NEW YORK (CNNfn) - Cendant Corp. announced on Wednesday that it is restructuring its board of directors as part of a $2.8 billion settlement agreement in a class action suit over accounting irregularities.|
The New York-based company, which franchises a broad spectrum of popular brand names including Century 21 real estate, Howard Johnson hotels and Avis car rentals, has annual revenue of about $5.4 billion.
Robert Kunisch and John Snodgrass resigned as board members effective March 31. Both men had resigned as executives of the company over the past three years.
The two were replaced as members of the board by Myra Biblowit, vice dean for cultural affairs at New York University, and Sheli Rosenberg, vice chairman of Equity Group Investments Inc.
Board member Michael Monaco, also a former executive who recently left the company, and board member Carole Hankin will both resign from the board after the company's annual meeting on May 25, officials said.
"When I read this, I simply viewed it as a positive," said Seth Moshman, an analyst with Deutsche Banc. Alex Brown. "They're adjusting the board of directors to reflect a fresh point of view ... This is a positive -- to bring people with diverse experiences together as a board is a good thing."
Cendant was formed in 1997 by the merger of HFS Inc. and CUC International. The suit stems from accounting irregularities at the former CUC International's business units.
Cendant had disclosed that CUC had engaged in irregular accounting practices to inflate earnings, which prompted a class action suit against Cendant by several shareholders and some of the nation's largest pension funds: the California Public Employees Retirement System; the New York State Common Retirement Fund; and various New York City pension funds.
The suit alleged the company issued false and misleading statements and that company officers sold Cendant stock before the announcement of the accounting problems.
Cendant Spokesman Elliott Bloom said the board's restructuring comes well before the two-year deadline set by a federal judge in the settlement, which was reached about four months ago.
In addition to paying $2.8 billion as part of the settlement, the company agreed to include several people outside the company on its board of directors.
Cendant also announced that the U.S. District Court in New Jersey has scheduled a June 28 hearing on the proposed settlement agreement.
Shares of Cendant (CD: Research, Estimates) gained 5/8 to close at 17-7/8 on the New York Stock Exchange Wednesday.