RDN » Topics » Proposal 2: The Performance Share Plan

This excerpt taken from the RDN DEF 14A filed Apr 25, 2005.

Proposal 2:    The Performance Share Plan

 

Radian’s board of directors adopted the Radian Group Inc. Performance Share Plan on February 8, 2005 upon the recommendation of the Compensation and Human Resources Committee of the board. The Performance Share Plan was amended and restated by the board, at the recommendation of the compensation committee, on March 30, 2005. A copy of the Performance Share Plan is attached to this proxy statement as Appendix A. The Performance Share Plan is intended to motivate Radian’s key employees and to focus their attention on critical financial indicators that measure Radian’s success. Performance shares issued pursuant to the Performance Share Plan will come from Radian’s existing Equity Compensation Plan. The material terms of the Performance Share Plan are being submitted for stockholder approval to qualify the compensation that may be granted under the plan for deductibility under Section 162(m) of the Internal Revenue Code. If those material terms are not approved, the performance shares granted under the Performance Share Plan will become null and void and no additional performance shares may be granted.

 

Key employees of Radian and its subsidiaries who, through their position or performance, can have a significant, positive impact on Radian’s financial results, are eligible to participate in the Performance Share Plan. The participants are expected to consist of Mark A. Casale, Robert E. Croner, Sanford A. Ibrahim, Martin Kamarck, Roy J. Kasmar, C. Robert Quint and Howard S. Yaruss or their successors. In the future, the committee may expand the group of participants to include other key employees, or may contract the group of participants.

 

The Compensation and Human Resources Committee may grant performance shares to eligible participants with respect to performance periods of varying and overlapping durations. The first performance period under the plan is the three-year period that began January 1, 2005 and ends December 31, 2007. The committee expects

 

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that future performance periods will cover additional three year periods beginning January 1, 2006, January 1, 2007 and so on.

 

At the establishment of each performance period, a target number of performance shares is established for each participant in the plan. The performance shares are denominated in shares of Radian common stock and will be settled in shares. The maximum payout under any performance share award for purposes of Section 162(m) is 250,000 shares of Radian common stock.

 

Each performance share award becomes payable at the target amount multiplied by a factor depending on Radian’s growth of earnings per share, growth of adjusted book value or return on equity over the performance period. For the first performance period, one third of each award is based on each of the three metrics, each metric is measured both on an absolute basis and relative to a group of Radian’s peers and the performance shares are payable at between 0% and 200% of the target amount.

 

The table below shows the target number and dollar value of performance share awards for the period from January 1, 2005 through December 31, 2007 to each of the participants in the plan who are listed in the Summary Compensation Table of this proxy statement, along with additional information. In addition, Mr. Ibrahim is expected to receive an award of performance shares for a period commencing on or about the effective date of his employment and ending December 31, 2007:

 

Name and Position


  

Target Number of

Performance Shares


  

Monetary Value as of

February 8, 2005


Martin Kamarck
President of Enhance Financial Services Group Inc.

   8,800    $ 425,832

Roy J. Kasmar
President and Chief Operating Officer

   8,800    $ 425,832

C. Robert Quint
Executive V.P., Chief Financial Officer

   5,400    $ 261,306

Howard S. Yaruss
Executive V.P., Secretary, General Counsel and Corporate Responsibility Officer

   4,000    $ 193,560

All current executive officers as a group

   30,900    $ 1,495,251

All current non-executive directors as a group

   0    $ 0

All current non-executive officers as a group

   0    $ 0

 

Termination of Employment and Change in Control

 

If a change in control of Radian occurs (as defined in the Equity Compensation Plan) and at least twelve months have elapsed in any open performance period, then payments with respect to the target number of performance shares for each such performance period will be made immediately upon the change in control. Performance shares with respect to performance periods for which less than twelve months have elapsed will expire upon the change in control.

 

Upon retirement of a participant, payments with respect to the target number of performance shares related to performance periods for which the participant worked at least one full year will be made at the end of the performance period to the extent the performance goals for that period are met. Upon disability or death of a participant, payments with respect to the target number of performance shares related to all open performance periods will be made at the end of the performance period to the extent the performance goals for that period are met. Upon termination of employment for any reason other than retirement, disability or death, all performance shares with respect to open performance periods immediately will be forfeited and canceled.

 

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Administration and Amendment

 

Radian’s Compensation and Human Resources Committee administers the Performance Share Plan and may amend or terminate the Performance Share Plan at any time.

 

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The foregoing is a description of the material features of the Performance Share Plan. You should read the Performance Share Plan, which is attached as Appendix A to this proxy statement, for additional information.

 

Required Vote

 

Assuming a quorum is present at the meeting, the material terms of the Performance Share Plan will be approved if a majority of the shares present in person or by proxy and casting a vote on this proposal vote “FOR” the proposal. For purposes of the foregoing, abstentions and broker non-votes shall not be deemed to be votes cast.

 

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