Jun. 15--An investment firm won its proxy battle with PHH Corp. last week, getting its two representatives elected to the company's board of directors and ousting the CEO and chairman from the seven-member board.

Pennant Capital Management LLC, PHH's largest shareholder with 9.9 percent of the stock, has previously said that while it wanted Terry Edwards off the board, it is not trying to remove him as the company's chief executive officer. So PHH will be in the unusual position of having a CEO who is not on the board of directors.

PHH will need a new chairman, because non-executive chairman of the board A.B. Krongard was also defeated in the proxy vote at last week's annual meeting.

PHH is a New Jersey-based mortgage and vehicle fleet management company. Its mortgage banking business operates out of facilities in Mount Laurel, N.J., and Jacksonville, and was the fourth-largest U.S. originator of residential mortgages in the first quarter this year.

Pennant Capital Managing Member Alan Fournier has been critical of top management, saying in a recent letter to shareholders that "fresh ideas and strong leadership are desperately needed at PHH."

Fournier has been particularly critical of the mortgage operations, despite recent improvements in financial performance. He attributes the improvement to the nationwide refinancing boom sparked by lower interest rates.

PHH's stock has risen from a record low of $4.27 last November to the mid-teens in recent days, but Fournier said in his letter that "the company's stock could end up trading largely as a proxy for refinancing activity."

PHH's current board of directors said in a letter to shareholders that management should be given credit for keeping the company afloat in a period of mortgage market turmoil.

"We believe our survival and effective positioning for the future are a reflection of the fundamentally sound business models we have created and the prudent management of our businesses," it said.

Fournier apparently won over shareholders, as preliminary results of the vote showed that Pennant nominees Allan Loren and Greg Parseghian defeated Edwards and Krongard for election to the board. Loren is a former chairman and CEO of Dun & Bradstreet, and Parseghian is a former chief investment officer of Freddie Mac.

Jana sells Convergys shares

Convergys Corp. was another company facing pressure from its largest shareholder before reaching a settlement with Jana Partners LLC in February. Now Jana is reducing its stake in Cincinnati-based Convergys, according to Securities and Exchange Commission filings.