of our common stock issuable for deferred stock units at December 31, 2009 are as follows: Ms. Biblowit, 26,804; Mr. Buckman, 20,297; Mr. Herrera, 24,903; Mr. Mulroney, 47,445; Ms. Richards, 26,843; and Mr. Wargotz, 22,557.
 
(c) Includes deferred stock units credited for dividends paid on deferred stock units outstanding on the record date for such dividends.
 
In June 2009, management engaged our Compensation Consultant, Hewitt Associates LLC, to review the compensation of our Board members against the compensation of the board members of the peer group companies described below under “Executive Compensation — Compensation Discussion and Analysis — Compensation Benchmarking”. Based on the review, management recommended to the Board that it adopt a $10,000 increase in the annual retainer for Board members and a $5,000 increase in the annual retainer for the chairs of the Audit, Compensation and Corporate Governance Committees. In November 2009, the Board considered and approved such recommendations. Based on the above, the following describes 2010 compensation for non-management Directors:
 
         
Annual Lead Director retainer
  $ 185,000  
Annual Director retainer
    160,000  
Audit Committee chair
    25,000  
Audit Committee member
    10,000  
Compensation Committee chair
    20,000  
Compensation Committee member
    7,500  
Corporate Governance Committee chair
    15,000  
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


13


Table of Contents

for one year from the date of the change-in-control or retirement as applicable. Directors are not required to use this benefit and not all Directors have opted to use the benefit.
 
We provide for a company match of a Director’s qualifying charitable contributions in an amount up to $10,000 per year.
 
We maintain a policy to make available to our Directors the right to use annually one week at a Wyndham Vacation Ownership timeshare facility.
 
Stock Ownership Guidelines
 
The Corporate Governance Guidelines require each non-management Director to own at least 1,000 shares of our common stock. Deferred stock units credited to a Director count towards satisfaction of the guidelines. As of December 31, 2009, all of our non-management Directors met or exceeded the ownership requirements.
 
Ownership of Our Common Stock
 
The following table describes the beneficial ownership of our common stock for the following persons as of December 31, 2009 (November 13, 2009 for Ms. Wilson): each executive officer named in the Summary Compensation Table below (who we refer to in this proxy statement as named executive officers), each Director, 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 178,748,535 shares of our common stock outstanding as of December 31, 2009. The principal address for each director, nominee and executive officer of Wyndham Worldwide is 22 Sylvan Way, Parsippany, New Jersey 07054.
 
                 
 Name   Number of Shares       % of Class
FMR, LLC
  26,744,369     (a)     14.96%
 Vanguard Windsor Funds — Vanguard Windsor II Fund
  18,130,159     (b)     10.14%
Barrow, Hanley, Mewhinney & Strauss, Inc. 
  18,086,505     (c)     10.12%
 BlackRock, Inc. 
  10,462,500     (d)     5.85%
The Vanguard Group, Inc. 
  9,518,500     (e)     5.33%
 Geoffrey A. Ballotti
  115,466     (f)(g)(h)     *
Myra J. Biblowit
  49,736     (i)(j)     *
 James E. Buckman
  415,054     (i)(j)(k)     *
Thomas G. Conforti
  --     (f)     *
 Eric A. Danziger
  92,693     (f)(g)(h)     *
Franz S. Hanning
  441,983     (f)(g)(h)(i)     *
 George Herrera
  24,903     (j)     *
Stephen P. Holmes
  1,610,559     (f)(g)(h)(i)(l)     *
 The Right Honourable Brian Mulroney
  59,953     (i)(j)     *
Pauline D.E. Richards
  26,843     (j)     *
 Michael H. Wargotz
  23,279     (j)     *
Virginia M. Wilson
  236,583     (g)(i)     *
 All directors and executive officers as a group (16 persons)
  3,379,194     (m)     1.87%
 
 
 * Amount represents less than 1% of outstanding common stock.
 
(a) We have been informed by Amendment No. 1 to a report on Schedule 13G filed with the SEC on February 16, 2010 by FMR, LLC (FMR) that FMR beneficially owns 26,744,369 shares of our common stock with sole voting power over 5,754,727 shares, shared voting power over no shares, sole dispositive power over 26,744,369 shares and shared dispositive power over no shares. The principal business address for FMR is 82 Devonshire Street, Boston, Massachusetts 02109.
 
(b) We have been informed by Amendment No. 4 to a report on Schedule 13G filed with the SEC on February 4, 2010 by Vanguard Windsor Funds — Vanguard Windsor II Fund (Vanguard) that Vanguard beneficially owns 18,130,159 shares of our common stock with sole voting power over 18,130,159 shares shared voting power over no shares, sole dispositive power over no shares and shared dispositive power over no shares. We have been informed that as of December 31, 2009, the 18,086,505 shares reported in the table above beneficially owned by Barrow, Hanley, Mewhinney & Strauss, Inc.


14


Table of Contents

(Barrow) include 15,081,718 shares beneficially owned by Vanguard, for whom Barrow is an investment manager. The principal business address for Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
 
(c) We have been informed by Amendment No. 1 to a report on Schedule 13G filed with the SEC on February 9, 2010 by Barrow that Barrow beneficially owns 18,086,505 shares of our common stock with sole voting power over 1,128,807 shares, shared voting power over 16,957,698 shares, sole dispositive power over 18,086,505 shares and shared dispositive power over no shares. We have been informed that as of December 31, 2009, the 18,086,505 shares reported in the table above beneficially owned by Barrow include 15,081,718 shares beneficially owned by Vanguard, for whom Barrow is an investment manager. The principal business address for Barrow is 2200 Ross Avenue, 31st Floor, Dallas, Texas 75201.
 
(d) We have been informed by a report on Schedule 13G filed with the SEC on January 29, 2010 by BlackRock, Inc. and certain affiliates (BlackRock) that BlackRock beneficially owns 10,462,500 shares of our common stock with sole voting power over 10,462,500 shares, shared voting power over no shares, sole dispositive power over 10,462,500 shares and shared dispositive power over no shares. The principal business address for BlackRock is 40 East 52nd Street, New York, New York 10022.
 
(e) We have been informed by a report on Schedule 13G filed with the SEC on February 8, 2010 by The Vanguard Group, Inc. (TVG) that TVG beneficially owns 9,518,500 shares of our common stock with sole voting power over 285,453 shares, shared voting power over no shares, sole dispositive power over 9,263,247 shares and shared dispositive power over 255,253 shares. The principal business address for TVG is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
 
(f) Excludes shares of our common stock issuable upon vesting of restricted stock units after 60 days from December 31, 2009 as follows: Mr. Ballotti, 208,687; Mr. Conforti, 98,554; Mr. Danziger, 249,870; Mr. Hanning, 239,193; and Mr. Holmes, 226,439.
 
(g) Includes shares of our common stock which the named executive officers have the right to acquire through the exercise of stock-settled stock appreciation rights within 60 days of December 31, 2009 (November 13, 2009 for Ms. Wilson) as follows: Mr. Ballotti, 15,904; Mr. Danziger, 21,210; Mr. Hanning, 138,972; Mr. Holmes, 735,112; and Ms. Wilson, 118,841.
 
(h) Excludes shares of our common stock which the named executive officers did not have the right to acquire through the exercise of stock-settled stock appreciation rights within 60 days of December 31, 2009 as follows: Mr. Ballotti, 47,713; Mr. Danziger, 63,631; Mr. Hanning, 67,083; and Mr. Holmes, 805,252.
 
(i) Includes shares of our common stock which the directors and named executive officers have the right to acquire through the exercise of stock options within 60 days of December 31, 2009 (November 13, 2009 for Ms. Wilson) as follows: Ms. Biblowit, 22,932; Mr. Buckman, 376,077; Mr. Hanning, 72,806; Mr. Holmes, 350,014; Mr. Mulroney, 12,508; and Ms. Wilson, 9,808.
 
(j) Includes shares of our common stock issuable for deferred stock units as of December 31, 2009 as follows: Ms. Biblowit, 26,804; Mr. Buckman, 20,297; Mr. Herrera, 24,903; Mr. Mulroney, 47,445; Ms. Richards, 26,843; and Mr. Wargotz, 22,557.
 
(k) Includes 3,220 shares held in Mr. Buckman’s IRA account.
 
(l) Includes 3,394 shares held by Mr. Holmes’ children and 22,000 shares held in charitable trust.
 
(m) Includes or excludes, as the case may be, shares of common stock as indicated in the preceding footnotes.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Our directors and executive officers are required to file with the SEC reports of ownership and changes in ownership of our common stock. All 2009 reports were filed on time.


15


Table of Contents

 
ELECTION OF DIRECTORS
 
At the date of this proxy statement, the Board of Directors consists of seven members, six of whom are non-management Directors and 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 The Right Honourable Brian Mulroney and Michael H. Wargotz. Both 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.
 
Shareholder Voting for Election of Directors
 
Our Certificate of Incorporation and By-Laws provide for a plurality voting standard for the election of our Directors. Under a plurality voting standard, the nominee for each Director position with the most votes wins the election.
 
Under the Board’s Corporate Governance Guidelines, any nominee for Director in an uncontested election (such as this one, where the number of nominees does not exceed the number of Directors to be elected) who receives a greater number of votes withheld from his or her election than votes for such election shall promptly tender his or her resignation following certification of the shareholder vote. The Corporate Governance Committee will promptly consider the tendered resignation and will recommend to the Board whether to accept the tendered resignation or to take some other action, such as rejecting the tendered resignation and addressing the apparent underlying causes of the withheld votes. In making this recommendation, the Corporate Governance Committee will consider all factors deemed relevant by its members.
 
The Board will act on the Corporate Governance Committee’s recommendation no later than at its first regularly scheduled meeting following certification of the shareholder vote, but in any case, no later than 120 days following the certification of the shareholder vote. In considering the Corporate Governance Committee’s recommendation, the Board will consider the factors considered by the Corporate Governance Committee and such additional information and factors the Board believes to be relevant. We will promptly publicly disclose the Board’s decision and process in a periodic or current report filed with the SEC. Any Director who tenders his or her resignation under this process will not participate in the Corporate Governance Committee recommendation or Board consideration regarding whether or not to accept the tendered resignation. However, such Director shall remain active and engaged in all other Corporate Governance Committee and Board activities, deliberations and decisions during this Committee and Board process.


16


Table of Contents

 
Nominees for Election to the Board for a
Three-Year Term Expiring at the 2013 Annual Meeting
 
     
Photo of Stephen P. Holmes   The Right Honourable Brian Mulroney, 71, has served as a Director since our separation from Cendant in July 2006. Mr. Mulroney was a Cendant director from December 1997 until the completion of Cendant’s separation plan in August 2006. Mr. Mulroney was Prime Minister of Canada from 1984 to 1993 and is currently Senior Partner in the Montreal-based law firm, Ogilvy Renault. Mr. Mulroney is a director of the following public companies: Barrick Gold Corporation, Blackstone Group, L.P., Independent News and Media, PLC, Quebecor, Inc. (including its subsidiary Quebecor Media, Inc.). Mr. Mulroney was a director of HFS from April 1997 until December 1997. Mr. Mulroney served as a director of Hicks Acquisition Co. I, Inc. from September 2007 to September 2009 and Archer Daniels Midland Company Inc. from December 1993 to December 2009.
 
Mr. Mulroney served as the Prime Minister of Canada and is the Senior Partner of a renowned international law firm. He brings exceptional leadership, experience and expertise to the Board.
     
     
     
Photo of Myra J. Biblowit   Michael H. Wargotz, 51, has served as a Director since our separation from Cendant in July 2006. Since September 2009, Mr. Wargotz has served as the Co-Chairman and a founding partner of Axcess Luxury and Lifestyle, a business development agency for aspirational and ultra luxury brands. From December 2006 to September 2009, Mr. Wargotz served as the Chief Financial Advisor of NetJets, Inc., a leading provider of private aviation services. From June 2004 until November 2006, he was a Vice President of NetJets. From January 1998 to December 1999, Mr. Wargotz served in various leadership positions with Cendant, including President and Chief Executive Officer of its Lifestyle Division, Executive Vice President and Chief Financial Officer of its Alliance Marketing Segment and Senior Vice President, Business Development. Mr. Wargotz was a Senior Vice President with HFS from July 1994 to December 1997. Mr. Wargotz has served as a director of Resources Connection, Inc. since January 2010.
 
Mr. Wargotz’s experience as a chief executive officer and chief financial officer of premier marketing and branding companies provides the Board with exceptional leadership and valuable expertise in areas critical to our business.


17


Table of Contents

 
Directors Continuing in Office for a Term
Expiring at the 2011 Annual Meeting
 
     
Photo of Brian Mulroney   James E. Buckman, 65, was a Director since May 2003 of the already-existing, wholly owned subsidiary of Cendant that held the assets and liabilities of Cendant’s hospitality services (including timeshare resorts) businesses before our separation from Cendant and has served as a Director of Wyndham Worldwide since our separation from Cendant in July 2006. Since May 1, 2007, Mr. Buckman has served as Vice Chairman of York Capital Management, a hedge fund management company headquartered in New York City. From January 2007 until May 2007, he served as a Senior Consultant to York Capital Management. Mr. Buckman was General Counsel and a director of Cendant from December 1997 until the completion of Cendant’s separation plan in August 2006. Mr. Buckman was a Vice Chairman of Cendant from November 1998 until the completion of Cendant’s separation plan in August 2006. Mr. Buckman was a Senior Executive Vice President of Cendant from December 1997 until November 1998. Mr. Buckman was Senior Executive Vice President, General Counsel and Assistant Secretary of HFS from May 1997 to December 1997, a director of HFS from June 1994 to December 1997 and Executive Vice President, General Counsel and Assistant Secretary of HFS from February 1992 to May 1997. Mr. Buckman served as a director of Nascent Wine Company, Inc. from August 2007 to May 2008.
 
Mr. Buckman’s extensive service as a Vice Chairman and General Counsel of Cendant and a Vice Chairman of a leading hedge fund manager brings to the Board exceptional leadership, experience and perspective.
     
     
     
Photo of Michael H. Wargotz   George Herrera, 53, has served as a Director since our separation from Cendant in July 2006. Mr. Herrera was a Cendant director from January 2004 until the completion of Cendant’s separation plan in August 2006. Since December 2003, Mr. Herrera has served as President and Chief Executive Officer of Herrera-Cristina Group, Ltd., a Hispanic-owned multidisciplinary management firm. From August 1998 to January 2004, Mr. Herrera served as President and Chief Executive Officer of the U.S. Hispanic Chamber of Commerce. Mr. Herrera served as President of David J. Burgos & Associates, Inc. from December 1979 until July 1998.

Mr. Herrera’s background as chief executive officer of a multidisciplinary
management firm and the U.S. Hispanic Chamber of Commerce provides the Board exceptional leadership and management knowledge.


18


Table of Contents

 
Directors Continuing in Office for a Term
Expiring at the 2012 Annual Meeting
 
     
Photo of James E. Buckman   Stephen P. Holmes, 53, has served as the Chairman of our Board of Directors and as our Chief Executive Officer since our separation from Cendant in July 2006. Mr. Holmes was a Director since May 2003 of the already-existing, wholly owned subsidiary of Cendant that held the assets and liabilities of Cendant’s hospitality services (including timeshare resorts) businesses before our separation from Cendant and has served as a Director of Wyndham Worldwide since the separation in July 2006. Mr. Holmes was Vice Chairman and director of Cendant and Chairman and Chief Executive Officer of Cendant’s Travel Content Division from December 1997 until our separation from Cendant in July 2006. Mr. Holmes was Vice Chairman of HFS Incorporated, from September 1996 until December 1997 and was a director of HFS from June 1994 until December 1997. From July 1990 through September 1996, Mr. Holmes served as Executive Vice President, Treasurer and Chief Financial Officer of HFS.
 
Mr. Holmes’ exceptional day-to-day leadership as our CEO provides him with detailed strategic perspective and knowledge of our operations and industry.
     
     
     
Photo of James E. Buckman   Myra J. Biblowit, 61, has served as a Director since our separation from Cendant in July 2006. Ms. Biblowit was a Cendant director from April 2000 until the completion of Cendant’s separation plan in August 2006. Since April 2001, Ms. Biblowit has been President of The Breast Cancer Research Foundation. From July 1997 until March 2001, she served as Vice Dean for External Affairs for the New York University School of Medicine and Senior Vice President of the Mount Sinai-NYU Health System. From June 1991 to June 1997, Ms. Biblowit was Senior Vice President and Executive Director of the Capital Campaign for the American Museum of Natural History.

Ms. Biblowit’s exceptional leadership experience with iconic research, educational
and cultural institutions provides a unique perspective to the Board.
     
     
     
Photo of George Herrera   Pauline D.E. Richards, 61, has served as a Director since our separation from Cendant in July 2006. Ms. Richards was a Cendant director from March 2003 until the completion of Cendant’s separation plan in August 2006. Since July 2008, Ms. Richards has served as Chief Operating Officer of Armour Reinsurance Group Holdings Limited (formerly Brevan Howard P&C Partners Limited), an investment management company. From November 2003 to July 2008, Ms. Richards served as Director of Development at the Saltus Grammar School, the largest private school in Bermuda. From January 2001 until March 2003, Ms. Richards served as Chief Financial Officer of Lombard Odier Darier Hentsch (Bermuda) Limited in Bermuda, a trust company business. From January 1999 until December 2000, she was Treasurer of Gulfstream Financial Limited, a stock brokerage company. From January 1999 to June 1999, Ms. Richards served as a consultant to Aon Group of Companies, Bermuda, an insurance brokerage company, after serving in senior positions from 1988 through 1998 including Controller, Senior Vice President and Group Financial Controller and Chief Financial Officer. Ms. Richards was chairperson of Cendant’s Audit Committee from October 2004 until the completion of Cendant’s separation plan in August 2006.
 
Ms. Richards’ extensive financial background and exceptional leadership experience provides the Board with financial accounting and management expertise and perspectives.
 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ELECTION OF THE NOMINEES,
THE RIGHT HONOURABLE BRIAN MULRONEY AND MICHAEL H. WARGOTZ


19


Table of Contents

 
EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
Overview
 
Our Total Compensation Strategy is designed to achieve the following objectives:
 
Attract and retain superior senior management talent.
 
Provide our executives with market competitive compensation consistent with comparable hotel and other service companies.
 
Support a high-performance environment by linking compensation with performance.
 
Support a long-term focus for our executives that aligns their interests with the interests of our shareholders.
 
As discussed in more detail below, the compensation decisions and other actions applicable to our named executive officers for 2009 were as follows:
 
In February 2009, management recommended to the Compensation Committee (Committee) that, as part of an overall plan to reduce our costs, the named executive officers together with other senior levels of management should not receive a 2009 base salary merit increase. The Committee considered and approved this recommendation. We paid our named executive officers the base salaries listed in the Summary Compensation Table below.
 
In February 2009, the Committee granted stock-settled stock appreciation rights and restricted stock units to Mr. Holmes, our CEO, and restricted stock units to our other named executive officers in the amounts listed in the Grants of Plan-Based Awards Table below.
 
In February 2009, the Committee approved the factors to be used to determine any potential 2009 annual incentive compensation for our named executive officers.
 
In February 2009, the Committee granted restricted cash units to Mr. Holmes, Mr. Ballotti, CEO of our Wyndham Exchange and Rentals business unit (WER) and Mr. Hanning, CEO of our Wyndham Vacation Ownership business unit (WVO) as described below under “Long-Term Incentive Compensation.”
 
In February 2009, the Committee approved 2009 executive perquisites consistent with our 2008 program. Named executive officer compensation for 2009 attributable to perquisites is described in the All Other Compensation Table below.
 
In May 2009, our shareholders approved the amendment and restatement of our 2006 Equity and Incentive plan primarily for purposes of Section 162(m) of the Internal Revenue Code (Code).
 
In July 2009, we entered into a termination and release agreement with Virginia M. Wilson, formerly our Chief Financial Officer (CFO). Under SEC rules, we are required to include as a named executive officer any person serving as CFO during 2009. Since Ms. Wilson served as our CFO during 2009, she is a named executive officer for purposes of this proxy statement. Under the termination and release agreement and as provided under the terms of her employment agreement, we paid Ms. Wilson cash severance and accelerated the vesting of certain equity-based awards. The amounts paid to Ms. Wilson under the termination and release agreement are listed in the Summary Compensation Table and discussed further below under “Termination and Release Agreement with Named Executive Officer.”


20


Table of Contents

 
In September 2009, we appointed Thomas G. Conforti Executive Vice President and CFO. We entered into an employment agreement with Mr. Conforti with a term expiring in September 2012.
 
In November 2009, we executed a second amendment to the employment agreement with Mr. Holmes to, among other things, extend the term of his employment for a period of 3 years from the termination date under his then existing agreement of July 2010 to July 2013.
 
In November 2009, we executed a new employment agreement with Mr. Hanning expiring in August 2011. The terms of the employment agreements for the named executive officers are further described below under “Employment Agreements” and “Agreements with Named Executive Officers.”
 
In February 2010, the Committee approved and we paid our named executive officers 2009 annual incentive compensation in the amounts listed in the Summary Compensation Table below.
 
Total Compensation Strategy
 
Our Total Compensation Strategy is designed to achieve the following objectives:
 
Attract and retain superior senior management talent. We believe that attracting and retaining superior senior managers are integral to our ongoing success. Our named executive officers possess extensive experience in our business and the hospitality industry segments in which we compete and demonstrate the leadership skills and commitment to excellence that we believe are critical for our company. Accordingly, our Total Compensation Strategy is designed in part to promote a long-term commitment from our named executive officers.
 
Provide our executives with compensation that is consistent and competitive with compensation provided by comparable hotel and other service companies. We provide our named executive officers base salary, cash-based annual incentive compensation, equity-based long-term incentive compensation, perquisites and retirement, health and welfare benefits that are targeted to the market median but may approach the 75th percentile of our peer group based on meeting corporate, business unit and individual objectives.
 
Support a high-performance environment by linking compensation with performance. Our key goals are to increase our earnings, cash flow and shareholder value. Consistent with these goals, we believe a significant portion of our executive compensation should be contingent on actual results. Accordingly, compensation levels are strongly influenced by corporate, business unit and individual performance.
 
Support a long-term focus for our executives that aligns their interests with the interests of our shareholders. Long-term incentive compensation is intended to align the interests of our named executive officers with those of our shareholders as well as support our goal of retaining our key personnel.
 
Compensation Committee Matters
 
Wyndham Worldwide Compensation Committee.  The Committee is responsible for establishing executive compensation policies and programs consistent with corporate objectives and shareholder interests. The 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 Committee Chair reports at our Board meetings on Committee actions and recommendations.


21


Table of Contents

Executive Compensation Consultant.  For 2009, Hewitt Associates was retained by the Committee as a third-party advisor to provide independent advice, research and evaluation related to executive compensation. In this capacity, the Committee utilizes reports and analyses prepared by Hewitt Associates. Hewitt Associates was retained to provide the Committee with competitive market pay analyses including compensation measurement services, peer group proxy data studies and market trends. In November 2009, we paid Hewitt Associates approximately $7,500 for benefits and regulatory trend consulting services that were not related to any specific employee or group of employees of Wyndham Worldwide. Hewitt Associates provided no other services to the Committee or Wyndham Worldwide during 2009.
 
Management’s Role.  Our management plays a significant role in our executive compensation process including evaluating executive performance and recommending base salary merit increases, performance factors for annual incentive compensation and long-term incentive compensation for the named executive officers other than our CEO. Our CEO works with the Committee in establishing the agenda for Committee meetings and management prepares and distributes meeting information to Committee members. Our CEO also participates in 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 Committee.
 
Annual Evaluation.  An important aspect of the Committee’s work relates to the annual determination of compensation for our named executive officers. The Committee meets each year to evaluate the performance of the named executive officers and consider, review and approve any potential increases in base salaries, annual incentive compensation, grants of long-term incentive compensation and perquisites.
 
Compensation Committee Discretion.  For 2009, while the Committee reviewed management’s recommendations, the Committee retained discretion over all elements and levels of the named executive officers’ compensation. For 2009, 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 deemed appropriate by the Committee.
 
Employment Agreements
 
We have entered into employment agreements with each of the named executive officers the terms of which form the basis of the named executive officers’ compensation elements and levels. The compensation elements and levels provided under the agreements are reviewed at the inception, annually or for renewals of each agreement by our compensation consultant and the Committee against the peer group data described below under “Compensation Benchmarking”.
 
In September 2009, we entered into an employment agreement with Mr. Conforti with a term expiring in September 2012. In November 2009, we executed a second amendment to the employment agreement with Mr. Holmes to, among other things, extend the term of his employment for a period of 3 years from the termination date under his then existing agreement of July 2010 to July 2013, revise the method by which his severance is calculated in the event of a without cause termination or a constructive discharge, eliminate his right to receive severance solely upon the occurrence of a change-in-control, and eliminate a tax gross up in the event an excise tax under Section 4999 of the Code is triggered under his agreement, but instead provide that his compensation will be reduced to $1 below the threshold that triggers excise taxes under the Code, but only to the extent that the net after-tax amount received after the reduction is higher than what he would receive if he paid the applicable excise and related taxes. In November 2009, we executed a new employment agreement with Mr. Hanning expiring in August 2011.


22


Table of Contents

The terms of the employment agreements are further described below under “Agreements with Named Executive Officers”.
 
Compensation Benchmarking
 
Management and the Committee believe that information regarding compensation practices at other companies is useful in evaluating the compensation of our named executive officers. Management and the Committee 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 management and the Committee consider in assessing the reasonableness of the compensation of our executives.
 
Accordingly, in September 2008, our compensation consultant conducted a competitive review of the compensation elements and levels of our named executive officers using a representative peer group of companies. Our compensation consultant recommended to the Committee and the Committee approved a peer group of companies consistent with the prior year review and based on one or more of the following criteria: companies or divisions within companies in generally the same industry or business as Wyndham Worldwide; companies that were similar in size to Wyndham Worldwide in terms of revenues and market value; companies used by analysts to compare Wyndham Worldwide’s financial performance; and organizations in similar markets such as non-hospitality companies that have franchise operations. Our peer group for 2009 compensation benchmarking consisted of the following companies:
 
     
Choice Hotels International, Inc. 
  Darden Restaurants, Inc.
Host Hotels & Resorts, Inc.
  Morgans Hotel Group Co.
Marriott International, Inc. 
  Orient-Express Hotels Ltd.
Starwood Hotels & Resorts Worldwide, Inc. 
  Bluegreen Corporation
Intercontinental Hotels Group Plc
  Sunstone Hotel Investors, Inc.
MGM Mirage
  Strategic Hotels & Resorts, Inc.
Wynn Resorts, Limited
  LaSalle Hotel Properties
Royal Caribbean Cruises Ltd. 
  Gaylord Entertainment Company
Carnival Corporation & Plc
  Yum Brands, Inc.
American Express Company
  The Walt Disney Company
 
The objectives of the compensation review were to compare for consistency the compensation of our executives to that of similarly-situated executives at peer organizations, ensure that our compensation practices are consistent with our Total Compensation Strategy and provide a framework for 2009 compensation decisions. The peer group compensation review included the following compensation elements using the most recently filed proxy statements for each peer company: base salary, annual incentive compensation, long-term incentive compensation, actual total cash compensation and actual total compensation. Compensation levels were obtained for the peer group median and 75th percentiles for each compensation element to provide a full understanding of competitive pay practices.
 
Base Salary
 
Consistent with our Total Compensation Strategy, we provide base salaries designed to attract and retain our named executive officers while providing them with a base level of income.
 
In October 2008, our compensation consultant reviewed the named executive officers’ 2008 base salaries against the peer group and found their base salaries to be above the benchmark median but below the 75th percentile.
 
In February 2009, management recommended to the Committee that, as part of an overall plan to reduce our costs, the named executive officers together with other senior levels of management


23


Table of Contents

should not receive a 2009 base salary merit increase. The Committee considered and approved this recommendation.
 
For 2009, we paid our named executive officers the base salaries (that were effective March 1, 2008) listed in the Summary Compensation Table below.
 
Annual Incentive Compensation
 
Consistent with our Total Compensation Strategy, we provide cash-based annual incentive compensation designed to create incentives for the named executive officers to drive our short-term financial and operating performance and thus create value for our shareholders.
 
In October 2008, our compensation consultant reviewed the named executive officers’ 2007 annual incentive compensation (because 2008 annual incentive compensation was not determined until February 2009) against the peer group and found the executives’ annual incentive compensation to be above or consistent with the benchmark median but below the 75th percentile.
 
In February 2009, management recommended and the Committee approved a combination of four factors to determine potential 2009 annual incentive compensation for our named executive officers: actual total company (corporate) and/or business unit Earnings Before Interest and Taxes (EBIT), as adjusted, a standard measure of our profitability, as measured against target EBIT established at the beginning of the plan year; individual performance based on meeting strategic objectives; a target percentage of base salary as specified in the executive’s employment agreement; and the executive’s actual base salary earned during the year. An executive’s annual incentive compensation may be higher or lower than target annual incentive compensation depending on corporate, business unit and individual performance.
 
The EBIT targets for the corporation and business units are recommended by management and approved by the Committee based on operating budgets consistent with our strategic plan. The EBIT targets may be adjusted for special items including legacy matters. Consistent with our Total Compensation Strategy, we believe that the EBIT targets represent appropriate and rigorous goals for our executives to achieve earnings growth and create shareholder value. We further believe that using our annual incentive compensation program to provide incentives to our named executive officers to exceed the EBIT targets and accomplish strategic objectives is an important tool to implement our Total Compensation Strategy.
 
To review the named executive officers’ individual performance, senior management reviews the executives’ individual contributions and personal leadership together with their performance on function or business unit strategic objectives including business development, business drivers and cost reduction initiatives. Management reviews the function or business unit operating results against the targets as previously approved by the Committee together with the individual performance of the named executive officers and recommends to the Committee annual incentive compensation levels for the named executive officers. The Committee then considers the recommendations and may approve, deny or modify the recommendations in its discretion.
 
For 2009, the corporate adjusted EBIT target was approximately $664.3 million and actual adjusted corporate EBIT was approximately $734.8 million or 110.6% of the adjusted target. Any potential annual incentive compensation to be paid to Mr. Holmes and Mr. Conforti was weighted 100% on the corporate results and their individual performance. Management reviewed the corporate results together with their individual performance and recommended to the Committee that Mr. Holmes and Mr. Conforti receive 2009 annual incentive compensation at 125% of target. Since Mr. Conforti joined Wyndham Worldwide in September 2009, his 2009 annual incentive compensation was prorated to his 2009 earnings.
 
For 2009, the WER adjusted EBIT target was approximately $200.8 million and actual WER adjusted EBIT was approximately $231.5 million or 115.3% of the adjusted target. Any annual incentive


24


Table of Contents

compensation to be paid to Mr. Ballotti was weighted 25% on the corporate results and 75% on the WER results and his individual performance. Management reviewed the WER and corporate results together with his individual performance and recommended to the Committee that Mr. Ballotti receive 2009 annual incentive compensation at 125% of target.
 
For 2009, the Wyndham Hotel Group (WHG) adjusted EBIT target was approximately $164.7 million and actual WHG adjusted EBIT was approximately $131.5 million or 79.8% of the adjusted target. Any annual incentive compensation to be paid to Mr. Danziger was weighted 25% on the corporate results and 75% on the WHG results and his individual performance. Management reviewed the WHG and corporate results together with his individual performance and recommended to the Committee that Mr. Danziger receive 2009 annual incentive compensation at 74% of target.
 
For 2009, the WVO adjusted EBIT target was approximately $298.9 million and actual WVO adjusted EBIT was approximately $371.9 million or 124.4% of the adjusted target. Any annual incentive compensation to be paid to Mr. Hanning was weighted 25% on the corporate results and 75% on the WVO results and individual performance. Management reviewed the WVO and corporate results together with his individual performance and recommended to the Committee that Mr. Hanning receive 2009 annual incentive compensation at 125% of target.
 
In February 2010, the Committee considered and approved the management recommendations described above. The Non-Equity Incentive Plan column of the Summary Compensation Table below lists the annual incentive compensation we paid our named executive officers for 2009.
 
Long-term Incentive Compensation
 
Consistent with our Total Compensation Strategy, we provide our named executive officers with long-term incentive compensation to create incentives to achieve share price appreciation and encourage retention.
 
In October 2008, our compensation consultant reviewed the named executive officers’ 2008 long-term incentive compensation against the peer group and found it to be above the benchmark median but below the 75th percentile.
 
Management annually recommends and the Committee approves an aggregate budget available for long-term incentive compensation. For 2009, the aggregate budget was allocated based on the relative number of eligible executives in corporate services and the business units. Long-term incentive compensation is then recommended by management and granted by the Committee to the named executive officers based on individual performance review and future potential. Elements of individual performance considered by the Committee in such review include business unit or function results of operations, achievement of the strategic objectives described above and leadership characteristics.
 
Consistent with the objectives of our Total Compensation Strategy, 2009 long-term incentive compensation for our named executive officers focused on aligning their interests with those of shareholders, achieving competitiveness with the external market, rewarding key talent contributions and retention.
 
Consistent with these objectives, the Committee granted long-term incentive compensation as follows: in February 2009, the Committee granted stock-settled stock appreciation rights, restricted stock units and 817,500 restricted cash units to Mr. Holmes. In February 2009, the Committee granted each of Mr. Ballotti and Mr. Hanning restricted stock units and 202,500 restricted cash units. In December 2008, in connection with his employment agreement, the Committee granted Mr. Danziger an initial grant of stock-settled stock appreciation rights and restricted stock units. Mr. Danziger’s 2009 grant of restricted stock units was prorated based on the terms of his employment agreement given the initial grant in December 2008. In September 2009, in connection with his employment agreement, the Committee granted Mr. Conforti restricted stock units.


25


Table of Contents

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 subject to continued employment. Restricted cash units vest in whole in February 2012. Each restricted cash unit is equal to $1 on vesting. For our February 2009 grants (other than for Mr. Danziger) the Committee reduced our traditional vesting period for long-term incentive compensation from four years to three years to further support the objectives of our Total Compensation Strategy.
 
The 2009 grants of stock-settled stock appreciation rights and restricted stock units made to the named executive officers are listed in the Grants of Plan-Based Awards table below. Long-term incentive compensation is granted under our 2006 Equity and Incentive Plan (amended and restated as of May 12, 2009).
 
Total Compensation
 
In connection with the annual and on-going evaluation of the compensation of the named executive officers, our compensation consultant prepares and management provides the Committee with prior year total compensation summaries and tally sheets for the named executive officers so the Committee may evaluate how each compensation element fits into our overall compensation objectives. In addition, based on the peer group data for the individual compensation elements discussed above, management provides the Committee with a market assessment of total compensation of each of the named executive officers.
 
In October 2008, our compensation consultant reviewed the named executive officers’ 2008 total compensation (using 2007 annual incentive compensation) against the peer group and found it to be above the benchmark median but below the 75th percentile. In February 2009, the Committee reviewed the peer group data prepared by our management and compensation consultant as described above in considering each compensation element against total compensation and the Committee was satisfied that 2009 total compensation was consistent with our Total Compensation Strategy.
 
Mix of Compensation Elements
 
In addition to the review of the compensation levels of the named executive officers against the revised peer group, the Committee reviewed the mix of compensation elements prevalent among the peer group. For 2009, our compensation consultant advised management and the Committee that the elements of compensation that we provide our named executive officers are consistent with the compensation elements provided by the peer group companies.
 
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 named executive officers while providing them with a base level of income. Annual incentive compensation is designed to create incentives for the named executive officers to drive short-term financial and operating performance and thus create value for shareholders. Long-term incentive compensation creates share price appreciation incentives for our named executive officers and encourages retention. As each element has specific objectives, the 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 Total Compensation Strategy.
 
Since the peer group 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 Total Compensation Strategy, and given the significant scope and responsibilities of the CEO, which are greater than those of the other named executive officers, the Committee believes any differences between the individual compensation elements and the total compensation of our CEO and the other named executive officers are appropriate.


26


Table of Contents

Perquisites
 
We provide our named executive officers with perquisites that management and the Committee believe are reasonable, competitive and consistent with our Total Compensation Strategy. Management and the Committee believe that our perquisites help us to retain the best managers and allow them to operate more effectively.
 
In February 2009, management provided the Committee with and the Committee reviewed a market assessment of competitive perquisite practices utilizing widely available market data publications from Hewitt Associates, Watson Wyatt and other compensation consultants. Based on this information, the Committee found our 2009 executive perquisites to be consistent with market practices.
 
In February 2009, the 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. As permitted under his employment agreement, for 2009 we provided Mr. Holmes with personal use of company aircraft for which we imputed income without a tax gross-up. Perquisites provided to the named executive officers in 2009 are described in the All Other Compensation Table below.
 
Officer Deferred Compensation Plan  
 
Our nonqualified officer deferred compensation plan permits named executive officers to defer salary, commission and annual incentive compensation. We match executive contributions to the plan up to 6% of salary, commission and annual incentive compensation. The executive makes an irrevocable deferral election prior to the beginning of the calendar year. 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 2009 Nonqualified 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 make available to our named executive officers a savings restoration plan, which allows executives to defer compensation in excess of the amounts permitted by the 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 vesting of specified long-term incentive grants 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” and “Potential Payments on Termination or Change-in-Control”.
 
The severance terms for the named executive officers were negotiated in connection with their employment agreements consistent with peer group market practices and data provided by our compensation consultant. We believe these arrangements are necessary to attract and retain our executives and ensure the continuity of management. 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.


27


Table of Contents

Change-in-Control Arrangements  
 
The 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” and “Potential Payments on Termination or Change-in-Control”. In addition, long-term incentive compensation grants made to all key employees, including the named executive officers, under our Equity and Incentive Plan fully vest on a change-in-control.
 
The change-in-control terms for the named executive officers were negotiated in connection with their employment agreements consistent with peer group market practices and data provided by our compensation consultant. Since a potential change-in-control transaction generally results in increased shareholder value, the Committee believes that it is important to provide incentives to motivate the named executive officers to pursue and complete a potential transaction should it arise and ensure retention. 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 the named executive officers’ current income and therefore are independent of the annual compensation review.
 
Amendment of Equity and Incentive Plan  
 
In May 2009, our shareholders approved the amendment and restatement of our 2006 Equity and Incentive plan primarily for purposes of Section 162(m) of the Code. In connection with the amendment, we reduced the reserve of shares of our common stock that may be issued under the plan from 43.5 million to 36.7 million shares and extended the expiration of the plan to March 30, 2019.
 
Termination and Release Agreement with Named Executive Officer
 
In July 2009, we entered into a termination and release agreement with Ms. Wilson effective November 13, 2009. Consistent with Ms. Wilson’s employment agreement, we paid Ms. Wilson cash severance of $2,056,000, which is an amount equal to 200% of the sum of her 2009 base salary and target annual incentive compensation, and any of Ms. Wilson’s long-term incentive awards that would have otherwise vested within one year of November 13, 2009 vested immediately. As a result of this acceleration of the vesting dates, Ms. Wilson was vested with the following stock-settled stock appreciation rights that would have otherwise vested on March 1, 2010, 11,591 with an exercise price of $22.17, and May 2, 2010, 7,923 with an exercise price of $36.70, all of which expire November 13, 2011. Similarly, Ms. Wilson was vested with 99,565 restricted stock units (before income tax withholding) that would have otherwise vested on February 27, 2010, March 1, 2010 or May 2, 2010 as applicable. Ms. Wilson will continue to hold stock-settled stock appreciation rights and stock options as described in the Outstanding Equity Awards at 2009 Fiscal Year-End Table.
 
Ms. Wilson executed a customary release agreement with us pursuant to which Ms. Wilson released us from claims arising in connection with, among other things, her employment with us and the termination and release agreement. Under the termination and release agreement, Ms. Wilson will remain subject to certain provisions of her employment agreement including customary restrictive covenants including non-competition and non-solicitation covenants for two years following the effective date of the termination and release agreement.
 
2010 Annual Incentive Compensation
 
In February 2010, the Committee approved the factors that will be used to determine any potential 2010 annual incentive compensation for our named executive officers. While corporate and business unit EBIT performance and individual performance against strategic objectives will continue to be significant determining factors as in prior years, for 2010 we have introduced the Cash Flow Multiplier, an additional annual incentive compensation modifier that will create incentives for superior execution to increase cash flow.


28


Table of Contents

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 require our named executed officers to own our common stock with a market value at least equal to the following multiples: CEO: 4 times base salary; and Business Unit CEO and our CFO: 2 times base salary. Share ownership meeting the guidelines includes common stock and restricted stock units. As of December 31, 2009, all of the named executive officers were in compliance with these guidelines.
 
Impact of Accounting and Tax
 
As a general matter, the Committee considers the various accounting and tax implications of the compensation elements employed by us. Section 162(m) of the 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 named executive officers during any taxable year, unless such compensation is performance based and meets certain requirements. Although it is the Committee’s goal to maximize the effectiveness of our executive compensation plans, the Committee may determine that it is appropriate and in our best interest as well as the best interests of our shareholders to have the flexibility to pay compensation that is not performance-based for Section 162(m) purposes in order to provide a compensation package consistent with our program and objectives.
 
Compensation Committee Report
 
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. We recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for filing with the SEC.
 
COMPENSATION COMMITTEE
 
The Right Honourable Brian Mulroney (Chair)
Myra J. Biblowit
Pauline D.E. Richards


29


Table of Contents

 
2009 Summary Compensation Table
 
The following table describes compensation paid to our named executive officers for 2009, 2008 and 2007.
 
                                                                       
                                      Non-Equity
                 
                      Stock
      Option
      Incentive Plan
      All Other
         
              Salary
      Awards
      Awards
      Compensation
      Compensation
      Total
 
Name & Principal Position
    Year
      ($)       ($)(a)       ($)(a)       ($)(b)       ($)(c)       ($)  
Stephen P. Holmes
      2009         1,085,011         922,500         1,010,000         2,712,528         365,762         6,095,801  
                                                                       
Chairman and Chief Executive Officer
      2008         1,076,355         1,250,000         3,750,000         -- (d)       222,462         6,298,817  
                                                                       
        2007         1,013,848         1,000,000         3,000,000         2,212,435         329,339         7,555,622  
                                                                       
Geoffrey A. Ballotti
      2009         550,004         922,500         --         687,505         31,710         2,191,719  
                                                                       
President and Chief Executive Officer,
      2008         401,926         1,387,500         462,500         401,926         72,850         2,726,702  
                                                                       
Wyndham Exchange and Rentals
      2007         --         --         --         --         --         --  
                                                                       
Eric A. Danziger
      2009         500,009         750,000         --         368,756         143,444         1,762,209  
                                                                       
President and Chief Executive Officer,
      2008 (e)       28,847         562,500         187,500         --         --         778,847  
                                                                       
Wyndham Hotel Group
      2007         --         --         --         --         --         --  
                                                                       
Franz S. Hanning
      2009         606,008         922,500         --         825,000         69,833         2,423,341  
                                                                       
President and Chief Executive Officer,
      2008         599,470         1,687,500         562,500         2,462,000 (f)       70,036         5,381,506  
                                                                       
Wyndham Vacation Ownership
      2007         561,821         1,500,000         500,000         795,300         104,928         3,462,049  
                                                                       
Thomas G. Conforti (g) 
      2009         149,427         1,500,000         --         186,784         49,187         1,885,398  
                                                                       
Executive Vice President and
      2008         --         --         --         --         --         --  
                                                                       
Chief Financial Officer
      2007         --         --         --         --         --         --  
                                                                       
Virginia M. Wilson
      2009 (h)       464,581         768,750         --         --         2,149,184         3,382,515  
                                                                       
Former Executive Vice President
      2008         510,157         937,500         312,500         357,111         91,654         2,208,922  
                                                                       
and Chief Financial Officer
      2007         481,578         937,500         312,500         525,454         92,492         2,349,524  
                                                                       
 
 
(a) Represents the aggregate grant date fair value of stock and option awards computed in accordance with ASC 718. For 2009, for Mr. Holmes, Mr. Ballotti and Mr. Hanning, excludes grants of 817,500, 202,500 and 202,500 restricted cash units (each with a grant date fair value of an equivalent dollar amount), respectively, all of which vest in whole in February 2012.
 
(b) For 2009, represents annual incentive compensation for 2009 paid in 2010. For 2008, represents annual incentive compensation for 2008 paid in 2009. For 2007, represents annual incentive compensation for 2007 paid in 2008.
 
(c) See All Other Compensation Table below for a description of compensation included in this column.
 
(d) The Committee reviewed and accepted Mr. Holmes’ recommendation to not award Mr. Holmes 2008 annual incentive compensation for reasons unrelated to his performance.
 
(e) Mr. Danziger commenced employment in December 2008.
 
(f) Includes $2 million additional cash incentive compensation payable pursuant to previous employment agreement.
 
(g) Mr. Conforti commenced employment in September 2009.
 
(h) Includes compensation for 2009 through termination date, November 13, 2009, and for amounts paid in connection with termination and release agreement.
 


30


Table of Contents

 
All Other Compensation Table
 
The All Other Compensation in the Summary Compensation Table above includes the following components. The total all other compensation amounts for 2008 and 2007 are provided in the “All Other Compensation” column of the Summary Compensation Table above.
 
                                                                           
            Mr. Holmes
    Mr. Ballotti
    Mr. Danziger
    Mr. Hanning
    Mr. Conforti
    Ms. Wilson
   
            ($)     ($)     ($)     ($)     ($)     ($)    
Personal use of company
      2009         46,115         --         --         --         --         --      
                                                                           
aircraft (a)
      2008         91,695         --         --         1,504         --         --      
                                                                           
        2007         78,845         --         --         7,658         --         --      
                                                                           
Company automobile (b)
      2009         26,756         17,917         20,346         27,229         6,083         14,116      
                                                                           
        2008         23,788         10,247         --         27,906         --         20,586      
                                                                           
        2007         23,870         --         --         17,404         --         15,199      
                                                                           
Financial planning
      2009         10,000         7,930         --         9,930         1,330         8,930      
                                                                           
services (c)
      2008         10,000         --         --         9,680         --         8,700      
                                                                           
        2007         10,000         --         --         9,310         --         8,390      
                                                                           
401(K) company match
      2009         --         2,131         --         14,700         --         13,514      
                                                                           
        2008         --         --         --         13,500         --         --      
                                                                           
        2007         --         --         --         13,500         --         --      
                                                                           
Deferred compensation
      2009         227,852         --         50,972         --         --         27,875      
                                                                           
company match
      2008         64,581         46,961         --         --         --         52,036      
                                                                           
        2007         193,577         --         --         47,718         --         60,422      
                                                                           
Dividends (d)
      2009         35,968         2,330         5,196         11,062         --         22,363      
                                                                           
        2008         3,172         --         --         3,110         --         2,179      
                                                                           
        2007         --         --         --         --         --         --      
                                                                           
Cash severance
      2009         --         --         --         --         --         2,056,000      
                                                                           
Relocation expense
      2009         --         --         46,662         --         29,054         --      
                                                                           
reimbursement (e)
      2008         --         10,764         --         --         --         --      
                                                                           
Aggregate tax gross-up
      2009 (f)       19,071         1,402         20,268         6,912         12,720         6,386      
                                                                           
        2008 (g)       24,426         4,158         --         11,090         --         7,433      
                                                                           
        2007 (h)       14,939         --         --         8,225         --         7,368      
                                                                           
2009 Total
                365,762         31,710         143,444         69,833         49,187         2,149,184      
                                                                           
 
 
(a) Represents income imputed for personal use of company aircraft calculated using a standard rate per mile flown.
 
(b) Aggregate incremental cost to us of automobile benefit calculated as the aggregate company payment less any executive contribution. The amounts for company payment include insurance and other charges and exclude tax gross-up described below.
 
(c) Amounts exclude tax gross-up described below.
 
(d) Dividends paid on vesting of restricted stock units.
 
(e) Amounts exclude tax gross-up described below.
 
(f) Aggregate tax gross-up for 2009 consisted of the following: Mr. Holmes, automobile, $13,212 and financial planning, $5,859; Mr. Ballotti, automobile, $1,044 and financial planning, $358; Mr. Danziger, automobile, $20, and relocation expense, $20,248; Mr. Hanning, automobile, $6,628 and financial planning, $284; Mr. Conforti, automobile, $362, financial planning, $10 and relocation expense $12,348; and Ms. Wilson, automobile, $6,013 and financial planning, $373.
 
(g) Aggregate tax gross-up for 2008 consisted of the following: Mr. Holmes, automobile, $15,787 and financial planning, $8,639; Mr. Ballotti, automobile, $1,260 and relocation expense, $2,898; Mr. Hanning, automobile, $9,702 and financial planning, $1,388; and Ms. Wilson, automobile, $6,191 and financial planning, $1,242.
 
(h) Aggregate tax gross-up for 2007 consisted of the following: Mr. Holmes, automobile, $10,421 and financial planning, $4,518; Mr. Hanning, automobile, $6,890 and financial planning, $1,335; and Ms. Wilson, automobile, $6,170 and financial planning, $1,198.


31


Table of Contents

 
2009 Grants of Plan-Based Awards Table
 
The following table summarizes grants of plan-based awards made to the named executive officers in 2009.
 
                                                                         
                                  All Other
      All Other
             
                                  Stock
      Option
      Exercise
    Grant
                                  Awards:
      Awards:
      or Base
    Date Fair
                                  Number of
      Number of
      Price of
    Value of
            Estimated Possible Payouts Under
      Shares of
      Securities
      Stock
    Stock and
            Non-Equity Incentive Plan Awards       Stock or
      Underlying
      and Option
    Option
      Grant
    Threshold
    Target
      Maximum
      Units
      Options
      Awards
    Awards
Name
    Date
    ($)     ($)       ($)       (#)       (#)       ($ /Sh)     ($)(a)
Mr. Holmes
    02/27/09                                 250,000 (b )                 3.69         922,500  
                                                                         
      02/27/09                                           500,000 (c)         3.69         1,010,000  
                                                                         
      (d)     542,500       2,170,000         2,712,500                                          
                                                                         
Mr. Ballotti
    02/27/09                                 250,000 (b )                 3.69         922,500  
                                                                         
      (d)     174,625       550,000         687,500                   --                      
                                                                         
Mr. Danziger
    02/27/09                                 203,252 (e )                 3.69         750,000  
                                                                         
      (d)     215,000       500,000         625,000                   --                      
                                                                         
Mr. Hanning
    02/27/09                                 250,000 (b )                 3.69         922,500  
                                                                         
      (d)     165,000       660,000         825,000                   --                      
                                                                         
Mr. Conforti
    09/08/09                                 98,554 (f )                 15.22         1,500,000  
                                                                         
      (d)     175,000       175,000         186,784                   --                      
                                                                         
Ms. Wilson
    02/27/09                                 208,333 (b )                 3.69         768,750  
                                                                         
 
 
(a) For 2009, for Mr. Holmes, Mr. Ballotti and Mr. Hanning, excludes grants of 817,500, 202,500 and 202,500 restricted cash units (each with a grant date fair value of an equivalent dollar amount), respectively, all of which vest in whole in February 2012.
 
(b) Grant of restricted stock units, which vest ratably over a period of three years on each anniversary of February 27, 2009.
 
(c) Grant of stock-settled stock appreciation rights, which vest ratably over a period of three years on each anniversary of February 27, 2009. Number of stock-settled stock appreciation rights calculated by dividing the grant date fair value by the fair value of such rights on the date of grant as determined using the Black-Scholes formula. A discussion of the assumptions used in calculating the fair value of such rights may be found in Note 18 to our 2009 audited financial statements of our annual report on Form 10-K filed with the SEC on February 19, 2010.
 
(d) Represents potential threshold, target and maximum annual incentive compensation for 2009. Amounts actually paid for 2009 are described in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above.
 
(e) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of February 27, 2009.
 
(f) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of September 8, 2009.
 
Under our Equity and Incentive Plan, all grants set forth in the table fully vest on a change-in-control. Dividends paid on our common stock are credited for unvested restricted stock units and are paid in cash on vesting.


32


Table of Contents

 
Outstanding Equity Awards at 2009 Fiscal Year-End Table
 
The following table summarizes the number of securities underlying outstanding plan awards for the named executive officers as of December 31, 2009 (November 13, 2009 for Ms. Wilson).
 
                                                     
      Option Awards     Stock Awards
                                    Number of
      Market Value
      Number of Securities
                    Shares of
      of Shares of
      Underlying Unexercised
      Option
            Stock That
      Stock That
      Options
      Exercise
      Option
    Have Not
      Have Not
      (#)       Price
      Expiration
    Vested
      Vested
Name
    Exercisable       Unexercisable       ($)       Date
    (#)       ($)(a)
Mr. Holmes
      105,030                   46.43844       01/13/10                
                                                     
        208,498                   19.77837       01/03/11                
                                                     
        36,486                   40.02951       01/22/12                
                                                     
        134,794         44,932 (b)       31.85000       08/01/16                
                                                     
        152,129         152,130 (c)       36.70000       05/02/13                
                                                     
        139,094         417,285 (d)       22.17000       03/01/14                
                                                     
                  500,000 (e)       3.69000       02/27/15                
                                                     
                                            19,624 (f)     395,816
                                                     
                                            13,624 (g)     274,796
                                                     
                                            42,287 (h)     852,929
                                                     
                                            250,000 (i)     5,042,500
                                                     
Mr. Ballotti
      15,904         47,713 (j)       23.82000       05/02/14                
                                                     
                                            43,687 (k)     881,167
                                                     
                                            250,000 (i)     5,042,500
                                                     
Mr. Danziger
      21,210         63,631 (l)       4.33000       12/01/14                
                                                     
                                            97,431 (m)     1,965,183
                                                     
                                            203,252 (n)     4,099,593
                                                     
Mr. Hanning
      31,274                   29.18687       04/03/11                
                                                     
        20,849                   27.00154       10/18/11                
                                                     
        20,683                   40.02951       01/22/12                
                                                     
        71,890                   31.85000       08/01/16                
                                                     
        25,354         25,355 (c)       36.70000       05/02/13                
                                                     
        20,864         62,592 (d)       22.17000       03/01/14                
                                                     
                                            15,699 (f)     316,649
                                                     
                                            20,436 (g)     412,194
                                                     
                                            57,087 (h)     1,151,445
                                                     
                                            250,000 (i)     5,042,500
                                                     
Mr. Conforti
                                          98,554 (o)     1,987,834
                                                     
Ms. Wilson
      7,356                   38.83177       11/13/10                
                                                     
        2,452                   38.83177       11/13/12                
                                                     
        71,890                   31.85000       11/13/11                
                                                     
        23,769                   36.70000       11/13/11                
                                                     
        23,182                   22.17000       11/13/11                
                                                     
 
 
(a) Calculated using closing price of our common stock on the New York Stock Exchange on December 31, 2009 of $20.17.
 
(b) Grant of stock-settled stock appreciation rights, which vest ratably over a period of four years on each anniversary of May 2, 2006.
 
(c) Grant of stock-settled stock appreciation rights, which vest ratably over a period of four years on each anniversary of May 2, 2007.
 
(d) Grant of stock-settled stock appreciation rights, which vest ratably over a period of four years on each anniversary of March 1, 2008.
 
(e) Grant of stock-settled stock appreciation rights, which vest ratably over a period of three years on each anniversary of February 27, 2009.
 
(f) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of May 2, 2006.
 
(g) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of May 2, 2007.
 
(h) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of March 1, 2008.
 
(i) Grant of restricted stock units, which vest ratably over a period of three years on each anniversary of February 27, 2009.
 
(j) Grant of stock-settled stock appreciation rights, which vest ratably over a period of four years on each anniversary of May 2, 2008.
 
(k) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of May 2, 2008.
 
(l) Grant of stock-settled stock appreciation rights, which vest ratably over a period of four years on each anniversary of December 1, 2008.
 
(m) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of December 1, 2008.
 
(n) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of February 27, 2009.
 
(o) Grant of restricted stock units, which vest ratably over a period of four years on each anniversary of September 8, 2009.


33


Table of Contents

 
2009 Option Exercises and Stock Vested Table
 
The following table summarizes the Wyndham Worldwide stock option exercises and vesting of restricted stock units by the named executive officers in 2009.
 
                                                 
      Option Awards     Stock Awards
            Number of Shares
    Value
          Number of Shares
    Value
            Acquired
    Realized
          Acquired
    Realized
            on
    on
          on
    on
Name
    Date
    Exercise
    Exercise
          Vesting
    Vesting
            (#)     ($)     Date
    (#)     ($)(a)
Mr. Holmes
    --     --     --       03/01/09         14,095         45,104  
                                                 
      --     --     --       05/02/09         26,435         337,311  
                                                 
Mr. Ballotti
    --     --     --       05/02/09         14,562         185,811  
                                                 
Mr. Danziger
    --     --     --       12/01/09         32,476         615,420  
                                                 
Mr. Hanning
    --     --     --       03/01/09         19,029         60,893  
                                                 
      --     --     --       05/02/09         25,916         330,688  
                                                 
Mr. Conforti (b)
    --     --     --       --         --         --  
                                                 
Ms. Wilson
    --     --     --       03/01/09         10,571         33,827  
                                                 
      --     --     --       05/02/09         18,160         231,722  
                                                 
      --     --     --       11/13/09         99,565  (c)       1,885,761  
                                                 
 
 
(a) Calculated using closing price of a share of our common stock as follows: March 2, 2009, $3.20; May 4, 2009, $12.76; December 1, 2009, $18.95; and November 13, 2009, $18.94.
 
(b) Mr. Conforti commenced employment in September 2009 and accordingly did not have stock awards that vested in 2009.
 
(c) Consists of accelerated vesting of restricted stock units in connection with termination and release agreement.
 
2009 Nonqualified Deferred Compensation Table
 
The following table provides information regarding 2009 nonqualified deferred compensation for the named executive officers.
 
                                                   
      Executive
    Company
          Aggregate
     
      Contributions in
    Contributions in
    Aggregate Earnings in
    Withdrawals/
    Aggregate Balance at
Name
    2009
    2009
    2009
    Distributions
    12/31/09
      ($)(a)     ($)(b)     ($)(c)     ($)     ($)(d)
Mr. Holmes
      227,852         227,852         692,207         --         3,408,090  
                                                   
Mr. Ballotti
      --         --         31,000         --         116,073  
                                                   
Mr. Danziger
      50,972         50,972         11,152         --         64,230  
                                                   
Mr. Hanning
      --         --         309         --         97,568  
                                                   
Mr. Conforti
      --         --         --         --         --  
                                                   
Ms. Wilson
      27,875         27,875         216,831         --         1,033,151  
                                                   
 
(a) All amounts are reported as 2009 compensation in the Summary Compensation Table above.
 
(b) All amounts are reported as 2009 compensation in the All Other Compensation Table above.
 
(c) Represents gains or losses in 2009 on investment of aggregate balance.
 
(d) Includes amounts that were reported as compensation since 2006 as follows: Mr. Holmes, $871,764; Mr. Ballotti, $93,922; and Mr. Hanning, $95,436.


34


Table of Contents

 
Our Officer Deferred Compensation Plan is described above under “Compensation, Discussion and Analysis”. The aggregate balances of the named executive officers are invested based on the executive’s investment election made at the time of enrollment. Executives may change their investment elections during the year. For 2010, we offer a choice of 30 investment options including our common stock. Investment options include money market, debt, equity and lifecycle funds.
 
Agreements with Named Executive Officers
 
The following describes our employment, termination and related arrangements with our named executive officers.
 
Mr. Holmes
 
Employment Agreement.  In July 2006, we entered into an employment agreement with Mr. Holmes with a term expiring in July 2009, which term automatically extended to July 2010 pursuant to the terms of the agreement. In December 2008, we executed an amendment to the agreement intended to either exempt payments and benefits under the agreement from or comply with Section 409A of the Code.
 
In November 2009, we executed a second amendment to Mr. Holmes’ agreement. The amendment extends the term of his employment from July 2010 to July 2013 and provides that the failure to extend Mr. Holmes’ period of employment or to enter into a new employment agreement with him upon the expiration of his employment term will constitute a constructive discharge under his agreement. In addition, the amendment provides that in the event of a constructive discharge or a without cause termination, Mr. Holmes’ is entitled to a lump sum payment equal to 299% of the sum of his then-current base salary plus an amount equal to the highest annual incentive compensation paid to him for any of the three years immediately preceding the year in which his termination occurs, provided that in no event will the annual incentive compensation portion exceed 200% of his then-current base salary. The amendment also eliminates Mr. Holmes’ right to receive severance solely upon the occurrence of a change-in-control and receive a gross up in the event an excise tax under Section 4999 of the Code is triggered under his agreement. As amended, his employment agreement provides that in the event Section 4999 of the Code is triggered, his compensation will be reduced to $1 below the threshold that triggers excise taxes under the Code, but only to the extent that the net after-tax amount received after the reduction is higher than what he would receive if he paid the applicable excise and related taxes.
 
Mr. Holmes’ agreement provides for a minimum base salary of $1 million, annual incentive compensation with a target amount equal to 200% of his base salary subject to meeting performance goals, grants of long-term incentive compensation as determined by the Committee and employee benefits generally available to our executive officers. The agreement provides Mr. Holmes and his dependents with medical benefits through his age 75.
 
Mr. Holmes’ agreement provides that if his employment with us is terminated by us without cause or due to a constructive discharge all of his then-outstanding equity awards will fully vest and remain exercisable for varying periods as described in the agreement. The agreement provides for customary restrictive covenants including non-competition and non-solicitation covenants effective during the period of employment and for two years after termination of employment.
 
Mr. Ballotti
 
Employment Agreement.  In March 2008, we entered into an employment agreement with Mr. Ballotti with a term expiring in March 2011. In December 2008, we executed an amendment to the agreement intended to either exempt payments and benefits under the agreement from or comply with Section 409A of the Code. The agreement provides for a minimum base salary of $550,000, annual incentive compensation with a target amount equal to 100% of base salary subject to meeting performance goals, annual long-term incentive compensation as determined by the Committee, relocation assistance and participation in employee benefit plans and perquisite programs generally available to our executive officers.


35


Table of Contents

In December 2009, we executed a second amendment to the agreement intended to clarify certain terms regarding the amount of Mr. Ballotti’s severance benefit provided under the agreement in order to address Section 162(m) of the Code. The agreement, as amended, provides that if Mr. Ballotti’s employment is terminated by us without cause or due to a constructive discharge, he will receive a lump sum payment equal to 200% of his then-current base salary plus an amount equal to the highest annual incentive compensation paid to Mr. Ballotti for any of the three years immediately preceding the year in which his employment is terminated (but in no event will the annual incentive compensation portion exceed 100% of his then-current base salary, and in the event of a termination during the three years following the effective date, such amount will be no less than his then-current base salary). In the event of such termination, all of Mr. Ballotti’s then-outstanding equity awards that would otherwise vest within one year following termination will vest (subject to performance goals, if applicable) and any such awards that are stock options or stock appreciation rights will remain exercisable until the earlier of two years following termination and the original expiration date of the awards.
 
The agreement provides for customary restrictive covenants including non-competition and non-solicitation covenants effective during the period of employment and for one year following termination if his employment terminates after the expiration of his employment agreement and for two years following termination if his employment terminates before the expiration of his employment agreement.
 
Mr. Danziger
 
Employment Agreement.  In November 2008, we entered into an employment agreement with Mr. Danziger with a term expiring in December 2012. The agreement provides for a minimum base salary of $500,000, annual incentive compensation with a target amount equal to 100% of base salary subject to meeting performance goals, annual long-term incentive compensation as determined by the Committee, relocation assistance and participation in employee benefit plans and perquisite programs generally available to our executive officers.
 
In December 2009, we executed an amendment to the agreement intended to clarify certain terms regarding the amount of Mr. Danziger’s severance benefit provided under the agreement in order to address Section 162(m) of the Code. The agreement, as amended, provides that if Mr. Danziger’s employment is terminated by us without cause or due to a constructive discharge, he will receive a lump sum payment equal to 200% of his then-current base salary plus an amount equal to the highest annual incentive compensation paid to Mr. Danizger for any of the three years immediately preceding the year in which his employment is terminated (but in no event will the annual incentive compensation portion exceed 100% of his then-current base salary, and in the event of a termination during the three years following the effective date, such amount will be no less than his then-current base salary). In the event of such termination, all of Mr. Danziger’s then-outstanding equity awards that would otherwise vest within one year following termination will vest (subject to performance goals, if applicable) and any such awards that are stock options or stock appreciation rights will remain exercisable until the earlier of two years following termination and the original expiration date of the awards.
 
The agreement provides for customary restrictive covenants including non-competition and non-solicitation covenants effective during the period of employment and for one year following termination if his employment terminates after the expiration of his employment agreement and for two years following termination if his employment terminates before the expiration of his employment agreement.
 
Mr. Hanning
 
Employment Agreement.  In November 2009, we entered into an employment agreement with Mr. Hanning with a term expiring in August 2011. The agreement provides for a minimum base salary of $606,000, annual incentive compensation with a target amount equal to $660,000 subject to meeting performance goals, grants of long-term incentive awards on terms as determined by the Committee and employee benefits and perquisites generally available to our executive officers.


36


Table of Contents

Mr. Hanning’s agreement provides that if his employment is terminated by us without cause or due to a constructive discharge, he will be entitled to a lump-sum payment equal to 200% of the sum of his then-current base salary plus an amount equal to the highest annual incentive compensation paid to Mr. Hanning for any of the three years immediately preceding the year in which his employment is terminated (but in no event will the annual incentive compensation portion exceed $660,000). In the event of such termination, all of Mr. Hanning’s then-outstanding equity awards that would otherwise vest within one year following termination will vest and any such award that is a stock option or stock appreciation right will remain exercisable until the earlier of two years following termination and the original expiration date of such award.
 
The agreement provides for customary restrictive covenants including non-competition and non-solicitation covenants effective during the period of employment and for two years after termination of employment; provided, that if Mr. Hanning’s employment terminates due to the expiration of the period of employment and Mr. Hanning has complied with his obligations under his employment agreement, then Mr. Hanning will not be subject to the non-competition covenants following such expiration unless we exercise our right to subject Mr. Hanning to such obligations for one year following such expiration by paying Mr. Hanning an amount equal to his then-current base salary plus an amount equal to the highest annual incentive compensation paid to Mr. Hanning for any of the three years immediately preceding the year in which his employment is terminated but in no event will the annual incentive compensation portion exceed $660,000.
 
Mr. Conforti
 
Employment Agreement.  In September 2009, we entered into an agreement with Mr. Conforti with a term expiring in September 2012. The agreement provides for a minimum base salary of $525,000, annual incentive compensation with a target amount equal to 100% of his base salary subject to meeting performance goals, 2009 annual incentive compensation equal to at least $175,000, annual long-term incentive compensation on terms as determined by the Committee, relocation assistance and employee benefits and perquisites generally available to our executive officers.
 
Mr. Conforti’s agreement provides that if his employment is terminated by us without cause or due to a constructive discharge, he will be entitled to a lump-sum payment equal to 200% of the sum of his then-current base salary plus an amount equal to the highest annual incentive compensation award paid to Mr. Conforti with respect to the three years immediately preceding the year in which his employment is terminated (but in no event will the annual incentive compensation portion exceed 100% of Mr. Conforti’s then-current base salary or be less than $525,000). In the event of such termination, all of Mr. Conforti’s then-outstanding time-based equity awards that would otherwise vest within one year following termination will vest and any such award that is a stock option or stock appreciation right will remain exercisable until the earlier of two years following termination and the original expiration date of such award, and all of Mr. Conforti’s performance-based long-term incentive awards (including restricted stock units but excluding stock options and stock appreciation rights) will vest and be paid on a pro rata basis, subject to the achievement of the applicable performance goals, based upon the portion of the full performance period during which Mr. Conforti was employed by us plus 12 months (or, if less, assuming employment for the entire performance period remaining after Mr. Conforti’s termination).
 
The agreement provides for customary restrictive covenants including non-competition and non-solicitation covenants effective during the period of employment and for one year following termination of employment, if Mr. Conforti’s employment terminates for any reason after expiration of the term of the employment agreement, or for two years following termination of employment for any reason, if Mr. Conforti’s employment terminates during the three-year term of the employment agreement.
 
Ms. Wilson
 
Termination Agreement.  In July 2009, we entered into a termination and release agreement with Ms. Wilson effective November 2009 as described above under “Termination and Release Agreement with Named Executive Officer”.


37


Table of Contents

 
Potential Payments on Termination or Change-In-Control
 
The following table describes the potential payments and benefits under our compensation and benefit plans and arrangements to which the named executive officers would be entitled upon termination of employment or change-in-control. The payments described in the table are based on the assumption that the termination of employment or change-in-control occurred on December 31, 2009.
 
                                                         
                    Continuation
      Acceleration
             
                    of Medical
      of Awards
             
                    Benefits
      Under Equity
      Excise
    Total
            Cash
      (present
      and Incentive
      Tax
    Termination
      Termination Event
    Severance
      value)
      Plan
      Gross-Up
    Payments
Name     (a)     ($)       ($)       ($)(b)       ($)     ($)(c)
Mr. Holmes
    Voluntary Retirement, Resignation or Involuntary Termination       0         360,880         0         N/A         360,880  
                                                         
      Death or Disability       0         360,880         15,705,195         N/A         16,066,075  
                                                         
      Termination without Cause or Constructive Discharge       9,732,450         360,880         15,705,195         N/A         25,798,525  
                                                         
      Change-in-Control       9,732,450         360,880         15,705,195         N/A         25,798,525  
                                                         
Mr. Ballotti
    Voluntary Retirement, Resignation or Involuntary Termination       0         N/A         0         N/A         0  
                                                         
      Death or Disability       0         N/A         6,126,167         N/A         6,126,167  
                                                         
      Termination without Cause or Constructive Discharge       2,200,000         N/A         2,008,166         N/A         4,208,166  
                                                         
      Change-in-Control       2,200,000         N/A         6,126,167         N/A         8,326,167  
                                                         
Mr. Danziger
    Voluntary Retirement, Resignation or Involuntary Termination       0         N/A         0         N/A         0  
                                                         
      Death or Disability       0         N/A         7,408,657         N/A         7,408,657  
                                                         
      Termination without Cause or Constructive Discharge       2,000,000         N/A         2,351,892         N/A         4,351,892  
                                                         
      Change-in-Control       2,000,000         N/A         7,408,657         N/A         9,408,657  
                                                         
Mr. Hanning
    Voluntary Retirement, Resignation or Involuntary Termination       0         N/A         0         N/A         0  
                                                         
      Death or Disability       0         N/A         7,125,288         N/A         7,125,288  
                                                         
      Termination without Cause or Constructive Discharge       2,532,000         N/A         2,621,011         N/A         5,153,011  
                                                         
      Change-in-Control       2,532,000         N/A         7,125,288         N/A         9,657,288  
                                                         
Mr. Conforti
    Voluntary Retirement, Resignation or Involuntary Termination       0         N/A         0         N/A         0  
                                                         
      Death or Disability       0         N/A         1,987,834         N/A         1,987,834  
                                                         
      Termination without Cause or Constructive Discharge       2,100,000         N/A         496,948         N/A         2,596,948  
                                                         
      Change-in-Control       2,100,000         N/A         1,987,834         N/A         4,087,834  
                                                         
 
 
(a) Cash severance payable upon a change-in-control for the named executive officers assumes that the employment of such executives was terminated on a change-in-control as a termination without cause or constructive discharge.
 
(b) Calculated using closing price of our common stock on the New York Stock Exchange on December 31, 2009 of $20.17.
 
(c) Amounts do not reflect whether any reduction in payments would apply by virtue of the golden parachute rules under Sections 280G and 4999 of the Code.


38


Table of Contents

 
Accrued Pay.  The amounts shown in the table above do not include payments and benefits, including accrued salary and annual incentive compensation, to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of employment.
 
Deferred Compensation.  The amounts shown in the table do not include distributions of aggregate balances under the Officer Deferred Compensation Plan. Those amounts are shown in the 2009 Deferred Compensation Table above.
 
Covered Terminations.  The table assumes a termination of employment that is eligible for severance or other benefits under the terms of the named executive officers’ employment agreement and our Equity and Incentive Plan.
 
A termination of an executive officer is for cause if it is for any of the following reasons: the executive’s willful failure to substantially perform his duties as our employee (other than any such failure resulting from incapacity due to physical or mental illness); any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against us or the executive’s conviction of a felony or any crime involving moral turpitude (which conviction, due to the passage of time or otherwise, is not subject to further appeal); the executive’s gross negligence in the performance of his duties; or the executive purposefully or negligently makes (or has been found to have made) a false certification to us pertaining to our financial statements.
 
Subject to the individual employment agreements, an executive suffers a constructive discharge if any of the following occur: any material failure by us to fulfill our obligations under the executive’s employment agreement (including any reduction of base salary or other element of compensation) or any material diminution to the executive’s duties and responsibilities relating to service as an executive officer; the executive’s principal office is relocated to a location more than a specified distance from its original location; or the executive experiences a reduction in title or reporting responsibilities. For Mr. Holmes, constructive discharge also includes our decision not to renew his employment agreement or if he is no longer a member of our Board. For Mr. Hanning, constructive discharge also includes if Mr. Holmes is no longer our CEO.
 
Continuation of Medical Benefits.  Mr. Holmes’ agreement provides Mr. Holmes and his dependents with medical benefits through his age 75 regardless of the termination event. The actuarial assumptions used to calculate continued medical benefits for Mr. Holmes include a discount rate of 6%; no mortality assumptions for Mr. Holmes, his spouse or children; and standard pre-retirement and post-retirement per capita costs for Mr. Holmes and his spouse and standard per capita costs for Mr. Holmes’ children.
 
Acceleration of Awards Under Equity and Incentive Plan.  Grants made to all eligible employees, including the named executive officers, under our Equity and Incentive Plan, fully vest on a change-in-control. Under the individual agreements for awards, all awards fully vest on the death or disability of the named executive officer. The table does not reflect a reduction in shares that would be withheld for taxes on vesting.
 
Payments Upon Change-in-Control Alone.  For our named executive officers, severance payments in connection with a change-in-control are made only if the executive suffers a covered termination of employment. The table assumes that the employment of these executives was terminated on a change-in-control as a constructive discharge or termination without cause. Grants made under our Equity and Incentive Plan fully vest on a change-in-control whether or not the executive’s employment is terminated.
 
Related Party Transactions
 
For 2009, certain affiliates of Barclays Global Investors which, prior to December 1, 2009, beneficially owned approximately 5.85% of our common stock, performed various commercial banking, investment banking and other financial advisory services for us and our subsidiaries for which they received customary fees and expenses. We estimate the fees paid to Barclays Global Investors by us in 2009 were less than $5.1 million. We have been advised that BlackRock, Inc. acquired Barclays Global


39


Table of Contents

Investors on December 1, 2009. As a result, BlackRock, Inc. now beneficially owns approximately 5.85% of our common stock.
 
A member of Mr. Hanning’s family is a member of a law firm which has provided and continues to provide services to our vacation ownership business. Fees and expenses paid for such services were approximately $212,309 in 2009 based on the firm’s customary rates.
 
Another member of Mr. Hanning’s family currently serves as a Senior Vice President, Sales of our vacation ownership business. This individual was hired in 1981, prior to Mr. Hanning’s employment. In 2009, this individual received total cash compensation consisting of base salary, commission and bonuses of $773,693 and was granted 39,750 restricted stock units. All compensation and incentive awards were paid and awarded on a basis consistent with that applied to our other associates.


40


Table of Contents

 
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
 
The Audit Committee has selected Deloitte & Touche LLP as our independent registered public accounting firm to conduct an integrated audit of our consolidated financial statements and internal control over financial reporting for fiscal year 2010. The Board seeks an indication from shareholders of their approval or disapproval of the Audit Committee’s appointment of Deloitte & Touche LLP as independent registered public accounting firm (auditors) for fiscal year 2010.
 
Deloitte & Touche LLP served as our independent registered public accounting firm for 2009. No relationship exists between Deloitte & Touche LLP and us other than the usual relationship between auditor and client. Representatives of Deloitte & Touche LLP will be present at the annual meeting of shareholders and available to respond to questions and will have the opportunity to make a statement if such representatives desire to do so.
 
Disclosure About Fees
 
The following table presents fees for professional audit services billed by Deloitte & Touche LLP for the integrated audit of our financial statements and internal control over financial reporting for the fiscal years ended December 31, 2009 and 2008, and as well as fees billed for other services rendered by Deloitte & Touche LLP during those periods.
 
                 
Type of Fees
    2009           2008      
Audit Fees
  $  6,564,226     $ 8,567,897  
Audit-Related Fees
  $ 516,773     $ 383,527  
Tax Fees
  $ 1,911,747     $ 1,888,965  
All Other Fees
  $ 0     $ 48,438  
                 
Total
  $ 8,992,745     $  10,888,827  
 
In the above table, in accordance with the SEC’s definitions and rules, audit fees are fees billed for the integrated audit of our annual financial statements and internal control over financial reporting included in our Form 10-K for fiscal year 2009, review of interim financial statements included in our Form 10-Qs for the quarters ended March 31, June 30 and September 30, 2009 and for services that are normally provided by the auditor in connection with statutory and regulatory filings or engagements. Audit fees for 2008 include approximately $800,000 related to the 2007 audit. Audit-related fees are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements; tax fees are fees billed for tax compliance, tax advice and tax planning; and all other fees are fees billed for any services not included in the first three categories.
 
Pre-Approval of Audit and Non-Audit Services
 
Under the Audit Committee charter, among its other duties, the Audit Committee is responsible for the pre-approval of all audit and permissible non-audit services to be performed for us by our independent registered public accounting firm. The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accounting firm. Under the policy, the Audit Committee pre-approves on an annual basis all audit, audit-related and tax services to be provided by the independent registered public accounting firm. On an ongoing basis, management communicates specific projects and categories of service other than relating to audit, audit-related and tax services for which the advance approval of the Audit Committee is requested. The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of the independent registered public accounting firm. On a quarterly basis, management reports to the Audit Committee regarding the actual fees incurred for all services provided by the independent registered public accounting firm. For 2009, all of the audit, audit-related, tax and all other fees listed in the table above were pre-approved by the Audit Committee.
 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE ADOPTION OF THE PROPOSAL
TO RATIFY THE APPOINTMENT OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


41


Table of Contents

 
PROPOSAL TO APPROVE AN AMENDMENT
TO THE WYNDHAM WORLDWIDE CORPORATION
2006 EQUITY AND INCENTIVE PLAN
(AMENDED AND RESTATED AS OF MAY 12, 2009)
 
General
 
Our shareholders are being asked to approve an amendment to the Wyndham Worldwide Corporation 2006 Equity and Incentive Plan (amended and restated as of May 12, 2009) (the Plan).
 
The amendment was approved by the Board on March 26, 2010, subject to approval of our shareholders at the annual meeting. The amendment is intended to provide greater performance incentives to our CEO, to ensure that any payment to our CEO at maximum levels as annual incentive compensation, referred to as our “Annual Incentive Program” under the Plan, with respect to years after 2010 would be deductible to Wyndham Worldwide under Section 162(m) of the Code (as described in greater detail below) and to bring the annual payment limits under the Annual Incentive Program component of the Plan in line with similar plans sponsored by our peer group companies. Accordingly, the amendment would increase the maximum value of aggregate payments under the Annual Incentive Program to any individual Plan participant during any Plan year from $3 million to $10 million. Other than with respect to this change, the Plan will remain unchanged from the amended and restated version approved by our shareholders at our 2009 Annual Meeting of Shareholders.
 
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. The Plan includes both a Long- Term Incentive Program and an Annual Incentive Program pursuant to each of which the Committee is authorized to grant stock- and cash-based awards to participants in the Plan under such terms and conditions as deemed by the Committee to be consistent with the purposes of the Plan.
 
The Plan is intended to exempt awards granted thereunder from the corporate tax deduction limits under Section 162(m) of the Code, such 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).
 
Awards granted under the Annual Incentive Program may be granted with value and payment contingent upon performance goals, so long as such goals relate to periods of performance of one calendar year or less. The Committee may designate an award granted under the Annual Incentive Program as “performance-based compensation” under Section 162(m) of the Code by conditioning the award or the lapse of restrictions on the achievement of performance goals; provided that the Committee establishes the objective performance goals at such time required under Section 162(m) of the Code and while the outcome of the performance goals are substantially uncertain.
 
The Board recommends that shareholders approve the amendment to the Plan. If the requisite shareholder approval of the amendment is not obtained, the amendment 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. Our CEO has been granted an award under the Annual Incentive Program in respect of the 2010 Plan year that, if the applicable performance goals are achieved at maximum levels, exceeds $3 mil