Future for Avis CEO is uncertain.

Cendant may offer Rand $15 million exit settlement after acquisition is final

When industry observers consider A. Barry Rand's tenure as chairman and CEO of Avis Group Holdings Inc., most would agree that Rand has earned a much deserved "Well done!" But, they may also ask, has he done himself out of a job in the process?

In November, Cendant Corp. announced plans to acquire 25.6 million outstanding shares of Avis Group for $33 per share. Cendant previously owned 100% of Avis, before spinning it off three years ago, retaining ownership of the franchise name. Once the deal is done, Cendant will have complete ownership again. Just a few days after the announcement, The New York Times reported that a preliminary proxy statement filed with the Securities and Exchange Commission (SEC) included a $15.1 million golden parachute for Rand.

Despite the buzz about whether he will leave Avis, Rand couldn't give any details about what the future may hold for him. "Right now, I'm focused on the completion of the merger," he said in a telephone interview. "That won't take place until February or March, after the customary processes for the SEC. Then we will have a vote of our shareholders."

He appeared confident that shareholders would vote in favor of the acquisition. Last summer, they rejected Cendant's initial offer of $29 per share, accusing the company of low-balling them. "I prefer to say they felt it wasn't representative of the value that had been built in the company," Rand said. "My assumption is that Cendant will value these businesses quite highly, and its intent is to continue to grow that value. I'll be here through the transition, and we'll let the future decide what direction we'll go [in]."

According to Michael Millman, an investment analyst at SalomonSmith Barney Inc., who watches Cendant, the company "is not a hands-on operator, typically. I don't know what [Rand's] contract looks like, but this is not a case of Cendant buying Avis because they think it's been mismanaged. I think they're buying it because they see a lot of good things."

Rand agrees. "This is a success story. If you look at what's happening in the market, the S&P is down 4% for the year. [The] Nasdaq is down for the year and if you look at rental car companies, in terms of stock value, they are down 45% over the year." Avis, he claims, is not only up 75% [for the year], "but it has also transitioned from a rent-a-car company to a vehicle management services company that is the largest and best in the world."

When pressed further on details about his future, Rand laughs, saying it's a question he's been hearing a lot. "Let's say my intent at this point is to stay on," he says vaguely. "I can't answer the real question about what I'm going to do until sometime in the future."