This excerpt taken from the RDN 8-K filed Nov 18, 2009.
Approval of STI/MTI Incentive Plan
On November 12, 2009, the Board of Directors (the Board) of Radian Group Inc. (the Company), upon the recommendation of the Compensation and Human Resources Committee (the Committee) of the Board, approved a new performance based cash bonus plan for senior officers. This plan, the Radian Group Inc. STI/MTI Incentive Plan for Executive Employees (the Plan), is intended to enhance the Companys performance and risk-based approach to compensation by replacing the prior, annual short-term incentive plan with a two-year program consisting of short and medium term incentive awards. Each of Radians named executive officers, including Radians Chief Executive Officer, participates in the Plan.
The Plan, effective as of January 1, 2009, is designed to provide the Companys senior officers with the opportunity to earn cash bonus awards (Incentive Awards) during each two-year performance period, commencing with 2009. At the beginning of each two-year performance period, the Committee will establish a target bonus award for each participating officer (the Target Incentive Award). The 2009 Target Incentive Award under the Plan for each of the Companys named executive officers is the same as his or her 2009 short-term incentive target under the Companys prior short-term incentive plan. For 2009, these targets (expressed as a percentage of their 2009 base salary) are as follows: S.A. Ibrahim (Chief Executive Officer) 175%; C. Robert Quint (Chief Financial Officer) 125%; Teresa A. Bryce (President Radian Guaranty Inc.) 150%; Lawrence C. DelGatto (Chief Information Officer) 125%; and H. Scott Theobald (Chief Risk Officer Radian Guaranty Inc.) 85%.
At the end of the first year performance period, the Committee will determine the level of funding or bonus pool for all Incentive Awards under the Plan (such amount may range from 0% to 200% of the aggregate Target Incentive Awards) based on the Companys achievement of certain business and financial performance metrics and goals. For 2009, the total bonus pool will be determined based on the Committees assessment of the Companys performance against the following metrics:
Once established, the total bonus pool will then be allocated among the participating officers by management, or the Committee for each of the named executive officers, based on each officers performance against criteria established by the Committee. The amount awarded to each officer may range from 0% to 200% of such officers Target Incentive Award. For 2009, in accordance with criteria established by the Committee, the Incentive Award for each participating named executive officer will be based on such executive officers achievement of his or her management-based performance objectives and performance rating, subject to the discretion of the Committee.
Following the first year performance period, 50% of the amount of any Incentive Award awarded to a participating officer under the Plan, will be paid to such officer as a short-term incentive bonus. The remaining 50% of any Incentive Award awarded to such participating officer will be established as that officers target medium-term incentive award (MTI Award) for the second year performance period. No amounts will be paid on the remaining 50% of any Incentive Award until the conclusion of the second year performance period as described below.
At the end of the second year performance period, the Committee will determine what percentage, if any, of the target MTI Awards will be paid to participating officers (such percentage will be the same for each participating officer and may range from 0% to 150% of the target MTI Award) based on the Companys achievement of certain business and financial performance metrics and goals. Individual officer performance will not be evaluated for purposes of determining or paying the MTI Awards. The initial MTI Award for each named executive officer will be determined based on the Committees assessment of the Companys credit default rate for mortgage insurance written by the Company in 2009. In addition, the Committee also may limit or decide not to pay any MTI Award in the event there is a material restatement of earnings.
The foregoing summary is not a complete description of the Plan and is qualified in its entirety by reference to the full text of the Plan, which is filed as Exhibits 10.1 to this Current Report on Form 8-K.