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PHH, EJF Capital Reach Governance Agreement

Exterior of low-rise office building. PHH headquarters in Mount Laurel, NJ. (Photo: The Norwood Co.)

MOUNT LAUREL, NJ—PHH Corp. and hedge fund EJF Capital have reached an agreement on PHH’s governance. PHH said Friday it would nominate James Neuhauser and Kevin Stein to its board at its 2017 annual meeting, and EJF has agreed to vote its shares of PHH common stock in favor of all PHH nominees at the 2017 annual meeting in June. The agreement comes about five weeks after EJF increased its stake in PHH from 8.4% to 9.9% and sought to add two members to the board of the financial services company, which provides mortgage services, including loan origination.

In March, Arlington, VA-based EJF had nominated Neuhauser and Stein, increasing PHH’s board from seven to nine members. The two nominees each have “vast knowledge regarding the financial services industry generally, businesses engaged in similar lines of business to the company and mergers and acquisitions, divestitures and restructurings of publicly traded financial services companies,” EJF Capital wrote in a letter to PHH.

This past Thursday, PHH directors Thomas P. Gibbons and Deborah M. Reif notified the board that they had decided not to stand for re-election at the 2017 annual meeting. PHH said the two directors’ were not related to its agreement with EJF, which calls for Neuhauser and Stein to serve as observers to the board until the company’s annual meeting.

“We are grateful for Todd and Debbie’s many years of outstanding service to the Board and wish them well in the future,” says James Egan, non-executive chairman. “We look forward to a smooth transition and to maintaining a balanced mix of qualified, diverse directors with the requisite skills and experience to understand the business, risks challenges and opportunities ahead for PHH.”

He adds that Neuhauser and Stein will bring “broad and deep experience in the mortgage and financial services industries, and their collective expertise will be a welcome contribution as we execute our strategic plans and remain committed to our longstanding goal of maximizing value for our shareholders.”

Neuhauser has served as a managing member of Turtlerock Capital LLC, a real estate fund investing in luxury homes in Los Angeles, since 2009. Stein is CEO of Resolution Analytica Corp., a buyer of commercial judgments, and an operating adviser of KCK-US Inc., a private equity firm.

Pursuant to the agreement, EJF has agreed to certain customary standstill, voting and other provisions. Latham & Watkins is serving as legal counsel to PHH. Fried, Frank, Harris, Shriver & Jacobson LLP is serving as legal counsel to EJF.

In late March, PHH announced that CFO Robert Crowl had been named COO, reporting to president and CEO Glen Messina. Effective June 28, the date of the company’s annual meeting, Crowl will succeed Messina, who is stepping down, as president and CEO.

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