Cendant's ( CD) first-quarter earnings shot up 40%, powered by strong gains in its real estate brokerage service and a tax benefit. The company also pruned a generous compensation arrangement it has with its chief executive, tying most of his future bonuses to specific earnings goals and eliminating most future stock and options grants.

The diversified consumer services company earned $441 million, or 42 cents a share, in the latest first quarter, compared with earnings of $309 million, or 30 cents a share, last year. Revenue rose 8% to $4.48 billion.

Analysts were forecasting earnings of 41 cents a share on revenue of $4.28 billion.

Cendant tightened the range of its full-year 2004 estimate to $1.69 a share to $1.74 a share, which would be year-over-year growth of 20% to 23%. The old guidance was $1.68 a share to $1.74 a share. Cendant expects 2004 net cash from operating activities of about $5 billion and free cash flow of more than $2 billion.

Analysts surveyed by Thomson First Call were forecasting earnings of $1.73 a share on revenue of $19.28 billion in the full year.

Gains in the most recent quarter were driven by a 17% jump in revenue from its real estate franchises and operations to $1.16 billion, reflecting growth in royalties earned by the franchises and real estate brokerage commissions. Revenue at its vehicle services unit rose 3% to $1.39 billion, reflecting growth in its Wright Express fuel card management businesses and at Avis.

Cendant, which was sued over the way it compensates CEO Henry Silverman, adopted several new standards that will link his future compensation to how the company performs, and largely eliminate future equity compensation. The restrictions were adopted to settle the suit.

In addition, Silverman's employment contract now expires in December 2007 instead of December 2012, and the period during which he will receive a cash salary after he leaves the company was cut to five years from life. Silverman is currently the company's largest shareholder.

"We believe that these revised contractual arrangements are responsive to concerns we have heard from our investors and are clearly in our shareholders' best interest," the company said in a statement.

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